Sitting of 20 February 1985

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

    Human Rights
    Mr. Chris Smithasked the Secretary of State for Foreign and Commonwealth Affairs whether he has made any representations to the Government of Guatemala over violations of human rights.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Renton): In the absence of official relations with Guatemala we have no means of expressing our concern directly to the Guatemalan Government. But we have repeatedly expressed disquiet during United Nations debates at reports on human rights abuses in Guatemala, and we continue to support efforts by the United Nations to bring about an improvement in the situation. On 14 December 1984 the United Kingdom voted in favour of a United Nations resolution which reiterated great concern about human rights in Guatemala.
    Mr. Smith: Has the hon. Gentleman seen and considered the findings of the British parliamentary human rights group report on its visit to Guatemala, which was published in October 1984? In particular, has he seen the distressing finding in that report that
    "the killings and disappearances have continued, and there has been no significant improvement in the human rights situation —if anything, it has worsened since 1983"?
    In the light of that, has the hon. Gentleman made any representations to the Government of the United States to urge them to abandon their current proposals to reestablish military links with and military aid to Guatemala.
    Mr. Renton: Yes, I have seen the report to which the hon. Gentleman referred—"Bitter and cruel". We share the concern expressed in that report about the continuing human rights violations in Guatemala. It is worth pointing out that Lord Colville, the rapporteur, on whose views the United Nations recommendations and resolution were based, does, on the contrary, see some improvement in the situation in Guatemala. But we have continued regularly to express our concern to the United States, particularly about the possible consequences of any military aid to Guatemala and the effect that that would have on our garrison in Belize.
    Mr. Meadowcroft: Have the Government sought to prevent arms sales to Guatemala by British companies, and, if so, with what success?
    Mr. Renton: As I said in my first answer, as we have no diplomatic relations with Guatemala we cannot make any representations directly to Guatemala, but one of the things that the United Nations resolution called for, which we firmly supported, was that there should be no military aid to Guatemala.

    Cyprus
    Mr. Wilkinsonasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the recent diplomatic attempts to solve the Cyprus problem.
    The Minister of State, Foreign and Commonwealth Office (Mr. Richard Luce): We are disappointed that the outcome of the high level meeting between the leaders of the two communities in Cyprus was not more positive. We have consistently supported the efforts of the United Nations Secretary-General to seek a settlement of the Cyprus problem and will continue to do so. We share his view that at that time the gap between the two sides had narrowed significantly and welcome his intention to pursue his initiative. We have stressed the need to seize the opportunity he has created.
    Mr. Wilkinson: During his recent visit to Ankara, did my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs make representations to General Evren and the Turkish Government that they use such good offices as they may have with Mr. Denktash to be as accommodating as possible and to try to seek a negotiated settlement in line with the United Nations' proposals?
    Mr. Luce: Yes, my hon. Friend will be glad to know that my right hon. and learned Friend the Foreign Secretary had a full discussion about Cyprus with the Turkish Government and both Governments agreed jointly that the dialogue between the parties concerned should continue and that every support should be given to the Secretary-General in his efforts.
    Mr. James Lamond: Do the Government still hold firm to their decision not to recognise the so-called Turkish state in northern Cyprus?
    Mr. Luce: Our position remains precisely the same.
    Mr. Cyril D. Townsend: I share my hon. Friend's great disappointment about the collapse of the talks in New York. Is it not unhelpful for the Turkish authorities to be calling for elections on 23 June and to be saying that concessions so far offered are to be withdrawn? Is it not important that Britain should keep in touch with the other guarantor powers to support the Secretary-General's important initiative?
    Mr. Luce: We believe that nothing should be done to undermine the efforts of the Secretary-General to get a reconciliation between the parties. In January the gap had narrowed considerably and we believe that the alleged proposals by Mr. Denktash to hold elections in June will not be helpful to that process.
    We have kept in close touch with the other parties. The Foreign Secretary has been to Turkey to talk to the Government there and my right hon. Friend the Prime Minister has had three meetings with President Kyprianou in the past five months.
    Mr. Healey: Is not the position of the Turkish Government central in this matter, because a programme for the withdrawal of Turkish troops from Cyprus is the main issue for the Greek community? What representations did the Foreign Secretary make on that subject? It is entirely within the scope of Turkey, an ally of Britain and one of the guarantor powers, to secure a programme for the withdrawal of Turkish troops as part of an ultimate settlement.
    Mr. Luce: It is the British Government's clear view that the withdrawal of foreign troops, principally the 22,000 Turkish troops, should be part of a comprehensive package. That was discussed by the Foreign Secretary when he was in Turkey.

    Turkey
    Mr. Michael Brownasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on relations with Turkey in the light of his recent visit to that country.
    Mr. Luce: My right hon. and learned Friend visited Turkey from 11 to 13 February. He met the President, the Prime Minister, the Foreign Minister and other leading Turks, including representatives of the Opposition parties. These talks covered a wide range of issues and we are confident that the visit will have helped to develop our relations with Turkey. These relations are based on firm foundations, including our shared membership of NATO, the Council of Europe and OECD.
    Mr. Brown: When my right hon. and learned Friend the Foreign Secretary visited Turkey, did he have an opportunity to raise with the Government recent reports that the Greek Government are to ask the United States to remove its bases from the Mediterranean? Did my right hon. and learned Friend also discuss the possibility that Turkey might be able to fill the vacuum that could occur in those circumstances?
    Mr. Luce: My right hon. and learned Friend's principal aim in his discussions with the Turkish Government was to express the hope that, in the greater interest of the strength of NATO, Greece and Turkey would reconcile their differences and have bilateral discussions to overcome their problems.
    Mr. Boyes: The Minister mentioned the interests of NATO, but did the Foreign Secretary have an opportunity to raise the interests of members of the executive of the Turkish Peace Association, who are languishing in a lousy, stinking jail, so described in a pamphlet that is in my possession? Did the Foreign Secretary make strong representations to the Turkish Government to the effect that our relations with them will not improve until human rights in Turkey are improved and the peace prisoners are set free?
    Mr. Luce: Turkish leaders have been made aware on a number of occasions of the anxieties and views of hon. Members, the British public and the Government on human rights. However, the hon. Gentleman ought to acknowledge the progress that Turkey has been making in recent months towards the restoration of democracy and the strengthening of human rights. There is no shadow of doubt about the fact that considerable progress has been made. The hon. Gentleman should bear in mind that
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    before 1980 there were an average of 20 political murders a day in Turkey. There has been a considerable improvement and we ought to encourage that process.
    Mr. Hickmet: Does my hon. Friend agree that Britain's relations with Turkey are at a post-war high, and should we not capitalise on that fact by increasing ECGD cover and aid to Turkey, thereby helping to restore its economy? Would that not do more than any other single measure to secure a lasting return to democracy in Turkey, which is a member of NATO?
    Mr. Luce: I agree with my hon. Friend that it is in all our interests to encourage trade between Britain and Turkey. The ECGD restored cover for Turkey in 1983 and agreed, for example, to provide cover for the important Bosphorus bridge project. We are doing everything that we can to encourage trade.
    Mr. George Robertson: Is it not true that only last week Amnesty International published reports showing that there is still widespread official torture in Turkey and that thousands of Turks are facing the death penalty in Turkish gaols? In that light, what conceivable justification can there be for the Foreign Secretary to offer his help in unblocking the EEC aid which is the one effective means by which Turkey has been brought closer towards democracy? How does the Foreign Secretary think that that sort of support given in Ankara to the Turkish Government will help the prisoners who are languishing in the gaols of our NATO partner?
    Mr. Luce: As I have said, we are well aware of the allegations that have been made over many months about the abuse of human rights. We should acknowledge the facts in Turkey today. Martial law has been lifted in 33 of the 67 provinces and the military prison population was reduced from 43,000 in 1981 to 16,000 in 1984. If the hon. Gentleman is referring to allegations of brutality, I point out that more than 100 police officers have been convicted of ill-treatment of prisoners. It is absolutely wrong to turn our back on a country which is responding to representations from the Western world that it should improve its human rights treatment. On the contrary, we should give encouragement, and that is why we support the releasing of European Community aid to Turkey.

    UN Decade for Women
    Ms. Richardsonasked the Secretary of State for Foreign and Commonwealth Affairs if he will publish the reports prepared by the United Kingdom working groups on the United Nations Decade for Women.
    Mr. Renton: We have made funds available for copies of the reports to be distributed to group members, relevant Government Departments, copyright libraries and the Library of the House. The groups themselves will be free to make further copies available as they see fit.
    Ms. Richardson: When will the Government ratify the United Nations convention on the Decade for Women? Why have the Government not done so?— [AN HON. MEMBER: "Rubbish."] Someone says, "Rubbish". I hope that that is understood by the public as a comment from the Tory party on the rights of women.
    When will the Government realise that Britain is almost the last major state to ratify the convention? I know that 67 other states have done so. If and when the Government

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    ratify the convention, what advice will the Under-Secretary of State give to other Ministers about carrying out the convention?
    Mr. Renton: We hope to be in a position to announce our decision soon. We are still considering the convention in the light of our existing legislation. We are consulting other Departments. I do not think that the delay in ratifying is surprising in the light of the convention's wide scope.
    Mr. Marlow: Will my hon. Friend enlighten everyone in the United Nations and elsewhere that in this country at least we have no time whatever for this modish rubbish? In this country women are equal, and, thank heavens, most of them are different.
    Mr. Renton: We have not yet taken a decision to ratify. We signed the convention in July 1981 because we share, as I am sure does my hon. Friend, its central objective of eliminating discrimination against women. We have a long tradition of concern about human rights and discrimination, wherever it occurs. We live in a world where discrimination against women is still commonplace. It is against that background that we originally signed the convention.
    Mr. Corbyn: Will the hon. Gentleman take this opportunity of condemning as disgraceful and offensive to women in this country and throughout the world the remarks of the hon. Member for Northampton, North (Mr. Marlow)? The hon. Gentleman refuses to recognise that a strong body of opinion finds discrimination against women anywhere offensive, and believes that the British Government should reflect the views of the large majority of people and should, therefore, play an active part in United Nations efforts to outlaw discrimination against women throughout the world.
    Mr. Renton: The hon. Gentleman is capable of conducting his own condemnation and does not need any assistance from me. I share his view that there is still far too much discrimination against women in the world. We have a long history of concern about the abuse of human rights, which was the reason for our original decision to sign the convention.

    Spain
    Mr. Peter Bruinvelsasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Anglo-Spanish relations following the opening of the border between Gibraltar and Spain.
    Mr. Renton: I refer my hon. Friend to the statement my right hon. and learned Friend made in the House on 6 February. We, and the Chief Minister of Gibraltar, are fully satisfied that the results of the opening of the border and the meeting in Geneva with the Spanish Foreign Minister are good for Gibraltar. They open the way to even closer relations between the United Kingdom and Spain.
    Mr. Bruinvels: Does my hon. Friend agree that the arrangements made between my right hon. and learned Friend the Foreign Secretary and Senor Moran have greatly improved the prospects for the future of Gibraltarians? Does he agree that they encourage and maintain the base, preserve the heritage and, more important, bring about a tremendous increase in the tourist boom?
    Mr. Renton: Yes, Sir. I support what my hon. Friend said. I understand that there is to be a conference next week entitled "Save Gibraltar's Heritage", which will be opened by an address from the Duke of Gloucester. The tourist industry in Gibraltar is doing extremely well. There have been 108 coaches there since the frontier was opened, and all the 210 pubs on the rock are said to be doing a thriving business.
    Mr. Merlyn Rees: In view of the increase in the number of tourists to Gibraltar and Spain, will the Minister have a word with the Spanish authorities about improving safety at Spanish airports? There is worry about some airports, especially about landing arrangements. It is about time that special steps were taken and representations made, because large numbers of British people go there.
    Mr. Renton: I take the right hon. Gentleman's point. I was in Spain 10 days ago discussing with, the Interior Minister the safety arrangements in the tourist resorts and so on for the 6 million British tourists who go to Spain on holiday. I shall certainly bear in mind the hon. Gentleman's point about the safety of landing arrangements at Spanish airports.
    Sir John Biggs-Davison: May we now give up discussion of sovereignty in any future talks, and get on with practical co-operation, on which an excellent start has been made?
    Mr. Renton: My right hon. and learned Friend the Foreign Secretary made it clear in his statement to the House what was said about sovereignty, namely, that Senor Moran outlined the Spanish position, and informally suggested some proposals about possible ways in which Spain would wish to try to recover the sovereignty of Gibraltar, and that those proposals are now likely to be presented through diplomatic channels. My right hon. and learned Friend made it clear that he would not comment on any ideas until they were formally put forward, and also underlined our commitment to respect the wishes of the people of Gibraltar as set out in the preamble to the 1969 constitution.

    Human Rights
    Mr. Woodallasked the Secretary of State for Foreign and Commonwealth Affairs what progress has been made in the implementation by the Union of Soviet Socialist Republics of the human rights provisions of the Helsinki final act during the past six months.
    Mr. Brando-Bravoasked the Secretary of State for Foreign and Commonwealth Affairs whether there has been any change in the degree of Soviet compliance with the provisions of the Helsinki agreement.
    The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind): During the past six months, in spite of welcome progress on a small number of bilateral personal cases, Soviet compliance with the majority of its Helsinki commitments has remained completely unsatisfactory.
    Mr. Woodall: I thank the Minister for that reply, but it is disappointing. In view of the Soviet Union's failure to honour its human rights obligations, will the Minister make further representations to the Soviet Foreign Minister? Will he approach Mr. Gromyko and ask him to use the occasion of the 40th anniversary of VE day to

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    declare an amnesty for all Soviet war veterans, such as Colonel Lev Ousischer, who have been detained for many years against their will, and to allow them to visit their families and friends abroad? It is because they have expressed a desire to do that that they are locked away.
    Mr. Rifkind: The problem of human rights was raised during the visit of Mr. Gorbachev to the United Kingdom in December. I note the hon. Gentleman's suggestion, and the celebrations of the 40th anniversary, which are intended to be an occasion of reconciliation, would provide an adequate and desirable opportunity for acts of the kind recommended by him.
    Mr. Brandon-Bravo: Since a right to believe in God and to practise one's religion is a right which we take for granted in this country but which, in practice, is still considered to be an offence against the state in the Soviet Union, should we not put that country in the dock for its utter failure to live up to the aspirations of the Helsinki and Madrid agreements?
    Mr. Rifkind: My hon. Friend is right to draw attention to that. The ironic fact is that the Soviet constitution purports to grant freedom of religious observance to Soviet citizens. We are unfortunately aware that that does not happen in practice. It is important to remind the Soviet Union of that. For that reason we included cases of religious persecution in the representations made to Mr. Gorbachev and on other occasions.
    Mr. Allen McKay: Will the Minister acknowledge the visit that was led by my right hon. Friend the Member for Barnsley, Central (Mr. Mason) to the Soviet Union recently to study the plight of Soviet Jewry? There are a number of people in prison whose only sin is to want to go to Israel. Will the Minister take those matters into consideration and increase the pressure on the Soviet authorities to reverse the trend which is increasing the number of those in prison, increasing the harassment, and deterring many people from making representations to them?
    Mr. Rifkind: We are delighted when parliamentarians make representations similar to those made by Her Majesty's Government. The hon. Gentleman correctly draws attention to the dramatic fall in the number of Soviet Jews permitted to leave the Soviet Union. Last year the figure was some 900, compared to 51,000 several years earlier. There is no doubt that that is because of the refusal of the Soviet authorities to process applications from those who would like to leave.
    Sir Peter Blaker: Would it not be a cause for great rejoicing if the Soviet Union were to make half as much progress in the field of human and democratic rights as Turkey has in the past few years?
    Mr. Rifkind: My right hon. Friend is justified in making that comment. As my hon. Friend the Minister of State emphasised, human rights in Turkey have improved progressively over the past few years. It is unfortunate that we cannot say the same about the Soviet Union.
    Mr. Winnick: Does the Minister realise that when there was a question about Guatemala not one of his Back Benchers stood up to speak, despite the terror in that country? Is the Minister also aware that the Soviet Union would receive a more sympathetic hearing in this country
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    if it pursued different policies towards people who want to practise their religion or leave the Soviet Union? The sooner the Soviet Union modifies its policy the better.
    Mr. Rifkind: With regard to the first part of the hon. Gentleman's question, if he wishes to be consistent, I should expect him to be advocating the same sort of policy of dialogue and contact with Turkey or Guatemala as he seems keen to have with the Soviet Union.
    Mr. Lawrence: Is my hon. Friend aware that at the visit referred to by the hon. Member for Barnsley, West and Penistone (Mr. McKay) five Members of the House were allowed to visit 37 refuseniks? They told us in Moscow that they were grateful to the Government for continuing to make the point with the Soviet authorities that if the Soviets want us to trust their undertakings on peace they must first honour their international undertakings to respect fundamental human rights.
    Mr. Rifkind: We have noted that whenever representations are made to the Soviet authorities they take careful note of the points that are made and of the individuals who are mentioned. We can only hope that they are the basis for the action that is taken by the Soviet authorities. There has been some modest progress with regard to certain personal cases which my right hon. and learned Friend the Foreign Secretary has raised. We hope that that will be the beginning of more substantial improvements. There is as yet no hard evidence to support any degree of optimism.
    Mr. George Robertson: May I emphasise to the Minister that Opposition Members who campaign for human rights do it even-handedly in East and West. Discussions on the middle east are taking place in Stockholm and between the Soviet Union and the United States in Vienna this week. Is this not an opportunity whereby the British Government might pursue the idea of greater flexibility on the Soviet Union's part in allowing some of its Jewish citizens to go to Israel, in contrast to the record of that country over the last few years?
    Mr. Rifkind: I certainly agree with the hon. Gentleman that no country should feel obliged to forbid its citizens to leave its territory. If it does so forbid its citizens, that is a mark of a substantial lack of self-confidence in the merits of the country concerned.

    Middle East (Arms Supplies)
    Mr. Tom Clarkeasked the Secretary of State for Foreign and Commonwealth Affairs whether he intends to hold discussions with European Economic Community partners on arms supplies to the middle east.
    Mr. Luce: My right hon. and learned Friend has no plans to do so. It is for each member Government of the Community to decide on their own policy on arms supplies to other countries.
    Mr. Clarke: Does the Minister accept that there are double standards on the part of certain European countries, as well as on the part of the United States, which are self-defeating? Does not the arms race in respect of the middle east worry him, and is not the imbalance, which has been deliberately created by the United States, causing difficulties for moderate Arab countries, which have been driven into the hands of the Soviet Union despite the fact that the United States says that that is not its intention?
    Mr. Luce: I agree with the hon. Gentleman in the sense that everything must be done to strengthen the prospects of peace and stability in the middle east, and particularly at this time in respect of the Arab-Israeli conflict, and the Lebanon. All efforts must be seen in that light and the sale of arms—the subject that the hon. Gentleman has raised —must be judged against the background of whether it is likely to exacerbate the possibility of conflict. We have criteria in that connection.
    Mr. Latham: If the Government agreed with the EEC arms embargo against Israel as a result of the Lebanon war will my hon. Friend confirm that when the Israelis withdraw finally from Lebanon there will be no possible basis for continuing such an arms embargo?
    Mr. Luce: I should tell my hon. Friend that it was, of course, a British Government decision in the summer of 1982 to impose an arms embargo on Israel arising from its invasion of the Lebanon. Following a European Council meeting at the end of June that year the Belgian Prime Minister, who was President, stated that no member of the Community was supplying arms to Israel. We are watching with great interest—indeed, we welcome—the withdrawal of Israel from the Lebanon. The question of arms sales can be reviewed as withdrawal is completed.
    Mr. Cartwright: Is not the Minister concerned about the continued supply of sophisticated arms to Israel by the United States, particularly when those weapons have so often been used not for self-defence but for offensive strikes against neighbouring states?
    Mr. Luce: As I said earlier, our criterion is to judge each case on its merits and on whether the sale of arms is likely to exacerbate the possibility of conflict in that part of the world. However, each country obviously has a right to self-defence.
    Mr. Cyril D. Townsend: Is it not high time that the European Community had a co-ordinated policy towards selling arms to the middle east? If the United States is unable to meet the shopping list recently supplied by Saudi Arabia, is that not a jolly good opening for the British arms industry and the prospects for employment in this country?
    Mr. Luce: It is certainly the case that we have good relations with many Arab countries as well as with Israel. We hope that it will be possible to sell certain equipment to them. As to the European Community, there is no provision under the treaty for common policies on arms sales. Nevertheless, we exchange views with it on arms sales policy from time to time.
    Mr. Mikardo: Is it not a fact that the arms with which Christians and Muslims in Lebanon are killing each other on a large scale all come from Europe, including the Soviet Union and Great Britain?
    Mr. Luce: I cannot put my finger on the source of every firearm that is being used in the Lebanon. All I can say is that it is very much in the British Government's interest to see the sovereignty of the Lebanese Government displayed throughout the Lebanon. That means that we want to see all foreign troops withdraw from the Lebanon to give that country a chance to survive on its own.
    Mr. Wilkinson: Will my hon. Friend examine the possibility of concerting European policy in this matter within the Council of the Western European Union? Will
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    he further, as a priority, make sure that the needs of Kuwait and Jordan, which are in a particularly vulnerable position, are met from European sources?
    Mr. Luce: I shall give thought to my hon Friend's suggestion about the WEU. As I said, within the European Community we exchange views from time to time on the question of arms sales.
    Mr. Healey: Does the Minister agree that nothing would do more to improve the prospects for peace and prosperity throughout the middle east than a sharp reduction in the expenditure of all those countries on foreign arms? This matter concerns not only the European Community but countries in the Communist bloc and, above all, the United States. What representations has the Minister made to the American Government to ensure that this matter is discussed in the current talks on the middle east between the United States and the Soviet Union?
    Mr. Luce: During the course of today and tomorrow my right hon. Friend the Prime Minister will be having discussions with the American President and Mr. Shultz, and the middle east will be a major topic of conversation. In the view of the British Government—and, I believe, of the United States—the highest prioirty must be given to working for an end to the Arab-Israeli dispute and the Iran-Iraq war, on both of which we follow policies which give priority to achieving an end to the conflicts rather than to exacerbating them.

    Human Rights
    Mr. Dubsasked the Secretary of State for Foreign and Commonwealth Affairs what information he has concerning torture and other abuses of human rights in Iran.
    Mr. Luce: We continue to be concerned at the large number of reports of violations of human rights in Iran. We take every suitable opportunity to urge the Iranian authorities to meet their obligations under the United Nations convention on human rights. Our continuing concern was expressed by the European Community Presidency at the United Nations in November 1984 and I set out our position very clearly in an Adjournment debate on this subject on 21 December 1984.
    Mr. Dubs: Is the Minister aware that a list has recently been announced by Mr. Rajavi, the chairman of the National Council of Resistance of Iran, which documents over 10,000 executions in that country, including 18 women who were pregnant at the time of execution and 430 children under 18? Is he aware that there are, in addition, allegations of torture on a wide scale and imprisonment without charge and trial? Is the hon. Gentleman satisfied, in the light of this unprecedented wave of barbarism, that the British Government are doing all that they can, in conjunction with other countries, to mobilise international opinion against what is happening in that country?
    Mr. Luce: Yes, Sir. The British Government are deeply concerned by reports of the abuse of human rights in Iran which have been drawn to our attention, not just in respect of the Baha'i community but in respect of other parts of the Iranian community. With that in mind, we cosponsored last year a resolution of the United Nations Commission on Human Rights about the abuse of human

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    rights in Iran. We propose to do precisely the same now, with the resumption of the United Nations commission's work in Geneva. We use whatever means we can—through the European Community, the United Nations and in other ways — to draw the attention of the Iranian authorities to the grave concern that is felt about the abuse of human rights.
    Sir Anthony Grant: Does my hon. Friend agree that the allegations of the hon. Member for Battersea (Mr. Dubs) about torture and misery in Iran are remarkably similar to the complaints that were made against the Shah's regime, when the revolution was heralded as the answer to all the troubles? Is this not another example in the course of history of the fact that revolutions nearly always seem to bring greater misery to the people whom they are meant to save?
    Mr. Winnick: Bring back Louis XVI.
    Mr. Luce: I agree with my hon. Friend, and that is why we are focusing as much attention as we possibly can, within the United Nations and the Community, on drawing the attention of the Iranian authorities to our anxieties about the abuse of human rights.
    Mr. Johnston: The Minister sounds very reasonable, but why do the Government continue not only to approve of, but to encourage, the vast increase in trade between Britain and Iran that has taken place since Khomeini took over power? There is no doubt that that trade has helped him to maintain his barbaric and cruel regime so that, in the end, we have some responsibility for what happens to the Baha'i.
    Mr. Luce: I disagree with the hon. Gentleman. If he makes the assumption that if we impose trade sanctions on countries which abuse human rights that will improve the situation in those countries, he should think again. It is in our interest to have a good trading relationship with Iran to maintain contact between our country and the Iranians, but at the same time to draw to their attention our grave anxieties about the abuse of human rights.

  EUROPEAN COMMUNITY

    European Council (Voting)
    Mr. Parkasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the use of majority voting in the European Council.
    Mr. Rifkind: The European Council's task is to provide strategic direction and general political impetus to the Community. Majority voting would not be appropriate for this purpose. The European Council therefore proceeds by consensus.
    Mr. Park: Does not the system of qualified voting on the budgetary provision end any effective United Kingdom say in the amount of money spent on agriculture, and will this not be even more so when Spain and Portugal join the Community?
    Mr. Rifkind: The hon. Gentleman's supplementary question refers not to the European Community but to the Council of Ministers, where different procedures apply. It has been the case for some time that a qualified majority applies in budgetary matters, but the hon. Gentleman
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    should also bear in mind that new arrangements have been reached on agricultural guidelines that will control agriculture expenditure.
    Sir Anthony Meyer: In view of the persistent frustration of an emerging consensus on policies of direct advantage to the United Kingdom through the abuse of the veto by countries such as Greece, is not the balance of the argument now shifting in favour of going back to the original concept of the treaty and accepting majority voting in those cases where it is specifically provided for?
    Mr. Rifkind: There are many circumstances in which the Presidency can request a vote, and it would then be up to the country concerned to decide whether it wished to apply the veto. Recently it has been the practice for voting to take place rarely, but there is nothing either in the treaty or in what is called the Luxembourg compromise that prevents further voting if the Presidency of the day so chooses.
    Mr. Maclennan: Does the Minister recognise that at many of the previous European Council meetings matters of detail and not of broad strategy have been discussed by the Heads of Government? When that is so, would it not be appropriate to move towards a majority voting system?
    Mr. Rifkind: The hon. Gentleman is correct in that it has been one of the causes of concern that European Councils have often had to deal with matters of detail. When the European Council is dealing not with matters of strategy but with points of detail, it takes on the form of a Council of Ministers and can take decisions in the normal way.

    Spain and Portugal
    Miss Boothroydasked the Secretary of State for Foreign and Commonwealth Affairs when he now expects the accession of Spain and Portugal to take place.
    Mr. Rifkind: As I said in reply to the hon. Member for Burnley (Mr. Pike) on 23 January, we are working for completion of the negotiations as soon as possible so that Spain and Portugal may accede on 1 January 1986.
    Miss Boothroyd: If the accession of Spain and Portugal is one of the exceptional events that allow a change in the terms of budgetary discipline, will the Minister give an undertaking that the accession of these two countries will not mean increasing the 75 per cent. of the budget that is already spent on agricultural affairs?
    Mr. Rifkind: The need for budgetary discipline is separate from the question of enlargement, although I freely concede that if there were no budgetary discipline, enlargement would create additional problems. It is the common desire of the House and of the member states that the proportion of total expenditure should be reduced and should continue to decrease, and the formula agreed so far on agricultural exenditure means that agriculture will progressively represent a lower and lower share of total Community expenditure.
    Mr. Nicholas Winterton: What account has my hon. Friend taken of the employment implications for the United Kingdom of the accession of Portugal and Spain to the Common Market? Is he aware that, in particular, the textile, clothing, paper and board industries will suffer enormously? What account has he taken of this factor,

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    bearing in mind that, for the United Kingdom, there is no economic benefit from the accession, and that the European Economic Community is now a political community and nothing to do with economics?
    Mr. Rifkind: It is certainly the case that there is concern in various quarters about the implications of enlargement. It is for this reason that tough and lengthy transitional arrangements are being insisted upon. I cannot agree with my hon. Friend that there are no economic advantages to the United Kingdom. For example, the arrangement that has been reached on industrial tariffs and controls on imports of motor vehicles to Spain means that the present duty will be reduced by over half in the first three years after Spain's accession. That should give opportunities to the United Kingdom in that important area.
    Mr. Leighton: As a tax increase to 1·4 per cent. was envisaged to cope with the Iberia enlargement, if that enlargement is delayed will the Minister guarantee that no such increase will be made? After all the talk of financial discipline, as agricultural spending is already punching big holes in the EC budget, will he assure the House that he will not be coming back for even more money for EC agriculture?
    Mr. Rifkind: The proposed increase in own resources is caused by several factors, of which enlargement is only one. The Federal German Government have indicated that they could not support the introduction of any increase in own resources until after the ratification of the accession treaty has been completed. In regard to the hon. Gentleman's second point, we have already said that it may indeed be necessary in the current year to provide for further supplementary finance if the own resources provision is not brought forward.
    Mr. Forth: Does my hon. Friend not regret that it has been left to the Greek Government to take a robust and sensible attitude to the accession negotiations? Does he agree that it is always more important to get the right answer, however long it takes, than to attempt to rush Spain and Portugal into the Community on the wrong terms?
    Mr. Rifkind: My hon. Friend is correct. He will reflect that Spain's application for membership of the Community was made seven years ago, so I do not think anyone can be accused of rushing the negotiations. In regard to his comment on Greece, Greece is simply concerned about integrated Mediterranean programmes. It is openly and blatantly using its objectives in that respect as a bargaining point to try to achieve what it believes to be appropriate.
    Mr. George Robertson: Is the Minister aware that the Labour party supports the accession of Spain and Portugal to the EC? Given the shambles at the Foreign Affairs Council yesterday, where does this leave the practicalities of accession on 1 January next year and the consequent EC funding crisis? Is there not genuinely a monumental crisis that cannot he shoved under the carpet any longer? West Germany will exercise a veto on any increase in own resources unless accession takes place before an impossible date; the British rebate is almost certainly doomed and the Community is running out of cash. How precisely will the Council of Ministers resolve the EC financial nightmare?
    Mr. Rifkind: I am pleased to hear that the hon. Gentleman and his colleagues are in favour of Spain joining the community. I would be pleased to hear an equally unequivocal statement that they are in favour of Britain not leaving the Community. That itself would represent considerable progress. The hon. Gentleman correctly referred to the difficulties and problems that the Community faces. There is no belief within the Community that these problems cannot be resolved. Various proposals are on the table and it is reasonable to assume that over the next few weeks major progress will be made.

    External Identity
    Mr. Haynesasked the Secretary of State for Foreign and Commonwealth Affairs what progress has been made at the ad hoc Committee on Institutional Affairs concerning an external identity for the European Economic Community.
    Mr. Rifkind: In its interim report, which is available in the Library of the House, the committee has identified a number of useful ideas to enable the Ten to strengthen their foreign policy co-operation and make it more effective, complementing the Community's existing trade and development policies.
    Mr. Haynes: Can the Minister inform the House whether, when the Prime Minister has discussions with the President of the United States, she will urge him to abandon his policy of destruction and destabilisation in Central America? [Interruption.] Will she bear in mind the Dublin declaration, which clearly said that the only solution to the Central American problem—
    Mr. Speaker: Order. I am not sure that that question has much to do with the EC.
    Mr. Haynes: It has.
    Mr. Speaker: Has it? All right.
    Mr. Haynes: It is the bully boys over yonder who are causing the trouble. Will the Prime Minister bear in mind the Dublin declaration, which was associated with the EC, and which stated that the solution to the Central American problem lay not in the use of armed force but in political efforts?
    Mr. Rifkind: As I am the British member of the ad hoc Committee on Institutional Affairs, I can tell the hon. Gentleman that this is not a subject that we have discussed so far. It may be appropriate for our next meeting, and I shall bear the hon. Gentleman's interests in mind. I am sure that my right hon. Friend the Prime Minister will bear in mind any statement made by the Heads of Government at meetings that she attends.
    Mr. Yeo: Is my hon. Friend aware that most people are far less concerned with the development of an external identity with the Community than with the removal of the many obstacles to the free movement of trade and services within the Community and with the ending of such absurdities as the directive that requires businesses with a turnover of only £18,000 to register for VAT?
    Mr. Rifkind: One of the unanimous recommendations of the interim report of the committee to which the question refers is a strong desire for early and maximum

    1031
    progress on the completion of the internal market. This is one of the most important priorities for the British Government.

    Expenditure
    Mr. Freemanasked the Secretary of State for Foreign and Commonwealth Affairs what is the most recent estimate of the date by which European Community expenditure could not be met by the present rate of Community receipts, without recourse to an increase in the own resources value added tax rate or supplementary finance.
    Mr. Rifkind: Uncertainties surrounding the rate of Community expenditure do not permit a precise estimate of the date by which additional resources will be required. In forwarding the draft 1985 budget to the European Parliament, the Council undertook to meet additional budgetary requirements by 1 October 1985.
    Mr. Freeman: If and when the Government come back to the House for authority to increase the net contribution to the Community above the £900 million provided for next year, will he assure us that, first, the Government will consider the relative merits of that increased finance against other means and, secondly, that the House will have an early opportunity to debate the wisdom of that supplementary finance?
    Mr. Rifkind: I have no doubt that, if it is necessary to ask the House to approve supplementary finance for this year, the House will have the same very full opportunity as it had recently to express its views. It has been made clear to the other member states that the approval of the House of Commons is required before any additional expenditure can be agreed.
    Mr. Deakins: Why has the Community not budgeted to spend within its anticipated income?
    Mr. Rifkind: The hon. Gentleman will be aware that there is a conflict of responsibilities within the Community because of the way in which the treaty is drafted. There is a limit on the resources available to it this year, and that is a legal responsibility that it has to accept. There are also certain legal responsibilities to meet the entitlement of private citizens and others who benefit from Community expenditure. It has not been possible to reconcile these two requirements.
    Mr. Beaumont-Dark: Will my hon. Friend accept that most right hon. and hon. Members think that there is nothing uncertain about Common Market expenditure and that it will continue to be out of control? May I remind my hon. Friend that the Economic Secretary to the Treasury promised us, almost on the Holy Grail, that we should not be asked for more money? Yet even today we are told that the House will be asked to give more money to the EEC. When shall we get this monstrous organisation under control?
    Mr. Rifkind: I read the minutes of the evidence that the Economic Secretary gave to the Committee of which my hon. Friend is a member. I can assure him that the Economic Secretary gave no such assurance. He has gone out of his way, at the Dispatch Box and elsewhere, to say that it may be necessary to have supplementary expenditure this year. Her Majesty's Government have striven more than most to control Community expenditure.
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    It was because of the Government's efforts that the very substantial new proposals on budgetary discipline were finally agreed by the Community.
    Mr. Ron Daviesasked the Secretary of State for Foreign and Commonwealth Affairs if the Foreign Affairs Council has considered a further supplementary loan as a way of financing European Economic Community expenditure in the coming year.
    Mr. Rifkind: Council discussions are at present continuing about the best way of financing Community expenditure in 1985.
    Mr. Davies: I should like to remind the Minister of the precise words of the Economic Secretary to the Treasury on 22 January:
    "I should like to think that supplementary budgets for the European Community would not be a thing of the future"—[Official Report, 22 January 1984; Vol. 71, c. 884.]
    How can the Minister reconcile that statement with the statement that he has just made? If he is to request the House to approve a further supplementary loan, will he at least guarantee that that loan will not be supported by the Government until the burden of expenditure in the European budget is redirected away from agriculture and towards the reduction of unemployment?
    Mr. Rifkind: This is the final year before the new budgetary discipline proposals come into effect. It is for that reason that expenditure that may be incurred by the Community this year has not had the benefit of the control and discipline agreed upon last year at Fontainebleau. Only when the budgetary discipline proposals have come into effect, beginning with the price-fixing discussions on agricultural prices within the next few months, will we be able to judge their effectiveness.
    Mr. Budgen: Is it my hon. Friend's estimate that the supplementary finance that will be required for 1985 is likely to be even greater than the £120 million required for 1984?
    Mr. Rifkind: The Commission has come forward with certain figures—
    Mr. Budgen: Answer the question.
    Mr. Rifkind: The Commission has come forward with certain figures which, at the moment, it maintains represent sums that will be due. We have not yet had an opportunity to consider them in detail. If the figures are correct, they represent a larger amount than for the previous year. However, the Government intend to scrutinise very carefully—as they did last year— any proposals by the Commission, in order to see whether the figures are unnecessarily high.
    Mr. Healey: The result of all this Government voyeurism—these careful scrutinies—is always to give in to the Community. Does the Minister agree that, as a matter of fact and practice, there is no chance whatever of the Commmunity avoiding bankruptcy this year unless Her Majesty's Government pay over a large part of the rebate owed to us since Fontainebleau?
    Mr. Rifkind: If the right hon. Gentleman had done his homework he would have appreciated that on the last occasion when voyeurism—as he so politely describes it —took place, the Commission's proposals were reduced by more than half through the efforts of my hon. Friend the Economic Secretary.
    Mr. Healey: The Government have not yet received the money.
    Mr. Rifkind: Yet again, the right hon. Gentleman is incorrect. The rebate for the year to which I have just referred was paid and the House was not asked to approve any further proposals until that sum was paid.
    Mr. Healey: What about this year?
    Mr. Rifkind: At the discussions that have just taken place in the Foreign Affairs Council there was unanimous agreement that that sum has to be paid, in accordance with the provisions of the Fontainebleau summit. Her Majesty's Government are confident that that obligation will be properly satisfied.

    Fontainebleau Agreement
    Mrs. Clwydasked the Secretary of State for Foreign and Commonwealth Affairs what benefits have accrued to the United Kingdom as a result of the Fontainebleau agreement.
    Mr. Rifkind: The following have accrued to the United Kingdom as a result of the Fontainebleau agreement: payment of our 1983 refund of £430 million; an abatement of £625 million for 1984; a lasting mechanism for the future which will require the United Kingdom to contribute only half what it would otherwise have had to pay to the Community budget; and an agreement on the control of Community spending, including agricultural spending.
    Mrs. Clwyd: The Minister's reply is amazingly complacent, as his replies have been all afternoon. The Fontainebleau agreement was supposed to have ended the haggling, but, as the agriculture budget for 1985–86 is to increase by 6 per cent., the haggling will continue. How can the Minister claim that there is any such thing as budgetary discipline in the EEC?
    Mr. Rifkind: My answer was not complacent. I gave a factual answer to a factual question. As a result of Fontainebleau, over £1,000 million has already been paid to the United Kingdom, quite apart from the additional advantages to which I have just referred. That was what the hon. Lady asked, and that was the answer that I gave. For the first time in its history the EEC has agreed to a tight procedure for the control of expenditure. As I mentioned earlier, the agricultural price proposals of the Commission have to be framed within that procedure, and we believe that this marks a new opportunity for the Community properly to control its expenditure.
    Viscount Cranborne: Does my hon. Friend agree that the Fontainebleau agreement would have been even more effective if it had included certain quid pro quos, notably a freer market on matters affecting EEC trade, such as freer access by the British insurance industry to the German insurance market, which has so far been denied us?
    Mr. Rifkind: That is indeed a great priority of the United Kingdom and something which the President of the Commission has said will be one of his priorities during his term of office. The Fontainebleau agreement was concerned with ending once and for all the budgetary imbalance problem that the United Kingdom faced. By an overwhelming majority, the House has welcomed that agreement.
    Mr. Healey: On a point of order, Mr. Speaker. Are you aware that, through no fault of yours or of right hon. and hon. Members who are deeply concerned about the many vital issues that are raised during Foreign Office questions, once again the House has managed to cover only a tiny handful of the questions on the Order Paper before going on to European Community questions at 3.10 pm. Are you further aware that approaches were made some weeks ago through the usual channels to abolish the distinction between Foreign Office and Community questions or, at a minimum, to extend the time available for Foreign Office questions by five minutes, at the expense of Community questions? Can you use your good offices to ensure that there is rapid progress on this matter?
    Mr. Latham: Further to that point of order, Mr. Speaker. Although I do not agree precisely with the proposal of the right hon. Member for Leeds, East (Mr. Healey), there is widespread support for his general worry about the division between the 78 questions for the rest of the world and the 17 questions concerning EEC matters. The House has already agreed that questions relating to Overseas Development should be taken on a separate day. There might be a precedent there and I ask you seriously to consider this matter, as it worries many hon. Members.
    Mr. Winnick: Further to that point of order, Mr. Speaker. This matter has been raised on other occasions and you stated at the time that it should be pursued through the usual channels, but so far, as you know, there has been no solution. Is it not worrying that, for example, yesterday, those of us who joined a picket outside South Africa House—
    Mr. Speaker: Order. I do not think that this is anything to do with me.
    Mr. Winnick: I realise that what is happening in South Africa is of no interest to Tories, but those of us who are interested made it clear yesterday that, as the House was to have Foreign Office questions today, we would have an opportunity to try to catch your eye. In the event, it was not possible to raise the issue of the police action and repression that is taking place in South Africa on the few questions that were reached.
    Mr. Anthony Beaumont-Dark: Further to that point of order, Mr. Speaker. I hope that you will ignore the request of the right hon. Member for Leeds, East (Mr. Healey). Perhaps we need a special session of Common Market questions, but the idea that the needs of Guatemala and Nicaragua and all of those other places are more important than the nonsense that goes on in the Common Market is ridiculous. It is not that we have too many questions on the Common Market but that we have too few. I hope that you will see that we get more, not fewer.
    Mr. Maclennan: Further to that point of order, Mr. Speaker. While I recognise the division in the ranks of the Labour and of the Conservative parties on the Common Market, do you agree that, if this matter is suitable for decision through the usual channels, the participation of the alliance parties is extremely important and should be acknowledged?
    Mr. Skinner: Further to that point of order, Mr. Speaker. I wonder whether you have noticed that, during the past 12 months or more, ever since the Common Market ran into extreme financial difficulties, almost

    1035
    every hon. Member, including most of those who were eager to get into the Common Market, now make continuous and long complaints—
    Mr. Speaker: Order. This is nothing to do with me.
    Mr. Skinner: I have not quite finished. I shall only be a minute.
    Mr. Speaker: Order. That is nothing to do with me.
    Mr. Skinner: That point has nothing to do with it. I am just asking, Mr. Speaker, whether you had noticed, as I have, that no hon. Member, apart from those at the Dispatch Box, stands up to back the Common Market, which is one of the biggest uneconomic units in the world, whose reserves—
    Mr. Speaker: Order. This does not concern me.
    Mr. Skinner: I will get to it.
    Mr. Speaker: I do not know whether the hon. Member will get to it. We have a very long day ahead of us and I am taking points of order. Perhaps this is an appropriate moment to say that this has absolutely nothing to do with me. I am taking points of order because I thought that it would be interesting for the Leader of the House to hear about this matter. There is nothing more for me to add.
    Mr. Skinner: My point of order, Mr. Speaker, is—
    Mr. Speaker: Order. All right, come on.
    Mr. Skinner: I was just getting to it. It was a long preamble, but it was not so long as the Minister's earlier answer. My point of order is that because hardly any hon. Member will stand up and support the Common Market, it would be a good idea if this country got out of it. Twenty minutes would then be saved and that time could be spent on Foreign Office questions.
    Mrs. Clwyd: Further to that point of order, Mr. Speaker. While not wishing to challenge your ruling, which I respect, I should have thought that it was appropriate, on the day that the Prime Minister is meeting President Reagan to discuss star wars, for a statement to be made on the Floor of the House—
    Mr. Speaker: Order. The hon. Lady and I have had some correspondence about this matter. She must not pursue it.
    Mr. Marlow: On a point of order, Mr. Speaker. I should be grateful for your assistance upon a very important matter for the whole House. As you know when we joined the European Community we did so on the basis that 1 per cent. of the nation's VAT resources should be applied in that direction—
    Mr. Speaker: Order. This has nothing to do with me. The hon. Gentleman must raise a point of order to which I can respond.
    Mr. Marlow: It relates to the nature of the debate and discussion of the parliamentary measure which should be introduced to deal with such matters. As you know, Mr. Speaker, not long ago the House had to vote on the extended loan to the Community of £120 million of taxpayers' money. From the answer of my right hon. Friend this afternoon, the Chancellor—
    Mr. Speaker: Order. The hon. Gentleman is trying to do something which I thought we had stopped doing—that is, prolonging Question Time. I think that we should now proceed to the ballot for notices of motions.
    Mr. Loyden: On a point of order, Mr. Speaker. I understand the difficulties you have in this unruly place. May I ask you to have regard, when calling hon. Members, to those hon. Members who have put down questions on foreign affairs? I understand your difficulties, Mr. Speaker, but today several Members who have not shown sufficient interest to put down questions have been called while those hon. Members who have put down questions have been ignored.
    Mr. Speaker: The hon. Member has frequently heard me say that I try not to do that.

  BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 8 MARCH
  Members successful in the ballot were:

  Mr. T. H. H. Skeet

  Mr. Peter Hordern

  Mr. Paddy Ashdown

London Regional Transport (Consideration of Bill)
Motion made and Question proposed,
That, notwithstanding the practice of the House relating to the interval between the various stages of a Bill brought in on a Ways and Means Resolution, more than one stage of the London Regional Transport (Amendment) Bill may be proceeded with at any sitting of the House.—[Mr. Biffen.]
3.39 pm
Mr. Nigel Spearing: I beg to oppose the motion, Mr. Speaker. In doing so, I wish to point out to the House that it is most unusual to have such a business motion at the commencement of public business before even a ten-minute Bill. But this is an unusual business motion, because it was put down yesterday and it could have been taken at about 4 am this morning, but one of my hon. Friends from London turned it, technically, into opposed business. Therefore, it is on the Order Paper, quite properly, as first business this afternoon.
I understand that the Leader of the House wishes to vary procedure. The motion says:
"notwithstanding the practice of the House".
Whenever that happens, Back Benchers of all parties have to take some notice, irrespective of what may have happened in the usual channels—which of course do not exist. When I think of usual channels I think of rivers, and their usual channels are usually up the creek on either side.
Be that as it may, the motion is in respect of a Bill founded on a money resolution. When money resolutions are presented to the House, whether they relate to the Consolidated Fund or other moneys, power flows with them. The Bill authorises the payment to the Treasury of an additional £50 million by the ratepayers of London, which was not thought proper by many of my hon. Friends, and authorises the Secretary of State for Transport to do that.
The Bill only received its Second Reading yesterday at 10 pm. Originally, its Committee stage, its Report stage, if any, and its Third Reading were to be taken tomorrow. That left the minimum of two days for the preparation of Committee amendments. That was the minimum possible even for a Standing Committee let alone a Committee of the whole House.
We understood yesterday that there was an opportunity to rearrange business. We could have had a long debate on milk, which we missed yesterday, and perhaps a continuation of yesterday's debate on fluoridation, which did not get very far. I do not know. Instead, the Leader of the House not only does not arrange those debates but brings tomorrow's debate forward to today. Therefore, the time for preparation of Committee amendments on an important and controversial Bill is further reduced.
Hon. Members reading yesterday's proceedings in Hansard will find some difficulty in following the speech by the Secretary of State for Transport. I was in the House, I come from London, I take an interest in transport, and I found it difficult. We need at least two days for preparations to be made. But we are now confronted with the possibility of considering the Bill almost immediately.
It is also relevant in opposing the motion to mention why the Bill is particularly controversial. Not only is it likely to lead to rates being increased in London, by a party which, I understand, does not always approve of putting
1038
up rates, but it does so on a controversial action of the Secretary of State. Under section 49 of the London Regional Transport Act the Secretary of State—
Mr. Speaker: Order. The hon. Gentleman is arguing the merits of the Bill. We must confine ourselves in this debate to the point about taking more than one stage of the Bill at a single sitting. We are not concerned with when the Committee stage begins. That was agreed yesterday. I must ask the hon. Gentleman to address himself to the terms of the motion.
Mr. Spearing: I understand that, Mr. Speaker, but if we are to vote on Third Reading, there is a supposition in the House that there has been adequate opportunity for discussion in Committee. I put it to you, Mr. Speaker, and to the House, and more importantly to the Leader of the House, that no such adequate opportunity has been afforded. It has barely been afforded for Thursday and it has not really been afforded for Wednesday.
I could rest my case there, but as we are discussing a money resolution it is in order to point out that the money resolution was brought in because, according to a High Court Judge, the Secretary of State had acted
"unlawfully, irrationally and procedurally improperly in giving a direction which exceeded his statutory powers without consideration of all relevant material and without consultation with the Greater London Council." — [Official Report, 19 February 1985; Vol. 73, c. 876.]
Mr. Speaker: Order. That is the sort of argument which should be adduced on Third Reading. It has nothing to do with the motion before us, which is a business motion.
Mr. Spearing: I will conclude, but the House could proceed to Third Reading today, though we may debate this motion until 10 pm, unless the Leader of the House wishes to move a closure motion, which would be possible, but would not go down well with my hon. Friends.
In view of the long list of business, to which you, Mr. Speaker, referred earlier, and the circumstances that I have outlined, the Leader of the House should consider whether we should proceed with the Bill at all today. We should certainly not proceed to Third Reading. The right hon. Gentleman may feel that his motion is lawful and rational. I believe that not only is it irrational, but it is procedurally questionable, if not improper.
3.46 pm
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): It may be for the convenience of the House if I make my contribution at this stage of the debate.
The hon. Member for Newham, South (Mr. Spearing) suggested that what is contained in the motion is improper. I reject that suggestion. However, I accept that the motion causes some inconvenience for the House and I made that point to the hon. Member for Newham, North-west (Mr. Banks) last night. I do not deny that for a moment. However, in this instance, as in so many others, the House has to make a judgment of where the balance should lie. Our proposal is unusual, but is by no means unparalleled or unprecedented.
The problems that have arisen to require the motion are within the recollection of the House.
Mr. Ian Mikardo: You can always withdraw the motion.
Mr. Biffen: Please—may I be allowed to proceed? Objection was raised to the taking of the Rate Limitation (Prescribed Maximum) (Rates) Order which was set down for consideration today and it was agreed that that consideration should be postponed until Monday. As a consequence, we had to rearrange business. There are a variety of ways in which that can be done, but this was the means chosen by the Government. It gives rise to the characteristics — I understand that it also gives rise to anxiety—that all the remaining stages are to be taken in one sitting and that that is to follow the day immediately after Second Reading.
No one would suggest for a moment that our proposal is the most leisurely and ideal way of setting about the matter. However, the procedure has been used in the past. The neatest precedent that I can use to demonstrate the fact that the procedure is something with which the House is at least familiar, if not on a frequent basis, is our consideration of the Oil Taxation Bill in November 1983. Not only were all remaining stages taken in one sitting, but, as in this instance, they were taken on the day after Second Reading.
The reasons that have prompted some expedition in the legislation lie much more within the province of my right hon. Friend the Secretary of State for Transport, who will seek to catch your eye later, Mr. Speaker. However, what has been proposed, although inconvenient, is a reasonable working way to go forward.
3.49 pm
Mr. Ian Mikardo: The Leader of the House has explained the reasons why he tabled his motion, but I do not find those reasons satisfactory, much less convincing.
There are good reasons for the existence of what the motion calls
"the practice of the House".
We commit a great error if we do not give ourselves adequate time to consider legislation.
The practice of the House is based on the concept that, at each stage of the proceedings, hon. Members have an opportunity to consider what happened during the previous stage and, in that light, to determine what action, if any, should be taken during the subsequent stage.
Mr. David Winnick: Does my hon. Friend not agree, therefore, that this subject must concern all hon. Members, not just those from London? If a Government intend to act as this Government are doing with this Bill, how do we know that they will not act in precisely the same manner with a number of future Bills? How do we know whether the Government will do what my hon. Friend says should not be done—not give the House sufficient time to consider amendments after Second Reading?
Mr. Mikardo: I am grateful to my hon. Friend for raising that point. My observations, as you will have noticed, Mr. Speaker, do not concern the contents, merits and demerits of the Bill. They concern the general question of the practice of the House.
We cannot table amendments in Committee until a Bill has had its Second Reading. To decide which amendments, if any, should be tabled, one needs to study the speeches made on Second Reading. Otherwise an hon. Member — I speak from experience; you, too, Mr. Speaker, may have had the same experience when you
1040
were on these Benches—may be proposing to table an amendment about a matter which, if he had been present for the whole of the Second Reading debate, he would have know had been dealt with. For that reason, we always assume that there will be times between Second Reading and Report for hon. Members to study the Official Report of the Second Reading debate.
As you know, Mr. Speaker, because you have the duty of selection, one's attitude and action during the Report stage must be based on what happened in Committee. The Chair often makes its decision on whether to select amendments on the basis of the extent to which those amendments were discussed adequately in Committee. It is, therefore, virtually impossible for hon. Members to table amendments on Report unless they either sat through the whole of the Committee stage or, even better, had the opportunity to read the proceedings. Third Reading does not present so difficult a problem and does not give rise to the type of difficulties I have described.
The Leader of the House has rightly said that there are precedents for this procedure. He has, equally rightly, said that there are not many precedents, because there have been few occasions on which this procedure is indulged in. We all know that it is a bad procedure and we therefore use it only as a last resort, when there is an especially good and weighty reason. I have been present in the House as I believe you have, Mr. Speaker, on occasions when all the stages of a Bill were considered by agreement between the two sides on a single day. That process almost always occurs by agreement. The exceptions are occasions when there is a pressing emergency—to use a grandiloquent phrase, when there is an urgent reason of state.
Mr. Dennis Skinner: My hon. Friend has got to the heart of the matter, which is that the House reaches agreement on these occasions. One of the most famous occasions was when the Tory Government discovered that one area of private enterprise was in a dire mess. Its reserves had become exhausted and it was an uneconomic unit of production. I refer to Rolls-Royce. On that occasion Labour Members agreed with alacrity to nationalise Rolls-Royce right through the night, because otherwise thousands of workers would have lost their jobs. A second example of agreement being reached was on the Prevention of Terrorism (Temporary Provisions) Act 1974, after the Birmingham bombing. The Government, represented by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) — the Social Democrat bloke whom we never see these days—said that the measure would last only a year or two, and it still exists.
Those are examples from the past of instances where there was agreement. But this time the position is completely different. The reason for the procedure is that the Secretary of State for Transport has made not one cock-up but an almighty cock-up of the entire proceedings during the past three months.
Mr. Mikardo: My hon. Friend has reinforced my argument, but I was being terribly—[Interruption.]
Mr. Speaker: Order. The hon. Member does not need help.
Mr. Mikardo: My hon. Friend produced some examples to reinforce my case. I was being extremely careful not to refer to particular measures, just as I do not

1041
wish to refer to the measure before us today. I am urging the House to consider the general principle, unrelated to the merits or demerits of this case.
No one will dispute the fact—I know that the Leader of the House will not — that when in the past we adopted this admittedly bad procedure, we always did so because there was a compelling reason of state. No one can pretend that there is a compelling reason of state on this occasion. The procedure is not being introduced because of circumstances outside the Government's control, which they must take emergency measures to deal with because they could not have anticipated what happened. It has arisen solely from a matter within the control of the Government. My hon. Friend the Member for Bolsover (Mr. Skinner) described the reason for it in language more colourful than I normally use—that is, as a "cock-up" by the Secretary of State. I would have been inclined to use more euphemistic phraseology, but the facts are the facts. There has been an error in procedure, and the right hon. Gentleman is asking the House to carry the can for a mistake, perhaps more than one mistake, made by one of his colleagues.
I do not see why that is necessary. The remaining stages were tabled for tomorrow, and we could have had the Royal Air Force debate today. Last night the right hon. Gentleman told us that he was being pressed from all quarters for that debate and that he had to have one quickly. If we had debated the Royal Air Force today, we could have had 24 hours to read the report of yesterday's Second Reading debate, and all hon. Members would have been better able to decide which amendments, if any, they wanted to table in Committee.
I strongly support the observations of my hon. Friend the Member for Newham, South (Mr. Spearing). They should strike a chord among Conservative Members, because this will not be the last occasion on which a Minister will seek to get this slippery short-cut procedure through the House, and the victims of it may not always be on the same side of the House. All Back-Bench Members should unite against the Front Bench. We should not be asked to carry the can for the mistakes of those on the Front Bench. I hope that the motion will be withdrawn, but, like my hon. Friend, I shall certainly oppose it, if need be, in the Lobby.
3.59 pm
Mr. J. Enoch Powell: I hope that well before the end of this short debate the Leader of the House will find severer terms to reprobate the proposal which is before the House. The strongest thing he said against it was that it was inconvenient to hon. Members. A more severe term than that is required to describe a procedure which makes it, in effect, impossible for hon. Members to put down amendments to a Bill which has had its Second Reading and to have the chance of them being considered.
The House is ready and capable of doing almost anything, irrespective of its Standing Orders, when there is an evident necessity for it. It is not the urgency of what is contained in the Bill that is the reason for the opportunity being denied to the House by the motion.
With great respect to him, the hon. Member for Newham, South (Mr. Spearing), whose duties in Committee have obliged him not to be in the Chamber at the moment, was correct to say that the objectionable effect of this motion derives from the fact that the Bill is being put down for Committee on the day after Second
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Reading. That has happened not because of the urgency of obtaining the contents of the Bill; it is due to the fact that, owing to other matters altogether unconnected with the Bill, the business of the House had to be rearranged. The business of the House has been rearranged in such a way that a motion which in itself is not at all unusual, has an unusual and far-reaching effect — it deprives the House of any genuine opportunity to have a Committee stage on the Bill.
The Leader of the House cited a precedent for the motion being applied to a Bill which was being taken in Committee on the day following Second Reading. There may be that and other precedents, but it would be wrong for the House to allow the motion in these circumstances, when no conditions of urgency and emergency can be pleaded, to remain without reprobation whatever the precedents, otherwise we shall soon find ourselves in circumstances where a Government, in arranging their business, and short of parliamentary time, can do this again. Another Leader of the House, not this one, and not necessarily of that party, will say to the House, "You ought not to be surprised to find this on the Order Paper. You ought not to be surprised at this procedure. This is a procedure which has happened before. There are precedents. Keep quiet."
I hope that on this occasion the Leader of the House will recognise, as he is a House of Commons man, that the House of Commons is right not to keep quiet about the motion that is before it.
4.3 pm
Mr. Tam Dalyell: As Ministers have flown in the RAF to help them rescue Thursday's business, I raise this point. All the trouble is about £5 million with regard to the London borough of Haringey. A certain airport in the South Atlantic is having 70 times that figure spent on it.
Mr. Speaker: Order. The hon. Member is wrong. All the trouble is about the business of the House motion. That has nothing to do with what I think he is about to say. The motion is about whether the remaining stages—not the Committee stage, because taking that was agreed yesterday and passed by the House—Report, and Third Reading should take place today.
Mr. Dalyell: I wish to get things into perspective and to be helpful. As the RAF debate is to take place tomorrow, would it not be desirable for a Minister from the Department of the Environment, if he can be spared from rate capping and the like, to explain in the RAF debate the reason for the rise in the cost—
Mr. Speaker: Order. That could have taken place, if the hon. Member had been called yesterday, when we were discussing the change of business. That does not arise today.
4.4 pm
Mr. Tony Banks: I hope that we can convince the Leader of the House that the Opposition are not being obstructive by opposing the motion.
Mr. Robert Atkins: We do not believe the hon. Gentleman.
Mr. Banks: The hon. Gentleman's problem is that he never believes the truth. He would not recognise it if it hit him straight between the eyes. I hope that it will one day.
Mr. Speaker: Order. Will the hon. Member confine himself to the business of the House and try to keep down the temperature a bit?
Mr. Banks: As those few hon. Members who were in the House yesterday will be aware, the London Regional Transport (Amendment) Bill is not just highly controversial, which puts it in a category different from those other Bills which it has been agreed should go through all their stages in one day; it is highly technical. If the Bill goes through, the GLC will have to find £50 million which it does not have at the moment. It is entitled, with hon. Members, to analyse carefully what the Secretary of State said yesterday, and to consider carefully whether to table amendments so that London ratepayers and Members of the House can obtain a fair deal and a fair hearing. Under the circumstances, it is not just inconvenient that we should be taking the remaining stages of the Bill today: it is grossly unfair to London ratepayers and to Members of the House.
I understand that because of the way that the stages are being concertina-ed, amendments have been turned down because they were technically incorrect or were not tabled in time. How, in all fairness, were those of us who were studying the Second Reading and tabling amendments to produce amendments that were in time and in order? It is unfair, and I appeal through you, Mr. Speaker, to the Leader of the House. There must be other business that can be considered which would give the Opposition sufficient time to study carefully what the Secretary of State said yesterday, and to come forward with reasoned amendments, giving everyone the opportunity to debate those amendments and achieve some resolution of a tricky technical and highly controversial measure.
The Opposition are not being obstructive. We are seeking genuinely to debate the Bill properly. The Leader of the House must have some other business that is not so controversial and detailed in its application that he can bring forward to allow us to have more time to discuss the Bill.
4.7 pm
Mr. Chris Smith: I support the arguments of my hon. Friend the Member for Newham, South (Mr. Spearing) in opposing the business motion. I do not have as many years' experience in the House as my hon. Friend the Member for Bow and Poplar (Mr. Mikardo) or the right hon. Member for South Down (Mr. Powell). As an outside observer of the proceedings of the House for many years, it has seemed to me that the tradition has always been that business is rushed through all its stages in the course of 48 hours in extreme and unusual circumstances only. That is what is being proposed in the motion.
The Bill, which is about to enter its Committee stage, Report and Third Reading, if the Government have their way, is being dealt with with the most unseemly and undue haste. That has been one of the arguments of those opposing the Bill.
A further element of haste is added to the picture with the proposal that the Bill should come forward by 24 hours with Committee, Report and Third Reading all rolled into
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one. I cannot support the motion. I am surprised that the Leader of the House has brought it before us because he is in most circumstances a fair and honourable man.
We have had insufficient time to consider what was said by the Secretary of State on Second Reading. Because of other engagements, I was unable to attend the entire debate yesterday. However, I have attempted this morning, when not attending a meeting of a Select Committee, to read carefully what was said in the House yesterday. Some very important points were made by the Secretary of State in the course of his remarks. For example, in winding up, he gave some detailed information about the amount of money required by LRT from the GLC and the purposes for which that money was required. That was important, new and detailed information. It was not available to me until I collected my copy of Hansard this morning. I have been unable to table amendments. In the light of the Committee debate which is to take place later today, it may well be impossible to think carefully and deeply enough to table further amendments and to make comments on Report and on Third Reading.
It is not just a question of haste; it is in particular that detailed and grave arguments emerged in what the Secretary of State said yesterday, and we are now denied an opportunity to make full use of these in further consideration of the Bill.
The Bill is one of great importance to hon. Members who represent London constituencies. Our constituents will be affected financially by the measures proposed in the Bill. It is important that we have an opportunity to consult our constituents, the GLC, which is affected by the measure, and the London borough councils which will also be affected in consideration of their rating policies by whatever decisions the House takes. That degree of consultation has been denied to us by the haste with which the Bill is being brought forward.
I hope that the Leader of the House will consider the motion further because we have had insufficient time to protect the interests of our constituents, to give proper consideration to comments which were made yesterday in the House and to give fair and full consideration to what we will wish to put forward in the course of debate later today. I hope that the Leader of the House will think again before pressing the motion.
4.13 pm
Mr. Peter Shore: These are serious matters, as I think the Leader of the House, if he did not believe so before this short series of interventions took place, would readily accept now. Not for the first time, the House is indebted to my hon. Friend the Member for Newham, South (Mr. Spearing) for watching over our procedures so carefully and defending the interests of Parliament in so doing. I agree with virtually all that has been said by my hon. Friend and, indeed, by the right hon. Member for South Down (Mr. Powell).
Here is a very special case in which the principle and practice of our procedures is put to the test. The principle from which the motion seeks to depart is that we should not simply run one stage of an important Bill into another without having time to reflect upon what has happened and without a chance to amend. The practice, of course, is that if one does not allow for such an opportunity, one runs into great difficulties.

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No hon. Member who has considered the Bill can have any doubt that it is not a perfectly conceived Bill. It is a Bill which requires considerable discussion and, indeed, reasonable amendment. My right hon. and hon. Friends have not had—indeed, cannot have—the opportunity of tabling those amendments that they genuinely wish to table. Nor have people outside the House who have serious and legitimate interests in the progress of the Bill had a chance to consider what was said yesterday by the Secretary of State or to make represenations to their Members of Parliament on further amendment of the Bill in Committee.
What adds a special piquancy, indeed irony, to this attempt to accelerate our procedures is that the Bill arises out of an initial faulty judgment by the very Secretary of State who now presents the Bill to the House. If he had got it right the first time, he would not need to use this process now. The idea that he is going to get it right the second time without anybody having a chance to consider what he said yesterday is highly unlikely. What adds farce upon farce is that the very fact that we have a change of business arises from the misjudgment of his right hon. Friend the Secretary of State for the Environment who botched up an order yesterday.
Therefore, I think that there is here very special reason why the Leader of the House should take notice of what has been said to him from a wide-ranging body of opinion, and should seek to withdraw the motion and substitute something more acceptable for the business of the House today.
4.16 pm
The Secretary of State for Transport (Mr. Nicholas Ridley): I should like to say a few words, because hon. Gentlemen have made perfectly fair points, and I may be able to add a little further information from the point of view of the Bill as opposed to the point of view of the business of the House with which my right hon. Friend has been dealing.
Mr. Eric Deakins (Walthamstow): On a point of order, Mr. Speaker. Is it in order for the Secretary of State to transgress your earlier ruling that in consideration of the motion we should debate merely the contents of the motion?
Mr. Speaker: The Secretary of State was present when I ruled on what was in order in consideration of the motion. He should not go into the details of the Bill. We are considering a motion on the business of the House with respect to further proceedings of the Bill.
Mr. Ridley: Perhaps I might be allowed to complete my sentence. Right hon. and hon. Gentlemen have made certain remarks and asked certain questions to which it would be right for me to reply. Obviously I cannot answer for my right hon. Friend in his arrangement of the business of the House.
On Second Reading yesterday I gave the reasons for the urgency of the Bill:
"because the GLC cannot be certain that Parliament will approve the Bill in the form that I have presented it. In order to give the earliest possible element of certainty to the GLC and to LRT the Government propose that the progress of the Bill be expedited. The House will have seen the motion on the Order Paper in the name of the Leader of the House proposing that the remaining stages be taken on Thursday. I am sure that hon. Members will agree that, whatever they may think of the contents of the Bill, it is right to decide the issue as quickly as possible." — [Official Report, 19 February 1985; Vol. 73, c. 871–2.]
Mr. Jeremy Corbyn rose—
Mr. Ridley: I will give way, but I am trying to answer the point of the right hon. Member for South Down (Mr. Powell) that there is no urgency—a point raised also by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). There is urgency, because LRT will run out of cash later this month.
Mr. Alan Williams rose—
Mr. Ridley: I will give way after I have finished my point. The GLC has to fix its rate precept for 1985–86 very soon, not later than the first week in March. These are what hon. Gentlemen called reasons of state. These are the reasons which give rise to the urgency.
Mr. Corbyn rose—
Mr. Ridley: I am coming to the point about tomorrow, but it may be helpful if I give way to the right hon. Member for Swansea, West (Mr. Williams).
Mr. Williams: The whole House heard the right hon. Gentleman say—he was quoting from his speech—that it was urgent to get this legislation through on Thursday. In that case, he must concede, and should consult the Leader of the House about conceding, that in all logic, if the Bill is not needed before tomorrow, we should have the Air Force debate today and the LRT debate tomorrow.
Mr. Ridley: That shows how important it sometimes is to complete one's argument before giving way. I was explaining why the Bill was required urgently. It is not as if that was not pointed out yesterday; those who heard me or who read my remarks in Hansard would have known that the Government attached urgency to the passage of the Bill.
The Leader of the House announced the change of business at 10 o'clock last night. Most hon. Members who have spoken in this brief debate were present on that occasion. My right hon. Friend announced that it was proposed to bring forward the further stages of the Bill from Thursday to today. The only Opposition Member to comment on the matter was the hon. Member for Newham, North-West (Mr. Banks).
Mr. Shore: So did I.
Mr. Ridley: And the right hon. Gentleman. The hon. Member for Newham, North-West was merely concerned—I am grateful for his kind thoughts—about the state of my physical health. I assure him that I am in good trim and ready to undertake the debates on which we are, I hope, shortly to embark. There was no objection from him to the business being taken earlier than had previously been suggested.
Mr. Corbyn: Is the Secretary of State aware that, because the Leader of the House has brought forward tomorrow's business to today, it is impossible for hon. Members to study what the right hon. Gentleman said in yesterday's debate, to consult anybody or to table considered amendments? Is he aware, therefore, that he is denying us the ability to conduct any serious consultation about the form of amendments that should be tabled to this nasty little Bill?
Mr. Ridley: I was about to come to the point that the hon. Gentleman raises. It is said that there has not been sufficient time, that considerable discussion is needed and that we are proceeding with undue haste. I remind the

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House that we had a considerable debate on the Ways and Means resolution, when all this ground was covered—[Interruption.] — and that we had a full day's debate yesterday on Second Reading, when all the ground was covered again. More than eight hours have already been spent debating the Bill.
The right hon. Member for Bethnal Green and Stepney and others allege that there has not been time to table amendments. But Opposition Members have tabled amendments. They put down six amendments and this morning they tabled a new clause. I would not for a moment comment on whether those amendments should have been selected; that is entirely a matter for you, Mr. Speaker. It cannot be sustained, however, that Opposition Members have not had time to put down amendments, because in practice they have done so.
Mrs. Gwyneth Dunwoody: The right hon. Gentleman must not exaggerate. The amendments standing in my name and in the names of my hon. Friends were tabled at extremely short notice immediately after the Second Reading last night. That is not the way in which amendments should be tabled, because hon. Members could not have had time in which to consider them. We would have liked to table a number of other amendments and a new clause; we put those in this morning, but they were not found acceptable. It is nonsense to say that because we succeeded—by rushing at the Clerks in what I can only call a most undignified manner after 10 o'clock last night—in getting some form of words on the Notice Paper we had time to table amendments.
Mr. Ridley: The hon. Lady succeeded in putting down some amendments, two or three of which will be debated later. They raise interesting new points to which I shall be glad to respond in due course. The fact that not all of her amendments were in order is not the fault of the procedure. I do not know what reasons Mr. Speaker would give for not selecting them. I am simply saying that it is not true to say that there was not time or opportunity for hon. Members to table amendments — [Interruption.] — because amendments have been put down, and the hon. Lady tabled a new clause this morning. Other hon. Members could certainly have put down further amendments this morning.
I do not know what attitude you, Mr. Speaker, would take to any further amendments—manuscript amendments and matters of that sort—because that is not a matter for me. I could not accept, therefore, that hon. Members have not had an opportunity to put down amendments. The contents of the Bill have been known for nearly a fortnight.
Any amendments that hon. Members might have contemplated could have been prepared, even though the Bill did not get its Second Reading until last night. I accept that the House is put to some inconvenience by the change of business which has brought the debate forward by one day, as the Leader of the House said, but I cannot accept that it is without precedent or that the House has not had ample opportunity to table amendments.
Mr. Frank Dobson: Unless my ears deceived me, I heard the right hon. Gentleman say that the GLC needed to know the outcome of the measure because it had to decide its budget on 1 March.
Mr. Ridley: I referred to the first week in March.
Mr. Dobson: The Secretary of State is still wrong, because Friday 1 March falls in the first week of March and the GLC does not intend considering making its budget until Thursday 7 March. There is therefore more time available than the Secretary of State thought there was.
Mr. Ridley: My last word in reply is that the hon. Gentleman neglects to remember that the Bill has to go to another place.
4.27 pm
Mr. Eric Deakins: The motion constitutes a dangerous precedent. I invite Conservative Members, who may be sitting smugly listening to the debate on this issue and thinking about the vast majority that the Government have in the House, to consider that this precedent could be used by a future Government of a different political complexion for purposes which they might wish strongly to resist.
We are discussing an issue which is for the House of Commons as a whole. The Leader of the House said that it was a matter of inconvenience to hon. Members. It was unusual for him to be mealy-mouthed about such a matter, for it is not just a question of inconvenience, but of taking away the right of Back Benchers to table considered amendments following the Second Reading of a Bill.
The only precedents that can be quoted are of Bills introduced by all-party agreement through the usual channels at times of national emergency. There is no national emergency for this Bill. As my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) pointed out, the Bill stems not from one but from two examples of incompetence by Cabinet Ministers, the Secretaries of State for Transport and for the Environment, the actions of one compounding those of the other. I invite the Leader of the House to say whether there is any precedent for such a procedure to be introduced solely to cover up the embarrassment of a Government who have been doubly incompetent in handling their affairs.
Urgency was the theme of the remarks of the Secretary of State for Transport. If it was urgent to have the Bill on Thursday of this week—when a week ago notice was given of the day when the Report and Committee stages would be taken—what has happened to increase that urgency which makes it necessary for it to be taken today rather than tomorrow? The answer was not clear from what the right hon. Gentleman said. Indeed, I thought that he evaded the point. Neither the right hon. Gentleman nor the Leader of the House has so far addressed himself to that feature of this issue.
Mr. Tony Banks: My hon. Friend will have heard the Secretary of State say that the money was needed urgently by LRT. I do not know whether my hon. Friend was in the House yesterday when the Secretary of State detailed the use to which the money would be put. The right hon. Gentleman said that it included £21 million for voluntary severance payments that had been agreed—
Mr. Speaker: Order. We had this out yesterday, as the hon. Gentleman has just said. It is nothing to do with the motion that we are debating now. The hon. Gentleman must confine himself to the motion.
Mr. Williams: On a point of order, Mr. Speaker. I submit that the point that my hon. Friend the Member for

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Newham, North-West (Mr. Banks) is making is relevant to the motion that we are discussing because he is trying to demonstrate that the purposes for which the money will be used are not urgent purposes. Therefore, it is necessary to consider this point.
Mr. Speaker: Order. If that were the case, the shadow Deputy Leader of the House would find it on the Order Paper. It is not there, so we must confine ourselves to the motion that we are discussing. If the hon. Member for Newham, North-West (Mr. Banks) is arguing for urgency, that is one thing, but to start reading from the debate last night is a rather different thing.
Mr. Tony Banks: With great respect, Mr. Speaker, I point out that the Secretary of State has just said that this business motion was introduced because of the urgency of the payments to LRT, so it is germane to that argument to say what the money is to be used for. Yesterday the right hon. Gentleman gave a whole list of things, and if you will not let me read it out, Mr. Speaker, I cannot do so. However, it clearly—
Mr. Speaker: Order. The hon. Member has made one speech. This is supposed to be an intervention. I am stopping him making a second speech. An intervention in the speech of his hon. Friend the Member for Walthamstow (Mr. Deakins) is another matter. The hon. Gentleman is rather banging on.
Mr. Deakins: I thank my hon. Friend the Member for Newham, North-West (Mr. Banks), but the point that I am making is narrower than the point that he was making. I am asking what change in urgency there has been since last Thursday's business statement that warrants bringing the Bill forward from Thursday to Wednesday.
I have a simple question for the Leader of the House. The Government have a difficult problem as a result of the double incompetence of two Ministers. Why, when faced with such a dilemma, did the Government choose the difficult way out of the problem—bringing tomorrow's business forward to today and bringing some extraneous business in for tomorrow—rather than the easy way out, which would have been to bring in the extraneous business to fill in the gap of the rate-capping order today?
4.32 pm
Mr. Jeremy Corbyn: The only national emergency that we face today, which we faced yesterday and will face tomorrow, is the incompetence of the Secretaries of State for the Environment and for Transport. We are in this mess because the Secretary of State for the Environment cannot get his figures straight before he goes on his merry way of destroying local government services, and the Secretary of State for Transport cannot get his figures right when he is trying to rob the ratepayers of London of a further £50 million to continue on his course of privatising London transport, which is what he is trying to do at the end of the day.
Before I came to the House I was always alarmed and concerned at the way in which Parliament could apparently drop everything, for no good reason, apart from the convenience of a Department or a Minister, and force through special legislation without adequate consultation or debate. I was concerned about that as somebody who was not then a Member of Parliament but who was Watching from outside. I could not believe that hon. Members would give even less consideration to a matter
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than part-time councillors faced with an emergency at their monthly meeting. We are being confronted with this situation because the Secretary of State for Transport has been asked to bail out his friends in the Government by bringing the Bill forward today. If the Bill goes through and the Government get their way, it will result in £10 being taken from every Londoner to pay for the Secretary of State's earlier cock-ups and in a further deterioration of transport in London. More importantly, it is impossible for me or for any other London Member to have any opportunity to consult anyone about the details of the Bill.
Yesterday the Secretary of State for Transport spoke at great length twice. During his winding-up speech, he released what I now understand to be new figures and information on the funding of London transport. I do not intend to quote at length, but I can give examples. He talked about
"£21 million for voluntary severance payments … £6 million for insurance claims … £4 million for claims outstanding on the Jubilee line". — [Official Report, 19 February 1985; Vol 73, c. 945.]
Various other figures were mentioned. I need an opportunity to analyse those figures. I need to consult the National Union of Railwaymen, the Associated Society of Locomotive Engineers and Firemen, the GLC and the many transport consultative and advisory groups in London, including the transport consultative committee set up by the Secretary of State. There is no opportunity to do that. If an hon. Member was not here yesterday—for example, my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) could not be here—he would not have heard those pearls of wisdom from the lips of the Secretary of State. He would not have known about them, and therefore he would have been denied the opportunity of tabling any amendment.
It is inconceivable that the House should now start debating this measure after many amendments have been rejected. It is impossible to take any advice on the detail or the substance of the matter and there is now to be another debate on London transport. It is a farce, and it is occasioned by a series of cock-ups in Ministers zeal to destroy local government, public services and transport. Anyone listening to the debate would ask where is the urgency in this matter when there is the Prime Minister in Washington discussing Star Wars, a famine in North Africa, a miners' strike and all manner of disasters around us. Instead of discussing those matters, we are asked to put through a motion to save the face of the Secretary of State for Transport and the competence of the Secretary of State for the Environment.
I ask through you, Mr. Speaker, even at this late stage, the Leader of the House to withdraw the proposal to discuss this matter today and bring forward some other much more serious, much more urgent matter than saving the face of the Secretary of State for Transport.
4.36 pm
Mr. Richard Holt: I hope that my right hon. Friend the Leader of the House will not be persuaded by the siren voices on the Labour Benches. However, if he were to be, and if he were in a mess, perhaps we might use the time usefully by having a debate on a subject that would find universal favour throughout the House—the funding of the BBC and television licensing. In that way, all of us would be made happy.
4.37 pm
Mr. James Lamond: Until the last intervention, which was fairly sharp, it was disturbing to note that all of the speeches, with the exception of those from the Front Bench, have come from the Opposition side of the House. I should have thought that this matter transcends party politics because it concerns all Back Benchers if they want to defend their rights, not just today but in the future.
It is true that there are precedents for railroading legislation through the House in one day, but in very special circumstances that do not arise on this occasion. If we allow this Bill to go through without any complaint the occasion will be used as a precedent. It will be pointed to in the future. It will be said, "You cannot complain now. We did it before. You should have prevented it on that occasion and you cannot stop it now."
We do not accept that. The reputation of the Leader of the House stands high in the House. He is admired for the way in which he stands up for Back Benchers. Therefore, it is all the more surprising that he comes forward unnecessarily, as far as we can gather from what he said, on this occasion. He has given us no reason why there is added urgency that requires the remaining stages of the Bill to be brought forward to today.
The Secretary of State tried to show that the Bill is urgent. We can accept that he sees it as urgent, as it was so urgent last week that he wanted it to be discussed on Thursday — tomorrow. Now, something has happened that means that he wants to have the debate on Wednesday. We want to know what has caused him to bring forward the legislation to today.
Mr. Jerry Hayes: If the matter is as apolitical as the hon. Gentleman says and cuts across party political lines, will he not accept that anything that is happening today should not be blamed upon the Secretary of State for Transport or even upon the Secretary of State for the Environment but upon the council of Haringey for not getting its figures out in time?
Mr. Lamond: I have been trying, in accordance with the instructions you gave us, Mr. Speaker, to confine myself to the motion that is before us. I may be wrong in blaming the Secretary of State for Transport. Perhaps he was told that his business was to be brought forward to today, whether he liked it or not, and he is trying to make the best of a bad job. We should not be swept away by something that is convenient for the Government. The rearrangement of the business has been done for their convenience, although the Leader of the House has said that it is a bit inconvenient. Because of that little bit of convenience we will set a precedent that may be used in the future against all Oppositions. Hon. Members should think twice about it.
After we have dealt with the Bill it will all be water under the bridge and no doubt it will be forgotten about in three weeks' time. But the precedent will not be forgotten and will be trotted out from time to time to push through legislation that is not agreed across the House but, rather, is highly controversial. That is the important point. This legislation is not agreed between the parties. Some of my hon. Friends regard it as highly controversial. Therefore, although he has already spoken, the Leader of the House should, with your leave, Mr. Speaker, speak again. It would be difficult now for him to bring on another
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debate. I understand that hon. Members who should reply to any other debate are probably away wining and dining. Even so, the Leader of the House should set his mind to thinking about it. If he wants to retain the high reputation he has on the Opposition Benches for standing up for Back Benchers and if he wants us to accept what he proposes in future, he must demonstrate today that he is as concerned about the rights of Back Benchers as we are.
4.42 pm
Mr. David Winnick: I think we can agree that this is a matter not simply for London Members but for the entire House. What is proposed in the motion is to rubber-stamp our procedure to make a mockery of a system that has been used for a long time, whereby there is an interval between the Second Reading and the Committee stage of a Bill. My hon. Friends who are concerned with the Bill which is due to be debated have said to you, Mr. Speaker, and to the Leader of the House that there has not been time to table amendments. That is a very important point.
The Leader of the House may be surprised to hear that I have much sympathy for him. I do not believe that this is his mistake. I think he has been pushed into it by two of the most incompetent colleagues that he has in the Cabinet.
Mr. Corbyn: Does my hon. Friend agree that the remarks made earlier by the hon. Member for Harlow (Mr. Hayes) are disgraceful since the Department of the Environment withdrew its order because of its own incompetence and not the incompetence of Haringey council?
Mr. Speaker: Order. I did not manage to stop the hon. Member for Harlow (Mr. Hayes), but that has nothing to do with this motion.
Mr. Winnick: The only appropriate comment to make is that the more we hear from the hon. Member for Harlow (Mr. Hayes), the more we regret the defeat of Mr. Stan Newens.
The Leader of the House of Commons has been described as someone who generally tries to listen to the voice of Back Benchers. Therefore, it is all the more regrettable that on this issue, which is a House of Commons matter and not one confined to London Members, he has been pushed into bringing forward business which Back Benchers have not had the necessary time to consider to enable them to table amendments, if necessary.
The issue is important. That is why Conservative Members are wrong to ignore what we are saying. If this is done today, how do we know that it will not be done on other Bills? We are dealing with an authoritarian type of Government. If they come to the conclusion that the House of Commons is an easy pushover and that it does not matter what is said or done, they will again arrange the Second Reading of a Bill one day with the Committee stage the next. The Prime Minister may decide that the House of Commons can be dealt with easily and that there is no need to worry.
Mr. Deakins: We must not be a rubber stamp.
Mr. Winnick: As my hon. Friend says, we must not allow the House to be a rubber stamp. We must stand up for our rights and privileges.
Mr. Holt: If the hon. Member for Walsall, North (Mr. Winnick) had been present at 3 o'clock this morning, he would have seen the strength of Back Benchers.
Mr. Winnick: I was here at about 2 o'clock last Friday morning, and I did not see the hon. Gentleman. I am pleased that he was present for a debate which obviously occupies his interest. This is even more important in many respects for the House of Commons than what was being debated in the early hours of this morning, because it is a constitutional issue. Therefore, Conservative Members, particularly those who came into the House at the last election, should remind themselves that these procedures have evolved over many years to some extent to protect the interests of Back Benchers. That is all the more reason why we should be concerned about the motion that is before us.
As has already been said, it would be foolish for Conservative Members to think that if they remain Members of Parliament they will always sit on the Government side of the House. If they do not protest now, it may be too late for them to start protesting when another Government propose to do the same. That Government may say that they regret it but that it is urgent business which has to be discussed. What will Conservative Members say then? They can hardly say that they protested at the appropriate time—namely, today. [Interruption.] I am glad that the hon. Member for Billericay (Mr. Proctor) has been so persuaded.
There would only be an excuse to do what is proposed if the legislation was not controversial. If there was unanimous agreement, so be it, but there is not. This is a highly controversial measure which has aroused much passion. Moreover, we are dealing with a Secretary of State who can hardly get anything right, a right hon. Gentleman who, if I may say so without being ungenerous, is notorious for his ministerial incompetence. This matter should occupy the attention of Conservative Members as much as it occupies ours. Therefore, the Leader of the House should consult in the appropriate manner through the usual channels to ensure that the motion is withdrawn. If it comes to a vote, it should be fiercely resisted. If it is not withdrawn and there is a Division I hope to see some Conservative Members in the same Division Lobby as us.
4.50 pm
Mr. Frank Dobson: It is essential to make it clear who is responsible for this procedural debate. It is the Secretary of State for Transport. He introduced and got through the House the London Regional Transport Bill, and it is no one else's fault that, when the right hon. Gentleman started to administer the legislation, he got it wrong and acted in a way which a High Court judge described as
"unlawful, irrational and procedurally improper."
Mr. Mikardo: Is it all right, apart from that?
Mr. Dobson: I think so, yes. I have not read every word of the judgment, and it may be that there were other faults. But it is felt by those who have been initiated into the matter that those three criticisms carry some validity and ought to carry a great deal of weight.
Opposition Members who have taken a deep interest in what happened have objected strongly to every effort that the Secretary of State has made to change the law to suit himself. It is necessary to fill in a little of the background
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to demonstrate that we have not been particularly obstructive and that, if there is any great urgency for the present Bill, the fault lies with the Secretary of State.
One of the problems appears to be that when the Leader of the House and the distinguished panjandrums on the Treasury Bench met to decide what should go on to the agenda of the House, anything to do with an amendment to the London Regional Transport Act became a movable feast. As chairman of the Labour group of London Members, I am consulted from time to time about the Opposition's responses, and it was my understanding, before the Government suddenly decided that we had to have a debate on the Belgrano sinking on Monday, that in one of the original drafts of the business statement for this week this Bill was to be read a Second time on Monday, with the remaining stages on Thursday. That would have been right. We should then have had time, as we are entitled to have time, to consider what had been said in the Second Reading debate before we got to the remaining stages of the Bill.
Apparently that does not matter to many Conservative Members who purport to represent London constituencies. They have scarcely ever been present when the House has discussed this legislation. But my right hon. and hon. Friends and I who have spent a great deal of time looking into what has been happening feel that this procedural motion means that we are being robbed of the right and opportunity to do our duty and to attempt to protect the interests of the people who elected us.
If any right hon. or hon. Member thinks that our duty to our electorate can be performed properly today following yesterday's Second Reading, he has a very peculiar view of how hon. Members should discharge their responsibilities. We have not had the opportunity to consider in detail some of the new information given by the Secretary of State at the end of yesterday's Second Reading debate. We believe that we are entitled to scrutinise what he said and to consult others who are more expert in these matters than we are, so that we can attempt to protect the interests of those who sent us here with the sole job of protecting their interests.
We are being denied the opportunity to do our job properly. Therefore, we hope that the Leader of the House will have some regard for the rights of Back Benchers. We do not blame him for what is happening unless he forces through this motion. We are willing to accept that it is the Secretary of State who is at fault. The Leader of the House is well known for his skill as a wordsmith. Even leaving out of account what the judge said about the actions of the Secretary of State being unlawful, I think that the right hon. Gentleman must agree that, having had the Second Reading debate yesterday, for the House to be forced to go through all the remaining stages today would, in the immortal words of Mr. Justice McNeill, be "irrational and procedurally improper."
4.55 pm
Mr. Harry Cohen: I agree fully with my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) that this procedure is wrong. I was about to quote Mr. Justice McNeill's statement about the Secretary of State, because it is very important. The learned judge described the right hon. Gentleman's actions as illegal and irrational, and said that he was acting improperly procedurally as well.

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With this proposed procedure the Leader of the House is compounding that illegal, irrational and procedurally improper behaviour, and it is essential that the House has no truck with it. It is especially important for the House to get the procedure right when there has been a court judgment of this kind. It is ridiculous for us to compound procedurally improper behaviour.
Mr. Eric Forth: Will the hon. Gentleman do the House a favour and cut out those parts of his speech which simply repeat what has gone before, and give us something new?
Mr. Mikardo: On a point of order, Mr. Speaker. Is it in order for an hon. Member who has not been in the Chamber to walk in and then instruct the Chair on what may or may not be said?
Mr. Speaker: I did not hear the hon. Member for Mid-Worcestershire (Mr. Forth) instruct me to do anything.
Mr. Cohen: At that stage of my speech I had made only one point, and that was about the judgment of the court that the Secretary of State had acted illegally, irrationally and procedurally improperly. I was not repeating what had been said by my hon. Friend the Member for Holborn and St. Pancras, because what I said was that, that judgment having been delivered, it was very dangerous for the House to compound that conduct and go ahead with further procedures that were procedurally improper.
Mr. Kevin Barron: Like me, my hon. Friend is a comparatively new Member of the House. Does he not treat with suspicion legislation which seems to be trying to cover up a misdemeanour by a Minister which was condemned by the High Court a few weeks ago?
Mr. Cohen: I agree with my hon. Friend, and it was one of my arguments during yesterday's Second Reading debate. For the benefit of Government supporters, I shall not repeat it.
It is not just serious that the House should contemplate compounding an improper procedure. We are also compounding the deception of the House. It was clear that the Secretary of State did that in several respects. Again I shall not go over the right hon. Gentleman's speech yesterday, but he deceived the House when he said that there was no intention to create a surplus, which was untrue. He also failed to answer our question about his comment that the matter was sub judice. In yesterday's debate he made the excuse that, even though it was not actually sub judice, it was sub judice to him. Apparently he has some God-given right to say when a subject—
Mr. Speaker: Order. The hon. Gentleman keeps saying that he is not going back over yesterday's debate, and then does so. I ask him to confine his remarks to the motion.
Mr. Cohen: I shall do that, Mr. Speaker. I have no intention of going over the details of yesterday's debate. I made quite a lengthy speech, and I shall not repeat it.
Mr. Deakins: Now that the Attorney-General is present, would it not be advisable for my hon. Friend to ask the right hon. and learned Gentleman for his opinion? When the Secretary of State was describing what led up
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to this legislation, which we are being forced to consider in all its stages today, he said that in his opinion the matter was sub judice. Is not that a new procedure for the House?
Mr. Speaker: Order. I hope that the hon. Member for Leyton (Mr. Cohen) will not be tempted to do so, because it is a question that has nothing to do with the business motion.
Mr. Cohen: I take your ruling on that, Mr. Speaker. Perhaps the Attorney-General will answer questions on that matter at some future date. Indeed, he still has answers to give us about the prosecution of Mr. Ponting, but I shall not raise that matter now.
The motion flows from the fact that the Secretary of State got his figures wrong in his demands upon the GLC. The Bill is concerned with figures—
Mr. Speaker: Order. I know that the hon. Gentleman is relatively new here, but he is rehearsing an argument which he no doubt rehearsed yesterday. His argument will be perfectly in order on the amendments or on Third Reading, but not on the business motion, which he must please stick to.
Mr. Cohen: I accept your ruling, Mr. Speaker. However, my point is related to the business motion.
Mr. Corbyn: Will my hon. Friend give way?
Mr. Cohen: In replying to the debate yesterday the Secretary of State introduced new figures. The Bill is a technical Bill and the figures have to be studied by hon. Members before any reasoned amendments can be put down.
Mr. Corbyn: Can my hon. Friend tell us what opportunities he has had since the Secretary of State finished his reply to the debate at 10 o'clock last night to discuss with either his local borough council or people at the bus garage in his constituency how many jobs will be affected by the revelations made last night by the Secretary of State? Does my hon. Friend now feel able to contribute adequately to a debate on the basis of any discussions that he may have been able to have with workers in London Regional Transport?
Mr. Cohen: I have not been able to have any detailed consultations at all on the implications of the new figures.
I had a constituency commitment this morning. I was unable to come here in order to pick up a copy of Hansard, and study what the Secretary of State had said, and put down amendments to the Bill. I am sure that I was not the only hon. Member who could not be here. It is very bad that hon. Members should not have an opportunity fully to use the proper procedures of the House. Rushing the Bill through in 48 hours is dangerous. It would not be a dangerous precedent in terms of any future Labour Government, but it would be dangerous in terms of a future Conservative Government, who might try to muzzle all opposition, even from their own Back Benches. When such a precedent is involved, we should speak for Parliament. Bills have been rushed through only in emergencies, and when there has been agreement between both sides of the House. It has been made quite clear that there is no agreement on this matter. This is therefore a dangerous new departure.
The Secretary of State for Transport justifies the procedure by saying that there is an emergency. Although that question was hotly disputed last night, it was clearly

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shown in the debate that there is no emergency — certainly not as regards LRT's 1984–85 operating needs. LRT has the money for those needs.
Mr. Speaker: Order. We are not concerned about what the Bill is about. We are concerned about the motion on the Order Paper—whether we should take the remaining stages of the Bill after the Committee stage. The Committee stage was agreed last night. I believe that the hon. Gentleman was present.
Mr. Cohen: Yes, Mr. Speaker, I was present. The justification for the motion is that there is urgency. The Secretary of State made that point just now. My point is that there is no urgency in terms of LRT's operating needs in this financial year. That argument is spurious.
Mr. Tony Banks: Was my hon. Friend here when, in arguing the urgency case, the Secretary of State said that LRT would run out of money by the end of February? That statement was simply untrue. The Secretary of State has given LRT external borrowing powers. There is no question of urgency in terms of LRT's money supply.
Mr. Cohen: My hon. Friend speaks for Parliament in shooting down another deception which the Secretary of State has tried to impose on us.
In arguing the urgency case, the Secretary of State showed considerable concern for the GLC and its budget-making process. In my recollection, this is the first time that the right hon. Gentleman has shown concern for the GLC. He has been singularly vindictive about the GLC. In my view, the Secretary of State's argument was purely an excuse. Has the GLC contacted the right hon. Gentleman the Leader of the House or any Minister with a request for urgent consideration of the Bill? I suspect that it has not. There is no shred of evidence that it has done so. The argument is spurious.
We have not had time to study Hansard and put down amendments. I am thinking of both Back Benchers and Front Benchers. I have spoken to one of my right hon. Friends on the Front Bench. He told me that, although the Front Bench had studied the matter in detail, when a Front Bench spokesman attempted to put down amendments they were ruled out of order because of this unnecessarily rushed procedure.
The procedure is unfair, not just to hon. Members, such as myself, who have not had the opportunity to study the Secretary of State's speech, but to my Front Bench colleagues. Some amendments were submitted, I believe, but they were turned down. That is serious in itself. When the hon. Members sought to submit other amendments in their place, they were told that they were out of time.
Mr. Speaker: Order. The hon. Gentleman must not perpetuate something that is wrong. I do not select amendments for the Committee stage and have no knowledge of whether or not amendments have been submitted incorrectly. The hon. Gentleman must concern himself with the motion on the Order Paper.
Mr. Cohen: I have no criticism to make of you, Mr. Speaker. I understand your role. I understand that this will be a matter for the Chairman of Ways and Means. I was merely relaying to the House, in relation to the business motion, the fact that hon. Members had had no opportunity to put down amendments or that amendments submitted had been turned down or ruled out of time. The Secretary of State is ruling out an entire parliamentary process—
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the Committee stage. This is a dangerous messing around with our constitution. I see that the Leader of the House is nodding assent. I hope that that argument will be reflected in his answer to the debate.
Your role in these matters is carefully defined, Mr. Speaker, and you must protect the rights of the House and Back Benchers. If the Leader of the House does not have a re-think, you should seek means of having words in his ear in order to protect the rights of the House and Back Benchers.
The motion is procedurally improper, just like the Secretary of State's action towards the GLC, and unsatisfactory. I strongly urge the Leader of the House to withdraw it.
5.11 pm
Mr. K. Harvey Proctor: The hon. Member for Walthamstow (Mr. Deakins) said that Conservative Members were sitting smugly while listening to the debate. I was not one of them as I listened from the beginning and with increasing anxiety about what was proposed. Moreover, I did not want the debate to go by without that worry being expressed on this side of the House.
I mean no disrespect to Opposition Members present, but one of the reasons why some of my right hon. and hon. Friends treated the initial stages of the debate with some contempt might be that we have had to listen to a string of what might be regarded as bogus points of order or claims to parliamentary difficulties, so it was difficult to differentiate between them and this genuine worry.
Why does my right hon. Friend the Leader of the House think that there was no row about these matters last night? I assume that it was known last night during the business statement that taking the remaining stages of the Bill in one sitting would create difficulties. I wonder why there was no outcry last night from the Opposition Front Bench. There might be a procedural reason for that. I have great sympathy for my right hon. Friend in the problems that he faces with the rate limitation measure, on which I had hoped to address the House tonight if I caught your eye, Mr. Speaker.
Mr. Barron: The hon. Gentleman says that there was no objection last night. Has he read the Official Report and seen that my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) made all of these arguments after the business statement? If the hon. Gentleman reads column 950, he will see that what has been said today was also argued last night.
Mr. Proctor: I am sorry if I lost the point that the right hon. Member for Bethnal Green and Stepney was making last night in the noise. Nevertheless, I am surprised that we did not have last night the rather lengthy debate that we are having now.
Mr. Spearing: The hon. Gentleman is under some misapprehension. Extended points of order, which are sometimes in order—the House had points of order, all of which were in order, for 14 hours on the European Communities Bill—are one thing, and a motion such as this on which speeches can be as long as may be and in which interventions such as this, which the hon. Gentleman has kindly allowed me to make, can be made is quite another. This is not a protest but a discussion of a motion which should be tabled only for specific, well

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tried and well justified purposes. Such motions usually go through on the nod but, because the Opposition believe that this purpose is not well founded, we are having proper debate and speeches. I hope that my extended intervention has been helpful to the hon. Gentleman.
Mr. Proctor: I am grateful to the hon. Gentleman for explaining why he thinks there is an extended debate on this motion and why there was none last night. My point is that if the anxiety had been as great last night as it obviously is today, it might have been possible to make some changes in today's business last night. My right hon. Friend the Leader of the House must be aware that if such an adjustment had been made last night we might not have delayed the House so long on this motion. The debate on the Royal Air Force might have taken place today rather than on Thursday, although my right hon. Friend might give reasons why that was not possible.
I did not want anxiety on this matter to come only from the Opposition. Perhaps the only time that I have agreed with the hon. Member for Walsall, North (Mr. Winnick) was when he said that there will come a day when Conservative Members will find themselves on the Opposition Benches, including my right hon. Friend, who has rightly been called a House of Commons man. I am sure that he would be the first to object to such a motion if the roles were reversed.
5.17 pm
Mr. Peter Griffiths: I do not represent a London constituency and I have not taken part in previous debates on the Bill, but I have given my right hon. Friend the Secretary of State for Transport my general support.
When I came to the House today, one of my first actions was to see how long was the list of amendments tabled for the Committee stage. I assumed that it would run to a full page. I was amazed to find that only two groups had been selected, so I came to this debate. It occurred to me that if the Opposition Front Bench, with the resources available to it, had found it difficult to table the number of amendments that one normally expects, how much more difficult it must have been for Back Benchers.
If any point is missed during the Committee stage of a Bill by hon. Members or Front-Bench spokesmen there is normally time for reflection, consideration and consultation before Report stage. I believe that on this occasion the procedure proposed by my right hon. Friend the Leader of the House is wrong. It removes the fail-safe opportunity to pick up at the Report stage the points that were either missed or could not be presented during the Committee stage.
This point goes wider than the merits, or otherwise, of the Bill that is to be discussed in Committee. I ask my right hon. Friend to consider whether it might be in the best interests of the House of Commons and of Back Benchers on both this and later occasions, when this procedure could be described as a precedent, if he were to accept that there is a belief on both sides of the House that it is undesirable for the Committee stage of a Bill to follow closely upon Second Reading and that it is even more undesirable for the Report stage of that Bill immediately to follow the Committee stage. Today's business covers not only the London Regional Transport (Amendment) Bill. The
1060
Trustee Savings Bank Bill is to be considered, followed by the milk supplementary levy motion. I ask my right hon. Friend to consider whether it would be a reasonable day's work for the House to complete the Committee stage of the London Regional Transport (Amendment) Bill and all stages of the Trustee Savings Bank Bill and the levy and to return to the Report and Third Reading stages of the London Regional Transport (Amendment) Bill on a later occasion — if necessary, tomorrow after the debate on the Royal Air Force.
5.21 pm
Mr. Denis Skinner: The hon. Member for Portsmouth, North (Mr. Griffiths) has now broadened the attack on the Government for their handling of the business of the House. During this relatively short debate contributions have been made by hon. Members with many years' experience of this House, initially by my right hon. Friend the Member for Bethnal Green and Bow—
Mr. Mikardo: No—Bethnal Green and Stepney.
Mr. Skinner: He is not right hon?
Mr. Mikardo: Yes, but he is the right hon. Member for Bethnal Green and Stepney.
Mr. Skinner: My right hon. Friend made it clear that he could not remember any occasion when such a controversial matter had been brought before the House at such short notice. My right hon. Friend compared it to certain examples that he remembers well. I referred to Rolls-Royce which was in one hell of a mess. There was general agreement that Rolls-Royce ought to be nationalised. Rolls-Royce was nationalised under the last Tory Prime Minister. The present Prime Minister and the Leader of the House joined in that little escapade. On that occasion they were all in favour of nationalisation. We went into the same Lobby shouting and cheering and saying that Rolls-Royce should be shifted from the private sector, where it had failed, to the public arena.
Mr. J. Enoch Powell: I was against it.
Mr. Skinner: The right hon. Gentleman has made an important point. There was no vote. I imagine that on that occasion the right hon. Gentleman shouted, sometimes strongly and sometimes weakly, "No." The point is that the right hon. Gentleman threw the towel in at Wolverhampton before the general election in 1974. When he threw the towel in, he did a pretty fair job. I am sure, Mr. Speaker, that on this occasion you have grave doubts about the predicament in which you have been placed. On occasions like this it is apparent that you are stuck there like piggy in the middle. Hon. Members do not want you to be placed in that predicament. We will argue the toss with you, Mr. Speaker, when it matters, but this is not one of those occasions.
On this occasion, the Government have a massive majority of 147. It makes one wonder what the Government are up to. With their 147 majority they are trying to wheedle through this Bill on two successive days by means of their payroll vote and their prospective payroll voters who are waiting to go into the Lobby at a moment's notice. But last night, on fluoridation, they were not very keen. With all those payroll voters behind them the Government are capable of getting any piece of legislation through the House. Therefore, one is bound to come to the conclusion that there is something much more sinister

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about it. It is because it is sinister that my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), with all his experience, and my hon. Friend the Member for Newham, South (Mr. Spearing), who began this procedural debate and who examines these matters in detail, raised this matter. When my hon. Friend the Member for Newham, South has spotted something on the Order Paper and raises a point of order in the PLP and subsequently on the Floor of the House, you can bet your bottom dollar that, 85 to 40 on, he is right. That is so on this occasion.
Mr. Brian Sedgemore: My hon. Friend says there may be something sinister about this. Does he think it is sinister that the Attorney-General is sitting on the Back Benches? [HON. MEMBERS: "Oh."]
Mr. Skinner: I have a little note here. When the Attorney-General walked in I put down, "Attorney-General. Prime Minister missing, on holiday." [Laughter.] Yes, I believe that it is sinister. The Attorney-General wandered into the debate because he, too, is concerned. The Attorney-General can get up, if he likes, but I do not expect him to jump up and contradict the Leader of the House. However, as a Law Officer who is not on holiday and who is taking a long and detailed interest in the matter, perhaps we ought to hear his view, along with all the other many and varied views.
During this attack there have been speeches from only two Conservative Members, apart from the Leader of the House and the Secretary of State. Both put forward the constructive argument that the Leader of the House should take this back whence it came. In fact, the hon. Member for Portsmouth, North (Mr. Griffiths) made the constructive suggestion that the House should deal with whatever is on the Order Paper today. The Trustee Savings Banks Bill was opposed on Second Reading. It will no doubt be opposed during its remaining stages. There will be argument and discussion and, no doubt, a vote. Is that not sufficient? It is to be followed by the milk supplementary levy.
Then the right hon. Member for South Down (Mr. Powell) joined in. I put it to you, Mr. Speaker, that although we may not agree on some issues, we are not all that far apart on the Common Market, as we see this ramshackle organisation fall to the floor. We are enjoying that. However, the right hon. Member for South Down follows these matters meticulously, as does my hon. Friend the Member for Newham, South. He made it clear, in as strong a voice as possible, that this matter should be reconsidered. The right hon. Member for South Down is an old ex-mate of the Leader of the House. I wonder whether he has paid sufficient attention to the remarks of the right hon. Member for South Down? If we allow this Bill to proceed, there will be more occasions of this kind. It is a scandal. With a majority of 147 the Government can push anything through the House. With their majority they can trample all over parliamentary democracy. They say that they were elected to look after the freedom of the people of Britain, yet this is what the Government are up to.
The breadth of the attack has not included the Social Democrats and the Liberals. They talk about freedom of information, being in favour of peace and other wonderfully abstract things, but when it comes down to the
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real nitty-gritty of fighting for parliamentary democracy, where are they? Not a single Social Democrat has spoken in the debate. [Interruption.] Here they are. It is just possible that at the tether end of the debate one of them will be trying to catch your eye, Mr. Speaker—a typical Liberal intervention. They have probably had a meeting about joint selection and failed to reach agreement again.
Many hon. Members who pay a lot of attention to procedural detail have said, almost in unison: take it back. Look at all the time that we have wasted, Mr. Speaker. You could have been having your tea, but you are very concerned about the matter. I do not know what discussions you had with Mr. Deputy Speaker but the chances are that you said to him, "Look, I am not leaving the Chair on this important House of Commons matter. It is one at which I should be present." That in itself broadens the attack. Hardly anyone is left to support the motion.
Mr. Sedgemore: I am grateful to my hon. Friend for giving way. He was referring most solic—most solicit—he was referring to the close relationship which existed between the right hon. Member for South Down (Mr. Powell) and the Leader of the House. Is it not a shame that former philosophical bedfellows should now be kicking each other out of bed?
Mr. Speaker: Order. I know that the hon. Member for Bolsover is solicitous of my welfare, but he must stick to the motion. I really would like to go and have my tea.
Mr. Skinner: I do not think, Mr. Speaker, that you should go for your tea until I have done.
Before my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) intervened, stuttering and stammering — unusually for him because he has been in the law courts and knows all about it and will probably try to catch your eye later—I was going on to say that sometimes Back Benchers argue with the Leader of the House about business. That is fair and above board, but often the issue is a bit narrow.
However, this time it is different, because the Opposition Front Bench has sussed this out as well. It is not just the Back Benchers who are saying it is wrong. The Opposition Front Bench has said it is wrong as well, so there have been none of the usual arrangements to get the matter through. Why? They have been trying all day to table amendments. Any hon. Member knows that any Front Bench Member should be able to table more than the paltry few amendments that have appeared today on a matter of such major importance. The real reason is that they have not had the time to table them and to make sure that they are acceptable to you, Mr. Speaker.
One thing that worries me is that the debate might be closured. The Government have a majority of 147 and many Tory Members are stuck outside the Chamber who, unlike the Attorney-General, have never come in to listen to the arguments. They are stuck in the woodwork somewhere. If you, Mr. Speaker, decide to go for your tea at about 6 pm, a Tory Whig could move the closure of the debate. That would make the matter even worse. We are arguing why the business should be taken off, but the Government can come along, in almost dictatorial fashion, and move the closure. It is not for me to tell you your job, Mr. Speaker, but I am suggesting that the debate should not be closured, in view of the number of hon. Members who have taken part and who still want to take part.
Mr. Spearing: Does my hon. Friend remember that when I first opposed the motion I said that a closure would be a possible course of action for the Leader of the House and that I hoped that he would not take it? But my hon. Friend is perhaps slightly mistaken. As I understand it, a Government Whip may claim to move the closure but whoever is in the Chair at that time—be it you, Mr. Speaker, or Mr. Deputy Speaker — is under no compulsion to accept it. I hope, Mr. Speaker, that you or your Deputy, in view of the importance of the principle of what we are debating, would not accept that closure until there had been a proper debate. My hon. Friend is on an important point when he mentions democracy. If the Government really cared for that, the motion would not be before us at all.
Mr. Skinner: In contrast to my attempts to be more delicate, my hon. Friend has, in his blunt fashion, put his finger on it. I would not try to put words into your mouth, Mr. Speaker, but my hon. Friend, who studies such matters in great detail, has put his finger on it. We would not look kindly on a closure motion on this debate.
There was a lot of talk last week—we all heard it—about agreement between the two sides of the House. There is no agreement on this matter, yet the Prime Minister stood at the Dispatch Box and played merry hell because my right hon. Friend the Leader of the Opposition would not tell her that he agreed with her or believed her on this, that and the other. What nonsense it makes. Last week all the newspapers said that the Leader of the Opposition and the Prime Minister could not agree and that parliamentary democracy was at stake and would be ruined. Yet here we are a week later and the Government are saying, "To hell with agreement. We are not bothered about agreements with the other side. We are going to steamroller this thing through and we do not care what the Labour Front Bench says. We do not care what the Liberals say." They have just arrived—
Mr. Simon Hughes rose—
Mr. Skinner: —and one wants to speak. Yes, the hon. Gentleman may, in his squeaky, piping voice.
Mr. Hughes: I do not know whether I am grateful to the hon. Gentleman for that introduction, but I should like to remind him that it is not just the Opposition who can make life difficult. When the hon. Gentleman and I were here at 2 am today, we had another closure. On that occasion, Conservative Back Benchers were making life difficult. It is now becoming apparent that almost no business can be got through the House with agreement without resorting to procedural devices. I have not been here as long as the hon. Gentleman. Perhaps he will tell us when that was last the case. It is certainly the first time since I have been here that we have had so many procedural tricks.
Mr. Speaker: Order. I hope that the hon. Gentleman will not pursue something which is purely hypothetical.
Mr. Skinner: That admonition is absolutely right, but the hon. Gentleman has made a germane point and yet missed it. The hon. Gentleman said that he was up all night—at least, he was up until about 3 am—and that the Government were in a mess. That is part and parcel of the problem. The Government have lost control of their business, so much so that last night they could not keep
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100 Tory Members here to closure the debate. This is germane, Mr. Speaker, because the hon. Gentleman wanted to table an amendment to the Bill and he was in bed. He did not get back until 4 am. All those hon. Members who did stay, especially Opposition Members, who were worried about fluoridation got home late and could not get up in time—
Mr. Speaker: Order. It is interesting to hear about last night, but the motion on the Order Paper is about today's business. The hon. Gentleman is a good parliamentarian and must stick to the motion on the Order Paper.
Mr. Skinner: The point that I am trying to illustrate is that every hon. Member can play his or her part in the Bill. If they wish, they can table amendments. It should have been debated tomorrow. Anybody who stayed up late last night and did not get here as early as they otherwise might—especially the Liberals, who are not as quick on their feet as most people—has been unable to table amendments. Because this business has been brought on today, hon. Members have not had time to put down amendments. The hon. Member for Southwark and Bermondsey (Mr. Hughes) inadvertently stumbled across an argument, but failed to appreciate it fully.
Then there is the question of the urgency of the matter.
Mr. Deakins: Before my hon. Friend leaves the question of amendments, will he bear in mind the fact that not only do hon. Members on both sides of the House wish to table considered amendments for the Committee stage, but we may wish to take amendments if there is a Report stage? If we go straight from Committee to Report, there will be no time for us to table amendments.
Mr. Speaker: Order. The hon. Member for Walthamstow (Mr. Deakins) is absolutely on the point. That is what the motion is about and that is what the hon. Member for Bolsover (Mr. Skinner) should confine his remarks to.
Mr. Skinner: I am confining myself to the generality of the argument and my hon. Friend the Member for Walthamstow (Mr. Deakins) has put his finger on the nub of the issue. We have been prevented from carrying out our duties.
Mr. Mikardo: There will be no Report stage.
Mr. Skinner: That is correct. My hon. Friend is on the button again.
The Secretary of State for Transport talked about the urgency of getting the Bill through. We believe that that is a phoney argument. I suggest that it is as phoney as the arguments used by, let us say, the Central Electricity Generating Board, which has lost £2,000 million and is being allowed by the Government to borrow ad nauseam as long as the Government can drive the miners into the floor. The Government allow the CEGB to borrow £2,000 million, but they are not prepared to allow London Regional Transport to borrow £50 million. It is a bit of nonsense.
Mr. Tony Banks: In fact, LRT has external borrowing powers which it could use. The Secretary of State gave it those powers. There is no question of urgency about its money.
Mr. Skinner: The same is true of a lot of industries and organisations. The Government will allow them to borrow. The Secretary of State says that the Government

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need to get the Bill through today to get the £50 million so that the matter can be resolved. It is nonsense, because the Government are prepared to let other utilities borrow £2,000 million or any other amount when it suits their purpose. They are not worried about bringing Bills before the House then.
Those are the arguments that have been relayed by my hon. Friends. There is no alternative to the case that they have put. Unusually, the Leader of the House was not able to sustain his argument against the right hon. Member for South Down. He has not been able to convince hon. Members that the Government's proposal makes sense. There ought to be discussions between the usual channels to facilitate the proper progress of business today.
There are various options. One was put by the hon. Member for Billericay (Mr. Proctor) and I have put another. No doubt my hon. Friends on the Front Bench have other ideas in mind. It is a scandal that the House should be asked to allow the Bill to go through in one day. It is a vital piece of legislation. The Government should withdraw the motion and let us get back to normal business.
5.44 pm
Mr. Brian Sedgemore: It is a pleasure to speak in the debate and I feel humble to be following so many distinguished hon. Members from both sides of the House.
It is with some trepidation that I follow my hon. Friend the Member for Bolsover (Mr. Skinner). The last time that we spoke together was at the Chesterfield by-election, when he followed me. My reception was excellent, but his was stupendous. It is always that way; he is always pinching my lines.
The debate is important because it goes to the heart of the British constitution. As it has unfolded, it has reflected enormous credit on Back-Bench Members and one cannot help contrasting that credit with the grave dishonour that the debate has reflected on the Government. We are witnessing the arrogance of the Executive. We have tried to put aside party politics and no one has tried to score party points. We have treated the matter as a high constitutional issue.
One of the most difficult aspects of the British constitution is the awkward relationship between the Executive and the legislature. There is a series of checks and balances—an ebb and flow. Sometimes it seems that the Executive is in charge, and occasionally it seems that the legislature is in charge. Today, the Executive is seeking to trample on the legislature.
Mr. Corbyn: My hon. Friend is involved in the Committee stage of the Bill that will abolish much of local government in this country. Will he advise the House on the close relationship between the attempt to destroy local government in London and other places through rate capping and the attempt to get this Bill to precepting authorities before 6 March?
Mr. Speaker: Order. That would not be in order. Hon. Members must stick to the motion.
Mr. Sedgemore: It would be improper for me to try to draw parallels between the guillotine on the Local Government Bill and the attempt to take the remaining stages of this Bill in one day.
It is important that the relationship between the Government and Back-Bench Members on both sides of
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the House should operate on principles of equity and natural justice. The Government must recognise that Back-Bench Members will make legitimate demands about the Committee, Report and Third Reading stages of a Bill. One demand will be that we have time to consider what has happened in Committee before we have to deal with the Report stage.
I can think of only two precedents for what the Government are doing. The first was the Prevention of Terrorism (Temporary Provisions) Act 1974, which went through Parliament in one day. I did not agree with that. The second precedent was the Bill to nationalise Rolls-Royce when that company was going bankrupt. Although that company may have been trading illegally at the time, I do not believe that there was an argument for pushing the Bill through so quickly. Therefore, if there was no case for haste with those Bills, which appear to have been far more important and urgent than the London Regional Transport (Amendment) Bill, there surely cannot be a case for haste today.
Mr. Barron: I was working in the coal mines when the Conservative Government nationalised Rolls-Royce and put the Bill through in one day. Can my hon. Friend tell me what opportunities there were for tabling amendments to that Bill? It seems that we are to have no opportunity to put down amendments on this Bill.
Mr. Sedgemore: My hon. Friend was working in the coal mines and I was working in the law courts, so neither of us can say with clarity what happened on that occasion. If the Leader of the House is given leave to speak again, perhaps he will be able to enlighten my hon. Friend.
If we follow precedent, our position must be based on trust and agreement between both sides of the House. It is difficult to understand how there could be agreement between both sides of the House in this case. We are dealing not only with a Bill that is consequent upon a previous public ownership Bill and certain borrowing requirements, but with an astonishingly important consitutional issue — retrospective legislation. This legislation seeks to legalise the illegal actions of the Secretary of State for Transport. How could there be agreement that the Report stage should follow immediately on the Committee stage when we are dealing with this constitutional issue? How could there be agreement when we note that Mr. Justice McNeill did not merely criticise the Secretary of State? His criticism was so condign as to make those of us who are capable of reading between the lines of the law reports believe that he was talking with incredulity about the right hon. Gentleman's irrationality. That is why it is extremely difficult to have any agreement on the truncating of debate.
Mr. Dave Nellist: I do not wish to dwell too long on that fact, even though I was at the Rolls-Royce technical college when Rolls-Royce was nationalised. I remember the occasion very well because, as an apprentice, I was called into the main meeting room to hear the decision. Does my hon. Friend accept that the principle of retrospective legislation, of which the Secretary of State may well be in favour at present, will not sit so easily on the right hon. Gentleman's shoulders if, as I hope, a future Labour Government use that same principle to bring back those Clay Cross councillors who, 13 years ago, under the Housing Finance Act 1972, were disfranchised for defending working people?
Mr. Speaker: Order. I hope that the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) will not follow that line either.
Mr. Sedgemore: I can barely resist those temptations, Mr. Speaker, but, under your stern instructions, I absolutely refuse to follow my hon. Friend's point. I do not know why he is trying to lead me down those devious routes. I know that it will put me in bad favour with you, Mr. Speaker, and I shall be desperate to catch your eye next Monday afternoon during the debate on the rate capping order.
I know, if only because I discussed this matter with him before he stood up to speak, that my hon. Friend the Member for Bolsover has an important point to make about the way in which the Secretary of State for Transport misled the House over fiduciary and financial issues. I do not believe that the right hon. Gentleman made out a case for bringing the Report stage on immediately after the Committee stage. He claimed that this had to be done because London Regional Transport would run out of money this week. I must say, for my sins, that I was trained as an economist. I know that it is not true that LRT will run out of money this week. It is grotesquely misleading for the Secretary of State to tell us that it will. Just as the Central Electricity Generating Board has external borrowing limits, so too does London Regional Transport. I am not saying that LRT has external borrowing limits up to £2 billion like the CEGB. I doubt that the CEGB has such limits anyway. LRT does, however, have external borrowing limits amounting to at least £50 million.
The Secretary of State for Transport owes us an explanation of why, in saying that the Report stage should immediately follow the Committee stage, he argued the fiduciary case. The right hon. Gentleman cannot justify that case. I am willing to allow him to intervene to apologise for misleading the House. I note that the right hon. Gentleman is not rising to meet the challenge. He is not prepared to apologise for misleading the House on important fiduciary and financial issues.
It is a sorry state of affairs when we have Secretaries of State who are prepared to mislead the House and who, when they are given the opportunity to withdraw, sit sullenly in their seats, turned away from the Member who is addressing the House of Commons. That is the kind of democracy in which we live. That is the arrogance of the majority and of the Executive which we have come to expect.
Mr. Cohen: Last night, when accused of misleading the House, the Secretary of State said that the matter was sub judice to him, although it was not sub judice to anyone else. Does the same consideration apply to what the right hon. Gentleman said today at the Dispatch Box about this matter being urgent? It might be urgent to him, although it is not to anyone else.
Mr. Speaker: I ask the hon. Member for Hackney, South and Shoreditch to resist that temptation as well.
Mr. Sedgemore: Absolutely, Mr. Speaker. I know something about the sub judice rule, but it would take much of the time of the House if I went into the various refinements of the arguments between my hon. Friend the Member for Leyton (Mr. Cohen) and the Secretary of State for Transport. Again I accept your invocation, Mr.
1068
Speaker. It would be extremely remiss of me if I were to follow the path down which my hon. Friend tried to send me.
I am concerned about the practical difficulties that have been raised by this motion. I am one of those hon. Members who have been locked in a Committee Room for two days and two nights a week considering the Local Government Bill, which seeks to abolish the GLC and the metropolitan county councils. We sat until midnight last night dealing with certain clauses. The Bill is fiendishly complicated. The debate on it drains one of nervous energy and physical stamina. I went home feeling like a wet rag last night. I got up at half-past five this morning, knowing that I would have to read Hansard to ascertain what happened yesterday on Second Reading. I had barely started dealing with half a dozen letters and opening some of my papers—I do not have a red box; in fact, I have a blue box—when the telephone started to ring, and I have been interrupted ever since. My only chance to read yesterday's debate on Second Reading has come while I have been sitting here trying—occasionally, because the debate is so important — to glance at what was said yesterday.
I am a London Member and represent the poorest borough in this country which is desperately worried about having to pay a share of the £50 million to the Secretary of State. Is the House really asking me, as one who sat up last night until midnight dealing with a major Committee, who got up at half-past five this morning, and who has been interrupted in the middle of all his business, to table on Report amendments which will arise out of Committee proceedings which I have not even seen? No one in his right mind would ask a Member of Parliament to do that. It is asking too much, even of someone of my capacity and energy. I cannot do it. I honestly say that it is beyond my capabilities.
Mr. Skinner: Frayed at the edges.
Mr. Sedgemore: My hon. Friend may laugh and sneer. This is what makes Members of Parliament snap. I do not know why my hon. Friend is goading me in this fashion. We have on occasions walked around St. James's park talking as colleagues and trying to help each other. Now my hon. Friend is trying to put all these severe parliamentary pressures on to me. I do not find it funny, and I hope that my hon. Friend does not either.
Mr. Skinner: I have been reselected.
Mr. Sedgemore: It is not just a matter of how many hours there are in a day. The answer is 24, and that is not enough. I am concerned also because there are a number of bus garages in Hackney, South and Shoreditch and in Hackney, North. I had an agreement that, before the Report stage and after the Committee stage, I would go to some of those bus garages and consult the work force about possible amendments to the Bill. After going to see the work force, I would go to the GLC. I wanted to talk to my hon. Friend the Member for Newham, North-West (Mr. Banks) and Mr. Ken Livingstone about the kind of amendments I should table on Report.
That has become impossible because of the time scale. It need not be impossible, and that is where the Leader of the House can help us. There is no reason why that impossibility should be created. I do not believe that the motion was tabled for political malice or spite. All hon.

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Members have said that we have an extremely good Leader of the House, who is interested in the wishes of Back-Bench Members.
Mr. Skinner: It is a lifetime tarnished.
Mr. Sedgemore: I do not believe that. We are having a series of rows, which there was no need to have.
Mr. Speaker: Order. I am the last person who would wish the hon. Gentleman to snap. If he would bring his speech to a conclusion, perhaps we could both go and have a cup of tea together.
Mr. Sedgemore: That is the sort of offer that I cannot refuse. In fact, I should like a rock cake, if that is all right. However, before we have our cup of tea together, I wish to emphasise the point that we could have had the debate on the Royal Air Force today. I do not know why we cannot do that, and have the Committee and Report stages tomorrow, or the Committee stage today and the Report stage tomorrow. What prevents us from doing that? I know that there is a different Whip on the two matters.
Mr. Speaker: Order. I am sorry to keep stopping the hon. Gentleman, but that matter could legitimately have been argued last night when the business statement was made. It cannot be argued on the motion this afternoon.
Mr. Sedgemore: That point has been argued today by at least five hon. Members. I bow to your ruling, Mr. Speaker, but I am rather shocked that the hon. Member for Hackney, South and Shoreditch should have fewer rights than more distinguished, older and abler hon. Members. However, I obey immediately because I am anxious for that cup of tea.
My final point relates to incompetence. Even when I am in control — I am at breaking point now — it seems appalling that because of the incompetence of the Secretary of State for the Environment, compounded by the incompetence of the Secretary of State for Transport—a parliamentary Tom and Jerry show—hon. Members should face this impossible position. It is time that the legislature stood up to the Government and asserted its rights.
Mr. Deakins: On a point of order, Mr. Speaker. The motion before the House is presumably amendable, as it is a motion. Would it be in order for the Leader of the House to move a manuscript amendment to the motion to remove from the motion any reference to Report and Third Reading, or to Third Reading, so that at least hon. Members would have a break and an opportunity to consider the stages that we are to rush through today, before the Bill is passed? If that were in order, would you accept it?
Mr. Speaker: Order. That is a hypothetical question. No such suggestion has been made to me.
6.4 pm
Mr. Alan Williams: I am sure, Mr. Speaker, that that can soon be remedied. Our two and a half hours of debate bear a remarkable, striking and important similarity to our five hours of debate between 10.30 pm and 3.30 am last night. Throughout the two debates there has not been one speech from Conservative Back-Bench Members in support of the Front Bench. Every speech from those Back-Bench Members has opposed the Govenment's proposal. We can hardly be
1070
surprised that that is the case. The Secretary of State, who has an unlimited capacity to turn almost everything that he touches to farce, is in danger of making a farce of the procedures of the House. That is not a trivial or laughing matter, although during the recent contributions the Secretary of State seemed to regard it as such.
Many hon. Members have said that we regard the Leader of the House as an honourable man, and we mean it sincerely and truly. We have a high regard for the way in which he carries out his duties, but he will know, as most hon. Members know, that it takes a long time to build up a reputation in the House, and that a reputation can be destroyed in one debate. I ask him to consider seriously our points. I call on him, as his hon. Friends have done, to protect the House from an important abuse that otherwise may be committed today.
The Secretary of State is in danger of creating a precedent that he, his party, me and many of my colleagues would regret. If the precedent is created and the course of action is acceptable to the Tory party when it is in government, it will be acceptable to the Labour party when we are in government. I do not want any mealy-mouthed interventions in future, if we behave—
Mr. Michael Brown rose—
Mr. Williams: I shall give way in a moment. I am glad that the hon. Gentleman has discovered an interest in the subject.
Mr. Brown: I have been here throughout the debate.
Mr. Williams: In that case the hon. Gentleman should have spoken because his interests and rights are endangered. The Secretary of State may create a precedent that the House will regret, especially the Conservative party when it is in opposition.
Mr. Proctor: Will the right hon. Gentleman think again about his comment that, if and when there is a Labour Government, he would use the same procedures that are threatening Back-Bench Members now? Will he reconsider that remark because it is not an appetising threat to my right hon. and hon. Friends?
Mr. Williams: The House runs on precedent. If the Government are allowed to create this precedent this week, they can use it again next week. If they create the precedent and use it again, the Labour party will also be free to use it. That is how the House works, and that is why it is important that we do not allow the precedent to be created. The hon. Member for Beverley (Sir P. Wall) has been here longer than I and he knows that.
Mr. Michael Brown: I have grave misgivings about the resolution for all the reasons given during the debate. Although I understand that it would be entirely reasonable for any Labour Leader of the House to claim that precedent is the basis for using the device we are debating, the right hon. Gentleman does not strengthen his case to resist the precedent by suggesting that his party will use that device.
Mr. Williams: The hon. Gentleman must understand that today, as last night, the Leader of the House calls on precedent in support of what he seeks to achieve. Our argument, which is what the argument of every hon. Member should be, is that the motion is a gross abuse of any precedent for the timetabling of the activities of the House. The Leader of the House mentioned previous occasions of crisis, but there is no suggestion of a crisis today.

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The Secretary of State tried to justify the accelerated timetable. In his speech last night he said that the money was needed for the transport authority to be able to pay its development land tax. I invite him to tell us what change has taken place since last Thursday in relation to the transport authority's commitments on development land tax. Secondly, he said that the action was necessary because of the transport authority's duties in relation to voluntary severance pay. I invite him to tell us what changes have taken place in that regard since last Thursday that make it necessary to bring the timetable forward.
The third and final support for the Secretary of State's case was that insurance claims would have to be met by the transport authority. This is my third invitation. Will the Secretary of State tell us now what has happened since last Thursday in relation to insurance claims that has made it necessary for us to deal with this legislation today rather than tomorrow? I look forward to hearing the right hon. Gentleman's list of changes.
Mr. Ridley: The right hon. Gentleman is mixing two completely separate matters. If he had followed our debate yesterday he would be aware that we were talking about the cash surplus that was carried through into the next financial year and the accrued liabilities which could be set against it. He has been quoting some of the figures partially and incorrectly. What I said this afternoon was on a completely different matter. It was that LRT's cash balances will go into the negative before the end of February—that is different from before the end of the financial year—unless those sums are paid.
Mr. Williams: Let me be clear about what the right hon. Gentleman is saying. He is saying two different things. First, he is making it clear that nothing has changed since last Thursday and, secondly, he is giving us our point. He is saying, "Because you have not had time to read Hansard thoroughly to study what was said last night, it is conceivable that you might not have understood what was said." That is what my right hon. and hon. Friends have been saying. Conservative Members could be in the same position at some time.
The stages of the legislative programme in the House have not been arrived at accidentally. They are not arbitrary. They are not pure quirk. They are there because they serve a purpose. There is a gap between the stages because it serves a purpose. It is necessary, for example, as the right hon. Gentleman has tried to demonstrate, for hon. Members to have an opportunity to check what happened during the previous stage. That is especially important when we are dealing with someone like the right hon. Gentleman who has such a remarkable record of getting things wrong. That becomes doubly important—
Mr. Ridley: No.
Mr. Williams: If I got it wrong, why are we going through this farce today? Who got it wrong? Whose legislation was wrong first time round? The right hon. Gentleman does not just have a proven track record of inaccuracy and ineptitude; in his reply last night in answer to my hon. Friend the Member for Wigan (Mr. Stott) he introduced a new set of figures about which no one had
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previously heard. We should have wanted to check them if they had come from a competent Minister. We certainly want to check them coming from him.
After Second Reading it is normal for hon. Members to want an opportunity to consult, check and consider their amendments. As my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said in an intervention, last night she had to dive straight from handling the debate to handing in amendments which were due to be debated today. Most of us are not lawyers. Unlike some right hon. and hon. Members, we do not have a legal training. It is not uncommon for some of our amendments to be ruled out of order or be improperly drafted. That is not shameful; it is normal. We know that. The way in which we conduct our affairs normally ensures that if we get things wrong we have time to obtain advice from the Clerks and to put in suitably worded amendments. That will go if we accept the precedent that the Leader of the House is in danger of imposing.
We have heard constantly from the Government—I say this sincerely enough, I hope, for the Leader of the House to take note—about the sanctity of the law, but we must understand that in the House there is also the sanctity of the law-making process. Arbitrary law is not just bad law, it breeds disrespect for the law. We should honour procedures, and breach, change or bend them only when there is no alternative for the working of the House.
A Government with a majority of 147 could have bulldozed the legislation through the House tomorrow as they had originally intended. Instead, they are bringing it forward by a mere 24 hours. They are treating the House with disdain. Neither the Leader of the House nor the Secretary of State has given a significant or meaningful reason for the change. The only reason given is that it is for the convenience of the Executive. It has nothing to do with the needs of the House or the legislative requirements of the transport authority.
Mr. Deakins: My right hon. Friend is being overfair to the Government by saying that it is for the convenience of the Executive. I should have thought that it was extremely inconvenient for the civil servants and the Ministers in the Department of Transport who had been working on the assumption that they could consider amendments. Amendments must be considered in the Department. The Department is suffering as well. I suspect that this is being done solely for the convenience of the Ministers who were leading the debate on Monday.
Mr. Williams: With the Secretary of State's record, I suspect that he does not want us to have time to check the figures that he provided last night. We are due to have a ten minute Bill to which we are all looking forward with great anticipation. I ask the Leader of the House not to give a final decision now. He should take the opportunity to have a discussion through the usual channels to see whether they can find a way to resolve the matter, because the principle that is at stake tonight is important to Back Benchers on both sides of the House.
If we are not careful and we do what the Leader of the House is asking, we shall be adding to the Secretary of State's proven contempt for the law-making processes of the House.
6.17 pm
Mr. Biffen: By leave, Mr. Speaker, I wish to address a few remarks to the House to conclude the debate. It has

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been a wide-ranging and, I think, truly important debate, which reveals how the House feels about its procedures. The House has tackled the issue from a variety of standpoints, and I must at once acknowledge, I suppose, with some charity the concept that I have become the victim of fallen innocence in this matter. I feel no different now than I did 24 hours ago—to every problem I bring the same wearied sense of realism.
I should like to assure the hon. Member for Newham, South (Mr. Spearing) that none of his opponents would in any sense characterise what he or his hon. Friends have said as obstructive. The debate has truly been about the relationship between the House and the Executive, which is as old as Parliament itself. Anyone tracing the debate will conclude that the measure outlined in the business of the House motion is not one that would ever be lightly sought by the Executive. It is not a measure that is readily granted by Parliament. Much of this afternoon's debate has demonstrated that.
The objections to the motion are, first, that all remaining stages are taken in one sitting. That was objected to, especially by the hon. Member for Holborn and St. Pancras (Mr. Dobson). That prospect for the treatment of this Bill was always evident, in the sense that the motion was published to relate to the Bill had it been debated tomorrow rather than today. However, added to that was the second and in a sense fortuitous factor that all the remaining stages should be taken upon the day successive to Second Reading — the point made particularly by the right hon. Member for South Down (Mr. Powell).
I was immediately aware that that was the particularly controversial aspect of the arrangement of Government business, and that is why I readily agreed with the point observed by the hon. Member for Newham, North-West (Mr. Banks). It was one of the consequences, fortuitous and unintended, of the altered business as a result of the different treatment of the rate-capping orders. I had to make the judgment—bearing in mind that I wished to recreate the business at extremely short notice and to take account as far as possible of the desire for a continued responsible working programme for Parliament — whether I would undertake this device which is sanctified by precedent and in my hands, I realise, creates a precedent.
Although that was not an easy judgment, I was none the less much persuaded by the problem of speed which was implicit in the legislation. The word "crisis" is not perhaps the one that I would choose, but often when a matter becomes relevant consideration turns on the speed with which measures are required. My right hon. Friend the Secretary of State for Transport spoke on that matter.
Mr. Williams: Will the right hon. Gentleman amplify why it is so important that this legislation should be considered today rather than tomorrow, and why tomorow was adequate when he announced the business last Thursday?
Mr. Biffen: The split between today and tomorrow arose as a consequence of the general upheaval that flowed from the necessity to take the rate-capping order on Monday.
Mr. Tony Banks: The Leader of the House will be aware that it was speed, undue haste, that got us into this mess to start with — undue haste on the part of the Secretary of State, and his failure to consult.
Secondly, the right hon. Gentleman said that it was a difficult choice to make. He could have brought forward the debate on the Royal Air Force, because no resolution is attached to that. A resolution is attached to this legislation, and it will cost the ratepayers £50 million.
Mr. Biffen: I realise that point. Doubtless we could all make business programmes, just as we could all select cricket teams for an Australian tour. I assure the hon. Gentleman that I had to go through the range of agonies before I made the judgment which is now at stake and will soon be subject to the vote of the House. The hon. Gentleman is of course right in saying that, whenever one operates under constraint of speed, the political process is that much more difficult.
I very much hope that the House will proceed to vote for the motion on the business of the House. I very much take account of the constructive suggestion made by my hon. Friend the Member for Portsmouth, North (Mr. Griffiths), but I still feel that it is appropriate that the House should—
Mr. Williams: Will the right hon. Gentleman give way? This a is very important point
Mr. Biffen: I know that it is important, and for that reason I will shortly give way. I none the less feel that it would be preferable for us to proceed to authorise the business that was announced last night to give some certainty to a programme of business that has already been subject to overmuch adjustment.
Mr. Williams: I apologise for having interrupted the right hon. Gentleman. Will he consider accepting my invitation to have discussions through channels during the succeeding ten-minute Bill? Since he seems unwilling to make the concession for which we ask of removing the business from today's Order Paper, would he consider as an option that might meet some of our concern allowing a separate Report stage?
Mr. Biffen: I recommend to the House that the motion under consideration should be secured. I go further and say that of course I have noted what the right hon. Gentleman says about the usual channel discussions. I agree that this matter would be better discussed through the usual channels, so that it may proceed as he has requested.
Mr. Spearing: Will the right hon. Gentleman give way?
Mr. Biffen: No, I will not give way. I am on my last sentence.
We are shortly coming to a vote. The House records its view by votes, but after the votes have been recorded the voices linger. I know perfectly well from the volume, intensity and quality of the voices that have been heard this afternoon that the House has the deepest unease about this kind of procedure. I think that that unease is common to both sides of the House and will moderate and qualify whatever sense of precedent may be held about the outcome this evening.
Question put:—
The House divided: Ayes 256, Noes 180.

Division No. 116]

[6.25 pm

AYES

Alexander, Richard

Haselhurst, Alan

Ancram, Michael

Havers, Rt Hon Sir Michael

Arnold, Tom

Hawksley, Warren

Atkins, Robert (South Ribble)

Hayes, J.

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

Hayhoe, Barney

Baker, Nicholas (N Dorset)

Hayward, Robert

Baldry, Tony

Heddle, John

Beaumont-Dark, Anthony

Henderson, Barry

Bellingham, Henry

Hickmet, Richard

Bennett, Rt Hon Sir Frederic

Hicks, Robert

Best, Keith

Hind, Kenneth

Bevan, David Gilroy

Hogg, Hon Douglas (Gr'th'm)

Biffen, Rt Hon John

Holt, Richard

Bonsor, Sir Nicholas

Hordern, Peter

Boscawen, Hon Robert

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

Bottomley, Peter

Howarth, Gerald (Cannock)

Bottomley, Mrs Virginia

Howell, Rt Hon D. (G'ldford)

Boyson, Dr Rhodes

Howell, Ralph (N Norfolk)

Braine, Rt Hon Sir Bernard

Hubbard-Miles, Peter

Brandon-Bravo, Martin

Hunt, David (Wirral)

Bright, Graham

Hunt, John (Ravensbourne)

Brittan, Rt Hon Leon

Hunter, Andrew

Browne, John

Irving, Charles

Bruinvels, Peter

Jackson, Robert

Buchanan-Smith, Rt Hon A.

Jenkin, Rt Hon Patrick

Budgen, Nick

Jones, Gwilym (Cardiff N)

Burt, Alistair

Jones, Robert (W Herts)

Butterfill, John

Jopling, Rt Hon Michael

Carlisle, Kenneth (Lincoln)

Kellett-Bowman, Mrs Elaine

Carttiss, Michael

Kershaw, Sir Anthony

Chalker, Mrs Lynda

Key, Robert

Chapman, Sydney

King, Roger (B'ham N'field)

Chope, Christopher

King, Rt Hon Tom

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

Knight, Mrs Jill (Edgbaston)

Clark, Dr Michael (Rochford)

Knowles, Michael

Clark, Sir W. (Croydon S)

Knox, David

Clegg, Sir Walter

Lamont, Norman

Cockeram, Eric

Latham, Michael

Colvin, Michael

Lawrence, Ivan

Conway, Derek

Lawson, Rt Hon Nigel

Cope, John

Lee, John (Pendle)

Cranborne, Viscount

Leigh, Edward (Gainsbor'gh)

Crouch, David

Lennox-Boyd, Hon Mark

Currie, Mrs Edwina

Lester, Jim

Dickens, Geoffrey

Lightbown, David

Douglas-Hamilton, Lord J.

Lilley, Peter

Dunn, Robert

Lloyd, Ian (Havant)

Durant, Tony

Lord, Michael

Fairbairn, Nicholas

Luce, Richard

Farr, Sir John

Lyell, Nicholas

Favell, Anthony

McCrindle, Robert

Fletcher, Alexander

McCurley, Mrs Anna

Fookes, Miss Janet

Macfarlane, Neil

Forman, Nigel

MacGregor, John

Forsyth, Michael (Stirling)

MacKay, Andrew (Berkshire)

Forth, Eric

MacKay, John (Argyll & Bute)

Fox, Marcus

Maclean, David John

Franks, Cecil

Madel, David

Freeman, Roger

Major, John

Gale, Roger

Malins, Humfrey

Galley, Roy

Malone, Gerald

Gardner, Sir Edward (Fylde)

Maples, John

Garel-Jones, Tristan

Marland, Paul

Glyn, Dr Alan

Marlow, Antony

Goodhart, Sir Philip

Marshall, Michael (Arundel)

Goodlad, Alastair

Mates, Michael

Gorst, John

Mather, Carol

Grant, Sir Anthony

Maude, Hon Francis

Greenway, Harry

Mawhinney, Dr Brian

Gregory, Conal

Mellor, David

Grist, Ian

Meyer, Sir Anthony

Grylls, Michael

Mills, Iain (Meriden)

Hamilton, Hon A. (Epsom)

Mills, Sir Peter (West Devon)

Hamilton, Neil (Tatton)

Moate, Roger

Hampson, Dr Keith

Moore, John

Hanley, Jeremy

Morris, M. (N'hampton, S)

Hannam, John

Morrison, Hon C. (Devizes)

Hargreaves, Kenneth

Moynihan, Hon C.

1076

Mudd, David

Steen, Anthony

Murphy, Christopher

Stevens, Lewis (Nuneaton)

Neale, Gerrard

Stevens, Martin (Fulham)

Needham, Richard

Stewart, Allan (Eastwood)

Neubert, Michael

Stewart, Andrew (Sherwood)

Nicholls, Patrick

Stewart, Ian (N Hertf'dshire)

Normanton, Tom

Stokes, John

Norris, Steven

Sumberg, David

Onslow, Cranley

Tapsell, Sir Peter

Oppenheim, Phillip

Taylor, John (Solihull)

Ottaway, Richard

Taylor, Teddy (S'end E)

Page, Sir John (Harrow W)

Tebbit, Rt Hon Norman

Page, Richard (Herts SW)

Temple-Morris, Peter

Parris, Matthew

Terlezki, Stefan

Patten, J. (Oxf W & Abdgn)

Thomas, Rt Hon Peter

Pawsey, James

Thompson, Donald (Calder V)

Peacock, Mrs Elizabeth

Thornton, Malcolm

Pollock, Alexander

Thurnham, Peter

Porter, Barry

Townend, John (Bridlington)

Portillo, Michael

Townsend, Cyril D. (B'heath)

Powell, William (Corby)

Tracey, Richard

Powley, John

Trippier, David

Prentice, Rt Hon Reg

Trotter, Neville

Raffan, Keith

Twinn, Dr Ian

Renton, Tim

van Straubenzee, Sir W.

Rhodes James, Robert

Vaughan, Sir Gerard

Rhys Williams, Sir Brandon

Viggers, Peter

Ridley, Rt Hon Nicholas

Waddington, David

Ridsdale, Sir Julian

Waldegrave, Hon William

Rifkind, Malcolm

Walden, George

Rippon, Rt Hon Geoffrey

Wall, Sir Patrick

Roberts, Wyn (Conwy)

Waller, Gary

Robinson, Mark (N'port W)

Ward, John

Rossi, Sir Hugh

Wardle, C. (Bexhill)

Rost, Peter

Watson, John

Rumbold, Mrs Angela

Wells, Bowen (Hertford)

Sainsbury, Hon Timothy

Wheeler, John

Sayeed, Jonathan

Whitfield, John

Shaw, Sir Michael (Scarb')

Whitney, Raymond

Shelton, William (Streatham)

Wiggin, Jerry

Shepherd, Colin (Hereford)

Winterton, Mrs Ann

Silvester, Fred

Winterton, Nicholas

Skeet, T. H. H.

Wolfson, Mark

Smith, Tim (Beaconsfield)

Wood, Timothy

Soames, Hon Nicholas

Yeo, Tim

Speed, Keith

Young, Sir George (Acton)

Speller, Tony

Younger, Rt Hon George

Spencer, Derek

Spicer, Michael (S Worcs)

Tellers for the Ayes:

Squire, Robin

Mr. Ian Lang and

Stanbrook, Ivor

Mr. Peter Lloyd.

Stanley, John

NOES

Abse, Leo

Canavan, Dennis

Alton, David

Carlile, Alexander (Montg'y)

Anderson, Donald

Carter-Jones, Lewis

Archer, Rt Hon Peter

Cartwright, John

Ashdown, Paddy

Clark, Dr David (S Shields)

Ashton, Joe

Clarke, Thomas

Atkinson, N. (Tottenham)

Clay, Robert

Bagier, Gordon A. T.

Clwyd, Mrs Ann

Barnett, Guy

Cocks, Rt Hon M. (Bristol S.)

Barron, Kevin

Cohen, Harry

Beckett, Mrs Margaret

Coleman, Donald

Beith, A. J.

Concannon, Rt Hon J. D.

Bell, Stuart

Cook, Frank (Stockton North)

Benn, Tony

Cook, Robin F. (Livingston)

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

Corbett, Robin

Bermingham, Gerald

Corbyn, Jeremy

Bidwell, Sydney

Cowans, Harry

Blair, Anthony

Craigen, J. M.

Boothroyd, Miss Betty

Crowther, Stan

Boyes, Roland

Cunliffe, Lawrence

Brown, Gordon (D'f'mline E)

Cunningham, Dr John

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

Davies, Rt Hon Denzil (L'lli)

Brown, Ron (E'burgh, Leith)

Davies, Ronald (Caerphilly)

Bruce, Malcolm

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

Caborn, Richard

Deakins, Eric

Campbell-Savours, Dale

Dewar, Donald

1077

Dobson, Frank

Maxton, John

Dormand, Jack

Maynard, Miss Joan

Douglas, Dick

Meacher, Michael

Dubs, Alfred

Meadowcroft, Michael

Duffy, A. E. P.

Mikardo, Ian

Dunwoody, Hon Mrs G.

Millan, Rt Hon Bruce

Eastham, Ken

Mitchell, Austin (G't Grimsby)

Evans, John (St. Helens N)

Molyneaux, Rt Hon James

Ewing, Harry

Morris, Rt Hon A. (W'shawe)

Fatchett, Derek

Morris, Rt Hon J. (Aberavon)

Faulds, Andrew

Nellist, David

Field, Frank (Birkenhead)

Oakes, Rt Hon Gordon

Fields, T. (L'pool Broad Gn)

O'Brien, William

Fisher, Mark

O'Neill, Martin

Flannery, Martin

Orme, Rt Hon Stanley

Foot, Rt Hon Michael

Owen, Rt Hon Dr David

Forrester, John

Park, George

Foster, Derek

Patchett, Terry

Fraser, J. (Norwood)

Pavitt, Laurie

Freeson, Rt Hon Reginald

Pendry, Tom

Freud, Clement

Penhaligon, David

Gilbert, Rt Hon Dr John

Pike, Peter

Gourlay, Harry

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

Hamilton, James (M'well N)

Prescott, John

Hamilton, W. W. (Central Fife)

Radice, Giles

Harman, Ms Harriet

Redmond, M.

Harrison, Rt Hon Walter

Rees, Rt Hon M. (Leeds S)

Hart, Rt Hon Dame Judith

Richardson, Ms Jo

Hattersley, Rt Hon Roy

Roberts, Allan (Bootle)

Haynes, Frank

Roberts, Ernest (Hackney N)

Hogg, N. (C'nauld & Kilsyth)

Robertson, George

Holland, Stuart (Vauxhall)

Robinson, G. (Coventry NW)

Home Robertson, John

Rogers, Allan

Hoyle, Douglas

Ross, Stephen (Isle of Wight)

Hughes, Dr. Mark (Durham)

Ross, Wm. (Londonderry)

Hughes, Roy (Newport East)

Rowlands, Ted

Hughes, Sean (Knowsley S)

Sedgemore, Brian

Hughes, Simon (Southwark)

Sheldon, Rt Hon R.

Janner, Hon Greville

Shore, Rt Hon Peter

John, Brynmor

Short, Ms Clare (Ladywood)

Johnston, Russell

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

Jones, Barry (Alyn & Deeside)

Silkin, Rt Hon J.

Kaufman, Rt Hon Gerald

Skinner, Dennis

Kennedy, Charles

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

Kinnock, Rt Hon Neil

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

Kirkwood, Archy

Smyth, Rev W. M. (Belfast S)

Lambie, David

Snape, Peter

Lamond, James

Soley, Clive

Leighton, Ronald

Stott, Roger

Lewis, Ron (Carlisle)

Strang, Gavin

Lewis, Terence (Worsley)

Thomas, Dafydd (Merioneth)

Litherland, Robert

Thomas, Dr R. (Carmarthen)

Lloyd, Tony (Stretford)

Thompson, J. (Wansbeck)

Lofthouse, Geoffrey

Tinn, James

Loyden, Edward

Wainwright, R.

McDonald, Dr Oonagh

Wardell, Gareth (Gower)

McKay, Allen (Penistone)

Wareing, Robert

McKelvey, William

Williams, Rt Hon A.

Mackenzie, Rt Hon Gregor

Wilson, Gordon

Maclennan, Robert

Winnick, David

McNamara, Kevin

Woodall, Alec

McTaggart, Robert

Young, David (Bolton SE)

McWilliam, John

Marek, Dr John

Tellers for the Noes:

Marshall, David (Shettleston)

Mr. Nigel Spearing and

Mason, Rt Hon Roy

Mr. Tony Banks.

Question accordingly agreed to.
Ordered,
That, notwithstanding the practice of the House relating to the interval between the various stages of a Bill brought in on a Ways and Means Resolution, more than one stage of the London Regional Transport (Amendment) Bill may be proceeded with at any sitting of the House.

Emphysema (Compensation of Coalminers)
6.38 pm
Mr. Geoffrey Lofthouse: I beg to move,
That leave be given to bring in a Bill to provide compensation for mineworkers under the Industrial Injuries Acts for emphysema.
This must be the latest hour on record that a ten-minute Bill has been presented to the House. However, the unfortunate miners of whom I am speaking — some cannot walk more than a few yards and some cannot dress themselves—would not mind waiting even another three hours, having waited for more than a century, for us to put right the injustice with which the Bill deals.
This is the fourth occasion on which I have brought this subject to the attention of the House. I presented Bills in October 1982, in March 1983 and again in November 1983. I make no apology for my persistence because the evidence, based on learned study, supports the view that emphysema is prevalent among coalminers.
In presenting my previous Bills, I put before the House a detailed list of research. I shall not cite that detail again. I assure hon. Members that it was scholarly and decisive, and I simply draw attention to it in support of my Bill. However, I wish especially to draw attention to the paper "Cockroft et al" published in The Lancet on 11 September 1982. This report brings together all the findings of the research since 1966.
In further support of my Bill, I submit to the House the strong, short and easily understood argument contained in The Lancet editorial on 19 March 1983, based on 20 learned papers. Since presenting my last Bill on 23 November 1983, I have studied another learned paper entitled "Emphysema and Dust Exposure in a Group of Coal Workers" by Ruckley v. Anne et al published in the respected journal American View of Respirable Disease. The paper outlines how a distinguished team of medical experts examined the lungs of 450 coal miners from 24 British mines. In its summary, the paper concluded:
"We conclude that the association observed between respirable coal dust and emphysema in coal miners indicates a causal relationship. However, because it can be demonstrated only for men whose lungs show some dust-related fibrosis, it is suggested that the extent and nature of such fibrosis may be a crucial factor in determining the presence of centracinar emphysema."
In presenting my previous Bills, I relied upon the evidence of learned papers. I now submit evidence of my own research within the catchment area of the Pontefract area health authority which is officially measured as having 169,800 people, although it is generally considered to be much larger in practice.
This research has shown me that, in the mortality rate over the period 1979–83 inclusive, there were 634 recorded deaths from chronic bronchitis and emphysema, which is an average of 177 a year. Expressed as a standardised mortality ratio, when the figure for England and Wales in 1981 is taken as an arbitrary 100, this comes to 169, which is a highly significant statistical difference from the national average. The standardised mortality ratio over the same period for lung cancer was 109·4, which is not significantly different from the national average.
It would be reasonable to assume that the lung cancer deaths are a reflection of the magnitude of smoking-related

1079
deaths in the district, and as these are not higher than the national average, the excess mortality from chronic bronchitis and emphysema might reasonably be attributed to other factors. The most likely of these are air pollution and occupational factors of which, of course, mining is by far the most important.
Of the hospital admissions in the Pontefract area health authority, over 7,000 bed days were utilised by patients with respiratory disease in 1983. This is most certainly a conservative estimate. In 1984, approximately 300 patients had to be admitted to the chest unit at the Pontefract general infirmary for chronic bronchitis and emphysema, out of a total of 1,000 inpatients in all disease categories over the same period. Of these, male patients outnumbered female patients by three to one. Of these men, approximately 80 per cent. were, or had been, miners, strongly suggesting an occupational factor in the aetiology of the disease. It is fair to say, however, that almost 100 per cent. of them were also smokers. I think that here we are seeing an additive effect of two potent causes of chest diseases.
Over the same period, the outpatient figures show that general practitioners referred 150 new cases of chronic bronchitis and emphysema to one consultant, and a further 800 patients with this condition were followed up in his clinic. The same male to female ratio applies to these patients as to the hospital admissions, as does the occupational history. Many of these men had simple and, usually, low-category, pneumoconiosis.
There were only 12 new referrals of patients with complicated pneumoconiosis where a high percentage of pension was being awarded. Some 88 follow-up patients fell into this category. It is obvious that chronic bronchitis and emphysema, with or without simple pneumoconiosis, is a much larger problem than the more severe forms of pneumoconiosis.
Section 76(2) of the Social Security Act 1975 provides that, before any disease can be prescribed for which
1080
industrial injury benefit is payable, the Secretary of State must first be satisfied on two points. First, he must be satisfied that the disease should be treated, having regard to its causes and incidence and any other relevant considerations, as a risk of occupation and not as a risk common to all persons. Secondly, he must be satisfied that the disease is such that, in the absence of special circumstances, the attribution of particular cases to the nature of the employment can be established or presumed with reasonable certainty.
As I told the House before when I presented my Bills, I understand from the medical profession that the individual can never be truly assessed during the course of his life. He can be assessed only by a post mortem examination after death, and that is too late. The evidence is such that these men should have to wait no longer.
In those circumstances, I hope that the Government will at least reward my consistency and examine this situation seriously. I am well aware that the Industrial Injuries Advisory Council is looking at evidence on this disease. It is 10 years since it last looked at the subject, and I am pleased that it is doing so again. I hope that, if the council decides to prescribe, the Minister will accept the recommendations. I hope that the House will support my Bill.
Question put and agreed to.
Bill ordered to be brought in by Mr. Geoffrey Lofthouse, Mr. Roy Mason, Mr. Alec Woodall, Mr. Peter Hardy, Mr. Allen McKay, Mr. J. D. Concannon, Mr. William O'Brien, Mr. Walter Harrison, Mr. Terry Patchett, Mr. Jack Ashley, Mr. Martin Redmond and Mr. Kevin Barron.

Emphysema (Compensation of Coalminers)
  EMPHYSEMA (COMPENSATION OF COALMINERS)
  Mr. Geoffrey Lofthouse accordingly presented a Bill to provide compensation for mineworkers under the Industrial Injuries Acts for emphysema: And the same was read the First time; and ordered to be read a Second time upon Friday 19 April and to be printed. [Bill 91.]
Orders of the Day

  London Regional Transport (Amendment) Bill
  Considered in Committee
  [SIR PAUL DEAN in the Chair]
  6.48 pm
  Mr. Nigel Spearing: On a point or order, Sir Paul. The circumstances of the Committee stage are a little hurried. I wish to raise a point of order on the selection of amendments. New clause 1, which some of my hon. Friends have tabled, relates to sums payable under the Act to be put into a special fund for the direct enhancement or improvement of the services provided by London Regional Transport.
  I had hoped that there would be an opportunity to discuss that because yesterday, during the Second Reading debate, I put a question to the Secretary of State which bore directly on this matter as I regarded a statement that he had made on 7 February as incompatible with some of the things that he said yesterday. I cannot go further than put it to you. Sir Paul, that it is only through the selection—
  The Second Deputy Chairman of Ways and Means (Sir Paul Dean): Order. I am sorry to interrupt the hon. Gentleman. I realise that he and the Committee are in difficulty, but new clause 1 is not on the Amendment Paper because it was out of order. Therefore, I cannot allow him to develop points about a new clause which was out of order.

  London Regional Transport (Amendment) Bill
    Clause 1

      GRANT BY GLC FOR INITIAL YEAR OF LRT
      Mrs. Gwyneth Dunwoody: I beg to move amendment No. 2, in page 1, line 11, at end insert
      'after deducting therefrom any money paid pursuant to the said section 49 and in anticipation of a direction under the section being money paid prior to the passing of this Act'.
      Normally when we move amendments we have had sufficient time to study the implications of the speech by the Secretary of State on Second Reading and also to ensure, with the assistance of the Clerks, that our amendments are within the rules of order. One of the problems about the debate on this shoddy little Bill has been the propensity of the Secretary of State to throw around various sets of figures, as though he were Will Hay in one of his madder sketches. This has caused considerable difficulty. We are still not clear exactly what the GLC will be required to provide and whether the Secretary of State is prepared even to accept the arrangements that have already been entered into.
      It is important to remember that we are talking about large sums of money and about an authority which has to raise that money properly. The GLC will be asked to pay London Regional Transport £258,179,588 for the remaining part of 1984–85, which is called the initial year
      1082
      after the transfer of control of London Transport to the Secretary of State, between 29 June 1984 and 31 March 1985.
      We must make certain that, as the GLC has already paid £177 million, the Bill will not add to that sum but will give the GLC credit for the amount that has already been paid. There is doubt about it, because the Secretary of State said on Second Reading:
      "Subsection (2) provides for the phasing of payments by the GLC. Its intention is to avoid requiring the GLC to pay money to LRT in advance of when it would have had to do so under the section 49 direction.
      It allows for two possibilities. If Royal Assent is received before 25 March, the first instalment of grant is payable on the day following Royal Assent. That instalment is the amount which would have been due under the section 49 direction by 25 February, less the two sums of £10·2 million and £12·9 million now conceded to the GLC. A second instalment will then fall due on 29 March and under the section 49 direction this was divided into two payments, due on 25 and 29 March." —[0fficial Report, 19 February 1985; Vol. 73, c. 874.]
      That may be factually correct, but the basis is wrong. The figures that should have been used are the current cash flow needs of LRT, not what was estimated last June. Had we been given more time to consider the Bill, we would have tabled amendments relating to this point. The narrowness of the amendment has been dictated by the narrowness of the Bill and the speed with which it has been dealt. It is a fundamental consideration. We should ensure that credit is given for the £177 million that has been paid by the GLC since the appointed day for the operation of the London Regional Transport Act 1984.
      It has been noticeable throughout the entire battle—a word which I use deliberately because it has been a battle; the Secretary of State has tried to ride roughshod over the interests not only of London's ratepayers but of Members of Parliament — that the GLC has behaved properly. It explained to the Secretary of State in the first instance that it did not believe that the sums of money that he was demanding were accurate. However, because of LRT's operating needs the GLC continued to pay the money, explaining that it was doing so without prejudice. The GLC also made it clear that it would appeal against the actions of the Secretary of State.
      Since that is the case, the Secretary of State has a responsibility to write into the Bill a much clearer undertaking that he has taken account of the £177 million that has already been paid over. If the GLC had been seeking to cause untold difficulty, it could have withheld, until the court case was over, the amount of money that the Secretary of State was demanding. Because it knew that the money was needed for the operating costs of LRT, it behaved properly by warning the Department of Transport what it was doing, but nevertheless continuing to make the payments. Therefore, it is all the more dispiriting when there is no clear indication from the Secretary of State that he will take account of the money that has already been paid.
      So far the Secretary of State has shown no intention to take account of the needs of the passengers of London Transport, the wishes of elected London councillors or the needs of the House of Commons. The Secretary of State would show a welcome and astonishing degree of flexibility if he were to accept that his calculations were done on the wrong basis. The figures that should have been used were the current cash flow needs. Therefore, I ask the Secretary of State to accept the amendment.
      7 pm
      The Secretary of State for Transport (Mr. Nicholas Ridley): It may be convenient if I intervene now because I can give the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) a categorical assurance that the money paid by the GLC to LRT since 29 June will be taken into account in calculating what the GLC owes in future.
      To help the Committee, perhaps I may be allowed to take the hon. Lady through the figures. She took me to task for what she described as throwing around sets of figures. I am certain that she would have been even more critical if I had not tried to give the maximum information during our many discussions about the Bill. I think that I can give her a little more information, provided that she does not then blame me for having done so and accuse me of throwing around even more figures.
      Mrs. Dunwoody: I do not think that the right hon. Gentleman quite understands my argument. I am happy that he should give accurate information. However, we are extremely worried because, during our different debates, different sets of figures have been given to the House at different times. We are told that this is simply a case of interpreting them in different ways but, frankly, everyone would be happy if we knew the basis on which the Department was doing its calculations.
      Mr. Ridley: I do not think that that is sustainable. All the figures that I have given are totally compatible. I think that the hon. Lady is trying to say that the GLC would have preferred to work them out in a different way and to have got a different answer.
      Before 29 June of this year, the GLC had paid, taking into account the £10·2 million, a total of £88·9 million. Section 49 and this Bill do not apply to that. We leave that on one side, because it was before the date of the LRT Act.
      Since the Act, the GLC has deposited £177 million with LRT. We agree about that. The Bill requires that £258 million-odd should be paid when the Bill becomes an Act. The difference which will have to be paid is the difference between £177 million and the £258 million — £81 million-odd which is not yet paid. It has to be done this way because the section 49 direction that I made in June was quashed by the court and is therefore invalid. That means that there is no basis for regularising the money which has already been deposited by the GLC.
      As the hon. Lady said, the GLC has behaved correctly in this respect and has left the money there, but it cannot be said that that money is there as part of any instalment or debt or obligation which lies upon the GLC. There would be such an obligation only if the direction had been upheld and had come into force. With the quashing of the direction, that money was left by the GLC as an instalment of what it expected to have to pay either when there was a new direction or, as it turns out, when this Bill becomes law.
      To have specified in the Bill that the £177 million had to be paid would have been retrospective, and retrospectivity is an accusation which has been thrown about frequently in these debates and which I deny. But if I had so drafted the Bill that the £177 million which the GLC has already paid was included as if it was required to be paid, it would have been retrospective because, when the GLC deposited it, it did not know that it would have to pay it.
      The GLC now knows that the total will be £258 million-odd and I give the Committee the categorical assurance
      1084
      that under the Bill, as drafted, there is no suggestion that the £177 million already deposited will not be counted against the total sum that is owed.
      That means that the amendment is unnecessary. The Bill is drafted exactly to take account of the hon. Lady's point. The amendment is also defective. As it is neither correctly drafted nor necessary, I hope that the hon. Lady will feel able to ask leave to withdraw it.
      Mrs. Dunwoody: Since what in this case is sauce for the gander should be sauce for the goose, if the amendment is neither necessary nor well drafted, it appears to be in line with all that has happened in relation to London Regional Transport ever since these debates began. But having a degree of graciousness which is not always found on the Government Benches, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Mr. Roger Stott: I beg to move amendment No. 3, in page 1, line 13, leave out from 'paid' to end of line 16 and insert
      'on the third day upon which banks are open for business after that on which this Act is passed'.
      The Second Deputy Chairman: With this, it will be convenient to discuss amendment No. 4, in page 1, line 13, leave out
      'on the day after that on which this Act is passed'
      and insert
      'on the third day upon which banks are open for business after that on which this Act is passed'.
      Mr. Stott: These are two inconsequential amendments in respect of the main purpose of the Bill. They have been tabled merely to make sense of a measure which we thoroughly oppose.
      You, Sir Paul, will not permit me to go into the argument conducted up until 10 minutes ago about the way in which we have arrived at this position. It is a great pity that only three Opposition amendments have been selected. That is not my fault. I was not a party to the usual channels negotiations last night, and I have to tell the Minister of State that it was the Opposition's wish to table a great many other amendments of much more substance if we had had the opportunity to do so.
      I was one of those hon. Members who spoke at great length and in great detail in last night's debate. The Secretary of State had some very serious questions addressed to him which he answered by bringing in new figures which we are not allowed to challenge. I feel that I ought to make that protest even though I may be out of order.
      The amendments are designed to assist the GLC if this measure is carried into law. I was reminded of the speech made by the Secretary of State for Transport at the annual dinner last week of the Bus and Coach Council, when he referred to another Transport Bill and said:
      "We should really try to fashion a better Bill in Committee."
      I hope that we can fashion a better Bill in Committee today. If these amendments are accepted, in my view the Bill will be marginally better.
      The amendments attempt to ensure that the GLC is given two working days in which to arrange to have available the money that the Secretary of State is about to take from the GLC, money which a court of law found to be unlawful. The Secretary of State has not accepted that judicial decision. He has introduced legislation to overturn

      1085
      that decision. That being the case, having secured a Second Reading for his Bill, he will appreciate that the GLC is anxious to be given time to provide him with the money. Simply because the GLC may have budgeted for the money does not mean that tomorrow morning it can lay its hands on £80 million. It cannot. It needs time to do it.
      That is the reason for these amendments. The GLC needs time to ensure that the Secretary of State cannot require the money to be paid on a non-banking day.
      If the amendments are defective in drafting or inhibiting in any way, I have no doubt that the Minister of State will say so, but I hope that she will take on board the spirit behind them. It is simply to ask that, if the Bill is passed, having been rushed through the House tonight, at least she will be gracious enough to allow the GLC time to marshal its forces and come up with the money.
      The Minister of State, Department of Transport (Mrs. Lynda Chalker): I understand what the hon. Member for Wigan (Mr. Stott) said about the spirit behind the amendments, but I hope that I can assure him that there is no difficulty here.
      I assume, although he did not say so, that the hon. Gentleman considers the amendments as alternatives. If he does not, they can be shown to be contradictory. I shall not discuss that point. I understand the hon. Gentleman's difficulty only too well. If I understand his intentions aright, amendment No. 3 makes the whole sum payable to LRT on the third working day after Royal Assent and amendment 4 retains the framework of the stage payments as set out in clause 1(2)(a) and (b), but also involves payment by the third working day. The two amendments are exclusive rather than to be taken together.
      Mrs. Dunwoody indicated assent.
      Mrs. Chalker: I see that the hon. Lady and I understand each other, on that point at least.
      The amendments are unnecessary. There is nothing in law to prevent the GLC from paying up on the day after Royal Assent, which may well he some time away. It does not need more time. The money could be paid by electronic transfer within a single day, or the GLC could write—[Interruption.] It is perfectly possible to transfer money in a single day.
      Mrs. Dunwoody: If you have it.
      Mrs. Chalker: We are discussing these sums and it is obvious, from other decisions that it has been making, that the GLC has the money. It has undoubtedly been warned in the past and by means of the passage of this short Bill. As the Bill progresses, it will be up to the GLC to have the money ready to pay over in good time. There is no way in which amendments such as these could be made in terms of other transactions that pass between public bodies, referring to a specific third banking day after the due date. The whole process is designed to take place when the sum becomes payable.
      I think that, if the Bill is passed before 25 March, there will certainly be enough time — that is the reason for bringing the Bill forward now — for that money to be raised and paid over as agreed in clause 1(2)(a) plus the remainder at the end of March.
      My right hon. Friend explained just now why the total figure was in the Bill. We are really talking about a remainder figure.
      Mrs. Dunwoody: It is a big remainder.
      Mrs. Chalker: I do not dispute the fact that it is a large figure. The figures have been around for a long time. They were fully known during the court case. There is no reason why the money should not be available when it is required to be paid over.
      I shall not indulge in any nit-picking over the wording of the amendments. I could do so, but that is not my purpose. I understand the spirit behind the amendments, but I assure the hon. Gentleman that there is no need for the concern that he has expressed, and no need to press the amendment.
      7.15 pm
      Mr. Frank Dobson: The Minister graciously tells us that she is not going to involve herself in nit-picking about the details of the amendments which have had to be cobbled together by the Opposition. We do not in fact regard that as especially gracious on her part, because it was only because we were not given sufficient time to consider the matter that we had to produce the amendments in a rush. Still, perhaps we should be thankful. No doubt, had the Secretary of State dealt with this part of the Bill, he would have made nitpicking criticisms.
      The GLC may have the money in its budget. It may have raised the money. However, that does not mean that the money is instantly available to be handed over to someone else without damage to the ratepayers' interests. Conservative Members — there are not many of them here — know more than I do about having money on account. They are probably aware that local authorities, other organisations and rich individuals may invest money in such a way that an instant withdrawal to meet the needs of instant payment will damage the person who has invested the money. It is quite conceivable that, like other local authorities, the GLC invests the sums at its disposal that are not needed at once in such a way that an instant demand to hand money over to LRT would result in a loss of interest to the ratepayers. There might be genuine difficulties and genuine losses as a result of what the Government are demanding, if they will not accept either amendment or something on these lines.
      I am sure that my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) is not slavishly committed to the wording of the amendments and would be happy to accept a Government amendment on Report—
      Mrs. Dunwoody: Hear, hear.
      Mr. Dobson: —that was better than the ones that she was able to devise in the few minutes available to her yesterday.
      Mrs. Dunwoody: Given all their resources, the Government do not seem to have done very well up to now.
      Mr. Dobson: It is true that most faults discovered in legislation spring not from things that happen in the House or in Committee but from the parlous standard of parliamentary draftsmanship. It may well be that our innocent efforts will produce better and more accurate legislation than the Minister could achieve.
      We have to have this debate, either because the Bill that became the London Regional Transport Act 1984 was a mess or because the Secretary of State has administered the Act badly. In either case, as the right hon. Gentleman

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      was responsible for both the Act and its administration, he takes responsiblity. The drafting of my right hon. Friend the Member for Crewe and Nantwich may be better than anything that the ministerial advisers could produce for Report.
      There is one further point to be made on the Bill, if the Government will not either accept the amendment or produce a variation of their own. If the crucial stage of the Bill were taken late on Friday, the GLC might have to find the money to hand over to LRT on a Saturday. Even using electronic means to shift money, the Minister must accept that Britain's financial institutions are not usually at their best on a Saturday. In practice, the demands might be difficult to meet. We are merely saying that we want to avoid such practical difficulties for the GLC to stump up the money on the instant, and the financial losses to London's ratepayers that might be suffered as a result of the precipitate withdrawal of GLC funds.
      One would have thought that a touch of humility would have been appropriate from the Government now. It ought not to lie in their power, still less in their desire, to pass legislation which might prove difficult for the GLC, as all the difficulties that have led to the Bill spring from shortcomings on the part of the Government. Just this once, the Government might listen to what the GLC is saying.
      If the Secretary of State had taken one minute's notice of what the GLC said about his direction under section 49, the courts would not have found that he had acted unlawfully, irrationally and procedurally improperly. In those circumstances, we should not have to put up with listening to him again. I hope that the Minister will be able to accept the spirit of the amendment and do the decent thing.
      Mr. Harry Cohen: My hon. Friend made an excellent point when he said that it would be difficult for the GLC to stump up the money at a moment's notice from the Government. Does he agree that it is not beyond the Government, who have been vindictive to the GLC all along, to insist that the money be stumped up at a most inconvenient time?
      Mr. Dobson: Yes. It beggars the imagination that any hon. Member should be expected to say that he is willing to accept the Government's good faith in their dealings with the GLC. The Government have had the ultimate in bad faith in their dealings with the GLC since the Prime Minister precipitately introduced at a late stage into the Tory manifesto a draft commitment to abolish it. As my hon. Friend the Member for Leyton (Mr. Cohen) said, the Government might deliberately time the demand to cause maximum embarrassment and difficulty. They have always done that in other respects. The same is true of rate capping for other local authorities in London.
      It is preposterous for Ministers to expect us to accept that they will act reasonably and in good faith. They sit there having been found guilty by Mr. Justice McNeill of having acted unlawfully, irrationally and procedurally improperly. The trouble is that in all three respects he found them acting characteristically. If we no longer accept their word or that they will act in good faith, they have only themselves to blame. I hope that the Minister will accept the amendment or agree to come up with a better Government amendment on report. Without such an
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      amendment, we shall leave the GLC and the ratepayers of London vulnerable to more of the Government's malignance.
      Mr. Stott: The amendments are contradictory simply because, at 10 o'clock last night, my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), after spending the whole day in the Chamber debating the Bill's Second Reading, had to cobble together some amendments to enable us to debate the matter today. We had no time for preparation, or to consult anyone, or to consider the Secretary of State's responses, and the amendments were put down as a marker to give the Committee something to talk about. If my hon. Friend had not had the foresight to table these amendments at the eleventh hour, we should have not one amendment to debate.
      I accept that, in the circumstances that I have described, the amendments might be badly drafted or contradictory, but the spirit behind them is worthy of discussion. By virtue of his huge majority the Secretary of State will get his way and his money—well, not his money, but the money of London ratepayers. Unfortunately, we cannot prevent him from getting his way because we do not have the troops in the Lobby to stop him.
      We are merely asking that, once the Bill receives Royal Assent, the Minister should please listen to advice that we have received from the GLC about getting the money together. The Secretary of State is requiring £80 million of it. Amendment No. 4 says that he should be able to do that
      "on the third day upon which banks are open for business after that on which this Act is passed".
      What is unreasonable about that? It gives the GLC time to marshal its resources and to give the Secretary of State his ill-gotten gains.
      Mr. Ridley: Not me.
      Mr. Stott: Well, LRT, but some of that money will be filched away to the Treasury, because LRT does not need it all.
      Mr. Ridley: No.
      Mr. Stott: The Secretary of State ought not to lead me down that line of argument. I am trying to concentrate on the amendments.
      My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) asked the Minister a simple question — whether, if the Bill became an Act of Parliament on a Friday, the following day, logically, being a Saturday—
      Mr. Dobson: Not necessarily with this Secretary of State.
      Mr. Stott: I have to take each point slowly so that the right hon. Gentleman understands. If it were to be a Saturday, the Secretry of State could demand that the Greater London council should pay over this money to him.
      7.30 pm
      I want to draw the Committee's attention to the fact that it is in Committee that hon. Members get down to the nuts and bolts of altering, changing, amending and improving legislation. If the Standing Committee that considered the London Regional Transport Bill had done what it should have done, or if the Secretary of State had responded to the suggestions made by my right hon. and hon. Friends, legislation of this kind would not have to be debated

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      tonight. We are engaged in writing legislation, and it is beholden upon the Committee to get it right. The Secretary of State must not be forced to introduce another Bill because he cannot get the money from the GLC on a Saturday. That might appear to be ludicrous, but unless this legislation is corrected that is what might happen.
      I do not wish to labour the point. Both the Minister of State, Department of Transport and I want to make progress. We have both been involved in many transport Bills, and no doubt there will be many more. I ask the Minister of State to look carefully at the amendment and at least to take on board the spirit of it. If it is inadequately drafted, perhaps she will be able to say that in the other place she will meet the point that I have made.
      Mrs. Chalker: Because of the complicated nature of the days when the money might be paid, I suspected that we might spend a little longer on this amendment than upon the previous one. However, since the amendments are based upon the advice that the hon. Gentleman and his hon. Friends have received from the GLC, I believe that it is unreasonable that the hon. Gentleman should have referred to the time that was needed to draft the amendments. This problem has been known for quite some time and the hon. Gentleman knows that. There is no reason why the GLC should need two extra days in which to transfer funds to London Regional Transport.
      The GLC has already been given notice that it will be required to pay this money. If the payment has to be made on a banking day which, for the purposes of any Bill, including this Bill, is Monday to Friday inclusive under the terms of the Banking and Financial Dealings Act 1971, it can be made immediately, on the same day. That is how the GLC has made payments to London Regional Transport during the past six months. If the due day is at the weekend, the GLC can discharge its liability to pay by dispatching a cheque on that day. The money would not necessarily have to be received on that day — [Interruption.] I am certain that the GLC would not do such a thing. The hon. Lady knows that only too well.
      Mr. Dobson: What about American Express?
      Mrs. Chalker: I believe that the hon. Gentleman's limit on his credit card might be exceeded by this particular sum. It is no part of our intention that the GLC should suffer any financial penalty by having to have the money ready for payment on the due date. When the Bill passes through the other House, the GLC will know when it has to have the money ready. Until that date there is no reason why the GLC should not continue to receive interest on the money that it will eventually pay over. The hon. Member for Holborn and St. Pancras (Mr. Dobson) suggested that Royal Assent might be given on a Friday or a Saturday.
      Mr. Dobson: I did not say Saturday.
      Mrs. Chalker: The hon. Member says that he did not say "Saturday". However, for the sake of argument, let us take either a Friday or a Saturday, in particular a Friday. The hon. Gentleman's fear is unfounded, because the Commission for Royal Assent hardly ever sits on a Friday or a Saturday. I can give that assurance to the hon. Gentleman and to the Committee.
      Mr. Dobson: Will the hon. Lady accept that if a measure is not urgently required
      to be passed into law the
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      House of Commons very seldom sits on a Wednesday to debate the remaining stages of a Bill that received its Second Reading on a Tuesday?
      Mrs. Chalker: If I were to stray back to the last business of the House I think that you, Mr. Chairman, would rule me out of order. Nobody has made any bones about the fact that this is an unusual situation. As the hon. Member for Wigan (Mr. Stott) said, had the Committee which considered the London Regional Transport Act drafted that Bill in a different way, probably a far greater sum, namely £23 million, more would have been paid over during the year than will be paid over as a consequence of this amending Bill. There is no reason for Opposition Members or for the GLC who briefed them to believe that there will be any problem over this payment. The GLC can discharge its obligations by drawing a cheque or another payable instrument whenever it wishes to draw it. When the other place has considered the Bill, the GLC will know what sums will be owing and those sums can be drawn in due time.
      These amendments are unnecessary. This procedure is designed to do no more than rectify the manner and the timing of the payments before the end of the financial year. The Bill enables the GLC and London Regional Transport to know exactly where they are over the payments due to LRT.
      Mr. Stott: The only saving grace is that our proceedings are being recorded by Hansard and that their Lordships will have more time than the Opposition have had to study what has been said before they debate this Bill. I hope that their Lordships will take note of what the hon. Lady has said. At least they will have more time to consider what has been said than the Opposition have had between Second Reading and today's proceedings. Since the other place will have more time in which to study the response of the hon. Lady to these amendments, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Question proposed, That the clause stand part of the Bill.
      Mrs. Dunwoody: In a two-clause Bill, in which the second clause simply relates to the name, clause 1 is almost inevitably at the heart of the Bill. Before we allow such a measure to be put on to the statute book we must look closely at its provisions. This entire saga has been a disgrace from beginning to end. It is appalling that we have had to sit through the proceedings on a Bill which ought to have been unnecessary. We should not be wasting the time of the Committee by debating clause stand part. It is putting right not only the sums of money that should be paid but the way in which they should be paid and the liability or otherwise to the interest payments to be made by the GLC if the sums are not paid on the due date. The Bill is the result of the Secretary of State's desire to push ahead with improperly drafted and ill-thought-out legislation.
      This clause is part of the Bill for one reason alone—because the Secretary of State pushed through a Bill which was so badly drafted that he was found to be in default of his proper responsibilities. We cannot reiterate that too often.
      I know that we are not supposed to use foreign languages in the House, although occasionally some of the gobbledegook that goes through in the form of legislation

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      constitutes practically a different language, but from the beginning to end of the Bill the Secretary of State has acted as if he had droit de seigneur over the entire transport system. He says what he wills will be done and then, irrespective of the needs of the ratepayers, the elected councillors, the House of Commons and anyone else involved in the legislation, what the Secretary of State wants shall be done. If that means bringing in the odd Bill every now and then to amend the Bill that he originally thought of before he got it wrong and had to redraft it and bring it all back, that is unfortunate. It becomes a rather complicated game.
      We are told that we must discuss the clause today because the money is urgently needed. There is considerable doubt about that. LRT may go into deficit by the end of February, but it has considerable borrowing powers — of up to £10 million — given to it by the Secretary of State. Yet he stands at the Dispatch Box and says that he must push the Bill through because if he does not LRT will not be able to cope.
      It may well be that LRT's borrowing powers need to be extended, but there is nothing to stop the Secretary of State extending them. He could do that if there were any question of LRT not being able to pay its operating costs. If there really were any urgency, why would this Bill say that there is a possibility of the Bill becoming an Act after 25 March? In other words, when the Secretary of State was having the Bill drafted by his own infallible means he wrote into it the assumption that if the Bill were not passed before 25 March it would be passed afterwards. That is the general level of assessment that we have had all the way through this bit of nonsense. Nevertheless, we should take account of it.
      Mr. Eric Deakins: Does not that suggest that LRT would, if it were a commercial organisation, be trading illegally if the Bill were not passed by 25 March? Is not that what the Secretary of State and his departmental officials must have anticipated and therefore must have also anticipated that LRT would be able to use the borrowing powers which the Secretary of State asked the House to approve last year? What other reason is there for the borrowing powers?
      Mrs. Dunwoody: My hon. Friend has hit upon it. The reality is, as the Secretary of State knows, that we do not have to push this completely inadequate two-clause Bill through tonight. He understands better than anyone that there is no real urgency because he has the powers to give LRT the right to borrow the money to keep itself solvent. That would not be difficult for him to do. Indeed, it would not be an unusual thing for him to do.
      The Bill is being raced through the House with what can only be called indecent haste. It would not be unusual if the Secretary of State were to say that if LRT wants to extend its borrowing powers it shall do so. He knows that that is almost the norm. It has been done many times before. What has not been done many times before is for a Secretary of State to produce a measure which is found by the British courts to be illegal and irresposible and then to compound the difficulty by bringing forward another Bill in which he seeks for a second time to do that which he was not able to do legally on the first occasion.
      The Secretary of State has done that with no apology and very little explanation to the House of Commons. He
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      says that we debated the Ways and Means Resolution and have had a debate again today so why should we go through the whole affair again? We need to go through the whole affair over and over again because the message behind clause 1 and the arrogant way in which it has been shoved through the House of Commons is that the Secretary of State's political view of transport, which bears a strong resemblance to Dante's "Inferno", is that if he wants to change the system he will. It does not matter whether he is talking about finance for LRT, about the services that are provided for London ratepayers or even about levying extra sums on the ratepayers, which is what he has been doing in advance of this nasty little Bill. As far as the Secretary of State is concerned, his word is law and anything else must be subsidiary to his narrow and blinkered view.
      7.45 pm
      The Bill ought not to go through the House of Commons. It ought not to be pushed on to the statute book. The House should not be examining it today and we should not be asked to accept it. The Secretary of State will get it through, of course he will, because although Conservative Members are not prepared to make speeches about the Bill they will be prepared to vote for it tonight. If he is not ashamed of his behaviour, I hope that some of his hon. Friends will be. The Secretary of State's entire decision-making process on the Bill has been defective. It has been a disgrace from beginning to end and I am appalled that we should be asked to accept it tonight.
      Sir John Page: I congratulate my right hon. Friend the Secretary of State on presenting this clear, simple Bill which requires no amendment. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) talked about the droit de seigneur. She is certainly the dame aux camellias tonight. The hon. Lady has bored us to death, as did her hon. Friends in the tedious repetition of the same shabby little argument. My right hon. Friend was wise and sensible to introduce the Bill and we welcome it tonight.
      Mr. Ian Mikardo: After the speech of the hon. Member for Harrow, West (Sir J. Page), I hesitate about addressing the Committee because that which the hon. Gentleman supports with such exaggerated and baseless language is so manifestly invalid that it needs no one to oppose it. I shall confine myself to a single point and make it shortly.
      Mr. John Fraser: Does my hon. Friend accept that the description, la dame aux camellias, is more apt for the Secretary of State than for my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) because the tragedy of the heroine of "La Traviata" was that she could not get her accounts right?
      Mr. Mikardo: If I followed that line of thought, I should not get far before I was ruled out of order. Therefore, I shall not follow that line.
      As my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) pointed out, the Bill seeks retroactively to validate an Act which was invalid at the time that it was passed. That is the obverse of a method of which the reverse is retroactively to criminalise something which was not a crime at the time that it took place. One has only to say that to show how repulsive it is to democrats that, except in emergencies, retroactive

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      legislation should be introduced. Such legislation is a common feature of police states. Totalitarian Governments who do not like what a chap is doing, but discover that it is not a crime, pass laws to make it a crime and make them retroactive for a couple of years to catch him. That is bad, but it is as bad to validate retroactively an action that was invalid.
      When I first became a Member, everyone was horrified at the idea of retroactive legislation. A Minister who had to introduce it — it happened only when something drastic or deadly had to be coped with — came to the House in sackcloth and ashes, as a humble penitent, begging the pardon of the House for not having anticipated matters well enough to ensure that he did not need to be forced to legislate retroactively. It was considered to be a very nasty thing which Ministers should do only as a last resort, in a great emergency and on a matter of grave importance. It was also considered that they should apologise to the House for having to do it.
      The mores of ministerial behaviour have changed since 1979. We saw some of that this week. I do not know whether the Secretary of State for Transport was an hon. Member when Sir Thomas Dugdale, who was an hon. Member in every sense of those words, was Minister of Agriculture, but someone in Sir Thomas's Department committed a not very grave impropriety. The Minister of Agriculture was not involved, but, being an honourable man, he took responsibility for the actions of his subordinates and resigned. There were later cases, one or two of which were painful, and on that account I shall refrain from mentioning them.
      The standards of morality and decency that used to characterise the Conservative party and others have evaporated in what my hon. Friend the Member for Crewe and Nantwich rightly called the arrogance of Ministers, especially in their dealings with the House.
      Ministers in this Government have ceased to see themselves as servants of the legislature, putting its decisions into practice. They now see themselves as masters of the legislature — deceiving and lying if necessary and, whether necessary or not, brazening and railroading things through the House. Today has been a prime example of that.
      The Secretary of State is introducing legislation retroactively to make him an honest woman. He went whoring after false gods; he did not realise that they were false until a judge told him so. Now he has introduced legislation to make himself honest. It is a smelly business from start to finish. If I were in his place, I would be ashamed of it.
      Mr. Simon Hughes: Clause 1, which the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) says is all that we are left to debate, is not, as the hon. Member for Harrow, West (Sir J. Page) claimed, before us without amendment. It is an amendment itself.
      The basis of the argument—if it can be accorded that description — of the hon. Member for Harrow, West is that this is a wonderful, tidy little Bill. I was able to be in the House only briefly for last night's Second Reading debate, because I was upstairs in Committee on the Local Government Bill. The Government spend so much time interfering with local government that many of us have to
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      occupy most of our time in Parliament on local government matters rather than national Government issues.
      However, I have read the arguments adduced on behalf of the Government yesterday and they do not begin to persuade me that the sum set out in the Bill is the right sum. The Secretary of State said:
      "The sum of £258·2 million roughly achieves just that."
      The "just that" was the amount that the Secretary of State regards as reasonable in relation to LRT's requirements. He said:
      "It will leave a cash surplus of some £30 million at the end of the year. But LRT has liabilities of £21 million for voluntary redundancies and a further £15 million for other unfunded liabilities. Thus, the £285 million is certainly not more than LRT needs to balance its books this year."—[Official Report, 19 February 1985; Vol. 73, c. 873.]
      I am not a mathematician, but the figures in that paragraph alone do not justify the sum for which the Secretary of State is asking the House.
      I remember the discussion in Committee on last year's London Regional Transport Bill. The reason for the clause empowering the Secretary of State to seek a direction was that when the governance of London Transport was broken in the middle of a financial and accounting year, the right hon. Gentleman would be allowed to do two things. Mr. Justice McNeill made clear what those things were. The first was to consult, and the second was to agree an appropriate figure to balance the books.
      Clause 1 of this Bill seeks to produce that right figure; it is an accountancy figure. Yesterday's debate on Second Reading and today's debates on the business motion and the amendments were about whether we should agree a clause that gives a certain sum, under the control of the Secretary of State, from one authority to another. Is the sum that the right hon. Gentleman has determined is the right sum to go to the GLC and on to LRT to make up the balance for this year?
      In considering those questions, we have to go on the evidence. There is no other way in which we can be persuaded. The only argument that we have been given and the only evidence presented to us is that contained in my quotation of what the Secretary of State said on Second Reading. That is not convincing.
      We are being asked to agree the budget of LRT for this year. We need to know more about its liabilities for voluntary redundancies and whether they are attributable to the Capitalcard or are connected with the policies that LRT has implemented. We also need to know about its unfunded liabilities.
      I have a duty to my constituents, who pay rates and travel by LRT, to find out whether we are providing the right sum. The money does not come out of the Secretary of State's pocket; he merely acts as the authority. The money comes out of the pockets of my constituents. Every extra pound paid to LRT means that my constituents have a pound less for something else.
      We are talking about a substantial sum. The Minister of State says that she is not used to dealing in millions of pounds. We are talking about £258 million, which is a large sum. If it is divided equally among London citizens, of whom there are about 7 million, we are paying more than £10 each. Even if we knocked off a bit for the people outside London who use London's transport, we are still paying pounds as opposed to pence.
      Mr. Deakins: It is £30 each.
      8 pm
      Mr. Hughes: Is is more than £30. That means that I and other London ratepayers and residents are paying more than £30.
      Mr. Cohen: It is £37.
      Mr. Hughes: The computations are being ever bettered around me. The further east we go the more accurate the accounting becomes. The amount has gone up to £37 per Londoner.
      I should have liked to have time, without doing six other things simultaneously, to read all of last night's debate. I am not the transport spokesman for my party, but this is a London matter, and I should have liked to be able to consider amendments. Normally I would table amendments to Bills that relate to London. We know that it has been impossible to table amendments because we were sitting in Committee upstairs until midnight and then had to participate in a debate on fluoride, which continued until about 2.30 am.
      The hon. Members for Wigan (Mr. Stott) and for Crewe and Nantwich said that it would be useful to talk about what will happen. It would be useful to check with officials whether or not the sums are correct. All political parties have their own advisers and are given the good offices of independent officials in the GLC, local councils and transport authorities to check figures. Accountants are also available to give plenty of advice if we ask for it. We have not been given a moment to ask for advice.
      I shall not go on at great length, although I recall that last year when I was on a Committee I was able to speak, without any trouble, for 80 minutes. I am well minded to continue, because I am sufficiently angry about this matter. I have rarely been as angry in my time in the House, and I shall have been here two years this week. I am angry because I have seen what the Government are doing to justify this clause and this money.
      The Government Front Bench have given muddled arguments with different figures. The Government want to rush through all the stages in the same day with no opportunity for proper consideration. This is all to do with the nationalisation of a public service by a Government who do not believe in nationalisation. It is all to do with handing over powers from local authorities to the present incumbent in the Department of Transport, who should never have had the powers in the first place.
      As a member of the legislature my primary job is to control the Executive. My second role is as a member of a political party. The arguments I have been given do not begin to persuade me that this is the right sum. What do I do? I have one option — to vote against the clause. That option will be exercised when other hon. Members vote against the clause. I must register my grave dissatisfaction in being asked to vote for this financial measure, which is what Governments are all about, without the assistance or safeguards which we would normally have when financial measures come before the House. Taxation measures go through a special procedure with special examination in Committee upstairs. We normally have an ample opportunity to consider any measure of financial relevance, but for this measure we have been given no opportunities at all.
      An amount of £250 million-odd is asked for as the last stage of the saga. As we have often been reminded, the Secretary of State got it completely wrong the first time
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      around. I have no reason to believe that this figure is any more accurate than the first figure. Unless and until the Government's procedures improve to show that they believe that their duty is to prove the case, there is no option but for Committee members to do all that is left in their power—I wish that they could do more—and make it thoroughly difficult for the Government to get such business through the Committee, and later through the House.
      There are only a limited number of options available to delay the Bill. If it were in the Committee's power, I would not be at all reluctant to delay well beyond 25 March, because that is the reward that the Secretary of State deserves for the appalling way in which he and his colleagues have treated the House of Commons in this small, but significant, piece of legislation, which has already, for no reasoned argument, broken two principles.
      Mr. Ridley: I believe that the Committee would like me to reply briefly to the points that have been made. The hon. Member for Southwark and Bermondsey (Mr. Hughes) has seen a misprint in Hansard. The figure of £285 million should be £258 million.
      Mr. Dobson: Ha, ha.
      Mr. Ridley: The hon. Gentleman laughs, but I may have something to say about him later. I do not think that the Committee would hold me responsible for a printer's error.
      This may be a rushed job, but the hon. Members for Southwark and Bermondsey and for Bow and Poplar (Mr. Mikardo) have misunderstood the position. The hon. Member for Southwark and Bermondsey got himself into a lather of bogus information and used the rest of his speech to mouth adjectives which he thought might hurt. I must include in that charge the hon. Member for Crewe and Nantwich (Mrs. Dunwoody).
      I must make clear the errors of the hon. Member for Southwark and Bermondsey. In the passage to which the hon. Gentleman referred I was talking about the balance at the end of the existing financial year, 1984–85. I was answering points put by hon. Members, including the hon. Member for Newham—
      Mr. Spearing: Which one?
      Mr. Ridley: Both, the hon. Members for Newham, North-West (Mr. Banks), and for Newham, South (Mr. Spearing). I was referring to the surplus of cash and whether that sum was roughly equivalent to the accrued liabilities. I was doing so to justify my pledge that LRT's needs would be met—no more, no less. I cited figures showing that, roughly speaking, within the margins of error, that had been achieved. The hon. Gentleman mixed that up with LRT's total cash needs for the year and the amount in the Bill that should be taken from the GLC to fulfil the objective of financing LRT for the year.
      The hon. Member for Southwark and Bermondsey failed to understand that because of all the other things that he says he is doing. Why does he not do the other things and stop getting mixed up in matters that he does not understand? Having made his mistake, the hon. Gentleman started to abuse me. It is easy to do that, but he would have been right if he had leased his argument on the correct figures.
      The hon. Member for Bow and Poplar made a similar mistake. He said that the legislation was retroactive and

      1097
      proceeded to castigate the Government for bringing in retroactive legislation. The hon. Gentleman failed to prove his point. The legislation is not retroactive. The GLC knew, when the London Regional Transport Bill was published in December 1983, that its exposure under section 49 was £360 million in toto for the year. That figure, less the amount that the GLC had already paid, was put into the direction made in June. Until that moment, the GLC had no doubt that that was the amount it would have to pay.
      The judgment went against the Government and in favour of the GLC. That same morning I said that I intended to appeal. At no time did the GLC have any doubt that it could be liable for the full £360 million. In the event, it is asked to pay £23 million less than it was always on notice it would have to pay. The hon. Member for Bow and Poplar must withdraw the charge of retroactivity, because there is nothing about that series of events that is retroactive. If he does so, as he must, he must withdraw the adjectives.
      Mr. Mikardo: I thought that I had made myself clear. The element of retroactivity arises from the fact that the Minister got it wrong the first time and is introducing this nasty little Bill to correct his error.
      Mr. Ridley: The hon. Gentleman has not heard the precedents that I cited either. It is better to read previous debates. He will know the two precedents that I cited. They are cases where local authorities, one of which was the GLC, were busily paying concessionary fares, were taken to court and were found not to have the powers to pay them. Immediately the House legislated and overturned the illegality. There is no difference between those precedents and what I have done.
      There are two reasons for urgency. First, London Regional Transport will be running out of money soon, will go into deficit and will have to pay interest on borrowings. The hon. Member for Crewe and Nantwich picked up that reason. The second reason is an important one, which she conveniently ignored. The GLC needs to know what will be in the Bill in order to make its rate. It is typical of the hon. Lady to pick up one argument and ignore the other. Obviously, the two arguments go together, and are strong reasons why the Government wish to make progress with the Bill. Although we have had the debate about the day on which this matter is being taken, I wanted to put her right on that.
      Mrs. Dunwoody: Has the right hon. Gentleman at any point said to the GLC in reply to its queries that it does not matter what happens with the Bill and that it can proceed on the figures because it should assume that the Bill will become law? Or has he given the GLC to understand, during the many months of argument, that it will have to make its calculations without any clear indication of the sums of money involved? I believe that there is considerable doubt whether he has made the position as clear as he suggests.
      Mr. Ridley: The position is now totally clear—
      Mrs. Dunwoody: Now.
      8.15 pm
      Mr. Ridley: Now. The sum of money is on the face of the Bill. I made it clear earlier that the £177 million deposited will be taken into account. If the House gives the Bill its Third Reading tonight, there will be no way in
      1098
      which the Bill can be amended, especially in relation to the sum or, indeed, to anything else. At the close of play tonight there will be certainty for the GLC. It will know what sum to work on for its budgetary purposes.
      The hon. Lady had made a meal of these debates and heaped adjectives upon me, which I have taken in good part. I must tell her that she even made a slip tonight when she referred to the measure as a two-clause Bill. It is a one-clause Bill. If she cannot get even that right, it does not say much for her competence.
      Mrs. Dunwoody: It is a two-clause Bill.
      Mr. Ridley: It is a one-clause Bill.
      Mr. Stott: On the Bill it says clause 1 and clause 2.
      Mrs. Dunwoody: There are two clauses.
      Mr. Ridley: It is a one-clause Bill in so far as what matters and the hon. Lady knows it. The hon. Lady has conducted her opposition with all the venom that she can muster, but she knows in her heart of hearts that this is the only possible way to redress the interests of the ratepayers versus the GLC. However much she may have enjoyed opposing the Bill, the ratepayers and travellers of London will not thank her for all the efforts that she has made.
      Question put, That the clause stand part of the Bill:—
      The Committee divided: Ayes 221, Noes 157.

      Division No. 117]

      [8.15 pm

      AYES

      Alexander, Richard

      Garel-Jones, Tristan

      Atkins, Robert (South Ribble)

      Glyn, Dr Alan

      Baker, Nicholas (N Dorset)

      Gower, Sir Raymond

      Beaumont-Dark, Anthony

      Grant, Sir Anthony

      Bevan, David Gilroy

      Greenway, Harry

      Boscawen, Hon Robert

      Gregory, Conal

      Bottomley, Mrs Virginia

      Griffiths, Peter (Portsm'th N)

      Brandon-Bravo, Martin

      Grist, Ian

      Bright, Graham

      Grylls, Michael

      Brittan, Rt Hon Leon

      Hamilton, Hon A. (Epsom)

      Brooke, Hon Peter

      Hamilton, Neil (Tatton)

      Brown, M. (Brigg & Cl'thpes)

      Hanley, Jeremy

      Bruinvels, Peter

      Hannam, John

      Buchanan-Smith, Rt Hon A.

      Hargreaves, Kenneth

      Budgen, Nick

      Haselhurst, Alan

      Burt, Alistair

      Havers, Rt Hon Sir Michael

      Butcher, John

      Hawksley, Warren

      Butterfill, John

      Hayes, J.

      Carlisle, Kenneth (Lincoln)

      Hayhoe, Barney

      Cash, William

      Hayward, Robert

      Chalker, Mrs Lynda

      Heddle, John

      Chope, Christopher

      Henderson, Barry

      Clegg, Sir Walter

      Hickmet, Richard

      Cockeram, Eric

      Hicks, Robert

      Coombs, Simon

      Hind, Kenneth

      Cranborne, Viscount

      Holt, Richard

      Crouch, David

      Howard, Michael

      Douglas-Hamilton, Lord J.

      Howarth, Gerald (Cannock)

      du Cann, Rt Hon Sir Edward

      Howell, Ralph (N Norfolk)

      Dunn, Robert

      Hubbard-Miles, Peter

      Durant, Tony

      Hunt, David (Wirral)

      Fairbairn, Nicholas

      Hunt, John (Ravensbourne)

      Farr, Sir John

      Hunter, Andrew

      Favell, Anthony

      Jackson, Robert

      Fletcher, Alexander

      Jenkin, Rt Hon Patrick

      Fookes, Miss Janet

      Jones, Gwilym (Cardiff N)

      Forman, Nigel

      Jones, Robert (W Herts)

      Forsyth, Michael (Stirling)

      Jopling, Rt Hon Michael

      Forth, Eric

      Kellett-Bowman, Mrs Elaine

      Franks, Cecil

      Kershaw, Sir Anthony

      Freeman, Roger

      Key, Robert

      Gale, Roger

      King, Roger (B'ham N'field)

      Galley, Roy

      King, Rt Hon Tom

      Gardner, Sir Edward (Fylde)

      Knight, Gregory (Derby N)

      1099

      Knowles, Michael

      Ridley, Rt Hon Nicholas

      Knox, David

      Ridsdale, Sir Julian

      Lamont, Norman

      Rifkind, Malcolm

      Lang, Ian

      Roberts, Wyn (Conwy)

      Latham, Michael

      Robinson, Mark (N'port W)

      Lawrence, Ivan

      Rossi, Sir Hugh

      Lee, John (Pendle)

      Rost, Peter

      Lightbown, David

      Rumbold, Mrs Angela

      Lloyd, Ian (Havant)

      Sainsbury, Hon Timothy

      Lord, Michael

      Sayeed, Jonathan

      Luce, Richard

      Shaw, Sir Michael (Scarb')

      Lyell, Nicholas

      Shelton, William (Streatham)

      McCrindle, Robert

      Shepherd, Colin (Hereford)

      McCurley, Mrs Anna

      Skeet, T. H. H.

      MacGregor, John

      Smith, Tim (Beaconsfield)

      MacKay, Andrew (Berkshire)

      Soames, Hon Nicholas

      MacKay, John (Argyll & Bute)

      Speed, Keith

      Maclean, David John

      Spencer, Derek

      Madel, David

      Spicer, Michael (S Worcs)

      Major, John

      Stanbrook, Ivor

      Malins, Humfrey

      Stevens, Lewis (Nuneaton)

      Malone, Gerald

      Stevens, Martin (Fulham)

      Marland, Paul

      Stewart, Allan (Eastwood)

      Marlow, Antony

      Stewart, Andrew (Sherwood)

      Marshall, Michael (Arundel)

      Stewart, Ian (N Hertf'dshire)

      Mates, Michael

      Stokes, John

      Mather, Carol

      Stradling Thomas, J.

      Maude, Hon Francis

      Sumberg, David

      Mawhinney, Dr Brian

      Taylor, John (Solihull)

      Maxwell-Hyslop, Robin

      Taylor, Teddy (S'end E)

      Mayhew, Sir Patrick

      Temple-Morris, Peter

      Mellor, David

      Terlezki, Stefan

      Meyer, Sir Anthony

      Thomas, Rt Hon Peter

      Miller, Hal (B'grove)

      Thompson, Donald (Calder V)

      Mills, Iain (Meriden)

      Thompson, Patrick (N'ich N)

      Mills, Sir Peter (West Devon)

      Thornton, Malcolm

      Moate, Roger

      Thurnham, Peter

      Monro, Sir Hector

      Townend, John (Bridlington)

      Montgomery, Sir Fergus

      Townsend, Cyril D. (B'heath)

      Moore, John

      Tracey, Richard

      Morrison, Hon C. (Devizes)

      Trippier, David

      Moynihan, Hon C.

      Trotter, Neville

      Murphy, Christopher

      Twinn, Dr Ian

      Neale, Gerrard

      van Straubenzee, Sir W.

      Needham, Richard

      Vaughan, Sir Gerard

      Nelson, Anthony

      Waddington, David

      Newton, Tony

      Waldegrave, Hon William

      Nicholls, Patrick

      Walden, George

      Normanton, Tom

      Wall, Sir Patrick

      Norris, Steven

      Waller, Gary

      Onslow, Cranley

      Ward, John

      Oppenheim, Phillip

      Wardle, C. (Bexhill)

      Page, Sir John (Harrow W)

      Watson, John

      Page, Richard (Herts SW)

      Wells, Bowen (Hertford)

      Parkinson, Rt Hon Cecil

      Whitfield, John

      Parris, Matthew

      Whitney, Raymond

      Patten, J. (Oxf W & Abdgn)

      Wilkinson, John

      Pawsey, James

      Winterton, Mrs Ann

      Peacock, Mrs Elizabeth

      Winterton, Nicholas

      Pollock, Alexander

      Wolfson, Mark

      Porter, Barry

      Wood, Timothy

      Portillo, Michael

      Yeo, Tim

      Powell, William (Corby)

      Young, Sir George (Acton)

      Powley, John

      Younger, Rt Hon George

      Proctor, K. Harvey

      Raffan, Keith

      Tellers for the Ayes:

      Renton, Tim

      Mr. Mark Lennox-Boyd and

      Rhodes James, Robert

      Mr. Peter Lloyd.

      Rhys Williams, Sir Brandon

      NOES

      Alton, David

      Beith, A. J.

      Anderson, Donald

      Bell, Stuart

      Archer, Rt Hon Peter

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

      Ashdown, Paddy

      Bermingham, Gerald

      Atkinson, N. (Tottenham)

      Bidwell, Sydney

      Bagier, Gordon A. T.

      Blair, Anthony

      Barnett, Guy

      Boothroyd, Miss Betty

      Barron, Kevin

      Boyes, Roland

      Beckett, Mrs Margaret

      Brown, Gordon (D'f'mline E)

      1100

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

      Kennedy, Charles

      Brown, Ron (E'burgh, Leith)

      Kirkwood, Archy

      Bruce, Malcolm

      Lamond, James

      Buchan, Norman

      Leighton, Ronald

      Caborn, Richard

      Lewis, Ron (Carlisle)

      Campbell, Ian

      Lewis, Terence (Worsley)

      Campbell-Savours, Dale

      Litherland, Robert

      Canavan, Dennis

      Lloyd, Tony (Stretford)

      Carlile, Alexander (Montg'y)

      Loyden, Edward

      Carter-Jones, Lewis

      McCartney, Hugh

      Cartwright, John

      McDonald, Dr Oonagh

      Clarke, Thomas

      McKelvey, William

      Clay, Robert

      Mackenzie, Rt Hon Gregor

      Clwyd, Mrs Ann

      McNamara, Kevin

      Cocks, Rt Hon M. (Bristol S.)

      McTaggart, Robert

      Cohen, Harry

      McWilliam, John

      Coleman, Donald

      Marek, Dr John

      Concannon, Rt Hon J. D.

      Marshall, David (Shettleston)

      Cook, Frank (Stockton North)

      Mason, Rt Hon Roy

      Cook, Robin F. (Livingston)

      Maxton, John

      Corbett, Robin

      Maynard, Miss Joan

      Corbyn, Jeremy

      Meadowcroft, Michael

      Cowans, Harry

      Mikardo, Ian

      Craigen, J. M.

      Millan, Rt Hon Bruce

      Crowther, Stan

      Mitchell, Austin (G't Grimsby)

      Cunliffe, Lawrence

      Morris, Rt Hon A. (W'shawe)

      Cunningham, Dr John

      Nellist, David

      Davies, Rt Hon Denzil (L'lli)

      Oakes, Rt Hon Gordon

      Davies, Ronald (Caerphilly)

      O'Neill, Martin

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

      Orme, Rt Hon Stanley

      Deakins, Eric

      Park, George

      Dewar, Donald

      Parry, Robert

      Dobson, Frank

      Patchett, Terry

      Dormand, Jack

      Pike, Peter

      Douglas, Dick

      Radice, Giles

      Dubs, Alfred

      Randall, Stuart

      Duffy, A. E. P.

      Redmond, M.

      Dunwoody, Hon Mrs G.

      Rees, Rt Hon M. (Leeds S)

      Eadie, Alex

      Richardson, Ms Jo

      Eastham, Ken

      Roberts, Allan (Bootle)

      Evans, John (St. Helens N)

      Robertson, George

      Ewing, Harry

      Robinson, G. (Coventry NW)

      Fatchett, Derek

      Rogers, Allan

      Faulds, Andrew

      Rowlands, Ted

      Field, Frank (Birkenhead)

      Sheldon, Rt Hon R.

      Fields, T. (L'pool Broad Gn)

      Shore, Rt Hon Peter

      Fisher, Mark

      Short, Ms Clare (Ladywood)

      Flannery, Martin

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

      Forrester, John

      Silkin, Rt Hon J.

      Foster, Derek

      Skinner, Dennis

      Fraser, J. (Norwood)

      Snape, Peter

      Freeson, Rt Hon Reginald

      Soley, Clive

      Gilbert, Rt Hon Dr John

      Spearing, Nigel

      Gould, Bryan

      Stott, Roger

      Gourlay, Harry

      Strang, Gavin

      Hamilton, James (M'weil N)

      Straw, Jack

      Hamilton, W. W. (Central Fife)

      Thomas, Dafydd (Merioneth)

      Harrison, Rt Hon Walter

      Thompson, J. (Wansbeck)

      Hart, Rt Hon Dame Judith

      Wainwright, R.

      Haynes, Frank

      Wardell, Gareth (Gower)

      Hogg, N. (C'nauld & Kilsyth)

      Wareing, Robert

      Holland, Stuart (Vauxhall)

      Welsh, Michael

      Home Robertson, John

      White, James

      Hoyle, Douglas

      Williams, Rt Hon A.

      Hughes, Dr. Mark (Durham)

      Winnick, David

      Hughes, Robert (Aberdeen N)

      Woodall, Alec

      Hughes, Roy (Newport East)

      Young, David (Bolton SE)

      Hughes, Simon (Southward)

      John, Brynmor

      Tellers for the Noes:

      Johnston, Russell

      Dr. Roger Thomas and

      Jones, Barry (Alyn & Deeside)

      Mr. Allen McKay.

      Kaufman, Rt Hon Gerald

      Question accordingly agreed to.
      Clause 1 ordered to stand part of the Bill.

    Clause 2

      SHORT TITLE
      Question proposed, That the clause stand part of the Bill.
      Mr. Simon Hughes: It is important that we have a debate on this clause, given that about 10 minutes ago the Secretary of State did not know that it was in the Bill. In my two years in the House I have never known a Bill to have clauses that were not known to its drafters. I remind the Committee that the right hon. Gentleman told the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) that it did not say much for her confidence if she did not realise that it was a one-clause Bill.
      I know that we have descended to personalities, but it is important that the world should know that the Secretary of State for Transport introduced a Bill and did not spot one of the clauses. If we did not have the clause, the Bill would have no name. If the Bill had no name, it might have no consequences. If the Bill had no consequences, many of us might be a great deal happier, because clause 2 says something important. It states:
      "This Act may be cited as the London Regional Transport (Amendment) Act 1985."
      Most Bills have something like that at the end because they like to have a name when they become law. The significance of the name of this Bill is that it is important that the history books should record that the Secretary of State needed to introduce not just one London Regional Transport Bill but two, the second being the London Regional Transport (Amendment) Bill. That is the title of the Bill, but not the name of the clause. It shows that the first time around the Secretary of State got it wrong.
      Out of respect for the Committee, I shall reserve my remarks about the other things that the Secretary of State said in reply to the hon. Lady on the earlier clause until Third Reading. That means, as I understand it, that I shall not have to reserve my remarks for long.
      It is a pretty odd state of affairs when 50 per cent. of a Bill is unknown to its master. Perhaps the arguments have been put so badly because, as some hon. Members believe, 50 per cent. of them are also unknown.
      Question put and agreed to.
      Bill reported, without amendment.
      Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Ridley.]
      8.30 pm
      Mrs. Dunwoody: Today's The Standard carries an interesting editorial. It says:
      "Mrs. Thatcher's terrible twins were at it again yesterday: Mr. Patrick Jenkin and Mr. Nicholas Ridley reminding us that, for some Ministers, banana skins don't have to be special, just part of life's routine. Mr. Ridley was involved in what one MP happily described as a piece of legislative Tippex, to correct a court ruling that had unfortunately gone against him. … Mr. Ridley, in other words, broke the law. So yesterday he used the full weight of the law-and-order Party to change it. … The problem with both Ministers is that these are not isolated blunders. Mr. Ridley's recent record features own goals on Stansted, heavy lorries in London, and private buses. What each man has in common (apart from a certain baffled charm) is an unerring ability to turn a perfectly logical case into an unholy mess. Mrs. Thatcher's Cabinet would be stronger without them."
      That well-known Socialist newspaper, the The Standard, is expressing in fairly calm terms the sentiments of every hon. Member who has sat through the passage of the London Regional Transport (Amendment) Bill.
      1102
      The Bill was created out of chaos, it has been prosecuted with prejudice and it passes on to the statute book with a distinct odour of disgrace.
      It is not often that the House is asked to deal with badly drafted legislation that has been taken to court almost as soon as it has passed on to the statute book, that has a specific and damaging effect on the ratepayers of London yet is presented to them by the Secretary of State for Transport as amending legislation that is saving them from the rapacious and all-embracing Greater London council.
      The reality behind the Bill is a simple one, but it bears repetition simply because the House has a responsibility to make sure that when Ministers make radical and serious mistakes they do not rewrite the legislation but come to the House and admit, first, that they have got it wrong. The Secretary of State asked for more money than he had a right to ask for. He persisted, when a court of law found that he was acting illegally, in demanding that the House should not discuss the matter, because, he said, it was sub judice. He said that not once but four times. When I suggested that he had no intention of appealing, he said that I was misreporting him. The Secretary of State claimed that he had said that the matter was sub judice because it was sub judice to him.
      From the beginning of the debate the truth is that the GLC has been asked to hand over money that it has raised from the ratepayers, which belongs to the ratepayers and which should go back to the ratepayers if it is not required for the operating costs of London Regional Transport. But the Secretary of State has been prepared to accept neither that he made a mistake nor that he should now no longer demand that the mistake be put right by legislation, in whatever form it is written, the intention of which is to have retrospective effect. He is seeking to put right something which a court of law found was based on an illegal demand. I can think of no other way of expressing it.
      The Secretary of State says that we claim that the legislation is retrospective, but we never expand on the point. The crux of the matter is that the Secretary of State asked for something to which he was not entitled. When he was found out and taken to a court of law he said that it did not matter and that he intended to create a new Bill to cover what he had not done in the first instance.
      That is a shameful way to proceed. Hon. Members representing London constituencies have consistently asked him not to rush the Bill through Parliament. They have asked him to give us time in which to table amendments that would at least explore some of the extraordinary reasoning behind the Bill.
      The Secretary of State has made a number of speeches, everyone of which has given a different set of figures, sometimes amended because he says there has been a printing error. Sometimes he has claimed that we have not understood the full implications and sometimes he has done this simply because he is shifting the grounds of the argument as we proceed.
      I believe that this incident has been one of the most shabby in which I have been involved since I was elected to Parliament. It has demonstrated the will of a Government who are no longer prepared to concern themselves with the interests of the ratepayers or the taxpayers. The Secretary of State has encapsulated that view in his attitude to the Bill.
      Tonight we have not had sufficient time to debate the few inadequate amendments that have been tabled.

      1103
      Tonight the House has moved from Committee to Report to Third Reading without the chance to amend or even fully to explore some of the figures that the Secretary of State has given. Tonight we have seen as fine an example of completely arrogant disregard for the interests of the people of Britain as we are ever likely to see even from a Conservative Government.
      This has been a shameful episode. I am deeply depressed that the Secretary of State will use his majority to push this nasty little measure on to the statute book.
      8.37 pm
      Mr. Simon Hughes: On 12 February the Minister of Transport at 11.55 pm introduced to the House a debate on the draft London Regional Transport (Levy) Order 1985. That order sought approval for the budget for London Regional Transport for the coming financial year. In remarks relating to the year that is about to begin the Minister of Transport explained to the House, in answer to a question, that the matter was difficult, complicated and complex. After a debate which lasted one and a half hours, the Minister of State, in reply to the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), said:
      "I agree wholeheartedly … that the order is complicated." —[Official Report, 12 February 1985; Vol. 73, c. 306.]
      The House was of course asked to decide on that matter before we had sorted out the budget for this year, so it was an illogical order.
      It was even more illogical when one considers what the Secretary of State said on 7 February:
      "LRT has to budget and plan ahead for 1985–86 and beyond, as well as to settle its 1984–85 accounts. The GLC is at the crucial final stages in its annual budgetary and rate-precepting processes. Legislation is the only way to resolve the uncertainties and give Parliament the opportunity to determine the outcome in a way that is reasonable as between the parties concerned."
      The right hon. Gentleman then said:
      "This matter must be urgently resolved, if possible, before the end of the financial year."
      We should have done things in the right order. We should, first — to use the Secretary of State's words — have settled the 1984–85 accounts. We should have been given the opportunity to determine the matter, as the right hon. Gentleman said, in a reasonable way as between the parties concerned. To have had to go through this process in two days has been unreasonable and not in keeping with what the Secretary of State said, for he claimed:
      "This matter must be urgently resolved, if possible, before the end of the financial year."
      He did not say that it had to be resolved within a week or by the end of February, or that the LRT could not go ahead unless the issue was resolved by a date in March, or that it had to be finalised by the end of the financial year. He simply said:
      "This matter must be urgently resolved, if possible, before the end of the financial year." —[Official Report, 7 February 1985; Vol. 72, c. 1198.]
      A steamroller has brought in an alteration of the Secretary of State's own making, getting all stages of the Bill through in two days. No wonder there have been protests. No wonder hon. Members complain when the figures do not add up—I am not talking about a printing error—when statistics given in the last 24 hours are not explained and when the right hon. Gentleman does not give the statistical detail to justify the Bill.
      The Secretary of State told me not to interfere in matters that I did not understand. The job of hon. Members is to
      1104
      examine legislation, and the Government have a duty to provide us with an opportunity to examine legislation in a responsible way so that the people whom we represent get a decent service, by the legislature tempering the activities of the Executive.
      I do not pretend to be an expert in transport subsidy matters. Does the Secretary of State believe that he improves the chances of hon. Members understanding such issues when he pushes legislation through in 24 hours? Does he think that Parliament passes better legislation by that means?
      Are members of the Government now forbidden to apologise to Parliament? Cannot a Minister say, "I am sorry, I got it wrong. I will see if we can agree a procedure that we should have sorted out in the first place." Do the Government presume that, because they are in office, they always get it right and need never be criticised? Governments all over the world make mistakes, sometimes fatal ones, occasionally involving millions of people being killed.
      Compared with some of the world's catastrophes, this Bill can be described as a minor mistake. Nevertheless, it is expensive and it is important. Hon. Members might have been more sympathetic to the Secretary of State had he apologised and said, "Mr. Justice McNeill said that I was unlawful, irrational and procedurally improper. He was right and I apologise to the House. I made a mistake. I shall try to do what I failed to do at the beginning. I shall now try to consult; I shall try to do what I said on 7 February, and resolve the issue in a way that is reasonable."
      What the right hon. Gentleman has done has been wholly unreasonable. Not only is the procedure unreasonable, but it is unconstitutional and unacceptable. Only because the Government, by our electoral system, have a majority in Parliament — though they have a gross minority of votes in the country—can they get a measure such as this on to the statute book. [Interruption.] Conservative Members should accept that their party is in power on the basis of a minority of votes.
      I do not know whether the occupants of the official Opposition Front Bench were consulted through the usual channels about the business statement that was made last night. If they were—and I guess that they were—they must be considered to have been a party to today's exercise. I know that my colleagues were not consulted. [Interruption.] My colleagues are in the building and will come in later to register their disapproval; they trust me to make these points. There is probably a greater percentage of my party present now, personified by me, than of the Conservative party as personified by the occupants of the Government Benches.
      If there was an agreement with the Labour party that all stages of the Bill should be taken so quickly, it should never have been made, for it goes against constitutional precedent and the right of hon. Members to have time to reflect and discuss so that they can do their job properly. That is why I say that the official Opposition must take their share of the blame.
      The real blame, however, must be laid at the door of the Government and the Secretary of State. Once they decided to take over transport in London, they were asking for trouble. When they decided to nationalise London Transport, against all their declared policies, they were interfering. Having done it, they had a duty to try to do a better job than those who had been running London

      1105
      Transport previously. If this Bill is the first evidence of the Government running transport in Britain, and it is, it is a pathetic, sorry and bad example.
      I hope that we learn the lesson never again to commit local authority functions to Government, because the Government are not worthy of the trust that they usurped when they took over those functions. Their interference has been shown by the courts to have been a disgrace, and by the high court of Parliament saying that the Bill is disgraceful and should not be passed. Only because the Government, for the time being—I hope for not much longer—have sufficient troops to get it through are they likely to succeed in doing so. We do not wish the Bill any success. I hope that the Secretary of State and his Department learn never to treat the House of Commons with such cavalier disrespect and lack of apology.
      8.48 pm
      Mr. Spearing: The Bill seeks to give authority to the Secretary of State to receive £258 million from the ratepayers of London to pass to LRT. During our debates there has been some argument whether that is £50 million or £30 million more than it should be.
      We have had little time to probe the technical complexities of the matter. Anybody who doubts that needs only to read the speech made yesterday afternoon by the Secretary of State. In the debate yesterday, at column 903, I asked the right hon. Gentleman a question, but he did not, when he replied, answer me specifically. I shall put it to him again. I referred to the proceedings in Parliament on the money resolution which we passed on 7 February, and said:
      "I assume that all the additional revenue over and above the requirements for this year will be used for improving the service or reducing fares. I hope that the right hon. Gentleman can give me that assurance."
      The right hon. Gentleman said:
      "I am happy to give the hon. Gentleman that assurance categorically "— [Official Report, 7 February 1985; Vol. 72, c. 1214.]
      The right hon. Gentleman has used that adjective several times today. I gave grateful responses, but said that people would always be suspicious of the right hon. Gentleman whenever there was a bus around.
      I am afraid that I had to ask further questions about that yesterday. I asked what the money was being spent on, and the Secretary of State said that the surplus was not £50 million, but £30 million, and that the liabilities would be £37 million, so there would be a deficit of £7 million. He said:
      "The expected current cash surplus at the end of this financial year is not £50 million, as he said, but £30 million. As I said, it is necessary to provide for the needs of LRT, and they are, including the accrued unfunded liabilities, the following sums: £21 million for voluntary severance payments already agreed and accepted"—
      I take it that that is before 31 March—
      "£6 million for insurance claims against LRT, which it will in due course have to pay; £4 million for claims outstanding on the Jubilee line"—
      the Jubilee line opened some years ago, so I cannot understand why it is still being paid for—
      "£5 million in relation to development land tax which it owes and will have to pay; and £1 million for land compensation claims. That makes a total of £27 million".
      That does not tally with what the right hon. Gentleman told me on 7 February, when he said that the funds would be used for improving services and reducing fares. Is there compatibility between those two statements? I ask the
      1106
      Minister of State, who sometimes has to field the awkward balls for the Secretary of State, to reply to that point. There may be an explanation for it. I may have missed the vital clue, and the Minister knows what I mean by that. Whether or not the answer is satisfactory, this is an unhappy Bill.
      Mr. Ridley: The understanding that I gave in the money resolution debate remains. Not one penny of this money goes to the Exchequer. It will all go to LRT. There has not been a change, and there will not be one. The hon. Gentleman asks whether the items that he has read out are compatible with improving the service and reducing fares. I listed those items in the context of the accrued liabilities and needs of LRT for the financial year ending 31 March 1985. It was an accountant's balancing that I gave. They are needed because the efficiency of London transport is going up and the costs are coming down. That means things such as redundancy and other costs that LRT will have to meet. I do not see the inconsistency that the hon. Gentleman is suggesting.
      Mr. Spearing: I am grateful to the Secretary of State, and I hope the House will be indulgent, because this is the problem of rapid legislation. The extract from which I have just quoted continues to say that "auditors will certify" the £37 million
      "as being due and having to be covered in this year's accounts." —[Official Report, 19 February 1985; Vol. 73, c. 945.]
      That may include redundancy, but one can have two views of this. Whether or not these sums are paid, the quality of services and the level of fares will not be affected one whit. I leave it to the House, the readers of Hansard, and perhaps the other place to judge between us on this matter.
      The whole Bill has a whiff of impropriety about it. I shall go further and, in great seriousness, say that it has a whiff, slight though it be, of the Reichstag. We have only to think of the Secretary of State's behaviour at Question Time on this matter a little time ago and his statement yesterday excusing his sub judice gaff by saying that it was sub judice to him. When he was subjected to a genuine sub judice constraint, the result was a phrase which I hope will go into parliamentary language—it deserves to be written to some catchy tune—
      "unlawful, irrational and procedurally improper".
      Had the Secretary of State taken the trouble to consult before making the direction, he might not be in this mess. Consideration before legislation is the historic watchword of this place and of parliamentary democracy. The right hon. Gentleman is not in tune with that, otherwise he would not have broken that law.
      As there was no proper consultation, the whole affair was conceived without consultation. It was born out of illegality, brought before the House irrationally and is being passed by improper procedure. It will be remembered for the injury that it has almost certainly done to parliamentary democracy and if, as I very much hope, it has not done that, it has certainly done an injury to the Secretary of State and to the Government who have put him where he is.
      We have not had proper time, but we are not the only people who have not had proper time. Because we did not have much time last night, and perhaps because he did not consult as widely as he might have done, the hapless Leader of the House had to accept the Prime Minister's

      1107
      motion earlier today, which means that there will be a plundering of London's ratepayers of £30 million to £50 million over what they should justifiably pay.
      This is a contemptible Bill, and that is not surprising because it comes from a contemptible Government and from a Prime Minister who has contempt for the House. It may be that today, in two great democratic Assemblies across the Atlantic, both of which owe a great deal to the procedures of the House, the right hon. Lady will be praised for making a speech which she did not write. At home, that motion in her name has ridden roughshod over the procedures of the House. Even if she did not personally approve it, it is redolent and typical of the hon. Lady's attitude to this place.
      It is not only typical of the right hon. Lady's attitude to this place, but typical of her attitude to the ordinary people of London—the least well-off people of London, mostly from Newham. It is mostly east London that has carried the debate today, and in previous stages, and that is no accident, because the Government do not understand ordinary people. There is anger in the country and it is being expressed in a way that Conservative Members do not understand.
      Mrs. Chalker: Nonsense.
      Mr. Spearing: The Minister says "Nonsense". She is entirely out of touch.
      Mr. John Ward: It is a big act. The hon. Member deserves an Oscar for that performance.
      Mr. Spearing: I am grateful for the attribute. This is not an act, because there is growing anger among many people, particularly those who are the least privileged and who have to pay more and more taxes that are required by this unjust Government. The Government say stupidly to the electorate that they want to reduce rates, yet, as a result of the Bill, people will have to pay more rates. The Bill is contemptible because it is in contempt of Parliament and, therefore, in contempt of the British people.
      8.59 pm
      Mr. Dobson: Perhaps I might begin by referring to the diversion caused by the hon. Member for Southwark and Bermondsey (Mr. Hughes). Had he listened to what the shadow Leader of the House said in the lengthy debate on whether all the remaining stages of the Bill should be taken today, he would have heard that the Labour party was not a party to any agreement to take the remainder of the Bill today. We were simply told that that was what the Government had decided. Had the hon. Gentleman been here at some ungodly hour this morning, at around 2.30 am—
      Mr. Simon Hughes: I was.
      Mr. Dobson: He may have had his eyes closed—he might have seen me sitting on the Front Bench shouting "Object" when the Government Whip moved that the Question be put.
      The only reason why we had an opportunity to debate the business motion this afternoon, according even to the Leader of the House, was that I shouted "Object" at that time. I do not recall any brilliant Liberal or alliance contribution then. Instead of trying to suggest that there was collusion between the Labour party and the
      1108
      Government to try to smuggle the remaining stages of the Bill through today, the hon. Gentleman should get the facts straight. There was no collusion. Our response was complete opposition and we made use of the opportunities that were available, in a way that alliance Members did not.
      Mr. Simon Hughes rose—
      Mr. Dobson: I am not giving way.
      The Bill is unnecessary. The Secretary of State, following the decision of Mr. Justice McNeill that his original direction in the matter was
      "unlawful, irrational and procedurally improper,"
      could have issued a new lawful direction that would have met the operating needs of London Regional Transport in 1984–85. He did not choose to do that because he wanted to go beyond the law that he had proposed in 1984. Section 49 of the London Regional Transport Act 1984 permitted him only to meet the operating needs of LRT. He told the Committee on that Bill that he would call only for the sums that were strictly necessary. We have to consider the Bill in this shabby and hurried way because the Secretary of State wants to do more than that. He wants to require the GLC to pay to LRT a sum that will mean that it will have £50 million surplus to its operating needs. That is why the law has had to be changed and why the Secretary of State has not relied on making another direction.
      The Bill is not about redrafting, but about changing the law. The Secretary of State is going back on a solemn undertaking that he gave in Committee on the London Regional Transport Bill. My hon. Friend the Member for Newham, South (Mr. Spearing), not a man given to making impassioned speeches, made an impassioned contribution. Conservative Members should ponder for a moment why he feels so passionately. It may be that, despite all their cant, he is upset about what has happened and feels that the people whom he was elected to represent are being robbed by the Secretary of State. They are sick of it, and my hon. Friend is sick of it. He is sick of being totally ignored by the Government when he is attempting to represent the interests of Londoners.
      Mr. Spearing: Let us get the facts straight. It is one thing for the Government to do things legally and properly to the disadvantage of my constituents, immoral though the Government may be; it is quite another to do them by adopting an improper parliamentary procedure. That is why I was angry.
      Mr. Dobson: That is right, and I do not think that my hon. Friend need explain his anger.
      If we started awarding Oscars, perhaps the Secretary of State would get a few nominations. In 1984 he might have been Legislator of the Year, having introduced his own apparently inadequate section 49, or perhaps he might have been Issuer of Directions of the Year that have been found to be
      "unlawful, irrational and procedurally improper."
      Tonight we have his final effort, presumably as Parliamentary Mathematician of the Year. He sought to upbraid my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) by asserting that the Bill had only one clause. I can only plead that the Chairman of Ways and Means then proceeded to call a clause stand part debate on clause 2.
      I shall always defer to Mr. Speaker or to the Chairman of Ways and Means if there is any dispute about the

      1109
      number of clauses in a Bill. But if we have a Secretary of State who cannot even get that right, the chances of this legislation proving to be up to the job are not very good, and it is conceivable that we shall be back here again considering the London Regional Transport (Amendment) (Amendment) Bill if the right hon. Gentleman's track record is anything to go by.
      In Committee, the Secretary of State said, and people took him at his word, that the GLC had asked that LRT's auditors should be requested to certify what its operating needs would be. The officials of the Department of Transport—democrats all, apparently—no doubt under instructions from the Secretary of State, refused that reasonable request on the ground that is was not germane to the issue. However, it was germane to the issue because, as the judge pointed out, the right hon. Gentleman was entitled to direct the GLC only to hand over money which was directed to meeting those operating needs. If he had been prepared to direct the GLC to hand over money to meet the operating needs, it would not have been necessary to bother the House with changing the law. The right hon. Gentleman could have made a lawful direction, but that is not what he has tried to do.
      That is why my right hon. and hon. Friends representing constituencies in London have been most perturbed. We believe that if money which was paid by ratepayers to the GLC is not needed for the operating needs of LRT, it should not be handed over to LRT. It does not need it. If the money stayed with the GLC, it could be used for one of two purposes, or a combination of both—either to reduce the rate precept on Londoners, or to improve its services. In that way the ratepayers of London would gain 100 per cent. from the money staying with the GLC.
      There is a further point which should appeal to the Secretary of State, who appears to believe that the paymaster should have some control over those to whom money is being paid. Both under the present Labour-controlled GLC and under previous Tory-controlled GLCs, it has always been the practice to hand over money raised by the rate precept to London Transport against performance by London Transport. If London Transport failed to carry out what the democratically elected GLC from year to year decided were its obligations, the GLC used to withhold some of the money. That is what the Tories normally call an incentive. It is wholly proper therefore that the GLC should not hand over money to LRT if LRT has not done everything that it was supposed to do or if the programme laid down by the GLC has not been carried out. The ratepayers are entitled to that degree of protection.
      On the other hand, because of the relationship between central Government finance and rate finance for LRT, if the surplus goes to LRT, the ratepayers' maximum benefit can be only two thirds of the sum involved. Far from London ratepayers paying twice, it is in their positive interests not to pay over money surplus to the needs of LRT, as they will under the Bill. If the Secretary of State was willing to accept that the money to be paid over to LRT should meet only its operational needs, he could make a valid directon under the present law and would not need to change the primary legislation.
      That is our case against this squalid little measure. We deeply deplore the way in which the measure has been put before the House. The situation is quite extraordinary. The ways and means resolution, which normally flows from a
      1110
      public Bill, was introduced and debated 10 days before the Bill itself. We then had the Second Reading debate yesterday. Today we have been expected to respond as best we can to the points made by the Secretary of State yesterday and to give proper and detailed consideration to the Bill.
      It would not necessarily have taken a long time to give proper and detailed consideration to a two-clause Bill. What would take time—if we were properly to represent the Londoners who elected us and who pay taxes and rates —would be proper consideration of the detailed drafting and of what the Secretary of State has said, and the tabling of amendments which would explore further the points that the right hon. Gentleman has raised or perhaps make changes to the Bill. We have been denied the opportunity to do that job properly.
      Having sat through the whole Committee stage of the Bill today, I do not think that we have done our job properly. I am not proud of the quality of debate this afternoon. The debate has been a mockery of the legislative process. If the Secretary of State does not agree, I do not know what he thinks would constitute a mockery of that process. We are all entitled, especially the London Members, to give proper consideration to these matters. We have been denied that opportunity. We deplore what has happened. What the Secretary of State has done is damaging not only to himself—I do not mind that—but to the interests of those who elected me and my hon. Friends. For that reason, we reject both the Bill and the Secretary of State who introduced it.
      9.14 pm
      Mr. Deakins: The Secretary of State has told us that the money is to go to LRT, not to the Government. We know that that is correct, not because the Secretary of State told us, but because that is what the Bill says. However, he did not tell us that the Government plan to cut their subsidy to LRT progressively and that if the Bill was not passed there could be no such subsidy reduction. Moreover, if the sum in the Bill had been reduced by the £50 million that my right hon. and hon. Friends wanted the level of subsidy cut would have been affected.
      The Bill displays two types of incompetence — incompetence in the reasons for the Bill, and incompetence in the handling of it. The Government have anticipated the possibility of further incompetence by clause 1(2), which provides that if the Act is passed before 25 March one set of provisions will apply, and that if it is passed after that date there will be different proceedings for the transfer of money. There could be no better example of the state that the Department of Transport and the Government have got into.
      With their large majority, the Government are in charge of the parliamentary timetable. The Bill was given a Second Reading on 19 February and refers to the Act receiving Royal Assent on 25 March. Why should the five weeks between those dates pose any problem for the Government? Nevertheless, the Government have panicked and included clause 1(2).
      Legislation undertaken in panic is rarely good. Like many other things, the Bill shows that the Government are losing their grip and, I suspect, their reason. That is one reason why the House should reject the Bill.
      Question put, That the Bill be now read the Third time:—
      The House divided: Ayes 229, Noes 155.

      Division No. 118]

      [9.17 pm

      AYES

      Alexander, Richard

      Jenkin, Rt Hon Patrick

      Atkins, Robert (South Ribble)

      Jones, Gwilym (Cardiff N)

      Baker, Nicholas (N Dorset)

      Jones, Robert (W Herts)

      Beaumont-Dark, Anthony

      Jopling, Rt Hon Michael

      Bevan, David Gilroy

      Kellett-Bowman, Mrs Elaine

      Boscawen, Hon Robert

      Kershaw, Sir Anthony

      Bottomley, Mrs Virginia

      Key, Robert

      Brandon-Bravo, Martin

      King, Roger (B'ham N'field)

      Bright, Graham

      King, Rt Hon Tom

      Brittan, Rt Hon Leon

      Knight, Gregory (Derby N)

      Brooke, Hon Peter

      Knowles, Michael

      Brown, M. (Brigg & Cl'thpes)

      Knox, David

      Bruinvels, Peter

      Lamont, Norman

      Buchanan-Smith, Rt Hon A.

      Lang, Ian

      Budgen, Nick

      Latham, Michael

      Burt, Alistair

      Lawrence, Ivan

      Butcher, John

      Lee, John (Pendle)

      Carlisle, Kenneth (Lincoln)

      Leigh, Edward (Gainsbor'gh)

      Cash, William

      Lester, Jim

      Chalker, Mrs Lynda

      Lightbown, David

      Chope, Christopher

      Lilley, Peter

      Clarke, Rt Hon K. (Rushcliffe)

      Lloyd, Ian (Havant)

      Clegg, Sir Walter

      Lloyd, Peter, (Fareham)

      Cockeram, Eric

      Lord, Michael

      Conway, Derek

      Luce, Richard

      Coombs, Simon

      Lyell, Nicholas

      Cranborne, Viscount

      McCrindle, Robert

      Crouch, David

      McCurley, Mrs Anna

      Dorrell, Stephen

      MacGregor, John

      Douglas-Hamilton, Lord J.

      MacKay, Andrew (Berkshire)

      Dunn, Robert

      MacKay, John (Argyll & Bute)

      Durant, Tony

      Madel, David

      Fairbairn, Nicholas

      Major, John

      Farr, Sir John

      Malins, Humfrey

      Favell, Anthony

      Malone, Gerald

      Fletcher, Alexander

      Maples, John

      Fookes, Miss Janet

      Marland, Paul

      Forman, Nigel

      Marlow, Antony

      Forsyth, Michael (Stirling)

      Marshall, Michael (Arundel)

      Forth, Eric

      Mates, Michael

      Franks, Cecil

      Mather, Carol

      Freeman, Roger

      Maude, Hon Francis

      Gale, Roger

      Maxwell-Hyslop, Robin

      Galley, Roy

      Mayhew, Sir Patrick

      Gardner, Sir Edward (Fylde)

      Mellor, David

      Garel-Jones, Tristan

      Merchant, Piers

      Glyn, Dr Alan

      Meyer, Sir Anthony

      Gower, Sir Raymond

      Miller, Hal (B'grove)

      Grant, Sir Anthony

      Mills, Iain (Meriden)

      Greenway, Harry

      Mills, Sir Peter (West Devon)

      Griffiths, Peter (Portsm'th N)

      Moate, Roger

      Grist, Ian

      Monro, Sir Hector

      Grylls, Michael

      Montgomery, Sir Fergus

      Hamilton, Neil (Tatton)

      Moore, John

      Hampson, Dr Keith

      Morrison, Hon C. (Devizes)

      Hanley, Jeremy

      Moynihan, Hon C.

      Hannam, John

      Murphy, Christopher

      Hargreaves, Kenneth

      Needham, Richard

      Haselhurst, Alan

      Nelson, Anthony

      Havers, Rt Hon Sir Michael

      Newton, Tony

      Hawksley, Warren

      Nicholls, Patrick

      Hayes, J.

      Normanton, Tom

      Hayward, Robert

      Norris, Steven

      Heddle, John

      Onslow, Cranley

      Henderson, Barry

      Oppenheim, Phillip

      Hickmet, Richard

      Page, Sir John (Harrow W)

      Hicks, Robert

      Page, Richard (Herts SW)

      Hind, Kenneth

      Parkinson, Rt Hon Cecil

      Holt, Richard

      Parris, Matthew

      Howard, Michael

      Patten, J. (Oxf W & Abdgn)

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

      Pawsey, James

      Howarth, Gerald (Cannock)

      Peacock, Mrs Elizabeth

      Howell, Ralph (N Norfolk)

      Pollock, Alexander

      Hubbard-Miles, Peter

      Porter, Barry

      Hunt, David (Wirral)

      Portillo, Michael

      Hunt, John (Ravensbourne)

      Powell, William (Corby)

      Hunter, Andrew

      Powley, John

      Jackson, Robert

      Prentice, Rt Hon Reg

      1112

      Proctor, K. Harvey

      Terlezki, Stefan

      Raffan, Keith

      Thomas, Rt Hon Peter

      Renton, Tim

      Thompson, Donald (Calder V)

      Rhodes James, Robert

      Thompson, Patrick (N'ich N)

      Rhys Williams, Sir Brandon

      Thornton, Malcolm

      Ridley, Rt Hon Nicholas

      Thurnham, Peter

      Ridsdale, Sir Julian

      Townend, John (Bridlington)

      Rifkind, Malcolm

      Townsend, Cyril D. (B'heath)

      Roberts, Wyn (Conwy)

      Tracey, Richard

      Robinson, Mark (N'port W)

      Trippier, David

      Rossi, Sir Hugh

      Trotter, Neville

      Rost, Peter

      Twinn, Dr Ian

      Rumbold, Mrs Angela

      van Straubenzee, Sir W.

      Sainsbury, Hon Timothy

      Vaughan, Sir Gerard

      Sayeed, Jonathan

      Viggers, Peter

      Shaw, Giles (Pudsey)

      Waddington, David

      Shaw, Sir Michael (Scarb')

      Walden, George

      Shelton, William (Streatham)

      Wall, Sir Patrick

      Shepherd, Colin (Hereford)

      Waller, Gary

      Skeet, T. H. H.

      Ward, John

      Smith, Tim (Beaconsfield)

      Wardle, C. (Bexhill)

      Soames, Hon Nicholas

      Watson, John

      Speed, Keith

      Wells, 'Bowen (Hertford)

      Speller, Tony

      Wheeler, John

      Spencer, Derek

      Whitfield, John

      Spicer, Michael (S Worcs)

      Whitney, Raymond

      Stanbrook, Ivor

      Wilkinson, John

      Steen, Anthony

      Winterton, Mrs Ann

      Stevens, Lewis (Nuneaton)

      Winterton, Nicholas

      Stevens, Martin (Fulham)

      Wolfson, Mark

      Stewart, Allan (Eastwood)

      Wood, Timothy

      Stewart, Andrew (Sherwood)

      Yeo, Tim

      Stewart, Ian (N Hertf'dshire)

      Young, Sir George (Acton)

      Stokes, John

      Younger, Rt Hon George

      Stradling Thomas, J.

      Sumberg, David

      Tellers for the Ayes

      Taylor, John (Solihull)

      Mr. Archie Hamilton and

      Taylor, Teddy (S'end E)

      Mr. Mark Lennox-Boyd.

      Temple-Morris, Peter

      NOES

      Alton, David

      Crowther, Stan

      Archer, Rt Hon Peter

      Cunningham, Dr John

      Ashdown, Paddy

      Davies, Rt Hon Denzil (L'lli)

      Atkinson, N. (Tottenham)

      Davies, Ronald (Caerphilly)

      Bagier, Gordon A. T.

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

      Barnett, Guy

      Deakins, Eric

      Barron, Kevin

      Dewar, Donald

      Beckett, Mrs Margaret

      Dobson, Frank

      Beith, A. J.

      Dormand, Jack

      Benn, Tony

      Douglas, Dick

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

      Dubs, Alfred

      Bermingham, Gerald

      Duffy, A. E. P.

      Bidwell, Sydney

      Dunwoody, Hon Mrs G.

      Blair, Anthony

      Eadie, Alex

      Boyes, Roland

      Eastham, Ken

      Brown, Gordon (D'f'mline E)

      Evans, John (St. Helens N)

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

      Ewing, Harry

      Brown, Ron (E'burgh, Leith)

      Fatchett, Derek

      Bruce, Malcolm

      Faulds, Andrew

      Buchan, Norman

      Field, Frank (Birkenhead)

      Caborn, Richard

      Fields, T. (L'pool Broad Gn)

      Campbell, Ian

      Fisher, Mark

      Campbell-Savours, Dale

      Flannery, Martin

      Canavan, Dennis

      Forrester, John

      Carlile, Alexander (Montg'y)

      Foster, Derek

      Carter-Jones, Lewis

      Fraser, J. (Norwood)

      Cartwright, John

      Freeson, Rt Hon Reginald

      Clarke, Thomas

      Gilbert, Rt Hon Dr John

      Clay, Robert

      Godman, Dr Norman

      Clwyd, Mrs Ann

      Golding, John

      Cocks, Rt Hon M. (Bristol S.)

      Gould, Bryan

      Cohen, Harry

      Gourlay, Harry

      Coleman, Donald

      Hamilton, James (M'well N)

      Concannon, Rt Hon J. D.

      Hamilton, W. W. (Central Fife)

      Cook, Frank (Stockton North)

      Hart, Rt Hon Dame Judith

      Cook, Robin F. (Livingston)

      Haynes, Frank

      Corbett, Robin

      Hogg, N. (C'nauld & Kilsyth)

      Cowans, Harry

      Holland, Stuart (Vauxhall)

      Craigen, J. M.

      Home Robertson, John

      1113

      Hoyle, Douglas

      Park, George

      Hughes, Dr. Mark (Durham)

      Parry, Robert

      Hughes, Robert (Aberdeen N)

      Pavitt, Laurie

      Hughes, Roy (Newport East)

      Penhaligon, David

      Hughes, Simon (Southward)

      Pike, Peter

      John, Brynmor

      Radice, Giles

      Jones, Barry (Alyn & Deeside)

      Randall, Stuart

      Kaufman, Rt Hon Gerald

      Redmond, M.

      Kennedy, Charles

      Rees, Rt Hon M. (Leeds S)

      Kirkwood, Archy

      Richardson, Ms Jo

      Lambie, David

      Roberts, Ernest (Hackney N)

      Lamond, James

      Robertson, George

      Leadbitter, Ted

      Robinson, G. (Coventry NW)

      Leighton, Ronald

      Rowlands, Ted

      Lewis, Ron (Carlisle)

      Sheldon, Rt Hon R.

      Lewis, Terence (Worsley)

      Shore, Rt Hon Peter

      Litherland, Robert

      Short, Ms Clare (Ladywood)

      Lloyd, Tony (Stretford)

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

      Loyden, Edward

      Skinner, Dennis

      McCartney, Hugh

      Snape, Peter

      McDonald, Dr Oonagh

      Soley, Clive

      McKelvey, William

      Spearing, Nigel

      Mackenzie, Rt Hon Gregor

      Stott, Roger

      McNamara, Kevin

      Strang, Gavin

      McTaggart, Robert

      Thomas, Dafydd (Merioneth)

      McWilliam, John

      Thomas, Dr R. (Carmarthen)

      Marek, Dr John

      Thompson, J. (Wansbeck)

      Marshall, David (Shettleston)

      Wainwright, R.

      Mason, Rt Hon Roy

      Warden, Gareth (Gower)

      Maxton, John

      Wareing, Robert

      Maynard, Miss Joan

      Welsh, Michael

      Meadowcroft, Michael

      White, James

      Mikardo, Ian

      Williams, Rt Hon A.

      Millan, Rt Hon Bruce

      Winnick, David

      Mitchell, Austin (G't Grimsby)

      Woodall, Alec

      Morris, Rt Hon A. (W'shawe)

      Young, David (Bolton SE)

      Morris, Rt Hon J. (Aberavon)

      Nellist, David

      Tellers for the Noes:

      Oakes, Rt Hon Gordon

      Mr. Allen McKay and

      O'Neill, Martin

      Mr. Lawrence Cunliffe.

      Orme, Rt Hon Stanley

      Question accordingly agreed to.
      Bill read the Third time, and passed.

  Trustee Savings Bank Bill
  As amended (in the Standing Committee), considered.
  9.30 pm
  Mr. Gerald Bermingham: On a point of order, Mr. Speaker. On Second Reading, I questioned the legality of the Bill in a paraphrase of the Latin expression nemo dat qui non habet—you cannot give what you have not got. The Economic Secretary to the Treasury did not deal with that point, but he admitted that there was no detailed knowledge about the ownership of the trustee savings banks and that ownership could not be determined.
  Therefore, I refused to serve on the Standing Committee that considered the Bill, but I have carefully considered what was said in Committee, because, although I concede immediately that Parliament is sovereign, I do not accept that the House can authorise the TSB to enter what is clearly an illegality — to sell something that it does not own. The Bill is nonsense and should be withdrawn. The Government ought either to include in the Bill an authorisation for the TSB to become possessed of all its assets and proceed from there towards the sale, or to create a mutual company.
  Parliament is being asked to pass nonsense and I ask you, Mr. Speaker, to rule that the matter should go back to the Government for reconsideration.
  Mr. Speaker: I am grateful to the hon. Member for St. Helens, South (Mr. Bermingham) for having given me notice that he would raise the point of order. I have considered carefully the point that he has made and I have to rule that it is not a matter for the Chair. If the Bill is defective, as the hon. Member claims, it is for the House to decide whether to pass it. It is not a matter for me.
  Mr. D. N. Campbell-Savours: Further to that point of order, Mr. Speaker. I have been approached by a number of people who have asked whether Parliament is able to legislate in this way. I appreciate that it does not fall within your purview to take these decisions, but surely the Leader of the House should make a statement dealing with the accusations that have been levelled against the Government and with the suggestion that the Government do not have the right to legislate. Before the Bill comes before the House, the Leader of the House should clear the way. The Bill is consuming parliamentary time and that is a matter not for the Economic Secretary to the Treasury, but for the Leader of the House who protects the interests of all hon. Members.
  Mr. Speaker: That is not a matter for me. The hon. Gentleman can table an amendment on the matter —indeed, the Government could table an amendment—or vote against the Bill. It is certainly not a matter for the Chair.

  Trustee Savings Bank Bill
    New Clause 1

      SHARE FLOTATION
      'On the vesting day employees of the TSB Group and holders of deposits in the TSB Group shall be offered 55 per cent. of the shares of the Group.' —[Dr. McDonald.]
      Brought up, and read the First time.
      Dr. Oonagh McDonald: I beg to move, That the clause be read a Second time.

      1115
      The purpose of the new clause is to take account of the history and traditions of the TSB, which has been closer to a mutual organisation than to a public limited company, and of what was once the expressed hope of the TSB. The banks gave evidence to the committee that reviewed the functioning of financial institutions in 1979. The summary of evidence stated:
      "The Trustee Savings Banks have demonstrated a will and ability to adapt to modem commercial requirements and the changing needs of their customers, whilst retaining a fundamental purpose which is not dictated by purely commercial interests."
      The TSB not only acknowledged its traditions, but outlined what it hoped that its future would be: it hoped that it would not be devoted entirely to commercial interests. That theme has been continued in the comments on the TSB's change of status and in the TSB's own hopes that depositors and employees will wish to take up shareholdings. The Sunday Times on 11 November 1984 referred to the need to resolve the TSB's legal structure. The article stated:
      "The first preference (and one to which some"—
      others would say many—
      "members of the TSB adhere) was to retain mutuality. But this received an official thumbs down, because of accountability problems."
      I do not believe that the term "official" is intended to refer to the Government's attitude. The Government's role in the Bill is to facilitate the changes that the TSB's management wishes to bring about. The management has stressed the problems faced in setting up a mutual organisation. The TSB's existence as a mutual organisation is not clearly defined in the way in which building societies are.
      The Sunday Times article went on:
      "For a start, by abandoning its mutual status, the TSB jettisons its basic difference from the high street clearing banks. Other attractive babies, too, could disappear down the plughole with the mutual bathwater.
      The TSB's great strength has always been the traditional loyalty of its 6 million customers. Personal customers account for over 95 per cent. of its customer base."
      More interestingly, and certainly more surprisingly to Conservative Members, the Financial Times leader of 17 January echoed and developed that theme. It accused the Government and the management of the TSB of being too unimaginative in their consideration of the TSB's future status and organisation. When the Financial Times puts the matter as a choice between a mutual organisation and a public limited company, it is being unimaginative.
      The new clause says that, even if the future organisation has to be a public limited company—first, because of accountability and, secondly, because of the need to raise capital—it does not have to conform exactly to the form taken by other high street banks and other companies. We believe that consideration should have been given to forming a plc in which the majority of shares are held by the employees and holders of deposits. To some extent, that would have taken account of the TSB's traditions, the hopes that it would not be a purely commercial enterprise and the fact that, until now, the TSB has been different from the high street banks in its relationship with its customers. Personal customers account for much of its business. If the majority of the shares were offered to employees and depositors, they, too, would have an opportunity to continue those traditions.
      1116
      The Banking Insurance and Finance Union, 98 per cent. of the membership of which are employees in the TSB organisation, would like to see a preferential share issue of this kind. They would regard it as being similar in some ways to the British Telecom and Jaguar flotations. However, when we discussed a similar issue on Second Reading the Economic Secretary to the Treasury said:
      "I do not think that it would be appropriate for the legislation itself to include specific provisions about the flotation or about the subsequent conduct of the TSB as a private sector company …
      I believe that the overall purpose of the Bill is helpful to the TSB and its depositors."—[Official Report, 14 January 1985; Vol. 73, c. 71.]
      Opposition Members must part company with the Minister on that. There is no reason why shares should not be offered in the way suggested in new clause 1. It could be done within the scope of the normal mechanisms of share flotation and transfer. There would be no particular problems if all of the 55 per cent. laid down in new clause 1 were not taken up, because the unsold shares could be the vested property of the board.
      It may be suggested that there may be pricing difficulties about insisting that the share flotation should take place in that way. That is true if one accepts the view that institutions are prepared to pay more for shares than individuals are. The TSB may lose out on the sale of shares, if it has to sell a significant percentage of them to individuals. However, that is not an unavoidable outcome. If individuals and, in this case, the employees and depositors, to whom the issues involved could be spelt out, as the TSB can easily inform them, realise that institutions have been rationed on the flotation, they can expect the value of their shares to increase in future.
      To suggest that the TSB should be treated and should operate like every other high street bank is to ignore the history, traditions and importance of its personal customers. It is not like another bank, and many people would argue, as the Opposition argue, that every effort should be made to ensure that the TSB continues to offer a different sort of service. That was in part meant in the Page report in 1973, which referred to a third force in banking.
      By tabling the new clause in this way we are saying, "If the TSB must become a public limited company, it does not need to be wholly commercial in its purpose, and shares need not be distributed as they are distributed for other banks and public limited companies".
      Mr. Robert Sheldon: My hon. Friend is making an excellent speech and many important points, as expected. Is she aware that not only is the TSB being regarded as yet another clearing bank, making a total of five instead of four clearing banks, but that the clearing banks see it as a main competitor? I have had discussions with a number of banks, and it is clear that eventually there will be a merger either between the TSBs and the other banks, or between the clearing banks because the United Kingdom cannot accommodate five large clearing banks.
      9.45 pm
      Dr. McDonald: I thank my right hon. Friend for his intervention. Some of his points will be relevant to new clause 2 which is designed to limit individual shareholdings to prevent such a take over. We can see why other high street banks regard the TSB as a competitor. The Midland's position is a little shaky. Following the

      1117
      flotation of its shares, the TSB will have roughly the same value or even a little more than the Midland bank, and no doubt the Midland bank will be watching the TSB's operations somewhat nervously.
      I want to focus on the difference in the shareholding and the fact that it could make a difference to the way in which the TSB operates in the future. It is essential to preserve what should be preserved from the TSB's past. The matter has been discussed with representatives of the TSB management. Those discussions do not leave one unworried, for two reasons. I received the impression that the TSB management regarded a wide shareholding, spread among the large number of individuals, as extremely expensive to operate. The bank would be required to inform each shareholder about its accounts. They would have to be informed of the date of the annual general meeting, the agenda and such matters.
      That reaction makes one fear that the TSB is moving somewhat away from its 1979 statement when it said that its future would not be dictated by purely commercial interests. I was sorry to have that response and a lack of commitment to as large and wide a spread of shareholders as possible among depositors and employees. I understand the reasons for that, but nevertheless I was worried at that response.
      Although the TSB has offered its depositors priority pink forms, it does not expect there to be a large share take up from them. It does not see that the majority of its depositors can take up the shares. That is a pity. The TSB should be going all out to encourage shareholdings by its employees and depositors. The new clause will ensure that that happens and that the bank can have a public limited company structure which is rather different from that of other commercial organisations and the banks with which it will compete.
      Mr. Paddy Ashdown: I support the new clause which was so ably moved by the hon. Member for Thurrock (Dr. McDonald). My party has had a long and honourable record of supporting and seeking to promote measures to encourage workers and participants in industry to own their own jobs.
      It will come as no surprise to anyone in the House that the new clause is one which my right hon. and hon. Friends in the Social Democratic party support. In Committee we were represented by the hon. Member for Stockton, South (Mr. Wrigglesworth). We find the clause advantageous and we support it.
      Judging by the Government's rhetoric, it is odd that they cannot support the new clause rather more readily than appeared to be the case from reading the report of the Committee stage.
      On Second Reading, the Minister said:
      "I welcome the opportunity that this Bill will provide for spreading share ownership more widely and, in particular, for enabling those who have been involved in the business of the TSB as customers and employees to invest more directly in their future."—[Official Report, 14 January 1985; Vol. 71, c. 31.]
      That is a sentiment with which we would agree.
      It seems that the Minister on that occasion was only paraphasing, perhaps restating, the commitment given in the White Paper, of which it may be worth reminding ourselves. It said:
      "Customers and staff will have priority in subscribing for shares."
      The clause calls for no more than that to be put into effect.
      1118
      When the Bill was considered in Committee, the Minister said:
      "it would be a good idea if depositors and staff were to have a really substantial holding in the TSBs."
      Again, the clause asks for no more than that the Minister put into effect the rhetoric of his speech on Second Reading, his speeches in Committee and the statements in the White Paper.
      The Minister also said in Committee that fixing a figure to how the Government would put their commitment to wider share ownership into practice would be rather difficult. He then said:
      "it is impossible now to mention figures. I have talked figures with the TSB".—[Official Report, Standing Committee D, 31 January 1985; c. 91.]
      What the Minister did not state was the conclusions that he had reached. Since the Minister said that it was impossible to talk figures when he was discussing these matters with the TSB, it may be possible for him to give us an indication now of the percentage of shares he envisages being offered to the employees and to the contributors of the TSB. If he were able to mention some figure—no doubt less than 55 per cent., but at least an indication of how far the Government wish to make a commitment to honour their own rhetoric — many Opposition Members would doubtless feel satisfied without pressing the clause.
      I ask the Minister to clarify his statement that he did not see it as appropriate to offer figures then, although he implied that at some time in the future he would be able to say how far he was able to commit himself. However, if the Minister cannot do that, I think that we are entitled to believe that what the Government are expressing in terms of wider share ownership and all the great ideas that we now hear them articulate are hollow rhetoric. Rhetoric comes cheap. It is by the actions of the Government in the matter that we will determine their true intentions.
      As the hon. Member for Thurrock said, there can be no clearer case for a commitment to the concept of wider share ownership than the TSB. No cause was ever more suitable for the Government to show their sincerity than in respect to the TSB, an organisation founded on the concept of mutuality, which is at the heart of the organisation, and one which has involved itself in group and community activity in a unique way — to use the Minister's words:
      "a unique organisation in today's world."—[Official Report, 14 January 1985; Vol. 73, c. 36.]
      Under the proposed clause, the Minister has the opportunity to preserve and build on that uniqueness and to give the work force, the contributors and those involved with the TSB a chance to begin to own the estate in the future of the TSB.
      The Government claim that they want to see wider share ownership. If they reject the clause, hon. Members will suspect that they are giving not wider share ownership to employees and those involved with the TSB, but a wider opportunity for the established banks to own a chunk of the TSB and to do with that chunk what they will.
      What has the Minister to lose by accepting the clause? It is drafted in a reserved fashion. It does not require that members of the work force of the TSB or, indeed, contributors of the TSB should own 55 per cent.; it asks only that they be offered 55 per cent.
      If the Minister means what he has said consistently throughout the debates on the Bill, he should accept the new clause. If not, will he allay some of our suspicions by

      1119
      at least indicating what proportion he means to allow to be offered to the work force and contributors of the TSB? In the absence of such an assurance, many of us will believe that the Government's rhetoric on the matter is hollow and that they have no intention of putting their assurances into practice in a realistic fashion.
      Mr. Stuart Randall: I, too, support the new clause, which is a modest proposal. It merely suggests that on vesting day employees and holders of deposits in the TSB should be offered 55 per cent. In view of what the Government have said about the notion of wider share ownership—about the so-called property and share-owning democracy that they want to see—it would make sense for them to accept the new clause.
      The TSB has been an unusual banking institution. Historically, it provided merely a mechanism by which people could save. They deposited money on which interest accrued, but the organisation did not make a profit and did not have shareholders. It existed solely for the activities of those who held accounts with the TSB.
      As my hon. Friend the Member for Thurrock (Dr. McDonald) pointed out, many of the 6 million account holders are in the lower income groups. Those are the people the bank has aimed to serve. I fear, therefore, that something important could be lost in the shift away from the traditional mutual type of organisation to the new plc arrangement.
      The TSB has changed considerably, away from its previous personal form of banking and into the new range of services about which we have heard so much since the mid-1970s. The banks have moved into cheque accounts and Trustcards, thus putting themselves into high interest lending and connections with UDT, an organisation for financing consumer spending. The whole range of banking is broadening.
      I do not know what will happen when flotation takes place and the bank receives the money from that flotation, perhaps £500 million to £600 million. What it does with it will be within the prerogative of the new management. For those who have been account holders, and the employees who have served the TSB ably in the past, it seems not unreasonable to give them the opportunity to buy shares in the bank.
      I should like to see the organisation, because of its mutual roots, providing the basis for a democratic form of management. In particular, I should like to see the employees having a say in the types of service that the new plc group will provide, especially in relation to the way in which it will fit in with the current joint stock banks.
      My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) made an interesting point about the possibility of mergers. I cannot see where this will go. Will the TSB become part of the joint stock banks, or will it be absorbed? We know that in the 1960s—
      It being Ten o'clock, the debate stood adjourned.

      SHARE FLOTATION

        BUSINESS OF THE HOUSE
        Ordered,
        That, at this day's sitting, the Trustee Savings Banks Bill may be proceeded with, though opposed, until any hour.— [Mr. Peter Lloyd.]
        Question again proposed, That the clause be read a Second time.
        Mr. Randall: A matter of great concern is how the new TSB will fit into the banking system. My right hon. Friend the Member for Ashton-under-Lyne expressed his concern about a merger, and the Midland bank was keen on developing what it called the cloth cap accounts. It pushed this hard in the late 1960s and early 1970s, and is still interested in that. Similarly, it encourages student accounts, although these are not the cloth caps accounts. These are people whom they hope and expect will have substantial deposits in the future. We do not know what will happen. We do not know whether this ready-made organisation of cloth cap accounts could be sensibly absorbed into the joint stock bank arrangement, particularly bearing in mind the investment that the joint stock banks have made in their technology, networks, terminal systems, data bases and all the other stuff that is needed to provide a payments and other financial systems.
        There is a big question mark, and because of the traditional background of the TSB, to which other hon. Members have referred, the people who are employed in the banks should have a say in how the organisation should develop. The only mechanism for this is through the holding of deposits. I am still a little suspicious about the possibility of a merger. I am concerned that the big institutions will come in and buy up substantial shares. There is a tremendous risk, and I know that hon. Members share my concern. Many hon. Members, particularly Labour Members, would be concerned if the Minister were to waste this opportunity to provide a broader share of ownership and decision-making in the TSB group.
        The Labour party believes that the original idea that we had at the time when the Page report was produced, of a banking system that exists merely to serve people, is a laudable concept. We know that the clearing banks found it difficult to compete with the TSB group because it did not have to make a profit and did not have any shareholders. The TSB arrangement has valuable attributes and it would be sad to see them go.
        I hope that the Minister and the Government will support this new clause, because the opportunity of retaining this important structure, serving the people that it does, could be lost for ever unless we provide a mechanism for sharing the management and the ownership of this group between the employees and the account holders.
        Mr. Jim Craigen: I am in favour of new clause 1 because half a loaf is better than nothing. On Second Reading I took strong objection to the whole Bill. I do not believe in making long speeches at funerals and effectively we are burying the TSB and interring the prospects of transforming it into a mutuality.
        Reference has been made to the significance of the 55 per cent. initial controlling interest for depositors and staff of the TSBs. It is important to have that provision, to prevent a merger or a takeover by a domestic or a foreign bank of the trustee savings movement. It will be difficult to prevent the TSB from becoming A N other bank. Although new clause 1 aims to preserve distinctiveness in the operation of the bank, its objective is by its nature limited.
        It would be useful to know the probable apportionment of the 55 per cent. shareholding among the top management and the remaining staff of the bank and depositors generally. As my hon. Friend the Member for Thurrock (Dr. McDonald) pointed out, the view of the top

        1121
        brass in the TSB was that it would be too much bother to deal with 7 million or 8 million depositors. This makes me wonder how other organisations and, indeed, the country are run when we consider how large the population is.
        It is the view of the Government that, so far as possible, this should be a property-owning democracy and now, apparently, a bank-owning democracy too. I hope the Minister will accept the new clause; otherwise there is a danger that the shareholding possibility that is opening up as an Aladdin's cave will end up as an exclusive club for a few shareholders. I hope the Minister will tell us that he was correct all along in his interpretation that the Government were taking essentially a neutral stance. Those may not be quite his words, but I think they were the sentiments of the Treasury. The Government were distancing themselves from, dare I say, the mechinations of the powers that be in the TSBs. It was the TSB that wanted the Bill. The Government were merely the willing handmaiden in the whole process.
        I hope the Minister will tell us that he is accepting the new clause because, as I said, half a loaf will at least guarantee an element — hopefully a controlling element—of depositor and employee shareholding interest in the new PLC. That is very important. I hope the Minister will put his commitment where his brief at Second Reading lay.
        Mr. Austin Mitchell: The new clause is fulfilling for the Government the intention that they said that they had in this legislation of trying to turn the Trustee Savings Bank if not into a mutual bank, which the Oppostion would like, at least into something as near a mutual bank as possible within the scope of the legislation. We are taking that intention and attempting to embody it in the legislation.
        It was the intention of the Page report that the TSB should be a third force in British banking. It was the assumption that prevailed throughout the 1970s, the assumption that was dominant in the TSB itself and the assumption embodied in Labour's own legislation in 1976 that the TSB should be a mutual bank. The Government have decided that we cannot fulfil that intention with the totality that we would like, but that we can come somewhere near it, and this new clause reserving 55 per cent. of the shares for the customers and employees of the TSB, comes as near as we think we can get.
        It is important to come that near, because the TSB was different, is different and should be different from the other high street banks. It is a bank run in mutual fashion, the profits of whose operation go to those who provide them—the customers. This is as near as we can get to that. It is a novel principle. It is an important principle to maintain, because the TSB has been much more like a people's bank than any other bank. It is part of the community, and that is how our amendment tries to keep it.
        I also speak not only out of concern for that principle but on the basis of another very basic human emotion. I am motivated by the purest altruism and concern for my fellow man. That motive is pure, simple and unadulterated hatred of the commercial banks. They provide us at our expense with their marble halls and their sanctimonious lectures from bank managers to customers burdened by a crippling rate of interest that the banks choose to impose. They spend enormous sums to put self-congratulatory advertisements on television telling us what a marvelous
        1122
        job they are doing, whether the advertisements come from inside the cupboard or from the soaring spaces that the NatWest chooses to embody in its commercials. They go in for endless public relations to tell us what a marvellous job they are doing. They support Tory Members of Parliament as consultants. They provide endless sermons for customers. All these are paid for by the crippling interest rates that customers are having to carry.
        The banks have been the only beneficiaries of this Government's policy of high interest rates. They have encouraged those rates to go ever higher for their own benefit and enrichment and not that of their customers. Every time there has been a threat or even a minor stirring on the exchanges against the pound sterling, there has been a Gadarene rush of banks, usually led by Barclays, to hike up interest rates and impose even more crippling burdens on their customers.
        Since 1979, there have been four occasions when the banks have brought about high interest rates subsequently endorsed by the authorities, so one assumes that the banks are acting with some nod or wink from the authorities in response to exchange rate pressures. The first was in autumn 1981, the second in autumn 1982, the third in July of last year and the fourth this January. On each occasion, the use of interest rates by the banks prompted the dominant impression that they were being used not simply to convey concern about the state of the money supply or of the interest market but to shore up the pound sterling, and to do so for their own benefit.
        The only beneficiaries of high interest rates are the banks themselves. They determine the high interest rates from which they are the only substantial beneficiaries. That is the approach, in a market economy, of the high street banks. There was a classic example on 7 January, when the December money supply figures were announced. The authorities were clearly relieved that sterling M3 had fallen by 0·5 per cent., bringing the annual growth rate down to the top end of the target. There was no reason for interest rates to rise. However, the clearing banks took the initiative once again and there was a Gadarene rush to raise interest rates.
        That is the approach of the high street banks to our economy and the people who pay for it are their customers. The banks act directly against the interests of the nation, of anyone with an overdraft and of anyone who borrows. That is what their concern for the community amounts to. It is important that the TSB should not become just another of that crew of condottieri who are doing well out of high interest rates at the expense of their own customers.
        10.15 pm
        Furthermore, without the safeguards embodied in new clause 1, the TSB, as a high street bank, would be a prey to inevitable takeover bids. There are now four high street banks. The TSB would be a fifth. The competition is so intense that the TSB would be bound to be sat on or taken over. There would be bound to be some onslaught on its integrity and independence.
        The TSB is in acute danger or becoming just another high street bank, pushing up interest rates and ruining British industry. The banks are notorious for their lack of concern for the basic productive capacity of this country. They lend umbrellas to people when the sun is shining —driving up the inflationary pressures by enormously increasing borrowing capacity—and then screw up the economy by taking the umbrellas back as soon as it begins

        1123
        to rain. We do not want the TSB to become another such bank. We want it to continue to be run in the interests of its own customers.
        The banks take the people's credit and use it for the profit of the plutocrats who own them. That profit should be used, for the people who helped create it by using the bank's credit and providing it with the opportunity to extend that credit. Only if the profit returns to the customers of the bank is the principle legitimately fulfilled. We cannot keep the TSB mutual — that pass was sold by the Government, though it should have been defended—but we want to keep it as mutual as it can be within the framework of the legislation.
        Mr. Peter Pike: Accepting new clause 1 is the only way of safeguarding the future of the TSB. I reluctantly accept that the Bill is likely to be given its Third Reading later tonight. I shall certainly vote against it, but one must face facts. Because of the majority on the Government's side, the Bill is likely to be passed.
        That being so, we can only protect the future of the TSB and respect its history and traditions by ensuring that, at least in the initial stages, the staff and account holders have a majority shareholding.
        The Government tell us that it is really the TSB—not the Government — that wants the Bill. Whom, at the TSB, have the Government consulted? Have the staff, down to the cashier at the local branch, been given an opportunity to express their views? Have customers been consulted? I am fairly certain that the answer to both of those questions is no, as I have seen nothing to that effect in branches in my constituency.
        I worked in a bank for the first 10 years of my working life and I know something about joint stock banks. There were the big five in the 1950s and the mergers of the 1960s. I have no doubt that, if the Bill goes through and there are no safeguards to protect the TSB, it will soon be taken over. If the staff have been consulted and said that they support the Bill, my comment must be that they have not looked to their future job security. If there is a merger or a takeover, whatever the assurances, there will be branch closures and changes. In many parts of the country there are too many building societies fighting for customers in the high street, and the same is true for banks. With increasing mechanisation and changes, there will be closures.
        When the Burnley building society was taken over by the Provincial building society to become the National and Provincial, assurances were given about job security for at least two years. The merger is not two years old and yet there are rumours this week that 300 jobs are to go in the Burnley area because dual head offices are no longer to be kept. I have no doubt that the same will happen with the TSB. The only way in which to protect its identity, to respect that identity and to respect local traditions is to allow staff and customers to have a majority shareholding. That will ensure that the TSB remains the TSB and does not become just another clearing bank.
        10.22 pm
        The Economic Secretary to the Treasury (Mr. Ian Stewart): I welcome the opportunity for this debate. The hon. Member for Yeovil (Mr. Ashdown) referred to what I said on Second Reading. He noted, and others have
        1124
        accepted, that I expressed myself then, as I did in Committee, as being favourable to the idea that customers and staff of the TSBs should have the greatest practical possibility of becoming shareholders in the new public limited company. I still hold that view.
        The hon. Member for Thurrock (Dr. McDonald) spoke of the history and traditions of the TSBs, which she respects, and which the hon. Member for Burnley (Mr. Pike) has just endorsed. All of us who have been involved with the Bill feel strongly about that. She drew attention to the long tradition of TSBs attending to the needs of personal customers. I am not sure that the joint stock banks should be regarded as such financial ogres as the hon. Member for Great Grimsby (Mr. Mitchell) painted them to be.
        I am sure that the manner of business of TSBs is appreciated by those who have used them. They are valued and respected in the financial community as having a special place because they have a wide spread of depositors among many groups who might otherwise not have bank accounts.
        The hon. Member for Great Grimsby said that the trustee savings banks were and should be different from other high street banks. I hope that they will retain a great deal of their individuality. The hon. Member for Kingston upon Hull, West (Mr. Randall) said that the trustee savings banks serve the people. I am sure that that is one of the reasons why they have been so successful. The changes that the Bill will bring about will increase, not hinder that development. A few years ago the trustee savings banks found it difficult to maintain their customer base. They were unable to offer the kind of facilities that were provided by other high street banks, but they have been successful in providing for their customers the facilities that they need. The proposals contained in the Bill should enable the trustee savings banks to improve the facilities that they offer to their customers. I accept that employees and depositors should be encouraged to hold a substantial part of the share capital when the new TSB group becomes a public limited company.
        I draw the attention of hon. Members to paragraphs 7, 8, 9 and 13 of Sir John Read's letter to my right hon. Friend the Chancellor of the Exchequer which is included as an annexe to the White Paper. In his letter of 6 December Sir John Read emphasises that the issue of shares to the public would be made
        "in a manner which will achieve wide ownership of the new TSB group among our customers and staff."
        He goes on to say:
        "We are firmly set on the principle of wide ownership of our shares, with priority for our customers and staff."
        The question is whether it would be right to put into statutory form the specific figure of 55 per cent. Although I am in sympathy with the spirit of the new clause, I do not believe that it would be in the interests of the trustee savings banks or of a successful flotation for that figure to be spelled out.
        Mr. Craigen: If the Minister is turning down the inclusion of the 55 per cent. provision in the Bill, why was Sir John Read's letter so convincing? It would be far better if Sir John Read's proposal were enshrined in the Bill rather than that one should have to interpret a letter from the chairman of the Central Board of the Trustee Savings Bank.
        Mr. Stewart: I take the hon. Gentleman's point. It is one that not only he but other hon. Members have raised

        1125
        and I shall try to answer it. The hon. Member for Yeovil said that if I did not think that 55 per cent. was right I ought to suggest another figure. The hon. Member suggested that a figure ought to be included in the Bill as evidence of the Government's commitment to that principle.
        I have considered the matter most carefully. The question falls into two parts. First, is it right that the Government should specify details relating to the issue of shares? I have come to the conclusion that it would not be right for the Government to do so. One of the reasons for that conclusion is the nature of the provisions that would have to be made. I accept what Sir John Read said in the letter. I take those assurances at face value. It is a subject which I have discussed with him at considerable length. I am sorry that the hon. Member for Thurrock received a worrying impression. It certainly is not the impression that I have received from discussions with the TSBs. It is for that reason that I said that I particularly welcome this debate.
        10.30 pm
        We had a lively debate in Committee on the same point. I said at the time that I thought that it was helpful that it should be on the record that there was a strong wish by those who were dealing with the Bill in Parliament that Sir John Read's expressed intentions should be carried into effect by means of the share issue. I endorse that today in the wider forum of the Floor of the House of Commons.
        When we consider the provision that 55 per cent. of the shares of the group should be offered to employees and depositors in TSBs we come up against exactly the sort of problem which has convinced me that it would not be right for the Government to try to set out the precise details of the proposed issue.
        Mr. Ashdown rose—
        Mr. Stewart: I shall give way, but would it not be better if I were to continue the argument?
        Mr. Ashdown: I want to intervene on that particular point. The hon. Gentleman has said that he does not think it right for the Government to give figures. In Committee he said:
        "Although it is impossible now to mention figures". — [Official Report, Standing Committee D, 31 January 1985; c. 91.]
        Is there not an implication there that it would be possible some day to mention figures? If he cannot honour that commitment at this point, will he tell us when he will mention figures?
        Mr. Stewart: No, the hon. Gentleman has misunderstood what I said in Committee. He assumes that when I said that it was not possible a few weeks ago to state a precise figure that I might be able to do so today. The point that I made in that debate in Committee, which I readily repeat now, is that it is not possible in advance of the circumstances of the issue to establish the exact arithmetic.
        Perhaps I was unwise to give way because I was about to come to the reasons why it is difficult and would not be helpful to insert a precise figure. Before I come to those points let me make a further general remark which may help the hon. Gentleman. I think that I quoted half and half in Committee as being the sort of figure that I would like to see. I shall not quibble whether it is 45, 50 or 55—something of that kind. I should like to see a substantial proportion of the shares of the issue being so allocated. I
        1126
        have given the range of the sort of figures that would be acceptable. But it is not right to pick on a single figure here and now regardless of the circumstances of the market, the demand for this type of share and the amount that depositors and staff will be able to provide at the time in the light of those conditions to apply for shares. If one tried to introduce a provision of the kind set out in new clause 1 the terms of the issue would be made so rigid that they could hardly be carried out.
        I shall not fall back on the well-tried method of Treasury Ministers in turning down an amendment or new clause on the grounds of drafting. That would not be in the spirit of the Bill and the way in which we have discussed it. But sometimes drafting questions contain the essence of the difficulty. In this case the essence of the difficulty is contained in the fact that the way in which shares will be offered will not be that a precise number of shares will be available, neither more nor less, for depositors and staff, but that priority in application will be given to employees and staff for a certain proportion of the shareholding. The amount allocated to them will depend on the amount for which they apply and on the amount for which other potential shareholders apply.
        It is possible—indeed, I should like to see this—that if a certain percentage were allocated for depositors and staff, they might also get some of the remainder. It is because we cannot determine the circumstances of the issue that I concluded that it would be wrong for the Government to set out precise conditions for the issue.
        Some Opposition Members may not be convinced that that is an obstacle to accepting the new clause. The issue was raised in Committee and I have thought about it carefully. It would undoubtedly limit the freedom of action of the TSBs if a specific formula were included in the Bill. I am keen that a substantial percentage of the shareholding should go to depositors and staff, and I hope that the TSBs will encourage that. They have undertaken to grant priority and we expect that undertaking to be fulfilled.
        However, to say that a certain percentage of shares—neither more nor less—shall be allocated to depositors and staff, regardless of how many they wish to apply for and regardless of how many other potential shareholders wish to apply for would make it more difficult, rather than easier, to achieve the objectives that I believe are shared on both sides of the House.
        Question put, That the clause be read a Second time:—
        The House divided: Ayes 82, Noes 183.

        Division No. 119]

        [10.37 pm

        AYES

        Alton, David

        Clwyd, Mrs Ann

        Archer, Rt Hon Peter

        Cocks, Rt Hon M. (Bristol S.)

        Ashdown, Paddy

        Cohen, Harry

        Bagier, Gordon A. T.

        Cook, Frank (Stockton North)

        Barnett, Guy

        Cook, Robin F. (Livingston)

        Barron, Kevin

        Cowans, Harry

        Beckett, Mrs Margaret

        Craigen, J. M.

        Beith, A. J.

        Cunliffe, Lawrence

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

        Davies, Ronald (Caerphilly)

        Bidwell, Sydney

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

        Blair, Anthony

        Deakins, Eric

        Boyes, Roland

        Dewar, Donald

        Bruce, Malcolm

        Dormand, Jack

        Buchan, Norman

        Dubs, Alfred

        Campbell-Savours, Dale

        Duffy, A. E. P.

        Canavan, Dennis

        Eastham, Ken

        Carlile, Alexander (Montg'y)

        Evans, John (St. Helens N)

        Clarke, Thomas

        Fatchett, Derek

        Clay, Robert

        Fields, T. (L'pool Broad Gn)

        1127

        Fisher, Mark

        Millan, Rt Hon Bruce

        Godman, Dr Norman

        Nellist, David

        Hamilton, James (M'well N)

        Park, George

        Hattersley, Rt Hon Roy

        Parry, Robert

        Haynes, Frank

        Penhaligon, David

        Hogg, N. (C'nauld & Kilsyth)

        Pike, Peter

        Holland, Stuart (Vauxhall)

        Prescott, John

        Home Robertson, John

        Randall, Stuart

        Hughes, Simon (Southwark)

        Redmond, M.

        John, Brynmor

        Short, Ms Clare (Ladywood)

        Kennedy, Charles

        Skinner, Dennis

        Kirkwood, Archy

        Snape, Peter

        Leadbitter, Ted

        Stewart, Rt Hon D. (W Isles)

        Lewis, Ron (Carlisle)

        Thomas, Dr R. (Carmarthen)

        Lewis, Terence (Worsley)

        Thompson, J. (Wansbeck)

        Lloyd, Tony (Stretford)

        Wardell, Gareth (Gower)

        Loyden, Edward

        Wareing, Robert

        McDonald, Dr Oonagh

        Welsh, Michael

        McWilliam, John

        Wilson, Gordon

        Marek, Dr John

        Winnick, David

        Mason, Rt Hon Roy

        Maxton, John

        Tellers for the Ayes:

        Maynard, Miss Joan

        Mr. Allen McKay and

        Meadowcroft, Michael

        Mr. Austin Mitchell.

        NOES

        Alexander, Richard

        Hamilton, Neil (Tatton)

        Baker, Nicholas (N Dorset)

        Hampson, Dr Keith

        Baldry, Tony

        Hanley, Jeremy

        Beaumont-Dark, Anthony

        Hargreaves, Kenneth

        Boscawen, Hon Robert

        Haselhurst, Alan

        Bottomley, Mrs Virginia

        Havers, Rt Hon Sir Michael

        Brandon-Bravo, Martin

        Hayes, J.

        Bright, Graham

        Hayward, Robert

        Brooke, Hon Peter

        Heddle, John

        Brown, M. (Brigg & Cl'thpes)

        Henderson, Barry

        Bruinvels, Peter

        Hickmet, Richard

        Budgen, Nick

        Hicks, Robert

        Burt, Alistair

        Hind, Kenneth

        Butcher, John

        Holt, Richard

        Cash, William

        Howard, Michael

        Chope, Christopher

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

        Cockeram, Eric

        Howarth, Gerald (Cannock)

        Conway, Derek

        Howell, Ralph (N Norfolk)

        Cranborne, Viscount

        Hubbard-Miles, Peter

        Dorrell, Stephen

        Hunt, David (Wirral)

        Douglas-Hamilton, Lord J.

        Hunter, Andrew

        Dunn, Robert

        Jackson, Robert

        Fairbairn, Nicholas

        Jones, Gwilym (Cardiff N)

        Favell, Anthony

        Jones, Robert (W Herts)

        Forsyth, Michael (Stirling)

        Jopling, Rt Hon Michael

        Forth, Eric

        Kellett-Bowman, Mrs Elaine

        Franks, Cecil

        Key, Robert

        Freeman, Roger

        King, Roger (B'ham N'field)

        Gale, Roger

        Knight, Gregory (Derby N)

        Galley, Roy

        Knight, Mrs Jill (Edgbaston)

        Garel-Jones, Tristan

        Knowles, Michael

        Greenway, Harry

        Knox, David

        Gregory, Conal

        Lang, Ian

        Griffiths, Peter (Portsm'th N)

        Latham, Michael

        Ground, Patrick

        Lawrence, Ivan

        Hamilton, Hon A. (Epsom)

        Leigh, Edward (Gainsbor'gh)

        1128

        Lennox-Boyd, Hon Mark

        Robinson, Mark (Nport W)

        Lester, Jim

        Ross, Wm. (Londonderry)

        Lightbown, David

        Rowe, Andrew

        Lilley, Peter

        Sayeed, Jonathan

        Lloyd, Peter, (Fareham)

        Shaw, Giles (Pudsey)

        Lord, Michael

        Shaw, Sir Michael (Scarb')

        Luce, Richard

        Shepherd, Colin (Hereford)

        Lyell, Nicholas

        Silvester, Fred

        McCrindle, Robert

        Skeet, T. H. H.

        McCurley, Mrs Anna

        Smith, Tim (Beaconsfield)

        Macfarlane, Neil

        Soames, Hon Nicholas

        MacGregor, John

        Speed, Keith

        MacKay, Andrew (Berkshire)

        Speller, Tony

        Major, John

        Spencer, Derek

        Malins, Humfrey

        Stanbrook, Ivor

        Malone, Gerald

        Steen, Anthony

        Maples, John

        Stevens, Lewis (Nuneaton)

        Marland, Paul

        Stevens, Martin (Fulham)

        Marlow, Antony

        Stewart, Allan (Eastwood)

        Mates, Michael

        Stewart, Andrew (Sherwood)

        Mather, Carol

        Stewart, Ian (N Hertf'dshire)

        Mawhinney, Dr Brian

        Stradling Thomas, J.

        Maxwell-Hyslop, Robin

        Sumberg, David

        Mayhew, Sir Patrick

        Taylor, John (Solihull)

        Mellor, David

        Taylor, Teddy (S'end E)

        Merchant, Piers

        Terlezki, Stefan

        Meyer, Sir Anthony

        Thomas, Rt Hon Peter

        Miller, Hal (B'grove)

        Thompson, Donald (Calder V)

        Mills, Iain (Meriden)

        Thompson, Patrick (N'ich N)

        Mills, Sir Peter (West Devon)

        Thornton, Malcolm

        Mitchell, David (NW Hants)

        Thurnham, Peter

        Moate, Roger

        Townend, John (Bridlington)

        Montgomery, Sir Fergus

        Tracey, Richard

        Morris, M. (N'hampton, S)

        Trippier, David

        Moyninan, Hon C.

        Trotter, Neville

        Murphy, Christopher

        Twinn, Dr Ian

        Neale, Gerrard

        van Straubenzee, Sir W.

        Needham, Richard

        Viggers, Peter

        Nelson, Anthony

        Waddington, David

        Newton, Tony

        Walden, George

        Nicholls, Patrick

        Waller, Gary

        Normanton, Tom

        Wardle, C. (Bexhill)

        Norris, Steven

        Watson, John

        Onslow, Cranley

        Wells, Bowen (Hertford)

        Oppenheim, Phillip

        Wheeler, John

        Ottaway, Richard

        Whitfield, John

        Page, Richard (Herts SW)

        Whitney, Raymond

        Patten, J. (Oxf W & Abdgn)

        Wilkinson, John

        Pawsey, James

        Winterton, Mrs Ann

        Portillo, Michael

        Winterton, Nicholas

        Powell, William (Corby)

        Wolfson, Mark

        Powley, John

        Wood, Timothy

        Proctor, K. Harvey

        Yeo, Tim

        Raffan, Keith

        Rhodes James, Robert

        Tellers for the Noes:

        Rhys Williams, Sir Brandon

        Mr. Tony Durant and

        Ridsdale, Sir Julian

        Mr. Tim Sainsbury.

        Roberts, Wyn (Conwy)

        Question accordingly negatived.

    New Clause 2

      SHARE OWNERSHIP
      'During the first five years following the vesting day no one individual may own more than five per cent. of the Group's ordinary shares nor after a five year period has elapsed may any one individual own more than 15 per cent. of these shares.'. —[Dr. McDonald.]
      Brought up, and read the First time.
      Dr. McDonald: I beg to move, That the clause be read a Second time.
      Hon. Members who have studied the Bill and the White Paper will be aware that new clause 2 is part of the letter which the chairman of the Trustee Savings bank wrote to the Chancellor of the Exchequer. In it he made it clear that when the TSB had been set up in its new form the draft memorandum of association would contain these provisions. We have transferred them to the new clause in an effort to include them in the Bill.
      There are two reasons for that. One of them, the future of the TSB, has been discussed at great length in the press. Views were expressed as far back as last July. In a typical example, the Glasgow Herald stated:
      "Quite how the TSB empire with total assets above £9·5 billion and owners of United Dominion Trust, TSB Trustcard and TSB Trust Company (insurance services and unit trusts) can be guaranteed against a future takeover bid, is unclear. If first-time buyers should prove amenable to a buy-out, then what kind of ring-fence would the Government erect to stop them?"
      That quotation illustrates that the Government should erect some kind of ring fence against a possible takeover. No ring fence against a takeover is contained in the Bill.
      The Government have accepted the assurances about the nature of the draft memorandum which were contained in the letter from the TSB chairman. The Opposition's disquiet about that arises from the fact that, although we accept that it may be difficult to change the draft articles of association, it is not impossible to do so. Although that seems to be a long-term guarantee against a takeover, it is not as secure as at first appears. My first point therefore is that we need to include the ring fence in the Bill rather than depend upon the assurances in the chairman's letter.
      My second point relates to the speculation about a takeover. In the earlier part of last year it seemed that the TSB would be ripe for a takeover. Its attractions were spelt out, for example, in the Glasgow Herald article. The TSB has wide outlets and a large number of personal customers, which could prove attractive to an American bank trying to find a secure foothold in British personal banking. Many people felt that the TSB was in danger of being taken over.
      I find it interesting to note that towards the end of the year, when it was fully appreciated how much the share flotation was likely to raise—between £700 million and £1 billion is most consistently quoted—it was felt, as the Daily Telegraph put it:
      "that the TSB will suddenly have a lot of money to spend, and may go on a City shopping spree to pick up, say, a fund management company and a stockbroker to go with existing banking, trustee and insurance business."
      The speculation changed towards the end of last year when it became apparent that the TSB would have spare cash and might consider taking over another company. That would not be excluded by new clause 2.
      To sum up, the reasons for introducing the new clause are to provide a secure ring fence against a takeover and to ensure that the history and traditions of the bank, which
      1130
      have been firmly rooted in this country, continue. It has been a domestic bank. That is especially true of the bank as it exists in Scotland, where 45 per cent. of bank outlets are controlled by the TSB. The bank has involved itself with the local community and we would not wish to see it taken over by one of this country's major financial institutions or by an American bank, which would use it solely to gain a foothold in this country's banking sector. Whereas the Minister is prepared to accept assurances, for which we respect him, of course, we prefer to include them in the Bill because we feel that this will ensure a more secure future for and be better way of preserving the history and traditions of, the TSB.
      Mr. Craigen: I wish briefly to support my hon. Friend the Member for Thurrock (Dr. McDonald). It is always pleasant to hear one's own words of wisdom quoted, and the article in the Glasgow Herald happens to have been written by me.
      The flotation of the TSB is one of the give-aways of the decade. It is essential for the Committee to approve the proposed clause in order to avoid the TSB being parcelled out to the various institutional interests that want to buy the shares.
      I have heard reference to cloth caps in connection with the TSB. I personally have never worn a cloth cap or, indeed, a bowler hat. I am simply a bare-headed Scot.
      It is important for the Committee to recognise the community of interest that has developed in the TSB and to ensure by acceptance of the clause that there is a safeguard for the development of greater customer satisfaction, at the same time avoiding the potential dangers of a takeover.
      I want to see this provision enshrined in the Bill. I am not taken in by letters from chairmen and the optimism of the management about what is likely to happen with regard to the flotation. I had the impression earlier in the debate that the Treasury had moved from its position of neutrality into one in which it was utterly neutered by the TSB management. I therefore hope that the Minister in reply will accept the principle behind the proposed clause.
      Mr. Ashdown: I support the proposed clause and commend hon. Members for their restraint and skill in drafting it. The wording is substantially that contained in the White Paper, as reflected in the letter from Sir John Read. Indeed, it takes its words almost directly from the Minister's mouth. I seem to have the habit of quoting the Minister in Committee, but it is important that he should be invited to honour what he said by the action that he takes in the Bill. On Second Reading, the Minister said:
      "for the first five years … there should be a limit on a shareholding by any one shareholder of 5 per cent. of the capital, and thereafter a limit of 15 per cent."—[Official Report, 14 February 1985; Vol. 71, c. 33.]
      Thus the Minister agrees in detail with the wording of the proposed clause. In that sense, the clause enacts the Minister's own rhetoric.
      Unhappily, the Minister said in Committee and on Second Reading that he considers the matter to be one for the TSB and not for the Government. Indeed, in Committee he said that it did not require legislation. His arguments for supporting that conclusion, judged by my reading of the Committee proceedings, are deeply unconvincing. If the safeguard is so important as to be expressed as a cardinal principle in the White Paper and referred to by the Minister as a matter to which he gives

      1131
      weight, why not enshrine it in the Bill? What has the Minister to lose by inserting it in the Bill? I hope that he will explain why it can be included in his statements but cannot be enshrined as a safeguard in the Bill.
      The Minister has claimed that as a result of the general belief that he has expressed, it would be many years before the TSB might be taken over. I am not sure that I share that view. At 15 per cent., it would require only 11 investors at a modest £50 million or so to reach the point at which they could control the TSB. Indeed, some of them might be the very banks with which the TSB will be in competition. The Minister has said that he wants safeguards against takeovers. Let him prove it by accepting the new clause.
      11 pm
      Mr. Austin Mitchell: We have a paradox in the way in which the world economy is moving. It is that the banks grow fat when the world goes wrong. Because under the Conservatives the world has gone more wrong than ever before, the banks—thanks to the Government's policies of high interest rates and an emphasis on money—have grown fatter than ever before.
      The world is full of predatory banks, and that is the phenomenon that the new clause attempts to control by erecting a ring fence round the TSB. Just as our banks are taking over banks in other parts of the world — most notably the Crocker bank in California, which must have been the purchase of the century; how anybody could ever again believe the advice of the Midland on investment policy, given its astuteness in respect of the Crocker bank, is a question we might ask in this context—so foreign banks want to get into Britain.
      They want access to a banking world which is at present closely controlled and dominated by the big four. In that situation, the TSB must present an object as desirable as the Prime Minister at Holyrood House on a wet Friday. The TSB is a desirable bank for a takeover because it has a large number of high street outlets, the trust of a large body of customers who are accustomed to a close and satisfactory working relationship, and because the Government are treating it as if it were a piece of lost property being sold at police auction to make a bob or two.
      They are sending it out into the world cash rich with all those desirable characteristics. In that situation, it is almost certain that foreign banking organisations which want to get not just a toehold but a major position in the banking world in this country will find it a most desirable object. It would be a disastrous outcome of our deliberations if the loved and trusted TSB, the people's bank, became the Manhattan TSB or the Jihad TSB.
      Mr. Craigen: It occurred to me, when my hon. Friend was referring to the Prime Minister at Holyrood, that the right hon. Lady is at present in the United States. Does he foresee a situation in which the flotation of the TSB could be a dollar earner for the economy, given how well the dollar is doing?
      Mr. Mitchell: I must not be tempted to go down that path, given how well our competitors, particularly West Germany and Japan, have done with the over-valued dollar and how badly we have done, and we could do with the dollar earnings. I acquit the Prime Minister of the charge that my hon. Friend levies against her, of the desire to flog
      1132
      off British assets, but I do not acquit foreign bankers of an insight into an opportunity such as the TSB group presents, unless protected by provisions such as those in the new clause. I would not want the TSB in Grimsby to be hoisting a sign saying, "The Gaddafi Bank of Grimsby", which is possible without the protection afforded by the new clause.
      It is essential that this banking group is kept in a close relationship not only with the customers but with the country. It should be kept free of foreign control and takeover.
      Mr. Randall: New clause 2 is an extension of new clause 1, in which we offered preference to employees and account holders to ensure that the small man has a say in the TSB group. New clause 2 proposes an arrangement whereby big institutions would not be able to control the TSB arrangement. It is important to enshrine this in the Bill. I hope that the Minister is able to accept it.
      To prevent the big battalions of the City institutions from coming in and doing all that they are bound to do, because the TSB group is an attractive organisation, we must say not only that we shall not allow that at the beginning but must maintain the principle. This is why I support the laudable suggestion of the 50 per cent. figure after five years. The great advantage of ensuring that there are small investors is that it will add to the protection of the TSB plc after the legislation has gone through the House. It will protect it from being taken over by the other domestic banking institutions. Therefore, TSB plc will retain the traditions of the TSB group, which have been valuable to the country and its customers, and therefore should be retained.
      Although the TSB group has extended its services, it has not invested in the technology and all the other things that are needed to run a fully comprehensive service. In that respect, as the TSB group has a comprehensive range of branches, it is attractive to all the other institutions. It would plug in nicely to the clearing banks which have invested so much into the payment systems and the large computer networks, into which the TSB group has not invested to the same extent because the extension of its services has taken place more recently. Logically, it would make sense to plug the two groups together, but if that happens, it would have serious effects.
      In addition, the international aspect needs to be looked at. If there is a takeover, it will be because of the traditional background of the TSB, and it would be undesirable to allow the TSB plc to fall into foreign hands. It will be an attractive banking organisation for foreign banks to take over. The liquid assets of the bank will be considerable if the flotation is successful. Therefore, the bank would be able to embark on a new programme of extension of services and even acquisition. That would be attractive to the big institutions. I do not mean that in a negative sense. We all want to see our financial institutions being successful because they are a crucial part of our economic, business and commercial system. But let us retain the personal element.
      I hope the Government will support the ring fence around the TSBs to which my hon. Friend the Member for Great Grimsby (Mr. Mitchell) referred. It is a valuable mechanism which would be appreciated by the 6 million customers who have traditionally banked with the TSBs.
      Mr. Ian Stewart: The debate has focused on the provisions for maintaining the independence of the TSBs

      1133
      for the longer term future. During the debate on the last new clause we were talking about the provisions in the Bill as they might affect the TSBs beyond vesting day and the reorganisation which was covered directly by the Bill. I said that I thought it was not right for the Government to lay down specific arrangements for the flotation itself.
      New clause 2 would provide a set of rules for the TSBs for the indefinite future. There is perhaps a greater difference between the Government and the Opposition on this new clause. I understand the point made by the hon. Member for Thurrock (Dr. McDonald), who was supported by the hon. Members for Glasgow, Maryhill (Mr. Craigen), for Great Grimsby (Mr. Mitchell), for Kingston upon Hull, West (Mr. Randall) and for Yeovil (Mr. Ashdown). They thought that absolute protection against any shareholder acquiring more than 15 per cent. of the shares should be set down in a statute for ever. They feel that the TSBs should be kept by statute in a special position, which could be changed only by another trustee savings bank measure.
      The Government's purpose in the Bill is to ensure that TSBs can have an independent future and not be dependent, as they have been for so long, upon Parliament whenever changes need to be made in the structure under which they operate. I accept that the aim of the new clause to prevent a shareholding greater than 15 per cent. is more limited than the arrangement stipulated in statute up to now. Nevertheless, it would restrict the actions of the banks in areas apart from those about which Opposition Members have spoken.
      Dr. McDonald: The Minister is really saying that he is prepared to accept the assurances given in the White Paper. What does he think—
      Mr. Archy Kirkwood: On a point of order, Mr. Deputy Speaker. I am trying hard to listen to the important points that are being made. I know that it is difficult at this time of the evening, but could hon. Members pay more attention to what is being said?
      Mr. Deputy Speaker (Sir Paul Dean): If conversations are to take place, I hope they will take place outside the Chamber.
      Dr. McDonald: How would the Minister view the takeover of the TSB by another bank or financial institution, particularly a foreign bank?
      Mr. Stewart: The hon. Lady has asked a question which was raised by herself and other hon. Members in their contributions to the debate on the clause. My view is that the 5 per cent. limitation for five years is desirable because there should be an absolute form of protection for a period after the TSBs acquire PLC status.
      11.15 pm
      I also think that there ought to be a substantial obstacle to takeovers beyond that time. I do not think that it ought to be an absolute obstacle, as the Opposition suggest. A takeover cannot arise for many years, so we are discussing conditions in the 1990s. After the issue, which perhaps may take place in the early part of next year, there will be the five-year period, taking us into the 1990s. There will then be a requirement for a special resolution with a 75 per cent. majority to change the articles to enable any one shareholder to own more than 15 per cent. of the shares. That is very difficult to surmount.
      1134
      The fact that it is not impossible is important, otherwise the TSBs will be permanently set apart with a form of protection which will dilute the degree of accountability, and it could limit other activities in which they might want to engage. They might want to link with another body. They might want to have a new holding company holding the TSB roup and some other undertaking. They might wish to have a link with a major shareholder. I shall not speculate on the kind of shareholder that that might be, but I remind the House that a large insurance company recently took a significant minority holding in a British bank. That would be impossible if a 15 per cent. limitation were placed on any shareholding. It might be that, say, a 26 per cent. share holding was thought desirable. That would block any special resolutions and provide an effective means against any unwelcome bidder.
      There is a difference of substance between the views of the two sides of the House. The Government do not believe that the TSBs should be held permanently in a special status which does not apply to any of their competitors or to other public limited companies. That is why I ask the House to reject the new clause.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 68, Noes 168.

      Division No. 120]

      [11.17 pm

      AYES

      Alton, David

      John, Brynmor

      Ashdown, Paddy

      Kennedy, Charles

      Barnett, Guy

      Kirkwood, Archy

      Barron, Kevin

      Leadbitter, Ted

      Beckett, Mrs Margaret

      Lewis, Ron (Carlisle)

      Beith, A. J.

      Lewis, Terence (Worsley)

      Bidwell, Sydney

      Lloyd, Tony (Stretford)

      Blair, Anthony

      Loyden, Edward

      Bruce, Malcolm

      McDonald, Dr Oonagh

      Campbell-Savours, Dale

      McWilliam, John

      Canavan, Dennis

      Marek, Dr John

      Carlile, Alexander (Montg'y)

      Maxton, John

      Clay, Robert

      Maynard, Miss Joan

      Clwyd, Mrs Ann

      Meadowcroft, Michael

      Cocks, Rt Hon M. (Bristol S.)

      Nellist, David

      Cohen, Harry

      Park, George

      Cook, Robin F. (Livingston)

      Parry, Robert

      Cowans, Harry

      Pike, Peter

      Craigen, J. M.

      Prescott, John

      Cunliffe, Lawrence

      Randall, Stuart

      Davies, Ronald (Caerphilly)

      Redmond, M.

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

      Short, Ms Clare (Ladywood)

      Deakins, Eric

      Silkin, Rt Hon J.

      Dormand, Jack

      Skinner, Dennis

      Duffy, A. E. P.

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

      Eastham, Ken

      Snape, Peter

      Evans, John (St. Helens N)

      Stewart, Rt Hon D. (W Isles)

      Fatchett, Derek

      Thompson, J. (Wansbeck)

      Fields, T. (L'pool Broad Gn)

      Wardell, Gareth (Gower)

      Fisher, Mark

      Wareing, Robert

      Godman, Dr Norman

      Welsh, Michael

      Hamilton, James (M'well N)

      Wilson, Gordon

      Hattersley, Rt Hon Roy

      Haynes, Frank

      Tellers for the Ayes:

      Hogg, N. (C'nauld & Kilsyth)

      Mr. Allen McKay and

      Home Robertson, John

      Mr. Austin Mitchell.

      NOES

      Alexander, Richard

      Burt, Alistair

      Baldry, Tony

      Butcher, John

      Beaumont-Dark, Anthony

      Chope, Christopher

      Boscawen, Hon Robert

      Cockeram, Eric

      Bottomley, Mrs Virginia

      Conway, Derek

      Brandon-Bravo, Martin

      Cranborne, Viscount

      Brown, M. (Brigg & Cl'thpes)

      Dorrell, Stephen

      Bruinvels, Peter

      Douglas-Hamilton, Lord J.

      Budgen, Nick

      Dunn, Robert

      1135

      Fairbairn, Nicholas

      Mills, Sir Peter (West Devon)

      Fallon, Michael

      Mitchell, David (NW Hants)

      Favell, Anthony

      Moate, Roger

      Forsyth, Michael (Stirling)

      Montgomery, Sir Fergus

      Forth, Eric

      Morris, M. (N'hampton, S)

      Freeman, Roger

      Moynihan, Hon C.

      Gale, Roger

      Murphy, Christopher

      Galley, Roy

      Neale, Gerrard

      Garel-Jones, Tristan

      Needham, Richard

      Gregory, Conal

      Newton, Tony

      Griffiths, Peter (Portsm'th N)

      Nicholls, Patrick

      Ground, Patrick

      Normanton, Tom

      Hamilton, Hon A. (Epsom)

      Norris, Steven

      Hamilton, Neil (Tatton)

      Onslow, Cranley

      Hampson, Dr Keith

      Oppenheim, Phillip

      Hanley, Jeremy

      Page, Richard (Herts SW)

      Hannam, John

      Pawsey, James

      Hargreaves, Kenneth

      Portillo, Michael

      Hayes, J.

      Powley, John

      Hayward, Robert

      Proctor, K. Harvey

      Heddle, John

      Rhodes James, Robert

      Henderson, Barry

      Rhys Williams, Sir Brandon

      Hickmet, Richard

      Ridsdale, Sir Julian

      Hicks, Robert

      Roberts, Wyn (Conwy)

      Hind, Kenneth

      Robinson, Mark (N'port W)

      Holt, Richard

      Rowe, Andrew

      Howard, Michael

      Sainsbury, Hon Timothy

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

      Sayeed, Jonathan

      Howarth, Gerald (Cannock)

      Shaw, Sir Michael (Scarb')

      Howell, Rt Hon D. (G'ldford)

      Silvester, Fred

      Howell, Ralph (N Norfolk)

      Skeet, T, H. H.

      Hubbard-Miles, Peter

      Smith, Tim (Beaconsfield)

      Hunt, David (Wirral)

      Soames, Hon Nicholas

      Hunter, Andrew

      Speed, Keith

      Jackson, Robert

      Speller, Tony

      Jones, Gwilym (Cardiff N)

      Spencer, Derek

      Jones, Robert (W Herts)

      Stanbrook, Ivor

      Jopling, Rt Hon Michael

      Steen, Anthony

      Kellett-Bowman, Mrs Elaine

      Stevens, Lewis (Nuneaton)

      Key, Robert

      Stevens, Martin (Fulham)

      King, Roger (B'ham N'field)

      Stewart, Allan (Eastwood)

      Knight, Gregory (Derby N)

      Stewart, Andrew (Sherwood)

      Knight, Mrs Jill (Edgbaston)

      Stewart, Ian (N Hertf'dshire)

      Knowles, Michael

      Stradling Thomas, J.

      Knox, David

      Sumberg, David

      Lang, Ian

      Taylor, John (Solihull)

      Latham, Michael

      Taylor, Teddy (S'end E)

      Lawrence, Ivan

      Terlezki, Stefan

      Leigh, Edward (Gainsbor'gh)

      Thomas, Rt Hon Peter

      Lennox-Boyd, Hon Mark

      Thompson, Donald (Calder V)

      Lester, Jim

      Thompson, Patrick (N'ich N)

      Lightbown, David

      Thurnham, Peter

      Lilley, Peter

      Townend, John (Bridlington)

      Lloyd, Peter, (Fareham)

      Tracey, Richard

      Lord, Michael

      Trippier, David

      Luce, Richard

      Trotter, Neville

      Lyell, Nicholas

      Twinn, Dr Ian

      McCrindle, Robert

      van Straubenzee, Sir W.

      McCurley, Mrs Anna

      Viggers, Peter

      Macfarlane, Neil

      Walden, George

      MacGregor, John

      Waller, Gary

      MacKay, Andrew (Berkshire)

      Wardle, C. (Bexhill)

      Malins, Humfrey

      Watson, John

      Malone, Gerald

      Wells, Bowen (Hertford)

      Maples, John

      Wheeler, John

      Marland, Paul

      Whitfield, John

      Marlow, Antony

      Whitney, Raymond

      Mates, Michael

      Wilkinson, John

      Mather, Carol

      Wintertpn, Mrs Ann

      Mawhinney, Dr Brian

      Winterton, Nicholas

      Maxwell-Hyslop, Robin

      Wolfson, Mark

      Mayhew, Sir Patrick

      Wood, Timothy

      Mellor, David

      Yeo, Tim

      Merchant, Piers

      Meyer, Sir Anthony

      Tellers for the Noes:

      Miller, Hal (B'grove)

      Mr. John Major and

      Mills, Iain (Meriden)

      Mr. Tony Durant.

      Questions accordingly negatived.

    Clause 1

      PRELIMINARY
      11.30 pm
      Mr. Gordon Wilson: I beg to move amendment No. 1, in page 1, line 9 after 'banks', insert
      '(other than Trustee Savings Bank Scotland Limited which is hereby excluded from this Act)'.
      The effect of the amendment is to exclude Trustee Savings Bank Scotland Limited from the Bill. It will retain Trustee Savings Bank Scotland as a trustee savings bank, but the prime effect of the change will be to secure the independence of Trustee Savings Bank Scotland. The amendment seeks to do what a Scottish Government would have done: to veto any attempt whatsoever to take this very important banking enterprise out of Scotland and subject it to alien control.
      Although the Treasury Bench cannot, for once, be criticised quite so strongly as I would normally criticise it, it should accept that there is a valid reason why in this instance it should not seek to follow the advice given to it by the Trustee Savings Bank group. Trustee Savings Bank Scotland — so far an independent banking enterprise that operates within the confederation of the TSB group—will be incorporated in the TSB Group plc. The shareholding of the TSB Group plc will be a United Kingdom shareholding and the Scottish element of control over Trustee Savings Bank Scotland will be eradicated.
      The Government ought to consider the importance of Trustee Savings Bank Scotland within the Scottish financial structure. It is unnecessary for Trustee Savings Bank Scotland to be made into a limited liability company. Within Scotland's financial network there are mutual companies like Scottish Widows and Standard Life which operate very effectively as mutual combines and which are respected not just in Scotland but elsewhere. If the Government decide that the banking structure would be improved by making trustee savings banks individually as well as a whole into public limited liability companies, Trustee Savings Bank Scotland ought, by this amendment, to be allowed to retain its independence.
      If doubt is cast upon the ability of the bank to stand on its own feet, let me spell out some of the information about it. Trustee Savings Bank Scotland operates about 2 million separate accounts; it has 1·25 million customers; it has 25 per cent. penetration of the personal savings market in the banking fraternity; and, unlike the other trustee savings banks in the British Isles, it has a larger proportion of AB social classifications than most. Therefore, it cannot be classified, as the TSB group might be in the English context, as a poor man's bank. It is a very big bank. As the hon. Member for Thurrock (Dr. McDonald) said, it holds a substantial proportion of the banking premises in Scotland.
      Moreover, nobody can doubt that, since the amalgamations, Trustee Savings Bank Scotland has been under very good and effective management. It has a good reputation. It has responded to new technology in banking. It has expanded its customer clientele and it has also been very productive. For example, on the overall working profit divided among the employees of the group, the Clydesdale bank, which is a fully owned subsidiary of the Midland bank and has no independence whatsoever within the Scottish banking context, produces a profit of only

      1137
      £2,600 per employee, whereas the Royal Bank of Scotland and the Bank of Scotland alternate between £6,500 and £7,500 profit per employee.
      I am told that the most recent figures show that TSB Scotland has a profit of £10,600 per employee, so it is clearly a substantial, efficient and effective bank in the Scottish financial scene. However, it seems to have made no attempt to regain some measure of independence or even quasi-autonomy. The Trustee Savings bank on the Channel Islands, perhaps because of the different taxation regime there, and certainly because of the society in which it will function, will allow 49 per cent of the shares to be taken over by local Channel Islands people. That is a formula that TSB Scotland could have adopted. However, I submit that that would not be adequate, as it would have left overall control with the TSB centre in London.
      The TSB could have said that TSB Scotland Ltd., as the representative of the progenitor of the Trustee Savings bank movement in the United Kingdom—it originated in Dumfriesshire when the first bank was opened—and bearing in mind its size and success, could have remained a trustee savings bank to continue the work which it has undertaken over the years. Secondly, it could have operated as an independent unit like the Royal Bank of Scotland or the Bank of Scotland. The Bank of Scotland has been an efficient bank. It was owned partly by Barclays Bank plc until recently. The Standard Life Assurance Co. bought out the 30 per cent. share that Barclays Bank had in the Bank of Scotland, so returning the Bank of Scotland to full Scottish ownership.
      The Royal Bank of Scotland is an interesting example. Three or four years ago, a tremendous fuss was kicked up when two foreign banks—the Standard Chartered Bank plc and the Hong Kong and Shanghai Banking Corporation — came in like predators with the aim of acquiring control of the Royal Bank of Scotland. It could be said that at that time the Royal Bank badly needed a kick in the behind, because it had slipped behind in its development. It was not showing the same degree of enterprise as the Bank of Scotland.
      One of the effects of the report of the Monopolies and Mergers Commission, which prevented the takeover of the Royal Bank of Scotland, was to transform the Royal Bank. It is now showing activity, energy and initiative that it failed to show hitherto. It is my contention that TSB Scotland could have filled a similar slot.
      The third option is much more interesting. We have discussed the money that will be made available in the TSB Group as a result of the flotation of the shares. Apparently the flotation will realise something between £500 million and £700 million. If the Scottish bank had been floated separately, it would have had less free capital becoming available because of its size. However, it would have a considerable amount of capital arising from its deposits.
      Now that Barclays bank has moved out of the Scottish banking scene, there is nothing to stop the TSB from entering into a merger or other arrangement with the Clydesdale bank, which has a low profit per employee. It should have been reintegrated into a new banking institution in the Scottish market. That is a great opportunity missed, and it will remain missed if the Government do not accept the amendment. I have no doubt that the Midland bank, which controls the Clydesdale bank, is somewhat stretched for cash because of the Crocker bank fiasco. It would do no harm if the
      1138
      Midland bank were to dispose of the Clydesdale bank, especially when we consider its overall activities in the rest of the United Kingdom. Those three options could still be available to TSB Scotland if the Minister were to accept my amendment.
      I notice that the Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart), is present and I am sure that he will appreciate another reason why my amendment is desirable. Hon. Members on both sides of the House believe that it is important to build up the financial sector in Scotland. Unlike the north of England, which used to have an independent financial sector which has been eroded and taken over by the City of London, Scotland still has a large area of financial activity which can be useful from time to time in providing investment locally.
      I fear that if TSB Scotland, which already has substantial penetration in Scotland, is taken over under the Bill, which will happen if my amendment is not carried, the funds which are raised in the flotation will not be spent in Scotland through the medium of TSB Scotland, but will be used for the expansion of the TSB group in those areas where it is not strong.
      Obviously, one of those areas will be the south-east of England, where the group may want to set up in competition with the other joint stock banks. Another will be taking over finance houses or becoming involved in stockbroking and other such areas. The profits that come from those areas will be available not to TSB Scotland but to the group as a whole. It will be operated from London and the employees of TSB Scotland will not see much benefit from it.
      In a strange way, by taking this rather cowardly decision, in copping out and selling out, the trustees of the TSB Scotland have, in a sense, stunted the growth of the company that they themselves have built up. I should not like the House to countenance that at all.
      Another factor that must be mentioned is that we are faced with encroaching centralisation in the financial markets. It does the Scottish banking sector no good whatever if a major enterprise such as TSB Scotland is to be taken out of the control of interest within Scotland. It is a weakening of the overall fabric. For the financial strategy of the Scottish Development Agency and the Scottish Industry Department, it would be desirable if TSB Scotland were able to retain its independence and full autonomy.
      Another reason why the amendment is vital is that there is no guarantee whatever of the jobs of the headquarters and other staff of TSB Scotland. Pledges have been given before — for instance, in connection with insurance companies which were taken over. After a number of years, insurance companies that had operated in Scotland for many years lost their independence then lost their identity and the jobs that went with the head offices of those companies were obliterated. With the passing generations, the promises and pledges which had been made at the time of takeover were seen to be completely and utterly empty.
      Mr. Nicholas Fairbairn: The hon. Gentleman talks of centralisation and the obliteration of jobs. One new independent bank has been formed in this country in the past 100 years and that is Adam and Company in Edinburgh. Several merchant banks have been formed, such as Noble Grossart and it is in

      1139
      Edinburgh. Far from centralisation and anglicisation, those are independent bodies. Why cannot the hon. Gentleman ever give any credit to the country that he pretends to represent?
      11.45 pm
      Mr. Wilson: I am glad that I have prompted the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) to participate in the debate; he has been absent for most of the evening.
      Some small — in United Kingdom terms — banking institutions have been established, and I congratulate those who showed initiative there, but if the hon. and learned Gentleman studies the Monopolies and Mergers Commission report on the attempted takeover of the Royal Bank of Scotland he will appreciate the pressures facing the financial sector in Scotland. Many of his friends in the Conservative party in Scotland will tell him about their worries. [Interruption.] The noise from the Government Back Benches reminds me that some English yobbos are present. I do not expect them to be interested in the banking scene in Scotland. They will not get directorships from it, so they are not interested in it.
      We are talking about a major bank which has operated in Scotland, through independent branches, for a considerable time. It has been amalgamated into a successful unit. I have given the figures and spelt out a strategy, which is not mine alone, but is the strategy favoured by the Scottish community, which is worried about the future and sees the opportunity for jobs in the financial sector.
      I am worried that, if the Economic Secretary to the Treasury does not accept the amendment, TSB Scotland will disappear from sight. If it loses its identity, jobs at the head office will be lost. We are taking out one of the props of the Scottish economy. The Bill has been reasonably uncontroversial, but it will have a serious impact in Scotland.
      Sir Hector Monro: That was the most parochial and short sighted speech that I have ever heard. The hon. Member for Dundee, East (Mr. Wilson) does not seem to realise, though he touched on it, that the savings movement began in Dumfries. Dr. Henry Duncan, who began it all, set up the savings movement throughout the United Kingdom. His lead in banking and commerce shows today in the great success of the TSB.
      It is beyond the comprehension of most people who know anything about banking why the hon. Member for Dundee, East should wish to split up something which has been peculiarly successful. He ought to know that Scotland has led the banking and commerce world over the past few hundred years in innovation and strengthening banking through amalgamations. The amendment is contrary to movements in banking over the past 50 years.
      The strength of the banks, achieved through amalgamations, has enabled them to develop banking services, aid for industrial development and commerce and banking practice. The amendment would deny those advantages to the TSBs. That shows how out of touch the hon. Member for Dundee, East is with the direction of banking today.
      Mr. Craigen: Will the hon. Gentleman give way?
      Sir Hector Monro: I hope that my hon. Friend the Economic Secretary to the Treasury will strongly oppose the amendment.
      Mr. Kirkwood: I listened with interest to the hon. Member for Dumfries (Sir H. Monro). The savings movement was started in Scotland in the hon. Gentleman's constituency by the Rev. Henry Duncan. The hon. Gentleman will appreciate that the savings movement in Scotland is light years removed from the sort of commerce and industry that pervades today's banking world. The savings movement in Scotland was unique. It was a working-class institution. People put their bawbees and shillings into bank deposits that were locked away in caskets and were not lent out at high rates of interest in the capital centres of the world. That was the unique flavour of the Trustee Savings bank, and the Bill is destroying that flavour.
      The concept of mutuality is destroying the uniqueness, character, acceptability and approachability of these banks in the high streets of Scotland, and the hon. Member for Dumfries knows it. I understand that the hon. Gentleman is a sponsor of the Royal Bank of Scotland Bill. If that does not give his game away, I do not know what does.
      Mr. Craigen: I think that the hon. Gentleman is under a misapprehension when he says that the hon. Member for Dumfries (Sir H. Monro) knows it. The hon. Member for Dumfries would not give way when I was about to ask him whether he had read the Bill. The Bill proposes to do away with the existing TSB Scotland. It is proposed to subsume TSB Scotland within this new TSB plc. I can only assume that the man who represents Ruthwell did not read the Bill.
      Mr. Kirkwood: Having listened to the speech of the hon. Member for Dumfries, I believe that that is not an unreasonable inference.
      I have had experience of the Trustee Savings bank. I remember going as a schoolboy to my first secondary school in Glasgow—[HoN. MEMBERS: "When?"]—more than five years ago! Every Friday I used to buy post office stamps with my half crown. When I had saved enough half crown stamps, I took my post office book to the savings bank around the corner. In that way I built up a credit balance. It was only when I went to university and the joint stock banks got hold of my money that I started to run up an overdraft, and I am still doing it.
      The Trustee Savings bank is unique, because it is a savings institution. A savings institution is not like a bank; it is supposed to promote savings actively. It is important in rural areas such as that of the hon. Member for Dumfries and mine that savings are promoted, because people are remote from the centres of commerce and the captains of industry who are the hon. Gentleman's friends. They have special needs in the savings market which have not been fulfilled in any other way. It is true, therefore, to say that in the past the Trustee Savings bank has fulfilled a need. I fear for its future. The difference between a savings institution promoting savings and the type of animal that we shall end up with when the Bill is passed is not appreciated by the Government. We shall suffer because of that.
      I do not like the Bill. It is one of the worst pieces of legislation that the Government have brought forward. There is a lot of logic in the amendment moved by my hon. Friend the Member for Dundee, East (Mr. Wilson). He said that there was no doubt about the quantitative basis

      1141
      on which the bank is founded. It could stand on its own with any other banking institution. It could also prosper, as it has done.
      Cogent arguments can be put about Scotland's peculiar legal system and financial environment. My biggest fear—I know that this point does not apply only to this amendment—is that the concept of mutuality—the basis of the Page report—will go out the window in Scotland, as in other parts of the country.
      Many of the present membership and management of the bank in Scotland are deeply worried that the concept of mutuality has been sold short. The Page committee talked about the need for the bank to be run for the benefit of its staff and customers, as opposed to the benefit of outside shareholders, for depositors to elect a board and for the bank to retain its assets. That is the essence of the matter, and the Government have got it severely wrong.
      The former right hon. Member for Orkney and Shetland, now Lord Grimond, suggested, for the first time in my experience, that there was great scope for having local banks that invest in their local communities. In the Borders area and my own constituency, banks such as the TSB would be cheek by jowl with the people in whom they invested. The Government should be moving in that direction, but, instead, they are moving 180 degrees in the opposite direction. That is to be deeply regretted.
      My experience in my constituency suggests that the TSB has been providing a unique service in such communities. The need for a bank such as the TSB as it is presently constituted in the Scottish financial services set-up is greater than ever. The Bill is bad. I hope that the hon. Member for Dundee, East will, if necessary, press the amendment to a Division, because if he does I shall be the first to follow him through the Lobby.
      Mr. Ian Stewart: I should state my credentials by saying that when the Trustee Savings Bank movement was founded in the constituency of my hon. Friend the Member for Dumfries (Sir. H. Monro), my family lived in Fife. I took the opportunity recently to return to Scotland with my hon. Friend the Member for Fife, North-East (Mr. Henderson) and to visit TSB Scotland. We found, not a declining organisation, in which jobs were being threatened, but an expanding bank, which embodied both some of the best traditions of the TSBs and the particular independent strain in the financial field which Scotland has contributed.
      The complaint made by Opposition Members, as the hon. Member for Dundee, East (Mr. Wilson) in part admitted, should be addressed, not to me, but to those who are responsible in the TSBs for the arrangement made possible by the Bill. The arrangement was not forced on the TSBs by the Government. The TSBs in Scotland amalgamated in 1983 to form TSB Scotland, and it was their wish then to join the other TSB bodies in England, Wales, Northern Ireland and the Channel Islands. The Bill makes their plans possible.
      Mr. Wilson: Does the Minister accept that just as the Bank of England has the duty of supervising the banks overall in the United Kingdom, so the Treasury, in promoting this legislation, is doing so because it does not run foul of public policy? In other words, if the Government had disagreed with the intention of privatising or changing the status to plc, they would not have produced the legislation, even if the TSB group had
      1142
      requested them to do so? If that is the case, and given the fact that in Scotland there are good public policy reasons why TSB Scotland should be excluded, would the Minister agree to accept the amendment?
      Mr. Stewart: It is not a matter of public policy whether TSB Scotland is excluded or separated from the rest of the group. If the amendment were to be accepted, TSB Scotland would be left in an entirely separate form from any other bank. It would be maintained under the old constitutional arrangements.
      Having brought TSB Scotland into the group with the other trustee savings banks, there is nothing to stop it continuing its own independence to whatever degree it cares to negotiate and arrange with the central board and management to which it has contributed. Nothing in the Bill will stop TSB Scotland from seeking such a form of separate activity or independence.
      12 midnight
      Mr. Wilson: If the Minister studies the White Paper he will find that after the date upon which the Bill becomes an Act the TSB Scotland is subsumed into the TSB group. Its board of trustees is extinguished from then on. The local board of TSB Scotland will be appointed by the TSB group centrally. Any vestige of independence there might be virtually disappears from then.
      Mr. Stewart: The arrangements were known a long time before the amalgamation took place in 1983. Those plans were put forward in 1982. All the arrangements that have taken place in the past couple of years and the future plans for TSB Scotland have been known and agreed by those involved. If it were otherwise, I am not saying that I would have tried to force a monolithic structure on the TSB. It is not for me to do that.
      Mr. Michael Forsyth: I understand my hon. Friend's point. The Scottish TSB will continue its tradition within the context of the group, but if he believes in that why did he not seize the opportunity presented by the Bill to allow it to have its own note issue in Scotland? That would have underlined its status within the context of the group.
      Mr. Stewart: The Government are not doing that, because they are not extending the right of note issue to any further banks. Those who possess it do so by virtue of a historical right which has not been removed. It has not been the policy of successive Governments for many years to extend the right of note issue.
      Mr. Craigen: I am puzzled by the Minister's line of argument. The implication is that we, as Members of Parliament, are wasting our time tonight. We might as well have accepted the TSB's proposals in their entirety, but the purpose of the debate is to scrutinise and amend proposals if need be. That is why we suggest that there should be an autonomous TSB Scotland.
      Mr. Stewart: I understand the hon. Gentleman's view, but, as I explained on Second Reading, the Bill is most unusual in that it contains some matters of public policy such as the vesting of assets which cannot be done in a group without ownership and the supervision and tax implications. That can only be done by a Minister on behalf of the Government through Parliament. The Bill also has, in many respects, the characteristics of a private Bill when Parliament is approached for legislation by a banking group which wishes to rearrange its structure.

      1143
      It would not be proper for Ministers to come forward with legislation forcing bodies to reorganise themselves in a way which the Government or Parliament might think right but which those bodies do not wish. We do not have an autocratic system of that kind for bodies in the private sector. It would not be right to apply that to a TSB any more than it would be—
      Mr. Malcolm Bruce rose—
      Mr. Stewart: Will the hon. Gentleman allow me to finish my sentence? It would not be right for us to single out the TSB for that type of treatment.
      Mr. Bruce: If the argument is as the Minister states it, why is it that in the last year we have had the Royal Bank of Scotland Bill, the Barclays Bank Bill and the Lloyds Bank (Merger) Bill? Is it not because the Treasury recognises its responsibility in regard to banks and, indeed, if it wished to do so, it would support the amendment?
      Mr. Stewart: Those are private bank Bills. I tried to explain, but I think that the hon. Gentleman cannot have been listening, that this is a Government Bill because there are matters of public interest separate from private interests. The public interest matters are not those parts which are the internal interests of the TSBs, and it has never been suggested that they should be. Some Opposition Members wish that that was the case, but I do not think it would be proper for Government to decide what sort of internal reorganisation the TSBs or any other banking group ought to have forced upon them. Therefore, the Bill deals with those matters which are of direct concern of Government such as supervision, tax and the question of vesting and ownership, which can be resolved only by Parliament.
      On that basis, I recommend the Committee to reject the amendment.
      Mr. Wilson: I am disappointed that the Minister has not accepted the amendment. He admitted that the Bill affected the public interest. He may well argue that point, although I think not very successfully, in relation to the Royal Bank of Scotland Bill and the other Bills to which the hon. Member for Gordon (Mr. Bruce) referred.
      In this case, however, we have to put it clearly on record that we are dealing with a request from people who do not own the bank. There is no ownership of the bank; it is mutually owned by the depositors. The people who have come to this decision are the trustees and managers who are culpable in selling out what is the heritage of the Scottish people. They were given a trust in this matter, and they have not observed it.
      We have a role to scrutinise and criticise legislation and to try to amend and improve it. If we think that there is a fundamental flaw in any legislation, it is not for the Minister, for me or, indeed, for any other hon. Member to accept that what we are told we have got to do.
      I was elected to Parliament to use my own judgment in these matters, as are all hon. Members. The judgment I make is that the Bill is wrong, particularly in relation to the Scottish element within it.
      I ask the Minister, even at this late stage, to change his mind.
      Question put, That the amendment be made:—
      The House divided: Ayes 29, Noes 137.

      Division No. 121]

      [12.07 am

      AYES

      Alton, David

      Loyden, Edward

      Ashdown, Paddy

      Maxton, John

      Barron, Kevin

      Meadowcroft, Michael

      Beith, A. J.

      Nellist, David

      Bruce, Malcolm

      Parry, Robert

      Carlile, Alexander (Montg'y)

      Penhaligon, David

      Clay, Robert

      Pike, Peter

      Cohen, Harry

      Rogers, Allan

      Craigen, J. M.

      Skinner, Dennis

      Davies, Ronald (Caerphilly)

      Snape, Peter

      Evans, John (St. Helens N)

      Stewart, Rt Hon D. (W Isles)

      Faulds, Andrew

      Welsh, Michael

      Home Robertson, John

      Hughes, Simon (Southwark)

      Tellers for the Ayes:

      Kennedy, Charles

      Mr. Gordon Wilson and

      Lewis, Terence (Worsley)

      Mr. Archy Kirkwood.

      Lloyd, Tony (Stretford)

      NOES

      Alexander, Richard

      Lilley, Peter

      Beaumont-Dark, Anthony

      Lloyd, Peter, (Fareham)

      Boscawen, Hon Robert

      Lord, Michael

      Bottomley, Mrs Virginia

      Luce, Richard

      Brown, M. (Brigg & Cl'thpes)

      McCurley, Mrs Anna

      Bruinvels, Peter

      Macfarlane, Neil

      Budgen, Nick

      MacGregor, John

      Burt, Alistair

      Maclean, David John

      Butcher, John

      Major, John

      Chope, Christopher

      Malins, Humfrey

      Cockeram, Eric

      Maples, John

      Conway, Derek

      Marland, Paul

      Cranborne, Viscount

      Mather, Carol

      Dorrell, Stephen

      Maxwell-Hyslop, Robin

      Douglas-Hamilton, Lord J.

      Mayhew, Sir Patrick

      Dunn, Robert

      Mellor, David

      Durant, Tony

      Merchant, Piers

      Fairbairn, Nicholas

      Meyer, Sir Anthony

      Favell, Anthony

      Miller, Hal (B'grove)

      Forsyth, Michael (Stirling)

      Mills, Iain (Meriden)

      Forth, Eric

      Mills, Sir Peter (West Devon)

      Freeman, Roger

      Mitchell, David (NW Hants)

      Gale, Roger

      Moate, Roger

      Galley, Roy

      Montgomery, Sir Fergus

      Garel-Jones, Tristan

      Moynihan, Hon C.

      Gregory, Conal

      Murphy, Christopher

      Griffiths, Peter (Portsm'th N)

      Neale, Gerrard

      Ground, Patrick

      Newton, Tony

      Hamilton, Hon A. (Epsom)

      Nicholls, Patrick

      Hamilton, Neil (Tatton)

      Norris, Steven

      Hanley, Jeremy

      Onslow, Cranley

      Hargreaves, Kenneth

      Oppenheim, Phillip

      Hayes, J.

      Page, Richard (Herts SW)

      Hayward, Robert

      Portillo, Michael

      Henderson, Barry

      Powley, John

      Hickmet, Richard

      Proctor, K. Harvey

      Hind, Kenneth

      Raffan, Keith

      Holt, Richard

      Rhodes James, Robert

      Howard, Michael

      Rhys Williams, Sir Brandon

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

      Roberts, Wyn (Conwy)

      Howarth, Gerald (Cannock)

      Robinson, Mark (N'port W)

      Howell, Rt Hon D. (G'ldford)

      Rowe, Andrew

      Howell, Ralph (N Norfolk)

      Shaw, Sir Michael (Scarb')

      Hubbard-Miles, Peter

      Shepherd, Colin (Hereford)

      Hunt, David (Wirral)

      Skeet, T. H. H.

      Hunter, Andrew

      Smith, Tim (Beaconsfield)

      Jones, Robert (W Herts)

      Soames, Hon Nicholas

      Jopling, Rt Hon Michael

      Speed, Keith

      Kellett-Bowman, Mrs Elaine

      Spencer, Derek

      Key, Robert

      Stevens, Lewis (Nuneaton)

      King, Roger (B'ham N'field)

      Stevens, Martin (Fulham)

      Knight, Gregory (Derby N)

      Stewart, Allan (Eastwood)

      Knight, Mrs Jill (Edgbaston)

      Stewart, Andrew (Sherwood)

      Knowles, Michael

      Stewart, Ian (N Hertf'dshire)

      Lang, Ian

      Stradling Thomas, J.

      Leigh, Edward (Gainsbor'gh)

      Sumberg, David

      Lester, Jim

      Taylor, John (Solihull)

      Lightbown, David

      Taylor, Teddy (S'end E)

      1145

      Terlezki, Stefan

      Whitfield, John

      Thomas, Rt Hon Peter

      Whitney, Raymond

      Thompson, Donald (Calder V)

      Wilkinson, John

      Thompson, Patrick (N'ich N)

      Winterton, Mrs Ann

      Thurnham, Peter

      Winterton, Nicholas

      Tracey, Richard

      Wolfson, Mark

      Twinn, Dr Ian

      Wood, Timothy

      Walden, George

      Yeo, Tim

      Waller, Gary

      Wardle, C. (Bexhill)

      Tellers for the Noes:

      Watson, John

      Mr. Tim Sainsbury and

      Wells, Bowen (Hertford)

      Mr. Mark Lennox-Boyd.

      Wheeler, John

      Question accordingly negatived.

    Clause 2

      THE CNETRAL BOARD AND THE REORGANISATION
      Mr. Ian Stewart: I beg to move amendment No. 2, in page 3, line 11 leave out
      'is to be paid or left unpaid'
      and insert
      'for the transfer or for shares or rights to shares disposed of under subsection (1) above in connection with the reorganisation is to be paid or left unpaid for any period or, in the case of shares or rights to shares, is to be full consideration or discounted'.
      Mr. Deputy Speaker: With this it will be convenient to take Government amendments Nos. 3, 4, 5, 6.
      Mr. Stewart: This and the related group of amendments are purely technical. Their object is to ensure that the Government do not receive part of the proceeds of the issue. Because of the curious structure of the TSB group and its legal position, the central board could acquire the shares and, when selling them on to the public, become liable to capital gains tax because of the method that was followed. It is not the intention of the Government to obtain tax revenue in that way; the proceeds of the issue should go to the TSB. This amendment to schedule 2, with accompanying amendments to clause 2, will ensure that that does not happen.
      Question put and agreed to.
      Amendments made: No. 3, in page 3, line 13 after `above', insert
      'relating to the transfer of assets by virtue of section 3(1)(b) or (c) below'.
      No. 4, in page 3, line 17 after 'of', insert 'or in connection with'.
      No. 5, in page 3, line 19 leave out from 'Treasury' to first 'the' in line 21 and insert
      '(if they have not already done so under subsection (1) above), dispose of any shares or rights to shares in the new holding company which are held by or, as the case may be, vested in'.— [Mr. Ian Stewart.]

    Schedule 2

      TAXATION
      Amendment made: No. 6, in page 15, line 33 at end insert
      '4A. For the purposes of the Act of 1979, gains arising on the disposal by the Central Board of any shares, or rights to shares, in the new holding company shall not be chargeable gains.'.— [Mr. Ian Stewart.]
      Motion made, and Question proposed, That the Bill be now read the Third time.
      12.19 am
      Dr. McDonald: I do not intend to detain the House on the Third Reading; I want to make only one or two remarks. As has been clear from the debate on the new clauses, the Opposition have sought to alter the Bill in such a way as to lead to the reorganisation of the TSB so that it might the better represent its traditions. We regret that the alterations were not made.
      We know that the chairman of the TSB has given assurances that he intends to maintain the tradition of the TSB as personal banks which will continue to serve the local communities in which they were established. The Opposition will be watching the progress of the TSBs after flotation to see whether they fulfil the commitments which the chairman gave in his letter which accompanied the White Paper. We wish them well.
      12.20 am
      Mr. Ashdown: I must express a degree of amazement—the hon. Member for Crawley (Mr. Soames) is doing his usual business of sitting in his seat and making some kind of intervention— [HoN. MEMBERS: "Withdraw."] No doubt he has once again dined too well— [HoN. MEMBERS: "Withdraw."] I make the assumption—
      Mr. Deputy Speaker: Order. I want to hear what the hon. Gentleman is saying.
      Mr. Ashdown: I make the assumption, Mr. Deputy Speaker, that since you do not take interventions from a sedentary position, the hon. Member for Crawley wants to intervene. To satisfy my curiosity as to whether he is as good when speaking on his feet as he is when sitting on his backside, I shall give way to him. It seems that he does not wish to intervene.
      As I was saying, I must express a degree of amazement after listening to the hon. Member for Thurrock (Dr. McDonald), who has indicated that the official Opposition will not vote against the Bill. The safeguards for which they asked in Committee and on Second Reading have not been provided by the Government. We are surprised that they have decided not to oppose the Third Reading, because the Government are seeking to change fundamentally an institution which has its roots in the working-class areas of Britain and which has been famous in the past for serving those areas in a way which, as the Minister said, was unique. Now that the Government intend to change the nature of that institution, the Labour party does not intend to vote against them.
      The Government have claimed during the passage of the Bill that this is a great advance towards wider share ownership and towards property owning. In reality it is revealed as a move in the opposite direction. The TSB sat uncomfortably in the banking sector and provided competition which the clearing banks could not meet. The London clearing banks obligingly said just that in their evidence to Page. The committee of the London clearing banks put forward to Page the argument that trustee savings banks represented unfair competition. The Page committee rejected that outright.
      What the London clearing banks meant when they said that was that the TSBs were reaching parts of the nation which they could not reach, that the TSBs were providing a service which they could not provide and that they were getting at a market which the clearing banks could not get into because of the low operating costs. In the Bill a new

      1147
      principle is being established. It is not the well-known principle, "If you can't beat them, join them," but rather, "If you can't beat them, get the Government to make them join you."
      In the absence of the safeguards which we have sought from ther Government and which they have consistently refused to give, the Bill is revealed finally as no more than a mechanism for the Government to do the bidding of the clearing banks, and of the management of the trustee savings banks as well, to the cost of many of their depositors and some of their employees.
      The Page committee said that there was a requirement in the banking sector for a third arm. It said that the TSBs could have become that third arm and fulfilled the need that it identified.
      All right hon. and hon. Members who have followed the issue closely recognise that some of that pass —perhaps all of it—was sold in the 1976 Act. My hon. Friend the Member for Stockton, South (Mr. Wrigglesworth), who had some dealings with the Act, generously admitted as much in his Second Reading speech. He said:
      "The Bill would not have been before us … had we clarified ownership of the banks in the 1976 Act … it might have been better had we gone down the road of mutuality in 1976."—[Official Report, 14 January 1985; Vol. 71, c. 50.] That is true. That is how we see it.
      The Bill could have reversed what happened after the 1976 Act. It could have gone a long way towards restoring that mutuality which Page thought so important and which it wished to see encouraged. It could have maintained what the Minister described as the unique character of the TSBs. It could have fulfilled the urgent need that Page identified for a third arm in the British banking sector. Instead, it has taken a noble and in some senses unique institution, founded in the community with the capacity to offer banking to some of our poorest and most deprived areas, and made it into yet another faceless financial conglomerate in the City of London.
      My hon. Friend the Member for Stockton, South said on Second Reading that at that stage he would not vote against the Bill, but he called for a number of safeguards. He asked for stronger guarantees about ownership. Those have not been provided. He asked for details of the amount of shares to workers and depositors. We again asked for those in new clause 1. Those, too, have not been provided. He asked for further details on the flotation. Those, too, have not been provided.
      The Page committee called for the TSBs to be made into mutual organisations. That has not been done. The committee called for the development of a third force in banking. The Bill will not do that, either. The committee believed that the customer first, profits later ethic that gave cheap banking facilities to the less well off should be preserved. The Bill will almost certainly destroy that unique quality of the TSBs.
      The Government had a unique opportunity with the Bill to give a new dimension to an old and proud tradition. They have not taken it, and it is an opportunity that has, sadly, been missed.
      There is a need for new types of institutions to stand between the great corporate financial structures so loved by the Tory party and the great corporate state structures beloved by the Labour party. We need community-based
      1148
      institutions serving individuals rather than either profit or the state. That is what the TSBs could have become. The Bill destroys that opportunity, and the alliance will vote against it.
      12.28 am
      Mr. Pike: I intend to vote against the Third Reading because I believe the Bill to be wrong. I have opposed all its stages, and the only way now to express opposition to it is by voting against the Third Reading.
      If the amendments had been carried, they would have provided safeguards for the future of the Trustee Savings Bank, and I regret that they have been rejected. But, even if they had been carried, they would still have provided a bad solution, the Bill would not have been a good one, and I would still have voted against it.
      My hon. Friend the Member for St. Helens, South (Mr. Bermingham) raised an important point of order at the start of Report stage. I respect the view of Mr. Speaker, and accept that his ruling was correct. He ruled that it was not for him to determine whether the Bill was legal. However, he did not say that the Bill was legal. He gave no interpretation of that point. I believe that my hon. Friend's point may well have been important. How can one privatise something that, at present, is owned by no one? The Bill is suspect and questionable. Those who vote for it tonight may be voting for a Bill that will be found to be illegal. What will their position be then?
      I said, when speaking on one of the amendments, that the trustee savings banks have a long tradition of service, providing a personal banking service for the ordinary working people. I started work in the Midland bank in 1954. The Midland bank then owned the Clydesdale and North of Scotland bank, now the Clydesdale bank. At that time the TSB was playing its traditional role. Since then it has developed rapidly with the introduction of cheque book accounts and Trustcards, and many other developments. I am not opposed to the TSB developing to meet the 1990s and the years to come. No doubt certain changes need to be made to give the TSB the powers and freedom to develop and meet the demands both of present and future customers. But I do not believe that the Bill is the right way forward. It is regrettable that the Government have brought it in.
      Once again, the Government express their belief that the employees in an industry should have the right to buy shares, but they are not prepared to make any concession to ensure that there will be worker directors within the organisation. We have not debated that point tonight, but it was debated in Committee. The same thing happened in the case of the royal ordnance factories and in other cases. The Government talk of giving greater participation to the employees of the organisations that they privatise, but they are not prepared to give them any special position on the board of directors. That is something that could have been done.
      The Bill is a bad Bill and this is a sad day for the TSB. I hope that it will continue to prosper, but I feel that it will not be many years before it is taken over. Whatever assurances are given by the chairman now, he may soon be replaced. His assurances are not worth the paper on which they are written.
      Some years ago there was a local brewery in Burnley, Massey's brewery, which had been there for more than 100 years. It brewed a very good pint of beer. It was taken over by Bass Charrington. An assurance was given that

      1149
      there would be no closure of the brewery in Burnley. Surprise, surprise—the chairman of Massey's brewery suddenly became chairman of Bass North-West. He was also at that time the hon. Member for Morecambe and Lonsdale. As soon as he became chairman of Bass North-West, the Burnley brewery was closed down.
      Mr. Michael Meadowcroft: Is it not true that many of his right hon. and hon. Friends are not prepared to join the hon. Member for Burnley (Mr. Pike) in the Lobby because one of the unions involved has done a deal? It is sad that, on so important an issue, hon. Members should be inhibited from supporting the hon. Gentleman by such a factor.
      Mr. Pike: I am not aware of any such undertaking and am certainly not party to it. I am also sure that my hon. Friends on the Front Bench are not party to any such agreement or undertaking.
      The brewery I was talking about closed, despite all the undertakings. The identity of and the service provided by the TSB will not survive for long as it will soon be merged and its employees will find themselves out of work. Technology and the existence of too many banks and building societies on the high street mean branch closures in the future. If the TSB is taken over, its employees will find themselves out of work. I hope that the House will think seriously about the Bill and vote against it receiving a Third Reading.
      12.35 am
      Mr. Ian Stewart: I do not want to rehearse the issues in the Bill, as they have already been dealt with. Before the Bill leaves the House, I should like to thank all those who have been responsible for arranging a complex and technical Bill that will provide an important basis for the future of the TSBs. I should also like to thank the hon. Member for Thurrock (Dr. McDonald) and her team for their generally constructive approach to the Bill.
      On Second Reading, I spoke of the TSBs' long history and distinguished past. I also said that we were confident that they had an important future. The Bill releases the TSBs from the restrictions of direct parliamentary accountability and opens the way for their further development as they have chosen. On behalf of the Government and, I hope, most if not all hon. Members, I should like to wish them every success in the future. Question put, That the Bill be now read the Third time:—
      The House divided: Ayes 130, Noes 25.

      Division No. 122]

      [12.36 am

      AYES

      Beaumont-Dark, Anthony

      Douglas-Hamilton, Lord J.

      Boscawen, Hon Robert

      Dunn, Robert

      Bottomley, Mrs Virginia

      Durant, Tony

      Brown, M. (Brigg & Cl'thpes)

      Fairbairn, Nicholas

      Bruinvels, Peter

      Favell, Anthony

      Budgen, Nick

      Forsyth, Michael (Stirling)

      Burt, Alistair

      Forth, Eric

      Butcher, John

      Freeman, Roger

      Chope, Christopher

      Gale, Roger

      Cockeram, Eric

      Galley, Roy

      Conway, Derek

      Garel-Jones, Tristan

      Cranborne, Viscount

      Gregory, Conal

      Dorrell, Stephen

      Griffiths, Peter (Portsm'th N)

      1150

      Ground, Patrick

      Neale, Gerrard

      Hamilton, Hon A. (Epsom)

      Newton, Tony

      Hamilton, Neil (Tatton)

      Norris, Steven

      Hanley, Jeremy

      Onslow, Cranley

      Hargreaves, Kenneth

      Oppenheim, Phillip

      Hayes, J.

      Page, Richard (Herts SW)

      Hayward, Robert

      Portillo, Michael

      Henderson, Barry

      Powley, John

      Hickmet, Richard

      Proctor, K. Harvey

      Hind, Kenneth

      Raffan, Keith

      Holt, Richard

      Rhodes James, Robert

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

      Rhys Williams, Sir Brandon

      Howarth, Gerald (Cannock)

      Roberts, Wyn (Conwy)

      Howell, Rt Hon D. (G'ldford)

      Robinson, Mark (N'port W)

      Hubbard-Miles, Peter

      Rowe, Andrew

      Hunt, David (Wirral)

      Sainsbury, Hon Timothy

      Hunter, Andrew

      Shaw, Sir Michael (Scarb')

      Jones, Robert (W Herts)

      Shepherd, Colin (Hereford)

      Jopling, Rt Hon Michael

      Smith, Tim (Beaconsfield)

      Kellett-Bowman, Mrs Elaine

      Soames, Hon Nicholas

      Key, Robert

      Spencer, Derek

      King, Roger (B'ham N'field)

      Stevens, Lewis (Nuneaton)

      Knight, Gregory (Derby N)

      Stevens, Martin (Fulham)

      Knight, Mrs Jill (Edgbaston)

      Stewart, Allan (Eastwood)

      Knowles, Michael

      Stewart, Andrew (Sherwood)

      Leigh, Edward (Gainsbor'gh)

      Stewart, Ian (N Hertf'dshire)

      Lennox-Boyd, Hon Mark

      Stradling Thomas, J.

      Lester, Jim

      Sumberg, David

      Lightbown, David

      Taylor, John (Solihull)

      Lilley, Peter

      Taylor, Teddy (S'end E)

      Lloyd, Peter, (Fareham)

      Terlezki, Stefan

      Lord, Michael

      Thomas, Rt Hon Peter

      Luce, Richard

      Thompson, Donald (Calder V)

      McCurley, Mrs Anna

      Thompson, Patrick (N'ich N)

      Macfarlane, Neil

      Thurnham, Peter

      MacGregor, John

      Tracey, Richard

      Maclean, David John

      Twinn, Dr Ian

      Malins, Humfrey

      Walden, George

      Maples, John

      Waller, Gary

      Marland, Paul

      Wardle, C. (Bexhill)

      Mather, Carol

      Watson, John

      Maxwell-Hyslop, Robin

      Wheeler, John

      Mayhew, Sir Patrick

      Whitfield, John

      Mellor, David

      Whitney, Raymond

      Merchant, Piers

      Wilkinson, John

      Meyer, Sir Anthony

      Winterton, Mrs Ann

      Miller, Hal (B'grove)

      Winterton, Nicholas

      Mills, Iain (Meriden)

      Wolfson, Mark

      Mills, Sir Peter (West Devon)

      Wood, Timothy

      Mitchell, David (NW Hants)

      Yeo, Tim

      Moate, Roger

      Montgomery, Sir Fergus

      Tellers for the Ayes:

      Moynihan, Hon C.

      Mr. Ian Lang and

      Murphy, Christopher

      Mr. John Major.

      NOES

      Alton, David

      Loyden, Edward

      Ashdown, Paddy

      Nellist, David

      Beith, A. J.

      Parry, Robert

      Bruce, Malcolm

      Penhaligon, David

      Carlile, Alexander (Montg'y)

      Pike, Peter

      Clay, Robert

      Skinner, Dennis

      Craigen, J. M.

      Snape, Peter

      Cunliffe, Lawrence

      Stewart, Rt Hon D. (W Isles)

      Davies, Ronald (Caerphilly)

      Welsh, Michael

      Evans, John (St. Helens N)

      Wilson, Gordon

      Home Robertson, John

      Hughes, Simon (Southwark)

      Tellers for the Noes:

      Kennedy, Charles

      Mr. Michael Meadowcroft and

      Lewis, Terence (Worsley)

      Mr. Archy Kirkwood.

      Lloyd, Tony (Stretford)

      Question accordingly agreed to.
      Bill read the Third time, and passed.

  Milk Supplementary Levy
  12.47 am
  The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): I beg to move,
  That this House takes note of European Community Document No. 4421/85; and supports the Government's intention of securing administrative modifications which in the light of experience would enable the milk supplementary levy to operate more efficiently and fairly throughout the European Community.
  As the Ministry's explanatory memorandum makes clear, tonight's debate concerns proposals for three Council regulations brought forward by the Commission. The proposed regulations are an attempt to satisfy requests from various member states for amendments to the present Community rules on milk quotas to cater for problems that have emerged in implementation. The regulations are—like the quota system itself—rather technical. However, the Scrutiny Committee has rightly identified them as being of importance in some of the changes that they make to the impact of quotas. The proposals were first outlined at the January Council of Agriculture Ministers and I referred to them in my subsequent report to the House.
  Discussions have been taking place since then at official level between representatives of the member states and the Commission in Brussels. This is to enable texts to be prepared for consideration and I hope that we shall be able to agree them at the February Council on Monday 25 and Tuesday 26 February. But I have to tell the House that several member states still have important reservations and it may be that the proposals will be difficult to agree in advance of this year's price-fixing negotiations. I shall certainly be pressing for the earliest possible adoption of the measures.
  The first of the draft regulations contains four proposals to amend Council regulation 857/84, which is the main regulation on milk quotas. The first of these proposals would allow 1980 to be used as an alternative base year for the purpose of allocating milk quotas to producers affected by exceptional events.
  At present the regulations provide that a producer whose production has been adversely affected during 1983 — the base year for determining milk quotas in the United Kingdom — by one of the exceptional events listed in article 3(3), can apply to have his quota determined on 1981 or 1982 production instead. The new provisions would allow 1980 to be chosen as well. I am bound to say that we would not welcome this proposal, as all producers would, quite naturally, want to be able to reconsider their positions. It would mean reopening tribunal and local panel cases which were already decided and going back to scratch in calculating individual quotas.
  Mr. John Home Robertson indicated assent.
  Mr. Teddy Taylor: I fully support what my right hon. Friend has said, but will he tell the House roughly how many cases have been considered by the tribunals and what has been the total cost of running them and paying the enormous costs of those who have taken part in them? Will he give us an assurance that he will resist the proposal which could reopen the matter?
  Mr. Jopling: I shall be coming to that point. I shall be resisting the proposals. Speaking from memory, I think the
  1152
  tribunal has been considering between 9,000 and 10,000 cases. Of course, I cannot say how much the affair will cost, because the tribunal has not finished its work.
  As I have just said, we have made it clear that we would not want to apply the provision at this stage. Most other member states are in a similar position. Indeed, the Germans, who originally asked for this change last summer, have now, like us, progressed too far in implementing the rules for the change to be of any help to them. Against that background, I understand that the Commission has now said that it is its intention to withdraw this part of the proposal.
  The next proposal in the first of the Council Regulations is in two parts. The first part deals with the problem of producers who have both direct and wholesale quota. Under the Commission proposals, a producer who, for example, had not enough direct sales quota but too much wholesale quota for his needs could simply transform some of his wholesale quota into direct sales quota. Thus, so long as he did not sell more than his total quota, of both types, he would not be liable for levy.
  Unlike the existing swap shop arrangements, a producer is not limited in the amount of his spare quota that can be transformed in this way. Since the Community legislation lays down the national totals of direct and wholesale quota on a continuing basis, the switch to which I have referred would take place for no more than one year at a time. Formally, one would revert to the previously allocated quotas for the next year, although the switch could be made again if necessary.
  That proposal was brought forward as a result of the strenuous efforts that I have been making to get changes to help mixed businesses in this country. If adopted, it would prove extremely useful to our producers in removing unnecessary restrictions on direct sales. I am pleased to report that some other member states see that problem in much the same way as we do. But there are other member states that are not so clearly in favour of the proposal.
  Although we can administer the proposal effectively here, there is real concern that it could result in a weakening of controls in some member states. I shall be doing all I can to meet those criticisms and to persuade all the other member states to accept it. In order to forestall the many questions which I am sure hon. Members will have about how the mechanism will work in practice, let me say only that the technical arrangements and the wording of the proposals are still very much under discussion. The proposal is likely to undergo yet further changes before it is adopted. For the moment, we have made clear to the Commission and the other member states the nature of the problem and will be insisting that any regulation adopted will tackle the problem effectively.
  A second feature of the change to article 6 of the regulation is a proposal to permit member states to use the calendar years 1982 and 1983 adjusted by a percentage to keep within the overall quota instead of calendar year 1981 plus 1 per cent. for the purpose of establishing direct sales quotas. That proposal would allow the same choice of base year for direct sales as presently applies to wholesale deliveries.
  Although the arrangements would have been desirable had they been introduced at the start of the scheme, it is difficult to envisage adopting them in the United Kingdom now, when the work on allocating direct sales quotas is virtually completed. As with the first of the proposals

  1153
  which I have already described, it would entail starting the system again from scratch with new parliamentary regulations, completely new applications from producers and a repeat of the appeals procedure. Therefore, we have obtained an assurance from the Commission that the proposal will be optional and if it is adopted we would not make use of it here.
  The next proposal is an amendment to article 7 of regulation 857/84 to meet a problem in Germany where 40 per cent. of the land is let on short-term leases. They feel that when the tenancies come to an end, tenants could be in an unfair position in negotiating new leases, as the landlord could demand much higher rents if the tenant had no other way of acquiring quota.
  The provisions could provide some protection for tenants in those circumstances, but would be optional for the member state to apply. Again, this text is being examined carefully because it may not meet the difficulties in Germany adequately.
  Of course, in the United Kingdom, short-term lettings are very much the exception as a result of the lifetime security of tenure provisions in the agricultural holdings legislation. As the proposal is both limited and optional, we have said that we would not wish to stand in the way. We do not see it as prejudicing our own position for the future, which we are currently considering in discussions with the industry.
  Mr. William Ross: Is the right hon. Gentleman aware of the Conacre system in Northern Ireland? Has that been taken into account during his consideration of the German position and short-term lettings?
  Mr. Jopling: As far as I am aware, the position in Northern Ireland is not relevant to this point, but I shall have another look at the matter and if there is something in it, I shall let the hon. Gentleman know.
  Mr. John Watson: What does my right hon. Friend have in mind as regards short-term tenancies in Germany? Would that have any applications to the British market? Might the amendment to article 7 enable us to install in the United Kingdom a more realistic form of transferability of quota and a recognition of the rights of ownership of quota which ought to belong to the tenant who has invested in the infrastructure of the farm?
  Mr. Jopling: My hon. Friend raises a difficult and important matter. The NFU is coming to see me in the morning to discuss the subject. I do not think that the Commission's proposed amendment is likely to affect the vast number of tenancies in this country and we do not see it as prejudicing our position for the future, which we are considering in discussions with the industry.
  The last of the proposals in the first regulation would amend article 12 of regulation 857/84 to enable groups of small dairies to be treated as a single purchaser. The proposal has been brought forward to deal with problems in mountain areas in France. They say that the pattern of sales in those areas varies as a consequence of the weather conditions and whether the cows can be fed in the mountain pastures or need to be brought down into the valleys and this affects the uptake of these dairies. By banding together and pooling their quotas, they would be better organised to operate within quota.
  An alternative for France, at least in principle, would be to set up regional milk marketing boards which offer
  1154
  producers and consumers a range of advantages. But in the context of a satisfactory package of amendments to the quota regulations, we would not be opposed to that element.
  The second draft regulation would allow Belgium to switch 25,000 tonnes from its national direct sales quota to wholesales. As a similar regulation was adopted last May to deal with a statistical problem in the United Kingdom, I feel that it would be right to accept this modest proposal for Belgium.
  The last of the draft regulations has been undergoing drafting changes since it was put before the Scrutiny Committee, although the intention behind it has not changed. It is to allow member states, for the first year of the quota arrangements, to switch unutilised quotas between producers and purchasers in the same region and between different regions. We have made it clear that the proposal must apply to direct sales as well as wholesale deliveries.
  The effect of the proposal would be similar to treating the milk industry of each member state as if there were a single purchaser applying formula B. In the United Kingdom it would permit a temporary movement of quota between the milk marketing boards. If adopted, it would reduce levy liability both where formula A applied and where formula B applied.
  So far as wholesale producers in the United Kingdom are concerned, this proposal would probably remove all liability for levy this year, since spare quota from Great Britain will become available to offset the present liability in Northern Ireland. I am sure that the hon. Member for Londonderry, East (Mr. Ross) is pleased to hear that.
  I can see advantage to the United Kingdom in this proposal, although I am bound to say that the Germans and Dutch have very strong reservations about it. The Dutch see it as undermining the fundamental purpose of quota arrangements, which is to curtail milk production by penalising those who over-produce. The Germans say they would find it embarrassing, given the lengths to which they have gone to implement the regulations to be in a position of having to refund levies they have already collected. Some other member states might, without such a measure, find it difficult to apply the quota system in its first year.
  I consider it most important that the quota system is applied effectively. Milk production must be contained, and I would not wish to undermine this. We want the levy to be applied effectively throughout the Community as soon as possible. This measure could help in that and provide some alleviation in Northern Ireland, and I am sure it is right to support it for application this year.
  These proposals are a package with some elements of important value to the United Kingdom. They are as yet subject to further negotiations and some member states have significant difficulties with some elements. I regard it as the highest priority to ensure that the United Kingdom's interests are secured in the way I have described and shall press for adoption of the measures at an early stage. On this basis, I can commend the proposals to the House.
  1.2 am
  Mr. John Home Robertson: We are asked to take note of yet another European Community document and to support the Government's intention to make the superlevy system work more efficiently and

  1155
  fairly. I am reluctant to take note of anything at this time of night after the events of the past couple of days, but we are always willing to support good intentions to make European Community schemes operate more fairly and efficiently. I speak as an increasingly disillusioned pro-European.
  As the Minister knows, we have been critical of the Government for the way in which they were stampeded into accepting a quota system on terms which are manifestly unfair to British milk producers. I do not like to embarrass the right hon. Gentleman, but I remind the Minister of State that on 1 March 1984 in a written reply he said:
  "The Government consider that the preferable route to achieve a better market balance in the milk sector is through price policy. But the necessary price cuts to achieve a balance in the market have not so far proved negotiable in the Community."—[Official Report, 1 March 1984; Vol. 55, c. 327.]
  Evidently not, because the Minister of Agriculture, Fisheries and Food came back two weeks later, on 14 March, not with a package of price cuts, but to announce the immediate introducion and imposition of milk quotas on the dairy industry.
  For some time the Labour party has been advocating a quota mechanism to control dairy production. We have consistently stated the case for a fair distribution of quota between member states and a reasonable period to allow the industry to adjust.
  Mr. Jopling: I apologise to the hon. Gentleman for interrupting him in full flight. He referred to statements by myself and my hon. Friend the Minister of State. I ask the hon. Gentleman to look at a speech that I made in the House on 1 December 1983, when I made it perfectly clear that we might have to accept quotas instead of our preferred option of price control.
  Mr. Home Robertson: I understand why the right hon. Gentleman is a little sensitive about this issue. We know that he did not want this system, but he was saddled with it, and the industry is now saddled with it. We have consistently said that there is merit in the principle of a quota system, but we would like to ensure that the distribution of quota among member states is seen to be fair and that our industry is given time to adjust.
  What happened was different from what we would have liked. It was agreed that the scheme would reduce EC milk production by 4·1 per cent., but for reasons best known to the right hon. Gentleman, he surrendered 6·2 per cent. of British production, despite the fact that the United Kingdom was not contributing significantly to European overproduction. Our producers were pitched headlong into panic measures to cut their production during the current year. The consequence has been a disgraceful and damaging shambles, without the original objectives being achieved.
  British production is likely to fall significantly short of the quota. That demonstrates the turmoil into which our industry has been pitched. Incidentally, that is in marked contrast to what is happening in other member states. The EC is still producing far too much milk — 20 million tonnes more than is required. That excess costs the Community taxpayer £2 billion. Our dairy industry has been put through all that agony, yet we are nowhere near achieving the original objective of bringing production near to the level of demand.
  1156
  The latest proposals appear to accept the continuing burden of overproduction in Europe, most of which is coming from other Community countries. The Minister has excelled himself. He has accepted a deal which does the maximum damage both to British producers and to British and European taxpayers. He has even managed to fall out with the National Farmers Union. He is bound to have noticed, as other hon. Members have, what the president, Sir Richard Butler, said at the annual general meeting last week. He is not renowned for attacking the Conservative party, but he said:
  "The British government has added to our misfortune. It has been ineffective in negotiation in Europe. It has been inept in administration at home. And it has not thought enough about the future."
  Amen to that. The Opposition want a quota system that will work and be fair. The present signs are that the system is neither working nor fair.
  The first proposal will apparently be withdrawn by the Commission. It would have made it possible for 1980 to be treated as an alternative base year for calculation of primary quota, in addition to 1981, 1982 and 1983. That might have been eminently sensible if it had been suggested in the first place, but to introduce it into the calculation now would be plain daft. It would encourage producers to return to the tribunals to appeal again, it would prolong the agony, and it would achieve little. In passing, it should be said that the whole tribunal procedure has been discredited, because producers are being allocated less than two thirds of the extra quota that has been recommended by the tribunals. I agree that we should probably do more about special cases, but the proposal would not have made sense. Therefore, I am glad that it is unlikely to see the light of day.
  The second proposal provides for interchangeability of quota between direct sales and wholesale categories. We support that form of flexibility and cannot understand why it was not permitted in the first place. I hope that it will come into effect as soon as possible. I shall be grateful if the Minister will tell us in his reply whether the proposal will be made effective for levy collection purposes for the current year.
  The Minister made it clear that the third proposal was entirely for the benefit of short-term lets in Germany. It could create potential for new rights for tenant farmers in respect of their quotas. If so, we would wholeheartedly support that objective, not least because of evidence that landlords in parts of England have been abusing their powers over tenants with regard to quotas in the outgoers scheme.
  The proposal also raises the issue of transferability of quota. I shall take this opportunity to comment on the responses that the Minister has received to his consultation paper on that subject. There seems to be a general consensus that quota should be transferable. We agree with that. However, obviously there is no merit in keeping quota on farms that are not using it, when other farms desperately need additional quota.
  The question seems to be whether quota should be transferred by sale or lease in a free market or in a regulated market, or whether it should be done through a purely administrative scheme. We recognise that a purely administrative scheme would not work, because there would be no incentive for producers to relinquish quota, but we are equally unhappy about the idea of a free market in the new commodity of quota.

  1157
  If we are to have unregulated buying, selling and leasing of quota, it will inevitably follow that bigger dairying concerns will be able to pay the price to acquire whatever quota might come on the market, while small farmers and people coming into the industry will find it increasingly difficult to obtain additional quota. By the same token, there is a risk that quota which might come on to the market in the less prosperous areas will be bought by producers in the richer areas. The Welsh quota might tend to be purchased by English dairy farmers.
  I notice that in its submission to the Government the English Milk Marketing Board said:
  "The Minister should have powers to limit the rate of movement of quota between areas and to limit the acquisition of quota by an individual business but these powers should only be invoked if monitoring of quota transfers showed it was necessary to do so."
  That sounds a little like shutting the buyer door after the cows have gone. Powers should be established at the outset to control the price of quota and to prevent excessive accumulation of quota in some areas or businesses.
  Mr. William Ross: The hon. Gentleman mentioned the excessive accumulation of quota. In modern farming practice, what would he consider to be an excessive number of cows and an excessive quota?
  Mr. Home Robertson: I am not foolish enough to be drawn into defining what is and what is not excessive. I am not qualified to do so. Someone in authority who can consult the various parts of the industry should have the power to make such an assessment and to regulate that kind of thing.
  In its submission to the Minister on that point the National Farmers Union said:
  "All transfers would take place through a central industry authority with powers to safeguard the structure of the industry and to provide assistance to young new entrants."
  That is the objective, and I think that there will be consensus that that is what the Minister should seek to achieve. The proposals from the Farmers Union of Wales on that point seem to be helpful and relevant. I am attracted by its proposal, which is aimed at creating a pool of quota for distribution to people coming into the industry.
  While we accept the principle of flexibility and transferability within the quota scheme, we believe it essential to ensure that those movements are subject to reasonable control in the interests of the whole industry and the people who work in it.
  We also agree with all involved that a system for transferring quota should be established as soon as possible. I hope that the Minister will take the opportunity to say something about that.
  The final proposal to which I wish to refer and about which the Minister spoke would make it possible, at least for 1984–85, for under-used quota, for example in England and Wales, to be transferred to areas of overproduction within the same member state; for instance, Northern Ireland. The Minister, as we know, has created such a degree of alarm and despondency in British dairy farming that production has fallen much further than even he intended, and we are now likely to fall 200 million litres below quota in the current year.. That is the equivalent of a year's production by 40,000 cows. In those circumstances, it would be perverse to require farmers in Northern Ireland to pay superlevy while the United Kingdom as a whole is well below its quota restriction.
  1158
  Some commentators are unhappy about that proposal. The Financial Times on 16 January described it as
  "a move dangerously close to the institution of national quotas".
  So what? It seems to us perfectly logical to fix quotas for individual nations and to penalise those nations which over-produce. Some hon. Members have been advocating that kind of strategy all along. The Commission should make sure that the quotas are enforced and the levy collected as soon as possible in those nations which are over-producing.
  The Minister must realise that he has got the dairy industry into a fine old mess. He has given away too much, he has created mayhem in the British dairy industry, yet, despite all that, there is still massive over-production in the European Community.
  We are not impressed; nor, indeed, is the industry impressed. Nevertheless, we recognise that the measures represent some gestures in the right direction, so we accept them for what they are worth. The Minister will have to try much harder in the coming months if he is to impress us, and harder still if he is to impress the NFU.
  1.15 am
  Sir Peter Mills: I welcome the regulations and the opportunity to debate them. It is important that we do so. The saga of milk quotas continues with all its problems and difficulties, although I do not think it is as bad as the exaggerated views of hon. Opposition Members suggest. These small proposals will help and will bring about some advancement. I am sorry that the Minister thinks that there should be some delay in putting the regulations into operation. I hope that he will urge them forward. They are an advancement, so let us go forward and help the industry as quickly as possible.
  I also regret, although it is not unexpected, that the hon. Member for East Lothian (Mr. Home Robertson) took the line that he did. I thought that his arguments were particularly weak. I am sorry that he brought in the president of the NFU. I thought that the president of the NFU used rather unfortunate rhetoric, and we know why.
  From my knowledge of the industry, I know that there has been the closest co-operation between the Minister and the NFU and, indeed, consultations are always taking place. The NFU has said that it wishes those consultations to take place in future before any hurried decisions are made. I put the hon. Gentleman's attitude down to his ignorance of what goes on behind the scenes between the NFU and the Minister.
  The hon. Gentleman, in his remarks about the failure of the Minister with respect to the drop in milk production, omitted to mention the weather, which I would have thought was obvious to everybody. Has not the weather played a part in this? Of course it has. Indeed, the drop in production was mainly due to the weather.
  The amendments to articles 5 and 6 are to be welcomed, and are essential. But much more needs to be done. I hope that we can move forward so that there will not be any penalties applicable to producer-retailers for the past year.
  Here we come to the nub of what ought to be done. At a time of large surpluses, the objective must be to get rid of them, for people to consume them, and not to store them away in intervention. The consumer should have the benefit of the surpluses. If a producer-retailer has the

  1159
  opportunity to get rid of these surpluses, I believe that he should be encouraged in every way and there should be a switch from wholesale to retail outlets.
  In the south-west, we want to take advantage of this with our famous Devonshire cream which can be sold at the farm gate. We want to see some of the surplus Devonshire and Cornish cream sold at the farm gate.
  Sales are increasing. It is important for our holiday industry that we provide the facility of cream, farmhouse cheese, yoghurt and the various products that farmers can produce and sell over farm gates and on retail rounds. That is the right way forward, rather than products being put into storage and intervention, finally to be sold to the Russians or others at knockdown prices.
  We must move forward in that area, and the whole House should support the Minister in these proposals. Indeed, because of his efforts in Brussels, many of the movements that I have described have been started. [Interruption.] Do any Opposition Members wish to intervene? Would the hon. Member for Pontypridd (Mr. John) like me to give way? Of course not. He has nothing to say. He cannot even sit upright in his seat.
  I assure Opposition Members that I do not belong to a fan club for the Minister, though he has been one of my best friends for a long time. We appreciate what it means to be loyal to each other, which is more than can be said of hon. Members on the Opposition Benches.
  As for the proposal affecting Northern Ireland, speaking as a former Minister with responsibility for that part of the nation, I welcome what is proposed, which will be of great benefit to Northern Ireland.
  The amendment to article 7 is intriguing because it refers to the quota attached to the holding being retained by the outgoing tenant. We might be able to build on that. The Minister should see whether it is possible to use that to assist with the whole problem of landlord and tenant in relation to quotas.
  I welcome this small move forward and hope that the Minister, using his strength and power, will endeavour in Brússels to build on what has been achieved so that we can avoid the stupid business of putting dairy products into storage and intervention. If those products can be sold and consumed, that must be the best way forward.
  1.22 am
  Mr. William Ross: As the Minister spoke of the difficulties that were being faced by every European country, I reflected that at least some of us foresaw that they were bound to arise as Europe moved from food deficit to food surplus. Once we entered the Common Market, the United Kingdom found itself in that position, and many of the problems that have arisen can be attributed to that occurrence.
  Milk, from the cow's udder to the teapot, is tightly controlled in every way. It was not possible for the milk industry to go into reverse in the way in which it was asked to do in the last year without severe difficulties being caused for every producer. The Minister said that he was afraid that we would have to go in for quotas. I have never been able to understand why, if the Government were aware — as they must have been — of that possibility, they did not signal those fears more clearly to farmers by starting to withdraw the grants that were being paid to enable production to go on at an ever-increasing pace. Had
  1160
  the Government taken that action a year or so earlier, fewer people would have gone into production and many of the difficulties that we now face would have been avoided. Many of those who have been hurt, and those who have yet to be hurt, would have come out of it in a much better position.
  As the Minister pointed out, we started with two different systems, one for Great Britain and one for Northern Ireland. I understand that some farmers in Great Britain wish that they had adopted the Northern Ireland system. That is the case only because Britain ended up with 200 million litres less. I believe, as a practical farmer, that that will cause considerable difficulties for farmers in Britain when we come to work out the quotas and incomes for individual farmers.
  We are all glad about the progress that has been made and hope that the Minister will continue with the good work. When the matter is brought to a satisfactory conclusion, we will have a common system of quotas throughout the United Kingdom. I do not think we can reach a reasonable end result without a common system.
  It is all very well for folk to say that there is some leeway but, as the hon. Member for Torridge and Devon, West (Sir P. Mills) pointed out, much of that was because of the weather and the rest was the fault of the farmers who took panic measures and cut production too much. I am pleased that the Minister will use that leeway to sort out Northern Ireland's problems, if only for this year.
  I ask the Minister and the farming community to look further ahead. The quota system has severe shortcomings. I fear that it will last only for a short period. So many points of friction are built into it that I cannot see it lasting for more than a few years. At the end of the way we will have a system of price governing production. If that is tied to national standard quantities, so much the better. I will be much happier; I am glad to see that the Minister agrees with me.
  1.26 am
  Mr. Teddy Taylor: It is unfortunate that we are spending time at this late hour discussing possible amendments, which will probably not be agreed in Brussels, to a scheme which is not working and which is not achieving its objective. Even if the scheme were to work, we all know that we would still have a horrendous surplus which it will be impossible to dispose of, even with the aid of the remarkable and costly subsidies through which we are trying to dump the surplus abroad. It is sad that we are discussing, in effect, a sick joke which was put forward as the first move towards restraint of production at a time when the Government were promoting plans to put an extra 40 per cent. of public expenditure into the Common Market.
  In view of the reference which has been made to the National Farmers Union and to Sir Richard Butler, and the attempts by my hon. Friend the Member for Torridge and Devon, West (Sir P. Miles) to draw a distinction between the bad Sir Richard and the good NFU, it is only fair to point out that at its annual conference the NFU passed unanimously a motion which blamed the structural imbalance on the Minister, but it did not put forward one specific, constructive proposal as to how the horrendous problem of over-production and the vast amount of public funds being put into surplus disposal could be tackled.
  We cannot regard this as a small matter at a time when, in all our constituencies, health authorities and councils

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  are having to cut expenditure. It is outrageous that the NFU should not have put forward one specific proposal about how to deal with the problem. It is costing us £100 million every single week simply to store and dump abroad surpluses, with the Russians and the east Europeans being the main beneficiaries.
  I have three questions for the Minister. First, does he welcome the extension of the transferability of quotas by means of a market mechanism, whether through a central agency or not? Is there not something squalid and very un-Conservative in the buying and selling of quotas which are simply giving people the right to produce at substantial cost produce which nobody wants and which cannot be disposed of? Has the Minister inquired about how the income from the selling of quotas will be regarded? Can we regard it, for example, as earned income for taxation purposes, because the quotas are being given and can be sold? Will it be unearned income, or will it be subject to capital gains tax? I ask the Minister that simple question on the transferability of quotas.
  Secondly, will the Minister back up the regulations in the discussions on Monday by resisting at all costs, in accordance with the Conservative manifesto, any increase in the price of milk which could disrupt the arrangements in the regulations? The Minister knows what was in the manifesto. Can he give us this clear assurance on price?
  Thirdly, will the Minister say whether, on balance, the proposed amendments will have the overall effect of increasing or reducing milk production? It has been clear that we expected an underspend or under-production. Will not these amendments have the effect, while not increasing quotas, of increasing production?
  Finally, as regards the possible changes to the tribunal organisation which would stem from the adoption of the amendment to article 3, can my right hon. Friend say what has been the cost to date of the operation of the tribunals and who is to pay for it? Does it come from the British taxpayer or from Community funds?
  The regulations, like the arrangements on the quotas, which are not working because we know what is happening in other countries, will have exactly the same result as happened with steel production, when we carried out our obligations in more than halving the numbers employed on steel production while other countries increased their capacity. We know what is happening, and it is absurd to give the impression that if these amendments are adopted, somehow the scheme will work and be effective. We all know in our hearts that it will not.
  The regulations and the milk quotas themselves demonstrate to British agriculture, which up till now has done pretty well out of the common agricultural policy, that it will not be possible to solve the problems of European over-production without doing immense damage to British agriculture. It is becoming more and more clear — those engaged in agriculture are just beginning to realise it—that it will be possible to solve the problems of agriculture within a United Kingdom framework but that if we are to solve the problems of over-production in the EEC it will only be done by having a violent and pretty vigorously deflationary effect on agriculture in Britain, which will do us immense damage.
  1.33 am
  Mr. Paddy Ashdown: I join other right hon. and hon. Members in welcoming the general objective of the amendments, though perhaps with not too much enthusiasm.
  The amendment to article 3 gives us the opportunity to use 1980 as an alternative base year for producers affected by an exceptional event. I welcome the Minister's statement that he regards the possibility of reopening the topic of special cases as one which would not be welcomed by him. However, in the brief from the Minister of State, we read that this one may be withdrawn or it may be optional. The Minister said that he regarded it as most likely that it would be withdrawn, but that it could be optional.
  I think that we may take it, from what the Minister said, that if it was optional it would be the Government's policy not to apply it.
  Mr. Jopling indicated assent.
  Mr. Ashdown: That is the most sensible way forward, and it would help the House if the right hon. Gentleman would make it quite clear that if it was optional he could not see the Government applying it.
  As for the amendments to articles 5 and 6, I think that we can take some pleasure from obtaining interchangeability between direct and wholesale quota. I was almost tempted to join the hon. Member for Torridge and Devon, West (Sir P. Mills) in congratulating the Minister on his achievement, because he has striven very hard to get something along these lines. All that stops me congratulating him as fulsomely as the hon. Gentleman is that those of us who read the Select Committee report will recall that the Committee was of the view that the right hon. Gentleman did not get it in the first place because he had not asked for it, and that he might have obtained interchangeability earlier if he had asked for it.
  Can the Minister clarify one matter? At one point he said that it was possible for some of the quota to be exchanged as between direct and wholesale, but I believe that later he said later that it was possible for all of it to be exchanged. There is a slight contradiction there. May I assume that there is no limitation on the amount of quota that can be exchanged? It seems unlikely that someone would want to interchange 100 per cent., but I would be grateful if the Minister could clarify what he meant.
  We have always made it clear—as, I believe, has the NFU — that we would have preferred a single quota covering milk production, whether wholesale or direct sale. However, though second best, a system that allows the farmer to choose at the end of every marketing year is welcome, and I believe that that is what is proposed. Again, I would be grateful if the Minister could confirm that, under the Commission's proposals, each individual could choose at the end of every marketing year about the interchangeability.
  The hon. Member for East Lothian (Mr. Home Robertson) called for an assurance that such proposals would be made effective for levy collection purposes in the United Kingdom during the present marketing year. It is important that that should be put on the record.
  I very much agree with those hon. Members who have expressed the hope that the Minister will view the amendments to article 7 as amendments which, if not totally applicable to Britain at present— one wonders

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  whether that is the case—might enable a much more effective structure to be built up in future. However, I believe that the amendments reveal what the Minister has strenuously denied for some time, namely, that quota is not viewed by the Commission as being immutably attached to land. Many of us believed that that was so, and we are now proved to be right, whereas the Minister's judgment has not been entirely correct.
  The amendments provide some basic recognition of tenants' rights to quota, and they are welcome for that, but I still believe that the wider question of the ownership and transfer of quota has been tackled in a somewhat superficial way. The NFU has produced a comprehensive package on ownership and quota which would provide a proper framework for the consideration of the interests of landlords and tenants, and could provide the framework for the future development of the industry. It would be useful if the Minister could make clear his general attitude to the NFU proposals.
  It would be preferable for quotas to be owned by producers and to be transferable separately from the land by sale or lease, perhaps, as I believe the NFU proposes, through a central industry authority. I believe that in the end we will need a mechanism to arbitrate between tenant and landlord in order to ensure the proper recognition of the genuine interests of both parties.
  We can support this measure as a first step towards solving the immediate crisis. We hope that the Minister will be able to build on it. It is the first step towards putting together a more permanent structure capable of accommodating changes in ownership and transfer arrangements that will be necessary if the industry is not to become trapped within unchangeable regulations, in a way that would permanently damage it.
  Mr. Jopling indicated assent.
  Mr. Ashdown: I am delighted to see the Minister nodding. I hope that there will be some development on those lines.
  Quota not used by Great Britain at the end of the first year will be able to be transferred to other areas—in this case, Northern Ireland. We can all rejoice with the Northern Ireland industry in the hope that that arrangement will help it over some of its own immediate problems.
  I believe the Minister said that the arrangement would be operated on a year-by-year basis an that the long-term structure of the quotas of the two areas would not be influenced. It would be useful if he could confirm that that is so.
  With those provisos, and hoping to receive those clarifications, I welcome the amendments.
  1.39 am
  Mr. Charles Wardle: I welcome the amendments to articles 5 and 6 and should like to illustrate the practical problems facing farmers who operate a mixed business of retail and wholesale production.
  On 10 January, when he moved that the Milk (Cessation of Production) Bill be read a Second time, my right hon. Friend the Minister reminded the House that the outgoers scheme was only one element in the Community supplementary levy arrangements. He made it clear, as he has done several times in the past year, that there are
  1164
  several steps to be taken if the urgently needed restrictions on the Community's milk output, which were necessarily introduced in some haste, are to be implemented effectively and continue to run sensibly.
  On Second Reading, several right hon. and hon. Members raised, and my hon. Friend the Minister of State responded to, aspects of the supplementary levy other than the terms and conditions for outgoers. High on the list of priorities were the problems facing dairy farmers with a mixed selling base—part retail, part wholesale. For that reason, I welcome the Commission's proposals to amend articles 5 and 6 and wish my right hon. Friend every success in persuading other members of the Council of Ministers that the changes are required urgently, at least in Britain.
  We have an entirely unreal and impractical distinction between the two types of quota, because we have a milk distribution system which is entirely different from that of the rest of Europe and the origins of which are to be found in the Agricultural Marketing Act 1931. After the Hop Marketing Board, the Milk Marketing Board was the second distribution mechanism to be set up—in 1933. Since then, it has provided a much more sophisticated milk marketing structure than is to be found anywhere else in Europe. It has enabled our unique doorstep delivery service of milk to continue.
  Not many farmers have set up as retailers as well as wholesale producers and there are perhaps a dozen in the south east, but those who have done so have found it difficult to take the supplementary' levy regulations seriously. When they received their direct sales quota—that took a little time in some cases—they realised that any business initiative that they took to capture a larger share of their local doorstep markets would incur a penalty immediately which would be applied much more directly than any penalty which might accrue to their wholesale production.
  Whereas wholesale producers have to wait upon national output statistics before the levy is assessed, the enterprising retailer knows from the outset that retail success above his existing quota brings a penalty for his own account. In practice, as a constituent has shown me, to avoid the extra levy, the enterprising retail operator has either to get on to the Milk Marketing Board and buy extra volume or to forgo the opportunity, although he has milk to spare from his herd, which is separately designated as wholesale production.
  To complicate matters further for the small retailer, the Milk Marketing Board is often reluctant to deliver less than a full tanker load at a time. The small retailer with additional daily doorstep sales of less than a full tanker load has to forgo his market opportunity or to buy in more milk than he needs, which clearly does not make a great deal of business sense. That is supposed to apply even when he has extra milk on his wholesale side.
  The present regulations are nonsense for the smaller British farmer retailer if he wants to expand or get rid of surplus milk production. By merging, or at least making interchangeable in some way, a farmer's direct sale and wholesale quotas, we shall remove a bizarre obstacle from the present complicated supplementary levy arrangements and provide a ray of hope to all dairy farmers who feel that they have been tied in knots by the Community's red tape that sanity will prevail.
  1.45 am
  Mr. David Penhaligon: I wish to mention one or two points that are not unrelated to the one that has just been made. The case I have in mind is rather worse than the one that has been drawn to the attention of the House by the hon. Member for Bexhill and Battle (Mr. Wardle), because his constituent realised the trap into which he was walking. However, in the south-west farmers did not realise the trap into which they were walking. Perhaps they should have done so, but they did not. There are farms where the holding is below the total allowable milk production quota. Because too large a proportion of their milk production, which is below the total global quota, has gone into direct sales, it is possible that these farmers will incur a very severe financial penalty this year.
  To be fair to the Minister, he was most encouraging when I last had the opportunity to raise this problem. He said that he hoped it would be possible to alleviate it. However, I believe that these regulations will not solve the problem for farmers this year. They relate to next year. That is to be welcomed. There will be great relief on a number of farms in the west country. However, will the alteration have any effect on milk quotas for this financial year?
  May I also mention the problem created by late applications. The original regulations stated clearly that farmers had to apply by a certain date, but many farmers are not too keen on reading bits of paper, especially if they think they will be told things they would rather not know. One or two farmers would, I know have been given a quota if they had appealed, but because they applied too late they were told that their quota was zero. I should like to know whether that problem could be examined in a humanitarian way. Undoubtedly there are one or two very difficult cases.
  Although one is inclinded to agree with the regional movement of quota, it must be made absolutely clear that it should apply only for one year. If it rains next year in the west country we want our full quota. We do not want to be told that we have lost some of it because the weather did not favour large-scale milk production. I hope the Minister will be able to reassure me on that point.
  The problem for this year relates to direct milk sales and late applications. I hope that the Minister will consider these points very carefully.
  1.48 am
  Mr. Nicholas Winterton: I am very pleased to be able to speak after my hon. Friend the Member for Bexhill and Battle (Mr. Wardle) and the hon. Member for Truro (Mr. Penhaligon). They have posed very succinctly a number of questions to which I hope the Minister will reply. I want to make it perfectly clear that there will be no praise from me for the Government, who have got the dairy industry in this country into the right mess it is in today. I do not believe that the Minister of Agriculture, Fisheries and Food has anything to be proud of, given the disgraceful way he has treated the dairy industry. I shall not follow the line of my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) and say that the Minister has been a friend of the industry for many years. I do not admire somebody who has decimated an industry which has been urged by him, by the Government and also by the European Community to produce milk and then, within 24 hours, has been told to put the clock back.
  1166
  Will my right hon. Friend give us reassurance— it can certainly be said that none was forthcoming in his speech—that these modest amendments will be accepted within the Community? Every word that my right hon. Friend uttered was hedged around with reservation and he highlighted the opposition that the proposals would receive from several countries within the European Community. Will he fight for the benefits and interests of the British dairy producer? I have my doubts about that. I doubt also whether the dairy industry will benefit from the proposals that he has announced because I do not think that the Community will accept them. My right hon. Friend will have, perhaps, to make a statement in future, or give a written answer to a parliamentary question, to explain that, sadly, some of the proposals have not been accepted.
  What reassurance will my right hon. Friend give to some extremely efficient dairy farmers in my constituency who invested heavily shortly before his announcement, which was basically retrospective, and who find that their quotas, even where they have appealed to the tribunal as special cases, mean that their return will not cover their overheads? I believe that my right hon. Friend has a heavy burden upon his shoulders. He owes the dairy producer—
  Sir Peter Mills rose—
  Mr. Winterton: No, I shall not give way. If my hon. Friend wants to intervene, he should realise that he had every chance earlier of doing so.
  Mr. Paul Marland: It is government that my hon. Friend the Member for Macclesfield (Mr. Winterton) wants to interrupt.
  Mr. Winterton: I wanted to listen to everything that was said. My hon. Friend the Member for Gloucestershire, West (Mr. Marland) happens to be a Parliamentary Private Secretary and I believe that on these matters he should keep quiet. At least there are some in the House who are prepared to speak out for those who have done what successive Governments have urged them to do. Of course, my hon. Friend the Member for Southend, East (Mr. Taylor) does not have one dairy farmer in his constituency and—
  Mr. Teddy Taylor: My constituents are consumers.
  Mr. Winterton: And so are mine, but included among them are dairy farmers. My hon. Friend the Member for Southend, East is prepared to be critical of the National Farmers Union and its president. It is a pity that the president did not speak out sooner in the forceful terms that he used only recently. If he had done, and if the NFU had been united, I do not believe that my right hon. Friend the Minister of Agriculture, Fisheries and Food would have returned with such a disgraceful package in March 1984, which I think that he announced with some reluctance, and with my great distaste, to the House.
  The NFU has done a great job for farmers. Indeed, it has done a great job for the consumer in guaranteeing him a secure supply of food at reasonable prices. I accept from my hon. Friend the Member for Southend, East that it was our joining the European Economic Community that brought about the high food prices in Britain. Prior to our joining, I am sure that my hon. Friend had little criticism of the NFU and the stand which it took.
  My hon. Friend the Minister of State must give rather more reassurance than was forthcoming from m} right

  1167
  hon. Friend the Minister of Agriculture, Fisheries and Food. I do not think that the way in which he hedged his speech with reservations when dealing with the European documents can give very much hope to dairy producers. I welcome the limited progress that has been made but I believe that my right hon. Friend has misled the House in the past in saying that we are contributors to the surpluses within the European Community.
  Other than in the byproducts of the production of butter Britain is not a contributor to the surplus. As has been said by at least one hon. Member tonight, we have had to take a bigger cutback than many other countries in the EC which are huge contributors to the surpluses of dairy products. If, by that, my right hon. Friend thinks that he has achieved a great breakthrough for the British dairy producers, he is living in cloud-cuckoo-land. He knows my strong opposition to the package. It is as strong now as it was when he announced it in March 1984.
  I hope that the Minister of State will give the House a little more reassurance tonight, and, through the House, the dairy producers. Many in my constituency are living in complete uncertainty, not knowing whether they will be able to continue to farm or whether, having served the communities in which they live and the people of the area which I have had the honour to represent for many years, generation after generation, they will have to leave farming. The repercussions of that upon our countryside would be devastating for the Conservative party.
  1.55 am
  The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor): I agree with my hon. Friend the Member for Bexhill and Battle (Mr. Wardle) that the hour is late. Like him I was here until the end last night. Therefore, except on one point, I shall confine myself to the questions that I have been asked which are relevant to the regulations.
  The hon. Member for East Lothian (Mr. Home Robertson) once again argued, as he has done so often in the past, that we have had a more savage cut in quotas than other member states and that the deal was unfair. I am sorry to have to remind him yet again that three member states, Germany, the Netherlands and Denmark, have had larger cutbacks in their national quotas than we have. We are the fourth because we have been the fourth largest expander in dairy production since 1981. There was no way of getting the Commission off 1981 as the base year from which the national quotas were calculated.
  The plain fact is that other member states have had a much bigger cut. Perhaps inadvertently, the hon. Gentleman referred to the fact that even now there is a 20 million tonnes surplus. I am sure that he will realise that the surplus is 12 million tonnes, not 20 million tonnes — the difference between consumption and the production levels in the coming year.
  The hon. Gentleman asked me about mixed businesses and whether the proposal relating to them would apply in the current year. That is important, because if it does apply in the current year it will deal with the levy collection position. I assure him that if the proposal goes through as it is intended it will cover the current year, and it is our intention to achieve that. My right hon. Friend the
  1168
  Minister and I have throughout pressed for that change because we have realised the importance of it in the current year.
  The hon. Gentleman made many comments about transferability. The hon. Member for Yeovil (Mr. Ashdown) also referred to that, and mentioned the NFU proposals. The initiative for the proposals on transferability comes from us. My right hon. Friend put out a paper on the mobility of quota for discussion with all the possibilities laid out because we are anxious to see greater transferability and flexibility in the system. The discussion that has been taking place in recent weeks has followed our initiative.
  It is too early to give our firm position on precisely what we shall be advocating because, as my right hon. Friend said, we are now having discussions with various bodies, including the NFU, on their reactions to our paper. Whatever changes we wish to advocate will have to be negotiated in Brussels with the Commission and Council. It is not yet possible to say when that can be done.
  I can tonight reaffirm our determination to try to achieve as soon as possible appropriate greater flexibility over and above the proposals that we are discussing in the regulations. Transferability is a key part of that in terms of flexibility. The hon. Member for Truro (Mr. Penhaligon) asked about this year. For this year, before the end of March, we are endeavouring to achieve the proposals that are in front of us now. It may be possible to discuss the proposals for greater transferability this year, but I do not think that they would apply retrospectively to this year. I stress that there will be resistance from various quarters in the Community, but we shall do everything that we can to achieve greater flexibility.
  My hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) said that my right hon. Friend the Minister had mentioned that there might be some delay. It is not our wish that there should be a delay. We are anxious to see the proposals in the regulations implemented as soon as possible and we shall be pressing for their approval as soon as possible, preferably next week. Indeed, we have been pressing the mixed businesses proposal for many months. Now that we have got this far, we want to press it to a conclusion.
  My hon. Friend said that, unless the mixed businesses proposal goes through, there could be super-levy penalties for producer-retailers. I agree with him about the position of the producer-retailer who is producing solely for the market, including exports, and not for intervention.
  The swap shop proposals that we have introduced have helped the producer-retailer this year. We allowed producers to exchange direct sale quota for wholesale quota and vice versa through the swap shop by enabling them to make offers in an exchange that closed on 31 January. We always suspected that a heavy balance of wholesale quota would be offered, with much less direct sale quota. Offers of wholesale quota outweighed direct sale quota by only about five to two. That was helpful. It meant that those who wanted to exchange wholesale quota for direct sale quota got about 42 per cent. of their requirements. Those who offered direct sale quota for wholesale quota got all the wholesale quota that they wanted.
  Of course we want to go further; that is the point of the proposed regulation on mixed businesses. It is clear that

  1169
  if we can get it through this year, it will help all the producer-retailers who, because they are likely to be over the top on their direct sales, would pay supplementary levy this year. Excess direct sales total about 10·5 million litres, with a levy liability currently estimated to be about 1·8 million if the proposal is not adopted. That shows why we are pressing so hard for the proposal to be adopted. It would be exceptionally helpful for us to get it through as soon as possible.
  My hon. Friend the Member for Torridge and Devon, West also asked about article 7, short-term leases and the implications for the United Kingdom. The article 7 proposal is designed to meet a specific German problem, just as the mixed business proposal was designed to meet a specific United Kingdom problem. It is optional, and member states would be free to apply it or not, as they judged fit.
  We are discussing with the industry what arrangements we should he seeking to make movements of quota much easier in the United Kingdom, for greater flexibility. We are giving particular attention to the interest of landlords and tenants in milk quotas. When we have completed our discussions, we shall be able to judge whether we could or should make any use of the proposal in article 7 and whether to build on it.
  The hon. Member for Londonderry, East (Mr. Ross) welcomed the proposal that is particularly important for Northern Ireland. Let me make the position clear. We estimate that, if the proposal goes through, it will require, allowing for transfers between producers, about 8 million to 10 million litres of quota to be transferred from Great Britain to prevent liability for levy in 1984–85. The current milk marketing boards' projections suggest that production in the rest of the United Kingdom will be sufficiently below quota for that requirement to be met. I know the importance that the hon. Gentleman attaches to our achieving that. The proposal is for this year only and does not affect future years. That is the position as the Commission has put it forward.
  I turn to the questions asked by my hon. Friend the Member for Southend, East (Mr. Taylor). I have noted that he welcomes the move towards transferability that we are endeavouring to achieve, but his particular points in that context are not covered by these regulations. They are much more relevant to any proposals that we may wish to put forward following consultation on the mobility of quota paper. I cannot, therefore, tell my hon. Friend what the position would be on the tax front, because we have not reached that point.
  I assume that my hon. Friend the Member for Southend, East, when asking about the price of milk, was referring to the Commission's price review proposals. We do not approve of the Commission's proposal for this year, and we shall argue against it.
  My hon. Friend asked also whether the amendments would increase production. The amendments will not in themselves increase production. The crucial point about all the regulations is that they do not undermine the fundamental basis of the system. My hon. Friend asked about the cost of tribunals. We are nearly at the end of the tribunal cases. I have no doubt that my hon. Friend will wish to table a question at an appropriate time so that we can give him the final answer.
  Mr. Teddy Taylor: Who will pay it?
  Mr. MacGregor: No doubt my hon. Friend will table a question about that, too.
  The hon. Member for Yeovil asked whether we intend to implement the article 3 proposal. My right hon. Friend the Minister made the position absolutely clear, but I shall repeat it. It would not be our intention to take up the option if that proposal went ahead, although it now seems unlikely that it will.
  The hon. Member raised two points about mixed businesses. The details of the proposal are being discussed this week, and we do not have the final proposal. That proposal will come before us at the Council meeting on Monday next week. On the hon. Gentleman's first point we hope that the producer with a mixed business will be able to switch within the year from direct sales to whole sales, or vice versa, without limit so long as—this is the vital condition—the overall production stays within his overall quota. The hon. Gentleman's second point was about whether this would apply at the end of the marketing year. The intention is that the proposal should be able to be applied at the end of the marketing year—not just one year, but each year thereafter — to provide flexibility. Some of the details still have to be thrashed out, but it is intended to give the producer that opportunity.
  The hon. Member for Truro (Mr. Penhaligon) asked about late applications. As he will know, late applications are not affected by these regulations. They are a different aspect, going back to the regulations we passed in July 1984. In the vast majority of cases—there are only one or two occasions when there is an opportunity for late applications to be considered—we are bound by the regulations, and late applications cannot be considered. I a sure that the hon. Gentleman realises that we are all anxious to complete the process of the panels and tribunals on secondary quota applications. If one allowed late applications, there would be no end to the process.
  I welcome my hon. Friend the Member for Macclesfield (Mr. Winterton) back, but I wholly reject the tenor of his remarks. In saying that my right hon. Friend put the clock into reverse in 24 hours, my hon. Friend is totally ignoring the fact that, time after time for some months, my right hon. Friend and I warned that we were having to look at the quota proposals because the price restraint option, which we would have preferred, seemed to be unnegotiable within the Community. Time and again we warned that the proposal in COM 500 was likely to come through in some form. My right hon. Friend did a tremendous job in getting the original COM 500 proposal into a shape that was acceptable to the United Kingdom.
  My hon. Friend should hear what is said about Ministers in other member states. There is no doubt that, compared with original COM 500 proposals, the eventual proposals on milk quotas were much more acceptable to the United Kingdom. I totally reject his allegations that my right hon. Friend is not fighting for British interests in the Community. He undoubtedly is, and with great success.
  My hon. Friend said that my right hon. Friend had some reservations in his speech. This is an important point, and perhaps the best one to finish on. My right hon. Friend's reservations were not about what we in the United Kingdom intended to achieve through these proposals, but about the position of other member states that had reservations. We are in a community and other member states also have views. My right hon. Friend has made our position absolutely clear. We intend to get the proposals through, especially those of importance to the United

  1171
  Kingdom, before the end of this marketing year. That is what we are setting out to achieve. I am extremely pleased that no hon. Member has suggested that we should not be doing so. We can go to Brussels next Monday with the support of the full House.
  Question put and agreed to.
  Resolved,
  That this House takes note of European Community Document No. 4421/85 and supports the Government's intention of securing administrative modifications which in the light of experience would enable the milk supplementary levy to operate more efficiently and fairly throughout the European Community.

  EUROPEAN COMMUNITY DOCUMENTS
  Motion made, and Question put forthwith pursuant to Standing Order No. 80(5) (Standing Committees on European Community documents.)
  EUROPEAN COMMUNITY DOCUMENTS

    AIR POLLUTION
    That this House takes note of European Community Documents Nos. 9219/83 and 11039/84, draft Directive and amendment on air quality standards for nitrogen dioxide, and 11159/83, Communication from the Commission concerning environmental policy in the field of combating air pollution; and supports the need for further monitoring of air pollution in the atmosphere.—[Mr. Peter Lloyd.]
    Question agreed to.

  St. Oswald's School, Accrington
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Lloyd.]
  2.11 am
  Mr. Ken Hargreaves: While I am most grateful for the opportunity to bring to the attention of the House the problems currently faced by St. Oswald's Roman Catholic primary school in Accrington, I am sorry that the opportunity has come on a night when my hon. Friend the Parliamentary Under-Secretary of State for Education and Science could have registered his bisque and been happily tucked up in bed at this late hour. As a good Christian man the Minister will know that the debate was scheduled to start on Ash Wednesday — the beginning of Lent and the time for penance and sacrifice. I am happy to have helped him to get his Lent off to such a good start.
  The history of the school can be traced back to 1952 when the chapel, which was also used as a school, was built on land given for the benefit of the people of Accrington. In 1869 when a new church was built, the original chapel became a school, which eventually moved to a building in Brown street in the Willows lane area of the town. In 1967 the building was declared unfit and a new school was built at the top of Willows lane in the area of Accrington called Fern Gore. The school has, therefore, been catering for the educational and spiritual needs of Roman Catholic children in Accrington for more than 130 years. It is still functioning as a school, even after the fire on 6 July 1983, which virtually destroyed it and left a mass of tangled metal with only two classrooms remaining standing.
  Since the fire, the children have been housed in several temporary premises. Their current home is the ROSLA building at Mount Carmel high school. While everyone concerned with St. Oswald's fully appreciates the generosity of the governors of Mount Carmel in providing temporary accommodation, the position is unsatisfactory.
  St. Oswald's children do not have sole use of the building but share it with 13 to 16-year-olds, as they share the school playground. Clearly four and five-year-olds should not be with 13 to 16-year-olds. It is wholly unsatisfactory and should be remedied with the utmost urgency.
  The ROSLA building lacks many of the amenities of an average primary school. There is no school hall and the large classroom that is used for morning assembly is not large enough for physical education for the junior children. Cloakroom facilities are inadequate, and first and second-year infants keep their coats in their classroom. The toilet facilities are poor, and infants share two toilets with the junior boys in a dismal area with no windows, and in which the electric light must be left on all day. School dinners and packed lunches must be eaten in the classroom. In other words, the accommodation has all the hallmarks of temporary accommodation, and rather unsatisfactory temporary accommodation at that. Nevertheless it has allowed the school to stay together.
  It is a tribute to the dedicated work of the acting headmistress, Mrs. Priestley, and her staff that despite the conditions 34 new entrants have registered at the school since the fire. That is 70 per cent. more than the original projected intake of 10 children per year.

  1173
  That demonstrates the need for a Catholic primary school in the Fern Gore area of Accrington, because despite the difficulties faced at Mount Carmel the advantage is that it is situated only a quarter of a mile from the original site of St. Oswald's school.
  If conditions are as unsatisfactory as I have outlined, one has to ask why parents continue to send their children there when there are at the moment spare places in other Catholic schools in the vicinity. I can appreciate those who do not know the area failing to understand the problem. One has to know the area to realise that the Fern Gore district of Accrington is at the top of a steep hill on the outskirts of the town. The steep hill, which must be climbed from all approaches, is a barrier to communication and travel. It is no simple journey on foot or by bus to get into the town centre from Fern Gore. The return journey is even more arduous. That journey would have to be undertaken each day to reach possible alternative schools at St. Anne's Accrington or the Sacred Heart, Church which are approximately two miles from St. Oswald's or St. Mary's Oswaldtwistle, which is a little nearer.
  The journey is therefore too difficult to undertake on foot. It would consequently be necessary to take a bus. This is not an area in which daddy goes to work in the family car and mummy uses the second car to take the children to school, if daddy works at all. With the high unemployment rate, there is less than a 50 per cent. chance that he will travel to work by car. Even if he does, there will be no second car in the garage for mother to use.
  It must be noted that St. Oswald's school has been designated as a social priority school. That status is based on the number of children having free school meals. At St. Oswald's, two thirds of the 65 children who stay qualify in that way. The qualification for free school meals is a low income—one child and a net income below £60 per week; two children and a net income below £75 per week; and three children and a net income below £90 per week.
  The need to pay bus fares would therefore place an impossible burden on many families, especially those with more than one child, who already find difficulty coping on a low budget.
  The sheer physical and financial difficulties to be surmounted, if they decide to send their children to an alternative school, are a major factor in the decision by parents to allow their children to remain at St. Oswalds even in the present unsatisfactory circumstances.
  It is important to bear in mind that St. Oswald's was not just a school but was a commmunity centre for the people of Fern Gore. It boasted a thriving pack of brownies and guides, cookery, judo, badminton and dancing evening classes and a pre-school playgroup for 24 children. It is therefore a definite asset to an isolated community.
  According to Lancashire county council's policy guidelines, community needs and the role of the school in the local community should be taken into account in urban as well as rural areas.
  I have outlined the difficulties to be faced if the children have to attend alternative schools, but an even greater difficulty may have to be faced in the years ahead—that of finding a place in an alternative school.
  We are all aware that the school population dropped dramatically because of the falling birthrate and St. Oswald's suffered as much as other schools in that respect. However, since 1978 there has been an increase in the
  1174
  birthrate, and that is confirmed by the difference between the projected figures for St. Oswald's and the numbers now registered.
  According to Hyndburn borough council planning officer, the 1981 census shows that children under 10 form a higher proportion of the resident population in the area around St. Oswald's than in Hyndburn as a whole—17 per cent. under 10 as against 13 per cent., and that figure will be accentuated as property in the town centre and outside the catchment area for St. Oswald's is cleared.
  In the past I have criticised Lancashire county council for taking too great a proportion of these surplus places from Church schools. In the case of St. Oswald's a letter of 6 December 1984 from the chief education officer, Mr. A. J. Collier, to the permanent secretary at the DES confirms that the education authority has accepted, as has the Salford diocesan schools commission, that there is a need for the 120 places which a rebuilt St. Oswald's school would provide. The borough council's report shows that that need will be greatest in the Fern Gore area.
  Before the unfortunate fire, the Lancashire education authority and the local school governors were trying to find ways of reducing the number of places in Catholic schools in Accrington by the 40 per cent. of excess places requested by the DES. The loss of 345 places at St. Oswald's meant a reduction, not of 40 per cent. of excess places, but of 90 per cent. If St. Oswald's is rebuilt at 120 places, 60 per cent. of excess places will still have been removed. The Roman Catholic community in Accrington will therefore have done more than its share to provide the savings asked for by the Department. If St. Oswald's is not rebuilt, we will in the not-too-distant future be getting perilously close to denying parents the right to send their children to a denominational school of their choice.
  I understand that there is some disagreement about whether the rebuilding of St. Oswald's should be a major project or a repair. The Catholic Education Council submits that it has always been DES practice to regard the reinstatement of a school destroyed by fire as a repair. If it is not a repair, what is it? Surely it cannot be a new school, certainly not in the legal sense, as a school still exists in the temporary accommodation, and there is no need for any section 13 proposals for its replacement in permanent accommodation.
  The only people to benefit from a decision by the DES not to treat the rebuilding as a repair will be the insurance company, which will not have to meet the liabilities for which Lancashire county council had insured. The parents, the governors, the children and the teachers at St. Oswald's are not interested in departmental disagreements, but, like me, they find it unacceptable that an arsonist found guilty of causing £2 million worth of damage and sentenced to life imprisonment should leave one of his victims depending for its future on some definition of rebuilding status. Their concern, like mine, is that the school is rebuilt urgently. Their case is justified, but only on social and education grounds. However, I suggest that in the circumstances surrounding the destruction of the school, justice also demands that the school be rebuilt.
  I urge my hon. Friend the Minister to give such rebuilding his urgent and sympathetic consideration so that St. Oswald's may serve the Roman Catholic community in Accrington for at least a further 130 years.
  2.22 am
  The Parliamentary Under-Secretary of State for Education and Science (Mr. Bob Dunn): I am glad that my hon. Friend the Member for Hyndburn (Mr. Hargreaves) obtained this Adjournment debate, as it allows me to pay tribute to him for the way in which he diligently and successfully represents the interests of his constituents. I have noted carefully the points that he has made about St. Oswald's school in Accrington and shall do my best to respond fully in the short time available to me.
  I should like to start by expressing my sympathy to the pupils, staff and parents of St. Oswald's for the loss of what was clearly a well-loved school building. I quite understand how important this issue is to local people in Accrington, and I am aware of the difficult conditions in which St. Oswald's is having to work, as so graphically described by my hon. Friend. My hon. Friend's constituents have left me in no doubt on that matter. I should also like to pay tribute to the efforts of the headteacher and staff of St. Oswald's to ensure that, despite the inevitable disruption following the fire, the damage to the education of the pupils has been kept to a minimum. It is clear that they have retained the full confidence of pupils and parents alike throughout these difficult circumstances. I should like particularly to acknowledge the charming letters written by pupils of the school, many of which are illustrated with their designs for a new school.
  In replying to my hon. Friend, I shall try to explain the background against which my right hon. Friend the Secretary of State has to take his decisions about this particular school. I shall start by explaining the history of our involvement with St. Oswald's, then I shall cover the national issues and Government policy that affect this case, and finally I shall discuss the way in which Lancashire's aided schools, and in particular St. Oswald's, fit into this background.
  First, the history of the case. On 8 August 1983, we received a letter from the Salford Roman Catholic diocesan schools commission informing us that St. Oswald's school had been completely destroyed by fire on 6 July. The letter explained that exhaustive efforts had been made to find suitable alternative accommodation for the school's pupils and that the only possible solution involved using spare accommodation at Mount Carmel high school, supplemented by a double temporary classroom unit, for the purchase of which urgent approval was sought.
  In this case, because of the urgency of the situation, approval was given over the telephone on 11 August for the work to start immediately, before the formal documentation usually required in such cases was received and processed. The House will see, therefore, that the swiftest action was taken in the Department to safeguard the interests of the pupils of St. Oswald's. When the appropriate documents were eventually sent in, the Department was asked to approve the purchase of three temporary classrooms, and so far some £34,000 has been paid in grant, at the rate of 85 per cent. towards the cost of that accommodation for St. Oswald's
  We heard nothing further about St. Oswald's until February 1984, and I understand that, in the meantime, the Lancashire education authority had been conducting a general review of primary school provision in the
  1176
  Hyndburn area and was not prepared to commit itself on the future of St. Oswald's until that review had been completed. In February 1984 I received a letter from my hon. Friend enclosing one from the St. Oswald's action group, which said that Lancashire had agreed to the rebuilding of the school. My hon. Friend will recall that in my reply I pointed out that, as the project had not been included in the 1984–85 building programme by Lancashire LEA, and as that programme was already fully committed, there was no prospect of the rebuilding of St. Oswald's proceeding in the immediate future.
  I am aware that since then both the Salford schools commission and Lancashire LEA have disputed the Department's view that the rebuilding from scratch of a school that has been completely destroyed by fire should be regarded as a new capital project to be met from the LEA's allocation for voluntary school building works. They have maintained that building works of this kind are equivalent to a repair and, as such, should not need to be met from Lancashire's annual allocation.
  The Catholic Education Council has also challenged this view in the case of St. Mary's school at Madeley in Shropshire, which has suffered a similar fate to St. Oswald's. The issues involved are complex and have considerable ramifications beyond the two specific cases being considered.
  I hope my hon. Friend will appreciate, therefore, that in the light of the wider implications, in particular my right hon. Friend the Secretary of State's various statutory responsibilities, we must give the most careful consideration to what is the correct conclusion, and that I cannot at this stage say what that will be.
  However, I would not wish to mislead my hon. Friend or his constituents about this issue. Even if we concluded that, legally, the rebuilding of St. Oswald's counted as repair, that would not necessarily mean that work on the project could start immediately. Work of this magnitude requires approval and must be considered against the total resources available.
  Even for smaller repair projects we have for several years, run with the agreement of the appropriate voluntary bodies, run a system of voluntary rationing on repair projects. This involves assessing needs and priorities, and St. Oswald's would have to be considered against other competing claims.
  If it were treated as a repair, the governors' share of the expenditure on which grant-aid would be payable would be some £150,000, and if it were to go ahead it would preempt a significant part of the budget for repairs, and other worthwhile projects would necessarily be delayed. When considering any project, however it is classified, my right hon. Friend has a duty to satisfy himself that it is a wise use of public funds, particularly at a time when, nationally, funds are restricted.
  Until now the proposed work at St. Oswald's has been classified as a new capital project and was considered as such when the allocations for 1985–86 were drawn up. I would now like to devote some attention to the issue of why St. Oswald's failed to find a place within the total allocated to Lancashire for 1985–86.
  Let me explain briefly how the funding of capital works at aided and special agreement schools is managed. The day-to-day running costs of an aided school fall to the local education authority which maintains the school. Most of the responsibility for providing buildings and improving them where necessary rests, however, with the governors

  1177
  of the school. To assist the governors in discharging that function they are provided with grant-aid from central Government. The proportion of the costs which are borne centrally has varied from time to time, but currently stands at 85 per cent. The provision and maintenance of aided schools involves, therefore, a three-way partnership between the voluntary bodies, the local education authorities and the Government, and this is reflected in the way in which allocations for grant-aid on building works at aided schools are made by the Government.
  LEAs are responsible, after consultation with the relevant voluntary bodies, for making bids each year to the Department for allocations for work to be carried out by the governors of voluntary aided and special agreement schools in their area. Since invariably the total of the bids exceeds the sum available nationally, we face difficult decisions about priorities. First, priority has to be given to meeting the Department's 85 per cent. share of expenditure to which governors are already contractually committed. The next priority has to be basic need to provide "roofs over heads" in areas where we are satisfied that population and denominational demand is increasing and the need cannot be met from any spare capacity in existing schools. Once these priorities have been met, consideration is given to building work arising from statutory proposals under section 13 of the Education Act 1980 that have been approved by my right hon. Friend the Secretary of State. When such proposals are approved, the proposers are under a statutory duty to implement them. Clearly, we must make the necessary provision to enable them to do so. Any remaining resources are allocated to projects designed to replace or bring up to standard school buildings which are currently substandard with priority being given to those projects that would lead to the removal of surplus places.
  We ask LEAs when making bids to list those for major projects costing more than £120,000 in priority order. The LEAs, with their detailed local knowledge and overview of all the schools in their area, are of course best placed to make those judgments and also have a direct financial stake through their responsibility for maintaining the schools. For building work costing less than £120,000, LEAs are simply required to put forward an estimate of the total sum required. Once an allocation for such works has been made, it is for the LEA and the voluntary bodies to decide on priorities within that total.
  In making the 1985–86 allocations for work by the governors of voluntary aided and special agreement schools, we faced a particularly difficult task because the total of committed expenditure within LEAs' bids far exceeded the provisional figure arrived at a year ago on the basis of LEAs' estimates of the likely phasing of expenditure on projects to be started last year. In many cases there appears to have been significant unforeseen slippage. Because of this it was necessary for us to be extremely selective in deciding which major new projects could proceed in 1985–86. All justified claims of basic need and all the projects arising from approved section 13 proposals were included, but this left only a tiny sum nationally for improvement and replacement projects. In order to allow some minor works to proceed, this remaining sum was divided between all LEAs to be used for that purpose.
  Lancashire's allocation for building work by the governors of voluntary aided and special agreement schools in 1985–86 is £2·244 million, the second highest
  1178
  in the country. The great majority of this is for committed expenditure. When Lancashire was informed of its 1984–85 voluntary school allocation, it was given a provisional indication that £750,000 committed expenditure would be met in 1985–86. But its bid last September for 1985–86 included £2·2 million of committed expenditure, £1·4 million in excess of that provisional indication. Lancashire was able to convince us that the slippage had arisen from factors outside its or the voluntary bodies' control, and since it had made a timely surrender of excess provision in 1984–85 we agreed to cover all the estimated committed expenditure for 1985–86. This of course had to be at the expense of provision for new work nationally. None of Lancashire's bids for new major projects fell into either of the two categories to which we gave priority and therefore Lancashire did not receive an allocation for this purpose. Apart from committed expenditure, the only allocation for building work at voluntary aided and special agreement schools which Lancashire received was for minor works.
  So what does this mean for St. Oswald's? Given the shortage of resources for grant-aid to voluntary aided schools nationally, the Department clearly has to make sure that those resources which are available are used to best advantage. When a school is burned down, therefore, we have to ask whether a school is still needed in the area and, if it is, whether it needs to be the same size. That is a particularly important question at a time of falling school rolls, which are creating surplus school places in many areas. It would be a waste of public resources, for which we would rightly be criticised, if scarce grant-aid were spent on building a school that was no longer needed, or which was much larger than was justified by the numbers of pupils expected to attend it in the years ahead. That is what we have been seeking to establish in the case of St. Oswald's.
  In this context I have to mention the priority which Lancashire LEA affords to the rebuilding of St. Oswald's. When making its bids for capital expenditure in 1985–86 Lancashire indicated that there were a lot of projects which it would like to see proceeding, but asked us to look at four in particular. These were placed in order of priority and St. Oswald's appeared third on the list. The LEA really is better placed to assess the relative needs of different schools in Lancashire than the Department. It appeared that it believed that projects at Thornton Cleveley's Roman Catholic primary school and at Our Lady and St. Gerard's Roman Catholic primary school in Walton-le-Dale were more urgent than the rebuilding of St. Oswald's.
  It is, of course, open to my hon. Friend and his constituents to try to persuade us, or indeed Lancashire LEA itself, that it has got the order of priorities wrong. I am always prepared to listen to such arguments and, as my hon. Friend knows, I have agreed to meet a deputation of his constituents who wish to come and put their point of view on the matter. I should add that one point which is already in St. Oswald's favour is that I understand the governors recognise that what is needed is school premises for about 120 pupils, rather than the 345 which was the capacity of the original building.
  I can also say that I fully recognise that the diocese, governors, teachers, parents and children have now had to endure 19 months of uncertainty about whether their school will be rebuilt. July 1983 must seem to them to be a very long time ago. The Department is therefore conducting an urgent review of this case. It is already in

  1179
  touch with Lancashire LEA to obtain what remaining facts are required; and the deputation which my hon. Friend is bringing to see me early next month will no doubt be of further assistance by providing other relevant information. My hon. Friend will understand that while this review is
  1180
  in progress I cannot give any undertaking that grant-aid will be available to enable St. Oswald's to be rebuilt in 1985–86. What I can undertake, and do so willingly, is that the school will not have to wait long for an answer.
  Question put and agreed to.
  Adjourned accordingly at twenty minutes to Three o'clock am.

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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 Gloucester.

Lord Murray of Epping Forest
The Right Honourable Lionel Murray, OBE, having been created Baron Murray of Epping Forest, of Telford in the County of Shropshire, for life—Was, in his robes, introduced between the Lord Blease and the Lord Cledwyn of Penrhos.

Doctors' Wives: Reimbursement
2.46 p.m.
Lord Winstanley: 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 arrange for Ministers and officials of the DHSS to meet with officers of the newly-formed Doctors' Wives' Association, to discuss ways of resolving the dispute over the reimbursement of costs of employment of doctors' wives on qualifying duties in medical practices.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): No, my Lords. We are familiar with their proposals.
Lord Winstanley: My Lords, I thank the noble Lord for that not wholly helpful Answer. May I ask the noble Lord whether he thinks it right that the Government should continue with an arrangement whereby, if a doctor marries one of his practice employees, his practice nurse, receptionist or manageress, he suddenly forfeits a substantial part of his income? Is that the kind of inducement that a Government wedded to Victorian values wishes to continue? If the noble Lord's anxiety about this matter is the question of possible abuses if reimbursement is extended to doctors' relatives, is he aware that the Family Practitioner Committees now scrutinise most carefully the qualifying posts (the posts which qualify for reimbursement in general), whether related to the doctor or otherwise? The Family Practitioner Committees assure me that they can make absolutely certain that there will be no abuse if the Government extend this to doctors' wives. Will the noble Lord meet these ladies?
Lord Glenarthur: My Lords, the present system may seem unjust to the noble Lord. In principle, the relatives of general medical practitioners should be treated in the same way as unrelated ancillary staff, but in practice it is not possible to do this without introducing what is (despite the noble Lord's remarks)
568
an unacceptable risk of abuse of public money. I suggest that the best way forward is for the association to speak to the General Medical Services Committee of the BMA.
Lord Jenkins of Putney: My Lords, will the noble Lord advise the noble Lord, Lord Winstanley, that if he wishes to persist he can change the name of the organisation to "Doctors' Spouses' Association", because the husbands of woman doctors are surely equally entitled to benefit from any advantages they may gain?
Lord Glenarthur: My Lords, I am sure the noble Lord, Lord Winstanley, will note the noble Lord's remarks.
Lord Kilmarnock: My Lords, is it not extremely easy to assess whether a wife is fulfilling a genuine ancillary role?
Lord Glenarthur: My Lords, perhaps the noble Lord will explain how he proposes that that should be done.
Lord Glenamara: My Lords, as the Government long ago admitted this principle in the case of the wives of Members of Parliament who act as their husbands' secretaries, why not admit it for doctors' wives?
Lord Glenarthur: My Lords, the point about Members of Parliament is another question.
Baroness Masham of Ilton: My Lords, is the noble Lord aware that in 1960 I moved an amendment to the National Health Service Act, which your Lordships accepted, to allow wives to work in doctors' practices? It has only to be implemented.
Lord Glenarthur: Yes, my Lords; but there are difficulties, as the noble Baroness will be aware. We are always prepared to consider positive and realistic proposals on this issue from wherever they arise, particularly where improved efficiency and better value for money are concerned. Nevertheless, any negotiations relating to general medical practitioners, including the reimbursement to doctors of the cost of employing their wives in their surgeries, are currently conducted between the department and the General Medical Services Committee of the BMA as the representatives of the general medical practitioners' interests. That is the way forward.
Lord Prys-Davies: My Lords, if there is a proven need for ancillary staff, why should not the suitably qualified wife of a general practitioner be employed by him to meet the need upon the same terms as any other person who may be employed to meet that need?
Lord Glenarthur: My Lords, primarily for the reasons of abuse of public money, the risk of which would be unacceptably high in the way I described to the noble Lord, Lord Winstanley. The extra cost of allowing 70 per cent. salary reimbursement even for related ancillary staff would probably come to many millions of pounds a year, and that money would be better spent in other areas of the health service.
Baroness Phillips: My Lords, what would be the situation if a doctor's wife went to work for another doctor?
Lord Glenarthur: My Lords, in that case, as far as I am aware, she would not be ancillary staff related to the doctor for whom she was working, so she would be covered elsewhere.
Lord Leatherland: My Lords, does the noble Lord agree that there is a simple answer to the problem? It is that the doctor should divorce his wife and then employ her in her capacity as a single women.
Lord Glenarthur: My Lords, that is not a course that I would advocate.

Merchant Fleet: Tonnage
2.51 p.m.
Lord Grimond: 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 was the tonnage of the British merchant fleet in 1965, what it is today and what they expect it to be in 1990.
Lord Brabazon of Tara: My Lords, the United Kingdom registered merchant fleet of ships of 500 gross tons and over at the end of 1965 was 26.7 million deadweight tons and 22 million at the end of 1984. No official forecasts are made for the future size of the fleet.
Lord Grimond: My Lords, is the noble Lord aware that the British Merchant Navy has fallen from 10 per cent. of the world fleet to 3 per cent? Indeed, the fall has been very much steeper since 1975. Only two new merchant vessels for registration under the British flag have been laid down since last July, excluding placements for the Falklands. The British flag is becoming known as the flag of inconvenience rather than convenience. Without pre-empting the Budget, will the Government give us an assurance that they will look at the taxation position as it affects British shipping? Also, will they explain how they expect this country to be supplied in the event of war?
Lord Brabazon of Tara: My Lords, the question of fiscal taxation is obviously a matter for my right honourable friend the Chancellor. I am aware that he has received representations, as he did last year, but I must ask the noble Lord to await the Budget. Regarding the possibility of emergency and war, my department is at present engaged in three studies in respect of shipping requirements in these times and we are employing Lloyd's Sea Group consultants to carry these out. The first is for the future supply and demand position up to 1992 for bulk shipping—those are tankers and dry bulk vessels—taking into account United Kingdom non-military requirements in times of emergency and war. The second is the same but for general cargo ships. The third is a joint study with the MoD to ascertain whether the United Kingdom fleet will be able to meet defence requirements over the next five years and to 1992.
Lord Shinwell: My Lords, is the noble Lord aware that those of us who are familiar with this subject are becoming very depressed at the situation? Is he aware that unless something constructive is done by the Government in particular, perhaps in conjunction with ship owners, the unions concerned, shipbuilders, people who work in the docks and so on, we shall no longer be able to be a maritime nation? That is a very serious situation. Something has to be done. What is the cause of it? Is it restrictive practices? Is it excessive competition? Will the noble Lord take note of what has happened to the Southampton Docks recently? As a result of a change in the management and administration, it is back to form again. The same could be done about Liverpool, the London Docks and elsewhere. I plead with the Minister and with the Government to give this matter as much attention as is possible; otherwise, as I say, we can no longer claim to be a maritime nation.
Lord Brabazon of Tara: My Lords, of course the matter of the docks is rather different from the tonnage of shipping. I know that the Government are concerned. We are also very pleased that there has been a change at Southampton recently. I think it is important to remember that tonnage is not the only matter at which one should look. Although around 87½ per cent. of tonnage is comprised of tankers and bulk carriers—where there are very competitive freight rates at the moment and our share of this tonnage has fallen considerably over the years—in fact they contribute only 40 per cent. of earnings, whereas 12½ per cent. of tonnage, comprised of cargo liners, containers and passenger ships, contributes 60 per cent. of earnings. The tonnage in this category has remained fairly stable in recent years and this is where we must look to for the future.
Lord Underhill: My Lords, I hope the Minister's reply does not indicate some degree of complacency over the serious situation which the noble Lord, Lord Grimond, has outlined in his question. May I ask the Minister to tell us a little more about this inquiry? Is it an inter-departmental inquiry? Alternatively, will the National Union of Seamen and the General Council of British Shipping be involved in the inquiry? Is it not a matter that may best be dealt with by a Select Committee of the other place conducting a detailed inquiry? What steps are being taken on an international basis, bearing in mind that we are confronted with all types of competition, including financial advantages given to our European partners in connection with their shipping?
Lord Brabazon of Tara: My Lords, I do not think I can really say any more about the study (rather than inquiry) which we have put in motion and which, as I have said, is being done for us by Lloyd's Sea Group consultants. In regard to international competition, we do not favour protectionism. We believe that a freely competitive environment is in the best interests of shippers and ship owners and we shall take whatever action is necessary to protect these interests. The overwhelming majority of world markets are open. What we can do, in concert with our European partners, is to try to fight protectionism against us and them. We are doing what we can there. We have set up

571
a consultative shipping group with the United States. This is making progress on agreement to preserve competition and we are now considering how to take this further.
Lord Chalfont: My Lords, will the noble Lord not agree that the experience of the war in the South Atlantic demonstrated, if it needed demonstrating, that a strong merchant fleet is essential for the successful operations of the Royal Navy in war? Will he accept that the progressive decline of the British merchant fleet is causing grave disquiet to those of us who are mainly concerned with the defence of this country in time of war?
Lord Brabazon of Tara: My Lords, I should agree. That is why we have started this study in conjuction with the MoD about future defence requirements.
The Earl of Onslow: My Lords, can the noble Lord give us a little clarification on this? He said in his first Answer that the Government made no forecasts of the size of the fleet after 1990. He then went on to say that he was going to do a study on defence numbers up to 1992. How are the two statements reconcilable?
Lord Brabazon of Tara: My Lords, we do not make any official forecast for the future size of the fleet. We shall obviously have to look into this while the study is taking place.
Lord Cledwyn of Penrhos: My Lords, as this is a matter of great interest to the House, I wonder whether the noble Lord can say a little more about the study? I assume that this has been commissioned by the Department of Trade. Can he say what the terms of reference are and when it is likely to be published? Will it be published so as to be available to this House and another place, and will debates be possible thereafter?
Lord Brabazon of Tara: My Lords, as I said in an earlier supplementary, the study is being conducted by the Department of Transport, the third part of it in conjunction with the MoD. The results are likely to be available to my right honourable friend the Secretary of State in the middle of 1985, but I cannot say at this stage whether or not they will be published.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord be good enough to say what are the terms of reference?
Lord Brabazon of Tara: My Lords, as I stated in an earlier supplementary, the terms of reference are, first, to study, in respect of requirements in times of emergency and war, the future supply and demand position up to 1992 for bulk shipping—that is, tankers and dry bulk vessels—taking into consideration United Kingdom non-military requirements in times of emergency and war. The second is the same but relates to general cargo; that is, cargo liners, containers and passenger ships. The third, as I have said, is a study together with the MoD to ascertain whether the United Kingdom fleet will be able to meet defence requirements over the next five years and into 1992.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware that the terms of reference are really inadequate in these circumstances. Does he not agree that the terms of reference should be extended to times of peace, the reasons for the decline and the possibility of expansion?
Lord Brabazon of Tara: My Lords, in times of peace, there has obviously been a great change in world trade over the last few years. There has also been the emergence of competition from less developed countries whose crewing costs are considerably below those of our own. In a situation such as that obtaining at the moment, when freight rates are very competitive, the marginal cost difference is very important.
Lord Nugent of Guildford: My Lords, is my noble friend aware that there is great interest in this topic? Will he be good enough to ask his right honourable friend the Secretary of State whether he will consider publishing this report when it is completed?
Lord Brabazon of Tara: My Lords, I definitely give that assurance to my noble friend.
Lord Paget of Northampton: My Lords, is there not a simple answer to this question? It is that ships which comply with what we regard to be necessary for safety and manning cannot compete with ships that do not, and until we put our foot down and say that ships which, by our standards, are unsafely equipped and unsafely manned will not be admitted to our ports then we shall not be giving our Merchant Navy a chance.
The Lord President of the Council (Viscount Whitelaw): My Lords, I feel that the noble Lord has had a very good run. He has put his point of view. It is time, I think, in spite of the importance of this Question—we can come back to this matter—to move to the next Question.

European Regional Fund: Aid to UK
3.2 p.m.
Baroness Carnegy of Lour: 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 how much aid the United Kingdom has received from the European Regional Fund since it was established in 1975.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, up to the end of 1984 the United Kingdom had been allocated £1,621 million from the main section of the European Regional Development Fund, and £122.5 million from the special measures section of the fund.
Baroness Carnegy of Lour: My Lords, I thank my noble friend for that Answer. While the overall figures

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sound impressive, can he tell the House whether this represents a fair share for the United Kingdom, whether our share is rising or falling, and how much has come, and is expected to come, to Scotland in particular?
Lord Lucas of Chilworth: My Lords, I think the figures represent a fair share of what is available. Up to the end of last year, our share was defined by council regulation as 23·8 per cent. of the quota section which comprises 95 per cent. of the fund. When the regulations were replaced in January this year, our maximum possible share was increased to 28·56 per cent. of the whole fund. In 1984 we received £371·7 million gross, of which Scotland received, or has been allocated but has not totally taken up, £93·1 million.
Lord Ross of Marnock: My Lords, will the noble Lord the Minister say how much we paid into this expensive organisation?
Lord Lucas of Chilworth: My Lords, we pay into the Community 1 per cent. of VAT. That is a variable level. The fund itself is determined by the Commission out of the total EEC budget, and that varies.
Lord Bruce of Donington: My Lords, is it not true that, out of the £1·6 billion that the noble Lord has mentioned as being received by this country, no less than £1·25 billion has been paid by this country into the regional fund? Would it not have been rather less misleading to have coupled the original figure with that one? Is the noble Lord further aware that, after taking into account all receipts from the regional and social funds and all receipts into the United Kingdom from the EEC, this country's taxpayers contributed to the EEC during the same period over £5,000 million net?
Lord Lucas of Chilworth: The noble Lord, Lord Bruce of Donington, has, I suspect, unwittingly misled the House in that he has joined the regional fund and the social fund in his figuring. I have answered truthfully and honestly the Question about the regional fund, which was the Question on the Order Paper.
Lord Bruce of Donington: My Lords, as the figures have been challenged, may I refer the noble Lord to Hansard of another place, which deals exhaustively with this matter at column 805 of the Official Report for 24th October?
Lord Glenamara: My Lords, will the noble Lord say whether this is additional money going to the regions of Britain or whether the Government simply deduct it from the money that they themselves would have provided?
Lord Lucas of Chilworth: My Lords, this is additional money. What lies behind the noble Lord's question is, I suggest, well known and well worn (and, if I may also suggest, ill-informed) criticism.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the figures I have given to your Lordships' House are taken from the Government's
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own statistics in this matter? Is he willing to repudiate the figures provided by his own department?
Lord Lucas of Chilworth: My Lords, I do not think that there is any question of my having to repudiate any figures at all. I answered questions with regard to the regional development fund, not the regional fund and the social fund, which were the figures that the noble Lord gave.

Social Security Reviews
3.7 p.m.
Baroness Lane-Fox: 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 is being made on the social security reviews.
Lord Glenarthur: My Lords, the Government are currently considering their conclusions on the reviews. Proposals for change will be announced in the course of the next few months.
Baroness Lane-Fox: My Lords, in thanking my noble friend the Minister for that encouraging reply may I ask a question that is connected with the reviews? I should like to know, if possible, when the feasibility study on the extent of disability is likely to be completed and, if it is found to warrant it, how soon afterwards the comprehensive study will be embarked upon?
Lord Glenarthur: My Lords, as my noble friend will be aware, that particular review is not one of the main social security reviews. However, we have put in hand a major new survey on the prevalence of disablement, covering the number of disabled people, their circumstances, and their needs. It will be the first such survey for 15 years. I can tell my noble friend that it will start in July this year and will proceed through 1986, and the results from it should be published a year or two after that; but I am afraid that I have no more information.
Lord Kilmarnock: My Lords, the noble Lord says that the proposals will be published. Can he say how? Will it be in the form of a Green Paper or a White Paper? Will there be plenty of time to consider the proposals before they are embodied in over-hasty legislation?
Lord Glenarthur: My Lords, I take it that the noble Lord refers to the four main social security reviews. The question of whether there will be a Green Paper, a White Paper, or whatever, will be decided and announced at an appropriate time.
Baroness Jeger: My Lords, can the Minister say whether the well-informed leaks in the press come from Ministers or from civil servants?
Viscount Whitelaw: My Lords, that is, I think, a question for me to answer, if I may say so to the noble Baroness. The answer is that there will be leaks, no doubt, in newspapers over a long time. We have a long way to go with this review and the noble Baroness will read of many more leaks. Where they come from is for her to judge, not for me.
Baroness Jeger: My Lords, not being totally disconnected with many newspapers in this country, I think that I might find the answers for myself. May I ask the noble Lord the Minister whether it is a fact that people who are working on these reviews have been instructed that there must be a nil cost effect in regard to anything that they suggest? Further, I wonder whether those involved will be able to consult the Treasury, so that we can at last get fiscal policies, taxation and social welfare integrated in a way which will be most essential if we are to make any progress?
Lord Glenarthur: My Lords, in reply to the last part of the noble Baroness's supplementary, I would say that in evidence to the reviews many commentators have put forward ideas for longer-term solutions, including some which involve the tax system, to which the noble Baroness referred. The implications of these suggestions are all being considered. In regard to the suggestion that it is just a cost-cutting exercise, I would say, no, this is not so. The Government are conducting a much wider-reaching review. We are concerned, for example, about the complexity of the system and how it might be made easier to understand and more efficient to administer. We are concerned also to ensure that the best use is made of available resources so that help is channelled to the people who need it most.

Business
3.12 p.m.
Lord Denham: My Lords, it may be for the convenience of your Lordships if at this point I say a word about the arrangements for this afternoon's short debates standing in the name of the noble Lord, Lord Henderson of Brompton, and the noble Lord, Lord Hunter of Newington. It is customary in short debates that the mover is allowed approximately 15 minutes and that the Minister should rise to reply not less than 20 minutes before the scheduled end of the debate.
In the case of the short debate in the name of the noble Lord, Lord Henderson of Brompton, this means that all other speeches should be limited to a maximum of eight minutes. If any noble Lord were to speak at greater length, it would be at the expense of subsequent speakers in the debate. In the case of the short debate in the name of the noble Lord, Lord Hunter of Newington, the number of noble Lords wishing to speak is such that it is not necessary to suggest any formal time limit, but I know that the House would appreciate it if noble Lords would exercise voluntarily a restraint consistent with the spirit of these short debates.

Swansea City Council (Tawe Barrage) Bill [H.L.]
Read a second time, and committed to a Select Committee.

Dartmoor Commons Bill
3.14 p.m.
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read a second time.— (Lord Aberdare.)
Baroness White: My Lords, I have no wish to impede the passage of this Bill, to which some very important amendments have been made in another place; but there are petitioners against it and it will therefore go before an Opposed Bill Committee for examination. In my view it would be inappropriate to seek to give formal instructions to that committee on a Bill which has the blessing of the Devon County Council, the Dartmoor National Park Authority and the Countryside Commission. However, I believe there is one area of disquiet to which it is proper to draw attention. The establishment under this Bill of the Dartmoor Commoners' Council gives statutory functions to a body which understandably is composed primarily of graziers holding stock on the commons. There are to be two representatives of the National Park Authority, of whom one must be a person appointed by the Secretary of State after consultation with the Countryside Commission.
I understand that the other public body with environmental responsibilities—the Nature Conservancy Council—had hoped for representation but that this has not been accorded. Under an amendment to the Bill, it will be given prior notification of activities which may affect simply those areas which have been designated as having special scientific interest. I understand also that by private agreement it will receive minutes of the Commoners' Council meetings. But there will not necessarily be anybody on that council who has the desirable knowledge of or interest in the wider ecological and habitat considerations which could be affected by the activities with which this Bill is concerned. I think I may properly express the hope that the examining committee will take this matter into account.
Lord Aberdare: My Lords, as the noble Baroness has correctly said, there are three petitions against this Bill, and if they are not withdrawn they will be heard by a Select Committee. I certainly will make sure that the remarks which the noble Baroness has made are drawn to the attention of the committee. I beg to move.
On Question, Bill read a second time, and committed to a Select Committee.

Disability Council
3.16 p.m.
Lord Henderson of Brompton Lord Henderson of Brompton rose to call attention to the need for a disability council, established by Royal Charter, to evolve from existing disability organisations; and to move for Papers.
The noble Lord said: My Lords, I hope in the brief space of 15 minutes to convince the House and Her Majesty's Government that it is necessary to have a disability council; that it is desirable that that council should be established by Royal Charter; to explain why it should evolve from existing disability organisations; and how it may be funded.
At the outset, may I take the House back to those halcyon days of 1970 when the Bill for the Chronically Sick and Disabled Persons Act was introduced in another place by Mr. Alf Morris. That Bill was seen through this House by the noble Earl, Lord Longford. The 1970 Act had no statutory provision for monitoring its implementation. I thought that it should have had such a statutory provision. But, with a little bit of lateral thinking, I thought perhaps that omission might be rectified by a prerogative body which would do the monitoring instead. Then of course there was a decade of remarkable legislation, all to the benefit of disabled people, and the idea slipped from my mind.
However, in the last two Sessions of this Parliament it came to the front of my mind and I thought that it would have a new use. The reason why it came to the front of my mind is that in the last two Sessions Parliament was deadlocked over the discrimination issue. In 1970 there was no party political dispute at all. This may well have been due to the splendid handling of the Bill by Mr. Alf Morris, to whom all credit is due. But it was an agreed measure, and it was a landmark of progress for disabled people. By contrast, unfortunately the discrimination issue caused extreme party political acrimony in the last two Sessions.
I think we could all surely agree that disablement issues normally should be above the party political battle. Disabled people themselves cannot wish to be a party political football, and I do not think that I was alone in finding it rather a degrading spectacle to see the great political parties competing as to which was the more caring. I grant that something may accrue to the benefit of disabled people by a political auction, but any such gain is countervailed by the loss of the harmonious agreement which led to the Act of 1970.
The noble Earl, Lord Stockton, has recently in this House, in a wider context, advocated,
"putting, as far as we can, party aside".
Surely all the more we should put party aside on disablement issues. I hope that does not sound too smug, coming from the Cross-Benches, and that my political friends will forgive me. I recall a noble and learned Lord, Lord Cross of Chelsea, saying from these Benches that he had an impartial dislike of all political parties. That is not my view at all. On the contrary, I have a partial liking for them all.
This time last year my proposal had three main roles: first, to monitor the Act of 1970 and subsequent legislation for the benefit of disabled people; secondly, to lift disability issues out of the party political battle;
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and, thirdly, in view of the deadlock in Parliament, to examine the extent of discrimination and to recommend what action should be taken to combat it, either by legislation or otherwise. I did not intend it at all to be a grant distributing body like those other Royal Charter bodies, the Arts Council and the Sports Council, though, when I circulated a note about this, I felt it necessary to include that function, if only to have it rejected.
Now, between 1970 and the last two Sessions, a body known by the acronym of RADAR was formed when two disability organisations came together. That body together with its Scottish, Northern Irish and Welsh equivalents (all with different names, incidentally) is as near as we have got to a national council. RADAR is an admirable body under its chairman—the noble Duke, the Duke of Buccleuch. It does splendid work. But who, I ask, outside those closely connected with disability, has ever heard of RADAR? If you tell people about RADAR, they think it has something to do with police speed traps, or possibly with the Royal Academy of Dramatic Art. I want to see a national council that is widely known; that enters into the national consciousness and conscience, a body that has prestige and influence, a body that can take its own initiatives and act, if it so agrees, at the request of the Government, on a whole host of matters to improve the lot of disabled people.
So, to avoid duplication of effort with RADAR and some other organisations, my proposal is that a disability council should evolve from those organisations. And—and I attach great importance to this—the council should cover, as RADAR does not, those who are blind, those who are deaf, and those suffering from mental illness. I am authorised to say that MENCAP supports this, and at least two of the various organisations concerned with sensory disabilities have given me their support.
One of the recommendations of the International Year in 1981 was that each country should appoint a national disability organisation. Several countries have done so. Others are in the process of doing so and we should surely do likewise, even if only for the purpose of representation abroad at important international conferences and bilateral negotiations or exchanges of views with other countries.
So to the three roles that I have already mentioned I now add two more: that this body should be independent of the Government, widely recognised as a national body of prestige and influence, and that its terms of reference should extend to the sensory disabilities and to mental illness.
I now add a sixth role which the Council will have to play, in my view, at the outset. That is to inquire into the existing resources available through central government, local government, charitable organisations and private sector funding. This is big money, and, so far as I know, has never been quantified—certainly not in the private sector. I established by a Question for Written Answer about this time last year that pensions, benefits and allowances for the long-term sick and disabled cost £3,500 million in 1982–83. Local authority expenditure in the same year was over £300 million; and at least £3 million out of the £15 million of grants given by the Department of Health and Social Security

579
to the physically handicapped and mentally handicapped must be put into that total. And if you add all the other central government expenditure on disability spread over several departments you reach a figure of £4 billion at least, and that takes no account of the private sector funding, which, as I say, has so far been unquantified. We need to know the total spent on disability, and the use to which it is put.
I can do no better than remind the House of the debate only last Wednesday on the National Health Service and the social services, and I am glad to see the noble Earl, Lord Caithness, in his place, because I am about to quote his words. He said (at col. 199 of Hansard):
"it is necessary to look initially at how the huge resources devoted to social security are used and to consider alternatives".
He also said (at col. 200) that the review was:
"an attempt to ensure that the huge resources … are directed at those most in need".
I should like to adopt those words for the disability council, and I should imagine that the Government would welcome an inquiry of that nature by an independent body that had the goodwill of the disability organisations. This is such a sensitive area, that an inquiry mounted by the Government itself might incur hostility and suspicion, which I think would not be the case if the inquiry was undertaken by the kind of council I propose.
Now I turn to finance. How is this new evolved council to be funded? As a start, I assume that the Government do not want to spend any more public money. That assumption I suppose is right, regrettably. But I believe that the review which I have just proposed might disclose that the council might be funded by better use of existing resources. And I should like to see the resources of that council coming from both the public sector and the private sector perhaps on a pound for pound basis. This is a form of financing which has the approval of the Government, and it was only recently that we had a Question on this subject when the noble Earl, Lord Gowrie, told us how well the business sponsorship incentive scheme had been going in relation to the arts.
I am sure that industry and commerce would be glad to be associated with the funding of a body of such prestige and national importance. Indeed, the partial funding of the council by the private sector would in itself be an indication of the council's independence of the Government. I take a deep breath here, and say that, in the long term, I would hope that a national lottery might be established, and I can think of no better use for the profits from our national vice of gambling than to put them towards helping the disabled, who have not drawn a happy lot in their life.
The Earl of Longford: May I ask the noble Lord one question? Has he not therefore invisaged this as being on the footing of the Arts Council, which, after all, has received very important government subsidies over the years?
Lord Henderson of Brompton: No, my Lords, I have not. I have explained that the Arts Council and the Sports Council are grant distributing bodies, and this is not to be a grant distributing body at all. That is a very
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substantial difference. Perhaps I may be allowed another minute after that interruption! I should like to sum up what I have said and give an idea of some of the many things that I think the council might do. First, I think the council is necessary, because existing organisations do not have sufficient prestige nationally to perform the functions proposed, and do not cover some of the most important areas. It should evolve from, and not be an addition to, existing organisations. It should preferably—I am not absolutely set on this—be established by Royal Charter without the delay implicit in legislation. The council could help to lift disability issues out of the party political arena. It could perform an initial quantitative and cost benefit analysis of the huge resources already available and would, I hope, promote the closest possible working together of disability organisations and be a clearing house for ideas from them.
The council could carry out, commission or indicate new areas of research; it could have an important monitoring role—for example, as regards not only the Act of 1970 but also some parts of the Education Act 1981, the implementation of the code of good practice for the employment of disabled people and the working of the quota system. Moreover, the council could take a fresh look at the need for a comprehensive disability allowance and the gross inconsistencies in the existing provisions for compensating those suffering from personal injury.
The council might have a valuable role to play as regards the consequences of local government legislation—both last Session and this—for the funding of social services for disabled people, which amounted to £300 million, according to the Written Answer that I received. Not least, although last, I submit that the council should provide an annual report for the Minister to lay before Parliament. In that way the council would, in a sense, be answerable to Parliament and its annual report could be the subject of debate in both Houses.
I think that I have covered the ground. I should just like to say that since this proposal was first floated I have had wide consultations both with the disability organisations and with a number of Members of your Lordships' House. I have received a wide measure of support. For all those reasons, I commend the proposal for a council to the House, to the disability organisations and to Her Majesty's Government—
Baroness Carnegy of Lour: My Lords, before the noble Lord sits down, can he tell the House what consultations he has had with the existing Council for Disability in Scotland and what relationship the new council would have with that council?
Lord Henderson of Brompton: My Lords, I can answer the noble Baroness very briefly by saying that I regret that I did not have consultations with that council.
My Lords, I beg to move for Papers.
3.32 p.m.
Baroness Lane-Fox: My Lords, it is no exaggeration to say that, as the Clerk of the Parliaments, the noble Lord, Lord Henderson, earned the respect of all noble

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Lords. Since he became a Member of your Lordships' House his wise perception and progressive outlook have remained unchanged. Happily he makes his views available for the positive benefit of the House. It is, therefore, very encouraging that he has chosen for debate:
"the need for a disability council, established by Royal Charter".
I understand that the noble Lord has been considering this matter for several years, and it is satisfactory to know that it has been one focus for his gimlet brain and kindly understanding. I would disagree with the noble Lord on one topic only as regards his speech to the House, and that is that I certainly did not think that the Bill on anti-discrimintion was in any way a party Bill.
The emancipation of disabled persons during the last 20 years has been matched to a large degree by the increased activity of, for example, RADAR, with its excellent Bulletin; NAIDEX, and research projects; the advisory groups, such as the Association of Disabled Professionals; and the economic advisers and pressure groups, such as the Disablement Income Group and the Disability Alliance. Bombarded with leaflets, books, radio and television programmes, there is little wonder that many victims of disability and their families and friends want so much to carry on and find out more about what they have heard. They feel that they ought to be up and in permanent pursuit of finding out more about it all.
The Disabled Living Foundation, and the other information centres springing from it throughout the country, have proved to be invaluable; and, in addition, a new edition of that excellent tome, Directory for Disabled People, is to be launched tomorrow. Nevertheless, in the past five or six years sufferers and their families who are caught up in such conditions as Huntington's chorea, Friedreich's axtaxia, myasthenia gravis and ankylosing spondylitis have formed into types of self-help groups. When membership of these and other recently-formed organisations is added to that very large number of long-standing national organisations, such as the Multiple Sclerosis Society, the Muscular Dystrophy Group, the Spastics Society and many more, membership numbers represent a very formidable contingent.
I believe that there is advantage to be gained from the council effecting the formation of a central linchpin and clearinghouse for the voluntary bodies. By publicising its existence, too, it could be the means of helping those solitary individuals still left out of the system and ignorant of what is available to help them. Often they are prevented by the mere exertions expended on daily living, or even by actual pain, from being able to search for help.
The noble Baroness, Lady Ryder of Warsaw, before departing for her admirably merciful work among disabled people in Ethiopia, specially asked me to say that she hopes and believes that a council such as the noble Lord has in mind would reach out and find these more solitary individuals. The noble Baroness is in favour of the noble Lord's proposal.
The noble Lord has referred to the financing aspect. I believe that he will have in mind methods of seeking funds from new and different sources. There has been
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mention of a national lottery. I must admit that I am researching the possibility of the United Kingdom following the example of many countries which supplement social projects with funds raised by a national lottery. The proposed council which we are debating today would surely be a candidate for such support if the idea proves feasible. In this "bingo age" it is hard to see why profits should not sometimes be channelled directly to worthwhile causes. I hope to have the opportunity to ask the House to consider this scenario at a later stage when more facts are to hand.
I am grateful to the noble Lord for initiating this debate. It is a brave, determined and tireless man who will undertake a task such as is envisaged; but if anyone can make it succeed, it will be the noble Lord. He certainly has all my best wishes.
3.37 p.m.
Lord Bancroft: My Lords, I echo the gratitude which has been expressed to my noble friend Lord Henderson for giving us the opportunity to have this debate. I approach the issue from a slightly different route from that which my noble friend took, but I reach the same conclusion. Perhaps I should begin by confiding to your Lordships that I spent many years in Whitehall stirring the pot of organisational and structural change. I have to confess that, with hindsight, many of those years were mis-spent, because organisational change is often a poor substitute for hard policy decisions—it enables them to be ducked. Innovation is not necessarily reform.
Therefore, my first reaction to this proposal by my noble friend was not one of enthusiasm, but more one of wary scepticism. However, further reflection and discussion overcame my doubts, and for three reasons. First, the status quo is goodhearted, but that is a long way short of enough. It is also unstable, probably inefficient and does less than justice to disabled people, who are the prime concern, and even (speaking as a professional Cross-Bencher) to politicians.
We are here confronted—and I speak deliberately and dispassionately—with the financial eqivalent of a huge public corporation. As my noble friend Lord Henderson has said, the amounts involved from taxpayers, ratepayers, the private sector and from charities run into many billions of pounds a year. The flows of those enormous amounts, as they slosh about, need to be identified—where from, and where to? Only after that job of analysis has been carried out can the effectiveness of their application, both for client and for source, begin to be examined. Indeed, I suggest that the very act of factual analysis would itself do much to lift disability out of the party auction ring, to which my noble friend referred.
Secondly, a council established by Royal Charter would involve the minimum of party politics, both in its setting up and in its running. Its overheads would be small; and as my noble friend suggested, they could partly be met from the funds already available to existing co-ordinating bodies out of which the council could, and in my view should, grow.
As has been mentioned, another source might be a pound-for-pound sharing arrangement with the private sector. The council would be at a long arm's length away from Government; and it would provide

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a degree of non-political continuity impossible in the fevered world of departments and departmental agencies. It would be a focus for representing disability both within the country and internationally.
Thirdly and lastly, the tasks of such a council, if carefully and sensibly defined, could fill the existing gap without crowding out the many admirable functional organisations already in being, though it might encourage sensible amalgamation where there is overlapping. I repeat: its job should be analytical, not managerial. It most certainly should not be the channel through which money flows, whether that money be public, private or charitable.
I speak with feeling and declare an interest as the chairman of a charity, a hospital, dependent on voluntary funds—the Royal Hospital and Home for Incurables (that is, the incurably disabled). I would defend its managerial and financial independence to the last. Without that independence, its services to its patients would wither, and it is the patients who are the be all and end all of its existence. As the council would not be a Government agency, it would leave intact—and this is an important point—the functional organisation of Government departments. Like Lord Haldane nearly 70 years ago, I have little time for a client-based organisation of the Government machine itself.
In short, I strongly believe that here is an initiative which deserves serious, urgent and sympathetic study. I have discussed it at the cold level of organisation, analysis and effectiveness. As many of your Lordships know better than I, there are other and higher levels of need in the field of disability which call even more insistently and compellingly for such a study—and then, I submit, for action.
3.43 p.m.
The Earl of Longford: My Lords, we have listened most closely to the noble Lord, Lord Bancroft, who speaks with such a vast knowledge of Whitehall and other matters. The noble Lord's mental processes have moved rather in the opposite direction from mine. The noble Lord said that he began in a mood of weary scepticism and finished with some kind of enthusiasm, which, during his observations, I thought on the whole he concealed fairly well. However, I move rather the other way. I started which a great deal of enthusiasm, if only because of my admiration for the noble Lord, Lord Henderson, which stops only just this side of idolatry, and I have now reached the point of what I might call guarded sympathy.
The noble Lord has spoken a great deal, as is proper from a Cross-Bencher after many years of enormous service to this House, of the need to get these matters out of party politics. Where would most of us—I do not say all of us—be without party politics? Most of us who are taking part in these debates are party politicians, even when we do not look like them. Even the noble Baroness, Lady Lane-Fox, is a very devoted Conservative; and so on.
However, the idea that somehow we can conduct the development of the social services without party politics entering into the matter is a fantasy which,
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with enormous respect to the noble Lord, on the whole is confined to the Cross-Benches.
Where would the social progress of this country have been without Lloyd George?—not that I have any use for that gentleman's private morals; but in this one field of the social services he must be thought to have rendered great service. The same applies to other people throughout history. I shall not give examples closer to the present day. The fact is that we on the Labour Benches and also those on the Liberal Benches believe that, with a limited measure of help from Conservative noble Lords, we on the radical side have pushed forward the development of social services. Noble Lords opposite can boast of their achievements in the field of defence. Every one can point to his or her own achievements in some particular field. But as regard social services no serious historian would suppose that the main impulse had come from the Conservative Party or even from the Cross-Benches, except when they were carrying out the orders of progressive Governments. But I say that just in passing.
Baroness Lane-Fox: My Lords, if the noble Earl would give way for a moment, I would say that my memory is that the attendance allowance was in fact introduced by a Conservative Government.
The Earl of Longford: My Lords, everybody can produce something which the Conservative Government have done. I do not say that in the last 80 years they have done absolutely nothing, but I say that they have done very little. If the noble Baroness could produce one other example, it would be about all she could produce.
Let us proceed, because time is limited. I am rather doubtful about all this because at least some of the organisations upon which I rely for my information about the disabled are not enthusiastic. I should like to quote one passage; and even with that interruption I should have time to do so. The Disablement Income Group, on which I rely, says this:
"Lord Henderson's proposal and the Minutes of the All Party Disablement Group meeting … were circulated to members of the Executive Committees of the Disablement Income Group and the Association of Disabled Professionals. … The proposals were discussed at length by both Executives".
I am not speaking for myself: I am talking about the executives of this very important organisation. The Document continues:
"Neither DIG nor the ADP were very keen on the idea of a Council for the Disabled".
We have to accept that they were not very keen. That does not mean that they were against it. They want the whole matter which is before noble Lords this afternoon clarified. I shall say no more other than simply indicate some of their worries:
"DIG believes in the pluralist approach … and would therefore be keen to ensure that the Council would not stop organisations having direct communication with government and with every other authority that might be able to help disabled people.
"DIG also believes that care would have to be taken to ensure that the Council did not act in any way as a cushion between government and disabled people's organisations".
Another matter that needs careful consideration is the question of financing, to which the noble Lord,

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Lord Henderson, has referred. How will the council be financed? The document says:
"Only large wealthy organisations could afford to help support a Council financially".
That is why I intervened to ask whether one would be looking to the Government. The DIG continues:
"If such support from organisations is envisaged, there is a risk of the Council not being supported by … the smaller less wealthy organisations of disabled people".
Those are some of the questions that need to be answered. Sir Winston Churchill once said that one can rat but one cannot re-rat. I have ratted on the noble Lord, Lord Henderson, this afternoon because I told him that I expected to support him, but I am quite ready to re-rat if these answers can be dealt with satisfactorily.
3.49 p.m.
Baroness Gardner of Parkes: My Lords, I thank the noble Lord, Lord Henderson, for bringing forward this topic for debate this afternoon and I should like to support him. I am pleased to be speaking immediately after the noble Earl, Lord Longford, because I found it quite laughable that he was determined to give all credit to his party for every good social service, and of course I do not for one minute accept that. I have seen the work done by Conservatives throughout the country so many times tht I cannot accept that for one moment.
However, I think that the noble Earl made one or two good points, including, for instance, that some bodies are afraid that the council might be a cushion. I hope that it will not be a cushion between the Government and disabled people, or people with disabilities, but rather that it will be a springboard, so that, instead, ideas might take off and be more effective because of the status and prestige of the council, which would enhance the whole position of people with disability. If the council is to succeed then it must achieve status at that level.
I would support the view that it should be non-political. It has been a great pity to see so many social services used purely as a means for political confrontation. Less is achieved when that is the situation. Going back to the 1970 Act which the noble Lord, Lord Henderson, mentioned, I was shortly after that chairman of a social services committee. Life was so different in 1970. We were all the time looking for new improvements to bring in. There was ample funding, and Westminster Council, on which I served, was keen to implement any improvements it could.
We started a survey of disabled people within the city. Then, by the time that 1973 had come and the oil crisis had hit, we found that we were in a very different financial situation, and we could discover disabled people more quickly than we could help them. Then we faced the question, what was the purpose of going on? What was the use of finding people if you could do nothing for them? This disability council would be in a position to see which groups needed most help, which groups were undiscovered. There is a great deal to be done in terms of co-ordination and discovery.
A lot of people with disability often first of all do not want to recognise that they have a disability. It is hard to come to terms with. I know many young people
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with progressive conditions who certainly do not want to come to terms with them. But they are the sort of people who are more willing to come forward to an impartial body such as a disability council than they would be to a local authority or the Department of Health and Social Security. For some reason people feel that a stigma attaches to going directly to the social services, and I think that a disability council would bridge the gap which exists.
Whatever structure the council took, it would be important that it was carefully thought out in terms of membership. I listened earlier this afternoon to the noble Baroness, Lady White, pointing out that some body was not represented on the Dartmoor council, or authority (I am not sure of the term), and I realised that exactly the same situation would arise with a disability council if you tried to make it representational and have a representative from each and every individual body associated with disability on it. It is therefore important that if the time comes, as I hope it will, when such a council is set up people should be appointed on their own merits. Certainly we want some people who have disability; certainly we want people who are interested and involved in this subject; but if you try to make it a purely representational body with each member coming from a particular body it will end up with someone coming forward saying that he has been left out, in the way we heard about earlier this afternoon.
I should like it to be an independent body. I should like it to be a valued body. But I should not like it to become a great bureaucratic machine. I want it to remain small enough to be in touch with people. I would want it to be not particularly expensive, but certainly very effective. I realise that many disabilities are something people have all their lives, but often we tend to overlook the aging effect on conditions such as arthritis. So many people will face a disability by the end of their lives even though they have never suffered one at the earlier stages. These people, again, could be encouraged to come forward and be interested in the work and help such a council.
There is a double benefit in helping any body such as this. You are not only helping others worse off than yourself but giving yourself an interest and an occupation and satisfaction in feeling that you are helping others, and when the time comes then others will help you. I hope that that would be the sort of co-ordination effect and encouragement that this council might have.
I would not want to see all the small, independent bodies done away with at all. When people mention that self-help groups are set up, I think that they are important because they are the groups which are so close to the people they represent. But they often need a bigger voice to speak for them. This is what I hope this disability council would do.
I hope that it would retain the goodwill of all the disability bodies, which the noble Lord, Lord Henderson, has said he is sure it will have. I was sorry to hear doubts expressed about that on the other side from the noble Earl, Lord Longford, but it may be that those doubts are natural doubts at this stage because it is early and no one quite knows exactly what is involved in this proposal. It is still a long way from the point where we shall be able to look at it and decide

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whether it is totally good, or totally bad, or needs modification. But I have great hope that such a disability council would be marvellous, and I have no hesitation in supporting this Motion.
3.56 p.m.
Baroness Masham of Ilton: My Lords, I thank the noble Lord, Lord Henderson of Brompton, for raising this subject. I feel that there is a need for a very well defined disability council. There should be a fountainhead with a distinctive title so that it can be easily found in works of reference, such as a telephone directory.
Its terms of reference need to be clearly defined. Its mandate should be that it should echo the voice of people with disabilities, not that it should speak for disabled people. The International Year for Disabled People 1981 elevated the aspirations of disabled people. The two main aims were integration and participation. Some disabled people want to speak for themselves if they possibly can and take responsibility for their own lives.
Some years ago I attended an international conference on rehabilitation, in Portugal, and after speaking with many disabled people from different countries I came away with the firm belief that they wanted to make known their needs and aspirations themselves rather than have others do it on their behalf. The wireless programme so aptly called "Does he take sugar?" is so entitled because of the patronising attitude society often adopts towards disabled people.
If this council is to evolve from existing disability organisations, the Minister for the Disabled, who is well liked and respected, should look very carefully and evaluate all the existing bodies concerned with disability and see what they are doing and how effective is their work.
I do not think that RADAR—the Royal Association for Disability and Rehabilitation—ranks very highly in the estimation of the disabled members of the public. The image is one of many people making a living out of disability and not achieving a great deal on behalf of disabled people, with their very real needs.
When a large Government grant is given there ought to be a list of achievements. I welcome the idea that if there is to be a council with a Royal Charter, it should lay a report before Parliament each year. It could help Government to pinpoint some of the most urgent priorities. As the noble Baroness, Lady Lane-Fox, has said, the noble Baroness, Lady Ryder of Warsaw, wrote to me saying that she supports the idea of an independent council. She knows very well the problems of very severely disabled people from all parts of the world.
At this time when funds are short it might mean that existing bodies which receive large grants would have to give up a percentage to go towards payment for the council. As I said, it would be useful for the DHSS to evaluate all existing organisations which receive grants to see whether they are serving disabled people in the best possible way and getting value for money out of the grant. The associations which are doing a good job and fulfilling their role well would have nothing to fear.
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There does not seem to be a body which collects important facts which are damaging to the well being of disabled people. The other day I attended a conference in York at the teacher training college of the College of St. John and Ripon. The seminar was held in the newly-built, most attractive, occupational therapy training centre—a new building on the campus. The only problem was that it was upstairs, with no lift. Four strong policemen attending the conference lifted me up and down. For a one-off event that was not so important. A very important point in regard to occupational therapy training is that therapists are supposed to learn about facilities for disabled people, since one of their jobs is advising social service departments on house adaptations. Many of them work for local authorities. One would hope that disabled people would help to give in-service training to these groups. The chairman of the English Access Committee, who is himself disabled and is a large man who uses a wheelchair, is the kind of person who could teach them a great deal. Legislation will be the only means of ensuring that buildings are accessible.
The kind of situation to which I have referred is being found all the time, even though many of your Lordships give good support to the numerous needs of the disabled.
I was invited to talk to a group of young disabled teenagers at a college near Leeds. Several of the girls suffered from spina bifida and they told me that they had not been welcome when they went to a dress shop to look round. I find very disheartening discrimination against young, highly sensitive people who want to see the changing fashions as much as does anyone else. I felt pleased that they had been able to tell me about it; but these attitudes really do exist in some places. There is a need for a council to collect and monitor all these problems and needs and then try to do something about them.
We in the all-party disablement group are disappointed that the building regulations that are intended to help disabled people have not yet become operational. The pressure of many social aspects becomes more urgent as new and worrying features emerge. I hope that this debate will help create action towards the formation of a council. Would it not be wise to look at the British council which is concerned with the organisations for disabled people? These are organisations run more or less by disabled people themselves. They certainly should not be left out.
Advancement in technology is so fast that it is important to try to keep up with every kind of progress. I have been very impressed by some of the new young Members of Parliament who are trying to help some of their disabled constituents. It would be useful for them to have a reliable and efficient service which could become a focal point. Disability crosses many Government departments and covers numerous specialities. The problems are often complex and intricate. If we are a caring society, it must be important to keep these in the forefront.
I end by saying that some people prefer to use the word "handicap" rather then "disability". As we are a part of Europe, the most suitable word which is generally acceptable should be used, if we are to have a council with a Royal Charter.
4.4 p.m.
Earl Attlee: My Lords, as always, it is a pleasure to follow the noble Baroness, Lady Masham of Ilton. I should like to say right from the outset that I support the call by the noble Lord, Lord Henderson of Brompton, for the setting up of a disability council. I do not mind whether it is to be called a disability council or a handicap council. When talking about the disabled I include the blind, and I also believe that old age is in itself a disability.
I listened to the noble Earl, Lord Longford, with great interest. I see why he mentioned party politics. If I heard him correctly, he said that he viewed this proposal with guarded sympathy. If that is the case, I should hate to listen to his speech if he made it with guarded antipathy, because I gained the impression that the noble Earl is against this proposition.
The Earl of Longford: Not really, my Lords.
Earl Attlee: My Lords, I stand corrected. It seems strange that while we have national institutions to look after the interests of children, animals, the arts and sport, we do not have a council to look after the interests of those who, apart from animals, are the least able to look after themselves and therefore require our help.
I am connected locally and nationally with various bodies concerned with the disabled. I should like to dwell on just two aspects of this matter, the first being that of sheltered workshops. I am the president of the National Association of Industries for the Blind and Disabled. Our members operate sheltered workshops up and down the country. Some of them are blind, some of them are blind and disabled and some are mentally disabled; and they produce the traditional artefacts made by the blind, like baskets, and they re-upholster chairs. I have been impressed, going round the country, at seeing blind people operating metal cutting lathes and welding equipment—blind people doing highly skilled jobs. If they can do it, that is a wonderful thing.
I am also a trustee of the Countrywide Workshops Charitable Trust. This was set up to sell products made exclusively by the blind and the disabled. When the trust was set up it was found that there was not one national organisation which knew where disabled people were, what their handicaps were and whether they could earn their own living. In the regions there are no such lists. In the counties themselves, again there are no such lists. Many of the people working through countryside workshops work from home. Some of them paint: we have one who paints with her mouth. Others do fairly skilled crafts; but there is no central record.
I hope that when this council is formed there will be a central record. We have to remember that if these people are blind and disabled they do not go round the country, and they probably have no knowledge of marketing. They do not know how to sell their products or to contact peple. That is one of the things that this council could do well.
It seems incredible that one hears people saying "Yes, these blind and disabled people are working, but it would be far cheaper to send them all home, disband the workshops and just pay them the money". People
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who say that have forgotten one important thing. If you are blind or disabled you do not want charity. The most important thing for these people is their self-respect, because the money in their pockets is money that they have earned. I have spoken to so many and time and again they have said, "Once I started working here I got my self-respect back".
The other matter I wanted to raise briefly is that there was a suggestion—I know that the noble Lord, Lord Henderson, spoke against it—that the council should be funded by the Government. I am sure that the noble Lord the Minister will view the formation of the council with sympathy, and I beg him not to agree to this. The Sports Council and the Arts Council are dishing out money, and the bodies which do not receive enough money from them are not exactly friendly towards those councils. The Government—let us be honest about it—have shown recently that they are very able to look after themselves, and if people go for them they can defend themselves. I think it would be wrong for this council, if it is formed, to have anything to do with handing out money.
4.10 p.m.
Lord Mountevans: My Lords, I, too, am grateful for the opportunity to join in the debate initiated by the noble Lord, Lord Henderson of Brompton. I feel that, from my point of view, he has put the case for a council for the disabled, its genesis, its aims and its funding so well that really he can take my support for granted. What I should like to do is to add, perhaps, to the objectives to which I should like to see a national council addressing itself. I hope that one of the tasks which it would put high on its list of priorities would be that of educating us, the able, in how, in our day-to-day life we can contribute to the quality of life of the disabled whom we are discussing this afternoon.
The term "disabled", used in its widest sense as we have already used it this afternoon, embraces those whose sight or hearing or mental ability is impaired, those whom we all too often ignore, not out of any discontent or out of any hostility but because we are not really aware of their immediate needs. We leave it to somebody else to make investments, to spend the huge sums of money that have been spoken about this afternoon, to give them increased mobility or a better quality of life; but we do not ourselves think, "What can I do—I myself—for the people in my immediate surroundings?" As I have said, I do not think it is hostility; it is a matter of ignorance that we are blind to their lack of sight, that we are deaf to their lack of hearing, and that all too often we are unmoved by their lack of mobility.
I feel that we must all become totally involved and I hope that an eventual national council would address itself to involving us all, making us more aware of the fact that it is not something that we can leave to others, but something in which we ourselves must join. I hope that it would teach us not only to note the holder of the white stick but, in doing so, to ask ourselves whether we can immediately give assistance to the holder of that white stick.
As I have said, I am totally committed and I hope that we shall eventually get a national disability council. I hope that it will not be an Arts Council style

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body, funding its clients and being leaned upon by them. but one which will prime pumps and give guidance. I appreciate that it will face many formidable tasks but I hope that one of the smaller ones that it will take on board will be, as I say, that of guiding the able along the path of helping the unable—a task which I think would be relatively low in cost but intensely rewarding for those whom we are discussing this afternoon, and as rewarding for we the able bodied.
It is not often that we chance to find ourselves with a great deal to give without having to put our hands in our pocket, but if Lord Henderson's national council comes to be it will, I hope, teach us in this instance how and when we should give.
4.13 p.m.
Earl Haig: My Lords, I should like to add my thanks to the noble Lord, Lord Henderson, for initiating this debate which has been so well worth while and deeply moving. The noble Lord, as a result of war service, has a particular experience of disability. I come into the same category of war disablement in a minor way, a mere 20 per cent. But I can understand the difficultues of having to cope with life with a really serious disablement. And the way that people cope has my constant admiration.
It is proposed that the new organisation would give to disabled people a chance to discuss and to explore ways and means of overcoming their problems. It would not be, I believe, simply a clearing house of ideas, but would give to the disabled a chance to put those ideas into practice. I remember the ineffectiveness in some ways of our Disabled Advisory Committee, of which I have the honour to be chairman. The quota system was ineffectual. We had in one isolated area a number of disabled people for whom nothing was really done to find employment. Finally, these people on their own initiative started a workshop of their own, which last year was visited by Her Majesty the Queen.
The new organisation should not be just a talking shop but a source of work and creativity. Secondly, there is a need to increase public awareness in the same way as the Arts Council acts as a stimulating body for the arts. In that context, the recent television documentary, "Beyond Sorrow, Beyond Pain", gave a moving account of how a relationship can help to overcome even the most grievous disabilities. The film must have stirred many hearts and encouraged many viewers to do more for disabled people.
Thirdly, there is the need to give expert advice to Ministers and their officials who will attend meetings and discussions primarily to listen and to learn. With regard to composition this should include to a major extent disabled people; it should have a region-wide basis and should include Scotland. Here I want to mention the existence of the Disability Council in Scotland which was set up some years ago on the initiative of a number of medical and orthopaedic specialists. I think that, although the Scottish Disability Council would want to preserve a measure of autonomy, there would need to be some form of
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integration between North and South of the Border so that so far as possible the two councils would speak with one voice.
Perhaps I may turn briefly to the ex-service element which has special meaning for the noble Lord, Lord Henderson, who himself bears the scars of war. Here I am speaking about a quarter of a million war disabled pensioners who form a very significant group who should be represented on the council. I know that the Royal British Legion of Scotland, of which I am president, could be a powerful ally in these matters. If it were encouraged to join, with its vast network of branches and members who have great experience in these problems, it could be of enormous help. It already assists the disabled whether or not they are war disabled. Should civilians be anxious about the bond with an ex-service organisation, I would say that the legion is a democratic organisation and very sensitive to any form of dictation from the top.
Speaking as I do, in an official capacity for the legion and also as vice-president of the Scottish National Institute for the War Blind, I can guarantee that an invitation to join the council would meet with a warm response. We are aware of the need to co-ordinate and to streamline the work and effort of the various ex-service organisations; and to minimise the risk of duplication we recently started a symposium which provides a forum for all the main Scottish ex-service organisations. With regard to the Scottish Council on Disability, the legion finds its membership of that body is useful as a means of sharing information and building contacts between ex-service and non-ex-service people. And we find the contacts with the regions particularly valuable, an aspect which the proposed council should not disregard.
Before committing themselves to this venture Scottish ex-service organisations would want reassurance on two points. First, they would not want to see the system of Poppy Day and other flag days altered, since the funding of their organisation has taken years to build up and still needs promotion. Secondly, we want to preserve the system of war preference and our right of direct access to the Government and, in particular, our direct link with the Minister for War Pensions. Nothing should be done to weaken the structure of the War Pension Office of the DHSS or of the War Pensions Welfare Office, with both of which the ex-service community has close links. Provided that these two principles are adhered to, I am sure the legion would welcome involvement with the proposed disability council.
Through support from their constituent members, the voluntary organisations would continue to raise their own funds and the proposed council would be assured of considerable financial support and so would be helped to carry out its work, which is so badly needed by all disabled people. I hope that, as a result of today's debate, preliminary steps will be taken to establish the disability council which the noble Lord, Lord Henderson, is proposing.
4.21 p.m.
Lord Fitt: My Lords, I rise briefly to lend my full-hearted support to the proposal of the noble Lord, Lord Henderson, to set up a disability council. I do so because of a particular experience which I had in my

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capacity as a Member of Parliament in the 1970s. In response to a number of letters I was receiving from constituents and also from people living far beyond the boundaries of my constituency who were severely disabled, I began to make enquiries of the Department of Health and Social Services in Northern Ireland. I found that they were totally ignorant about the number of people in Northern Ireland who were suffering from particular disabilities and diseases. It was only after putting down a hundred parliamentary Questions to the Ministry, asking them for specific information, and after a lapse of time which indicated that the Ministry officials were trying to find the information I was seeking, that we began to realise the extent of the disablement problem in Northern Ireland. Northern Ireland is a relatively small region of the United Kingdom and the investigations which were then initiated by an organisation known as Outset revealed figures for disablement in Northern Ireland that had never been known, and that created a great fuss at the time.
Regarding the position in which we find ourselves today, I think the most important proposal put forward by the noble Lord, Lord Henderson, in his background paper is that he would see this body as being a fact-finding body—because at the moment, in spite of all the voluntary organisations that are in existence, I am quite certain that we do not at all recognise the full extent of disability. As other noble Lords have said here this afternoon, there is a great need for co-ordination of all the voluntary bodies.
Although it has not been said out loud, I think that we have all heard that all these little voluntary bodies in relation to disability are very protective of their own interests. What is their motivation? Is their motivation genuine or, as has already been said here, could it be attributed to some other interest? For example, I have heard in regard to one of the organisations—I will not name it in this House because what I have heard may be untrue—that the administration costs in that organisation far outweigh the benefits which are given to people who are suffering from the particular disability involved.
As I see it, we should never be able to divorce this proposed council from the everyday politics that we have in this country. It would be totally impossible to do that. I wonder, therefore, if I dare express the point in the reverse way, because the noble Lord, Lord Henderson, has said that if such a disability council were to come into being it would produce an annual report and that report would be debated in both Houses of Parliament. I am convinced, after having spent many years in another part of this building—and when one looks down at the attendance figures given for the meeting which was chaired by the noble Lord on 16th May of last year one can see it clearly, by the personalities who were in attendance—that this is an issue which far transcends party politics in this building, and indeed in this country.
So I cannot see any real objection to such a body. I think it would be able to co-ordinate all the various activities that we now see carried out by such a number of organisations. I was speaking yesterday to the ex-Minister for the Disabled, and he told me that in relation to people who are suffering from deafness or autistic disability there are 11 organisations in the
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country. No doubt each one of those little branches, those organisations, would feel that they were far more important than the other ten. So there will be a difficulty in trying to prevail upon such organisations to co-ordinate their activities, which would be totally beneficial to the people who really need their help.
I would have some reservations about what the noble Lord, Lord Henderson, said in relation to a lottery at some time in the future. I know that disabled people want to maintain their pride and they do not want to be seen as being dependent upon charities; so I would have reservations about that particular aspect of the thinking of the noble Lord, Lord Henderson. However, I am quite certain that the intention behind this proposal for a disability council is highly laudable and I am also certain that, were it to be given the blessing of this House and of the Government, it would be a council of which in later years every Member of this House could be proud.
4.27 p.m.
Lord Campbell of Croy: My Lords, I am glad to join in supporting the proposal of the noble Lord, Lord Henderson, and especially so as its intention appears to be similar to that of the Bill which I introduced in the last Session of Parliament, the Disabled Persons Bill. I would remind your Lordships that I accepted some amendments which were proposed during the passage of that Bill, and that it passed through all its stages in this House with the goodwill of all sides and also with the goodwill of organisations outside Parliament. It did not find time in the other place, which is something that happens to many Private Peers' Bills. I will not go into the details, but we all understand the difficulty of time being found for debate in the Commons.
Like the noble Lord, Lord Henderson, in that Bill I set out to avoid the difficult and contentious points. For example, I did not try to make discrimination against disabled people illegal, with all the problems of definition and the legal processes which that raised. What the Bill aimed to do was to establish a disablement commission which would be separate from the Government or government agencies, and therefore similar to the council proposed by the noble Lord, Lord Henderson.
The reason for its being separate was that many handicapped people do harbour complaints about government offices and the way they are treated. Certainly when I was a Member of another place I found many of the complaints were about government offices. They are suspicious or dissatisfied—probably without real justification in most cases, I would add, but that is the case and it has to be borne in mind. I know that the Government's view has been that all the functions proposed for a council of this kind should be carried out within government departments and within government machinery. Psychologically, I believe that is not acceptable to many handicapped people; and that is the main point which I should like to make today to the Government.
Another reason for speaking in today's debate is that I was one of those in the Commons almost 20 years ago who started the movement there on behalf of the categories of severely handicapped people who were not then catered for in what was already called the

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welfare state, except by what was then called national assistance. For example, people who were handicapped from birth or early youth received no attention at all. Housewives found themselves in the same situation, too, if they suddenly became severely handicapped. This was because they had never worked or been available for work and were not in the national insurance system of those days.
The noble Earl, Lord Longford, referred to the Disablement Income Group and I was one of those who helped to set it up under its first head, the late Megan Du Boisson. The noble Earl read to us the views of that organisation on this proposal. I was moved to other duties, if I may put it in that way, in the shadow Cabinet and then in the Cabinet itself, and therefore was not able to continue fully in the campaign at that time. But the most glaring of the gaps to which we then drew attention were closed later, particularly in the early 1970s.
I respond to the request of the noble Earl, Lord Longford, when my noble friend Lady Lane-Fox interrupted him, because it was during the time of the 1970–74 Government that not only the attendance allowance but also the non-contributory invalidity pension and the mobility allowance—to give just three examples—were brought in. The noble Earl asked for one or two more examples; I did not want to interrupt his speech but I have used my own in order to provide them.
I remember them, because I was a member of the Cabinet that was taking the action then. But I am not making a party point. I agree with the noble Earl that party politics are necessary for the Government of the country, but I think he was perhaps a little unfair if, at the same time, he was inclining towards making a point that most of these things had happened under non-Conservative Governments.
I am still mainly concerned with the categories of severely handicapped people who have been handicapped since youth or during working age; and I prefer the word "handicapped" to "disabled". I congratulate the noble Lord, Lord Henderson of Brompton, on having introduced this debate and on his proposal. About 40 years ago he and I were both physically affected by enemy action in war. I was then greatly restricted and spent a long time in a wheelchair at various periods. But once on my pins I, and others like me, do not feel handicapped. We can carry out sedentary occupations and, dare I say it, engage in cerebral activity, though I would not expect all noble Lords opposite to agree that my activity could be described as cerebral during the past 25 years.
But to generalise about the disabled can be misleading. Again, advancing age normally leads to increasing infirmity. Someone in his late 80s or older must accept that some of his faculties will be lapsing. Everything should be done for the elderly in order to assist them, but that is a different category from the severely disabled who are young or of working age, and who are so handicapped as to be unable to live a normal life unless they receive special attention or measures. This, surely, must be our priority. My noble friend Lord Renton has asked me to say that he has not been able to take part in the debate. He is the president of Mencap and he would have liked to
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express his support for this proposal, but he has to be in the chair of a meeting at this moment.
In the minute or two that remain to me, may I say a word about names and organisations? There is a council for disability in Scotland and it, for example, formed the secretariat for the International Year of Disabled People, of which I was the chairman in 1981. It carries out various duties in Scotland already as the Scottish Council for Disability. RADAR has been mentioned. That does not operate at all in Scotland, though its chairman is the noble Duke, the Duke of Buccleuch—a distinguished Scot. These examples show the need for rationalisation, which could be brought about if this council were established. I very much hope that the Government will accept that it is not appropriate for the Government machine to try to do it all itself and that there is a place for a national independent body.
4.35 p.m.
Lady Kinloss: My Lords, the noble Lord, Lord Henderson of Brompton, is to be congratulated on his hard work and persistence in promoting a Council for the Disabled; I wish him good luck. I hope that such a council would not be just another pressure group. There are plenty of them already; perhaps too many for one to absorb easily. I see the council primarily as a co-ordinating and fact-finding group—one which would become a central exchange for facts. For these reasons, I hope that when members of such a council are being considered, the majority will be drawn from those most affected—the handicapped themselves. Especially, I should like to see blind or partially blind, deaf or partially deaf, persons included. With all the modern aids at their disposal, blind or deaf people are quite able to participate in meetings. In the case of the mentally handicapped, one would hope to see a representative of the various pressure groups included.
There are several suggestions which I should like to make. May I urge far greater publicity to educate the general public to a better understanding of the handicapped? What people do not understand they are often apprehensive of. Are we not all? Recently, a disabled friend in a wheelchair travelling with her husband wished to use a taxi. Most taxi drivers are extremely kind and helpful, but this particular one just sat in his seat and waited while her husband got her in with some difficulty. When they started off, they remarked to the driver that they were looking forward to the new London taxis. The reply was "I shan't have one. I don't want people like you using my cab". How thoughtless and hurtful!
But I do not suppose he gave a thought to their feelings, simply through ignorance of the needs of handicapped people or of the fact that they have feelings as we all do. Those feelings do not disappear simply because one happens to sit in a wheelchair, has crutches or calipers, or is in some other way handicapped. Perhaps the Minister could say when these new taxis are likely to become available.
Handicapped car drivers have a badge to display. Could we not have, say, a bright green badge to display on the cars of people who are willing to give handicapped people a lift? Likewise, if a blind, deaf or otherwise handicapped person wishing for a lift also

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wore a bright green badge, he could be seen easily by the driver. These badges would themselves serve to publicise the work of the council. Maybe this could be organised by existing bodies, such as Women's Institutes or the Townswomen's Guild. Perhaps a council could check with the larger insurance companies to make sure that the drivers are covered by insurance if they give these lifts. In rural areas, where there are very often hardly any buses, or should the number be cut in the future, this could surely be a useful and valuable service to the community.
Regional councils would probably be required to collect and collate information to pass to the central council. How is all this to be funded? This is a very sensitive question, because no existing body representing the disabled has any spare cash. I would only venture this suggestion. There are many firms not able easily to adapt their buildings in order to employ disabled persons. Could they not be asked to make contributions instead? There is a Minister for the Arts and there is a council for the Arts; there is a Minister for Sport and a council, and also a Minister for the Disabled. But why should he be disabled by not having a council? I hope that he soon has one.
4.39 p.m.
Baroness Faithfull: My Lords, I venture to speak in this debate on behalf of children with especial educational needs and do so with the knowledge and indeed the encouragement of the noble Lord, Lord Henderson. I appreciate that the subject of children with special educational needs is separate from the one of which the noble Lord, Lord Henderson, has spoken today. He has recommended the establishment of a disability council—a recommendation which I fully support.
I would contend that the needs of children under the Education Act 1981 based on the first Warnock Report is a different but closely related subject. The noble Earl, Lord Attlee, spoke of the disabled as unwilling to campaign for themselves. I submit that children not only are unwilling but are unable to campaign for themselves. A working party was appointed by the Voluntary Council for Handicapped Children. Oral evidence was received from some 85 organisations and individuals and these include social, medical and educational sectors from both the statutory and voluntary organisations. I would hope that many of your Lordships would feel yourselves able to read the book published by the National Advisory Committee.
The setting up of a national advisory committee for children with special educational needs, supported by Government but separate from Government, is, I believe, essential. The noble Lord, Lord Campbell of Croy, underlined the significance, the purpose and the effectiveness of voluntary organisations working in concert with Government departments. Why did the working party recommend the setting up of a Voluntary Council for Handicapped Children? First, the Education Act 1981 recommending the integration of children with special educational needs into ordinary schools and into the community is, I submit—and it is shown by the report—working unevenly throughout the country. Her Majesty's Inspectors in the Department of Education in some
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areas have organised seminars, conferences and discussion groups and are doing a splendid piece of work; but this work is not being carried out throughout the country.
Lord Somers: My Lords, will the noble Baroness allow me to interrupt for a moment? Does she agree that it is very important to differentiate between handicapped and disabled children? "Handicapped" generally means mentally handicapped; and "disabled" means physically disabled. Their needs are so different.
Baroness Faithfull: My Lords, may I thank the noble Lord, Lord Somers, for his intervention. I do not know that I quite agree with it.
My second reason for thinking that an organisation should be set up in the voluntary sector to look into the needs of—shall I say?—handicapped children and children with disabilities is that there is still very little understanding of how those children should be integrated into the normal schools and into the community. There is very little skill in diagnosis as to which children should and cannot be integrated; and there is very' little knowledge still as to what facilities should be needed. I shall give just two examples.
I know of a child of 16 who is clever, who is bright, and who is deaf. Her social circumstances have been such that she has been unable in the community to benefit from the very good service given by the education department and for social reasons she should perhaps have had much more specialised and concentrated help in a residential school. Secondly, I quote a case of a spina bifida child who was admitted to an ordinary school. The school nurse was not told; the school doctor was not told; and the building was not suitable. The child had to be withdrawn, with consequent feeling of rejection.
I give these two examples only to show what a very difficult task educationists, the medical profession and social workers have in deciding what is best not for a system but for each individual child and, furthermore, for the family of each individual child. I would suggest that, although this is not the same as the council proposed by the noble Lord, Lord Henderson, nevertheless if children were not looked after, his council would be far harder worked; whereas if the children were properly looked after, while there would still be a need for the council proposed by the noble Lord, Lord Henderson, the need, I suggest, would not be quite so great.
Sadly, I have to say that in Hansard of the House of Commons of 14th February 1985, at column 223, the Secretary of State for Education turned down the recommendation of the working party for the setting up of a National Advisory Committee to disseminate information and to offer knowledge and skills to a wide section of society. When I say this I do not refer only to educationists and teachers but to social workers and, as I have said before, to doctors and the community. Other noble Lords have mentioned the need for the community to understand the needs of those with handicaps and disability.
It may be that application for urban aid should have been made to the Department of Health and Social Security as well as to the Department of Education,

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and possibly to the Home Office, for every department of this type dealing with children is involved. While I know I have spoken wide of the recommendation of the noble Lord, Lord Henderson, nevertheless I beg your Lordships' House to think of children who must be trained and who must be helped so that they can take their place in society when they come to adult life.
4.49 p.m.
Lord Hastings: My Lords, I apologise for this intervention but I was not able to put my name down because I did not know whether I should be able to attend this important debate. I am very glad I have and we are. I think, well up to time. So for just two minutes I should like to support the noble Lord, Lord Henderson of Brompton, because I think the more support he can get, the better.
I want to re-emphasise the point made by the noble Lord, Lord Campbell of Croy, that communication with Government departments is all very well—I have had it in connection with charities on various occasions and they are invariably sympathetic—but it is not always possible for them to do what they want because they are under the control of a really very restrictive Treasury when it is a question of money. When it is a question of the moral aspect and the operative aspect of charities, something else is undoubtedly needed. I am sure that a co-ordinating, nationally recognised council must be the answer. It also takes the subject, as the noble Lord has said, right out of politics and in spite of what the noble Earl, Lord Longford, has said, that politics must sometimes enter into legislation even in this field, I am glad to say that it very seldom, if ever, enters into the operation of any particular charity.
I have been president of the British Epilepsy Association, and at some time its chairman, for the past 20 years. This is undoubtedly one of the most unfashionable and difficult disabilities to cope with both socially and in the field of employment. The council of some 30 members or so is a good cross-section. The founder was a Labour supporter and its original director-general. We are all members of the Labour Party, the Liberal Party or the Conservative Party, but we never quarrel. We co-operate, and that is true of most charities. That needs to be said because sometimes we sit in this House and try to score points when the people working in this field have that sort of feeling furthest from their minds. I want to make that point.
A central council will do a great deal as a morale booster and—I so agree with the noble Baroness, Lady Gardner—as an efficient small body. I should like to support the noble Lord and say this to the Government. I have spoken in years gone by on this subject of epilepsy and as a result have suceeded in getting the Government to do something very progressive—not progressive, perhaps, but effective—about it. I hope that the noble Lord, Lord Henderson, will have the same kind of success. I say to the Government that although I know they normally treat these matters sympathetically, I would not go down on my knees and beg them to do something. I believe we ought to say to the Government, "We expect you to do something about this. Indeed, we demand it."
4.52 p.m.
Lord Stallard: My Lords, I, too, apologise to the House for not having put my name on the list of speakers for similar reasons to the noble Lord who has just spoken. However, having heard the speech of the noble Lord who moved the Motion, I knew that I would be compelled to stay because of my lifelong interest in the problems of the disabled. I shall not delay the House for more than a few minutes.
I have felt for a long time, ever since I began to discuss and consider the questions raised by the mover, that there is much to be said for a council for the disabled, and all the reasons have been made this afternoon. But there are a few worries and concerns that I share with some others and I do not think they have been dispelled by what I have heard this afternoon. I have always felt, from my experience on the advisory committee mentioned by the noble Earl, Lord Haig, that there are too many organisations; but I fear that there may be a tendency to say that there are too many and that we should get rid of some. That might well tempt some people to do away with the self-help groups that the noble Baroness, Lady Gardner, mentioned and for whom I have a great deal of sympathy and support. They may well be swept away in the desire to reduce the number of organisations and that would be to the detriment of the disabled. I hope that we are aware of that problem and the consequences that would have for the regional groups—the specialist groups—because no matter how many huge organisations we have they could never deal with some of the very specialist problems in the area groups that exist. Therefore, I am worried about that.
A number of speakers have referred to the fact-finding aspect of this council. I do not know that such a Royal Charter council could be a fact finder. Fact finding always has to be done on the ground. It will still have to be done on the ground by all those organisations who have been beavering away for years and years to bring all these problems to the attention of the DACs, the other organisations and to the council. I do not see that the council could initiate much of that fact finding. I am currently worried at the fact that local authorities, because of the 1970 Act, have had to do much of the fact finding and surveys by themselves. They are finding it very difficult—and in some cases impossible—because of the lack of resources and finance. This is not the time to talk about rate capping, and so on, but there are difficulties for local authorities. They are finding it difficult to obtain these facts. I do not see how it would be any easier if we had a national council. It might even be more difficult because there would be a tendency to say, "There is the allocation for that council, so that is that, and no more."
That brings me to my final worry—funding. I know that this will be developed in later discussions, but I was a wee bit worried when I heard the mover, the noble Lord, Lord Henderson, mention raffles—lotteries, he called them, but it is the same thing. That brings out flag days. That is not moving forward in any way. We have moved away from that and we have made governments of all complexions accept that there is a financial responsibility at the centre for the problems of the disabled and the handicapped. It

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would be a retrograde step if we now move back into the flag day field.
I hope that some of those problems will exercise the minds of all of us in the aftermath of this discussion and in whatever we intend to do later on. As I said, I give the Motion reserved support at this stage until I know the answers to some of those questions.
4.56 p.m.
Lord Winstanley: My Lords, it is not for me to comment on the propriety or otherwise of what might be called unpremeditated interventions in the gap in the speakers' list by noble Lords; although I hasten to say that the contributions we have had from the noble Lords, Lord Hastings and Lord Stallard, who have done exactly that, have added important points to our debate. I merely say that when other noble Lords are extremely careful about keeping to their time limit, as they have been in this debate, that does allow other noble Lords to intervene in speeches and I feel that interventions can sometimes elucidate points of immense value—and have done so in this debate. With timed debates there is a tendency for people to believe that there cannot be any interventions. However, if there is a gradual assumption that if noble Lords make short speeches and there is any time left in the gap other noble Lords will rise to their feet to fill it, then that, I think, would be establishing a dangerous precedent.
I speak as the first speaker below the line on behalf of both parties on the Alliance Benches, and I am quite sure that in a short debate it is helpful to all if we speak with one voice rather than with several, particularly when our views exactly coincide, as they do on this matter. We are grateful to the noble Lord, Lord Henderson, for bringing this matter forward, and we are in full support of his efforts. Indeed, we congratulate the noble Lord, Lord Henderson, on his ingenuity in seizing on this device of a disablement council established by Royal Charter, which has all sorts of attractive possibilities attached to it, many of which have already been mentioned.
One which certainly attracts me is that it would avoid the necessity for lengthy and time-consuming legislation in your Lordships' House and in another place, which makes it almost impossible sometimes ever to get anything done. That is clearly an advantage. The noble Lord, Lord Henderson, mentioned some of the other possibilities, as did the noble Lord, Lord Bancroft. I ask the Government to very carefully bear in mind the words of the noble Lord, Lord Bancroft, who spelt out very clearly the advantages of proceeding on these lines of a disablement council established by Royal Charter.
One other advantage was mentioned which caused some argument—that it might take the whole business of disability out of party politics. I do not want to enter into argument with the noble Earl, Lord Longford, save to say that if we abolished parties today they would all re-form tomorrow. I have always felt that our party system is, up to a point, based on a fallacy. It is based on the fallacious assumption that if a group of people agree on one thing they must necessarily agree on everything else. That is manifestly untrue. My own party has only been able to give the appearance of
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complete unanimity over the years mainly because there were hardly any of us. When there are more we shall be just like the others.
But the fact remains that we need a mechanism from time to time to make it easier for noble Lords in all parties, or indeed sometimes in none, to work closely together on matters on which their views coincide. I think that that is one of the main functions that could be fulfilled by the establishment of a disablement council by Royal Charter. It would give an opportunity for support from members of all parties in different ways, and enable them to come together in a way that sometimes they cannot do.
Another function which the body could undoubtedly fulfil—and this has been referred to by many noble Lords either directly or obliquely—is to do something to integrate the work of the multiplicity of bodies that already exist, both nationally and locally. That is a point which was referred to by the noble Lord, Lord Stallard, a moment or two ago. There has been an explosive growth in the number of these organisations. I do not think that noble Lords could mention a single illness or disease for which I cannot somewhere find a society which exists to help the families and the sufferers. That is admirable; I do not criticise it for a second.
In connection with other work that I do I publish a handbook of organisations which exist to help the disabled, the sick, and so on, in the Granada area. It is a pretty big area—the whole of the north-west of Britain. That handbook lists all sorts of bodies, such as the British Epilepsy Association (which has already been referred to) and the British Diabetic Association. It lists all the national organisations, which of course have branches out in the regions, together with a whole series of smaller outfits which have been set up to fulfil a local need and to give support to the sufferers from this or that disease or disability. The handbook which I produce is updated regularly each year, and now runs to about 15 pages for the north-west alone.
That multiplicity of organisations undoubtedly from time to time leads to duplication of effort and perhaps a certain amount of waste. It also from time to time leads to damaging rivalry between different organisations whose territory sometimes overlaps. That is the kind of thing which could be looked at by a disability council. It could be helpful in making better use of the efforts of the multiplicity of organisations dotted about the country.
The noble Lord, Lord Henderson, also referred to the whole question of the implementation of the Chronically Sick and Disabled Persons Act. Together with Mr. Alfred Morris in another place, I had the honour of being one of the sponsors of that Bill. I have always taken a great interest in it. But mainly its provisions were enabling rather than mandatory on local authorities. I do not have a copy of the Act here, but to the best of my recollection it requires local authorities to do certain things where those things are considered to be both reasonable and practicable.
It has always been my experience—it is not perhaps surprising—that what some authorities find to be both reasonable and practicable others find to be totally unreasonable and quite impracticable. In the television programme which I present on these matters

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up in the north we regularly published a league table of where different local authorities were in the provision of telephones, the adaptation of homes for the disabled and all the other different duties which were laid upon local authorities in this permissive way by that Act. It was quite remarkable, when one local authority appeared at the bottom of the list which we showed on the television screen, how quickly it started climbing up the list.
But we need more than that. We need a central body with the clout (if I may use the word) which a body established by Royal Charter would undoubtedly have to do something about seeing to it that the provisions of that Act are applied a bit more evenly throughout the country. At the moment we have widely differing provisions in different places.
The noble Lord, Lord Henderson, referred—and I thought rightly—to something which is very interesting. We somehow need to know a little more about the total amount of resources spent on the disabled from all the various sources. He referred to central government, local government, all the voluntary bodies, and so on. As he rightly said, it has never been quantified. Surely it would be helpful to know what the total figure is. I think that when that total figure is ultimately compiled, added to it should be some kind of quantification of the value of all the things given in kind in various ways. Very often premises are loaned by an individual for use by a society. Often there is the work which is done entirely free by very many people. Food, equipment and all sorts of other things are given. The total resources are vast. A central body with a Royal Charter could look at all those resources from a central point of view, perhaps to say whether they are being used to the best possible advantage.
Before I sit down, let me say this. In establishing a new body we have to make absolutely sure that it turns out to be a net producer of resources rather than a net consumer. A disability council of this kind could be established in that way only if it had the fullest possible support of all the existing organisations for which so many noble Lords in this House do so much work. Our duty now is, first, to support the noble Lord, Lord Henderson, and to see that perhaps we get our disabilility council by Royal Charter. We should then do what we can by our influence in our own areas to encourage all the existing voluntary bodies of one kind or another to support the formation of a disability council. Unless they support it, it will have no chance of success.
5.5 p.m.
Lord Prys-Davies: My Lords, the debate this evening has been significant on at least two counts. First, it has been prompted by the noble Lord, Lord Henderson, who speaks with the authority and independence of the Cross-Benches. It is acknowledged that there is no one better equipped to initiate the debate in your Lordships' House than the noble Lord. He is the person who initiated the debate in the country on the need to establish by Royal Charter a national council for the disabled. A chartered body for the disabled is his vision and brainchild but modesty prevented him from saying so. I am grateful to the
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noble Lord for the well-deserved tribute that he paid to the pioneering work of my right honourable friend Mr. Alf Morris.
The debate is significant also because on every side of the House there has been overwhelming support for the Motion. Reservations have been raised by two of my noble friends, but on the whole there has been overwhelming support for the Motion. That must be satisfying to the noble Lord, and it must have some significance for the Government.
I think that we all acknowledge that a great deal has been achieved by the voluntary organisations working for the disabled generally or working for particular groups, but the voluntary organisations would be the first to acknowledge that they could do more if they had more time, more staff and probably more money. I therefore found myself asking the question: what would a national council established by Royal Charter do which cannot be done, or done as effectively, by any one or more of the existing major disability organisations?
Having read the discussion paper produced by the noble Lord and listened to the speeches this afternoon, it appears to me that the case rests on three main arguments. First, having a Royal Charter and therefore a prestigious title, the body will sometimes be in a position to put up a more effective fight. Pressure from a chartered body on the right people at the right time can put things on course. That is the way of the world for the foreseeable future. The noble Lord, Lord Winstanley, says that it will have clout. That is the clout which it will have. Secondly, being a chartered body it will present an annual report to the Minister, reporting on present conditions and making recommendations for future action: and the annual report could be the subject of an annual debate in Parliament.
Taking those two points together, we can see that the chartered body could become a permanent, central forum for discussing matters affecting the disabled generally and thus fulfilling a need which is not adequately met at the present time. It could become an important centre for expert knowledge, possibly for research, or commissioning research, on disability, and producing policy papers on major issues referred to it, or itself initiating policy papers. Again—and this has been underlined by at least four speakers this afternoon—it could facilitate better co-ordination of plans and policies. That has been the message of the noble Baroness, Lady Gardner, the noble Earl, Lord Haig, my noble friend Lord Fitt and the noble Lady, Lady Kinloss.
So the House perceives that there is a need to ensure better co-ordination and this body could take that task on board. It would achieve co-ordination while the existing organisations, each of them with its own peculiar interest, jealously guarding that interest, would preserve its own existing loyalties. It could be, in addition, a valuable link between Ministers and Parliament. My noble friend Lord Longford has, as against those advantages, raised one or two disadvantages and one would have to consider them. But on balance I am sure that the advantages far outweigh the disadvantages.
In the consultation paper which the noble Lord drew up last summer as the basis for discussion, he

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outlined a number of other possible functions for the proposed body. It was suggested that it could encourage rationalisation if it was satisfied that there was fruitless competition between organisations. Predictively this did not go down very well with most organisations, who are in the front line. They fear that this could lead to a take-over. It appears to me that there are two views in the House. Some consider that the council ought to go down that road, but I would take the view that if there is over-competition from time to time that should not be exaggerated. I should have thought for the time being that that is something one could live with.
There was also a suggestion in the consultative paper that the chartered body would be a grant-distributing body for the voluntary organisations, but there are very strong objections indeed to its being given this function. In the light of his consultations with individuals and organisations—and I am not sure whether the noble Lord had consultations with the organisations in Wales but next time round I hope he will have consultations with the Welsh councils of disability—I think the noble Lord has abandoned those two suggestions, at least for the time being.
The chartered body will require to be adequately funded, and in the main it appears to me that it must be Government funding—and with additional Government money. This is the point that is constantly stressed by the organisations who have looked at the consultative paper and who are basically in support of the proposal. The value of this chartered body, the value of this exercise, will be lost unless the resources are made available. I have no doubt that the new body would not receive as much money as it asked for, but it would be helpful if the noble Lord could before long give us an indication of the demands on the resources that it would make if it is to measure up to its tasks.
The noble Lord has expressed the hope that the chartered body will take disability above or outside party political battle into an atmosphere of goodwill. Certainly that is an ideal. But I doubt very much whether that will come about. It would be very surprising if it were not to be drawn into the controversies over the use of scarce resources. But the concept of a chartered council for the disabled enjoys our goodwill from this side of the House. I believe that, given adequate resources, and provided it builds on existing loyalties and is seen to be an organic development, the new body would have considerable potential. It would be a significant advance. I will not speak any longer because the House and many people outside it are very interested to hear how the Government respond to the debate.
5.12 p.m.
Lord Glenarthur: My Lords, I am most grateful to the noble Lord, Lord Henderson, for initiating this debate and for the constructive way in which he and indeed all those who have supported him have presented their case. It is one which attracts a good deal of sympathy and support on all sides of your Lordships' House, as the noble Baroness, Lady Masham, said. Speaking for the Government, I can
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only say how much we welcome the interest which your Lordships show in the important issue of provision for disabled people.
The proposal at the centre of today's debate has a great deal to commend it. We want to encourage the active participation of disabled people in the affairs which affect them and clearly a strong national consumer voice may be one way of doing that. We have always emphasised the crucial role played by the voluntary sector, particularly in the field of disability where it has a long and active history. The noble Lord's Motion gives full recognition to this and he, and, indeed, the noble Lord, Lord Winstanley, are quite right to suggest that to be successful such a body would need to evolve from existing organisations. It would need the confidence and respect of the many organisations already active in this field—some for many, many years—organisations which rightly take a pride in their own achievements, vitality and close understanding of the people they serve.
I do not believe that a national body imposed from above—the brainchild of government or the creation of statute—could fit this Bill. Behind the noble Lord's Motion—and others have referred to this as well—lies a desire to see a greater co-ordination of effort among organisations representing the interests of the disabled. On the other hand, it could be argued that the strength of the voluntary organisations lies in their diversity, and the imaginative pursuance of the aims their own particular members feel are important.
There is also a danger, perhaps, that the hopes placed in a national council for disabled people could become too ambitious. On the face of it, as I have said, it is an attractive concept, but it is also a very complex one. Disability is a very individual experience.
I note the points which my noble friend Lady Faithfull made about children. Of course, children would very much be a matter for the council to consider. So far as a national advisory committee for special educational needs is concerned, which she raised, I am aware of the letter of which indeed she has a copy. But the Government have not ruled out the possibility of considering the position later, in the light of other developments, including research the Government have commissioned on the follow-up to the 1981 Education Act. The results of this research are expected to be published in 1986.
But a national council would aim to act as a consumer voice for all disabilities—physical, sensory and mental. It would aim to be expert in all these fields, too, when commenting on various topical issues. That task is not impossible, but no one should under-estimate its difficulty—and I think this was a point to which my noble friend Lady Lane-Fox was alluding.
In the world of hearing impairment alone, there are four main national bodies. I am very pleased that in many ways they act together as the Panel of Four, representing the interests of those who are deaf or hard of hearing. Nevertheless they remain, by their own wish, separate autonomous bodies which do not wish to form one organisation. They have decided that this would not be in the best interests of those they serve, and even if these few did come together, there would still be scores of organisations of and for deaf and

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hearing-impaired people outside the main grouping; I do not mention this situation in any critical way, but simply to illustrate the complexity of the task of those selecting a body of manageable size to represent a very wide range of interests.
A further complexity is the number of advisory groups of one kind or another that already exist either specifically in the field of disability or covering disabled interests in their remit. Some are statutory bodies, others are not. There is the Social Security Advisory Committee, the National Advisory Council on the Employment of Disabled People, the Access Committee, the Transport Advisory Panel, and the Prince of Wales Advisory Group on Disability. That is by no means an exhaustive list and it could be argued that it merely illustrates the need for greater rationalisation.
However, I should strike two notes of caution. The first is that these various bodies have considerable expertise in their own specialist fields which enables them to grapple with complex issues and to make effective contributions to policy formulation. The second is that they often involve people who are not themselves disabled or directly representing disabled people but whose involvement in the decision-making process is of vital importance to disabled people. So far as the proposed council is concerned, this is a point that my noble friend Lady Gardner raised and which seemed to have some attraction for her. For example, the Access Committee for England has representation from designers, building control officers and the construction industry as well as from disabled consumers. In that way, there can be informed debate and a greater mutual understanding of apparently conflicting interests.
If a national council was aiming to give expert advice in these areas to Government, how would it stand in relation to such bodies as already exist? This was a point that the noble Lord, Lord Stallard, made. And would it aim to combine under its wing experts from both within and outside the world of disability itself? Again, I do not raise these questions in order to shoot down the proposals of the noble Lord, Lord Henderson, in any way, but merely to illustrate the complexities involved and the need to devise with great care the framework within which such a national council would most effectively operate.
Several of your Lordships and, notably, towards the end, the noble Lord, Lord Winstanley, have raised the question of Royal Charter. As the noble Lord himself said, a Royal Charter is not subject to the parliamentary process, nor the executive act of Government. The award is at the discretion of Her Majesty the Queen. Administrative approval is decided by the Privy Council Office. A request can be initiated either by departments or by an outside petitioner. But the advice and support of the Secretaries of State, in their capacities as Privy Counsellors, would no doubt contribute to success. This means that whoever nominated a body for Royal Charter, the Government's support would be an important consideration. Once a body has a Royal Charter it can only be disbanded by Act of Parliament, as I understand it, or at the wish of the body itself.
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As to the question of whether or not the national council should be a funding body—a point raised by the noble Earl, Lord Attlee, the noble Earl, Lord Longford, and the noble Lord, Lord Prys-Davies, and others—the Government are not in principle against the idea of using the voluntary sector to disburse grants. This is the way that our "Opportunities for Volunteering" scheme operates at the moment. It has proved a great success. However, I am aware of the great value that individual disability organisations place on presenting and arguing their own cases for grant aid. On this issue, the views of disability organisations as a whole would be the crucial factor and one certainly that the Govenment would need to consider.
The question must be asked, too, whether a national council for disabled people is a step towards their greater integration or, as some would argue, a move towards segregation. I find this a very difficult issue. On the one hand, one sees great fragmentation and perhaps duplication of effort with the consequent fear that the problems of disabled people are not being dealt with coherently. A strong, national and distinct "disability" body would seem to be one way to counter that. On the other hand, there is the view that disability should not be dealt with separately, but should be treated as one important aspect of the services and institutions which cater for the population generally. There is much to be said for that, too, and for arguing that our efforts should be devoted not to setting up a new "separatist" body, but towards ensuring that existing local and national activities have a disability dimension, and that disabled people are encouraged to participate in them.
It is certainly the Government's policy to encourage such participation in trying to provide the kind of support which gives disabled people greater independence and opportunities than they have had in the past. Here the noble Lord, Lord Mountevans, made some helpful remarks about educating the able about the needs of those not so fortunate. To my mind, it is not just a question of education; it is a question of upbringing in its most general sense. It is a matter of great importance and should be noted by all concerned; parents, teachers and others alike.
We have tried to take a consistent and coherent approach to the problem. First, we recognise the importance of financial support as a precondition for independence. It is no mean achievement in difficult economic times that we have increased expenditure on benefits for chronically sick and disabled people by 35 per cent. in real terms since 1978–79. Secondly, we have continued the trend away from the institutional model of care for disabled people, which fosters dependence, towards a community-based approach which concentrates on an individual's independence. This has been reflected in our care in the community initiatives, the more flexible use of joint finance and encouragement of joint planning between health and local authorities with the involvement of the voluntary sector at local level. It is reflected, too, in our various initiatives to support vital voluntary activities, the most recent of which was the £10.5 million "Helping the Community to Care" initiative announced last year which I hope will benefit disabled people among others.

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Thirdly, we aim in a variety of ways to create an environment free of the kind of barriers which have previously frustrated disabled people's attempts to exploit their own abilities to the full. That means, for example, actively promoting integration, as in the 1981 Education Act, and making places more accessible—a prime purpose of the Government funded Access Committee for England and of the proposed amendment to building regulations currently being considered by my colleagues at the Department of the Environment to which the noble Baroness, Lady Masham, referred. I can say that my honourable friend the Minister for Housing wishes to press ahead with this as soon as possible. He will decide how to proceed after he has received the full advice of the Building Regulations Advisory Committee, which is considering the proposals as a matter of urgency.
It means changing the attitude of employers so that they understand the true potential and abilities of disabled people. The Code of Good Practice on the Employment of Disabled People, which my right honourable friend the Prime Minister launched last November, will, I believe, be of great value here. These are just some examples. There are others in important fields like transport and telecommunications.
It is not my intention to read off a litany of Government achievements. Nor is it my intention to suggest for a minute that the Government can do everything, or that they alone can sort it out. That was the theme developed by my noble friend Lord Campbell. I have often been tempted by the beguiling words "this is not a party political matter," and have fallen for it. Sometimes, it certainly is a party political matter. But that would not be appropriate to the theme of today's debate. I do not see that, in any sense, this debate should be a party political matter. I wanted merely to give a brief outline of the Government's overall approach in their policy towards disabled people.
One of the main concerns, I believe, behind the proposal put forward by the noble Lord, Lord Henderson, supported by the noble Lord, Lord Bancroft, is that there appears to be a lack of coordination and direction in the approach to disability issues at national level, and that a national council would help to rectify this. I have tried to show that the Government recognise the need for clear objectives and a co-ordinated approach in their own policies towards disabled people, and that they try to maintain that approach across a very wide range of their activities. I should add that many of the activities and initiatives I have mentioned are devised and carried through in closest co-operation with disability organisations. That includes the ex-service community. As my noble friend Lord Haig knows, I have an association with them anyway in my capacity as the Minister with special responsibility for war pensions matters. So far as the relationship between England and Scotland is concerned, in answer to my noble friend Lord Haig I can only say that this is one of the complexities that would face those actually setting up the council.
The noble Lady, Lady Kinloss, asked a question about taxis. She asked when the new accessible taxi would be available. I can perhaps say that the new generation, capable of carrying a person in a
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wheelchair, should become available in late 1986. It should provide a major contribution to transport facilities for disabled people in London and other major cities.
This has been a good debate, with many useful contributions which we shall study carefully. The Government have an open mind about the noble Lord's proposal, and my comments have been made, I hope, in a constructive spirit. Some of the specific functions the noble Lord suggested for a national council would be problematic, and I have doubts, too, that it would, at the end of the day, be possible to combine such a wide range of very different roles within one manageable body. But I recognise that these are only suggestions at this stage, and that a great deal of detailed work would need to be done to refine them.
I come back to the point with which I began; that is, that the idea of a national council for disabled people stands or falls by the degree of acceptance it receives from existing organisations and from disabled people themselves. As my noble friend Lord Hastings will understand, this will doubtless require a great deal of discussion and debate; but we, for our part, will certainly listen sympathetically to any proposals put to us as a result of that process.
5.31 p.m.
Lord Henderson of Brompton: My Lords, I do not know how long I have to wind up, but so much has been said that I am sure no one will want to prolong this debate further. I must thank most warmly all those who have spoken, from every side of the House. I would say there was 99 per cent. support. The 1 per cent. is perhaps withheld by the noble Earl, Lord Longford, though when he was pressed by the noble Earl, Lord Attlee, he appeared to say, from a sedentary position, that he was really in support, after all. If that is so, I think I can claim 100 per cent. support.
At all events, even if this comes to nothing—I hope to goodness that it does not come to nothing—this debate surely will have been worthwhile because of all the extremely expert and different points of view that have been expressed from all quarters of the House. I regard this debate as a kind of Green Paper, and I hope that the Government will regard this as a Green Paper addressed to them and they will now produce a blueprint for a council. I think I am expressing the wishes of the House when I say that this Green Paper should be turned into a blueprint.
I should apologise most humbly for two derelictions of duty. I was properly accused by the noble Lord, Lord Prys-Davies, of not having consulted the Welsh; I was properly taken to task by the noble Baroness, Lady Carnegy of Lour, for not consulting the Scots. I have no excuse to offer. One other thing I should mention relates to the two noble Lords sitting at the back—Lord Stallard and Lord Fitt. I was very grateful for their support, and I am sorry slightly to have qualified their support by suggesting the remote possibility of a national lottery, the proceeds of which could go towards the disablement organisations and disabled people.

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When I introduced that, I did it with great hesitation. I am glad I did it; I think it ought to go into the hotch-potch of ideas. When you have the Government saying, on every front, that they will not add to the public sector expenditure then you search desperately for other than public sector expenditure—every other means that you can think of; and that, to my mind, includes a lottery. Quite sensible, moral nations have public lotteries. I do not think very much the less of, say, that great nation, France, that for so many years she has had a national lottery. Why should not we, too? That is an area of controversy. It is the only area of controversy in this debate so far.
I must thank the noble Lord, Lord Glenarthur, for his constructive winding-up speech. It was clearly his duty to point out all the difficulties. Now that he has done so, I hope he will take on board the support from all round the House and take this back to his very sensitive Minister for the disabled, Mr. Tony Newton; and I hope that he will be receptive. With that, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Pharmaceutical Industry
5.35 p.m.
Lord Hunter of Newington Lord Hunter of Newington rose to call attention to the state of the British pharmaceutical industry; and to move for Papers.
The noble Lord said: My Lords, I rise to move the Motion standing on the Order Paper in my name. The dimming of the lights, which I was forewarned about, is for a very obvious reason; though I think, if I may say so, that the noble Lord, Lord Henderson, in the way he led and guided this House in his debate, produced illumination of a very remarkable order.
Recent weeks and months have seen some very remarkable events in the fields of prescribing and the pharmaceutical industry. We have seen a Government who largely accepted the Greenfield Report, and gave advice to the Public Accounts Committee that a limited list might not produce much in the way of savings, change their view completely and introduce a drug list, albeit for discussion. This list was more remarkable for its omissions than for anything else.
The Government, unable to get the full cooperation of the British Medical Association and the Royal College of General Practitioners, wisely, I believe, asked the chief medical officer to set up a committee of experts; and they really are experts. They were to suggest a recommended list. I understand this has been done, and we look forward to hearing from the Minister about this important matter.
The Government must now be considering an even more difficult problem: how are they going to keep this list up to date? The Department of Trade and Industry must be wondering about the future of the British pharmaceutical industry and its contributions to exports and employment. Meanwhile, the British Medical Association, which originally was uncertain about Greenfield's proposals, embraced them
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vigorously and started talking about generic prescribing as a way of saving money. Surely it must know that only 20 per cent. of the non-patent drugs are available in generic form in the United Kingdom. This, as we will see, contributes to the concern of the ABPI. The roots of the situation are in the history which we must examine.
Meanwhile, the ABPI has mounted a most vigorous campaign against the Government, has encouraged doctors to protest to their Members of Parliament and has dislodged the Greater London Council from the centre pages of the national newspapers with its advertisements. I do not think there is any doubt that the anxiety of doctors about the availability of drugs in the National Health Service has transmitted itself to their patients. Some have anxiously approached your Lordships, and Questions have been asked in the House.
How has this happened? What is the state of the industry? How has it been financed by the British Government over the last 38 years? Have the Government considered the near-monopoly situation created by the National Health Service, and have they dealt with it? Why have they changed their policy about drug lists? Is it the desperation of a Government who feel that they cannot continue as before, and do they have a well-thought-out plan to protect the patient, make things possible for doctors so that they do not emigrate, and maintain the vigour of an important part of British industry?
I believe that to understand this situation we must go back to the beginning: the introduction of the National Health Service in 1948, the situation which existed then and persisted thereafter for a considerable number of years. Two factors were of supreme importance: first, the concern of the Government to introduce this great new innovation, the National Health Service, and ensure that no one who required medical treatment should have to pay; though prescription charges have always been a feature. The other was the determination of the medical profession to maintain its professional independence, and the idea of any restriction on its professional practice or judgment was abhorrent to it.
So at the beginning there was no officially approved list. Many hospitals, at that time and since, had a hospital drug list which was drawn up from time to time by the staff, with the assistance of the pharmacists. At least six government inquiries into prescribing costs have taken place in the last 30 years, and this reflects the deep concern of government about the cost of pharmaceutical services. At the present time the National Health Service market is valued at just under £1,600 million, and the sales are shared between British-owned European and American companies, about a third each. At the same time the pharmaceutical industry is the fourth largest positive contributor to Britain's balance of trade.
It is important to examine the reaction of the pharmaceutical companies to the situation which was created in 1948, and the consumer demand which was, in fact, created. Many UK drug companies and others from overseas set out to estimate and provide for the situation which had been created by the Government and was going to be substantially

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financed by the Government. Another important reason for the developments which occurred was the opportunity in the National Health Service to do clinical trials, and get results which would have been enormously expensive to do in many other countries.
So the stage was set for the substantial development of the pharmaceutical industry in the United Kingdom. Inevitably, discussions took place between the companies and the Government, and a code of pricing was developed which ensured that the companies got a profit rate comparable to other companies in the United Kingdom.
The present scheme is the Pharmaceutical Price Regulation Scheme, and in this two important factors are taken into account. One is the research component of the companies, and the other is their contribution to exports. In fact, my Lords, I understand that all United Kingdom pharmaceutical companies are considered to be research-based. This is perhaps unique in the world. In other countries, for example the United States, there are companies which produce only generic drugs; those which are not subject to patent restrictions. Later we shall see what are the complications which this causes.
Of half or more of the research-based UK drug companies, the drugs which they provide are not patent protected, and there is a degree of protection from the Pharmaceutical Price Regulation Scheme. The inevitable consequences of this expansion, and the host of new drugs which appeared in the 1950s, which of course was a worldwide phenomenon, culminated in the Thalidomide tragedy, and this stimulated the Government in 1961 to set up the Committee on the Safety of Medicines under the chairmanship of Sir Derrick Dunlop. I had the privilege of serving as chairman of the Clinical Trials Sub-Committee. Sir Derrick did a marvellous job with the industry, which agreed and co-operated, and by the mid 1960s the Medicines Commission was established under the distinguished chairmanship of Lord Rosenheim.
In the UK the Medicines Commission now insists that there is a data sheet for every drug published by the firm that markets it. The data sheet has to be agreed by the licensing authority, and it is illegal for a firm to promote a drug for any purpose other than those set out on the data sheet.
During the period in question, however, the pharmaceutical companies were not idle, making vigorous and imaginative efforts to inform doctors about their drugs; and visits—particularly to general practitioners—were routine. After all, 50 per cent. of the costs of general practice are due to pharmaceuticals, whereas the cost of drugs in hospital is much less. Many of those approaches and meetings organised by the drug industry were inevitably directed towards interesting doctors in the particular company's products. Britain is said to spend a smaller proportion of its gross national product on health care than comparable countries, but it spends about the same proportion of its budget on pharmaceuticals.
In the late 1960s and 1970s, there was a great deal of discussion about drug lists, generic prescribing and the patent life of new drugs, and all the time the costs continued to rise. The patent story is a complicated one, but, put simply, the case is that the introduction
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of animal experiments and clinical trials of new drugs by the Committee on the Safety of Medicines and similar bodies in the United States and in Europe, has lengthened the period between the time when a patent is first taken out following an original chemical or laboratory discovery, and the time when clinical trials are completed and the drug marketed. This time has become longer and longer, even up to 12 to 14 years in some cases. The consequence is a shortening of the period when the drugs can be marketed under patent protection, allowing the company recoup what it hopes will be a substantial part of the cost incurred in the development, together with profits which they hope to reinvest in further research. So the industry has become increasingly restless over this, and we are very fortunate on this occasion to have the noble Lord, Lord Ennals, speaking in this debate because he, I understand, negotiated the last agreement about patents.
In recent years, the cost of the drug bill to the National Health Service has increased steadily. In the period from 1970–71 to 1980–81, the proportion of national health expenditure devoted to general medical services fell from 7 per cent. to 5 per cent., but the spending on pharmaceutical services has now risen to 50 per cent. of general practitioner costs. As you know, my Lords, questions have repeatedly been asked in your Lordships' House about the Binder Hamlyn report on general practitioner services. Demands by the Government to cut the cost of general practitioner services are therefore substantially related to pharmaceutical costs.
Without waiting for the publication of the Green Paper on those and other problems, the Government is proceeding to introduce an approved list—or is it a recommended list? We look forward to hearing from the Minister. There is a great difference between the two. When I practised as a Professor of Therapeutics and Clinical Pharmacology, I always advocated a drug list professionally chosen. I have also felt that the use of generic drugs makes the demand on the public purse substantially less without detriment to the patient. But the introduction of any limited list at this time will cause acute problems in the pharmaceutical industry, affecting their research and development, and inevitably their contribution to exports. It will also cause substantial problems in the medical profession, and a very complicated administrative structure will undoubtedly be required to run any such scheme, because, to be effective the list will have to be constantly changed and updated to meet the clinical position, and it must have degrees of flexibility built into it.
Under certain circumstances we have to face the issue that we could finish up with a second rate industry; under-funded, behind the world leaders in research, and, most important of all, giving an inadequate service to the National Health Service. We do not wish to finish up like Australia, which has no domestic research-based pharmaceutical industry at all.
There is a growing impression among the medical profession and others familiar with the scene, that ministers in the DHSS do not have a policy, and that they very often do not understand the problems that they are trying to tackle, and the way this matter has

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been presented, and the way it has been handled, would seem to confirm this.
If the intention is to produce a recommended list of drugs, then how is it to be managed? Is it to be managed by a drugs review committee of the Medicines Commission? That would seem to be logical. But if 50 per cent. of drugs are to be provided in the generic form, there will have to be substantial changes in the British pharmaceutical industry or a massive importation of drugs from abroad. The consequences of a recommended drug list will be many. Will the recommended list be backed by statutory powers? I hope not. I believe that the whole matter can be sorted out over a period of, say, five years, but for some time the price of generic drugs in the United Kingdom will have somehow to be supported by the Government.
Are the Government going to continue to encourage imports from abroad on a "best buy" basis from the Common Market? The ABPI would claim that that policy has already undermined the United Kingdom industry's domestic earnings by something between £50 million and £100 million per annum.
Therefore, one can see the problem. The United Kingdom drug industry has developed along certain lines made possible by the Government. It is obviously the responsibility of the Government to provide reasonably priced drugs that are required in the National Health Service. Over-prescribing of medicines must somehow be stopped: but do we have too many research-based companies in the United Kingdom? Do we not require high-quality companies that confine their business to generic drugs? All of this will have to be examined and planned, and it will take time if the pharmaceutical industry. its exports and its employees are not to suffer.
Hopefully the Chief Medical Officer's Committee will have produced a recommended list which is satisfactory. But the evolution of a new future for the National Health Service drug supply and for the ABPI and its constituent companies will just be beginning. Perhaps the problem will be solved by free enterprise and market forces, in which this Government have great faith. One thing seems certain: the pharmaceutical industry and its supply of drugs to the National Health Service will never be the same again. My Lords, I beg to move for Papers.
5.52 p.m.
Lord Auckland: My Lords, your Lordships have listened to a most erudite, restrained and sensitive speech from the noble Lord, Lord Hunter of Newington. If I may say so, I can think of very few noble Lords with more experience who could initiate a debate on this subject. Anyone who is a layman and who ventures into a subject of this nature is probably taking the most awful risks. But during my 25 years or so in your Lordships' House I have spoken on a number of medical topics, including the drug industry. I have no interest whatever of a financial nature to declare in the industry, but I have toured a number of pharmaceutical companies, both as a member of the All-Party Parliamentary Chemical Industries Group and by invitation. I have also attended a number of
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conferences. Some of the drug companies have been accused of giving free gifts of a very lavish standard. I must say that I have yet to see free gifts of a very lavish standard from drug companies any more than I am likely to see them from companies in the non-medical sphere.
There is no doubt that the medical profession itself is to some extent divided on this topic. I readily accept from the researches which I have undertaken that there are doctors who support the Government's attitude with reservations. However, I should like to ask my noble friend the Minister a question. I know that he may have been asked this question before, as, indeed, my right honourable and learned friend the Minister of State for Health has been asked it in another place. How much consultation has there been with the pharmaceutical industry, with the medical profession and with the medical organisations? I put that question as a purely disinterested person so far as the profession goes, but as one who is deeply caring about the profession. I recall that back in 1941 I had a very bad mastoid following measles. Those were pre-penicillin days, pre the discovery by that great man Sir Alexander Fleming. I had to have my eardrum pierced. I make no complaint about that because medical progress, like any other progress, comes with time. But if penicillin had not been developed, how many other people would have suffered similarly?
There was a very interesting letter in a recent edition of the London Times from a Dr. Collier, who holds a senior position at the St. George's Hospital Medical School at Tooting. He wrote:
"In common with many others, I view the restricted drugs list as a charter for improving drug usage and so patient welfare. Economies made are a welcome, but a secondary bonus".
My interpretation of that paragraph is that he would appear to support in part what the Government are doing, but he seems to me to be questioning whether they have really researched the matter sufficiently.
Of course, there is another side to the case. Medical cabinets in many homes are full of unwanted drugs—ordinary aspirins, proprietary drugs and generic drugs: you name them, people have them. And declaring my interest, not for the first time, as an honorary vice-president of the Royal Society for the Prevention of Accidents, I am concerned about the situation. Indeed, we are all concerned about it. However, I really wonder to what extent there has been proper consultation.
I think that one is allowed to mention specific drugs or medicines. Benylin expectorant is a cough medicine which has been used for many years by children and adults. It is an anti-tussive preparation. Why is that to be removed from the list of preparations available to the National Health Service? I know that there are about six other cough medicines, including various linctuses, which are still available. I admit that this medicine has soporific qualities, but I believe that by law the drug companies are supposed to put that on the label. It is an example of one medicine which should certainly not be on the restricted list. Other noble Lords may disagree, but I speak merely as one who has consumed this medicine from time to time and whose children have consumed it, and I am quite sure that many of your Lordships' children and possibly grandchildren have consumed it.

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The noble Lord, Lord Hunter, mentioned exports. I know that the Government may well argue that one can ally exports to any profession, be they visible or invisible exports. But the pharmaceutical industry has a tremendous record in the field of exports. Its record stretches all over the world to Scandinavia, the Commonwealth countries and the third world, where there is an extremely vital market for drugs combating diseases such as malaria. I cannot help feeling that these measures will have a harmful effect upon exports unless and until they are properly clarified.
I am not necessarily criticising this or any other Government for looking into the number of drugs which are prescribed. Doctors' surgeries are often bombarded with literature. I know that my own general practitioner has complained more than once; yet he takes the Lancet and the British Medical Journal, and can glean much information from those publications. I accept that with some drug companies there is over-marketing or over-selling. But, against that, we have to look at the whole matter of research.
Perhaps I may go off at a slight tangent. I think that everyone was highly disturbed to read of the incident involving the Royal College of Surgeons, and of other incidents where there have been break-ins to pharmaceutical companies. Although this is not entirely germane to this subject, it is something that must be considered. Those who develop drugs are not wealthy gentlemen; they are not people who do it for the fun of it. They do it because they have a very genuine care about research. Having visited some of these companies, I believe that there is a real need for more consultation.
There is another aspect to this matter, and it concerns the outlying areas. My noble friend the Minister comes from Scotland, and for much of my life I have lived in Scotland. There are outlying areas in Scotland, the West Country and elsewhere. How will they fare if the limits on these drugs are as tight as is envisaged by the Government? There was an article about this in a recent edition of The Scotsman. The Government may well say that people will be employed to carry these drugs. Perhaps midwives or doctors themselves will be able to take them to people's homes. But that is not always easy when the weather is inclement. I believe that this is a matter which must be considered very seriously.
There has certainly been no lack of debate on this matter. The other day your Lordships' House debated the Greenfield Report and a Member for one of the Bradford constituencies tabled an Adjournment Debate in the other place. I am bound to say that I did not think my noble and learned friend the Minister, for whom I have the greatest respect, gave a particularly satisfactory reply. I take the point that the honourable gentleman, who I also know personally, raised some political points, but I think that even on an Adjournment Debate he was entitled to a more satisfactory reply. I understand the position of my noble friend the Minister; he has taken a great deal of stick on this. However, as a result of this and other debates, I hope that the Government will take on board that there must be more and comprehensive consultation.
6.4 p.m.
Lord Kilmarnock: My Lords, this debate inevitably takes place against the background of the Government's proposals for a limited list of drugs that may be prescribed for National Health Service patients. However, we cannot consider the timely Motion of the noble Lord, Lord Hunter, only in that current and, I suspect, rather shortsighted perspective. Our task this evening is surely to consider the wider question of the relationship of the industry to Government and how that might develop on more fruitful lines than those in prospect at the moment.
We start with a basic difficulty—a conflict of interests, which we have to acknowledge if we are to reach sensible conclusions. The Government, through the DHSS, are in a monopsony position; that is to say, the position of a monopolistic buyer in this country. They are also the custodian of the National Health Service. The industry consists of national and transnational firms, most of them with a manufacturing presence and a research base in the United Kingdom, but with sales world wide. A mechanism exists, the Pharmaceutical Price Regulations Scheme, the object of which is to reconcile these interests as far as possible. It has the difficult task of trying to create a favourable climate for a successful industry with a good export record, while securing to the National Health Service the best value for money on its drugs bill. The signs are that the Government now want to concentrate on the second of these objectives and to distance themselves from the industry, which means that the DHSS, hitherto seen as the industry's "sponsoring department", from now on will start dealing at arm's length with its previous protégé.
The industry has reacted with outrage, invoking its contribution to research, to jobs and to exports. Some have queried the industry's net export figures, but there can be no doubt that the industry's research record is very good, perhaps the best in the world. The industry, therefore, asked the question: Do we want a pharmaceutical industry in this country? It is a fair question. But we also have to ask—and I certainly as a health spokesman have to ask: "Do we want a National Health Service in this country?" In this complex and by now overheated situation, it seems to me that the time has come to call a truce and to search for common ground before we end up without either an industry or a health service.
In the first place, I should have thought that we should all agree on the desirability of an efficient, cost-effective National Health Service and an efficient, innovative industry earning fair but not excessive returns on capital employed. In the second place, there seems to be wide agreement between the industry, the professions, the distributors and the consumers that the Government have not chosen the best means of bringing about these desirable ends.
A unilaterally imposed list is roundly condemned by all the interests concerned, and I do not think that the Government can simply shrug this off as perverse or dictated purely by blind sectoral self-interest. In a book called The Wrong Kind of Medicine, written

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from the consumer angle by Charles Medawar, the author makes a telling point:
"A Government cannot simply insist on having its own way. It must not exceed its legal powers; nor does it have effective power without co-operation from the medical profession and the industry".
I am sure that that is profoundly true, at any rate in a democratic country. Therefore, one has to deplore, as was so frequently the case before, the way in which the present Government are seeking to make savings. I suggest that the industry has a perfectly legitimate complaint that in late 1983 the Government appeared to accept the Greenfield recommendation against a limited list—I believe that it was Recommendation 25 in that report—only to spring just this on everyone a year or so later without any intermediate consultation at all, which was the point made by the noble Lord, Lord Auckland. Clearly, this must be damaging to investment plans and to job prospects, to say nothing of the way in which it strikes at the heart of the Government's relationship with doctors, who, after all, are still independent contractors to the health service.
However, none of this means that savings could not be made by more sensible or sensitive means. Where should they come from? It seems to me that everyone concerned should make a contribution. The doctors should work on their prescribing and sharpen up their self-audit on the lines proposed by the Royal College of General Practitioners. The pharmacists have suggested a war on waste, which was another point referred to by the noble Lord, Lord Auckland. This is not the place to stray into those fields, because we are talking about the industry and that is what the Motion of the noble Lord, Lord Hunter, refers to. So I hope that I shall not be thought invidious in asking: "What could the industry do?"
At present, prices are not negotiated on individual drugs but on a company's overall sales. Individual product price control would be immensely complicated and bureaucratic. The experience of that system has not been good in France. It therefore seems that the present system must continue, but with modifications.
The PPRS does not distinguish between really innovatory R and D and research leading to analogues of existing drugs; sometimes a breakthrough is made leading to an important therapeutic advance, but often innovation means slightly modifying an existing drug. Some feel that there is no need for the NHS to pay heavily for such new drugs. But the border line between what is an advance and what is not is difficult to determine. Duplication of effort is, after all, common throughout the sciences. One way in which to proceed might be to make the Committee on the Safety of Medicine independent of the DHSS and to lift the veil of secrecy which covers its work. Surely it is absurd that this too should be covered by the all-embracing pall of the Official Secrets Act.
Why should there not be public access to the full company submission for all successful licensed applications? Under current provisions, if a new drug is as good as an existing one, it has to be granted a licence, but one could envisage an arrangement under which a drug might continue to be licensed as at
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present but made available to the NHS only if shown to be more efficacious, cheaper or safer. We made such a proposal in a policy document we issued in 1982. It would encourage real innovation and be much less draconian than the Government's proposed list.
Now to generics. The vexed question of generics versus branded drugs has been much over-dramatised. The historical facts are that when the NHS was founded in 1948 only 16 per cent. of prescriptions were branded. By 1970 this had risen to over 80 per cent. It would not seem unreasonable to redress this balance a little.
The Sainsbury Committee in 1967 recommended that there should be no brand names for new pharmaceutical products. This was not accepted, and the PPRS was introduced. But mounting costs led to the commissioning of the Greenfield Report, which proposed a compromise—namely that generic substitution should be carried out by pharmacists with the doctor's consent where the generic equivalent existed.
I do not believe that industry could not adapt to this, with one important proviso concerning patents. Patent life, as I understand it, was extended in 1977 from 16 to 20 years. The industry estimates that the lead time required for research and development often leaves only eight to ten years for the effective exploitation of a drug before the patent expires. The noble Lord, Lord Hunter, suggested that in some cases it might be even less. However some drugs need more development time, others less.
A suggestion recently made to me by an informed source was that all drugs should have a 15-year patent life from the moment of licensing. I am no patent lawyer—it is a complicated subject, as the noble, Lord, Lord Hunter, suggested—and I do not know whether this is feasible, but I have no doubt that we should be seeking to meet the reasonable demands of the industry on patent protection. If we do this, I cannot for the life of me see why, in return, generic substitution should not become the norm for products out of patent.
There is little reason to suppose that a market as large and viable as the pharmaceutical drug market could not respond to a change in the pattern of demand. If there were a greater demand for generic products I see no reason why existing companies, or new ones, should not manufacture high quality generic drugs in this country, thus easing the quality control problem posed by parallel importing, and, incidentally, introducing a more genuinely free market in drugs than exists at present.
I turn briefly to promotion. There seems to me to be some imbalance when one learns that the total industry spending on promotion is as great as that on research. It is argued that this is necessary to keep doctors informed, to provide back-up service for the medical profession, and so on. But it surely cannot be necessary to spend £180 million, or about one-tenth of the whole cost of the industrial operation in this country, on wooing 30,000 captive doctors. That works out at £5,000 or £6,000 per doctor. I am told that there is one representative in the field for every eight doctors. That seems to be rather excessive.
The Government have recently restricted allowable promotion to 9 per cent., and I would argue that more

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savings could be made here, and more money thus released for other purposes. One of the by-products of over-promotion is that overworked doctors develop excessive brand loyalty, with the result, for example, that valium, eight years out of patent, is still overwhelmingly prescribed at £13·62 per 1,000 tablets rather than diazepam at one-eighth of the price. This is hardly helping doctors to change their prescribing habits. Let us have a little more sense of proportion here.
When all this is said, my Lords, it is clear that the industry needs a stable and predictable financial climate within which to work and to plan its investment programme. The lack of any clear or consistent policy on the part of the Government is a major disincentive to investment and research. The clumsy limited list weapon which the Government have grasped is the wrong one. It interferes with the doctor's clinical freedom, it discriminates against poorer patients, and it means that the industry will not know where it stands.
I suggested on 6th February—and I make no apology for repeating the suggestion again—that the Government should hold their limited list in reserve and seize this opportunity to take a longer look at the whole problem, inviting this time the full collaboration of the industry and everyone else concerned. I believe that this is a propitious moment and that all interested parties would respond positively to a fresh Government initiative.
The Government may not be temperamentally attracted to this course. They may think it "wet". But they pride themselves on their realism in their approach to the nation's problems, and I would ask them simply to be realistic. A revised limited list—and they have already agreed that they will have to revise it—will not save £100 million. It might come out at £70 million on paper. And when you take into account the almost inevitable response of doctors, who will trade upwards to bridge a clinical gap, the Government may be left with only £30 million or £40 million—no more than they could have achieved without all this upheaval by generic substitution of a dozen branded drugs.
If they strive to make up this shortfall by cuts in other National Health Service departments they will be going back on their commitment to 1 per cent. real growth in that service, and they will not, I am sure, be anxious to do that. And it is all unnecessary, my Lords. There are greater savings to be made by a combination of measures willingly adopted by doctors and pharmacists with some contribution from the industry, than by heavy-handed lists and regulations which at best will only secure grudging compliance.
It is not too late for the Government to think again, and I am sure that we are all grateful to the noble Lord, Lord Hunter, for providing them this evening with the opportunity to do just that.
6.16 p.m.
Lord Greenhill of Harrow: My Lords, in the debate on 6th February on limited list prescribing I declared my interest as a director of a British pharmaceutical company, and that declaration is of course relevant
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today. I referred in my speech on 6th February to certain aspects of the pharmaceutical industry, and I should like to take advantage of Lord Hunter's Motion to emphasise some of these points again and add some additional observations.
Attention at the moment is rightly being constantly drawn to the unhappy state of British manufacturing industry as a whole. As noble Lords know, a Select Committee of this House under the noble Lord, Lord Aldington, is now looking at this situation. I am glad to be a member of this committee, but the evidence that we have been receiving is not encouraging. The British pharmaceutical industry is, generally speaking, an exception. It is substantial, financially successful and scientifically important. It has a worldwide reputation for high quality and brilliant innovation, and contributes substantially, as several noble Lords have said, to our export earnings. It is also a large employer, especially of skilled workers including scientists, a class of person who must be attracted to remain in support of British research.
It is important for the interests of us all to keep this industry strong and to permit its further growth. It is in a very competitive market. We have ranged against us the huge resources of Europe and the United States. Furthermore, the full weight of Japanese competition has yet to be felt. It is common knowledge that its impact will not be much longer delayed, and when it comes it will be powerful and expert.
It is essential therefore that Her Majesty's Government should not regard the pharmaceutical industry as primarily a source of rich pickings. It must be permitted to earn in this country and overseas a justifiable standard of living, taking account of the scale of investment and the exceptional level of research and development costs, and the need to maintain them. Equally, the industry must be scrupulous and not load the National Health Service and the general public with unreasonable charges. All this calls for closer co-operation and better relations between the Government and the industry than we have seen in recent months, and better relations with the medical profession.
Moreover, pharmaceutical companies have a certain strategic importance both domestically and internationally in cases of unforeseen epidemics both in human and in animals, polio, cholera, foot and mouth disease, and so on. Account must be taken of this.
The next point that I wish to make has very far-reaching consequences which are really outside the scope of this debate except that my point reinforces the need for a strong and healthy research-based pharmaceutical industry. In recent years drugs and other medical advances have, it might be said, altogether been too effective. They have not only improved our health but have changed the general shape of disease in the developed world. The third world is another question; it is a matter that we do not have time to debate today but it should be debated at some time in the future. As of now we no longer see a high incidence of death in the developed world from acute infection. We now see more and more of the population living to an age where they experience chronic diseases that require both prolonged treatment and often prolonged hospitalisation.

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We are constantly getting better at devising drugs and other medical procedures for treating, and sometimes curing, the remaining blights that ail us and we do so in even more sophisticated and costly ways. The total cost of medicine must by all of this increase in the future. How is it to be paid for? This is a highly political question. How much can the state carry and how much can the private individual be called upon to contribute? Self-medication is increasing world wide and has many economic and social advantages. But what is certain is that if these advances are required—and surely we must seek them—then there must be powerful and sophisticated drug companies strong enough to provide them. There are many qualified persons who believe we are close to a breakthrough in rational drug development, not only because of advances in molecular biology and genetic engineering but because extensive and expensive new techniques are available to us. I instinctively feel that this is true and that an unparalleled advance lies a short way ahead. The British pharmaceutical industry must be ready for it and contribute to it and we must be ready for it with political solutions.
Unless there is an upward surge in our economy I do not see how a solution can be achieved which does not involve some shift from the public to the private purse. If this becomes necessary, I do not see why this should not be achieved equitably and acceptably. The solution may outrage the theorists; but we must pass from theory to reality and I sincerely hope that this can be done with the minimum of divisive acrimony.
6.24 p.m.
Lord Molson: My Lords, I should not normally intervene even for a few moments in a debate in which nearly all the other participants are experts if it had not been for a remarkable personal experience of mine in the last fortnight. I obtained a renewal of the sleeping tablets which I keep by my bedside on the advice of my doctor. I had been accustomed to paying £12·02. As a result of hearing that nitrazepan was a generic drug, identical with the mogadon which I normally took, I found that instead of having to pay £12·02, I paid £1·77. That is an indication of the immense savings that could be made in the National Health Service if it became customary to prescribe generic drugs and not proprietary drugs.
With a figure like that it does not seem to me that the estimate by Mr. Norman Fowler that there is scope for economy of £100 million in the drug bill of the National Health Service is, on the face of it, in any way exaggerated. I only came across this matter because, as a result of taking a certain interest in it—owing to a casual conversation with the noble Lord, Lord Hunter—I saw a review of a book that had just been published by Social Audit called The Wrong Kind of Medicine? I bought it, perused it and was quite astonished by the revelations which are given in that book. The technical information is provided by a Dr. Herzheimer whose qualifications are indicated by the posts that he has held. In addition to being a senior physician at the Charing Cross Hospital, he is the editor and founder of the Drug and Therapeutic Bulletin, published by the Consumers' Association. He is a member of the World Health Organisation's
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expert panel on the selection of essential drugs and chairman of the health working group of the International Organisation of Consumers' Unions.
The noble Lord, Lord Kilmarnock, also indicated that he is familiar with this book. It is quite extraordinary what emerges from it. It was as a result of my conversation with the noble Lord, Lord Hunter, that I learned about the tendency of drug companies to produce marginally new drugs. When a branded name was ceasing to be effective because the patent had run out, drug companies would produce a new drug marginally different from the old drug, give it a name and obtain patent rights. As a result of the new patent rights, they were able to sell the new drug at a much higher price than would otherwise have been the case. There are an immense number of drugs which, according to this book, are amost identical. If the generic term were used in prescribing the cost could be very much reduced.
When I noticed that this debate was coming on I thought that I ought to intervene for just a few moments to draw attention to my own experience. It does not matter that I myself in the last two years while I have been living in London have paid six times more for a necessary drug than I should have done had I known its generic name; but I do regret that when I was living in Scotland and had the same drug prescribed by a National Health Service doctor I was charging the taxpayer of this country six times as much as would have been necessary.
I do not wish to go into the question of whether the Government may or may not have consulted the medical profession and other interested parties in the way that perhaps they should have done. I consulted a doctor friend of mine who considered that the line taken by his profession was unduly arrogant—and he used the word "arrogant"—and not sufficiently cooperative with the Government in this matter.
I hope that the Government will take every possible step to carry the interests concerned with them but on the broad principle I have not the slightest doubt that the attitude and policy of the Government are entirely right. There is ample scope for producing a list of drugs which will be very much less costly to the taxpayer and those patients will not in any way suffer from the prescription of generic drugs instead of the branded names which are so often charged at many times the price of the generic substitutes.
6.31 p.m.
The Earl of Halsbury: My Lords, I apologise for not having put my name down to speak, but the matter to which I wish to draw your Lordships' attention came to my notice only at tea-time yesterday. It took me a little while to make up my mind to intervene and by that time it was too late to put my name down. I am obliged to the noble Lord, Lord Hunter, for raising this subject. May I begin with a generality? When I was a young man, the popular public enemy No. 1 was the armaments industry. It was regarded as totally unacceptable that people should make profits out of death. Well, fashions in these matters change. The demonological enemy now is the pharmaceutical industry and, by a slight change of emphasis, it is wicked to make profits out of life.

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Many a time I have risen in your Lordships' House to defend the pharmaceutical industry from its many critics. The particular matter to which I wish to draw your Lordships' attention is the patent situation. Here, may I just say a few general words about patents, because it is a technical subject and the actual status of a patent is not familiar to everybody. A patent does not give you the right to make something or do anything except to appear in court as the plaintiff in an action for infringement. The right to make anything you please is a common law right, intrinsic to the subject. What the grant of a patent does is to enable you to bring suit for infringement against somebody who is doing the same thing as you are and to take away from him the rights that he would otherwise have at common law to do so.
Before 1977, the law on patents on foods and drugs was that they had the same effective monopoly granted to the inventor for 16 years from the date of grant and, in the case of patents in the field of foods and drugs and medical and surgical appliances, there was a proviso that the Controller of the Patent Office should grant to any applicant a licence of right, at a royalty to be determined by the Controller of the Patent Office, to make, use or sell the subject matter of the patent. This was felt to be wrong at the time of the 1977 Patents Act; and I spent night after night of a most traumatic and prolonged Committee stage modifying the Patents Act, as the Government thought it ought to be, by a number of amendments which certainly hurt, to judge by the counter-proposals that the Government made at Report stage.
We took away the proviso that, in the case of food and drugs, the Controller of the Patent Office must grant a licence of right; and the patent was extended from 16 years to 20 years. At a later stage—and I hope that I am not scoring own goals by relying on my memory—an honourable compromise was reached. The patent was extended to 20 years but the provision that licences of right could be granted was applied to the last four years of the life of the patent.
This is the matter that I wish to raise because it was raised with me by the pharmaceutical industry yesterday. I simply want to take the illustration by the noble Lord, Lord Hunter of Newington, that the time before a patent starts paying off can be anything from 12 years to 14 years. Subtract that, my Lords, from its 20-year life and you get eight years and six years. If you now shorten that by a further four years to grant licence of right in order to effect generic substitution of what would otherwise be a patented drug, then you are really running down the life of the profitable part of a patent not from eight years to six years but from four years to two years. That really is emptying out the baby with the bath water.
In defending the pharmaceutical industry, as I have so often done, I would utter the same plea as I have uttered on many occasions to the Front Bench of Governments of either complexion. Do not, please, kill the goose that lays the golden egg. Remember that the goose is a migratory bird and that some of them come from foreign parts! Any one of five American pharmaceutical houses is larger than the entire British pharmaceutical industry. This could also be true of the largest European pharmaceutical house. The
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Government are in a fairly strong bargaining position: all that I beseech of them is that they do not over-use that bargaining position by taking advantage of the provisions in the Patents Act which were an honourable compromise, not intended to effect generic substitution at the time that they were entered into. I ask them not to use the power that they have under that Act to shorten the life of patents still further.
I do not expect the noble Lord, Lord Glenarthur, who hears about this from me for the first time, to give me a very definite assurance on this point, but I think that I should on this matter fire a shot across the Government's bows and say that if I cannot get an answer from the noble Lord on this occasion I shall certainly seek an opportunity to raise it on some other.
6.38 p.m.
Lord Tordoff: My Lords, I am pleased that the noble Earl, Lord Halsbury, decided to intervene at this stage because he has injected a dimension into this debate to which none of the rest of us has really applied his mind. I wish that my noble friend Lord Lloyd of Kilgerran were here, because I think that probably he could comment on it much more than I possibly can. There really is very little else to say. The noble Lord, Lord Hunter, as always, applies his gentle wit and his considerable ability to a subject of this sort, and those of us who sit with him on the Select Committee on Science and Technology know that this is what we would expect from him. It has been an extremely good debate. It is a pity that a debate of this sort, which probably shows your Lordships' House at its best, does not have the benefit of television cameras, whereas the more exciting parts of the day have that benefit. But, be that as it may; that is the public's loss, except for those who are sitting in the Galleries upstairs.
I should declare an interest, in that I am associated with a chemical company which is not in the pharmaceutical industry but which could be so, given the opportunity. Having said that, I may say that I have spent a considerable amount of my working life in the chemical industry with the pharmaceutical industry as a customer of mine. I have the greatest respect for that industry and for the people who work in it. I think that that view has been ably expressed from all sides tonight, particularly from the noble Lord, Lord Greenhill of Harrow.
There are really three players on this scene: there is the pharmaceutical industry, the doctors and the Government. None of them has behaved wholly badly; none has behaved wholly well. The pharmaceutical industry has worked well for this country in the sense that, as the noble Lord, Lord Hunter, has said, it has been a research-based industry, it has attracted overseas investment, it has brought us a lot of export business, and it has produced drugs in this country which are greatly to the credit of the industry and to the health of the nation. Nobody yet has made a comparison with the pharmaceutical industry behind the Iron Curtain, which, to my knowledge, has produced nothing in all the years since the war. There has been virtually no creative research behind the Iron Curtain. I do not make that as any party political point, but it is a fact, and I think it is something we should always bear in mind when we are

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looking at things which may impinge upon the pharmaceutical industry in this country.
Doctors have served the nation well. After a hesitant start, they have thrown themselves into the National Health Service and looked after us well. Your Lordships would not expect me to say too many good things about the Government, but I think they have recognised that there is a problem here, although in my view they have been a little ham-handed in the way they have gone about things; and I shall come back to that in a minute.
On the other hand, the pharmaceutical industry has not been its own best friend in the way in which it has gone about the promotion of its branded products. It has created an image of itself which has become a little "tacky", for want of a better word. The noble Lord, Lord Auckland, said, I think, that he had not really seen any lavish gifts being offered by the pharmaceutical industry; but it is common knowledge that there have been instances of lavish gifts being spread around the medical fraternity, and that is unfortunate. On the other hand, I do not think that doctors have really been as wise as they might have been in allowing themselves to fall into the trap of prescribing branded products when, as the noble Lord, Lord Molson, said, many other products were available to them.
Perhaps I might just pick up the points made by the noble Lord, Lord Molson. I do not think there is really anything between us on this, but I think that perhaps he has not quite understood what the Government have set about doing so far. I do not think there is anything between us on believing that generic prescribing is something to be encouraged, but I believe the way in which the Government have restricted the list which they say is consultative (and again I shall come back to that) has given an impression that they are trying to be far more restrictive than common sense dictates. Nobody is saying that there should not be an increase in generic prescribing, and that there should not be encouragement to the full; but the Government have gone further than that and have said that there is a very limited list of drugs which may be prescribed. The Government then come back and say, "This is only a starting point, and we will consult from here on".
I think it is unfortunate that the Government took such a restrictive view in the beginning. We are still waiting to hear what will come out at the end of the day, but the starting point for the Government's argument was far too restrictive and, even giving them the greatest benefit of the doubt, I think they have thrown a shadow over this whole argument which, frankly, was unnecessary.
As the noble Lord, Lord Auckland, said, greater consultation in the early stages would have been much more helpful because I do not think there is any great party argument between any of us on this subject tonight, save only that the Government started from a point where they appeared to be saying, "So far and no further", and giving the impression that the only thing they were interested in was saving money. I think that was extremely unfortunate.
It is quite clear that there must be some changes in the situation, but we must be careful that in making
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them we do not restrict some of the good things which have come out of the relationship between the pharmaceutical industry and the medical profession. For instance, my noble friend Lord Winstanley pointed out that there has come from the pharmaceutical industry the funding of a number of post-graduate magazines which have been of the greatest possible use in the past, and that these are now going out of business because of the pressure which is being put on the industry. That I think is extremely unfortunate.
If I may encapsulate my view—and, I am sure, the view of the noble Lord, Lord Kilmarnock—we believe that the pharmaceutical industry has a right to make a reasonable profit in order to make sure that its research is properly funded. That is very much in the national interest. If necessary, the patent restrictions should be extended if the timescale is too restrictive. There are cases, though, where products which have been researched by a particular company should perhaps be opened up to other companies at an earlier stage. It may well be that because of research done in one particular laboratory products are discovered and developed which may not necessarily be appropriate to the manufacturing facilities of that particular company, and there should be the opportunity to spread those manufacturing opportunities elsewhere. I think the Government should encourage that, lest products which are perhaps not necessarily related to a company's normal line of business, as it were, are left on the shelf, when somebody else could exploit them.
But, having said that, when we get to the point where the patent has reasonably expired we need to recognise that we want to open up the maximum production opportunities in this country. Certainly it is my view that there are a number of companies in this country which would be perfectly capable of producing generic drugs, or perhaps their precursors, and could in fact add to the competitive situation once we are past the point when the patent has expired. I fear that there is a danger of a certain cosy relationship between some of the major pharmaceutical manufacturers that at the moment precludes that from happening. That is something to which we certainly ought to try to put an end. Certainly we should not leave it to importers of generically prescribed drugs to bring them in from Italy, or wherever, where there is a certain cavalier attitude towards patent restrictions, to supply the market over here if it is possible for the market to be supplied by British manufacturers.
The Government are the monopoly buyers, as my noble friend has said, and therefore there is a particular responsibility on the Government to take the lead in this matter, but not to use their monopoly in such a restrictive way as would damage the industry. On all sides of the House tonight we have heard that the industry is capable of serving this country well, provided that it is perhaps opened up to a little more competition and provided that generic prescribing is brought into play. If these things happen, I am quite sure that the industry can continue to serve this country for a long time to come. It is of course an industry where safety is of the greatest importance. It is subject to restrictions that many industries do not have, but let us not pretend that it is possible to have anything which is absolutely safe.

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If I may just float a little bee which is always in my bonnet, I think that too often in this country these days we try to pretend that we are immortal. We are frightened of taking risks, and even in the pharmaceutical industry nothing is absolutely risk-free. We must have the right kind of controls and the right kind of screenings. Let us not pretend that at the end of the day there is no risk in using powerful drugs on people, because if we go down that road we shall have no development and no research, and on the whole the country will suffer.
I am grateful to the noble Lord, Lord Hunter, for raising this topic, and I hope that the Government have gained from this very balanced debate a better understanding of what is the view of your Lordships—the view that more consultation is required and that they have been over-hasty in bringing forward the list. I hope we shall have some sort of indication tonight not just that they are going to have a token consultation but that they genuinely believe that the list can be very greatly widened while at the same time going very firmly down the road of generic prescribing.
6.50 p.m.
Lord Ennals: My Lords, I am sure that we are all most grateful to the noble Lord, Lord Hunter, for raising this debate and for the manner in which he did so. Inevitably, I suppose, we have concentrated on the Government's sudden proposals for a limited list, and I want to take a minute or two of your Lordships' time in broadening the subject a little.
In a national newspaper last week, I was accused by a Member of Parliament of,
"a new-found enthusiasm for the pharmaceutical industry".
I want to say quite openly, having no financial interest at all in the pharmaceutical industry to declare, that I have been enthusiastic about the pharmaceutical industry for 40 years, since I spent three years in hospital at the end of the Second World War. I should not be here, if it were not for the discoveries and inventions of the pharmaceutical industry—a point that was very well made by the noble Lord, Lord Auckland.
I have had, and I have today, a very great respect for an innovatory, life-saving industry. Its successes are based on research and there are many conditions, both in our own highly developed, long-life society in the West, and in the Third World where there are still mass diseases linked with poverty, for which cures and relief can still be found. If any of us assumes that the pharmaceutical industry has now completed its task, then he must be living in cloud-cuckoo-land.
There has to be research, and more research, and, as the noble Lord, Lord Greenhill, said from his own experience, Britain needs a strong pharmaceutical industry. I realised this when I was Secretary of State for Social Services. I did everything I could to promote the pharmaceutical industry in Britain and I am personally appalled at the way in which current Conservative Ministers are undermining a relationship which was a very good one.
We should not underestimate the economic as well as the life-saving importance of the industry. There are
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70,000 people employed in the British pharmaceutical industry; 10 per cent. of worldwide research spending takes place here, even though the NHS represents less than 4 per cent. of the world market; pharmaceutical exports from Britain earn us £1,200 million a year; and capital investment in United Kingdom-based pharmaceutical companies annually exceeds all the profits that the industry earns from the National Health Service.
The noble Lord, Lord Tordoff, said that the pharmaceutical industry has a mixed record. It is good and bad and sometimes indifferent. I am glad that he referred to the concern of the noble Lord, Lord Molson. It is absolutely right that there are great savings to be made. The speech that the noble Lord, Lord Molson, wisely made is the best possible argument, not for the Government's system but for the system recommended in the Greenfield report on generic substitution. I support generic substitution, but I believe that there might be a situation—I shall not take the case of Mogadon and I do not know the condition from which the noble Lord, Lord Molson, suffers, nor do I know his doctor—in which the doctor says "No, not a generic substitute. It is this that is best for my patient." I believe it is right that a doctor should still be able to say that a particular patient deserves a certain drug: "Three years" or "10 years have shown it to be, and that is what he should have."
Lord Molson: My Lords, may I say that my doctor was perfectly happy to prescribe a generic substitute?
Lord Ennals: My Lords, I wish that he had done so before, and then he would have saved the noble Lord, Lord Molson, a great deal of money, which I am sure the noble Lord would have welcomed. But that does not undermine the argument. I am just saying that there are circumstances which have to be taken into account, whether it is Mogadon, or the noble Lord, Lord Molson, or some other person, or some other drug.
Sometimes the industry is unfairly maligned. I believe that there have been cases where perfectly good drugs have been driven off the market by campaigns. I am thinking of Debendox, which was literally driven off the market. It was a product of Merrell Dow. Though it had been prescribed to well over 35 million people here and in other parts of the world, for cases of vomiting and for other conditions of pregnant mothers, it was driven off the market, which I think was appalling, in spite of the fact that it was eight times examined by the Committee on the Safety of Medicines. On the other side, we had the Thalidomide tragedy, when the Distillers Company fought for years and years before they were prepared to pay compensation to people who had been appallingly damaged as a result—
The Earl of Halsbury: My Lords, will the noble Lord give way? May I say, as a director of the Distillers Company at the time, responsible for clearing up the tragedy but having had no responsibility for it, that that statement is not true? The difficulty was to get the people to come and make their claims.
Lord Ennals: My Lords, I am very glad that the noble Earl, Lord Halsbury, was involved in finding a solution, because I do not think there was any doubt at all that the drug produced the Thalidomide children, with all the problems from which they are now suffering as young adults, but the compensation that was paid can never be proper compensation. It led to the Committee on the Safety of Medicines and that was a good result which came from a great tragedy.
Some individual firms are open to criticism. I think of the exploitation of Third World markets and the offloading of drugs that are no longer needed for the Western world. They are sometimes criticised for that and when they are they should be exposed. But there is enormous potential, both in this country and in the Third World. I was talking only two nights ago to two scientists who work for a drug company. We were discussing river blindness, which is a well-known scourge of the rivers of Volta and the Nile, affecting an estimated 40 million Africans in the heart of West Africa, Sudan and Ethiopia. Since I happen to be going to the Sudan in three days' from now. I, too, have an interest in this. But the scientists are very near to discovering something that may well bring an end to what has been a terrible blight. I hope that that is so.
I was glad also to see recently that the Association of the British Pharmaceutical Industry have put up in collaboration with the World Health Organisation a fund called the Action Programme on Essential Drugs. It will support expert advisers on such important needs as effective procurement of medicines, safe storage, quality control and distribution to the deprived rural areas. It is a good thing when we see the drug industry applying its mind, its time and its money to the needs of the Third World.
Certainly, no one doubts that there must also be effective control over pharmaceutical profits. We must protect the National Health Service from excessive profits. But I believe that there has sometimes been very unfair criticism. We talk about propaganda by the pharmaceutical industry, but I think that some of the propaganda by the Government has given a very false impression. I want to give three examples. The Government claim that there are 17,000 products prescribed under the National Health Service—twice as many as 25 years ago. The majority of the doctors use MIMS, which contains 2,100 medicines, and even the British National Formulary lists only 6,000, so this figure of 17,000 is absolutely wrong.
The Government have also been saying that the number of family doctor prescriptions issued has risen by 100 million in the last 25 years, implying that this justifies the Government's new plan. Of course, there have been enormous changes in prescribing, partly due to new drugs, partly to the fact that people are living so much longer and need more medication, and partly to the fact that fewer people are living in institutions and more in their homes; but if the medicines were not prescribed many of them would be in hospital instead of being in the community.
If we look at what other countries are doing, the Government say that no other country allows every drug to be prescribed at public expense under its health service. In fact, no other country has a universal, efficient and low-cost health care system like the
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National Health Service, or an overall medicine cost control scheme like the Pharmaceutical Price Regulation Scheme. Britain spends about £30 per head per annum on NHS medicines. The corresponding figure for countries like France, Germany and the United States is twice as much. So it really is not fair to say that there has been a dramatic increase in spending. Spending on medicines in the NHS represented 8.3 per cent. of NHS costs in 1970 compared with 9.6 per cent. today—that is marginally more, but that is because of the circumstances in which so much more prescribing is done for people in the community.
As I said earlier, there has to be effective control over profits in an industry so heavily dependent upon the National Health Service. The Government are quite right to look around for further ways to do so. Further cuts in the profit margin may be necessary, but in their plans to achieve a further saving the Government must, in my view, answer some questions. They are questions that have been posed to Ministers before and I hope that, from the noble Lord, Lord Glenarthur, we shall have some answers tonight. I make no apology at all for returning to the limited list question.
First, how far are the Government prepared to go to imperil investment in Britain by the pharmaceutical industry? I honestly believe that they under-estimate the extent to which major pharmaceutical companies are now looking to other parts of the world as a place for investment. Those companies have up to now with encouragement from—I was going to say successive Governments; I certainly was deeply involved in trying to persuade (and in producing inducements, with some success) pharmaceutical companies to invest in Britain. However, many of those same companies and others are certainly coming to me and saying—I guess they are coming to other noble Lords too—that they are now looking in other parts of the world. I want to say that if we lose the investment, if we lose the central position that we hold as being probably the best country in the world for research, we may never be able to build it up again. The painstaking work of previous Administrations may be undermined to the detriment of the British economy.
One wonders why it is that the Government seem to be so unaware of the reactions in the pharmaceutical industry. How far are the Government prepared to sacrifice jobs in Britain at a time of high unemployment? How far are they prepared to go in sacrificing exports by a powerful, strong pharmaceutical industry in Britain? I want to ask why the Government have done a U-turn in terms of their limited list concept.
It was rejected in very clear terms, as the Government know, by the Greenfield Committee. The committee said:
"It is our view that a limitation on prescribing at NHS expense would be interpreted by some doctors as an attempt to curtail their clinical freedom. Since we have not seen any convincing evidence that suggested financial benefits would outweigh the administrative problems in drawing-up and maintaining the list, we have concluded that such a move would not be justified and we do not recommend any measures to introduce nationwide a Limited List".
I think that that is very clear indeed. Partly that conclusion was reached by the evidence that the DHSS

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itself gave to the Greenfield Committee. It was quoted by the noble Lord, Lord Rea, in this House at column 1176 of the Official Report for 6th February. I shall read it again:
"It is almost impossible to establish"—
this was the DHSS's own evidence—
"whether the introduction of a limited list of drugs will in itself produce any financial saving for the NHS. What does seem apparent is that any attempt so to do is likely to arouse hostility, result in higher administrative costs, affect the pricing of drugs and the industry, generate unwelcome pressures for GPs and pharmacists, and possibly cast some doubt on the Government's intentions towards the standard of provision of general medical services in the NHS".
They were right. It has done exactly that. All those things have been quoted by organisations and sections of the health service with which Ministers ought to want to be on a friendly relationship.
Why have they decided totally to ignore the very clear policy statement, which has been quoted before in this House, by Mr. Patrick Jenkin when he was Secretary of State for Social Services? I quote again:
"In Britain, in contrast with many other countries … we have resisted any system of limiting the freedom of a doctor to prescribe whatever he thinks his patient needs. Not for us are such devices as limited lists".
Why do the Government suddenly decide that a commitment made by one Minister should be overturned by a successor Minister of the same Government? I just do not understand and I hope that the Minister will explain.
I want to ask about the well-tried machinery of the PPRS, which has been referred to by several noble Lords. I actually have an interest in this since I negotiated it with the pharmaceutical industry. It was referred to by the noble Lords, Lord Hunter and Lord Kilmarnock. It was part of a broad agreement with the pharmaceutical industry which, as the noble Earl, Lord Halsbury, said, led to an extension of the patent life from 16 to 20 years and reduced the amount which the pharmaceutical industry could spend on promotion and still charge against the NHS. I do not object at all to the department going a stage further and knocking off another 1 per cent. It might knock off 2 per cent. The PPRS was established in order to control prices in the pharmaceutical industry. I find it very difficult to understand why the department resorted to something different when the pharmaceutical industry had accepted the PPRS.
The last question I want to ask is this. Why did the Government embark on this course without consultation? It was a question put by the noble Lords, Lord Auckland and Lord Kilmarnock. The Government will no doubt say that of course they are consulting; that they are consulting with everyone; that they have produced their list and anyone can comment; and that if I do not like something on the list, I can write in. My objection is that there was not consultation before the principle was established. There was no consultation with doctors, with pharmacists or with any of the ogranisations before the Government decided to break away from the recommendation in the Greenfield Report and from the commitment that was made by Mr. Patrick Jenkin. All the consultation has simply been about what should be on the limited list and not on the basic principle of the limited list.
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It is to the principle that I object. All right, they can change the list as much as they like, but I am afraid that I shall still object because I believe quite fundamentally that a doctor has a right, not to prescribe expensive medicines—I believe that a good deal of education is necessary—but eventually that he must say he is the one to know that a particular medicine is something that is best for the patient, the particular individual, whom he is treating.
I agree with the noble Lord, Lord Kilmarnock, that the Government should think again. They have heard a good many views expressed from these and their own Benches. I believe that they should really think seriously not just about what is on the list but about the whole principle that lies behind the list and the effect it will have upon the pharmaceutical industry.
7.8 p.m.
Lord Glenarthur: My Lords, I too am grateful to the noble Lord, Lord Hunter, for initiating this debate. Many claims have been made by the pharmaceutical industry and others about the threat to its profits, its investment, its research and development and indeed its very existence as a result of the measures which the Government have taken. Many of these claims not surprisingly have been repeated today, and I welcome the opportunity to lay some of the more extravagant ones to rest.
Let me first put the pharmaceutical industry into perspective. In 1983 the value of pharmaceutical production as assessed by the Business Statistics Office was about £3.3 billion. Imports increased this total by about £½ billion. Sales to the National Health Sevice at £1.4 billion thus represented only about 40 per cent. of the industry's total saleable output. This is an important figure to bear in mind.
Many of your Lordships have painted a dramatic picture of the adverse effects of our limited list proposals on the industry. We have said on numerous occasions—indeed, we debated it in your Lordships' House only two weeks ago—that these changes will reduce net drug sales to the health service by up to £100 million per year. This represents only 7 per cent. of the industry's sales to the NHS; it is only 3 per cent. of the industry's total output. Can it really be that the industry's strength is so delicately balanced that it will collapse if sales of this magnitude are lost? I think not. Yet the Association of the British Pharmaceutical Industry is spending up to £1 million telling all who will listen that it might. I only hope that the association does not expect the National Health Service to foot the bill for this advertising extravaganza through higher drug prices.
The debate has centred largely on the limited list and I hesitate to go into it in quite the depth that I did the other day because there are other equally important matters to be covered such as the Pharmaceutical Price Regulation Scheme referred to particularly by the noble Lord, Lord Ennals. However, as regards consultation, the limited list proposals were announced on 8th November and there then followed a consultation process of some considerable extent. It went on until 31st January. We believe that a three-month period was sufficient for proper discussion of

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the details of the scheme. We have given careful consideration to the very many representations which have been made. The noble Lord, Lord Ennals, chides us for not having gone into a consultation process before, but I am quite sure that with his experience he will realise that it is not always appropriate to do so and that it is right to make a policy decision in principle and consult afterwards.
Lord Ennals: I disagree, my Lords.
Lord Glenarthur: My Lords, the noble Lord says that he disagrees. I am afraid that I must disagree with him.
Lord Tordoff: My Lords, is the Minister saying that the policy decision has been made or that the consultation process is still continuing or has just been completed?
Lord Glenarthur: My Lords, the consultation process on the limited list ended on 31st January. As regards the pharmaceutical companies, a letter was sent to the ABPI on the day that the limited list proposals were announced.
Lord Ennals: My Lords—
Lord Glenarthur: My Lords, the noble Lord has made his point and I ask him to let me continue. What has happened is that individual companies have made their own representations to the department and the experts concerned. They have done it in very great numbers and at great length. There is no truth in the suggestion that they have not been able to make their point. As regards a review of the limited list, a point made by the noble Lord, Lord Hunter, perhaps I may say generally that we hope to announce the final details of the limited list very soon. We will deal with the question of its review at that time, as we will with outlying areas in Scotland, which is another point that was raised.
The whole essence of the limited list is that it is no more than a continuation of the Government's efforts to make the most of the money that we have available to spend on the National Health Service. One of our heaviest bills is for drugs and medicines. Of course, much of this money is very well spent, but can anyone really claim that on such a colossal bill there cannot be savings—savings which can go to expand the service elsewhere? My noble friend Lord Molson put his finger on the point when he described his own personal experiences so well. Therefore, what we have done is take a good look at the great mass of medicines in a narrow range of the less important drugs to see whether all of them are really necessary and need to be paid for by the taxpayer.
I have said that genuine and widespread consultation has taken place over a period of three months to ensure that the limited list will meet all clinical needs, and the Chief Medical Officer has set up a panel of experts to advise him on it. As regards generic substitution, again it will be necessary for me to rehearse some of the arguments that I have been through before. The BMA claim that it is in favour of
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the system of generic substitution recommended in the Greenfield Report and that it would save as much as the limited list. Those claims are false. The BMA actually rejected the Greenfield proposal and produced a scheme of its own which would make substitution entirely voluntary and leave the decision up to the doctor as to whether a branded or generic drug is supplied. That is what happens now.
Doctors can make a decision on what to prescribe—but to what effect? A soaring drugs bill. Generic substitution has been on the agenda for 30 years and the medical profession has never actually agreed to anything yet. Even with its own suggested scheme the BMA introduced so many "ifs" and "buts" that the only conceivable outcome would have been more years of inconclusive talk while the drugs bill continued to spiral.
I now turn to other criticisms. It has been claimed that the profits we allow companies to make on their sales to the National Health Service are too low. We are not against profits. They are essential to the well-being of all companies, but we are against excessively high profits—as I assume is the noble Lord, Lord Ennals—and that is what we believe the pharmaceutical industry has been achieving in recent years. Until we reduced it on 1st April last year the industry as a whole had been allowed to earn profits of 25 per cent. on capital employed. This may not have been unreasonable when it was fixed in 1978—in the early days of the PPRS, but by 1983 it was manifestly too high compared with what the rest of British industry was able to achieve and in the light of the Government's success in reducing inflation. That is why we thought it right to reduce the allowable rate of profit last year and why we shall do so again from 1st April this year. It is also the reason why we are reducing by 10 per cent. the amount of sales promotion expenditure which can be reflected in the price of medicines sold to the National Health Service. If I understood the noble Lord, Lord Kilmarnock, right, he thinks there is room for further savings here. I assure the noble Lord that we keep this matter under review and I shall carefully note his words.
While competition is to be applauded, it is not necessarily right that the National Health Service should pay for the whole of such expenditure. Overall, we think that the new profit levels of 1985 are about right. The industry naturally disagreees. But it is instructive to look at the annual accounts of some large British companies. For those whose pharmaceutical business represents only part of their total turnover, it is usually the pharmaceutical division which is more profitable. For one well-known company in 1982 its pharmaceutical division represented only 36 per cent. of total sales but provided 65 per cent. of total company profits. For another equally well known company the figures were 7 per cent. of sales but 38 per cent. of profits. These are significant figures. I am sure that your Lordships will realise that those are significant figures.
What about the effect of our plans on investment? This point particularly concerned the noble Lord, Lord Ennals. Companies will of course be concerned and I know of some planned developments by national pharmaceutical companies which have been deferred.

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But I ask your Lordships: where is this investment to go if it does not come here?
Lord Ennals: Holland and Belgium, my Lords.
Lord Glenarthur: Will it go to France, my Lords, which has a drugs reimbursement system which is much more restrictive than anything that we plan? Or will it go to Italy, where drug prices are very low and patent protection somewhat weak? Or is the investment to be cancelled altogether? All the countries in Europe and Scandinavia are taking steps one way or another to reduce the cost of drugs, which in this country have risen inexorably year on year.
Lord Ennals: My Lords, is it not more likely that the investment will go to Belgium, Holland and possibly to Ireland?
Lord Glenarthur: My Lords, so far as I am aware there are no countries which are not facing similar problems to our own. I do not have specific figures with me for Belgium, Holland or Ireland but I can tell the noble Lord that only a few weeks ago a senior official from the Swedish Department of Health visited the DHSS to see whether there were any lessons for Sweden in our methods of seeking to keep drug costs down. Therefore, I say again, where is this investment to go?
Turning to research and development, this was spoken about by the noble Lord, Lord Hunter, my noble friend Lord Auckland and by others. Research and development has figured prominently in this debate and there is no doubt that it is essential to the pharmaceutical industry. The phrase, "Successful research is the lifeblood of the industry" is no idle statement in the pharmaceutical world. I join with the noble Lord, Lord Ennals, in paying tribute to the research work that they do and have done over the years, and to the marvellous products that they come up with. But the pharmaceutical industry is largely multi-national. Two-thirds of the companies in this country are subsidiaries of foreign parents. The remaining one-third, which is British owned, itself has its own subsidiaries throughout the world. Britain represents only about 4 per cent. of world consumption of drugs. Despite what the noble Lord, Lord Greenhill of Harrow, said, I do not therefore see the logic in the argument that research and development in this country will be seriously affected by our limited list proposals and the reductions on profitability.
Currently about 12 per cent. of the world's research activity is carried out here; and it is for two main reasons. The first is that this country is good at it and the second is that we are willing to pay for research. It is often claimed that pharmaceutical companies must have high profits because they have to finance the cost of research from them. This leads to the assumption that the cost of research must come from the profits we allow to companies through our price control system. Nothing could be further from the truth. In our price control calculations we allow reasonable expenditure on research and development as an item of expense before the profit is struck—a perfectly normal accounting practice.
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We are currently financing the cost of research and development to the tune of over £200 million each year through the price of NHS medicines. This is in addition to profit of about the same amount. If industry insists that research is indeed financed entirely out of profits, then the real profit it earns from its sale of drugs to the NHS is something like 50 per cent. return on capital employed. Even to non-accountants that would appear to be an exorbitant figure, and I am sure the industry would not want it to be publicised in that way. Nor is that the way it appears in company annual accounts. I think that the main point is that research on a very considerable scale will continue to be financed through drug prices, so there is no reason why it should be seriously affected by the limited list or reduced profit levels.
There are those who have indicated perhaps that the main casualty resulting from the limited list proposals will be research into illnesses treated by drugs within the therapeutic groups most affected by the list. This need not be so. We have said quite clearly that, if new medicines within the categories covered by the list were produced which offered real improvements in treatment and represented good value for money, it would be possible for them to be added to the list of drugs available on the NHS. What we should not welcome is research to promote yet another variant of similar products already on the market. But there is a real challenge to the industry to find something significantly better than what we have now.
The noble Lord, Lord Ennals, raised the question of jobs. When it comes to jobs the ones hurt most are those which coincidentally concentrate on the therapeutic groups most affected by the list. For these companies, I accept that there will be some job losses. How serious this will be depends on the extent of the final list and how well companies can adapt to the loss of NHS sales. But I must remind your Lordships that a high proportion of the drugs which will no longer be prescribable under the NHS do not need a doctor's prescription. They are already available in chemists' shops and can be bought over the counter by the general public.
One of the effects of the limited list will be that there will be created a greater incentive to manufacturing companies to increase over-the-counter sales. This, I am sure, they will attempt to do. However, it is clear that, where their NHS sales loss through the limited list is severe, it will not be easy to maintain turnover in the short term.
Lord Pitt of Hampstead: My Lords, the noble Lord said that one of the consequences of the limited list will be an increase in over-the-counter sales, if I understood him correctly. Is he telling the House that that is something we should welcome?
Lord Glenarthur: My Lords, there are considerable over-the-counter sales of medicines already. I can see no reason to suppose that it is necessarily a bad thing.
We have also been told—by the noble Lord, Lord Auckland, particularly—that exports will suffer as a result of our proposals. The argument is that as certain products will no longer be prescribable under the NHS they will be regarded overseas as being of little use. I do not think that there is anything to support that. We are

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not saying that the products affected by our proposals are no good. What we are saying is that the taxpayer should not be expected to pay for them. All the products will still be saleable in this country and will retain their product licence, which is essentially a certificate of safety, quality and efficacy. We will still issue export certificates on request, so I cannot see that exports suffer here.
The noble Earl, Lord Halsbury, and the noble Lords, Lord Kilmarnock and Lord Hunter, raised the question of patents. I shall study with care the points that they have raised. I, too, cannot claim to be the expert on patent law which the noble Lord, Lord Lloyd, would have been had he been here. But I am aware of the recent moves in the United States which have extended the patent term for drugs in that country. The pharmaceutical industry in this country has expressed concern about the length of the patent term and discussions are taking place with the ABPI and the Patent Office.
An important point to bear in mind is the various conventions in Europe and elsewhere to which we are signatories, and that any extension in the United Kingdom of the patent term would be contrary to the spirit, if not the letter, of those conventions. But I shall study the noble Earl's remarks.
The Department of Health and Social Security is not against the pharmaceutical industry. What I have been trying to do is to expose some of the fallacies of the arguments used against the steps which we really have to take. We are, after all—and as the noble Lord, Lord Greenhill of Harrow, will readily understand—the sponsors of the industry, as well as its best customer via the NHS. These two roles are difficult to play of course, and it is probably impossible to get the balance absolutely right.
We want to see a thriving pharmaceutical industry. It provides employment and contributes very positively to our balance of trade. It also contributes to the nation's health and well-being. If we need it, it certainly needs us. Where else would it get an assured market of £1·4 billion for its products? It appears that the industry has become somewhat complacent. It had a certain and generous profitability rating and operated in a trading environment unique in Europe in that there were no prescribing or reimbursement restrictions in our publicly financed health system. It did not believe that similar restrictions would be introduced in this country, but they had to be and are coupled with a trimming of profit levels.
If patients could accept that there is not a pill for every ill; that all effective drugs are in fact potentially dangerous and in taking them there is a balance to be struck between benefits and disadvantage; that many minor ailments are self-limiting and drugs are not necessary; in fact that on many occasions it would be positively advantageous not to take a medicine—if these simple precepts could be accepted, then perhaps we should not need a limited prescribing list or even a price control system. But while patients expect—as they very often do—a prescription from every visit to a doctor, and doctors, are willing to accede to these expectations, some controls are necessary.
We believe that the anxiety expressed about our present policies towards the pharmaceutical industry
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is misplaced. Both our limited list proposals and the changes in the Pharmaceutical Price Regulation Scheme are in the interests of more effective prescribing within the National Health Service and in aid of reducing an enormous NHS drugs bill. Both will help to restrain public expenditure, which is an important part of the Government's already successful economic strategy, and will provide a sounder basis for overall economic expansion, which will in turn enable us better to support health and other social services.
Lord Hunter of Newington: My Lords, one is tempted to ask one or two supplementary questions of the Minister but I think that we have had a reasonably well-balanced debate. I congratulate him on his spirited defence, although I think that many of us feel that this problem is by no means finally solved. We are still worrying about the distinction which I tried to make in my speech between the limited list and the recommended list. It seems to me that many people might come round to the limited list, particularly if it is obviously something that can be limited. But to do that on the negative side, without taking the opportunity of producing guidance for the medical profession by the experts, such as the CMO's experts, seems to some of us to be a great tragedy. I hope the Minister will take that thought away with him.
I thank all noble Lords for having contributed in the way that they have done to this debate which I think has been very successful. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Share Ownership
7.28 p.m.
Lord Terrington Lord Terrington rose to ask Her Majesty's Government what further steps they propose to take to achieve their declared objective of encouraging a wider spread of share ownership.
The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
This is by no means the first time that I have drawn attention in your Lordships' House to the importance of a wider spread of share of ownership, but it is the first occasion on which I have actually initiated a debate on this particular subject. In the circumstances, I think that I ought to follow the customs of the House and declare my personal interest, although I have already done so several times in the past during other debates.
First of all, I must declare a financial interest because I derive an income from the City partnership of which I have been a member for many years and which is substantially involved with private investors. Secondly, I must tell your Lordships that I am an executive member of the Wider Share Ownership Council, which is concerned with encouraging individuals to put at least a part of their savings into British industry and commerce.
Having said that, I now turn to the purpose of my Question, which is not to initiate a discussion on privatisation, although I should like to congratulate the Government on their British Telecom issue for

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reasons to which I shall refer later in my speech. My Question is concerned primarily with a spread of share ownership in its widest possible sense. By that I mean much wider than employee share schemes, admirable as they are for those who have access to them.
In fact, a number of reasons have prompted me to put my Question at the present time. Among them are comments on share ownerships which were made last year in your Lordships' House by the noble Lord, Lord King of Wartnaby. The noble Lord has, of course, considerable experience in industry. During his speech he expressed the view that although bricks and mortar provided the most natural type of ownership, that alone, in his opinion, was not enough. He felt that men and women should not only own a part of the company in which they work but in addition they should participate more generally in the whole success of British industry; in other words, share ownership in the widest possible sense.
I so agree with these sentiments that I find it particularly frustrating to have to recognise that personal share ownership continues to decline—apart from the privatisation of British Telecom, which was really rather a special event—and institutional domination of the market continues to increase. This surely cannot be in the best interests of its efficient functioning, as the chairman of the Stock Exchange has repeatedly emphasised. To my way of thinking, this is a very unsatisfactory situation, bearing in mind that we live in a mixed economy, and therefore socially it is vitally important for people to be involved in the success of industry, whatever their occupation. Also economically it is important because in a country such as ours, which is dependent largely on the success of its industry and its commerce, we must surely do all we can to help people understand the issues and the risks involved in various enterprises; in other words, education.
At this point I should like, if I may, to refer back to two debates in your Lordships' House, one in 1977 on a national recovery programme, initiated by my noble friend Lord Hankey, and another in 1978 on industrial growth, initiated by my noble friend Lord Baker. I took part in both those debates and I devoted a part of my speeches to pointing out the slowness of governments of all complexions in appreciating the need for a wider ownership of industrial shares and the very limited amount of encouragement they gave to individual investors.
Seven years have now gone by since these debates and regretfully I have to say that, apart from the special exceptions that I have mentioned such as privatisation, very little has really been done to provide strong encouragement to individual investors, although I should not be so churlish as to ignore the real breakthrough in the treatment of employee share schemes which were made possible by legislation, introduced by the last Labour Government, and further encouragement since then by the present Conservative one. Nonetheless, I have to declare that we make a very poor showing compared with the United States, which has a long tradition of share ownership, as we have in this country, and is based on similar capital markets and similar stock exchanges.
I do not want to spend much time on figures but I think these are important. These figures, which are the latest available to me, show that the number of shareholders in the United States is 41 million, which is about 19 per cent. of the entire population; and the United Kingdom total, prior to the privatisation of British Telecom—which is difficult to bring into the factor at the moment—appears to have fallen to 2·1 million, which is only 3¾ per cent.
I have chosen this particular comparison because I know something of the American scene from personal experience. For many years I was concerned with my firm's United States operations and I spent a part of each year working over there. In the course of my travels I talked regularly with industrialists and investment fund managers in many parts of the country. What particularly impressed me about these talks was the importance attached to the widest possible share ownership as a contributory factor to industrial growth.
Comparison with America is not, however, the only one that I wish to make today because there are European comparisons to be made which are to my mind equally important and, I should suggest, are worthy of some careful study by Her Majesty's Government. In France, for example, the Loi Monory, introduced in 1978, had a most striking impact on the spread of share ownership. Within three years of its introduction it had added more than 1 million new individual shareholders. This scheme is a very simple one. It grants tax rebate to individual taxpayers who make investments in quoted French companies—and I underline "quoted".
The rebate is quite substantial but the rules governing the scheme are very strict and provide safeguards against tax abuses. First of all, there must be a fresh investment—not an investment from a sale of shares held in an existing portfolio. This rule is well protected because a taxpayer, in order to make his claim, must declare his investments held in securities at July 1978, which was the starting point of the scheme. Secondly, the investment must be held for at least four years to qualify. Thirdly, it must be made in the shares of French companies directly or through special unit trusts which have pledged themselves always to devote 60 per cent. to those types of shares. This scheme ran until the end of 1982 and was succeeded by what may or may not be called the Loi Delors. Under this new scheme, the tax credit has been much reduced but the individual annual limits have been raised from 5,000 to 10,000 francs.
What I find particularly interesting in this country is the fact that the Government have already acknowledged the general principle of the Loi Monory but have confined their scheme to small and medium-sized unquoted companies—and I wonder why. The case in favour of a scheme to cover quoted companies seems to me to be a very strong one. In support, I should like to refer to your Lordships' Select Committee on the European Communities when it considered asset formation in 1981. But before going further, I should, if I may, pay tribute from these Benches to the late Lord Wolfenden who was chairman of this Select Committee. I feel sure that I speak for all sides of your Lordships' House in so doing.
I particularly noted in their report that the committee had difficulty in assessing trade union attitudes towards employee shareholdings because the TUC did not wish to give evidence to the committee. This, I must admit, I find rather disappointing. But it apparently became clear to the committee that, in general, unions are against employee share ownership, particularly when schemes restrict shares to the company in which the employee works. For that reason, the committee gave as its opinion that the Government should give careful attention to schemes that spread the employees' risks over a number of undertakings as, for example, in the French Loi Monory scheme. I do not want to flog this point, but it seems to me that I have a very strong ally in the opinion expressed by one of your Lordships' Select Committees. The Government will perhaps now feel inclined to agree with me.
There are a number of other points that I would like to make but I have probably spoken for long enough. I can therefore perhaps finish with a short summary of the main issues involved in my Question. To begin with, I know that the Government are enthusiastic about widening the scope of share ownership. I am very ready to acknowledge the steps that they have taken so far towards their declared objective. But I have to admit that I am doubtful if these steps can really help achieve their object, except perhaps over a very long period. I would respectfully suggest that a greater sense of urgency is now required.
I would never decry saving for retirement through a pension scheme or life insurance, but I deplore a tax system that does not appear to be fully on the side of the individual who wishes to be a capitalist through share ownership as well as through home ownership. It would seem that the owning of capital through shares is somehow still less virtuous than, for example, the ownership of a house. I would certainly commend a scheme such as the French have put into operation as a means of accelerating a wider spread of the owning of shares.
I realise that we are once again getting close to the Budget. This must obviously restrict to some extent what the noble Lord, Lord Brabazon of Tara, is in a position to say in reply to my Question. But if what I have said has drawn attention to a worthwhile means of really getting to grips with a much wider aspect of share ownership than just employee share schemes, then perhaps I may have achieved something this evening by asking this Question. I would conclude by saving that I look forward to hearing the views of other noble Lords who have put down their names to speak, and particularly the noble Viscount, Lord Bridgeman, who has chosen this occasion to make his maiden speech. My Lords, I beg to ask my Question.
7.43 p.m.
Viscount Bridgeman: My Lords, this is the first time I have had the honour and privilege of speaking in your Lordships' House. I am most grateful for the opportuntiy to address your Lordships. May I also pay tribute to the noble Lord, Lord Terrington, who, I know, is far from well but who has insisted on coming to the House tonight to put the Question to the Minister.
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I, too, must declare an interest in the debate as I am a member of the Stock Exchange and a partner in a member firm. While the reduction in stamp duty in the last Finance Act, from 2 per cent. to 1 per cent. was most welcome, it is still higher than in nearly every other major country. In Japan, for instance, it is 0.55 per cent. ranging down through Germany, where it is 0.25 per cent., to Holland, where it is 0.12 per cent.—only one-eighth of the present rate in this country—to, significantly, the United States of America, where it is nil.
With the improvements in communications between world financial markets, this is a hindrance which the United Kingdom securities industry can ill afford. It is also a major discouragement to the small investor. Furthermore, following the abolition of exchange controls in 1979, it has encouraged United Kingdom investors, quite legitimately, to hold United Kingdom securities outside this country by means, for instance, of American deposit receipts. This is a most unsatisfactory by-product of the high tax on dealing in the United Kingdom and serves to the benefit neither of the Exchequer nor, indeed, of the securities industry. I trust that I do not stray from the conventions of the House in expressing the hope that this tax, in the near future, will be further reduced.
May I impose on your Lordships' time to refer briefly to the Unlisted Securities Market on the Stock Exchange, or the USM as it is known? This is aimed at encouraging the small company to have a ready market for its shares, to allow the proprietors to realise some of the wealth they have built up in the business, and, most importantly, to make it easier for the company to raise funds to finance future growth. The noble Lord, Lord Cullen, will refer to employees' share incentive schemes, but one of the advantages of the USM is that it permits companies on that market to introduce these very valuable schemes.
From the outset, it has been emphasised that the USM is, in no sense, a second-rate market; rather, it is a miniature of the listed market. The ethics and disciplines of the Stock Exchange are in no way diminished. There is no minimum size for USM entrants. Entry formalities are kept to a minimum and there are concessions on the cost of entry in recognition of the generally smaller size of company. In many cases, the sponsors, be they stockbrokers or bankers, have local connections with the companies which encourage a local following among investors, who can thereby identify with, as it were, the firm next door.
I suggest that this market has, in the four years of its existence, had a success beyond the most optimistic hopes of its originators. There are now 346 companies on the USM and the number of failures is less than ten—a tribute, if I may say so, to the high standard of vetting by the quotations department of the Stock Exchange of companies seeking admission to that market.
The significance of this market in the context of the present debate is that each new company which comes to the USM will be expanding its share register from a handful of names or, in some cases, even a sole proprietor, to hundreds and, in some cases, thousands of shareholders. Naturally, many of the investors in these new companies on the USM will not be

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shareholders for the first time, but a significant number will. It is worth noting that since November, sponsors of these issues on the Stock Exchange have noticed a marked increase in inquiries from the public. I hope it is a fair deduction that this interest derives from the success of British Telecom and the awakening of interest in share owning that has been the legacy of that immensely successful flotation.
I suggest therefore that the USM is a wholly appropriate vehicle for the encouragement of wider share ownership. How, then, can more use be made of it in this regard? The noble Lord, Lord Terrington, has referred to the success of the Loi Monory in France. The Loi Monory and the business expansion scheme in the United Kingdom have one feature in common. They each permit the cost of an individual's investment to be set against his or her taxable income up to a prescribed figure. Here, the similarity ends, as the noble Lord has so eloquently said.
The difference between the French and British schemes is fundamental. Whereas investment in the business expansion scheme may not be quoted, the French scheme offers a choice of over one thousand companies on the French stock market. I suggest that this leads, in turn, to a further fundamental difference. BES investments are basically only attractive to investors who can afford to take risks—a comparatively small section of the population. The Loi Monory by enabling individuals to invest with tax relief in quoted companies appeals to a much broader section of the community. The noble Lord, Lord Terrington, has referred to the number of shareholders. I understand that the figure for the funds invested in the Loi Monory and the Loi Delors scheme over seven years is 36 billion francs. Shareholders in this scheme find themselves with a direct involvement in industry, while industry in its turn has been provided with a whole new catchment area of capital.
The Government have now two well-regulated markets on the Stock Exchange, admirably suited to a Loi Monory-type scheme: the Unlisted Securities Market and the main listed market. Between these two the individual would have the choice of the whole spectrum of United Kingdom companies, ranging from the small ones on the USM, with a capitalisation of perhaps £3 million, right through to the Shells and ICIs. I hope very much that the Minister will give consideration to the introduction of a scheme of this nature, if necessary offering it as an alternative to the business expansion scheme. The British Telecom issue has demonstrated beyond doubt the interest of the public in share ownership, and such a scheme would play a significant part in achieving this Government's aim of creating a property-owning democracy. My Lords, I thank you for the courtesy which you have accorded me.
7.51 p.m.
Lord Grimond: My Lords, it is my pleasure, though I am a comparatively new Member of your Lordships' House, warmly to congratulate the noble Viscount on a quite excellent and extremely fluent maiden speech. I remember his predecessor, who was a very well-known figure during the war, and, I am told, a very respected Member of your Lordships' House. My only
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direct contact with his family is that I was once asked to breakfast by his grandfather—a prospect which I must say filled me with some alarm, as I was a very small boy, but an occasion which I remember to this day with the greatest of pleasure.
One of the difficulties about coming from another place to the House of Lords is that, in another place, you can talk about any subject under the sun in the confident expectation that 99 per cent. of the House will know as little about it as you do yourself. The difficulty about the House of Lords is that quite a lot of your Lordships are expert on the subject under review. This certainly applies to the noble Viscount who has just addressed us. I hope very much that the Government will take note of his suggestions, both about the French experience and about the Unlisted Securities Market.
I should also like to thank the noble Lord, Lord Terrington, for having asked this Unstarred Question on what, to me, is an extremely important subject. May I say, with respect, that I agree with every word he said, particularly in regard to the disappointing experience of the last few years, which is that the institutions have gained ground while the private investor has declined. It is one of the most disappointing elements of the Government's policies that, although they profess to wish to spread ownership of property, and share ownership in particular, in point of fact they have done very little to alter the fundamental structure of industry. To my mind, it is extremely important to do so, not only because it will greatly improve industrial relations once there is some common interest between management and owners and workers, but also because it will enable workers of all sorts to share in the prosperity of the country. It will also combat inflation because it will mean that rewards can be linked to improved productivity and to profit. Finally, as we move on to the new technological revolution, in which, as I see it, fewer people are going to be employed but many people are going to make large fortunes, it is extremely important to spread the benefits of this revolution and to do so through wider ownership.
There are many ways of spreading ownership in industry. There are the co-operatives, in which I personally have an interest, but which are not part of the debate tonight. There are management buy-outs, which I think are to be applauded, and there is of course the employer-owned or employer-controlled business, which is now given official recognition. But the aspect to which the noble Lord has drawn particular attention tonight is the need for the wider diffusion of general share ownership. I wholly agree with him and indeed with the noble Viscount.
It seems to me that the Government should give to the man or woman who is prepared to buy shares advantages comparable to those they give to the house buyer, for instance. It is perfectly true that British Telecom was a great success and a great example, but, as the noble Lord who asked the Question said, it is rather sui generis. If you look at other examples of privatisation—for instance, British Aerospace and Jaguar Cars—you see that the inducement offered to employees in those firms to take up shares was very small. It amounted to £150 in British Aerospace and

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£450 in Jaguar Cars. If you compare this with the inducements offered to house owners—I think the noble Viscount mentioned this question of houseowning—you see that the inducement offered on mortgages is very large indeed. It is reckoned that, arising out of the privatisation of council houses, those who have bought their houses have probably, on average, gained about £7,000—far more than they would have done had they invested in equity shares. The Government are responsible for the tax inducements, or lack of them.
It is fair in this debate also to mention the City, to which both the noble Lord and the noble Viscount have referred. It seems to me that the City has done conspicuously well lately. It is the large City institutions which have gained from privatisation. As the noble Lord who asked the Question indicated, it is the large City institutions which take up more and more of our shares. It is the directors in the financial houses whose emoluments have risen steadily. In many cases the emoluments of directors have risen whether or not their companies are prosperous. When one reads of the inducements offered to the man who hopes to be the chairman of Dunlop one sees the enormous advantages of being at the top of the pile. Indeed, one reads of increases in the emoluments of directors of many companies which have not done very well.
It should also be borne in mind that the Financial Times recently pointed out that the FT Index has fallen by 50 per cent. since 1970. As I understand it, in spite of the fact that the index has gone through 1,000, anyone who invested money about 1960 or in the mid-1960s would by now, allowing for inflation, have lost half of his capital; so I think we should take care in recommending Stock Exchange investments to everybody and we should warn them of the importance of taking good advice and choosing the right companies.
I think the City is still itself neglecting the private investor. I am doubtful whether, when the "big bang" takes place next year, the private investor is going to be in a better position. The City owes it to us to explain what is going to happen to him. I believe also that, even in the City, there is some reluctance to distribute profits or even to wind up companies. It seems to me that many investment trust companies have been wound up where it was of advantage to their shareholders. But of course it suits the directors and the management to keep companies in existence and indeed to add to their reserves, which in many cases may be right but is not always to the benefit of the investor.
Further, there are what I believe are called the investment protection committees, which, largely on behalf of the insurance companies, are apt to oppose the distribution of shares to workers. Again, one can see their point, because it dilutes the capital. But the Government have made it possible for companies to distribute more shares to workers than was the case 10 or 15 years ago. I should be more reassured if I thought that the insurance companies see that this will lead to greater efficiency and profitability in industry and therefore is not something which it is necessary to oppose though it may lead to some diminution or some dilution of the capital.
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Apart from general tax adjustments to bring the buying of shares more into line with the buying of property or insurance—something upon which, I fully appreciate, as does the noble Viscount, it will be impossible for the Government to comment tonight: Governments may leak, but they do not, before the Budget, commit themselves in public—there are certain points which I think are very obvious. For one thing, there is the 12-month restriction on interest relief for those who borrow money to take up shares in employee-controlled companies. To my mind, there is no reason why this should be confined to 12 months; and in that I think I would be supported by the management of these employee buy-outs, which have been relatively successful.
The Government should certainly consider the example of France, which was dealt with so fully and so expertly that I need not go over it again. I believe this Question comes at a very auspicious time, in that we hope it will get through to the Government, at any rate before the Finance Bill, but I fully appreciate that the Government's answer tonight may be somewhat guarded. However, I wish to support very strongly what has been said by the last two speakers, which is that it is profoundly disappointing that the wealth of this country is more and more falling into the hands of institutions; that wealth is not being spread; that ownership is not being spread to any great significance, though there have been increases in employee buyouts and indeed in co-operatives; and that if the Government are sincere in their desire to see a wider and property-owning democracy, then it is really very necessary now that they should give financial advantages to those who are prepared to risk their money, at least equal to those which are available for other forms of investment.
8 p.m.
Lord Killearn: My Lords, first of all I should like to compliment and congratulate the noble Viscount, Lord Bridgeman, on his maiden speech, which I think we all agree is a most valuable and weighty contribution, and well in line with what those of us who knew his forebear might have come to expect. I hope that we shall hear from him on many future occasions.
Next, I feel that we should all be most grateful to the noble Lord, Lord Terrington, for introducing this debate this evening in your Lordships' House. It is a subject of the greatest importance to the well-being of this country—and all countries and their inhabitants—and for the proper and orderly development of the economies of countries both rich and poor, developed, developing, and underdeveloped. Having said that, I think I am going to pull the terms of the Motion about slightly.
One reason that I intervene in this debate at all, is that I was a member of the sub-committee of your Lordships' House which examined the Commission's memorandum to the council in 1979 (I think it was), and we reported thereon to your Lordships' House in July 1981. Here I think it will be fitting to underline what the noble Lord, Lord Terrington, said and pay a tribute to the late Lord Wolfenden, who was at that

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time our most distinguished chairman, and who guided our deliberations gently and yet purposefully.
As our inquiry progressed, it became clear to us there was a danger of several lines of thought getting slightly crossed. The whole subject of employee participation in all its forms was of course at that time right up our street. The sub-committee shortly afterwards considered various methods and degrees of sharing information, sharing interests, sharing initiative, between employers and employees. We considered undertakings large and small, and national and transnational, so we were spreading the net. We were looking at this whole subject from the rather negative angle of the minimum requirements of existing law in various countries, and perhaps what the Commission was trying to impose on us, of trade union thinking, and of the fifth draft Directive, and the Vredeling draft Directive—I can never quite distinguish the two. So that was the minimum way of looking at it.
The more positive way of looking at it was that we were trying to explore the best practices of the leading and most successful companies in the United Kingdom and elsewhere, and the methods developed by them naturally and spontaneously in order to harness and co-ordinate the total co-operation of all involved at all levels, to the benefit of all those same people.
We concluded that the various types of preferential shares in one's own company might be useful incentives for the higher échelon. This form of participation was, however, of limited importance in the total area of employee participation of common benefit, common interest and common endeavour. In fact, in certain cases we thought—at least I thought, anyway—that it might even be counterproductive, and held to be so both by trade unions and employees, if not by employers.
There are several reasons for this. One I think is bad, and two perhaps are good. The first one is that traditionally trade unions in this country, and I dare say in other countries, are rather opposed to too close a get-together between employers and employees. If they do not have a "them and us" syndrome, then of course there is nothing to talk about. This is very interestingly borne out in a book about the noble Lord, Lord Shinwell. It refers to the nationalisation of the coal industry in 1946. Three people—Will Lawther, Arthur Homer and Harry Pollitt—were invited to come on the National Coal Board (if that was its title then) and they all said, no, they would not do so because they would be falling down on their jobs as union representatives. Whether that is a good reason or not, I do not know; but it is a reason. It is there.
The second reason, which I think is perfectly logical, is that the average man in the average company would be well-advised by any financial adviser, any solicitor or any stockbroker not to put all his eggs in one basket. That is to say, he has his livelihood here; why should he put his savings here, too? It would be foolish.
The third one, which I think is equally logical, talking from the other side—again the union side, but from the other end—is that if you have a very good year and you get a very good bonus, you do not want
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to feel that the next year you are not going to get it, so you would much rather consolidate it in your wage packet than leave it as a bonus. So therefore there is not everything going for a completely common outlook.
As to the value of these employee participation schemes from the point of view of producing extra capital in the undertaking itself, again I have some doubts, as the aggregate permissible percentage of allotment of such participating shares is in almost all cases fairly limited, probably by the articles of association, if not by practice. This will apply however they are allocated, whether on a formula or by directors' say-so or whatever. They will never amount to a very large part of the undertaking. If they are bought in at market price, then effectively there is no increase to the company's capital. If they are issued from some special reserve of unissued shares held for a purpose, again the increase is likely to be fairly small.
So having said that, were our thoughts on the subject entirely negative? The answer is, no, they were not. If we consider the wording of today's Motion, we can for the present disregard the admittedly complicated problem of employee participation and we can agree on the following points. An increase in soundly invested industrial capital anywhere is a good thing. In general terms, the more widely held such a holding is, the better it is for the people concerned, for industrial wellbeing and for industrial expansion. We heard from the noble Lord, Lord Terrington, that the holding of shares is not very wide in this country as compared with America or elsewhere on the continent.
In terms of private industry, the population in this country, as we heard, puts investment in wealth-producing industry a very long way down as compared with holdings of property, chattels, government bonds, local government bonds, building societies, friendly societies, trustee banks—even local tontines. The industrial share comes a long way down. There is still, not perhaps in the South but in the North (or what I know of the North), the deeply-held feeling that if you save money that is thrift and is a virtue however, if you invest money in shares it is gambling, and therefore a sin. It is for that reason that organisations such as the Wider Share Ownership Council, Aids to Industry and also the Industrial Society—which I see is today celebrating its fiftieth anniversary and receiving a Royal Charter, which is a very good thing—are most valuable and should be positively and actively encouraged.
I was going to give a little spiel on the Loi Monory and the Loi Delors, but I think we have already heard exactly how it works. It works very well, and it is most valuable. In this country we have Section 47 of the Finance Act 1980, and Schedule 10 to that Act, which is supposed to go some way towards equating the Loi Monory and the Loi Delors, but I must confess that it is very hard to understand. I had never heard of it until tonight, and I looked it up before I came in here. So there is great scope for us to catch up with what the French are doing.
I come back to the terms of the Motion. I have some reservations as to how far anyone should be doubly at risk by investing his savings in his own company. I believe that a wider investment in industry by individuals

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throughout the country can only be for the benefit of the whole economy. It should be encouraged by the Government, not only by exhortation: there should be some more tangible and better advertised form of encouragement to everybody in the country to invest in industry.
8.12 p.m.
Lord Rochester: My Lords, I had not intended to speak at all in this discussion, but there is a particular point which has just come to my notice and I felt that I must place it before your Lordships in general, and the Government Front Bench in particular. The Industrial Participation Association—an organisation for which I have the greatest respect—recently carried out an attitude survey on profit-sharing and employee shareholding, which elicited responses from altogether 2,703 employees in 12 companies.
An analysis of those responses showed that, whereas in companies where employees have a choice between taking their bonus in cash or in shares 80 per cent. currently choose cash, the number choosing shares would probably double if the seven-year period before shares are free of potential income tax liability under the provisions of the Finance Act 1978 were reduced to five years. I appreciate that this is not a party political debate, but perhaps I may be forgiven if in passing I remind your Lordships that those provisions were in fact introduced as a result of pressure from the Liberal Party during the period of the Lib-Lab pact. The seven-year period was also shown to be the most disliked feature of schemes among employees who are shareholders, whether by choice or because they are in a scheme where all bonuses are distributed as shares. That was another finding of the survey to which I have referred.
I support very strongly the view of the Industrial Participation Association that if this particular seven-year provision could be modified in this year's Finance Bill it would provide a real stimulus to employee share schemes generally. Like the noble Lord, Lord Terrington, who introduced this Unstarred Question, I realise that, in response to the point that I have raised, the noble Lord, Lord Brabazon of Tara, will not be in a position to anticipate the provisions of the forthcoming Budget. I would, however, ask for his assurance that he will place the information that I have given the House before his right honourable friend the Chancellor of the Exchequer.
It is worth adding, perhaps, that in the survey that I have mentioned three-quarters of all respondents said that, as a result of the scheme operating in their company, they now take a greater interest in the financial performance and profitability of their firm. Of those who have become shareholders through profit-sharing, the majority said that they intend to retain their shares on a long-term basis.
It is also heartening to note that the management of all 12 companies involved in the survey said that, in the light of their experience, they would certainly now introduce a share scheme if their firm did not already have one. I believe that the achievement of a common awareness among management and other employees of the financial and economic factors affecting a company's performance might do more than anything
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else to improve this country's competitiveness. I am not sure, from what he has just said, whether the noble Lord, Lord Killearn, would altogether agree with me. But I do feel that wider share ownership is a valuable means to that end, and I therefore very much welcome the initiative which the noble Lord, Lord Terrington, has taken in asking this Unstarred Question.
8.17 p.m.
Lord Cullen of Ashbourne: My Lords, I should like to congratulate the noble Lord, Lord Terrington, both on his initiative in asking this Question today and also on the strength and the clarity of the case that he has put to your Lordships for the encouragement of wider share ownership.
Although I spent all my full-time working life (apart from the war years) in the City, mainly as a stockbroker, I retired nearly 10 years ago and therefore now have no personal interest to declare. When my noble friend Lord Brabazon comes to reply I hope that, even if he is somewhat constrained by the fact that the Budget is less than a month away, he will adhere to the oft-repeated Conservative aim of a property-owning democracy, and that he will encompass in the word "property" the ownership of shares quoted on the Stock Exchange and, as the noble Viscount, Lord Bridgeman, reminded us in his admirable maiden speech, on the unlisted securities market.
It is well known that the Government have made great strides in expanding the ownership of council houses. They have also done many other things, at first sight unrelated, to bring nearer the goal of a wider spread of ownership and wealth. They have improved upon the employee share ownership scheme introduced by a Labour Government during the period of the Lib-Lab pact, to which the noble Lord, Lord Rochester, referred and for which the credit must surely go to the Liberal Party. They have introduced tax relief for savings—related share option schemes; and since last April gains on options granted under approved schemes have been charged to capital gains tax rather than income tax.
Furthermore, the Government have removed or reduced many disincentives to personal shareholding. Stamp duty on share purchases has been halved to 1 per cent., and investment income surcharge has been abolished. The threshold of capital gains tax has been substantially raised, and the tax is payable only on real gains rather than gains which represent the inflationary rise in the money value of assets.
So much has been done to improve the conditions for personal shareholdings, and very welcome that is after many years when Labour Governments have gone out of their way to penalise personal shareholders. I refer to nationalisation, taxation at 98 per cent. of investment income, dividend limitation, capital gains tax on illusory inflationary gains, and so on. It does not seem surprising that the number of individual shareholders has declined in the way in which the noble Lord, Lord Terrington, has described.
What I hope will now happen is that further moves will be made by the Government in the direction in which they have been travelling, and I put forward

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some suggestions for consideration in regard to capital gains tax and stamp duty. It would be an enormous improvement if capital gains tax could be simplified. The present legislation is so complex that, though undoubtedly very welcome to sophisticated investors, it is really counter-productive in terms of encouraging wider share-ownership. I so agree with the Wider Share Ownership Council that there should be a new base rate of 5th April 1982 to coincide with the start date of indexation; and also that the original pooling and identification rules should be restored and the threshold raised to £6,500.
I now turn to the very important subject of stamp duty, to which the noble Viscount, Lord Bridgeman, referred. By far the best policy would be to eliminate this tax altogether. The noble Viscount, Lord Bridgeman, has explained the situation as regards Europe and also the complications about the American deposit receipts. As your Lordships will know, there are very many large British companies whose shares are quoted in New York in the form of American deposit receipts. By buying shares in these companies in New York, stamp duty can be completely sidestepped. There is no stamp duty in New York. Institutions take full advantage of this facility and there is nothing to stop individuals doing the same. There is a growing market in these ADRs, and I think that this is a red alert warning not to be ignored.
Incidentally, before I leave that point, it seems to me to be high time that we debated the present state of turmoil and uncertainty in our securities industry in the City. It seems that we are getting closer and closer to the time when American firms will have 100 per cent. ownership of British stockbrokers and stock jobbers, and there must be many people who wonder how far away is domination of London's security business by Wall Street. New York has long been jealous of London as the financial capital city of the world, and we must not lose that position.
Oddly enough, even in the last 48 hours a major firm of London stockbrokers has come to terms with an Arab banking consortium. I would ask my noble friend on the Front Bench whether the Government are content with what is happening. Personally, I find it extremely worrying. However, I digress, and I must return to the subject of the Question.
The noble Lord, Lord Terrington, and the noble Viscount, Lord Bridgeman, have pressed the Government to consider the introduction of a scheme along the lines of Loi Monory. Although my noble friend Lord Brabazon will hardly be able to give an indication of the Government's reaction this evening, I cannot see why he should not find such an idea compatible with Conservative philosophy. After all, the Government have proved their commitment to employee share-ownership schemes and to employee participation. These schemes have grown in number from 30 in 1979 to 788, and there are many more in the pipeline. This is splendid, but unfortunately such schemes attract the criticism of "all eggs in one basket", and are inappropriate for over 10 million employees. Recent estimates show that there are some 6,900,000 people employed in the public sector, 860,000 in foreign manufacturing enterprises in the
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United Kingdom, and 2,300,000 who are self-employed.
Splendid also is the very successful Business Expansion Scheme, introduced in 1983. During 1983–84 more than 10,000 investors put money into over 400 small companies, and over half of the £75 million raised went to young or very young start-up companies. This is an admirable scheme for helping to improve the economy of the country and to increase employment; but, as the noble Viscount, Lord Bridgeman, mentioned, the taxation incentives are designed to encourage rich people who can afford to speculate. It is, of course, limited to investment in unquoted companies.
Therefore, good as these employee share-ownership and business expansion schemes are, they leave over 10 million people out in the cold, and this is why we need an original Loi Monory-type scheme. The Wider Share Ownership Council strongly recommends that such a scheme should be instituted and that thereby individuals investing in United Kingdom equities should be able to claim income tax relief up to the amount permitted in employee share-ownership schemes, which is currently £5,000.
Finally, I turn to the report of the Select Committee on Asset Formation, to which many noble Lords have referred. It was a most interesting report despite the lack of evidence by the TUC; and I should like to add my tribute to the late Lord Wolfenden, who was chairman of that committee. However, why we have never had a debate on that report I do not know. It was many years ago, and I think it is extremely unfortunate that we have never before debated this matter. However, thanks to the noble Lord, Lord Terrington, the opinion of this committee has now been put to the House, and I sincerely hope that my noble friend Lord Brabazon will be able to give some indication that the Government will now give such a scheme the urgent attention that it deserves.
Lord Rochester: My Lords, before the noble Lord sits down, I am not sure whether I am permitted to say this but perhaps the House will allow me to put the record straight. I think I am right in saying that there was a debate on that particular report. If I remember correctly, I took part in it. I felt that I should say that. I hope that I am correct in putting the record straight.
Lord Cullen of Ashbourne: My Lords, I am very grateful to the noble Lord, and I shall certainly make it my business to read the debate.
8.29 p.m.
Lord Pender: My Lords, we are all grateful to my noble friend Lord Terrington for bringing this subject to the attention of your Lordships. The results of the most recent survey of the Central Statistical Office show a drop in the proportion of total value beneficially held by persons from 37·5 per cent. in 1975 to 28·2 per cent. in 1981. At the same time, there was a rise from 48 per cent. to 57·9 per cent. in the proportion held by financial companies and institutions. This erosion of the individual's share of the market has been going on for 20 years, and must be arrested. The reasons behind the percentage decline of the private investor are well known, and are partly

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explained by the ever-growing funds available to institutional investors from individuals. This trend, of course, emanates from the existing tax system.
There are, however, grounds for optimism that the benefits of wider share-ownership are now being better understood. Positive factors are the introduction of the business expansion scheme and the introduction and subsequent growth of profit-sharing schemes. Permission for stockbrokers to advertise must also assist the financial community to reach the public.
Additionally, privatisation has been a strong contributory factor in making known the opportunities for the private investor to participate in the industrial wealth of the nation. The recent British Telecom issue reached a whole new range of investors. Let us hope that they are here to stay! Finally, a small incentive for the private investor would be for the Government to abolish the 1 per cent. stamp duty. This is a hardy annual suggestion at this time of the year, but a positive act of encouragement to would-be investors.
8.31 p.m.
The Viscount of Falkland: My Lords, I should first of all like to express my appreciation to the noble Lord, Lord Terrington, for giving me a chance to speak on this Question as a fairly recent member of the Wider Share Ownership Council. There is nothing like having to speak on a subject to concentrate the mind. In preparing my speech I have been aware of my comparative lack of detailed knowledge of wider share owning schemes and so on. Therefore, if your Lordships will permit me, I shall get on to a rather more general basis.
In the meantime, I should like to congratulate the noble Viscount, Lord Bridgeman, on a fluent speech which I very much appreciated. I can see that he has a deal of expertise from where he sits. When there is some unity of purpose and some appreciation of the broader philosophical and social questions which have to be tackled in the whole area of the redistribution of wealth and so on, expertise like his and that of other noble Lords will be extremely useful.
This leads me to some of the areas touched upon by my noble friend Lord Grimond. Surely one must first have a look at the position of wealth owning in our country, and indeed wealth owning in other industrialised countries. It does not take very long before you realise that the wealth—and by the wealth of a country we mean roughly the same as in an individual case, the net difference between one's assets and one's liabilities—of particularly this country is concentrated in a very narrow area indeed. The concentration of assets these days is unhealthy because it encourages the concentration of income. When you get a concentration of income that leads you, in these days of increasing social awareness, to take steps to redistribute that income. That is where one gets into difficult areas such as increased taxation, and of course the growth of welfare and so on, and Government interference—indeed, many of the areas which the Government have shown clearly they would like to free.
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I do not think that this is a party matter at all. It is a national matter. It requires a great deal of national debate on a wide scale encouraged by thinkers, economists, academics, and indeed the media. We need to look at the whole nature of wealth in this country, the whole history of wealth, and to see how we can tackle these inequalities with a view to improving the overall prosperity of our country.
In the noble Lord's Question there is an implication that the Government have not done enough. I think that the Government cannot really be blamed for that. From my own experience in a large commercial company, albeit a service industry, and having had some experience of the application of incentive schemes and the possibility of share ownership, it has been clear that nobody has really fully understood the aims and the purposes, or indeed why one should want to give people incentives, whether incentives work or others.
The result of this has been a rather half-hearted and watery attempt to implement something which is only half understood and is new, and with the normal reaction we have to innovation in this country steps have been fairly slow. I hope that in the near future, with our declining industrial base and the problems of growing unemployment, we can take a look at these wider problems, and, to follow on from what the noble Lord, Lord Terrington, said, take a look at other countries who appear to have made more progress in this regard. The noble Lord mentioned particularly the United States of America, where there has been a much more concerted and much more understanding approach to the whole area of wider share ownership and incentives of that kind than here.
It appears that in this country the motivation for the excellent attempts which have been made has been purely philanthropic. I can think of large concerns which have made considerable and valuable inroads into this area. I can think of ICI, the John Lewis Partnership, Kalamazoo, and the Scott Bader Company, All these companies—with probably the exception of ICI, which has gone a little further than others—have taken a rather idealistic and philanthropic view, whereas the Americans appear to have taken a more realistic view of the wider area of the redistribution of wealth and the benefits that that would bring—and this is the point—to society as a whole.
Here in this country there is a fear at both ends of the spectrum that any kind of move in this direction is going to be damaging to the interests concerned. At one extreme those people who enjoy ownership of wealth in this country—and I am careful here to distinguish between wealth and income—are naturally afraid that they will suffer as a result of the redistribution of that wealth; and I do not think that that would necessarily be so. At the other end of the spectrum, there has been a trend in socialist thought over the last 50 to 70 years that ownership of assets is intrinsically a bad thing. This has been the mainspring of a lot of extreme Left-wing thought, which I think is beginning to become unfashionable.
We can only hope that now these two polarisations will disappear, and we can all get together—that is, the owners of wealth and those who have traditionally

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earned income from the sale of their labours—to see how we can redistribute the wealth so that we can go apace into a new era. The new era is surely upon us.
I hope that I shall not be misunderstood by my colleagues on this, but unemployment is a touchy subject in this country, and it must be so. The effects of unemployment on individuals are terrible to behold. Maybe we ought to recognise that unemployment is definitely with us. Unemployment is not, as a trend, going to decrease. The unemployed will be part of our society, and we shall have to try to remove the stigma from being unemployed. We shall have to give the unemployed the means and the wherewithal to exploit their leisure and to be able to enjoy a high standard of living—a high standard of living which does not necessarily spring from our cultural work ethic (again I shall probably be unpopular with my colleagues), which is another area which we shall have closely to examine.
Unemployment is unlikely to decrease because present productivity depends not so much on the labour of people but, to be competitive, on the further use of machines. One can visualise that if we are to become more competitive and more productive, unemployment will increase rather than decrease.
There is clearly a whole area of thinking and debate which has to be tackled. In the light of perhaps a new direction of philosophical thought behind this, it may be that we can approach the whole business of wider share ownership in a new light which will enable people to view it without being afraid of their own interests and to take a practical and optimistic view of the future which will perhaps lead to quicker, more decisive and more helpful guidance by Governments—I stress "governments"—in the future.
8.43 p.m.
Lord McIntosh of Haringey: My Lords, I should like to begin by thanking the noble Lord, Lord Terrington, for his introduction to this debate and by extending my congratulations to the noble Viscount, Lord Bridgeman, on his extremely well-informed, expert and well-delivered speech.
I hope it will not be thought that anyone speaking from this Dispatch Box is out of sympathy with increased participation in British industry, commerce and services. Indeed, if your Lordships will permit me, I should like to quote Clause 4(4) of the Labour Party constitution, which is printed on the membership cards which we on these Benches all hold. It says:
"to secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service".
I appreciate that a number of noble Lords might have views different from ours about,
"the common ownership of the means of production, distribution and exchange".
But there are a number of aspects of that extract from the Labour Party constitution which will find echoes in the breasts of noble Lords in all parts of the House.
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We are talking, are we not, about popular administration and control of each industry and service. We are talking about the full fruits of the industry of our people, and about the most equitable distribution of those benefits. On that we might find common ground. The difference that we on this side of the House feel from the generally expressed views this evening is about the most effective means of achieving those objectives.
I too, declare an interest. A number of interests have been declared from noble Lords who earn their living in the City. My interest is that I was, until recently, an owner of British Aerospace, Cable and Wireless, Amersham International, the British National Oil Corporation, Associated British Ports, Enterprise Oil and British Telecom. My shareholding in those enterprises has been taken away from me, and I object strongly to my loss of shareholding.
I want to say more about privatisation because the noble Lord, Lord Pender, expressed the hope that the two million-odd people who invested in British Telecom would stay as shareholders in that enterprise. The evidence for the fulfilment of that hope is not encouraging. My noble friend Lord Ponsonby tells me that he was at a dinner in December last year of the Chartered Institute of Secretaries at the Guildhall. The Lord Mayor asked the assembled company how many of them had taken up shares in British Telecom. About half the people at that dinner put up their hands. He then asked how many had already disposed of their shareholding—this was within a few weeks of the flotation—and about half that number again put up their hands. My noble friend asked me to make it clear that he put up his hand on neither of those occasions.
Not just that anecdotal evidence but the statistical evidence that privatisation does not achieve a wider share ownership is clear. Let us take, for example, British Aerospace. On flotation in February 1981 British Aerospace had 157,829 shareholders, not including the 58,800 employees who took advantage of the 33 free shares—that was 30,000 of them—and the free shares plus the one-for-one offer which was made available, which was a further 28,000. By January 1982—that is, less than a year after the flotation—the number of shareholders had declined by 83 per cent., and by December 1983, which is the latest period for which I have figures, the number of shareholders, including the employees, had dropped from the original 216,000 to fewer than 50,000.
Are we talking about meaningful participation by the wider public in British Aerospace when I say that at 31st December 1983 95.52 per cent. of the accounts of shareholders in British Aerospace were held by individuals, but that only 6.25 per cent. of the shares were held by those making up that 95 per cent. of the shareholders? Is that in any sense meaningful participation in the fortunes, let alone in the management or administration of British Aerospace? By contrast, the banks, the nominee companies, the insurance companies and the pension funds, which accounted for only 3.95 per cent. of the accounts of shareholders, held 40.63 per cent. of the shares, bearing in mind that 48 per cent. of the shares are still retained by the Government. I suggest that that sort of wider share ownership, apart from the fact that it is

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shown to be very temporary after flotation, does not amount to a meaningful social, economic, political or industrial reform of our society.
I should like now to turn to what I consider to be special pleading from a number of noble Lords for more favourable taxation for investors in private industry. I remind noble Lords that the Government have set their face against reductions in the tax base. They are, for example, considering—I do not think there is any secret about this—extensions to value added tax. Such things as childrens shoes, newspapers and books and food, other than in restaurants, have been suggested as subjects for value added tax so that the tax base may be widened.
In those circumstances, if we are talking about tax concessions to particular individuals—that is what the abolition of stamp duty would mean and what the application of the Loi Monory or the Loi Delors would also mean—we have to ask ourselves: who would benefit from those concessions, and who would lose out? Somebody has to lose out unless the total amount of tax received is to be reduced by means of these devices. I would suggest that the people who would benefit would be a very small number of not-too-poverty-stricken individuals while those who would lose out would be the rest of the taxpayers in this country. I am strengthened in that belief by the determination of noble Lords who support this Government to see to it that the biggest tax concession of all—the one which a number of noble Lords, including the noble Lord, Lord Grimond, have referred to, the tax concession in favour of home buyers—shall remain intact.
If we are talking about a rationalisation of that kind of tax concession, surely the first for the chop ought to be at least the increase in the tax concession to home buyers which was granted by the Government within the last two years. A number of noble Lords from the Alliance have spoken about increased participation. It is part of an honourable tradition of the Liberal Party in particular that they should believe in co-operatives, that they should believe in participation in industry and in sharing in industry. I respect and honour that tradition. I am disappointed, I must say, that they should feel it proper to support wide share ownership, except on the basis that it is a very poor alternative to the more broad-ranging, more socially desirable objectives which they have espoused over many years of political life. I must say that I think it is a going back from the Liberal tradition that we should have the welcome whch has been extended from the Alliance Benches to the Question and to the special pleading which has been given in support of the arguments for wider share ownership.
I return to the basic question. If we are to have, whether for employees or for the general public, wider participation in the management and profits of our industry and commerce, how are we to ensure that that participation will be meaningful? I suggest that the evidence for individual participation in shares as a way to achieving that goal is not particularly encouraging, and I suggest that the Government would be well advised to resist pleas for further tax concessions of the sort which has been suggested.
8.54 p.m.
Lord Brabazon of Tara: My Lords, I am most grateful to the noble Lord, Lord Terrington, for bringing the subject of wider share ownership to the attention of the House, and to all noble Lords who have made contributions to this interesting debate. I should like also to add my congratulations to my noble friend Lord Bridgeman for his excellent and well-informed maiden speech. I hope that we shall be hearing a lot more from him. I think we have the subject for him when the Financial Services White Paper is debated and we look forward to hearing from him again. I should also like to express the Government's tribute to the work of the Wider Share Ownership Council over the years in promoting the wider share ownership cause.
It is a cause that has the Government's full support. The private ownership of property carries with it a direct interest in both the economic performance of our industries and the social cohesion of the nation. The Government hope that the extension of private property ownership will enhance and emphasise the responsibility of the individual for both his own welfare and the welfare of his fellow citizens. It is part of the process of shifting power and responsibility from the state to the individual and, as such, is fundamental to the Government's basic philosophical approach to the job of government.
Home ownership to promote social cohesion has been one facet of this policy. The right given to council tenants to buy their own homes has resulted since 1979 in three-quarters of a million having done so. The halving of stamp duty and increases in the exempt threshold have reduced the costs of home purchase. The results have been dramatic. The proportion of home owners in England and Wales has increased from 57 per cent. in 1979 to 63 per cent. today.
Just as a wider spread of home ownership develops social responsibility, a wider spread of share ownership develops a community of interest in economic matters. Employees should have a stake in the business employing them, and ordinary individuals should be able to own part of the wealth generating activities of the economy. Employees with shares in companies employing them have a direct and immediate financial interest in company performance. Part of their savings is tied up in the company and part of their income depends on the profits made by the company. This brings into sharp focus the mutual interest of employees and employers. Mutual interest has always existed. The problem is that it is not always recognised. Profits are a dirty word to some people, concerned only to squeeze them and maximise wages at the expense of the long-term competitiveness of the business. Some managements have also seen the workforce as wage slaves interested only in the pay packet at the end of the week and have managed without any regard to the contribution that the workforce can make to the development of the enterprise.
This confrontational attitude of "them and us" is as short-sighted as it is damaging. No company can pay decent wages or provide secure employment without earning decent profits. And no company can prosper without the co-operation of its employees. Employee shareholdings crystallise these truths. The workers are

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motivated to work hard. They know that profits from their efforts are not creamed off by the so-called "bosses" but benefit them directly. They see clearly and experience directly the benefits of co-operation.
So much for employee share ownership. A second strand of policy is to enable individual investors to place a proportion of their savings in shares. This can be through direct investment listed shares in the Stock Exchange, through participation in the Unlisted Securities Market as my noble friend mentioned, or through unit trusts. Investing through unit trusts is an easy way into the stock market for small investors who are perhaps initially put off by the vastness of the equity market. In time this reluctance may disappear and lead to more people taking the plunge into individual share ownership themselves.
The more people own shares, the more people there are with a direct interest in the efficient running of companies and the operation of free markets. International comparisons are instructive here. The noble Lord, Lord Terrington, mentioned the comparison with the United States. I will not go through the figures again. However, we hope that following the BT share issue—and we do not know (as the noble Lord, Lord McIntosh, pointed out) how many people have held on to their shares: the register will be published next month—the sale will have increased the proportion of UK adults holding shares to about 8 per cent.
Lord McIntosh of Haringey: My Lords, I wonder if I may interrupt on that very point. A question was asked in the House of Commons on 24th January this year about the number of shareholders in various privatised industries and the answer from the Financial Secretary to the Treasury referred only to the number of shareholders on the flotation. Is the noble Lord saying that the number of shareholders there are in privatised industries after flotation will become public in future?
Lord Brabazon of Tara: My Lords, perhaps I may explain the technicalities. Some two million applicants got shares in the BT share issue. Those shares are currently being traded in what are known as allotment letters whereby they do not go on the register. Next month, I think, they will become registered and therefore the register will be open for anybody to see who owns the shares.
Lord McIntosh of Haringey: My Lords, in that case, why did the Financial Secretary to the Treasury fail to answer the question in another place as to the number of shareholders after flotation and after registration had been completed?
Lord Brabazon of Tara: My Lords, I do not think the noble Lord has quite got my point. Registration has not yet been completed. We could go on arguing about this all evening, but the shares are still being traded in allotment letters at the moment and therefore they are not registered.
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I have mentioned the recent United States experience because their recent economic success, including the creation of 10 million new jobs, has been partly due to the way American workers have adapted to the new technologies and changing economic circumstances of the 1980s. This greater adaptability and willingness to work is related to the greater personal commitment that the average American has to the market economy. There is less resistance to change and greater willingness to undertake new challenges because there is a greater perception of the relationship between effort and reward. We need to improve that perception in the United Kingdom.
So far, I have discussed the framework of Government policy. Noble Lords will legitimately ask what the Government have actually done. Action has been taken through the tax system, the privatisation programme and the promotion of institutional reform. I should like to say something about each in turn.
First, the tax system: at this point I should like to give credit to the Labour and Liberal Parties. Measures to promote employee shareholding through the tax system were brought forward in the 1978 Finance Act, as the noble Lord, Lord Rochester, mentioned. This was possibly the only benefit, some would say, that history will record as deriving from the Lib/Lab Pact. The encouragement was modest. The 1978 Act gave income tax relief for shares distributed to employees as part of an approved profit-sharing scheme, up to a yearly limit of£500. This Government have increased that limit to £1,250, or 10 per cent. of salary, subject to a ceiling of £5,000.
In 1980 my right honourable and learned friend Sir Geoffrey Howe introduced relief from income tax for employee share option schemes undertaken as part of savings plans. Up to £100 a month may now be invested in this way and the accumulated amount used to take up the options in five or seven years' time. The take-up of these options is also free from income tax.
The two schemes had to be open to all employees if they were to be approved and qualify for tax relief. In 1984 a new scheme enabling companies to grant key employees share options of up to four times annual salary or £100,000, whichever was the greater, was introduced. The options can be exercised between three and 10 years later, free of income tax. There has been some criticism of this scheme because companies may restrict participation to a small number of employees; but I do not accept the criticism. It provides an opportunity for certain key employees—for example, a brilliant scientist or technologist or an exceptionally capable manager—whose performance is crucial to the firm's success, to be rewarded. It gives firms the ability to attract, motivate and reward such key employees. Up to the end of January the Inland Revenue had approved nearly 900 schemes of all three types, involving an estimated 850,000 employees, and there were many more in the pipeline.
It has been pointed out that these incentives only help employees in companies with such schemes. What have the Government done to help the small investor who cannot take part in an employee share scheme to become directly involved in the wealth creation process? First, there is the Business Expansion Scheme, which has made investing in ordinary shares

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of unquoted companies a very inviting proposition. The Business Expansion Scheme provides generous tax reliefs which allow individuals to offset the cost of their investment against their highest marginal rate of tax. This can make the after-tax return on such investments very attractive, particularly for those paying the higher rates. It is important that we encourage risk-taking, and this scheme is helping to change attitudes by bringing together the investor and the less well-known smaller companies with good potential for growth. The Business Expansion Scheme benefits the unquoted company as well as the investor by making it easier to raise equity finance. It is important that small firms taking large risks should have a good proportion of equity funding if they are not to be weakened by an excessive interest burden.
My noble friend Lord Cullen has mentioned the results of the first year's operation of the scheme and it is hoped that many more investors will look closely at the opportunities which the scheme has opened up and that companies raising new finance should consider using these funds to ensure that they obtain the correct balance of types and sources of finance.
Noble Lords have pressed for the Business Expansion Scheme to be extended to quoted companies. Its purpose is to provide risk capital for start-up companies and those without easy access to the capital markets. It is targeted specifically at a sector which has experienced difficulty in the past in raising finance for new products and processes because of either high risk or unfamiliarity in the established markets. To widen the relief to quoted companies would mean siphoning money away from this sector, which needs special help, to more established companies. The Business Expansion Scheme is a chance for individuals to invest modest funds in small-scale risky ventures carrying with them the prospect of very high returns if the company succeeds. It is intended for venture capitalists, and the generous nature of the reliefs reflects this. It is not intended for everyday investment. Also in the tax area, general measures have been taken to encourage people to save, to put their savings into income yielding assets, to reduce the cost of direct investment, and to even out competition between institutional and direct savings mechanisms.
Stamp duty was mentioned by my noble friends Lord Cullen, Lord Bridgeman and Lord Pender, and here perhaps, if I may, I will quote from col. 367 of Hansard of the 15th December 1983, on the Second Reading of the Restrictive Trade Practices (Stock Exchange) Bill.
"It is worth reminding your Lordships that perhaps the biggest gainer on Stock Exchange dealings is the Chancellor. He takes 2 per cent. stamp duty, then he takes VAT on commission and, if one is lucky enough to make a profit, there is capital gains tax to pay on that. The removal of the 2 per cent. stamp duty would be a marvellous step and would prove that this Government are in favour of wider share ownership."
My Lords, those are my own words in my maiden speech made at that time when I was sitting on the Back Benches. Now I am on the Front Bench and I have to be a little more cautious.
However, as has been said, stamp duty was halved in the last Budget and that has reduced the cost of
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stock market investment to the individual investor. As noble Lords have pointed out, we have also abolished the investment income surcharge, we have removed dividend controls and we have attempted to help on capital gains tax. I quite take the point that the system is complicated.
The noble Lord, Lord Terrington, asked what further steps the Government will take, so perhaps I should address this point for a moment. I cannot anticipate the Chancellor, even if I knew what he was going to say, which I can assure your Lordships that I do not.
First, compulsion is not the way. There are advocates of making employee share schemes compulsory or telling companies that they may only introduce key employee schemes under the 1984 Act if they also introduce all-employee share schemes. But the Government do not agree. Company circumstances vary and employee share ownership will not work successfully unless there is genuine desire for it.
Many noble Lords have mentioned the Loi Monory and its successor and have called upon the Government to introduce measures akin to those operating in France. The Government have considered this possibility seriously and there are some attractions. But I am afraid that there are also a number of disadvantages and these outweigh the advantages. First, creating a new category of privileged savings would carry with it the same difficulties that would be involved in extending the Business Expansion Scheme qualification to quoted companies. There would be a blunting of the incentives currently available for investment in small, unquoted companies—which have the greatest need for risk capital and the greatest problems getting it.
Secondly, if the take-up was worthwhile, it would cost a lot of money. If the limit was, say, £1,000 per year, the cost would be between £300 million and £400 million per year for every million taxpayers who invested. It would also add substantially to Inland Revenue staff numbers. Thirdly, and most important, introducing such a general relief would create a new class of privileged savings and be quite contrary to the Government's policy of reducing distortions in the tax system. Last year, the Investment Income Surcharge and Life Assurance Premium Relief were withdrawn to remove biases which discriminated against direct investment in shares. It would be rather perverse and against the general grain of policy to introduce a new fiscal distortion a year later.
Before leaving the Loi Monory, I should point out that while the French are more generous than we are with tax reliefs on investment in quoted companies, they are less generous on other investments. For example, the French system of relief against tax for mortgage interest is much narrower than ours. Relief is subject to a fairly low ceiling and lasts for only five years. This is perhaps why they are able to be more generous on equities.
While I cannot hold out promises of extra tax incentives, there are two other areas where much has already been done and more will be done to promote equity investment individuals. The first of these is the Government's promotion of reform in City and other financial institutions, which my noble friend Lord

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Cullen and the noble Lord, Lord Grimond, mentioned; and I understand my noble friend's concern. The City is currently undergoing a controlled but officially approved, even officially promoted, revolution. Fixed commissions are to go by the end of 1986. This—together with Government action halving stamp duty last year—will reduce the cost to individuals of investing in the stock market. Link-ups between banks, with their large branch networks, and stockbrokers with their expertise in shares are taking place. As these new financial service institutions develop, we can expect them to compete with each other to offer customers a wider range of services. This will doubtless include facilities to make direct purchases of shares in branches. A network of retail outlets for share dealing, which American financial service enterprises have offered for many years, will grow up and introduce the possibility of share ownership to people who have never previously considered it.
Building societies may also play a part in the widening of outlets for share purchases. The Green Paper on building societies published last year floated the idea of building societies being able to offer shares—on an agency basis. Due consideration will be given to this proposal when the Government prepare their legislation on building societies. The Government welcome the increased availability of mechanisms for individuals to deal in shares. They seek to promote these opportunities and give investors the confidence to participate in these new markets. The White Paper on financial services and the protection of investors aims to establish a regulatory system that will promote competition and innovation while providing appropriate safeguards.
I now turn to privatisation and the opportunities it has created for both employees and small investors. Since taking office the Government have privatised eight undertakings. We estimate that as a consequence the number of employee shareholders has increased by a third of a million and, taking British Telecom into account the number of small investors by over a million. In the public flotations the arrangements have typically included for employees an offer of free shares, free shares up to a ceiling for shares purchased by the employee under the matching offer arrangements, and special forms which give employees preference in the allocation of shares, in addition to the free and matching offers. Take-up has been high: 96 per cent. of BT employees received shares under these arrangements and 99 per cent. of Cable and Wireless and Amersham employees.
Special efforts have also been made to make the offers attractive to small investors. Prospectuses and application forms have been distributed widely. In tender offers, those applying for a small number of shares have been allowed to bid at the striking price. The allocation in fixed price offers has been weighted to small investors. In the BT case over 2 million people were allocated shares. Almost half the investors applied for 200 or 400 shares and had their applications met in full. The privatisation programme is continuing. Future sales will continue the successful practice of making special provision for employee and small investor shareholding.
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I should like at this point to mention something which the noble Lord, Lord Grimond mentioned—the Finance Act 1983 regarding employee buy-outs. I take his point that the 12-month restriction should be removed, but I cannot of course comment on it at this moment. However, I should like to mention the case of the National Freight Consortium where there was a most successful management and employee buy-out. I am sure noble Lords will be pleased that for every £1 the employees invested those shares are now worth £8.60 through the efforts of the employees and the management to turn that company around from what was a pretty good disaster.
Noble Lords have made other points. I know that they do not expect me to answer them so close to the Budget and I am afraid that I obviously cannot do so. I should like to conclude on the question asked by the noble Lord, Lord Terrington. I cannot promise further steps in the taxation field. A great deal has been done already, but the Government are always open to new ideas. The noble Lord will appreciate that I cannot say more about this at the moment.
I can assure the House that in other fields the Government will be taking further steps. We will encourage the process of institutional change in the City and financial community by providing a regulatory framework to promote innovation and competition which will expand the opportunities for individuals to venture into the new markets and give them the confidence to do so. The privatisation programme, with its opportunities for employees and small investors, will continue.
We have had a most interesting debate. I hope that the noble Lord, Lord Terrington, has found at least some parts of my speech to his liking, and I congratulate him again on raising this important subject.
House adjourned at sixteen minutes past nine o'clock.

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