Sitting of 5 June 1985

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

PRIVATE BUSINESS
PLYMOUTH MARINE EVENTS BASE BILL
Order for Third reading read.
To be read the Third time tomorrow.
ROYAL BANK OF SCOTLAND BILL (By Order)
Order read for consideration of Lords amendments.
To be considered tomorrow.
BATH CITY COUNCIL BILL [Lords] (By Order)
Order for Third reading read.
To be read the Third time tomorrow.
GREATER MANCHESTER BILL [Lords] (By Order)
LUTON BOROUGH COUNCIL BILL [Lords] (By Order)
Read the Third time, and passed, with amendments.

Oral Answers to Questions
  TRADE AND INDUSTRY

    Post Office Closures
    Mr. Tony Lloydasked the Secretary of State for Trade and Industry if, when he next meets the chairman of the Post Office, he will raise the closure of post offices.
    Mr. Bruceasked the Secretary of State for Trade and Industry whether he has recently discussed the criteria for closing sub-post offices with the chairman of the Post Office.
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. David Trippier): My right hon. Friend has not recently discussed the criteria for closing post offices with the chairman of the Post Office and does not propose to do so.
    Mr. Lloyd: Is the Minister aware that many people will consider that answer to be unsatisfactory because of the way in which the Post Office is using its position as a monopoly supplier in relation to the closure programme? Why are the Government prepared to intervene in the nationalised industries when to do so is to the public disadvantage, but not when such action would help the public?
    Mr. Trippier: I compliment the hon. Gentleman in his persistence, because he had an Adjournment debate on the subject on 23 May. I do not think that he has any quarrel with the Government or with the Department of Trade and Industry. His quarrel is principally with his right hon.
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    Friend the Member for Chesterfield (Mr. Benn), who was responsible for setting up a Post Office Board with its own board of directors in 1969. It is interesting to note that when the Labour party was last in office it did not intervene once in any sub-post office closure.
    Mr. Bruce: Will the Minister nevertheless recognise that the criteria applied by the Post Office to sub-post office closures are unsatisfactory because they do not take account of the wider implications, such as their importance to local communities and the fact that the presence of a sub-post office in a local shop can mean the difference between that shop surviving and closing?
    Mr. Trippier: The criteria that are used by the Post Office in deciding whether to keep open or to close sub-post offices were discussed at great length in the debate which took place on the Floor of the House on 23 January. Much more lenient criteria are applied to rural sub-post offices.
    Mr. Conway: My hon. Friend will be aware of the concern that has been expressed in Shrewsbury about a recent decision to close four sub-post offices. Bearing in mind the recent denationalisation of British Telecom and the responsibility for the provision of rural services placed on that now private company, is it not time that we reviewed the 1981 Act and the code of practice placed on the Post Office so that there is much wider consultation before sub-post office closures, perhaps with a better form of appeal?
    Mr. Trippier: There is nothing wrong with the present system of consultation. I appreciate the concern about the proposed closure of some sub-post offices in my hon. Friend's constituency. I am sure that full advantage v/ill be taken of the appeals procedure as it now stands, it may be of comfort to him to know that 10 per cent, of appeals are successful.
    Sir Anthony Grant: I appreciate the constitutional relationship that exists between the Government and the Post Office, but is there a remote chance that perhaps on a social occasion, quite informally, Ministers might raise not only the subject of the closure of sub-post offices but the possibility that at some time in the future first-class post might arrive in somewhat less than three days from the date of posting?
    Mr. Trippier: If my hon. Friend has a specific example of mail, especially first-class mail, being delayed, I should be grateful if he would bring it to my attention, and I, in turn, will draw it to the attention of the Post Office Board.
    Mr. Ewing: Is the Minister aware that his statement that the Labour Government did not intervene over post office closures is grossly inaccurate? My right hon. Friend the Member for Glasgow, Rutherglen (Mr. MacKenzie), who is present in the House, intervened when Sir William Ryland was chairman of the Post Office Board and stopped it from closing post offices. The Minister ought to correct the misleading impression that he has given. Is he further aware that the Post Office's problem was created for it by the Government, who reduced its external financing limit and caused the closure of 5 per cent, of post offices? The Government were responsible for that policy, and the Minister ought not to shirk that fact.
    Mr. Trippier: I do not disagree with the hon. Gentleman's point about the way in which his right hon.

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    Friend the Member for Glasgow, Rutherglen (Mr. MacKenzie) intervened. He did so under the general powers in section 11(2) of the Post Office Act 1969, which states that he has power to intervene on matters of a general character for remedying
    "a defect in the general plans or arrangements of the Post Office
    for exercising any of its powers."
    A particular closure decision cannot be regarded as a
    general plan or arrangement.

    Floating Exchange Rates
    Mr. Knoxasked the Secretary of State for Trade and Industry how many individuals and how many organisations have made representations to him in favour of floating exchange rates in the past 12 months.
    The Minister for Trade (Mr. Paul Channon): None, Sir.
    Mr. Knox: Does my right hon. Friend agree that international trade was facilitated and that the British economy worked much better when there were fixed exchange rates? What steps are the Governnent taking to encourage greater order in international exchange rates? To that end, when will Britain join the exchange rate mechanism of the EMS?
    Mr. Channon: As my hon. Friend knows, the exchange rate mechanism of the EMS is not a system of fixed exchange rates. There have been fluctuations in the exchange rates between European currencies and the dollar. Of course all of us, especially exporters, would like a more stable exchange rate, but it is impossible to imagine that there could be a system of fixed exchange rates without enormous pressures on currencies when the rates become substantially out of line with true market values.
    Mr. Meadowcroft: How far would European financial stability assist this country in competing effectively with the United States of America?
    Mr. Channon: As I said to my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox), in the last few months there have been enormous fluctuations in the exchange rates between European currencies and the dollar. We should not avoid that problem by joining the EMS.
    Mr. Dorrell: Is it not important to do everything that we can to limit those movements? Is it not unrealistic to expect an expansion of trade in manufactured goods across international frontiers if we cannot tell from one month to the next what revenue we shall receive for given export orders because of fluctuations in exchange rates?
    Mr. Channon: I understand and share my hon. Friend's concern about the problems faced by exporters, but it is not just this country which finds itself in that position. Every other country has the same system of floating exchange rates. We must try to obtain greater market stability by encouraging sound monetary and fiscal policies, not only in this country but in many others. That was one of the aims of the recent international summit.
    Mr. Gould: Does the Minister accept that there is no such thing as a clean float and that one of the dirtiest elements is the current level of interest rates, which in the last six months has helped to push up the pound against the yen by over 6 per cent, and against the deutschmark
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    by nearly 5 per cent.? Does the Minister think that loss of competitiveness of that kind is helping British business men who are trying to sell in international markets?
    Mr. Channon: It is impossible to please the whole House on this issue. Whatever the rate of the pound may be, the Opposition will criticise it. The real point is that it is impossible to move against market pressures on any one currency if those pressures are sufficiently strong. It is an illusion to imagine that fixed exchange rates can work in a situation of that kind. We saw what happened when the Labour Government tried to operate such a policy.

    Businesses (Departmental Assistance)
    Mr. Richard Pageasked the Secretary of State for Trade and Industry what assistance his Department now provides to Business in the Community and to local enterprise agencies.
    The Secretary of State for Trade and Industry (Mr. Norman Tebbit): In the current financial year Business in the Community is receiving a grant of £75,000, and £175,000 has been allocated for support of local enterprise agencies on a pump-priming basis.
    Mr. Page: I thank my right hon. Friend for those figures. Is he aware that not only has Business in the Community helped to set up many successful small businesses, but that it has helped to prevent one or two ill-conceived ventures from going ahead, thus avoiding the pain and the distress that would have been caused when the crunch eventually came? May I ask my right hon. Friend to build upon that success by asking the British Overseas Trade Board to liaise more closely with local enterprise agencies in order to encourage the enterprising smaller firms to become more involved in exports?
    Mr. Tebbit: Certainly. My hon. Friend has made two good points. The Department's regional offices cover BOTB regional services. They have, of late, been increasing their links with the local enterprise agencies, and we have encouraged them to use the whole of the Department's services. We have also been making presentations on exporting to local enterprise agencies and to other organisations gathering small firms together. That is why, I think, some 75 per cent, of BOTB users are, indeed, small firms.
    Mr. Lofthouse: Has the Secretary of State any plans to assist those mining communities which are about to lose their pits, which are their only source of employment? Has he any plans to assist areas such as mine?
    Mr. Tebbit: I should be happy if local enterprise agencies were formed in such areas. The concept of the local enterprise agency is that it should be a community, and predominently private-sector, based organisation, although of course a good deal of the funding comes from local authorities and central Government. In addition to my Department's spending, the Department of the Environment contributed £843,000 last year through the urban programme, while the Development Commission contributed £12,000. The Welsh Office contributed £150,000 through the urban aid scheme and the Welsh Development Agency contributed £34,000. Furthermore, the Scottish Development Agency has contributed £280,000. In several areas where there are problems associated with pit closures, funding is clearly therefore

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    available for local enterprise agencies. I hope that some of them will be of help to those setting up in business in such areas.
    Mr. Maclean: Is my right hon. Friend aware that in its first 18 months of operation Business Initiatives Carlisle, a local enterprise agency, helped to create more than 100 small businesses with more than 200 jobs? Does he agree that although his investment of £175,000 in local enterprise agencies is most welcome, it is desirable to give yet more resources to such agencies, because helping successful organisations, such as BIC, is one of the best investments for creating jobs that the Department can make?
    Mr. Tebbit: I appreciate my hon. Friend's comments. However, one of the keys to the success of local enterprise agencies is that they have not become the mere creatures of Government but have very live and valuable support from local industry. It is local industry that benefits most from supporting other parts of local industry. Therefore, it is essential to ensure that funding is predominantly of a local nature.
    Mr. Wriggles worth: I welcome the Secretary of State's support for Business in the Community and local enterprise agencies, but will he say something about the future of the Department's small firms service? Is he aware that many small businesses welcome the service provided by his Department? Has the right hon. Gentleman any plans to pass it over to the agency or to other parts of the private sector, or to close it?
    Mr. Tebbit: The Department is extremely interested in continuing with its support for small businesses. That is, not least, why we are very active in pursuing policies that are directed towards removing the burdens of Government from small businesses. That is something that is best done through the Government, not through any other agency. Thus, whatever happens, we will remain extremely active in our support for small businesses.

    West Midlands (Regional Assistance)
    Mr. John Mark Taylorasked the Secretary of State for Trade and Industry how many applications for regional assistance have so far been received in the newly designated assisted area in the west midlands.
    The Minister of State, Department of Trade and Industry (Mr. Norman Lamont): Up to 24 May, 369 applications for assistance had been received by the Department's west midlands regional office.
    Mr. Taylor: I thank my hon. Friend for that encouraging reply. Perhaps I could put to him the equally important question: is he satisfied that west midlands industry has been adequately informed about the range of assistance available under regional aid so that it might not say that it has not been given sufficient information?
    Mr. Lamont: That is unlikely, as we have received more than 7,000 inquiries about regional selective assistance since the scheme's inception. Indeed, in case of doubt, we have gone out of our way to advertise such services, with about 40 seminars, which have been attended by more than 4,000 business men. My hon. Friend might like to know that the inquiries received by the Department and those that have become firm
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    applications are equal to £100 million of expenditure— that is, grants of £11·8 million—which would create or safeguard about 7,400 jobs.
    Mr. Winnick: Is the Minister aware of the large-scale redundancies and closures in the west midlands and the fact that, apart from Northern Ireland, that region now has the largest percentage of people unemployed for longer than 12 months? When will the Government recognise the tremendous harm that they have done to the west midlands by their disastrous economic policies? The people of the west midlands want to be able to earn their own living again, but there is no sign that such a policy will come from this Government.
    Mr. Lamont: The Government have done two things. First, they have categorised parts of the west midlands as assisted areas. I have given information that shows that potentially there is a great deal of help available for firms in those areas.
    Secondly, through their support of British Leyland, the Government have put a great deal of money into supporting not only the motor industry in the west midlands but those who supply it.
    Mr. Brandon-Bravo: When dealing with the applications, will my hon. Friend ensure that they are not simply transferring existing jobs from one part of the country to another? Has he considered the possible inadvertence of enabling a foreign manufacturer to reduce his surplus manufacturing capacity at marginal cost by assembling in this country? Will he look carefully at the activities of the Sprick Corporation of West Germany and the possible adverse effects on TI Raleigh in my constituency?
    Mr. Lamont: Obviously I shall consider the case my hon. Friend mentioned. When giving selective assistance to foreign investors in Britain, one of the major factors that we take into account is the impact on existing firms. Therefore, that is already part of the system.
    On the point about transferring jobs, my hon. Friend will know that as a result of our review of regional policy we have tightened the criteria to reduce the element of job shuffling.
    Mr. Geoffrey Robinson: On the question of Government aid to the west midlands, I am sure that the Minister is aware of the critical decision at Talbot, given the hold-up of payments on the Iran contract. Is he aware that with the barter trade arrangements, which we know are notoriously difficult, complex and at a difficult stage, the collapse of the Iran contract could prejudice the whole of the Talbot operation in the west midlands, with 10,000 jobs at stake? If his Department is not already active, will he consider taking an initiative to resolve the problem?
    Mr. Lamont: I assure the hon. Gentleman that I am extremely involved in that matter. We are well aware of the position and are doing everything that we can to help.

    British Leyland
    5. Mr. Strangasked the Secretary of State for Trade and Industry if he will make a statement on the Government's future commitment to British Leyland.
    Mr. Tebbit: The Government remain committed to the restoration of BL to commercial viability.
    Mr. Strang: Is the Secretary of State prepared to go down in history as the saboteur of Britain's only major indigenous motor manufacturer? Does he admit the accuracy of the report in today's Financial Times that Austin Rover is to be forced to rely on Honda engines, which, combined with the privatisation of Jaguar and the proposed privatisation of Unipart, make industrial sense only if the Government are planning to facilitate the eventual takeover of BL by Honda or some other multinational?
    Mr. Tebbit: The answer to the hon. Gentleman's first question is no. The answer to his point about the article in the Financial Times is that I have no intention of commenting upon an article that is a sort of bouillabaisse — a fishy stew; a mixture of truth, half-truth, inaccuracy and downright untruth.
    Mr. Spencer: Before my right hon. Friend commits further sums of public money to BL, will he fully satisfy himself that it has learnt the first rule of business—that the customer is always right?
    Mr. Tebbit: Yes; and I am of the opinion that that lesson has been well learnt.
    Mr. WilliamsDoes the Minister realise that if he were as ready with decisions as he always is with insults, BL would not be waiting after six months and the British Steel Corporation would not be waiting after 11 months for decisions about their futures? Does he accept that this inexcusable dither and delay by himself and his Department is damaging BL and that the uncertainty is stimulating and provoking the very type of speculation —I hope false—that we have seen in the newspaper that used to employ the right hon. Gentleman? The standards there have not changed at all. Is not this speculation destroying the morale that has been carefully built up during BL's recovery period? Is the right hon. Gentleman aware that if there is any truth in the proposition that BL is to be forced to drop engine production and to buy Japanese engines, so giving up high value skilled work in exchange for low value Meccano assembly operations, that will trigger off a massive storm not only in the west midlands but throughout the car and components industries?
    Mr. Tebbit: I have to say of my employer of some 30 or 40 years ago that the standards seem to have gone down as the pay has gone up. I take note of what the right hon. Gentleman says. However, although we received the original corporate plan for BL some months ago, at a late stage in our consideration of the plan, BL and Honda put to the Government some important proposals for collaborative projects. That changed the nature of the corporate plan. It is not unreasonable that we should have given extremely close consideration to those proposals. We are now nearing completion of our scrutiny of the corporate plan and the proposed further collaborative arrangements with Honda. I hope that I shall be able to announce our conclusions shortly.
    Mr. Forth: Can my right hon. Friend assure the House that, at this stage in his deliberations, he fully appreciates the crucial importance of the continuation of engine production by motor manufacturers, such as the Austin-Rover group, to their viability as full-scale manufacturers, and the key importance to the west midlands of that production?
    Mr. Tebbit: I fully undertstand what my hon. Friend says, but, having been firm in what I said to the right hon. Member for Swansea, West (Mr. Williams) about the fact that I shall announce our conclusions shortly, it would be wrong if I commented by way of half statements on bits and pieces of the proposals before us.
    Mr. Wrigglesworth: Even in advance of that statement, can the Secretary of State agree that it is vital for the whole of the British industry and economy that we retain the volume production of cars at British Leyland? Will he give a pledge that he will do everything in his power to sustain the volume production of cars, which can be done only if engine production is continued?
    Mr. Tebbit: I am anxious to ensure the success of BL from every point of view. I am conscious of the fact that motor cars that appear to the consumer to be British have had some foreign production. For example, on average, about half of a Ford motor car is British, about a third of a GM Vauxhall is British, and over 90 per cent, of a BL car is British. Therefore, we have a clear interest in that and also in the fact that BL is a British car exporter, alongside Jaguar, although on a different scale. We are acutely conscious of BL's importance in the British industrial scene.
    Mr. Dalyellasked the Secretary of State for Trade and Industry what discussions he has had with BL on the future of the commercial vehicles industry.
    Mr. Norman Lamont: The prospects of BL's commercial vehicles business are covered in the company's annual corporate plan.
    Mr. Dalyell: What can Her Majesty's Government do to assist the continuation of commercial vehicle manufacture in Bathgate?
    Mr. Lamont: As the hon. Gentleman knows, the decision about Bathgate has been made and, unfortunately, that decision will not be changed. As regards assistance to the area and alternative uses for the plant, my right hon. Friend the Secretary of State for Scotland is obviously prepared to view sympathetically applications for alternative use of the plant, or bits of it. As the hon. Gentleman knows, the travel-to-work area is a development area and therefore qualifies for the highest level of assistance.

    Skill Shortages
    Mr. Lathamasked the Secretary of State for Trade
    and Industry what representations he has received from
    industrialists about pressures on output through difficulties
    in recruiting skilled or semi-skilled labour in recent
    months.
    Mr. Channon: My Department has received a number of such representations, notably but not exclusively in the area of information technology.
    Mr. Latham: In view of the concern expressed by knitwear firms in Leicestershire recently, will my right hon. Friend undertake to have discussions urgently with the Department of Employment to see what can be done to deal with the problems and in particular to encourage recruitment and training?
    Mr. Channon: I agree with my hon. Friend and I shall do that. I know that as a result of his questions to my right

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    hon. Friends a special Manpower Services Commission investigation is taking place. My hon. Friend has raised a very important issue.
    Mr. Eastham: May I remind the Minister that British industry does not compare with its foreign competitors in investment in training for skill shortages? Is he aware that France invests twice as much as Britain, and that in America six times as much is being spent on training? Is it not time that the Minister got in touch with industrialists, shook them and told them that they have responsibilities to provide trained personnel?
    Mr. Channon: I agree that industry has responsibilities. If the hon. Member is talking about Government expenditure on training, I am surprised to hear what he says. After all, total expenditure has risen from £380 million in 1979 to £1·2 billion in 1985–86. That does not seem to me to be a reduction but rather an enormous increase and something that the whole House will welcome.
    Mr. Cockeram: Is it not a criticism of schools and technical colleges that employers have so much difficulty in finding suitably qualified personnel? Has the Minister seen in the Daily Telegraph every Thursday 10 to 14 pages of advertisements for technically qualified staff? Is he aware that employers continually complain that they cannot get suitably qualified applicants?
    Mr. Channon: That is one of the reasons why my right hon. Friend has authorised a substantial contribution of £12·5 million from the budget of the Department of Trade and Industry towards the package that has been made available to provide additional places in higher education for students in engineering and technology.
    Mr. Ashdown: Is it not the case that this autumn, as last autumn, there will be a significant number of unfilled vacancies in apprentice training establishments, both in the public and in the private sector, because firms cannot afford to fill those places? In that case, will the Government urge the Manpower Services Commission to fill those places at public expense so as to overcome the skill shortages that are affecting British industry?
    Mr. Channon: The hon. Member has raised a number of very important points that are primarily the responsibility of my right hon. Friend the Secretary of State for Employment. I must reiterate that expenditure on training is high. Special steps have been taken in higher education as well. I am sure that my right hon. Friends, and the Secretary of State in particular, are doing everything in their power to increase the amount of expenditure on training.
    Mr. Holt: Does my right hon. Friend agree that while it is essential to train as many people as possible, there is a vast reservoir of trained and skilled people who are unemployed? Is he aware that the main reason why they are unable to find jobs is that they cannot find anywhere to live, however far they ride on their bicycles? Is he further aware that it would be a saving for the Government and the country if my right hon. Friend could ask the Secretary of State to suggest in Cabinet that, when a man has been unemployed for six months, the Government might give him an advance of another year's unemployment benefit as a deposit on a house in another
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    part of the country, allowing him to fill a skilled job, thereby saving the unemployment costs and improving the efficiency of the country?
    Mr. Channon: My hon. Friend has raised a very interesting point. I shall certainly make sure that my right hon. Friend the Secretary of State for the Environment is aware of it.
    Mr. Williams: Does the Minister agree that it is to be deplored that the Government, through the trebling of company liquidations and the destruction of manufacturing industry at double the rate of our European competitor countries, have created conditions in which, even if there were world growth, Britain could not obtain its fair share because we no longer have enough industrial capacity? Does he not recognise that even more grotesque is the fact that, even with the present limited level of growth, many sections of British industry cannot take full advantage of it because of skill starvation? That is the direct result of the Government's blind destruction of the skill training system that they inherited.
    Mr. Channon: The right hon. Gentleman churns out that gush at every Question Time and it is no more valid today. The growth in the British economy this year is likely to be the highest in western Europe, and certainly the highest in the European Community. The economy is expanding. Training is a problem, but the Government, as the figures show, have done their utmost to try to provide more money. As has been said industry also has a responsibility for training.

    Rates
    Mr. Favellasked the Secretary of State for Trade and Industry what representations he has received about the effect of rates on trade and industry.
    Mr. Norman Lamont: A number of representations have been received from various bodies on behalf of industry and from individual business men expressing concern at the adverse effects of rates increases on industry.
    Mr. Favell: Is my hon. Friend aware that Stockport and Manchester are next door to each other and that there is not a blade of grass between the two? Is he aware that the rates in Stockport are two thirds those of Manchester, that Stockport has half the number of local authority employees per head of population and that at the height of the recession, between 1977 and 1981, employment went up in Stockport by 4 per cent, when in Greater Manchester as a whole it went down by 9 per cent.? Does he draw any conclusions from that?
    Mr. Lamont: My hon. Friend makes a good point. I am not sure that I need to underline his conclusions. Obviously, rates increases cost jobs. Perhaps he should send a copy of his question to right hon. and hon. Members on the Opposition Front Bench.
    Mr. Crowther: Is the Minister aware that in my constituency the rates levied on industry and commerce could be at least 30 per cent, lower if the Government of which he is a member had not progressively reduced the rate support grant year by year? Will he therefore make representations in appropriate Cabinet circles for the terrible rate burden to be reduced by restoring the rate support grant to its former level?
    Mr. Lamont: The hon. Gentleman's assertion would be more convincing if local authorities elsewhere in the country had not managed to combine a reduction in the rate support grant with modest rate increases. If empty buses did not travel half the night through Sheffield, the rates there would be a lot lower.
    Mr. Teddy Taylor: Can my hon. Friend explain to hard-pressed employers in Southend, who pay a lot in rates despite the excellent prudence of the splendid Southend borough council, why they should pay quite so much when the agriculture industry makes no rates contribution whatsoever?
    Mr. Lamont: Fortunately, I am not responsible for The Times this morning, the Department of the Environment or for agriculture so I shall pass on that question.
    Mr. Andrew F. Bennett: Does the Minister accept that the hon. Member for Stockport (Mr. Favell) has his facts wrong, because there is a considerable area of grass between Stockport and Manchester? The biggest problem is that for years Stockport has neglected many of its old council houses. Is the Minister aware that, like the hon. Member for Stockport, I should like them to be modernised? Is not the problem that such modernisation involves local government expenditure, not only in money but in staff, to ensure that the work is done?
    Mr. Lamont: Yes, but other local authorities have absorbed cuts in the rate support grant. Local authority expenditure in England has been rising by about 8 per cent, in real terms. There is no reason why people should expect to be subsidised by the general taxpayer in that respect.

    British Leyland
    Mr. Roy Hughesasked the Secretary of State for Trade and Industry if he has had any recent discussions with the chairman of BL concerning future investment.
    Mr. Tebbit: Yes, Sir.
    Mr. Hughes: When will the Secretary of State realise that unemployment is now the principal concern throughout the country? Will he bear in mind that the motor industry is a major employer of labour, and therefore that new investment is vital? Does he agree that without it we shall hear further redundancy announcements such as that recently made by the Girling company in South Wales?
    Mr. Tebbit: I am able to assure the hon. Gentleman that I am aware of all those matters and, of course, as he will be aware, the number of people in work in the United Kingdom has been increasing since the first quarter of 1983.
    Mr. Geoffrey Robinson: I think that all hon. Members will have been reassured by the measured and constructive tone in which the Secretary of State has spoken of the importance to the whole of Britain—the components industry, the capital goods industry—of British Leyland, but we are looking to him now to put his money where his mouth is. In that respect, can he confirm that he shares the view that an essential part of British Leyland to play will be in the continued manufacture of the power train— engine and gearboxes—in this country, and will he back the Austin Rover new engine project?
    Mr. Tebbit: I have to say to the hon. Gentleman that, if it comes to a question of money and mouth, he should
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    recollect that since this Government have been in office we have directly contributed something like £1·2 billion to the restoration to viability of British Leyland. Beyond that, I would advise him not to go too far in praising me —it might upset his hon. Friends. I hope that I shall be able to make a statement before too long which will please all those of a constructive frame of mind.

    Local Investment
    Mr. Meadowcroftasked the Secretary of State for
    Trade and Industry whether he will have discussions with
    representatives of local enterprise boards and of industry
    with a view to securing a co-ordinated approach to local
    investment.
    Mr. Trippier: I frequently meet representatives of local and national bodies concerned with investment in industry, including local enterprise agencies.
    Mr. Meadowcroft: Is the Minister aware that there will be a wide welcome in the House for the more constructive Government and business attitude towards the local authority enterprise boards? Will he accept the need for better co-ordination to give prompt help to new and expanded businesses? Can he give the House any assurance of the future of the West Yorkshire enterprise board and about its urgent need for further capital resources?
    Mr. Trippier: The hon. Gentleman makes a very important point. It is essential that I should stress that local enterprise boards, as opposed to enterprise agencies, are companies limited by guarantee and not directly affected by the Local Government Bill currently before the House. I understand that West Yorkshire county council has asked for consent for funding of the enterprise board to a sum of £2 million in 1985–86, and that that is currently before my right hon. Friend the Secretary of State for the Environment. The hon. Gentleman may be aware that I am constantly trying to encourage the use of local enterprise agencies such as the Leeds business venture, with which I know he is very familiar, as a signposting service and as a one-stop shop. I think that that excellent enterprise agency is in a very strong position with regard to acting as a co-ordinator in getting small firms financed. That will speed matters up and, I hope, remove many of the obstacles and the confusion which the hon. Gentleman has identified in his question.
    Mr. Haynes: I listened to what the Minister had to say, but he is not doing very well, is he? He visited a particular boat-building firm in my constituency and made certain promises, and then let it down. Why have these exhibitions been cancelled?
    Mr. Trippier: I must confess to the hon. Gentleman that I have not the slightest clue what he is talking about.

    Small Firms (Public Contracts)
    Mr. Hindasked the Secretary of State for Trade
    and Industry whether he has any plans to seek to increase
    the level of public procurement placed with small firms.
    Mr. Trippier: Contracts must be won on merit, irrespective of company size. However, we recognise that small firms often face particular difficulties in seeking public sector business, and we shall continue our efforts to reduce these.
    Mr. Hind: Is my hon. Friend aware that one major problem for small firms is obtaining the details of proceedings in tendering for Government contracts? Can he tell us whether he has taken any measures to improve that situation and what he can do to assist those small firms?
    Mr. Trippier: Only yesterday I published a new booklet entitled "Tendering for Government Contracts", aimed at helping small firms to sell to Government Departments. The booklet describes the types of goods and services that Government Departments buy, and explains how to apply and whom to approach in the major purchasing Departments. Obviously, I hope that it will be widely used.
    Mr. Campbell-Savours: Does not the existence of 10 major defence research establishments in the south and south-east of England have a major effect on procurement policy for small high technology companies in the south of England? Does it not put such companies in the south at an advantage? Why cannot we have the same advantages in the north? Why cannot some of those defence establishments be moved to the north of England, bearing in mind all the spin-offs that they have for the information technology industry?
    Mr. Trippier: It will probably interest the hon. Gentleman to hear that only this morning I was looking at the number of research establishments in both the public and the private sectors. It will perhaps come as a surprise to him, since he comes from the same region as I do, to discover that we in the north-west have a very fair share of the research establishments available north of Watford.
    Mr. Bellingham: Although I welcome the booklet and the obvious benefit that it will bring to small businesses, may I ask my hon. Friend what effect it will have on public procurement generally?
    Mr. Trippier: The most important development to have arisen out of the Government purchasing lead that we have taken in the Department of Trade and Industry is that it will encourage the use of interdepartmentally approved lists. Certainly it will improve the standarised procedures affecting small firms. I announced last May that tenders for most Government contracts worth less than £10,000 would be exempt from the normal procedures. That should help small businesses to obtain a share of those business opportunities.
    Mr. Robert C. Brown: The Minister spoke about his researches this morning. Is he aware that the northern region of England has the highest unemployment in mainland Britain and is the only region of mainland Britain without a Government-backed research and development agency? Is it not high time that we had such an agency in the north?
    Mr. Trippier: The problems of the northern region were recognised in the legislation on regional policy approved by the House last year. In that we said that we-would concentrate—
    Mr. Campbell-Savours: Cuts.
    Mr. Trippier: The hon. Member for Workington (Mr. Campbell-Savours) talks of cuts. I had better tell him that his hon. Friend was referring to the northern region and not the north-western region. Some 97 per cent, of the working population in the northern region were assisted
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    before the changes in regional policy, and the same percentage of people are assisted. In the north-west the numbers of people living in assisted areas have increased as a result of the legislation to which I referred. I am aware of the problems identified by the hon. Member for Newcastle upon Tyne, East (Mr. Brown), and recently we have received a report from Newcastle university entitled "The Location of R and D in Great Britain." We shall study that, and it will be taken into account in formulating future policy.

    Manufacturing Trade
    Mr. Teddy Taylorasked the Secretary of State for Trade and Industry what was the United Kingdom's surplus or deficit in manufacturing trade with the European Economic Community and the rest of the world, respectively, in the most recent annual period for which figures are available.
    Mr. Channon: In the 12 months ending March 1985 there was a deficit on trade in manufactures with the other members of the Community of just under £8 billion. With the rest of the world there was a surplus of £3·5 billion.
    Mr. Taylor: In view of this horrific trade deficit with the Common Market, which is equivalent to a loss of 800,000 British jobs, does my hon. Friend agree that there is an urgent need for a full-scale inquiry into why our trade with the Common Market is so appalling and why, according to an answer that my hon. Friend gave me the other day, our share of the Common Market's market for manufactured goods is less than it was the year before we joined?
    Mr. Channon: It is only rarely that I do not agree with my hon. Friend, but this is one of those rare occasions. He was a member of the Select Committee on Trade and Industry which examined this matter last year, and the Secretary of State replied to its report a year ago. I must point out that 46 per cent., of British exports went to Community countries.
    Mr. Roy Hughes: Answer the question.
    Mr. Channon: I should love to answer the question if I were allowed to.
    Mr. Speaker: Order. The hon. Member for Newport:, East (Mr. Hughes) should allow the Minister to answer.
    Mr. Channon: It is essential to look at all the facts affecting our trading position and not take any one area or any one component of the trading figures in isolation.
    I repeat that 46 per cent, of total British exports went to the Community last year, compared with 30 per cent, in 1970.
    Mr. Sheerman: Perhaps the Minister will come down from the clouds of theory and look at real closures. I refer him to the closure of Philips in Brighouse and the impending closures of Philips establishments in other parts of the country, with the result that manufacturing capacity in washing machines, tumble driers and television sets is being taken back to Italy. What does the Minister intend to do about closures, which take more jobs away from us with every day that passes?
    Mr. Channon: I am sure the hon. Gentleman welcomes the fact that in the last quarter the volume of our manufacturing exports increased by 12 per cent., which

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    was a great increase, and that our exports are running at extremely good figures. It must be good for British industry to be competitive, and to be able to export competitively and profitably.
    Mr. Gould: Does the Minister accept that the House is intelligent enough to read both sides of the trading account? Bearing in mind that the Minister of State told the House on 1 May that every 1 per cent, increase in import penetration cost the country 250,000 jobs, what connection does the right hon. Gentleman now make between our record trade deficit with the European Community and the record unemployment that we must now endure?
    Mr. Channon: The House must also understand that the United Kingdom is and has been in trade surplus for many years. That was not a factor—[HON. MEMBERS: "Oil."] Opposition Members attack whatever commodity suits them. [Interruption.] We have heard it all before. Many Opposition Members want us to leave it in the North sea. As hon. Members want to talk about manufacturing, let me tell them that Britain sends 39 per cent, of its exports of manufactured goods to the other Community countries, compared with 29 per cent. 15 years ago. That is a massive increase in exports of manufactures, and many thousands of British jobs depend upon it.

    Bosporus Bridge Contract
    Mr. Bowen Wellsasked the Secretary of State for Trade and Industry if he has raised with the general agreement on tariffs and trade the credit arrangements for the Bosporus bridge contract.
    Mr. Tebbit: The arrangements for export credit operation involving elements of aid are handled under the consensus and development aid committees of the Organisation for Economic Co-operation and Development rather than under the GATT. The Government are currently exploring within those OECD groups the issues raised by the type of credit arrangements offered by Japan for the second Bosporus bridge.
    Mr. Wells: Is it not unacceptable that the Japanese Government should put my right hon. Friend in the position of losing a major contract to the Japanese for bridge building although we produced the lowest contract price? Because of the use of subsidised export credits and trade in aid-type arrangements, the Japanese have won this major contract and, thus, are able to penetrate a market that was previously dominated by the British, with a consequent loss of jobs for the United Kingdom. Yet, the Japanese refuse to accept proper trade terms for the entry of our goods. Is it not essential that my right hon. Friend negotiates a watertight arrangement to put our manufacturers and exporters on the same basis as Japanese business men?
    Mr. Tebbit: I well understand my hon. Friend's anxiety. As I said the last time when I answered questions on this matter, it does not appear that the Japanese broke any undertakings and agreements on aid. However— [Interruption.] If the House is finished, I shall continue. However, what I find—[Interruption.]
    Mr. Speaker: Order. I seldom see the Secretary of State lost for words. Let him continue.
    Mr. Tebbit: I am not lost for words, but I have no intention of shouting above this bear garden, and the sooner hon. Members stop shouting, the sooner we shall get on. [Interruption.]
    Mr. Speaker: Order. Perhaps I should not have said that.
    Mr. Tebbit: Of course you should have said that, Mr. Speaker. Mr. Speaker is always right.
    The point about the Bosporus bridge contract, which I have sought to make both here and in discussions with the Japanese authorities, is that their dumping of cheap credit to obtain this contract is incompatible with the assurances and policies announced by Mr. Nakasone, under which the Japanese are seeking to limit their trade surplus. That matter is being taken up forcefully with the Japanese authorities, and unless they pay attention, before long other countries will take protectionist measures against them. I hope that they will draw back from the position into which they are getting before it is too late.
    Mr. Gould: In the light of the predatory policies being pursued by the Japanese, and in the light of what the Secretary of State has just said, does he accept that this is hardly the time to contemplate unilateral disarmament in trade of the sort with which the Government seem to be flirting in the wake of the Byatt report? Will he listen to the views of the National Economic Development Office, published today, and of his Department's overseas projects board, and ensure that British firms which seek major contracts abroad are not left defenceless against the Japanese and other foreign competitors?
    Mr. Tebbit: It is not my habit to flirt. When I get started, I get on with it.

    Japan
    Mr. Phillip Oppenheimasked the Secretary of State for Trade and Industry how many representations he has received from British exporters about non-tariff barriers in Japan.
    Mr. Channon: My Department receives a number of representations from British exporters about non-tariff barriers in Japan.
    Mr. Oppenheim: Does my right hon. Friend agree that the failure to export to Japan is often attributable not to non-tariff barriers but to weaknesses in British companies? None the less, last year, the Japanese exported to us £40 million worth of telecommunications equipment, and in return we exported to them only 1 per cent, of that figure. Does he accept that that occurred because we have liberalised our telecommunications market and thrown it open to imports from abroad, while the Japanese have no such policy and close their doors to overseas telecommunications products?
    Mr. Channon: My hon. Friend raises a fair point which, coupled with the points made by my right hon. Friend the Secretary of State in answer to the previous question, is an example of some of the practices of the Japanese Government that are getting the world trading system into a dangerous position. During his visit to Tokyo my right hon. Friend the Secretary of State raised my hon. Friend's specific point, and we shall continue to press the matter.
    Mr. Willie W. Hamiltonasked the Secretary of State for Trade and Industry what further progress has been made in talks with Japan on the liberalisation of trade.
    Mr. Channon: On 9 April, Prime Minister Nakasone announced a market-opening package of measures designed to bring about an increase in Japan's imports of manufactured goods, further liberalisation of internal financial markets and the internationalisation of the yen. We and our Community partners will be looking closely for evidence of practical steps to implement those intentions.
    Mr. Hamilton: Is the Minister aware that the country is becoming increasingly angry about the courteous claptrap that we have heard from the Japanese in such matters during the past 20 years, and about the fact that no progress has been made? Does he accept that the House will give unqualified support if the Government take retaliatory action against the Japanese?
    Mr. Channon: The feelings of the House are abundantly clear. However, it would be much more satisfactory and in the interests of Japan and the United Kingdom if the measures which the Japanese Prime Minister promised in July prove, in effect, to open the Japanese market to our exports. That would be a happier solution than having to take retaliatory measures, which would help neither the United Kingdom nor Japan in the long run. As my right hon. Friend the Secretary of State made clear, there is a grave risk of the world trading system falling into serious trouble and of retaliatory measures being taken.

    Regional Policy (Tourism)
    Mr. Adleyasked the Secretary of State for Trade and Industry what contribution he envisages tourism makes to regional policy, and vice versa.
    Mr. Norman Lamont: Tourism can make a positive contribution to employment in assisted areas, and tourism projects in those areas may also qualify in certain circumstances for regional assistance.
    Mr. Adley: As flourishing regional airports are fundamental to an effective regional policy and to the growth of regional tourism, will my hon. Friend give the House a categorical assurance that he will do all that he can to encourage the growth of traffic at regional airports outwith the south-east of England?
    Mr. Lamont: I recall that my hon. Friend led previous opposition to Maplin and Stansted on regional policy grounds. In view of the statement that may be made in two minutes' time, this is a case of my not venturing where angels fear to tread.

    Tourism
    Mr. Greenwayasked the Secretary of State for Trade and Industry if he will make a statement on the prospects for the tourism industry in 1985.
    Mr. Norman Lamont: In the first quarter of 1985 the number of visits to the United Kingdom by overseas residents was 10 per cent, higher than a year earlier, at a new record level for a first quarter. I am optimistic about the prospects for the rest of the year.
    Mr. Greenway: Is it not true that a record number of jobs are being created in tourism, and that this service industry is one of the most promising areas for growth in employment? What was the value of tourism to Britain last year, and how many people were employed in the industry?
    Mr. Lamont: Over 1 million people are currently employed in the industry. What my hon. Friend says about the prospects for growth in employment is correct. He may have noticed that we are now publishing, quarter by quarter, the growth in jobs in the tourist-related sectors. I hope that that will highlight the point that he is making.
    Mr. Heffer: Does the Minister agree that while it is good to encourage tourism to underdeveloped areas such as Merseyside, it would be better if the Government concentrated on rebuilding industry in such areas in order to get the thousands and thousands of workers who are unemployed there back to work? Otherwise, we shall become a national museum.
    Mr. Lamont: The hon. Gentleman has previously urged me to do more for tourism on Merseyside. We need to do things to help manufacturing and services, but we must face the fact that one of the best prospects for growth in employment lies in the services sector, and that includes tourism.
    Mr. Ewing: On a point of order, Mr. Speaker.
    Mr. Speaker: Does it arise out of questions?
    Mr. Ewing: Yes, Mr. Speaker. The House is aware that the Prime Minister, who has fortunately just joined us, has told the nation that she has changed her style.
    However, we have never been warned that the Secretary of State for Trade and Industry has changed his style. Could you do something, Mr. Speaker, to protect the House from the shock of the Secretary of State for Trade and Industry being nice to people, because if that goes on my hon. Friend the Member for Bolsover (Mr. Skinner) will change his style as well?
    Mr. Skinner: Oh, no!
    Mr. Speaker: Order. It is a consummation devoutly to be wished.
    Mr. Skinner: Further to that point of order, Mr. Speaker. I too have noticed that the Prime Minister now has more voices than Janet Brown. Today, at Question Time, we have heard from the Secretary of State for Trade and Industry and he has been nearly as quiet as a tailor's dummy, but, I assure you, Mr. Speaker, I ain't changing.

Sudan (Famine Relief)
3.31 pm
Mr. Michael Meadowcroft(by private notice) asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his action in the light of today's urgent warning of potential famine disaster in the Sudan.
The Minister for Overseas Development (Mr. Timothy Raison): We have been closely monitoring the serious food situation in Sudan. There are substantial supplies in Port Sudan. The problem is internal distribution. We are now providing £650,000 for the charter of a Hercules to be placed at the disposal of the Save the Children Fund within the next few days for a period of one month. That will airlift emergency food supplies to western Sudan where distribution problems have been acute. We are also providing up to £130,000 for the purchase of a light aircraft for use by voluntary agencies for moving supplies and personnel.
The European Development Council agreed on 23 May to my proposal to use emergency procedures to approve a £6 million project to rehabilitate the railway to western Sudan. I understand that the first phase, which provides special food trains, is already in operation.
We are holding further urgent discussions with the British voluntary agencies operating in Sudan to establish what immediate help we can give.
Mr. Meadowcroft: I am grateful to the Minister for his response. Does he accept that the House, and people in general, I suspect, will feel that it sounds very much like placing sticking plaster over a gaping human need? Surely much more needs to be done to enable the transportation of food from the east to the affected Darfur region in the west. One aeroplane and a light aircraft available to the voluntary agencies are not nearly enough. Will the Minister assure the House that the resources available are not limited by the existing budget, as with Ethiopia, but will be made available according to need? Otherwise a disaster far greater than that which occurred in Ethiopia will take place in Sudan?
Mr. Raison: The proposals that I have just announced amount to much more than sticking plaster. The problem is not the overall supply of food—there is a great deal of food available—but distribution. I believe that our aircraft, which will carry high priority supplementary foods, will be of great value. In addition, as I made clear in my reply, we have also galvanised the European Community to get on with the crucial job of ensuring that the railway line to western Sudan is fully operational. As I told the House, that process is already under way.
Mr. Bowen Wells: Is the railway capable of carrying enough food to western Darfur where the starvation is occurring? How much has the railway delivered to the western parts? Now that the rains are imminent, is it possible to distribute food in lorries from the railhead to the villages where it is needed?
Mr. Raison: I cannot yet say that I am satisfied that the railway is in a condition to provide all the food that is needed; it is a big job. However, I am confident that the steps that we have taken represent a substantial improvement. There is still more to be done on distribution
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from the railhead. It is a difficult problem, but we are determined to do all that we can to make sure that food reaches the people who are so desperately in need.
Mr. Tom Clarke: Is the aircraft additional to the resources of the Overseas Development Administration, or is it coming from Ethiopia? Is the Minister bearing in mind the views of the Select Committee on Foreign Affairs, and will the additional resources be coming from the ODA budget or from the Government's contingency budget?
Mr. Raison: We shall be paying for the cost of the Hercules out of our own contingency resources. I stress that we do not intend to deprive our aid project in Ethiopia of anything to mount the aircraft operation in Sudan. It will be a new operation.
Mr. Mark Robinson: I am sure that all hon. Members will welcome the additional assistance that my right hon. Friend has been able to give to Sudan in recent months. Has my right hon. Friend any up-to-date information on the situation in the region mentioned in The Times?
Mr. Raison: We get regular reports of what is happening. I am not sure whether my hon. Friend is referring to the western part of Sudan or to the whole area. We get updated reports, and they show clearly that there is, overall, a substantial quantity of food, but serious limitations in the internal distribution of food. We are concentrating on that.
Mr. Tam Dalyell (Linlithgow): How about the provision of British-made trucks?
Mr. Raison: I know that the hon. Gentleman is keen on this matter, but large numbers of trucks are already available in Sudan, which has a strong private enterprise trucking industry. It is crucial that necessary spares are made available and, in the west of the country, the railway is the lifeline.
Mr. Robert Banks (Harrogate): I welcome my right hon. Friend's reply and recognise the grave seriousness of the situation in the Sudan, but does he agree that one of the problems of distribution stems from a shortage of fuel? Will he consider providing fuel so that distribution can be made rapidly?
Mr. Raison: The provision of fuel has been a constant worry, although I do not think that it has ever broken down in the way that was feared. We have contributed $272,000 for fuel for the distribution of our most recent consignment of food aid which arrived successfully in May before the rainy season began.
Mr. Stuart Holland (Vauxhall): The Minister must realise that this response is quite inadequate. It is far too little and far too late. Warnings were given by us in the House earlier this year that the fuel problem was critical and that Sudan needed at least 250,000 tonnes of fuel. We urged the Minister then to act directly rather than through the EEC and we called on the Government to release more vehicles, if necessary from Ministry of Defence stock. The Minister has not done that.
The right hon. Gentleman's comments about the resources now being given for renewal of the railway stock also are quite inadequate. Tenders were being offered by British firms in January, in the expectation that the renewal of the rolling stock would be done by June, so

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that, when the rains came, the food aid could go through. As far as we can see, the project has only just been approved and the railway is inadequate to meet the food distribution needs, because only about one fifth of what is needed is getting through.
Mr. Raison: I have a feeling that whatever I announced from the Dispatch Box, the hon. Gentleman's automatic reaction would be that it was too little and too late. The railway, rather than fuel, is the crucial matter. The British Government have made the running throughout. We provided the consultant who prepared the plans earlier this year. I have repeatedly pushed as hard as I can in the European Community to get the project accelerated, because the understanding was always that the Community would implement it. I saw the Commissioner and told him the position a few weeks ago, and, at the Development Council on 23 May, I got it established that emergency procedures would be used. They are being used and the situation is improving, but I accept that there is still more to be done.
Mr. Holland: Six months too late.

Rolls-Royce, Derby
Mr. Speaker: I undertook yesterday to investigate a case of what appeared to be the premature disclosure by the Department of Trade and Industry of the text of a written reply to a parliamentary question put down for answer yesterday by the hon. Member for Southampton, Itchen (Mr. Chope). The matter was brought to my attention by the hon. Member for Derby, South (Mrs. Beckett).
I understand that a press release setting out the terms of the reply was intended to be issued by the Department for release at 4.30 pm but was, through an error, sent out at noon.
That constituted a breach of the rule under which answers to written questions may not be issued before 3.30 pm or before mid-day on Fridays. I hope that this rule will be maintained in the future.
Mrs. Margaret Beckett: While thanking you, Mr. Speaker, for that statement, I suggest that the House is owed at least a small apology by the Minister about the manner and timing of an announcement which had financial implications for the markets and strong implications for employment.
The Secretary of State for Trade and Industry (Mr. Norman Tebbit): I am grateful to you, Mr. Speaker, for making that statement. You are right to say that the press notice was issued in error, being wrongly sent among a number of other notices to the Central Office of Information at the time required for a noon distribution rather than at the time required for a 4.30 distribution, for which it was intended.
I should emphasise that the press notice did not carry an embargo. Therefore, no question of a breach of an embargo arises, so that on this occasion the press was innocent of any improper behaviour. I can only apologise to the House and to hon. Members who feel that they were inconvenienced for the breach of the rule which you have reiterated, Mr. Speaker.

Airports Policy
3.41 pm
The Secretary of State for Transport (Mr. Nicholas Ridley): With permission, Mr. Speaker, I should like to make a statement about the Government's policy for airports.
It is the responsibility of Government to ensure that sufficient capacity can be provided at United Kingdom airports, where it is required and in due time. Our policy of encouraging competition in the air requires that there should be enough capacity available, so far as is possible, to all airlines on equal terms.
We cannot direct flights to airports that they do not wish to use. Airports must use the opportunities open to them to attract as many flights as they can through providing a cheap and efficient service for the benefit of the passengers.
To make airport managements more responsive to their customers' and further to assist the growth of our most important and successful airline industry, the Government have decided to introduce legislation, first, to make every major airport into a limited company, and, secondly, to convert the British Airports Authority into a holding company and to privatise it with its seven airport companies.
I hope that local authorities will follow this lead and introduce private capital into their companies, too; but we do not intend to force them to do so. A system of regulation will be proposed to control the monopoly aspects of airports, including charges, to regulate traffic distribution when necessary, and to safeguard essential national interests.
Our air transport industry is the envy of the world and a great success story. It has a turnover of £4 billion and earns £500 million of foreign exchange each year. It is a growing industry, already employing 85,000 people.
It is essential to the continuation of this success, and to the provision of more jobs, that there is sufficient airport capacity. Equally important, this must be done with minimum damage to the environment and to the lives of people living near airports.
It is with solving this dilemma—adequate capacity with minimum environmental damage — that first the Inspector at the airports inquiries, and more latterly the Government, have had to grapple. I should like to pay tribute again to Mr. Graham Eyre, QC, for his thorough and comprehensive report. In announcing our decisions today, I want to stress that we have sought a solution which meets both objectives as far as is humanly possible.
The success of our regional airports depends on them handling more traffic, which in turn depends on a growth in demand and on more airlines deciding to operate services from them. The signs are good. Traffic grew by 12 per cent, last year and is expected to increase by one third more by 1990. 1985 has seen the introduction at regional airports of many new scheduled services to international destinations, and more are planned. The Government will do everything they can to increase flights to and from the regional airports, first and foremost by British airlines. As regards foreign airlines, we recently reached an agreement with the Government of Singapore which allows Singapore Airlines to operate to Manchester. We expect shortly to begin discussions with the United
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States Government about the basis on which scheduled traffic rights to Manchester for United States airlines may also be granted.
We will continue to study, with representatives of the regional airports, how to increase traffic still further. We will be ready to approve worthwhile investment in new facilities and the improvement of road and rail links where they are justified. We will ensure that competition between all airports, both BAA and local authority, will be on fair and equal terms. We recognise the importance of maintaining access for domestic flights into Heathrow and Gatwick.
Even after taking account of all these efforts to attract traffic to the regions and away from the south-east, the Government, after careful evaluation, have concluded that it is necessary to provide capacity in the south-east for between 72 million and 79 million passengers per annum by 1995. This is consistent with the inspector's planning figure of 75 million passengers per annum. We intend to achieve that figure as follows:
First, my right hon. Friend the Secretary of State for the Environment recently announced approval of the Stolport in London's docklands. This will provide 1 million passengers per annum.
Secondly, the Government have decided to invite Luton borough council to come forward with proposals, which would be subject to the necessary planning procedures to increase the capacity of Luton airport from its present throughput of 2 million passengers per annum to 5 million passengers per annum.
Thirdly, Gatwick airport is expected by that time to be capable on present plans of handling 21 million to 23 million passengers per annum. We have no plans for a second runway at Gatwick.
Fourthly, the capacity at Heathrow in 1995, when all four terminals will be in full operation, is expected to be between 38 million and 42 million passengers per annum. It is very possible that this will be adequate to handle as big a throughput of passengers as runway capacity will allow. The Government have decided to accept the inspector's recommendation that air transport movements at Heathrow should not be artificially constrained and to ask the House to accept the abandonment of the proposed limit of 275,000 air transport movements a year. Even with this, and with all foreseeable technological improvements to the full use of runways it seems likely that runway capacity, not terminal capacity, will be the limiting factor at Heathrow for some years ahead. Nevertheless, it seems prudent to ask the BAA to pursue with the Thames Water Authority the possibility of moving the Perry Oaks sludge works elsewhere. Only if and when this has been done, and in the light of traffic forecasts at that time, would it seem sensible to see whether extra terminal capacity should be provided, and if so how much. My right hon. Friend the Secretary of State for the Environment, on whose behalf the Minister for Housing and Construction has acted throughout, has turned down Uttlesford district council's application for planning permission for terminal 5, and no terminal can be built at Perry Oaks in the future without planning permission. We are setting up a study of improved surface access to Heathrow.
Fifthly, I come to Stansted. It will now be abundantly clear that the only way we can provide sufficient capacity to sustain the growth of our successful aviation industry is by terminal development at Stansted, thus bringing into

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more effective use the spare runway capacity which is available there. My right hon. Friend the Secretary of State for the Environment and I have therefore decided to accept the inspector's recommendation to the extent of granting the BAA outline planning permission for development at Stansted. The application was for 15 mppa. The inspector recommended initial permission for this 15 mppa rising later to 25 mppa at Stansted. Although we have granted permission for the 15 mppa recommended by the inspector, we have decided to impose conditions requiring that the development be phased, and limited in the first phase of development to 7 to 8 mppa. The initial development will thus amount to less than one third of what the inspector recommended ultimately. Apart from the planning decision I propose to seek powers to limit air transport movements at airports. Subject to Parliament giving me the necessary powers, I intend to impose an initial limit on air transport movements at Stansted equivalent to 7 to 8 mppa. Any further increases in traffic at Stansted would be subject to control by Parliament, by means of an affirmative resolution. As a result, further growth of traffic at Stansted would only take place when it was seen to be necessary, with Parliament having the decisive role. This should provide reassurance to people living in the area. We have rejected the possibility of the construction of a second runway at Stansted.
In the past, we as a nation have shirked the decisions needed for the growth of air traffic and the jobs that go with it. We are in danger of stifling one of our most enterprising industries and losing out to our continental rivals: Schiphol, Paris and Frankfurt are building capacity well ahead of growth. They no doubt hope that we will shirk the decisions once again. The Government are determined not to.
The decision letters on the planning application and the White Paper, all of which are now available in the Vote Office, set out the arguments for these decisions at length and with clarity. When they have read them, I hope that right hon. and hon. Members will feel that our responsibilities to all the many important and often divergent interests concerned have been adequately discharged.
Mrs. Gwyneth Dunwoody: The Secretary of State has made a major statement on future airports policy. The one thing that is certain is that it gives the green light and go-ahead in the south-east of the country. It represents a list of broken promises. For example, a solemn promise was given to those living around Heathrow airport that the controls on aircraft movements would be respected, but that has been abandoned. Undertakings were also given to Manchester that it would be given assistance in developing as a regional airport. It was also suggested that, by somehow privatising the aircraft industry, we could support regional airports in, for example, Scotland.
Why should we believe the Secretary of State when he says, on the one hand, that he intends to privatise extensively to improve the future of the aircraft industry and, on the other, that he intends to ask the House for greater controls both on air traffic movements and on future developments? Why should we believe, for example, that he will move the Perry Oaks sludge works but has no intention of building a fifth terminal? Why should we believe that the right hon. Gentleman is now going to assist the regional airports when, in effect, he has
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materially reversed his position since January 1985? In January, he said that he would give every possible support, particularly to regional airports. But the White Paper now makes it quite clear that in future any developments can go ahead only if the market has proven itself and the development is already there. That restriction is quite unacceptable.
What the right hon. Gentleman has done is to say that in future there will be added capacity at Stansted and Luton and increasing use of Heathrow. He is wholly uninterested both in the environmental aspects of the development of the major airports in the south-east and the very real industrial problems of the north. The statement is a slap in the face for regional airports and it should not be accepted by the House.
Mr. Ridley: I quite expected the hon. Lady to respond with predictable, old-fashioned reaction to the suggestion that the airport should be privatised, so I shall leave that typical reaction to one side.
On Manchester and the regional airports in the north:
"The Government rejects the suggestion that the air transport industry should be subject to the damaging restrictions on its operations which would be the outcome of the forced diversion of traffic to regional airports".
If the hon. Lady does not agree with that statement, she might like to know that I was quoting her Government's White Paper of 1978. What was good enough for that Government is good enough for me. [HON. MEMBERS: "Oh."] With the exception of that, there is nothing that the north-west and the other regions have requested in the development of their airports that is not contained in the White Paper. When the hon. Lady has time to read it, she will find that that is so. No restrictions are being imposed on any development.
The hon. Lady appeared to be a little muddled. She accused me of abandoning the limit on air transport movements at Heathrow — about which the House expressed some disquiet earlier in the Session — and suggested that it should be proceeded with. At the same time, she appeared to want to have terminal 5 built, which would have meant more traffic going through Heathrow.
Mrs. Dunwoody: No, I did not say that.
Mr. Ridley: The hon. Lady's position, as she set it out, was that she had no desire to see terminal 5 at Heathrow, so she cannot complain both ways.
Mr. Toby Jessel: Is my right hon. Friend aware that very many of the 1·75 million people living around Heathrow, who were dreading the intolerable traffic congestion and noise that would have resulted from a fifth terminal, will be immensely grateful and relieved at the decision not to build a fifth terminal and to turn down the current planning application? I speak also for my right hon. Friend the Member for Spelthorne (Sir H. Atkins), who is currently abroad on Select Committee duty.
Mr. Ridley: I am grateful to my hon. Friend, especially for mentioning our right hon. Friend the Member for Spelthorne (Sir H. Atkins), who has already told me how sorry he is that he cannot be here, because he would have wished to be present on this occasion. [ am pleased to be able to honour, for both my hon. Friends, the Government's pledge that terminal 5 would not be constructed.
Mr.MichaelFoot: Does the right hon. Gentleman recall that, after our last debate on airports policy there was an overwhelming vote against the development of Stansted? Why has he resolved to flout that vote? Why should anyone believe that the House of Commons will have any control over these matters if he is deriding and insulting the last vote of the House on this issue?
Mr. Ridley: The right hon. Gentleman may recognise two points: first, the vote was on whether the House should adjourn—[HON. MEMBERS: "Oh."] Secondly, the inspector at the airport inquiry recommended development at Stansted first to 15 million and then to 25 million passengers a year, whereas the Government are recommending that development should be limited to 7 million to 8 million passengers a year.
Mr. Julian Amery: May I congratulate my right hon. Friend on having arrived at the same conclusion about Stansted as that at which I arrived 21 years ago? That was accepted by the Government of the day, despite the reservations of Mr. Rab Butler about the possible effect on his shooting.
I urge my right hon. Friend to go rather further than he has in recognising the enormous importance of the maximum development of Heathrow. It is not just the gateway to Britain; it is the Clapham Junction of air traffic between the American continent, the European continent and the far east. It is important that it should be endowed with all possible facilities to give it its maximum establishment. With the much less noisy aircraft and the shorter take-off now available, the environmental damage will be greatly reduced from what it would have been some years ago.
Mr. Ridley: I am grateful to my right hon. Friend. Perhaps it is auspicious that, 21 years after he considered the matter, the decision should come of age. I agree entirely about Heathrow. The Government's policy as set out in the White Paper will be to use the runways to the maximum capacity, and that is the limiting factor at Heathrow. That will be in the best interests of British aviation and Heathrow which, as my right hon. Friend said, is one of the most important airports in the world, and probably the most important interlining airport in the world.
Mr. James Molyneaux: The statement on United Kingdom airports makes clear its intentions to make the major airports into limited companies. Will such legislation apply to the Northern Ireland Airports Authority? In the light of the intention to develop regional airports, will the Secretary of State be evaluating the expansion of capacity and use• at Aldergrove international airport?
Mr. Ridley: These matters are for my right hon. Friend the Secretary of State for Northern Ireland, but the offer to assist regional airports in attracting overseas flights will extend to Belfast.
Mr. Alan Haselhurst: Is this not a case of putting the most capacity in the wrong place to meet the prescription that my right hon. Friend has given — that it will be difficult for London to maintain its competitive position if people are invited to interline by taking a bus around the M25? On the procedural point, why is my right hon. Friend prepared to trust the voice of
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Parliament to defend Stansted growing beyond the 8 million passengers capacity when he is not prepared to give an opportunity for the House to judge the present position, which it could have done had he followed the precedent of the right hon. Member for Bethnal Green and Stepney (Mr. Shore) in the case of the Windscale inquiry?
Mr. Ridley: Airports will develop the traffic and the type of trade that suits them best under the freer regime that we are providing. I suspect that, more and more, Heathrow will develop into an interlining airport with a major input of domestic services, so the situation that my hon. Friend has suggested may not arise.
Secondly, my hon. Friend spoke about a special development order and I remember how the House, and he, welcomed the decision in 1980 that the Stansted proposal should be pursued through the normal planning process and should not be decided without a full and fair inquiry at which everybody could put their view. We adopted that proposal, and we cannot now be blamed for not changing our horses in midstream to the SDO proposal. The SDO method would have meant that we would be unable to secure the compulsory purchase orders, the listed building consents, the scheduled monuments consents, the trunk road orders, the side road orders and the stopping up and diversion of highways orders that will be necessary in the permission granted at Stansted.
Mr. Alfred Morris: Is the Secretary of State aware that his acceptance in principle and ultimately in practice of the development of Stansted airport into one of 15 million passengers per annum will cause the gravest concern in the north of England?
Julian Haviland, who is rightly respected on both sides of the House, reported this morning in The Times the Minister's derisory comments about forcing Londoners onto Manchester-bound trains to fly to Paris. Is the Secretary of State aware that that is offensive not only to Mancunians, Geordies and people from Yorkshire and Scotland, but to people from all over the north? Is he aware that as many as 30 per cent, of the people who fly into and out of London airport are not from the south-east and do not want to fly there? Why should millions of northerners have to catch London-bound trains to fly abroad?
What does the statement do about licensing policy as it affects regional airports? What will the Secretary of State do urgently to stop the cross-subsidy of Stansted airport by the British Airports Authority? The right hon. Gentleman has missed an opportunity to unite this nation at a time when it is bitterly divided.
Mr. Ridley: I must differ from the right hon. Gentleman on his three main points, because he is not right. The development at Stansted is limited to 7 million to 8 million passengers per annum, and if the House does not want to go beyond that traffic figure, it lies within the power of the House to prevent it. Secondly, the right hon. Gentleman said that 30 per cent, of the passengers going through London airports are not from the south-east. However, the true figure is that 25 per cent, of the passengers going through London airports are not from the south-east, and of that 25 per cent., 5 per cent, comes from the north-west and the north-east, with the rest from other parts of the United Kingdom. More people come from the

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south-west than from the north-west in passing through London's airports. The right hon. Gentleman's figures are not entirely right.
We have met the right hon. Gentleman's point that cross-subsidy to Stansted or any other airport will be stopped by making them separate limited companies. Any flow of funds will be transparent, and it will be made clear that those flows of funds must carry commercial interest rates. Therefore there will be no cross-subsidy.
Mr. Fred Silvester: I congratulate my right hon. Friend on continuing to be the Minister who has done most for regional airports of any since the war. However, will he remember that the two crucial matters for the north about the expansion of Stansted are that there should be no subsidy in that area, so that competition is free, and that the supporting infrastructure will be of a limited nature? Can my right hon. Friend confirm that that will be the case in both instances?
Mr. Ridley: I am grateful to my hon. Friend and I can confirm that there will be no subsidy to Stansted. The only investment will be of commercially raised money paying commercial rates of interest. That will cause landing charges to rise at Stansted to levels commensurate with other airports.
Secondly, the figures that I can give my hon. Friend for the infrastructure needed at Stansted development are £2 million for local roads. As well as that, there may or may not be some investment on rail infrastructure which could be about £50 million. That will be only if the investment appraisal of any scheme considered and put forward by British Rail achieves a positive result.
Mr. John Cartwright: Does the right hon. Gentleman accept that his fine words about regional airports fall a long way short of the real commitment that is needed if they are able to compete fairly? How realistic are the limitations on development that the right hon. Gentleman is proposing for Stansted? Surely it will be attractive to airline operators only if it has the fast rail link that the inspector recommended. British Rail tells us that it cannot justify financial investment without far more passengers at Stansted than the Secretary of State is suggesting. Is he not opening the door to the full-blooded development of Stansted?
Mr. Ridley: As an earnest of our intentions to improve and expand flights from regional airports, I point out that there are now 33 international scheduled services from Manchester airport, 14 of which have been inaugurated this year alone. That is a measure of what the Government are doing to increase traffic at regional airports. As I said in the statement, we shall continue to explore ways of getting more flights into the regional airports.
Secondly, on British Rail, nobody has known until now about the development of 7 million to 8 million passengers per annum at Stansted that I have announced today. Until British Rail has had a chance to assess the possibilities, it will be impossible to know how much it will cost and whether it will be economic at all. Far from opening the floodgates to Stansted, the result of my announcement may be that it is not economic to provide a rail link, and that would be a brake upon the development of Stansted.
Mr. Graham Bright: I congratulate my right hon. Friend on guaranteeing the future of Luton
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airport and, indeed, offering the prospect of a considerable number of new jobs in the area. Will he confirm that 5 million passengers a year is a final figure and that it will not be allowed to increase? Will encouragement be given to scheduled air services to use that airport, rather than developing the charter traffic that we have had to date?
Mr. Ridley: I am grateful to my hon. Friend. Luton borough council will be invited to submit proposals, which might be subject to a planning inquiry. I gather that the limit on what can be accommodated at Luton is controlled by national air traffic considerations and is unlikely to exceed 5 million passengers. It will be for the borough council to make such proposals as it sees fit.
My hon. Friend also asked about scheduled flights from Luton. I believe that some are taking place already but there will be no inhibition on scheduled flights to any airport to which an airline applies for a route licence to operate.
Mr. Terry Dicks(Hayes and Harlington): Will my right hon. Friend accept that many of my constituents will be bitterly disappointed at the decision not to go ahead immediately with a fifth terminal at Heathrow? They will believe that he does not understand the needs of Heathrow and that, because he has not listened to them, he does not understand the operating needs of the airlines that are using Heathrow.
Mr. Ridley: There is no possibility of putting a fifth terminal in the middle of the Perry Oaks sludge works. I am sure that even my hon. Friend would agree that the sludge works would have to be moved first. Surely it would make sense to decide on the scope and size of the terminal which might be put there when we discover whether any terminal is necessary after the sludge works has been moved.
Mr. George Foulkes: Why does the Secretary of State not admit the truth—that the huge increase in capacity in the southeast of England will make every Scottish airport less viable and will make it less likely that there will be direct flights from Scottish airports to destinations overseas? Since he has recently announced the continuation of Prestwick as Scotland's transatlantic gateway, what assurances has he received from the British Airports Authority and what guarantees will there be that Prestwick will continue to be Scotland's transatlantic gateway and, indeed, will remain open? Is he aware that we find it very sinister that separate companies are to be set up and that the British Airports Authority will not be privatised as one company?
Mr. Ridley: In the last year there has been a 20 per cent, increase in flights from Edinburgh to London. If that rate of growth continues, I shall have to find still more capacity in the south-east to accommodate the flights that the hon. Gentleman wants to travel on. How he can want both more aviation out of Scotland and less landing space in England beats me. The airport at Prestwick was the subject of a recent announcement in response to a question, and I have nothing to add to what was said at that time.
Sir Peter Blaker: Is my right hon. Friend aware that the removal of artificial constraints on the number of landings at Heathrow will be helpful to many provincial airports? He is to be congratulated on stopping the subsidy to Stansted. Is it not bizarre that for

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years charges for aircraft at that airport have been subsidised by large sums out of the profits of the so-called duty-free shops at Heathrow, to the disadvantage of provincial airports? Will not the change be very important for airports such as Manchester?
Mr. Ridley: I agree entirely with the two points that my right hon. Friend has made. First, it is important to keep as much access to London, and particularly Heathrow, as we can for domestic flights from the rest of the country. Secondly, I confirm that Stansted has benefited financially from the profits of other BAA airports. This should not be the case in future under our proposals.
Mr.BruceMillan(Glasgow,Govan): Is the Secretary of State aware that he missed the point about flights from Scotland to London? We do not want more flights to London; we want more flights from Scotland to destinations abroad without having to come through London. In the case of Prestwick, how does the Secretary of State expect a private limited company to operate Prestwick, given the bias towards the south-east in his statement today? Does his statement not make a farce of the review that was promised for Prestwick? Indeed, have we not heard from him today the pronouncement of a deferred death sentence on Prestwick?
Mr. Ridley: I said earlier that we would do all we could to increase flights from any regional airport. That does not exclude Scottish airports. They are in that category from the point of view of what I was saying. We shall do what we can to license flights out of airports in the rest of the United Kingdom.
Let me make it clear that my statement will not have the effect that the right hon. Gentleman suggested in regard to a public limited company at Prestwick. All that can happen is that it will show a loss in its accounts at the end of the year, and it does that anyway.
Mr. Bill Walker: My right hon. Friend is to be congratulated because, for the first time for many years, we have a Minister who has grasped the nettle. Contrary to some of the comments that have been made about Scottish airports, I am confident that they will continue to prosper, as they were doing for a long time before the OPEC oil price increases; they are now recovering. Will my right hon. Friend confirm that the Scottish airports will be managed largely by Scots?
Mr. Ridley: I am grateful to my hon. Friend. I can confirm that the British Airports Authority, while still in public ownership, will be invited to continue to have a Scottish vice-chairman and to have a large degree of Scottish management. Of course, if it passes into the private sector those matters will be beyond Government control, but I am certain that it will be in the interests of the new company to make sure that the four Scottish companies are managed predominantly by Scots.
Mr. Eddie Loyden: Is the Secretary of State aware that his statement today will be greeted with disappointment and perhaps anger by the northern regions, which will see it as another example of the Government's disregard of their problems? What
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effect will the statement have on Liverpool airport in my constituency? Will he give an assurance that the sludge works will not be shifted to Liverpool?
Mr. Ridley: I must repudiate both those suggestions. I do not remember a more helpful and determined attempt to assist the north. It is not more runway capacity, terminal capacity or airport capacity that is needed in the north of England, but more flights. The more flights we can get into the north, the more that will help the northern airports to expand and in due course to need more capacity. That is what we seek. I can give the hon. Gentleman an absolutely categorical assurance that the sludge works will not be moved to Liverpool.
Sir Fergus Montgomery: Is my right hon. Friend aware that his statement will go a long way to meeting the requirements of Manchester airport?
Mrs. Dunwoody: No.
Sir Fergus Montgomery: I suggest that the hon. Lady reads the White Paper. Can my right hon. Friend give a firm commitment to the constructive development of an international hub at Manchester? Can he give an assurance that, if British carriers are unwilling or not prepared to apply for flights on viable international routes out of Manchester, the applications of foreign carriers will be approved speedily and will not be subject to the two-year delay that Singapore Airlines had to endure?
Mr. Ridley: I am grateful to my hon. Friend. I am sure that if hon. Members read the White Paper they will discover more than I have been able to explain in my short statement.
I confirm that we intend to try to help Manchester airport build itself up into a hub for the north of England. That is what I said when I offered help to try to bring more traffic to that airport. The Singapore Government applied in March for a flight to Manchester and agreement was reached within six weeks. That is almost a record time for coming to an agreement on such a major application.
I am sure that my hon. Friend will agree that, although we want to do everything that we can to maximise traffic into and out of Manchester and the other regional airports, we want to give our airlines a good opportunity in the countries with which we are dealing. The greatest contribution to jobs that a regional airport can make is by British airlines obtaining traffic rights to fly out of the regional airports to overseas capitals. It is not just a question of welcoming foreigners into our regional airports, but of making deals which will benefit Manchester, for instance, and create jobs in the north.
Mr. Tony Lloyd: Is the Secretary of State aware that he is to be congratulated on one matter alone? He seems to have done enough to buy off his own Back Benchers from the north of England, but it is a policy for one region—the south-east—not a policy for the north.
When did Manchester ever ask for further runways or terminals? Manchester has always made one simple request — to be given the flights. It has always been denied that and the Minister has denied it again today. Manchester is not a regional airport. It wants to be a national gateway airport, as promised.
Mr. Ridley: Manchester is a gateway airport and will remain so. If the hon. Gentleman reads the White Paper he will discover that there are already route licences for 1,500 overseas routes out of the regional airports, of which

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only 100 have so far been taken up. The problem is to persuade airlines to take up more overseas routes from regional airports. That is the real problem from which all regional airports suffer and that is why the Government have addressed themselves with enormous diligence to trying to help put it right.
Dr. Alan Glyn: May I congratulate my right hon. Friend on honouring his promise not to construct the fifth terminal? Is he aware that that will bring great relief—[Interruption]. It certainly will not be constructed in this Parliament or the foreseeable future.
Is my right hon. Friend aware that my constituents suffer more than others from the noise problems, but are not entitled to proper funds to pay for insulation grants? Is he further aware that I am disappointed that the pledges about the number of flights given on 22 February and 21 November 1984 are not to be honoured? We are told that access to Heathrow will be increased, but I do not see how it can be increased by road improvements into London and most people travel to Heathrow by road. Is my right hon. Friend aware that his decision about Perry Oaks will be heavily criticised generally, not only by the Berkshire county council?
Mr. Ridley: I understand my hon. Friend's point of view. He is right that the decision on terminal 5 will be of some comfort to his constituents. Aircraft are rapidly becoming quieter and will become even quieter as new types are phased in. That will make a great difference to the noise in his constituency.
The Government were in a difficulty when the inspector on terminal four suggested that an ATM limit should be imposed on Heathrow and the inspector at the inquiry on terminal five suggested that there should be no such limit. The Government had to make up their mind and put their decision to the House, which will in due course have to accept or reject that decision.
Underground and rail access to Heathrow will be studied as carefully as road access because we must try to improve traffic between London and Heathrow in any way we can. Matters relating to Perry Oaks are perilously close to being the responsibility of my hon. Friend the Minister for Housing and Construction.
Mr. Simon Hughes: What steps will the Secretary of State take to ensure that the environmental damage and difficulties from which people near all airports suffer will be dealt with in the proposed legislation? Can the right hon. Gentleman explain the apparent illogicality in saying that he intends to take powers to limit air traffic movements—to apply immediately at Stansted — and that he also intends to remove restrictions at Heathrow, and presumably elsewhere? Where is the logic in that, when he knows that restrictions on movements are wanted not for commercial reasons, but for environmental reasons?
Mr. Ridley: When the hon. Gentleman reads the White Paper he will see that further protection in terms of abatement measures and of insulation are proposed for those living near Stansted. We shall further develop our understanding of what helps most to ease the pressure on people from aircraft noise.
Perhaps the Liberals would neglect to worry about this, but I have to provide sufficient capacity for the air
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transport industry to grow and to provide jobs. The decisions are based on there being adequate capacity for planes to land in the south-east of England. That is why, reluctantly, I have to recommend to the House that we should not put an artificial limit on the number of flights that can be accepted at Heathrow. My hon. Friends who represent areas around Stansted have made it clear that they want some protection from too great an expansion of Stansted.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) asked me how I intended to protect the environment of those who live near Stansted and other airports. The answer is that I intend to impose an ATM limit, which he seems to be against.
Mr. Robert McCrindle: In an attempt to evaluate the environmental impact of the decision on Stansted, having been told the number of passengers per year anticipated, are we not also entitled to hear the Secretary of State's views on the type of traffic which he envisages? If he is prepared implicitly to apply a movements limit to the expanded Stansted, might he also be prepared to impose a night curfew on Stansted? If that is so, does it not imply that he should be looking for charter traffic rather than scheduled traffic?
Mr. Ridley: All these matters are dealt with at length in the White Paper. We did not think it right to accept the inspector's recommendation that there should be night bans at London airports, although the present restrictions will certainly remain and possibly be tightened to ensure that night flying does not increase. A ban would be going too far.
Mr. Kevin Barron: When the Minister was drawing up the plans for an airports policy did he see the need for the development of new regional airports?
Mr. Ridley: The hon. Gentleman will know that we had either to accept or reject the recommendations in the inspector's report. It would not have been appropriate to suggest a totally different site, but I confirm that the Government do not believe that any new site, not mentioned today, would be preferable to the sites that we have been studying and about which we have made decisions.
Mr. Bowen Wells: Does my right hon. Friend accept that many of my constituents will greet his announcement with great anger and disappointment? They have fought the development of Stansted over 25 years and through two different public inquiries, only to face the decision that he has made today. My constituents are prepared to play their part in the national interest and accept that some development has to take place. I am grateful to him for the limitation to which he has agreed of 7 million to 8 million passenger movements per annum, although I believe that that is far too high a limit. I am also grateful for the fact that he has prevented cross-subsidisation of Stansted airport.
However, will my right hon. Friend accept that his proposals will result in great detriment to the environment of the area and that the people of Sawbridgeworth will have to suffer all the inconveniences of air traffic noise and pollution and a crowding of the very inadequate roads all around that airport, which he has apparently made no provision to improve? Will my right hon. Friend tell me

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—perhaps his hon. Friend the Minister for Housing and Construction will advise him on this — whether he intends to break the green belt policy that surrounds that airport to the north and to the south, and whether he will prevent the tremendous competition for jobs in an already over-employed area and the inevitable expansion of urbanisation which will occur unless strong measures are taken by his hon. Friend the Minister to prevent it?
Mr. Ridley: My hon. Friend the Minister for Housing and Construction will have heard what my hon. Friend said about the planning aspects of the decision and its future consequences. I have total understanding of the disappointment of some of his constituents and the fears about their peace and the environment of that very pleasant part of the country. But I am sure that he will equally accept that, as a result of that sympathy, we have gone a very long way to limit the development to that which is essential in the national interest for the aviation industry. I think that the House would blame me, with particular justice, if in a few years traffic had to be turned away and perhaps had to go to the Continent and the transport of the country was interfered with. I hae tried through the subsidy assurance and the ATM limit which he mentioned to make this development happen only if it is necessary and economic, and I think the fact that the House will have a further decision to take if ever further expansion were proposed should be of considerable reassurance to his constituents.
Mr. David Young: May I ask the Minister not to concentrate on the spin-off to Manchester from the south of the country? What does he intend to do to establish Manchester as a national airport and the economic and tourist gateway to the north-west? What does he intend to do to establish that airport not as a subsidiary airport but as a national airport in a region with one of the highest unemployment levels?
Mr. Ridley: The hon. Gentleman must acknowledge that the growth of Manchester has been phenomenal. There has been the large growth of up to 6 million passengers per annum hitherto, and we expect that to continue. Indeed, a 30 per cent, further growth to the end of the decade is predicted. That is about as rapid a growth as any airport has ever experienced. Secondly, it is no coincidence that it has taken place during the period of office of this Government. Therefore, I think that, if the hon. Gentleman is at all honest, he will go back to his constituents and tell them what a tremendous boost to Manchester this statement has been—as have been the policies of the Government in the past.
Mr. Anthony Steen: I believe that this is the best news for the British air transport industry since sliced bread, and I should like to congratulate the Secretary of State on his radical, reforming and decisive statement today. I should like to ask him about the environment—this is not the prerogative of the Liberal party, but a matter with which the Conservative party is greatly concerned—and the lifting of the 275,000 limit at Heathrow. Can he say something reassuring to those people who live on the boundaries of that limit? As he knows, aeroplanes are getting quieter, and I think that people should be reassured that the lifting of the limit will not make life intolerable for them.
Mr. Ridley: I am grateful to my hon. Friend. As I said in the statement, it is extremely difficult to balance the needs of the industry—I think that we all accept that industry has to be allowed to grow—with the difficult environmental questions about which I share his concern. There is a great deal about this in the White Paper, which I hope he will find helpful. The decline in noise levels has been and will continue to be dramatic as aircraft are required to be quieter, and as we have taken measures to protect the houses of the people who are most closely concerned, so let him not doubt that the Government are keen to do everything that we can to protect the environment of those who live around Heathrow. But let it be said that many people who live around Heathrow do so for the sake of the jobs that they have in the area, and are prepared to accept the noise and the difficulty for the sake of the prosperity that the airport brings.
Mr. Andrew F. Bennett: Will the Minister accept that most people in Greater Manchester will be disgusted by the statement and will bitterly resent the Government's claim that they have anything to do with the success of Manchester international airport? In fact, it is an example of a municipal airport which has succeeded in spite of the Government's hostility to municipal airports. If the Government want to win any friends in the Greater Manchester area, they should consider quickly providing the one to one and a half miles of railway that is necessary to link Manchester international airport to the national rail network and ensure that nearly one quarter of the population of the country are within an hour's journey time of Manchester airport.
Mr. Ridley: That staggering increase in flights, particularly international flights, which has taken place out of Manchester airport has occurred during the currency of this Government. The fact that, of the 33 international points currently served by scheduled services out of Manchester airport, 14 have begun to be served in this year alone is evidence, if the hon. Gentleman needs evidence, that the Government are not in any way prejudiced against it, but if anything are prejudiced in its favour.
Mr. Bennett: What about the railway?
Mr. Ridley: If the hon. Gentleman had listened to the statement, he would have heard that the Government have invited British Rail to examine the possibility of the rail link and to submit proposals for the investment if the necessary tests are passed.
Sir Walter Clegg: Is my right hon. Friend aware that many Conservative Members representing northern constituencies disagree a great deal with what has been said by Opposition Members? In fact, the White Paper will be helpful to Manchester, especially as there will be no subsidy to put us at a disadvantage compared to Stansted?
Mr. Ridley: I am grateful to my hon. Friend for what he has said. I believe it to be true and I believe that the White Paper will give a new opportunity to the regional airports for further growth.
Mr. Peter Pike: Will the Secretary of State not accept that his statement will be seen as a kick in the teeth to people in all regions of the country, and particularly in the north-west by people who want to use Manchester airport? Will he not admit that in fact he knows that it will not be possible to maintain the ceiling

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of 7 million to 8 million movements at Stansted? He knows that, when privatisation takes place, to make it viable it will be necessary to go beyond that limit. That means that the fast rail link and the supporting infrastructure will have to be established, and the rest of the country once again will be paying for London to get the benefits.
Mr. Ridley: I do not see how Manchester can be such a successful, prosperous and thriving airport with a throughput of 6 milion passengers per annum, if the hon. Gentleman suggests that Stansted, with 7 million to 8 million, will be totally uneconomic because of inadequate throughput. It just does not make sense.
Mr. Jerry Hayes: May I take this opportunity to congratulate my right hon. Friend on getting away with such a lot today—which I suspect is probably due to the total incompetence of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who appeared to fail to grasp what he was talking about?
When the sighs of relief of my hon. Friends have subsided and they begin to read the small print, I am sure that they will realise that this is a package which will upset many and please few and will probably be precisely the sort of fudge about which the inspector warned.
Mr. Ridley: I do not think that it is ever necessary to blame the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). She seldom seems to understand what we are talking about, and today is no exception.
It was not possible, given the situation that the Government faced, to make everyone feel that he had got exactly what he wanted. However, I believe that our decisions will both provide the necessary capacity and do the minimum damage to the environment of the various airports involved. If my hon. Friend reads the White Paper, I feel that he will find many statements in it to reassure him.
Mr. Robert C. Brown: Is the Secretary of State aware that the development of airports such as Newcastle reflects great credit on the local authorities which have had the foresight and will to develop first-class regional airports?
The right hon. Gentleman's statement is a second slap in the face for the north-east. Only last year he refused to allow the Newcastle authority to use its own money to build a parallel taxiway and so avoid delays in landings and take-offs. Now, when the airport is producing more than £1 million of profit for the ratepayers who have provided the capital for its development, he suggests that it should be privatised. Could it be that the right hon. Gentleman regards profits for the ratepayers of the area as grossly immoral, but profits going into private pockets as very good?
Mr. Ridley: The hon. Gentleman referred to Newcastle airport. He will know that the authority put in a bid for other priorities and then changed its mind about what it wanted. At any stage, if Newcastle airport wants to apply for investment approval for any project, we are always happy to look at it. However, the capacity at Newcastle airport is currently used only to the extent of 54 per cent. The airport needs not more bricks and mortar but more flights. That is why I have concentrated today on the importance of trying to get more flights into regional airports.
Mr. Robert Adley: Is my right hon. Friend aware that his juxtapositioning of the announcement of the privatisation of the British Airports Authority with the go-ahead for Stansted will inevitably lead some of us—I am one—to believe that, rather than today's announcement being made under the heading of airports policy, it might have been made by a Treasury Minister. To allay that fear, will my right hon. Friend at least assure the House that he will privatise the BAA before Stansted goes ahead?
Turning to airports policy—
Mr. Speaker: Briefly, though.
Mr. Adley: —will my right hon. Friend accept that trying to provide three London airports, none of which will be fully adequate, is a recipe for disaster? It will turn the M25, even without a channel tunnel, into a solid ring of parked vehicles on numerous days of the week. Will he assure the House much more than he has done so far that the investment in the rail infrastructure for Stansted and for Heathrow will be looked at overall not only in terms of the environment but as part of the environmental costs of airports policy?
Mr. Ridley: Some of us—I am one—will give my hon. Friend the assurance that he seeks that the rail infrastructure will be looked at in the way that I said, but with sympathy because of the environmental problems.
I cannot foretell how long it will be before it is possible to privatise the British Airports Authority. That will depend on the progress through the House of the necessary legislation. I fear that I must also say that planning consent has now been granted for the Stansted development, and I have no doubt that the authority will wish to start work as soon as the necessary plans are drawn up.
Several Hon. Members rose—
Mr. Speaker: Order. I shall allow questions on this statement to go on for a further 10 minutes. That means that Back Benchers will have had a full hour in which to put their questions to the Secretary of State. However, I ask for brief questions, in which case I hope to be able to call all those hon. Members who are seeking to catch my eye.
Mr. Tam Dalyell: Will the Secretary of State say a little more about the study into improved surface access to London Heathrow? Does this mean trains that will not stop at all the Hounslows? Are we sure that the study is not a broody hen sitting on a china egg? What will it do?
Mr. Ridley: I am not sure to what the hon. Gentleman's last comment referred. There are three authorities concerned—London Regional Transport in respect of the underground, British Rail, and my own Department for roads. I shall bring them together and get them to study very quickly and carefully—
Mr. Dalyell: Study what?
Mr. Ridley: —how to provide extra capacity from the centre of London to Heathrow without causing damage to the environment again. That is exactly what we need to do.
Mr. Michael Forsyth: I welcome my right hon. Friend's decision to privatise the British Airports Authority. When does he expect to introduce the necessary

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legislation? How will he ensure that the BAA does not exploit its monopoly and that we get fair competition between airports?
Mr. Ridley: I am grateful to my hon. Friend. The necessary legislation for privatisation will be introduced as soon as possible.
As for cross-subsidy and fair competition, putting each airport into a separate public limited company means that any transfer of funds will be transparent. As I said, we shall make sure that the transfer of funds takes place only at commercial rates of interest. That in itself will cut out cross-subsidy.
Mr. Ken Eastham: Does not today's statement about Stansted mean that once again millions of pounds are to be invested in the south of England? Is it not clear that in a few years this decision will be considered only as a toe in the door, and once again the Government will ask the House to vote millions of pounds, which again will be invested in the south? What consideration has the Minister given to industry and commerce in the north? The Government argue that there is a case for airport developments in the north not just for industry and commerce but also for tourism. How will the Stansted development help the traffic throughput in the northern airports?
Mr. Ridley: The approximate cost of the development of Stansted is thought to be about £270 million. I cannot give a firmer figure than that, because the British Airports Authority has not been able to give me a quotation, having only just heard of the decision.
Mr. Eastham: That is for now.
Mr. Ridley: I do not regard that as a large investment and, of course, it is all from air travellers' money—it is not from public money. The British Airports Authority earns a surplus, and it will be investing that at commercial rates of interest in the new development.
I am as keen as the hon. Member for Manchester, Blackley (Mr. Eastham) and as Manchester to see further traffic and activity in the north of England. That is why we have put our accent on trying to get more traffic going there. It is from that that the extra jobs will flow and not from building terminals, runways, aprons and taxiways which are not needed.
Sir John Biggs-Davison: In view of my right hon. Friend's concern for the environment around airports, how does he think that the beautiful rural character of the environment of Stansted will survive his proposals?
Mr. Ridley: An increase in the terminal buildings at Stansted will not improve the landscape, but there is an airport there already, and there are terminal buildings. It is conceivably possible that any new buildings will be slightly more pleasant to look at than the old ones. I hope that they are. We have to find a way of marrying careful and good design with our landscape; otherwise we shall become a museum and unable to earn our living.
Mr. D. N. Campbell Savours: Is the Secretary of State aware that the concern of Air Ecosse flying from Carlisle to Heathrow is landing charges? Will those charges rise or fall as a result of today's statement?
Mr. Ridley: The hon. Gentleman may not have heard it, but in my statement I said that the Civil Aviation Authority would be asked to supervise landing fees and charges at the various airports. I think that the result of that is more likely to bring down charges imposed by a monopoly than if we allow the monopoly to be free to charge what it likes.
Mr. Michael Colvin: Further to what my right hon. Friend said about privatisation, is he happy that individual airports which operate as independent plcs will be able to raise the capital required for their future expansion without any cross-subsidisation or Government guarantees? In relation to Heathrow, while uncertainty about terminal 5 persists, does he think that that company will be able to go to the market, especially as today he hinted clearly that, subject to planning, terminal 5 will be built one day?
Mr. Ridley: We shall put the seven BAA plc airports into a holding company, which will be able to make investments in any subsidiary that it wishes. The company which owns Heathrow will be one of the most prosperous companies in the country. The idea that it would not have credit to borrow to build a terminal, if one were necessary, seems unlikely.
Mr. Max Madden: Does not the Secretary of State realise that he is widely regarded as the Secretary of State for Transport who has dealt a grievous blow to our railway network, who wants to destroy public bus transport throughout the country, and who, with today's statement, has delivered a hammer blow to our regional airports? Does he further realise that millions of people who live in the north can see no justification for resources, whether public or private, being channelled into the south-east, that large numbers of unemployed people in the north can see no good reason for the creation of large numbers of jobs in relatively prosperous areas and, most important, that people who are inconvenienced by the existing travel arrangements can see no good reason for maximising flights from London airports?
Mr. Ridley: I find that a little odd. I think of myself as the Secretary of State for Transport who has presided over the highest rate of investment in British Rail for many years. I should like to claim that I am the Secretary of State for Transport who has freed the bus services from restrictions so that they can be improved and expanded, and who has now put forward a policy for the further expansion of the airline industry, which will bring jobs to all areas.
Mr. Christopher Murphy: Will my right hon. Friend consider my constituents, who are sandwiched between the development at Luton and that at Stansted? Does he recognise that they are extremely concerned on environmental grounds? Will he say what consolation I can offer them?
Mr. Ridley: My hon. Friend is in a slightly difficult position. There will have to be a public inquiry if Luton borough council makes proposals for expansion, and his constituents can put forward their views then. The developments at Stansted and Luton will result in a large number of extra jobs. My hon. Friend can draw some comfort from the fact that many people living in the area will benefit from those jobs, and that many, for that reason, are not wholly opposed to airport development.
Mr.MalcolmBruce: The Secretary of State will realise that hon. Members with BAA airports in our constituencies recognise the benefits that we have reaped from the managements, especially in Scotland. Is he aware of the anxiety caused by the fact that nowhere in his statement is there a suggestion that Scottish airports should be retained as a group? Indeed, he said that they would be sold off individually. Can he assure us about that? Regarding surface transport, does he recognise that the one way to help Prestwick airport to survive is to give the go-ahead to an effective rail link?
Mr. Ridley: The hon. Gentleman may have misheard me. I made it clear that the privatisation of BAA would be achieved by privatising the holding company, and that the separate companies would not be sold off independently. Therefore, the group will remain exactly the same as at present, and there will be little change in the relationship in that sense. The question of a rail link to Prestwick is one for British Rail, which can submit proposals, if it finds that a link is economic. That is also referred to in the White Paper.
Mr. Malcolm Thornton: Although I agree with my right hon. Friend that it is impossible to please everyone on these occasions, I thank him for the courtesy that he showed to the representations made by the North-West Regional Consortium, and the weight given to them in making his decision today. In so far as it is his responsibility, when he looks at the infrastructure requirements for the expansion of an airport which has seen spectacular growth — his statement said that of Manchester airport—will he ensure that investment will not be denied in favour of speculative growth at Stansted?
Mr. Ridley: I am grateful to my hon. Friend for what he said. I assure him that the question of investment in the rail link to Manchester airport will be taken on its merits, with regard to both an estimate of the build-up of traffic that will occur at Manchester and the environmental desirability of it. It will certainly not be affected or disadvantaged by anything at Stansted.
Mr. Gerald Howarth: I congratulate my right hon. Friend on having had the good grace to withdraw the artificial limits on Heathrow movements. Does he agree that that decision is inconsistent with the refusal to grant planning permission for terminal 5 now, which would present a great opportunity to redevelop Heathrow into the next century? Does he agree that Stansted would not be necessary if we had two runways at Gatwick, which the BAA has resisted and that it would be folly to build another international airport with one runway and repeat all these troubles in 30 yèars time?
Mr. Ridley: It is likely that some parts of the Civil Aviation Bill, to which my hon. Friend referred, will reappear in the later legislation. We regard air transport movement limitations both at Stansted and potentially at other airports as something which may eventually be necessary. That was the purpose of the original legislation. I doubt whether my hon. Friend would receive much support from people living in both Sussexes for his suggestion that there should be two runways at Gatwick. There is an agreement between BAA and the county council that that should not happen, and the Government
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have no plans to interrupt it. It would mean the demolition of a village and major environmental difficulties, and we prefer not to cause that.
Mr. Stuart Randall: I was pleased that the Secretary of State hoped that landing charges for a small airline at Heathrow would fall. I have a particular interest in Humberside airport. In the event of landing charges not falling, what special action will the Secretary of State take to help small airlines to be competitive and to overcome the problems of high landing charges?
Mr. Ridley: At present, the charges that airports levy are entirely within their control. I have no control over them, either at BAA or local authority airports. I propose that, as part of the new regulatory regime for airports generally, the CAA will have power to supervise landing fees and charges. However, legislation will have to come into effect before that can happen. I am sure that the CAA will want to interpret such a new power by stopping the exploitation of a monopoly and ensuring that the charging structure does not discriminate against any type of aircraft or airline.
Sir Anthony Grant: Although I appreciate my right hon. Friend's attempt to phase the expansion at Stansted, is he aware that an expansion to 15 million passenger movements a year would be wholly unacceptable to the people of Cambridgeshire? In view of his faith in the parliamentary process, may we assume he will encourage his colleagues to allow a free vote if that matter comes before the House? Before any such expansion takes place, why does he not do what the world's airlines want and instead of talking about sludge pits make a firm commitment to a fifth terminal at Heathrow?
Mr. Ridley: I doubt whether a proposal to increase the air transport movement limit at Stansted will come before the House for many years, because we have not yet imposed it, which is the first step. I cannot anticipate the decisions of my right hon. Friends the Leader of the House and the Patronage Secretary about the nature of the whipping on an occasion many years ahead and, perhaps, in a different Parliament, under powers which Parliament has not yet granted—[AN HON. MEMBER: "And a different Minister."] Yes, I accept that amendment.
As to a fifth terminal at Heathrow, we believe that retaining a large amount of room at Heathrow for domestic flights, as many hon. Members have stressed, is important. The result is that the number of passengers is not as great as was expected when Mr. Eyre reported. If it is not terminal capacity, but runway capacity, that limits the use of Heathrow, it would be wrong to embark on building an enormously expensive terminal before there is a clear need for it.
Mr. Cecil Franks: Does my right hon. Friend accept that many will interpret his statement not as one on a national airports policy but as one on an airport policy for the south-east? Many people will be appalled at the perfunctory reference in his statement to regional airports, especially airports in the north. Does he also accept that many people will infer from his statement unfair competition and subsidy by taxpayers for the development of Stansted? Will he explain why a Government who are committed to the

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operation of market forces cannot allow those market forces to determine the natural growth of Stansted, Manchester or any other airport?
Mr. Ridley: I have not made a precise measurement, but I believe that about one third of my statement dealt with helping regional airports. I would hardly call that a perfunctory reference in what was a long statement. I have given every assurance this afternoon that there will be no opportunity for cross-subsidy to Stansted to the detriment of other competing airports. Market forces will prevail to the extent that it will be for the proprietors of airports, whether Stansted, Manchester or any other to decide whether investments are made at commercial rates of interests.
Several Hon. Members rose—
Mr. Speaker: As an act of chivalry — Mrs. Bottomley.
Mrs. Virginia Bottomley: Thank you, Mr. Speaker.
Does my right hon. Friend agree that the only alternative to the loss of profitable air transport business to continental Europe is to have some expansion in the south-east? Although I understand why those in the affected areas, whether in the south-east or in the regions, are worried, we would all have much more reason to be worried if the Government's decisions resulted in the loss of British jobs and earnings.
Mr. Ridley: I agree with my hon. Friend. The first London airport is Heathrow with 29 million passengers. The second London airport is Gatwick with 14 million passengers. The third London airport is Charles de Gaulle with 13·6 million passengers. The fourth London airport is Schiphol with 10·9 million passengers. The fifth London airport is Manchester with 6 million passengers. Stansted does not even appear on the list.
Several Hon. Members rose—
Mr. Speaker: Order I am sorry that I have been unable to call all those hon. Members who wish to take part.
Mr. Anthony Nelson: On a point of order, Mr. Speaker.
Mr. Speaker: No. All that I can say is that I shall give them preference when we have a debate on the subject. It is no good raising a point of order on this matter now.
Mr. Nelson: On a point of order, Mr. Speaker. It will have become apparent to you during these lengthy exchanges that, although there has been strong criticism of the decision, especially from hon. Members for northern constituencies, no Back-Bench Member has supported the Government's policy, especially as it affects Gatwick and the south. Could I trespass on your generosity, Mr. Speaker, and ask you to allow me—
Mr. Speaker: Order. Had the hon. Member who represents Gatwick airport been present, he would certainly have been called. I must protect the other business of the House. It is impossible to call every hon. Member every time. I have gone well over the time that I normally allow—more than an hour—for Back-Bench Members, and I called many Conservative Members. It is unfair to try to raise points of order to continue questions on the statement—
Mr. Harry Greenway: On a point of order, Mr. Speaker.
Mr. Speaker: As I told the hon. Gentleman yesterday, he does extremely well.
Mr. Peter Bruinvels: Further to that point of order, Mr. Speaker. There are more than 40 Members of Parliament for the east midlands, and the East Midlands international airport was one of the major concerns—
Mr. Speaker: Order. I will now take a point of order on a different matter.
Later—
Mr. Greenway: On a point of order, Mr. Speaker.
Mr. Speaker: Very well—Mr. Greenway.
Mr. Greenway: I do not think there is any need to be cross about it; that is what we are here for, is it not? May we have some guidance on the way in which you measure the time that you are prepared to allow on statements? This afternoon, almost a record number of hon. Members rose, but the statement was not allowed a record time.
Mr. Speaker: I cannot give the hon. Gentleman any guidance on that. It is a matter of discretion, and I must make a judgment on the basis of the subsequent business on the Order Paper. The hon. Gentleman would have been deeply offended had he wished to speak in the subsequent debate but had been kept out as a result of my allowing the statement to run over time. On this occasion, the statement began at 3·41 pm and continued until after 5 o'clock, which I believe was a more than generous period.
Mr. Tony Favell: Further to that point of order, Mr. Speaker. With regard to the point of order raised by my hon. Friend the Member for Ealing, North (Mr. Greenway), will you bear it in mind in future that if there is not going to be a vote on such an extremely important matter, every right hon. and hon. Member who wishes should be given the opportunity to ask questions, especially if they represent constituencies such as mine, which will be adversely affected by the decision? This is probably the most important matter to come before the House this Parliament.
Mr. Speaker: There will be subsequent opportunities to debate the matter at Question Time, and there will be legislation in due course. I have already told the House —I keep my promises in this regard—that those who are unable to ask questions on statements are given preference when we come to debates. In fairness to other hon. Members, I cannot allow questions to continue for ever. If I did, we should never get our business finished.
Mr. Gregor MacKenzie: Further to that point of order, Mr. Speaker. Many hon. Members will know that, for some years, the length of statements has grown considerably, and I believe that you were extremely generous in your handling of the matter today. It is not the privilege of every hon. Member to be called every time he rises. That has frustrated many of us for many years, but you should appreciate, Mr. Speaker, that some of us understand how generous you are. Secondly, on a purely parochial note, we Members from Scotland would like to get on with our business.
Mr. Speaker: I am grateful to the right hon. Member. In deference to those hon. Members who have raised the

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matter, may I say that I fully understand their anxiety. I am conscious of the fact that they have constituency interests in this matter. There will be other opportunities to discuss it, and hope that they will use them.

Falkland Islands (Member's Statements)
5.4 pm
Mr. Bill Walker: On a point of order, Mr. Speaker. You will recall that I raised a point of order on 15 May, when I drew your attention to early-day motion 686 on a statement that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) was alleged to have made during a visit to the Falkland Islands.
[That this House condemns the reported statement of the honourable Member for Carrick, Cumnock and Doon Valley that the Falkland Islanders lacked guts and calls upon him to withdraw the statement; and further calls upon him to give up his campaign of rewriting the history of the events before, during and after the conflict which is designed to justify his attitude towards the sending of the Task Force to restore freedom, the rule of law and democracy to the islands after the unprovoked invasion by the Argentinians.]
There is a letter in the Daily Telegraph today from the lady in question, Mrs. Pat Luxton. Bearing in mind the fact that the hon. Member for Carrick, Cumnock and Doon Valley was also reported as saying that he had evidence that sinking of the fishing boat Mhari L had been caused by a United States submarine, which has since been proved to be untrue, what procedure can be used to remove the uncertainty about the validity of those reports, since I have withdrawn my early-day motion?
Mr. Speaker: This matter was dealt with. Apologies were offered and accepted, and I cannot be concerned—
Mr. George Foulkes rose—
Mr. Speaker: Order. I cannot be concerned with letters that appear in the press which may seek to reopen the matter. I shall allow the hon. Gentleman to comment, but then I must close the matter.
Mr. Foulkes: Further to that point of order, Mr. Speaker. I am worried by the fact that the hon. Member for Tayside, North (Mr. Walker) sought to link those two matters. I confirm that the account by Patrick Watts and Mrs. Luxton has been altered by them in three separate ways. First, they accept that there was no breaking of glass. Secondly, they accept that the Secretary of State for Defence was not involved. They have even now given a different version of what I am supposed to have said. Yet I have maintained consistently exactly what I said, which is supported by the hon. Member for Isle of Wight (Mr. Ross), who spoke to eye witnesses. I stand by what I said, notwithstanding what the lady said in her letter in the Daily Telegraph today.
As to the Mhari L, I made it clear that circumstantial evidence was given to me—[HON. MEMBERS: "Ah."] I made that quite clear. In the light of the inquiry, I am grateful for the opportunity of saying that the direct evidence shows that it was not a submarine. I fully accept that. I am surprised that the hon. Gentleman linked the two matters, and I am sure that he would wish to withdraw the implications of his doing so.
Mr. Speaker: Let us leave the matter there.

Local Authorities (Political Expenditure)
5.10 pm
Mr. Roy Galley: I beg to move,
That leave be given to bring in a Bill to make provision relating to expenditure by local authorities for political purposes.
The object of the Bill is to ban the use of ratepayers’
and taxpayers’ money for politically motivated propaganda. Local authorities have a duty to inform the public about their services and to provide proper information services about their areas. Such activities have always been regarded as valid.
Before the reorganisation of local government in the early 1970s, considerable anxiety was expressed in a series of reports that the information activities of local authorities were too limited. Provision was then made in the Local Government Act 1972 to allow the development of a range of information services. There was a considerable development in publicity activities by local authorities after 1974. In recent years, however, those activities have grown enormously and extended beyond the scope of giving information to the dissemination of party-political propaganda.
Since 1980, we have seen a series of political campaigns by local government, many of them opposing Government policy on matters relevant to local government. They have included the abolition of the metropolitan county councils, rate limitation, the extent of council house sales, the Police and Criminal Evidence Act 1984 and many other topics. There have also been campaigns on matters unconnected with local government —nuclear disarmament, the miners’strike, the future of some industries, immigration controls, and so on.
In promoting such campaigns a wide variety of normal advertising techniques have been used, including leaflets, posters, stickers, advertising space on hoardings, the national and local press and, to a limited extent, radio and television. Such diversity makes it exceedingly difficult to identify all expenditure on political activities, but some figures are available.
As so often happens, the worst offender in regard to wasteful expenditure has been the GLC. Its current "awareness campaign" anticipates expenditure of £10 million over about three years. That sum is greater than the total expenditure of many district councils. West Yorkshire county council has spent approximately £600,000 campaigning against the abolition of metropolitan county councils, and the West Midlands county council has spent approximately £500,000. Large sums of money are now being spent on opposing the Transport Bill and on a plethora of other party political activities.
Justification for such activities is often based upon sections 111, 137 and 142 of the Local Government Act 1972. Those sections are widely drawn and do not include any control over party political propaganda of the type that we have seen recently.
There have been a number of court cases on those matters and so far none of them appears to have succeeded in curtailing the use of taxpayers’ and ratepayers’ money for those ends. Although expenditure under section 137 of the 1972 Act is limited, it is possible to justify considerable expenditure under section 142.
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The lack of clarity in the relevant statutory provisions presents considerable difficulties to auditors in accounting for such local government expenditure. There is no adequate provision in law to distinguish between the dissemination of party political propaganda and the supply of unbiased information, which was clearly envisaged when the 1972 Act was passed. The Bill seeks to remedy that defect.
Apart from the supply of information, there are other matters of anxiety. Voluntary organisations outside the local authority structure are often used in campaigning by local authorities. Funds are often passed to them for campaigning. There is also a problem with the involvement of local authority staff in such campaigns as part of their day-to-day work. Staff can be pressured into participating in such activities when they wish to retain freedom of thought and action in party political matters. There are also instances of the establishment of trust funds controlled by political parties for party political ends.
A new height of outrage has been reached recently by the West Yorkshire county council with its biased approach. It has allocated ratepayers’ money for highway maintenance in areas on the basis not of need or fair treatment but of the political representation of those areas. All those matters could be dealt with in a Bill banning the use of ratepayers’ money for such political purposes.
There is clearly a requirement for local authorities to provide newsletters and newspapers to give information. If such publications were produced, the Bill would provide for equality of treatment between all political parties where political comment was seen to be proper.
There is plainly a major problem of definition in drawing the dividing line between what is information and what is politically motivated propaganda. There is a precedent, which the Bill could use, based upon the Independent Broadcasting Authority's code of standards and practices. That code expressly prohibits advertise-ments which are directed towards any political end, local or national, and which are not impartial on matters of political or industrial controversy or current public policy, local or national. That definition has worked well for the IBA, and it would form the basis of the definition in the Bill.
In our democratic society, reasonable people object to the use of public money for political purposes. There are sound reasons for their objections. The task of local government is to provide local services. In many instances, the publicity material produced has little to do with the provision of those services. Much of the recent publicity has flouted the long-held convention that public funds should not be used to gain party political advantage. Such expenditure involves the diversion of resources from the provision of services to the community. It is wrong to use scarce resources for party political propaganda when they should be used to provide services.
It is disgraceful that some councils claim that they have insufficient money to provide public services when they divert a great deal of money towards gaining political advantage. Such party political propaganda means that public debate is diverted from Parliament. Extra-parliamentary activity on that scale tends to undermine the role of Parliament.
What further offends ideas of fair play is that the information in so much of the publicity material is often

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based upon unsubstantiated allegations and is rarely grounded in fact. It is designed to play upon the emotions and arouse unjustified fears.
The time has come to prevent the use of public money on party political objectives. The political debate must be encouraged, but when people wish to put forward party political views they should raise funds to do so. To steal money from the public to further political objectives is a national disgrace, and it must be ended as soon as possible. I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Roy Galley, Sir Paul Bryan. Mr. Marcus Fox, Mrs. Jill Knight, Mr. Gary Waller, Mrs. Elizabeth Peacock, Mr. John Butterfill, Mrs. Edwina Currie, Mr. Michael Brown, Mr. Geoff Lawler, Mr. Tony Favell and Mr. Derek Conway.

LOCAL AUTHORITIES (POLITICAL EXPENDITURE)
Mr. Roy Galley accordingly presented a Bill to make provision relating to expenditure by local authorities for political purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 5 July and to be printed. [Bill 154.]
Orders of the Day

  Rating (Revaluation Rebates) (Scotland) Bill
  Considered in Committee
  [SIR PAUL DEAN in the Chair]

Clause 1

  RATES REBATES
  5.20 pm
  Mr. Donald Dewar: I beg to move amendment No. 1, in page 1, line 5, leave out 'may' and insert 'shall'.
  The amendment has the virtue of being short and simple.
  Mr. Albert McQuarrie: Hear, hear.
  Mr. Dewar: I knew that that would immediately appeal to the hon. Member for Banff and Buchan (Mr. McQuarrie). We constantly think of him, particularly when we are looking for some old-fashioned Tory independence, as we are in this debate.
  The Bill says that the Secretary of State may provide for revaluation rebates. We suggest that the discretionary "may" should be made a mandatory duty on the Secretary of State and that he should operate a similar system in future years.
  We are returning to a point with which the Committee is familiar. It is the problem of what is to happen in the remaining part of the quinquennium once the rescue package for 1985–86 is behind us. We say that there is considerable merit in trying to ensure that the Government are committed to continuing relief—I shall deal later with the objections that are likely to be made by the Minister—during the remainder of the quinquennium. It would be thoroughly unsatisfactory if there were help in 1985–86, but nothing in subsequent years. The Bill does not preclude the possibility of further help, but there is no guarantee that it will be forthcoming. It is common sense that Parliament should put that right. I note that the Under-secretary of State is messenger boy for the Secretary of State again today — the right hon. Gentleman is not here; he is quite a stranger in Scottish debates these days. We regret that fact.
  Mr. McQuarrie: The Secretary of State is doing a job in Scotland.
  Mr. Dewar: I should be happy if the right hon. Gentleman were doing a job in Scotland, though if he were, he would, once again—because of his policies— be out of step with everyone else in Scotland.
  If it is necessary to have the rescue package, which was not contemplated a few short months ago, in the current financial year, why is such a package not necessary for future financial years? Give or take one or two minor adjustments, we shall have the same valuation roll for the next five years. If we do not get a guarantee that the system

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  will continue, there will be considerable help in the current financial year and the full force of the revaluation will suddenly fall on those who are getting some assistance, limited though it is, under the Bill.
  The Under-Secretary might argue that rates could decrease if local authorities would cut their expenditure and reduce their services to the public. I might say that rates could be reduced if the Government would restore the rate support grant that they have filched over the years. A third party looking at the exchange might say that it was an arid argument—and I might have sympathy with that view.
  Let us compromise by saying that it is almost self-evident that the possibility of a substantial decrease in rates in the next year or two is one on which, to say the least, we cannot count. We can apportion the blame for that on another occasion.
  The Bill seeks to deal with what are seen as inequities arising out of the revaluation. However, is it fair that a householder should be faced with a threefold or fourfold increase in his rateable value while others face increases only twofold? Why should a business suddenly be faced with an enormous sevenfold or eightfold increase in its rateable value while its competitors are more lightly treated?
  The Government have said that they will remove the peaks and even out the effects of the revaluation. They are aiming to alleviate the wide variations. However, if the Bill is aimed at dealing with the individual disasters and horror stories that have arisen from the vagaries of the revaluation process, the exercise should be repeated each year.
  The Under-Secretary may say that our proposal is unfair and is far too rigid, because it would commit the Government to maintaining a system based on a multiplier of three times the pre-valuation rateable value. If that stops hon. Members supporting the amendment, they should turn their attention—their support would be welcome— to amendment No. 3, which would allow a variation of the multiplier in the Bill. Putting the multiplier in the Bill, rather than leaving it to the statutory instrument, itself creates inflexibility, but the Government have decided on that course and we have to live with it.
  The other argument that may be used by the Minister is that these matters should be left to the discretion of the Secretary of State and that we can rely on his good judgment and his perception of what makes political, social or economic sense in Scotland. The sad truth is that this matter is not within the discretion of the Secretary of State. As I pointed out on Second Reading, that fact was brutally brought to our attention by the Chancellor of the Exchequer on his foray to Perth for that gathering of the faithful which the Tories dignify with the name of a conference. The Chancellor then made it clear that he was —I use his phrase—"bailing out" the Secretary of State. He said that there were no more moneys likely for Scotland next year and added:
  "I do not think the Secretary of State will find me in the same compassionate, open-handed and generous mood next time."
  5.30 pm
  It is clear, therefore, that the Treasury will have a considerable say in what happens in future. I give Conservative Members credit for wanting to see this system continued for the rest of the quinquennium. The
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  trouble is that the Treasury might mount a punitive expedition against the Scottish Office on this matter, and the Treasury often wins.
  Mr. Michael Forsyth: Is the hon. Gentleman aware that it is possible for the Secretary of State to meet the obligation as part of the rate support grant, without the Chancellor having to bail him out? The problem this year was that the rate support grant had already been determined.
  Mr. Dewar: I accept that the hon. Member for Stirling (Mr. Forsyth) is producing a solution, but in doing so he is inviting the Secretary of State to find the money at the expense of local government services, and that is not acceptable to my hon. Friends and me. It would be going back to the so-called "first help from the Secretary of State" scheme, when the domestic element was raised to 5p in the pound.
  I do not know how many Conservative Members have bothered to look up the details, but the hon. Member for Stirling will remember how the Secretary of State made a great virtue of the help that he was giving, when in reality £19 million came from the Secretary of State and £31 million came from the unfortunate local authorities. The remainder came from the proceeds of industrial derating from 50 to 40 per cent.
  If it is said that we can make progress by cutting services in that way, the hon. Member for Stirling must realise that such a suggestion is totally unacceptable to Labour Members. The whole point about the £50 million —I wish to be fair to Ministers because they made a tremendous virtue of it at Perth and elsewhere—was the claim by the Government that it was new money and that it represented a victory at the expense of the Treasury. We can on occasions be generous, and that is why on this occasion Opposition Members are fighting to preserve the victory of the Secretary of State and want to help him beat off a counter-attack by his rapacious colleague, the Chancellor of the Exchequer.
  Conservative Members would do well to consider the impact of a sudden withdrawal of the concession. Consider what would happen if the Treasury won the battle for the financial year 1986–87 and instead of £30 million—or whatever the figure may be that will be paid out of the £50 million; we shall debate that whole issue later — suddenly nothing was available.
  In those circumstances, the electoral impact would be considerable. I trust that nobody will suggest that Conservative Back Benchers are above such political considerations; too many of them are looking nervously over their shoulders at their electoral prospects, and discouraging they are. I recommend them to consider the practical impact of allowing this help to be discontinued after the current financial year.
  There is, therefore, political common sense in what I am arguing. However, it is also a matter of equity, particularly for commercial ratepayers, who are the main beneficiaries under the scheme. There is much to be said for people knowing that they will have this help for the remainder of the quinquennium, because uncertainty will leave them contemplating potential increases in rating bills of perhaps £10,000.
  The Parliament Under-Secretary of State for Scotland (Mr. Michael Ancram): How does the hon. Gentleman think that the amendment would achieve the purpose that he has described?
  Mr. Dewar: The amendment would place a duty on the Secretary of State—
  Mr. Ancram: Answer my question.
  Mr. Dewar: The Minister will have an opportunity shortly to put his case, and, as is often the case with Opposition amendments, he may have some clever points to make. He may try to defeat it on the grounds that his lawyers and back-room boys have come up with interesting points on how it would fail to achieve the purpose that I have described. I am led to believe that that will be the case as I see the Minister examining a carefully typed script.
  There may be something wrong with the drafting of the amendment. If the Minister accepts it in principle and promises to introduce an amendment in another place to give effect to what we have in mind, I will willingly withdraw it. But if the Government will not give a guarantee that they are committed to the principle of maintaining this situation throughout the quinquennium, we shall mark our view on the matter. That is why we wish to place a statutory duty on the Secretary of State to continue the system for the remainder of the quinquennium.
  As I said at the outset, we are discussing a simple issue. The amendment, which would be supported by the general body of ratepayers in Scotland, should be accepted by the Minister.
  Mr. Gavin Strang: I support the remarks of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). Many people in Edinburgh will benefit from the Government's concession. This is the first opportunity that I have had in the House to welcome the concession. I welcome the Government's action in providing for ratepayers at the extreme end of the spectrum in terms of revaluation. Unfortunately, however, the concession does not go far enough.
  It is crucial for the people of Edinburgh to know that this protection, limited though it is, will be maintained for some years to come, because we must raise local authority expenditure in Edinburgh to levels more comparable with those of other authorities. Our services in Edinburgh— our recreational assets, housing and so on—have been screwed down intolerably and have been allowed to deteriorate in recent years to an extent which may be unique in Scotland. Indeed, that is the basis of the present confrontation with the Government, who are intent on imposing a Tory budget on the majority Labour council in Edinburgh.
  Edinburgh's services and general standards will be raised sooner or later. I believe that that will happen sooner, even before Labour wins the general election in two or three years from now. As my hon. Friend the Member for Garscadden pointed out, we must consider the period between now and the end of the revaluation period. That is why it is important to know that this concession, which does not go anywhere near far enough—it is a blunt instrument and is no alternative to the real solution, which is reversing successive Government cuts in local government expenditure — will continue to the end of the quinquennium.
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  I do not expect the Minister to show sympathy or understanding for the plight of the people of Edinburgh, who have suffered under Tory rule in recent years. I hope, however, that he will at least respond on the narrow issue of the future protection which hard-hit ratepayers would obtain as a result of the amendment.
  Mr. Bill Walker: This is a tempting amendment. I listened with interest to what was said about it by the hon. Member for Edinburgh, East (Mr. Strang). My hon. Friend the Under-Secretary of State for Scotland will, I hope, confirm that neither the amendment nor the clause will affect my constituents, many of whom will be registering appeals against the new valuations. My hon. Friend will be aware, as he has received all the papers, that I have carried out a detailed study of the matter. The study shows clearly that many of my constituents will be successful in their appeals. The question is how long it will be before decisions on those appeals are reached.
  The Bill will to some extent mitigate hardship this year, and we are grateful for that help, but appeal decisions may not be reached until next year. That is causing considerable concern, particularly in Angus. Expenditure in Angus has never been at a very high level, nor, for that matter, has it been very high in Perth and Kinross. The expenditure programmes of these authorities have been very carefully worked out. The changes that have taken place, particularly in Angus, are the direct result of the revaluation anomalies. Therefore the Opposition amend-ment is tantalising and I look forward to hearing what my hon. Friend has to say about it.
  Mr. Malcolm Bruce: May I follow up the point made by the hon. Member for Tayside, North (Mr. Walker). Some small businesses will look at this package and think that it will solve their problems, but eventually they will find that it has solved their problems only for this year. The very large rate increases that they fear will still apply next year, unless the Government enter into a commitment to continue the present arrangement. If small businesses do not realise this and do not lodge an appeal this year, they will find that next year it is too late. Either the Government must be prepared to continue this arrangement or, if they are unable to make that commitment, they must use their good offices to ensure that people appeal against the valuation if they believe that it is too high. We have heard of circumstances in which people might be persuaded not to appeal because they are to receive the full benefit of the adjustment this year— an almost exact adjustment in terms of their valuation. However, the consequence is that next year they will suffer.
  Although we welcome this measure in principle, it could be just a stay of execution. If the Government are not prepared to accept in principle the amendment of the hon. Member for Glasgow, Garscadden (Mr. Dewar) they should at least make it clear that they intend to continue the arrangement, if they possibly can, and that people should appeal, regardless of the present arrangement, in order not to forfeit their right to future adjustments.
  5.45 pm
  Mr. Michael ForsythIf my hon. Friend the Under-secretary of State is not prepared to accept this amendment, I hope that, having embarked upon a scheme for providing relief for small business men, he at least

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  recognises that it is essential for any small business to know what its position in future years will be and to be given at least some indication of its likely overheads. Just as the principle which guided his hand in introducing this Bill was the nature of the uncertainty and the nature of the impact on cash flows of a sudden and unexpected rates increase, so, equally, I ask my hon. Friend to recognise that businesses will be looking for certainty.
  I hope that my hon. Friend will be able to say whether this scheme is expected to continue. My constituents would prefer to know now whether they will receive no relief next year rather than to be faced with a nasty surprise later. If my hon. Friend is not prepared to accept this amendment, which would be binding upon him, it is important that he should say what is to happen next year.
  Mr. Hugh Brown: The Committee is indebted to my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) for moving this amendment. I have to admit that even after 20 years as a Member of Parliament I do not know the difference between "shall" and "may", but I do not suppose that is a matter of fundamental importance in terms of the information that we are trying to obtain from the Minister. It is accepted generally that annual provision is now made for the relief of domestic ratepayers. As relief for commercial ratepayers is to be introduced, it ought to be possible to assume that annual relief will be provided for them, too.
  The Government have been rushed into introducing this legislation. I do not know whether businesses which will go out of existence unless relief is provided for them this year will be able to continue in business if relief is not provided for them next year. I hope that the Minister can provide information about what prompted the Government to introduce this measure. Were they prompted to introduce it because of genuine hardship and because it was suspected that without relief certain businesses would go out of existence, or were other factors involved?
  Mr. Bill Walker: The hon. Member for Glasgow, Provan (Mr. Brown) is making a very important point which must be discussed. The evidence I have submitted to my hon. Friend the Under-Secretary of State includes evidence which shows clearly that in the past five years the net profits realised by businesses were less than the increase in rates that they will be forced to pay. There is no way, therefore, in which those firms could remain in business and be viable.
  Mr. Brown: As upholders of the capitalist private enterprise system, perhaps they should not be in business. I do not have access to the information held by the hon. Member for Tayside, North (Mr. Walker), but the Government should be in possession of this information by now. I am assuming that the Government have been given a great deal of evidence about businesses that have suffered rates increases that are so savage that they will have to go out of business because the increases are greater than their profits.
  Mr. John Maxton: That is true not only in the commercial sector which the hon. Member for Tayside, North (Mr. Walker) is delighted to support. Those who are engaged in the teaching profession in my constituency will receive no relief under the Bill because
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  their rates increases are not sufficiently large, but the increase in their rates will be higher than the increase in salary that this Government are prepared to concede.
  Mr. Brown: I do not intend to follow up that point. It goes a little wide of the amendment. I should be grateful if the Under-Secretary of State would provide the information that I seek. I should be grateful for evidence upon which the change for this year is based so that we may judge whether such a change would be desirable next year and in subsequent years.
  If the Minister cannot or will not say, can we assume that it is because there is some possibility of totally abolishing liability in the commercial sector? Is that part of the review now being undertaken, and is that why he cannot say what might or might not happen next year?
  Mr. Gordon Wilson: The hon. Member for Glasgow, Garscadden (Mr. Dewar) is to be congratulated on his gallant effort to attack the Government on their future intentions towards the scheme. But whether the amendment is effective is neither here nor there. After all, a principle is at issue. The Government have been bounced into producing this scheme for good reasons that are partly political but partly due to the howls of discontent that have come from the commercial sector.
  If the Government propose to make use of the scheme only for this year, there will be substantial problems next year, and the Government will have succeeded only in buying time for a year. However, they will have left a time bomb ticking away, and that could have deleterious consequences for small business men. Indeed, the Government owe it to the Committee to come clean and to say whether they intend to continue the scheme. If so, that will come as some relief to those in the commercial sector. It would also help if the Government could say whether, if they intend to continue it, they will also want a tapering effect so that the scheme will disappear during the current quinquennium or when the Government have produced an alternative scheme for financing local government.
  If the Government proceed with their local government fund-raising reforms, they may well apply them to the domestic sector while leaving the commercial and industrial sectors untouched. If so, that is all the more reason why the bad effects of this revaluation should be diluted by the Government over a period.
  In practice, the Government will not get many thanks from the commercial sector next year when the rates bills come tumbling in. People's memories can be very fitful, and although the Government may get some thanks for the relief that they are giving this year, they will run into a tirade of anger and abuse, such as they have had this year, if they fail to follow through with a coherent and consistent system to give aid to the commercial sector. The Government should come clean this afternoon and tell us exactly what they have in mind. It may not be▵ possibleto specify figures, but it is important that they should give some information about their future intentions.
  Mr. John Home Robertson rose—
  Mr. George Foulkes rose—
  The Second Deputy Chairman of Ways and Means (Sir Paul Dean): Mr. George Home Robertson.
  Mr. Home Robertson: I think, Sir Paul, that you have just called a composite hon. Member, but on this occasion I shall, if I may, take precedence over my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes).
  The amendment seems to be attracting quite widespread support, and I think that all those who have spoken have supported the spirit of it. Consequently, we all look forward to what the Minister will have to say about it. I feel that the amendment is right, because I do not want to give the present Secretary of State for Scotland any additional discretion. He is always only too willing to impose constraints of every kind on local authorities, yet when he wants to stick his nose in and to take direct action in the affairs of local authorities, he wants those powers to be purely discretionary.
  There seems to be a manifest need for this relief not only this year but in succeeding years, and Parliament should therefore legislate accordingly. Incidentally, some of the constraints that the Secretary of State has imposed on local authorities in recent years have probably led him into this very morass. It is his actions in cutting rate support grant year after year that have put so many ratepayers in Scotland in such a parlous situation that the Government have been forced, through political pressure, to respond in this way. All hon. Members must recognise the dificulties that the Government have imposed on ratepayers and must be concerned about it. We must seek ways of alleviating the problems of ratepayers while at the same time preserving the quality of essential local authority services for those whom we represent.
  Mr. Barry Henderson: The Bill will considerably help those whose valuations have increased threefold or more, but is it not true that for the great majority of ratepayers in Scotland, and particularly in Fife, the spending policies of local authorities have had more to do with increased rate bills than any revaluation?
  Mr. Home Robertson: I do not have detailed figures at my fingertips, but I suspect that the hon. Gentleman's statement is inaccurate. If my part of the world is anything to go by, the rate increases imposed in recent years are related far more directly to cuts in the rate support grant than to anything that local authorities may have done. For example, in my constituency East Lothian district council has reduced the rate-borne element of its expediture in the current year, but as a result of the latest round of rate support grant cuts, the rates have nevertheless been forced up. The hon. Gentleman could not ask for a clearer example than that.
  There is a case for this formula, flawed as it may be. But if it holds good for this year, it must also hold good for next year and the succeeding years. If there are anomalies and problems this year, those same problems will exist next year and the year after that. The Government may think that they have bought off Sir James Goold and all the others who have been making such a noise in recent months. Indeed, it may well be that this sum that the Chancellor of the Exchequer has been prepared to cough up as a one-off contribution can buy a little peace and quiet for Conservative Members this year. However, questions flow from that, to which we shall no doubt return. First, is that full £50 million actually going to be disbursed through this mechanism? Perhaps we should press the Government further on that.
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  However, the problem will be with us next year. Far be it from me to express too much concern about the future of Conservative Members, but yesterday I saw a prediction that was based on figures from recent opinion polls, which showed that only nine Conservative Members of Parliament for Scotland were likely to be elected at the next general election.
  Mr. McQuarrie: On a point of order, Sir Paul. We are debating amendment No. 1, which was selected by Mr. Speaker. With the greatest respect I think that the hon. Gentleman has drifted away from it.
  The Second Deputy Chairman: I have been listening carefully to the hon. Member for East Lothian (Mr. Home Robertson) and I hope that he was making no more than an incidental reference.
  Mr. Home Robertson: I was trying to help the hon. Member for Banff and Buchan (Mr. McQuarrie), as he is not one of the nine Conservative Members who is likely to survive. However, if "shall" was substituted for "may", he might have a better chance—
  Mr. McQuarrie: What about reselection?
  Mr. Home Robertson: I have been reselected, but I do not know whether the hon. Gentleman has been. Indeed, it is interesting to note that the Secretary of State and the Minister could be casualties if they do not get the formula right. Even if they do not accept the obvious merits of the case for getting this business right now, perhaps they will accept them in the interests of self-preservation.
  6 pm
  Mr. Foulkes: It is a great pleasure to follow my honourable and patrician Friend the hon. Member for East Lothian (Mr. Home Robertson) on this matter.
  I found the concern of the hon. Member for Stirling (Mr. Forsyth) for his constituents who have been affected very touching, especially as I have been reading reports — no doubt untrue—that because of the MORI poll findings he is looking for a seat in another part of the United Kingdom, unlike the hon. Member for Banff and Buchan (Mr. McQuarrie) who will fight to the bitter end in his area.
  Mr. Michael Forsyth: I cannot imagine the source of those reports. I should be grateful to know where the hon. Gentleman read them.
  The Second Deputy Chairman: Order. There is nothing to do with polls in the amendment. We must stick to the amendment.
  Mr. Foulkes: It is interesting to note that the hon. Member for Stirling did not deny the reports. However, I shall change my tone because I am not a controversial person, as hon. Members know.
  I thank the Minister for receiving a deputation earlier today, which I led, on behalf of the co-operative movement in Scotland. I declare my interest as a sponsored Co-operative Member. The Minister received the deputation with the greatest courtesy. He listened carefully to what was said and was diligent in answering our points.
  The representatives argued strongly on a point that my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) argued cogently when he moved the amendment

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  —that help should be continued in successive years. The representatives warned the Minister—I think that he took the point because they mentioned stores in his constituency—that societies such as Scotmid co-op are having seriously to consider closing stores. It will interest my hon. Friend the Member for Edinburgh, East (Mr. Strang) to know that one store that may be closed is a modern supermarket in Granton, which was opened only a few years ago when I was on the board of the St. Cuthbert's co-op.
  The representatives argued strongly for the continuation of this help to try to alleviate—and it is only a small alleviation — the problem. I do not think that it is improper to quote the Minister because he made his remarks in public. He said that the question of continuation would be considered in the autumn when such matters were generally reviewed.
  I want to put some questions to the Minister. If the answers are outside his prepared text, I hope that he will deviate from it and answer them. It would be even better if he did not have a prepared text. In the discussions in the autumn, what will be his view and that of his right hon. Friend the Secretary of State for Scotland? Will they fight for a continuation of help? The House would like to know, as would the commercial ratepayers of Scotland. What will the Scottish Office do?
  My second question is the most important: what will be the basis of any decision? What will be the criteron for continuing the help in future years? Will it depend on whether the money is made available? Will it depend on whether that money can be prised out of the Chancellor? I used that phrase when I met the Minister earlier today. Will it be based on the current year's experience? If there is any shortfall this year, will it be carried over to next year?
  My hon. Friends and I suspect that the decision will be based on whether the heat has gone off the Government —whether Sir James Goold has forgotten about it and is not jumping up and down. Indeed, by then he might be Lord Goold. That is the traditional way of buying off people. Will the Government wait to test the temperature at the run-up to the next party conference? We need to know the criteria for the decision. I hope that the Minister can answer those genuine, serious and, I hope, to some extent, intelligent questions.
  Mr. Maxton: When I listened to my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), I was slightly undecided whether to support the amendment. From a political point of view, the amendment is pure altruism on our part. We have discussed what will happen to Conservative Members if the money is not continued in successive years. If it is not continued next year, when the Conservative party faces the regional elections in 1986, it will find that the ratepayers of Scotland are yet again up in arms against it.
  I am tempted to say that I welcome that prospect because, unlike most of my hon. Friends, I have two Conservative regional councillors in my constituency. Of course, we shall take both those seats at the next election, but it would be much easier if the ratepayers of Newlands were up in arms against the Conservative Government.
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  However, I shall prove my altruism by giving my support to the amendment. Although it may not be the most beneficial action for the Labour party in Scotland, it is certainly beneficial for Scottish ratepayers.
  I want to take issue with the hon. Member for Stirling (Mr. Forsyth) about his intervention in the speech of my hon. Friend the Member for Garscadden. He sugggested that next year the problem might be solved through the rate support grant rather than by continuing the rebate system. We would object strongly to that because that could be achieved only by a cut in the services provided by local authorities. Conservative Members keep saying that local authorities are overspending. They should come to my constituency and see the deterioration in housing, in cleansing and in other services provided by the local authority. They could not then say that the increases are down to high-spending authorities. That is nonsense.
  The intervention by the hon. Member for Stirling was surprising. I assume that he still thinks that local authorities that he believes are overspending—including his local authority, Stirling district council—should be hit and receive less rate support grant than those authorities that he believes to be good authorities. If the Government were to adopt his scheme, his constituents who are paying high increases in their rates will not benefit next year because, presumably, the rate support grant will be cut. However, the constituents of the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) may benefit because they have a good local authority that does not overspend.
  I do not know what the hon. Gentleman thinks may be the solution. The rebate scheme is for the benefit of all ratepayers, no matter which local authority serves them. Surely that is what the hon. Gentleman wants, rather than using the rate support grant.
  Mr. Michael Forsyth: Those of my constituents who suffered an increase in rateable value of more than three times would still benefit because the money would be available. The point about a reduction in rate support grant is perfectly apparent, and I am glad to have the hon. Gentleman's confirmation of that. The cuts in the RSG in Stirling district and Central region came about because those authorities decided to spend hundreds of thousands of pounds on striking miners and other political causes. The cuts in rate support grant are a result of their spending decisions, which will no doubt be reflected in my constituency in the regional and district council elections.
  Mr. Maxton: It is obvious that the hon. Gentleman does not listen. I am not supporting cuts in rate support grant for Stirling district council. It has spent money on families of miners in desperate need, not on miners themselves, and many other local authorities rightly spent money in that way. Stirling district council should not have a cut in its rate support grant, but the hon. Gentleman thinks that it should. He said to my hon. Friend the Member for Garscadden that his constituency would suffer because of his Government's policies.
  This scheme is fair and should be continued for the full five years of the revaluation period so that there is not a sudden dramatic increase in the rates. So far, we have not heard whether the Government will concede that point. We heard nothing from the Secretary of State when he made his statement or on Second Reading when the point was pressed. Today, no guarantee has been given that the scheme will continue. It will be interesting to see whether the Minister will give one.

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  If no guarantee is given, we shall have to say that the money was given this year for purely political purposes, and not with any real regard for ratepayers in Scotland. I am waiting with interest to hear what the Minister has to say.
  Mr. Ancram: I am sure that the hon. Member for Glasgow, Garscadden (Mr. Dewar) was greatly relieved to hear that the hon. Member for Glasgow, Cathcart (Mr. Maxton) is to support the amendment, because not only is the hon. Member for Cathcart the Scottish Whip, upon whom the hon. Member for Garscadden depends to ensure that his troops do as they are told, but the hon. Member for Cathcart's name is on the amendment. Therefore, the House has the right to presume that he believed in what the hon. Member for Garscadden was saying.
  For a moment, I wondered whether the hon. Member for Garscadden was having the same trouble as I had of not quite understanding what the amendment is meant to do, but that might be a minor matter. I ask that question out of interest because I wished to understand the amendment. I am sorry that the hon. Gentleman took it the wrong way and did not give me any answer, but perhaps he will consider doing so.
  We have had a fairly wide-ranging debate. I always listen with interest to the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). He spoke about people moving round looking for constituencies, but I remember his travels round Scotland before he finally settled in Carrick, Cumnock and Doon Valley. Both he and the hon. Member for East Lothian (Mr. Home Robertson) referred to polls. Given your strictures, Sir Paul, I shall not mention them, except to say that we heard precisely the same speech in precisely the same terms in 1981, but in 1983 some of the predictions made by Labour Members lay rather heavily upon them.
  Mr. Foulkes: I am sure that the Minister will confirm that, once I found a constituency where the people wanted and elected me, I stayed there, and I shall continue to stay there. The Minister will recall that he used to represent another part of the country, but, when it gave him leave of absence, he flew elsewhere. However, we should get on to the subject rather than dwell on these political points.
  Mr. Ancram: I agree. I merely regret that the hon. Member for Carrick, Cumnock and Doon Valley is no longer a constituent of mine, living in the nice, splendid and expensive house in which he used to live in my constituency.
  My hon. Friend the Member for Tayside, North (Mr. Walker) spoke about appeals. In this connection it is important to reiterate what my right hon. Friend the Secretary of State said on Monday—that the Bill does not alter or affect valuations. If there are unfair valuations, or valuations that the ratepayers believe to be unfair, they should take advantage of the appeals procedure, because it is only through that that we can alter revaluations.
  6.15 pm
  As to the effect of appeals, some may take longer than it takes to bring the scheme into effect. I suspect that that will happen in the majority of cases. The scheme will relate to the valuations as at this time. If there is a successful appeal and a valuation is reduced below the three times multiplier, that case will fall out of the scheme in the future, and, if any adjustments are required to be made, they will be made at that time.
  Mr. William McElvey: Will any repayment to the Secretary of State for Scotland be required from someone who has benefited from the scheme?
  Mr. Ancram: In particular circumstances adjustments may need to be made. That will depend on the lime at which the appeal takes place and on the time that the valuation is changed.
  Mr. Dewar: I am sure that I am on the same point as my hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey). If a ratepayer is paying in 10 monthly instalments, the first instalment of which is due in May, on the assumption that he has an appeal pending — unfortunately, valuation appeals take a long time to resolve—he may have had the benefit of the rebate on several instalments already paid. If at a later date he succeeds with his appeal, for unpaid instalments he would not have a rebate. However, would he have to pay back any money to the Secretary of State for a rebate to which he was not entitled earlier?
  Mr. Ancram: The hon. Gentleman is talking about the same matter as I was in speaking of adjustments that might have to be made. This matter will be dealt with in the draft order. Adjustments will be made as a result of an appeal where the appeal has brought the valuation down below the three times multiplier. In effect, we would seek to ensure that no one unfairly benefits from the scheme. Therefore, where he has, in effect, been rebated, because of the success of his appeal he would have to make a payment back or an adjustment in some other way.
  The various ways and timings under which this can arise do not allow for a simple answer. The important point, which I reiterate, is that ratepayers should not think that, just because they qualify for relief, they do not need to appeal if they have an unfair valuation.
  Mr. Hugh Brown: The Minister seems to have confused me, if not the rest of the Committee. Is he saying that timing has something to do with when the decision on the appeal is made? I cannot understand the logic of this. If someone qualifies now under the Bill, and if there is a reduction in the rateable value on appeal, why should he not have his entitlement? Is the Minister trying to fudge that point, or does he not understand it?
  Mr. Ancram: I understand the point, and I think that the hon. Gentleman will find, when the draft order is published, that it is covered. Where, after a rebate has been granted by the rating authority, any alteration is made in the rate value or in the pre-revaluation rateable value or in the revaluation rateable value itself—[Interruption.] The hon. Gentleman asked for a clear answer, and if he will let me finish my sentence, he may learn something —the grant of the rebate and the calculation of any such rebate would have to be determined anew, and the amount of any rebate already paid or allowed or of any rebate or balance thereof found to be due should be paid or allowed or repaid to the rating authority accordingly. There is no simple or clear way of dealing with this. The general effect that we are trying to achieve is that where someone has benefited, but because of an appeal does not require to have benefited and has actually made a surplus, a repayment would have to be made.
  Mr. Jim Craigen: I understand what the Minister has said. Would he go as far as the

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  National Federation of Self-Employed and Small Businesses in saying that all applicants for relief must have lodged a formal appeal against the valuation?
  Mr. Ancram: I would not go that far, and I am sure that on consideration neither would the hon. Member. What that suggests is that people who may well have a multiplier of more than 3, but who feel that the assessor's valuation is correct and who would therefore have no grounds for appeal, would be required at their own expense to make appeals to qualify for a rebate. I am sure that the hon. Member for Glasgow, Maryhill (Mr. Craigen) would not consider that sensible, in terms either of administering the scheme and trying to make sure that the appeal procedure is not bogged down or of the financial interests of those who were to undertake that course. I take it from the fact that the hon. Gentleman is nodding, however gently, that he appreciates that that would cause chaos and achieve no useful purpose.
  Mr. Nicholas Fairbairn: I am worried about this. Let us take three cases: a person who has a multiplier of more than 3 who does not apply for any rebate; a person with a multiplier of more than 3 who applies for a rebate, who appeals and whose appeal is granted some time; and a person with a multiplier of more than 3 who appeals unsuccessfully and gets a rebate. What is the system under which these rebates are to be granted? Will one person have to repay? If ever there was an idiocy of a system, those three indications give it.
  Mr. Ancram: The first case would not arise. Those eligible will be identified by the rating authority. They will be notified, and rebates will be paid where they are due. Therefore, there will be no question of someone qualifying, but not applying. If the rating authority leaves out someone, it is our intention that that person should be entitled to point out to the rating authority that he has been left out. There would be an application only in that sense.
  In regard to the other two cases, in any scheme where relief is granted — not necesssarily by a successful appeal—and the ratepayer benefits overly, adjustments and repayments may have to be made. That may be done not by repayment but by adjusting the amount required to be paid over the rest of the year. I go back to what I said earlier to the hon. Member for Garcadden. The precise way in which adjustments would be made would depend on the circumstances and timing of the appeal.
  Mr. Dewar: Another slight complication could arise. If someone is appealing, there is a statutory disregard which is a certain percentage of the increase. Presumably that would become an adjustment and would be called into play in the final reckoning. I cannot remember what the percentage is. Perhaps the Minister would remind me and explain how that would fit into the complicated scenario that he is outlining.
  Mr. Ancram: I do not think it is a complicated scenario. It may be complicated in how it has to be phrased within the order, but the principle behind it is very simple. The figure is 10 per cent. In balancing the effects of a successful appeal, that would have to be taken into consideration to reach a fair result. In the case of those who have benefited but who do not require to have
  348
  benefited because they have appealed successfully, an adjustment may have to be made. I am sure that principle would be agreed by both sides of the Committee.
  The hon. Member for Edinburgh, East (Mr. Strang) referred to expenditure in Edinburgh—a matter that we should probably not be debating in Committee. However, there is one relevant point to which I must reply. The spending decisions of Edinburgh district have increased the district rate by 80 per cent. In terms of the figures produced by the administration, that accounts for a considerable amount of the rate increases facing both domestic and commercial ratepayers in Edinburgh. In view of the concern displayed not only by the hon. Member for Garscadden but by the hon. Member for Edinburgh, East, I hope that the hon. Member for Edinburgh, East will support the Government in their attempts to persuade that district authority to reduce expenditure and to return money to the ratepayers.
  Mr. Strang: I am grateful to the hon. Gentleman for the manner in which he made the point. I know that we cannot dwell on this at length, but if the Under-Secretary were to accompany me around my constituency he would see the dereliction and deprivation that exist because of the low level of provision by Edinburgh council over the years. He knows the position. There is no housing support grant; there is only a trivial contribution from the rates to the housing revenue account; and there is a very low level of expenditure on recreation compared with what is spent by some Tory authorities. We must be able to tackle the problems in Edinburgh. It is wrong for the Under-secretary to suggest that I am not supporting the council in beginning to tackle them.
  Mr. Ancram: We shall have other occasions in coming months to debate those matters. I do not wish to debate them in the context of this Bill. If the hon. Gentleman is concerned about the ratepayers and the effects of rates on businesses, I find it hard to appreciate that he is content to see an 80 per cent, increase in the district rate merely to meet the expenditure decisions of Edinburgh district council.
  The main point raised by the hon. Member for Garscadden was dealt with in a sense on Second Reading on Monday when both my right hon. Friend and I attempted to make clear that decisions as to future years are taken properly in the autumn of the year preceding the year in which they are to be effective. Decisions on rate support grant and on the domestic relief element of the rate support grant are taken then. I do not think that the hon. Member for Garscadden or the Committee could expect me to pre-empt those decisions. Hon. Members should not attempt to draw me into giving commitments about figures or any other details.
  It was made clear on Monday, and I reiterate today, that the Bill is drafted as an enabling measure. By use of an order or regulations, it can be applied in any year. As I said on Monday, we intend to introduce the order relating to the current year as soon as the Bill has Royal Assent. We are entitled so to do.
  Going back to what my hon. Friend the Member for Tayside, North said, there is nothing in the Bill to prevent the Secretary of State, if he so decides when he takes these decisions in the autumn, from providing relief in future years. That is an important and fundamental part of the Bill. I hope that my hon. Friends will accept that the

  349
  Secretary of State has the power. He has had other powers to help ratepayers in the past and he has used them. We have shown our concern for Scottish ratepayers, but the Bill provides the proper way, and I hope that my hon. Friends will accept it.
  6.30 pm
  Mr. Foulkes: The Committee knows that the Bill gives the Secretary of State that power. Will the Minister answer my question: what criteria will be used and on what basis will the decision be made to continue the provision in future years?
  Mr. Ancram: The decisions are taken in the autumn in the light of current circumstances. Relief to ratepayers is examined on an annual basis and decisions are announced in due course to Parliament. As my hon. Friend the Member for Stirling (Mr. Forsyth) said, businesses should have some idea of what is to happen. We shall let ratepayers know of our intentions in good time, as we do about other elements of the rate bill each year.
  Mr. Craigen: The Minister says that he wants to let ratepayers know in good time. The closing date for appeals against valuation will be September. Is the Minister saying that he will announce his decision in October? If so, people who have put in an appeal will not have had the opportunity to examine his decision.
  Mr. Ancram: The hon. Member for Maryhill is muddling two matters. The appeal will be to reduce a valuation. Those who feel that their valuations are unfair should appeal. The Bill does nothing to alter valuations, so the closing date for appeals has nothing to do with the argument.
  I tell my hon. Friend the Member for Stirling that businesses will have some idea of the burdens that they are likely to face because we intend to make the decision as soon as possible, consistent with the timetable that I have outlined. They will have some warning of their position in future years.
  Mr. Fairbairn: I should like to be clear about two matters. First, I assume that there will be no appeal against any assessment of abatement or non-abatement under the ordinary rating valuation procedures. Secondly, when the scheme is started, should I assume that, however unjust any part of the scheme is thought to be, we must vote for the whole or against the whole?
  Mr. Ancram: My hon. and learned Friend will see from the face of the Bill that the regulations come under the affirmative procedure.
  Mr. Fairbairn: So the answer is yes.
  Mr. Ancram: The answer is yes. I understand that my hon. and learned Friend was referring to appeals by those who feel that they should have received relief but have not. The normal type of appeal applies to the Court of Session. The hon. Member for Garscadden laughs, but he got the answer right. He appears to find that humorous.
  We want to maintain a degree of discretion and flexibility for future years by giving the Secretary of State the power, year to year, to make regulations which can provide relief under the Bill.
  Opposition Members seem suddenly to have a tremendous desire to promote relief schemes for commercial ratepayers, particularly in the long term. I recall that in 1978, when the last revaluation took place,
  350
  when the Labour party was in government and the commercial sector was disadvantaged, the differential between the average multiplier and the commercial multiplier was greater than it is today. There was no sign then of promoting schemes to help the commercial or domestic ratepayers who were most severely hit. The only reaction of the Labour Government to the plight of domestic and commercial ratepayers was to reduce domestic relief by about 75 per cent.
  We are grateful to Opposition Members for supporting the scheme, but some of their enthusiasm owes more to the politics of the situation than to a deep concern for the ratepayers.
  The Bill provides a system which will not only help ratepayers this year, but is capable of providing help in future years, if required. I ask my hon. Friends to reject the amendment which does not achieve what the hon. Member for Garscadden wishes it to achieve. In many ways it does not make sense. If the hon. Member for Garscadden wishes to press the amendment to a Division, I ask my hon. Friends to reject it.
  Mr. Dewar: I confess that the look of pain upon the face of the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) as the Minister smoothly referred to an appeal to the Court of Session as a normal appeal lightened my afternoon.
  I intend to press the amendment to a Division and I hope that my right hon. and hon. Friends will support me. If we carry the day the other place might have to do some tidying up, but I imagine that that can be done with ease if the view of the Committee is clearly established. I wish to press the amendment because it has all-party support. We agree that certainty is a virtue and that equity demands that the Government make it clear that they intend to carry the aid throughout the remainder of the quinquennium.
  It is not good enough for the Minister to stand at the Dispatch Box with no supporting argument, detail or explanation and to say that the Government will take a decision in the autumn. He did not try to answer my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) about the criteria.
  There is a good reason why we should expect the scheme to continue. I accept that the domestic element is different because that applies to all domestic ratepayers. In that sense we are talking about an omnibus provision. Whether the domestic element should apply might be a matter to be considered according to the circumstances in October. However, the proposed form of rebate is an attempt to equalise or at least to reduce the discrepancies within a particular category. Nothing that happens in October will change that picture. The valuation roll in October will be exactly the same as the present valuation roll. If it is offensive—we gather that the Government rightly think that it is offensive—and inequitable that certain people should suddenly see an enormous gap opening up between their rateable value and the rateable values of other people, that gap will still be there in October. No change of circumstance will affect that situation.
  If that is the injustice with which the Bill is dealing, it is an injustice which by definition will continue throughout the quinquennium, and there can be no reason for refusing to give an undertaking that at least in principle this help will be continued. If there were some caveat about the

  351
  level, we might be prepared to listen to that, but at least but there should be an undertaking that the discrepancies that will still exist will be dealt with as set out in the scheme.
  Therefore, it seems to me clear, logical and entirely consistent that we should express our displeasure at the totally inadequate response of the Minister, and invite the Committee to divide.
  Question put, That the amendment be made:—

  Division No. 227]

  [6.40 pm

  AYES

  Abse, Leo

  Kaufman, Rt Hon Gerald

  Archer, Rt Hon Peter

  Kennedy, Charles

  Ashdown, Paddy

  Kinnock, Rt Hon Neil

  Atkinson, N. (Tottenham)

  Kirkwood, Archy

  Banks, Tony (Newham NW)

  Lamond, James

  Barron, Kevin

  Leadbitter, Ted

  Beckett, Mrs Margaret

  Lewis, Terence (Worsley)

  Beith, A. J.

  Litherland, Robert

  Bell, Stuart

  Lloyd, Tony (Stretford)

  Bermingham, Gerald

  Loyden, Edward

  Boyes, Roland

  McCartney, Hugh

  Bray, Dr Jeremy

  McDonald, Dr Oonagh

  Brown, Gordon (D'f'mline E)

  McKay, Allen (Penistone)

  Brown, Hugh D. (Provan)

  McKelvey, William

  Bruce, Malcolm

  MacKenzie, Rt Hon Gregor

  Callaghan, Rt Hon J.

  McTaggart, Robert

  Callaghan, Jim (Heyw'd & M)

  Madden, Max

  Campbell-Savours, Dale

  Marek, Dr John

  Canavan, Dennis

  Marshall, David (Shettleston)

  Clark, Dr David (S Shields)

  Martin, Michael

  Clarke, Thomas

  Maxton, John

  Clay, Robert

  Maynard, Miss Joan

  Clwyd, Mrs Ann

  Meacher, Michael

  Cocks, Rt Hon M. (Bristol S.)

  Meadowcroft, Michael

  Concannon, Rt Hon J. D.

  Michie, William

  Cook, Frank (Stockton North)

  Millan, Rt Hon Bruce

  Cook, Robin F. (Livingston)

  Morris, Rt Hon J. (Aberavon)

  Corbyn, Jeremy

  Oakes, Rt Hon Gordon

  Cowans, Harry

  O'Brien, William

  Cox, Thomas (Tooting)

  Paisley, Rev Ian

  Craigen, J. M.

  Patchett, Terry

  Crowther, Stan

  Pavitt, Laurie

  Dalyell, Tarn

  Pendry, Tom

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

  Penhaligon, David

  Dewar, Donald

  Pike, Peter

  Dormand, Jack

  Powell, Raymond (Ogmore)

  Dubs, Alfred

  Prescott, John

  Duffy, A. E. P.

  Radice, Giles

  Dunwoody, Hon Mrs G.

  Randall, Stuart

  Eadie, Alex

  Richardson, Ms Jo

  Eastham, Ken

  Roberts, Ernest (Hackney N)

  Evans, John (St. Helens N)

  Robertson, George

  Ewing, Harry

  Robinson, G. (Coventry NW)

  Field, Frank (Birkenhead)

  Robinson, P. (Belfast E)

  Foot, Rt Hon Michael

  Sheerman, Barry

  Foulkes, George

  Short, Ms Clare (Ladywood)

  Freud, Clement

  Silkin, Rt Hon J.

  Gourlay, Harry

  Skinner, Dennis

  Hamilton, W. W. (Central Fife)

  Soley, Clive

  Hardy, Peter

  Spearing, Nigel

  Harrison, Rt Hon Walter

  Stewart, Rt Hon D. (W Isles)

  Hart, Rt Hon Dame Judith

  Strang, Gavin

  Hattersley, Rt Hon Roy

  Thomas, Dr R. (Carmarthen)

  Hogg, N. (C'nauld & Kilsyth)

  Thompson, J. (Wansbeck)

  Holland, Stuart (Vauxhall)

  Tinn, James

  Home Robertson, John

  Torney, Tom

  Howells, Geraint

  Warden, Gareth (Gower)

  Hughes, Dr. Mark (Durham)

  Wareing, Robert

  Hughes, Robert (Aberdeen N)

  Welsh, Michael

  Hughes, Roy (Newport East)

  Wigley, Dafydd

  Hughes, Sean (Knowsley S)

  Williams, Rt Hon A.

  Janner, Hon Greville

  Wilson, Gordon

  Jones, Barry (Alyn & Deeside)

  Winnick, David

  352

  Wrigglesworth, Ian

  Tellers for the Ayes:

  Young, David (Bolton SE).

  Mr. Frank Haynes and

  Mr. James Hamilton.

  NOES

  Adley, Robert

  Hirst, Michael

  Alexander, Richard

  Hogg, Hon Douglas (Gr'th'm)

  Alison, Rt Hon Michael

  Holland, Sir Philip (Gedling)

  Amess, David

  Holt, Richard

  Ancram, Michael

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

  Arnold, Tom

  Howarth, Gerald (Cannock)

  Ashby, David

  Irving, Charles

  Baker, Nicholas (N Dorset)

  Johnson Smith, Sir Geoffrey

  Baldry, Tony

  Jones, Gwilym (Cardiff N)

  Bellingham, Henry

  Knight, Gregory (Derby N)

  Benyon, William

  Knight, Mrs Jill (Edgbaston)

  Best, Keith

  Knowles, Michael

  Blackburn, John

  Knox, David

  Bottomley, Peter

  Lawrence, Ivan

  Bottomley, Mrs Virginia

  Lennox-Boyd, Hon Mark

  Bowden, Gerald (Dulwich)

  Lester, Jim

  Boyson, Dr Rhodes

  Lewis, Sir Kenneth (Stamf'd)

  Braine, Rt Hon Sir Bernard

  Lightbown, David

  Bright, Graham

  Lilley, Peter

  Brinton, Tim

  Lloyd, Ian (Havant)

  Bruinvels, Peter

  Lloyd, Peter, (Fareham)

  Bryan, Sir Paul

  Luce, Richard

  Buchanan-Smith, Rt Hon A.

  Lyell, Nicholas

  Burt, Alistair

  McCurley, Mrs Anna

  Butcher, John

  Macfarlane, Neil

  Butterfill, John

  MacGregor, John

  Carlisle, John (N Luton)

  MacKay, John (Argyll & Bute)

  Carttiss, Michael

  Maclean, David John

  Channon, Rt Hon Paul

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

  Chope, Christopher

  McQuarrie, Albert

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

  Major, John

  Clark, Dr Michael (Rochford)

  Malins, Humfrey

  Clarke, Rt Hon K. (Rushcliffe)

  Malone, Gerald

  Clegg, Sir Walter

  Mather, Carol

  Cockeram, Eric

  Maxwell-Hyslop, Robin

  Colvin, Michael

  Mayhew, Sir Patrick

  Conway, Derek

  Mellor, David

  Coombs, Simon

  Merchant, Piers

  Cope, John

  Meyer, Sir Anthony

  Cranborne, Viscount

  Miller, Hal (B'grove)

  Critchley, Julian

  Mills, Iain (Meriden)

  Crouch, David

  Mills, Sir Peter (West Devon)

  Dickens, Geoffrey

  Moynihan, Hon C.

  Dicks, Terry

  Murphy, Christopher

  Dorrell, Stephen

  Neale, Gerrard

  Douglas-Hamilton, Lord J.

  Needham, Richard

  Dunn, Robert

  Nelson, Anthony

  Durant, Tony

  Neubert, Michael

  Evennett, David

  Newton, Tony

  Fairbairn, Nicholas

  Nicholls, Patrick

  Fallon, Michael

  Norris, Steven

  Favell, Anthony

  Onslow, Cranley

  Finsberg, Sir Geoffrey

  Oppenheim, Phillip

  Fookes, Miss Janet

  Oppenheim, Rt Hon Mrs S.

  Forman, Nigel

  Ottaway, Richard

  Forsyth, Michael (Stirling)

  Page, Richard (Herts SW)

  Fowler, Rt Hon Norman

  Patten, Christopher (Bath)

  Fox, Marcus

  Pawsey, James

  Fraser, Peter (Angus East)

  Peacock, Mrs Elizabeth

  Gale, Roger

  Pollock, Alexander

  Galley, Roy

  Porter, Barry

  Garel-Jones, Tristan

  Portillo, Michael

  Glyn, Dr Alan

  Powley, John

  Gower, Sir Raymond

  Proctor, K. Harvey

  Gregory, Conal

  Rathbone, Tim

  Gummer, John Selwyn

  Rhodes James, Robert

  Hamilton, Hon A. (Epsom)

  Rhys Williams, Sir Brandon

  Hamilton, Neil (Tatton)

  Ridsdale, Sir Julian

  Hargreaves, Kenneth

  Roberts, Wyn (Conwy)

  Harris, David

  Robinson, Mark (N'port W)

  Hawkins, Sir Paul (SW N'folk)

  Roe, Mrs Marion

  Heathcoat-Amory, David

  Rowe, Andrew

  Henderson, Barry

  Rumbold, Mrs Angela

  Hicks, Robert

  Ryder, Richard

  Hind, Kenneth

  Sayeed, Jonathan

  353

  Shaw, Sir Michael (Scarb')

  Thompson, Patrick (N'ich N)

  Shelton, William (Streatham

  Thornton, Malcolm

  Shepherd, Colin (Hereford)

  Thurnham, Peter

  Shersby, Michael

  Tracey, Richard

  Sims, Roger

  Twinn, Dr Ian

  Skeet, T. H. H.

  Walden, George

  Smith, Tim (Beaconsfield)

  Walker, Bill (T'side N)

  Speller, Tony

  Waller, Gary

  Spencer, Derek

  Ward, John

  Spicer, Jim (W Dorset)

  Wardle, C. (Bexhill)

  Stanbrook, Ivor

  Watson, John

  Steen, Anthony

  Watts, John

  Stern, Michael

  Wells, Bowen (Hertford)

  Stewart, Allan (Eastwood)

  Wells, Sir John (Maidstone)

  Stewart, Andrew (Sherwood)

  Wheeler, John

  Stradling Thomas, J.

  Whitfield, John

  Sumberg, David

  Whitney, Raymond

  Taylor, Teddy (S'end E)

  Wolfson, Mark

  Tebbit, Rt Hon Norman

  Yeo, Tim

  Temple-Morris, Peter

  Terlezki, Stefan

  Tellers for the Noes:

  Thatcher, Rt Hon Mrs M.

  Mr. Ian Lang and

  Thomas, Rt Hon Peter

  Mr. Tim Sainsbury.

  Thompson, Donald (Calder V)

  Question accordingly negatived.
  Mr. Bruce: I beg to move amendment No. 2, in page 1, line 13, leave out '3' and insert '2·5'.
  The Second Deputy Chairman: With this it will be convenient to discuss the following amendments: No. 3, in page 1, line 13, after 'value', insert
  'or such other figure as shall be set by statutory instrument which shall not have effect until approved by resolution of the Commons House of Parliament'.
  No. 4, in page 2, line 11, at end insert—
  '(3A) Where at any time it appears to the Secretary of State that the expenditure for rebate under this section will not reach the sum of £50 million for which provision is made, he may by order reduce the multiples set at 3 under subsection (2) hereof so as to ensure that the said sum is utilised.'.
  Mr. Bruce: The purpose of the amendment is self-evident. It is to ensure that the relief gets to the people who need it most. That has been the intention behind all the amendments tabled by Liberal Members.
  It has emerged from our debates so far that no one seems to have accurate figures. The Under-Secretary of State made some play of the fact that at the time that the Liberal party was campaigning for exactly this kind of relief package we were asking for only about £4 million. He knows that that criticism of us was as much a criticism of the Scottish Federation on Small Businesses and Self Employed which had assessment information available to it that that is what would be required—[Interruption.] It has emerged since that such organisations as the Liberal party and the federation, without the aid of computers, are no more inaccurate than the Government, who have the aid of computers—[Interruption.] The braying of the hon. Member for Banff and Buchan (Mr. McQuarrie) is a matter that I may come to later.
  The Minister is aware that the figure of £50 million was not the first-aid relief of Mafeking, as was suggested at the Tory party conference, and a definitive figure produced by the Scottish Office on the basis of a detailed analysis. It appears now that it was at best a guess that it was hoped would cover the requirement, and that it was a generous guess. We are not ungrateful that the Scottish Office managed to squeeze a generous sum of money out of the Treasury. However, we want to ensure that the money is used for the purpose for which it was intended and that those who need the relief most will get it.
  354
  Regrettably, the Government's cut-off point of three times the increase in net annual value means that many people who need the relief will not get it. I have received a number of representations from people who face very considerable increases in their rates bills and will qualify for no relief.
  I quote the example of someone living in New machar, just outside the city of Aberdeen, who faces a 288 per cent. increase in rateable value and an increase of 26·2 per cent, in the rates that he must pay. He asks me to make representations to the Government to give him relief from that. The Government are pushing through this Bill which will give him no relief. He will have to pay the full increase.
  The hon. Member for Glasgow, Cathcart (Mr. Maxton) spoke earlier of a comparison with teachers. I can assure the Minister that it is not lost on teachers who are also ratepayers that they face rate increases of 25 per cent, or 30 per cent, in circumstances where at the moment they are getting no salary increase and what the Government are offering them will not cover their rates bills.
  One of my constituents lives in Ellon in a house which may have been sold to him by the hon. Member for Banff and Buchan. He faces an increase in his rateable value from £457 to £1,247. That is 273 per cent. The increased cash payment that he must make is 30 per cent. He, too, will get no relief under the terms of the Bill, and nothing that I or the Minister can tell him will make him feel very well disposed to the circumstances in which he finds himself.
  The third example that I quote is that of someone living in Bridge of Don who is asked to find an additional £250. My calculation is that that might be reduced to £220, and he points out that that is just £30 less than the rates bill that Balmoral castle will have to find, which suggests that living in a big house in the country may be cheaper than living in a small house in a town.
  I hope that those examples demonstrate to the Committee that the cut-off point that the Government are applying means that many people who, understandably, are incensed by their increased rates bills and worried about how to find the means to pay them are to get no relief.
  It could be argued that the 2·5 suggested in the amendment did not go far enough but not that it went too far. I accept that, because it was essentially a compromise based on my understanding of the kind of shortfall that might be available and the intention to concentrate the money available a little closer on the people who needed relief.
  On more than one occasion the Minister has implied that I, as distinct from my colleagues, did not appreciate the Government's offer of help. He knows that my colleagues and I have campaigned hard for a first-aid package. At a press conference in Edinburgh on 9 May, before the Government's announcement, I said that I thought that the relief necessary would be of the order of tens of millions of pounds because it was apparent to me that the figures would be fairly substantial.
  I welcome the Government's package, but I make two comments about it. The first is that the package is not concentrated hard enough where it is most needed. It is applied across the board, and many people will still have dramatic increases in their rate bills with no additional services, and relief for one year only. If we are talking about real politics, I can assure the Minister that those

  355
  people will not be better disposed towards the Conservative party after the passage of the Bill than they were before. They will be looking for more help than they have had to date. The Government will have to restore some of the rate support grant to local authorities next year to enable them to cushion their ratepayers.
  Mr. Henderson: If the hon. Gentleman thinks that the Government's introduction of the Bill demonstrates a warped sense of priorities, surely by this amendment he is seeking to warp the priorities even more. Is not that curious? Would it not be less necessary if Liberal councillors on Fife regional council had voted against expenditure policies exceeding the Government's guidelines put forward by the Conservative members of that council?
  Mr. Bruce: I am sure that the hon. Gentleman's constituents are well aware of the value of having Liberals on the local council, which is probably why about the safest Conservative seat on the district council is now in Liberal hands. That suggests that when people have Liberal councillors they appreciate them and elect more of them, as no doubt they will in other parts of the country.
  On the question of warped priorities, I freely admit that I might have chosen my words better in response to the statement. Let me therefore make my point clear. The Government managed to find £50 million of new money. It was not scientifically calculated, but a figure that they thought would be adequate.
  Mr. Donald Stewart: It was not calculated at all.
  7 pm
  Mr. Bruce: I agree with the right hon. Gentleman on that.
  Secondly, the Government rightly recognised that the money was necessary and managed to find it, having told us that there was no new money available for other priorities in the Scottish economy, such as investment in education. The Government are not going far enough. If they can find £50 million for ratepayers, they should be able to do so for teachers. I assure Conservative Members that my constituents recognise, as the Committee will recognise, that the Government's priorities are peculiar to them. They do not accord with what many people believe, that is, that we should be protected from these ridiculous rate increases, which have been brought about as much by cuts in Government rate support grant as by revaluation, and that the Government should invest in other priority services, such as education. It is valid to make the point that if the Government can find money for rates, they can find it for education.
  I have attended meetings in my constituency, which were extremely well attended by ratepayers, who will now campaign consistently for a restoration of justice within local government finance to enable local authorities to operate effectively and to carry out what they should do with proper support from central Government, which they are not receiving at present. Those people recognise the true colour of the Government's priorities.
  The Minister should acknowledge that the £50 million was not calculated scientifically, that its application is not
  356
  getting it through to those who most need it, and that some people who face substantial rate increases will not be helped by the legislation.
  The amendment would lower the threshold and give more people assistance. To quote the hon. Member for Cathcart, the political altruism of my party is that the amendment may help some of the Minister's disaffected supporters, who are outraged and no doubt wrote to him about the iniquities of the rating system, to feel that the Bill will benefit them, which it does not do as it stands. I would have thought, therefore, that Conservative Members would be anxious to ensure that the relief is spread as widely and among as many ratepayers as possible. To lower the threshold would achieve that end. It must be desirable both for general equity and, indeed, for Conservative Members in marginal constituencies.
  Mr. Dewar: As three amendments are grouped together, it may be helpful if I speak to amendment No. 3 in my name and the names of my hon. Friends.
  We are dealing with the same point as that raised by the hon. Member for Gordon (Mr. Bruce)—the mystery of the £50 million. The headlines told us that the Government had found £50 million, which was new money and would be used to help Scottish ratepayers. When the Prime Minister spoke at Perth about the commercial element in the package, she went out of her way to say that the scheme would cost "£40 million, at least." A great deal of political credit was claimed for having produced that £50 million. We are making the straightforward point that the goods should be as advertised. If the package was £50 million, it should be used for relieving the burden of the rating system at the point where that system creates most pressure.
  When the hon. Member for Edinburgh, South (Mr. Ancram) replied to the debate on Monday, he said of the scheme:
  "It is not easy to calculate how much that will cost, as hon. Members have realised. I believe that we shall not know the full answer to that question until all those who are eligible have been paid."—[Official Report, 3 June 1985; Vol. 80, c. 112.]
  That is a highly questionable statement.
  I accept that there may be some play on the estimates and that we may have to come and go on the £29·5 million or £29·6 million which COSLA calculated. However, it is extraordinary that, during the preparation of the scheme, COSLA was not consulted. COSLA holds the computer records and has the capacity to identify those who will benefit and the amounts that will have to be paid to them. Its figures are likely to be accurate within a small tolerance. COSLA strongly suggests that the shortfall will be about £20 million.
  In the debate the Secretary of State said:
  "While it looks as if the total cost should indeed be contained within the £50 million figure attached to the Bill and may be a bit less, it is not possible yet to be sure what it will amount to". —[Official Report, 3 June 1985; Vol. 80, c. 66.]
  We must make provision against the possibility — indeed, the strong likelihood — that COSLA's figures will be correct, and the suggestion that the sum may be a little less than £50 million is a euphemism. There appears to be a genuine danger that £20 million of the £50 million rescue operation will not be given to Scottish ratepayers, but will disappear into the ever-hungry maw of the Treasury.
  I like amendment No. 3 because it allows a sensible degree of flexibility. It is a genuine attempt to help. The

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  hon. Member for Gordon fairly suggested—in the sense that it was a genuine suggestion—that we should bring more people into the ambit of the scheme. He suggests reducing the multiplier from 3 to 2·5. I cannot support that because it is too arbitrary a figure and too inflexible in its effect. 1 cannot say what would happen with a multiplier of 2·5, but COSLA has informally suggested to me that it would include an enormous number of people and that the £50 million would have to be increased many times. In a sense that is desirable, and I understand the temptation to do that. However, 1 have tabled an amendment which I genuinely hope the Government will accept, and Conservative Back-Bench Members will support.
  Amendment No. 3 is much more modest than amendment No. 2. We are not demanding an arbitrary reduction; we are seeking, in case our suspicions turn out to be right and £20 million is to return to the Treasury and not spent as intended, to introduce a provision to give the Secretary of State the machinery to do something about the shortfall. When he has calculated at leisure how best to proceed by varying the multiplier or whatever, he may say, "I am sorry chaps, but I cannot do anything about the shortfall. I would have liked to, but the primary legislation was drawn in a way that did not allow it." For a long time he sheltered behind that proposition regarding the scheme itself. I am anxious to help by providing him with such a means, if it becomes clear that that is right because of the enormous shortfall caused by the present multiplier.
  The amendment allows the multiplier to be varied by statutory instrument in the same way as the other details of the scheme. We are not being unreasonable; we are merely giving the Secretary of State a power. The amendment is permissive. We are allowing the Government to cope with what would be a sad let-down if the figures fall far short of the promised support.
  Conservative members have already commented on the extremely limited impact of the scheme in their constituencies. The hon. Member for Strathkelvin and Bearsden (Mr. Hirst) reported, sadly, on the disappointments for Bearsden. To some extent, I appear at the Dispatch Box as a penitent because in the early days of the scheme I suggested that the Eastwoods and Bearsdens would be the principal beneficiaries. That has not turned out to be true, and I concede that. The figures show a much wider scatter than I thought likely, although the level of help is marginal.
  I discussed the figures with the hon. Member for Eastwood (Mr. Stewart), the Under-Secretary. They were supplied to me by the finance division of Strathclyde region. I give them to the Committee because they are interesting. In Glasgow, for example, 11·95 per cent, of all domestic ratepayers will get some benefit, although probably marginal, from the scheme. In Eastwood, only 197 householders will qualify for assistance, which represents less than 1 per cent, of the domestic ratepayers in that area. There is a great contrast between Glasgow at almost 12 per cent, and Eastwood at 0·98 per cent. The total of £59,000 that will be available in Eastwood shows how marginal the assistance is.
  It is interesting to note that, in Glasgow, 23 per cent, of non-domestic ratepayers will obtain some assistance from the scheme, whereas in Eastwood only 1·06 per cent., or 21 properties, will benefit. When the Eastwood Gazette, or whatever the local newspaper is called, gets its hands on those figures, the Under-Secretary of State may have an uncomfortable time explaining why there has been
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  such a minimal impact in his area. In Argyll and Bute, which is represented by another Under-Secretary of State for Scotland, 1· 35 per cent, of domestic ratepayers will be helped, compared with an average in Strathclyde of more than 6 per cent. That suggests that the help for Argyll and Bute will not be received with massive enthusiasm.
  I make those points because I believe that the record should be put straight, and because I wish to underline the fact that, if the scheme is extended, it will be extremely popular in areas that are important to Ministers, especially Eastwood and Argyll and Bute. I have obtained only the figures for Srathclyde, but perhaps if I obtained those for Angus, the portly frame of the Solicitor-General for Scotland might bounce a little more happily, given the electoral pressure from (which he suffers, when the multiplier was lowered and the present scheme extended.
  It will be frustrating and irritating for constituents to have to say to their representatives, "Not only are we getting only a marginal benefit from the scheme and being left with substantial rate increases, but we know that another £20 million is available, which will be handed back to the Chancellor and will not benefit Scottish ratepayers. Why can you not take up that extra £20 million by adjusting the scheme?" At that point, the Under-secretary of State—the hon. Member for Eastwood— and other Ministers will be grateful for the fact that this amendment has been accepted, because they will have the machinery to vary the scheme and to use all the available money. They need not go again to the Treasury, because the money is there. It must be good sense to change the scheme so that the Scottish Office can use all the available money.
  I hope that that simple, but persuasive and compelling, case will commend itself to Conservative Members. We know from Second Reading that the hon. and learned Member for Perth and Kinross (Mr. Fairbairn), the hon. Member for Renfrew West and Inverclyde (Mrs. McCurley) and others believe that the £50 million should be spent in the interests of Scottish ratepayers. Unless the Committee accepts the amendment, there will be no machinery to change the scheme, and real difficulties will occur.
  I am not talking about natural rebels on the Conservative Benches. The fact that the hon. and learned Member for Perth and Kinross and, I suspect, the hon. Member for Banff and Buchan (Mr. McQuarrie) take a strongly independent line about getting the maximum help for the ratepayer from the sum allocated by the Treasury is significant. What is even more significant is that on Second Reading the hon. Member for Strathkelvin and Bearsden said:
  "I appreciate that eligibility should be set down in the Bill, but is the revaluation of three immutable? Could some other figure, which used up the money, be applied?" — [Official Report, 3 June 1985; Vol. 80, c. 80.]
  He also said that he stood by his threat, if I can call it that:, in the Evening Times that he will throw all his weight behind effords to ensure that the entire £50 million is applied to rating relief in Scotland.
  It is significant when someone such as the hon. Member for Strathkelvin and Bearsden takes that line, not because I believe greatly in his political weight — I hasten to reassure the Committee on that—but because he is an identikit Tory. He is not one of the world's rebels; he is the loyalest of the loyal. He is the sort of young man that any hon. Member would like to chair his Young

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  Conservatives branch. When the hon. Gentleman comes to the House and says that the £50 million must be used in the way that was trumpeted at the Scottish party conference, and which brought peace to that conference, the Minister should listen to such persuasive arguments. If the hon. Gentleman was here to listen to the arguments —he has not yet appeared for the debate — I like to think that he would vote with us tonight, because it is a sensible amendment that does not commit the Government to a specific figure. It gives them some flexibility instead of leaving them in the lurch, when they would be in the most uncomfortable position of saying: "We have the money, but we shall give it back to the Treasury."
  That would be wrong in equity and would be bad for the morale of Scottish ratepayers and for the political system. The Government should keep their clear promise that £50 million will be available. However, there is a grave danger that that promise will be breached unless the Bill contains some flexibility along the lines set out in amendment No. 3.
  7.15 pm
  Mr. Donald Stewart: In speaking to amendment No. 4, which is in my name and that of my hon. Friend the Member for Dundee, East (Mr. Wilson), I shall draw attention to a small printing error on the amendment paper. The penultimate line uses the word "multiples" instead of "multipliers". I do not suppose that any of the intelligent members of the Committee were confused by that error, which probably arose from the haste with which the amendment was drafted on Monday night.
  I should stress that it has become clear that, if only those whose revalued rateable values are greater than three times their pre-revaluation rateable values will benefit, it has been calculated that considerably less than the £50 million given by the Treasury will be used. The Scottish National party believes that all that money must come to Scotland for the purpose of rates relief. It is little enough compensation as it is, and the Government must not be allowed to get away with skimping on it.
  I agree with the hon. Member for Glasgow, Garscadden (Mr. Dewar) that amendment No. 3 is flexible—indeed, any of the amendments in the group would meet my purpose—but amendment No. 4 states that if the full sum has not been used, the multiplier should be reduced to whatever figure is necessary to ensure the use of the full amount allocated by the Treasury.
  The Chancellor of the Exchequer said that the plug will be pulled on this life support next year and that there will be no cash in successive years. It is essential that Scottish ratepayers, domestic and commercial, benefit to the full from the £50 million. Anything less will be regarded as a climbdown and a sell-out of the commitment given to Scottish ratepayers by the Secretary of State at the Perth conference. If he wants to save his political skin and that of other Conservative Members, he would be well advised to accept the amendment. If he does not, he will suffer a renewed backlash in Scotland.
  Mr. McQuarrie: The Committee will welcome the presence this evening of the hon. Member for Gordon (Mr. Bruce) and his contribution to the debate, because he did not bother to appear for the Second Reading of the Bill or to contribute in any way on behalf of the ratepayers to
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  whom he pays lip service when he believes that he can make a political point. He said that no one had done any work to arrive at the factor of 3, but it is worth asking him how he arrived at the figure of 2·5. He said that he had no computer.
  The hon. Gentleman tried to hide behind the cloak of the Scottish Federation of Small Businesses and Self Employed when he said that it would have to take its £5 million from the figure of £40 million. Yet he had the audacity to say to the Secretary of State on 14 May that the money was
  of the warped priorities of a Government threatened with extinction in Scotland."—[Official Report, 14 May 1985; Vol. 79, c. 178.]
  It is strange that he described £40 million of relief as a warped priority when he asked for only £5 million. Would the alliance have allowed less?
  Mr. Bruce rose—
  Mr. McQuarrie: I shall not give way because the hon. Gentleman has had his say. I should like to get rid of amendment No. 2.
  The hon. Member for Gordon asked that the load should be spread fairly. I agree with that. In Grampian region, the rateable value before revaluation was £30·72 million for the private domestic ratepayer. After revaluation that figure rose to £86· 71 million. The figure was therefore increased 2· 82 times, or by 182 per cent. That is well above the 2· 5 factor called for by the hon. Member for Gordon. For the local authority domestic ratepayer the figure before revaluation was £13· 5 million. After revaluation it became £36· 45 million. In that case the figure was increased 2· 7 times or by 170 per cent. That is still not down to the factor of 2· 5.
  The most important element of the £50 million relates to the commercial ratepayer. Before revaluation, the rateable value was £38· 51 million and after revaluation it rose to £86· 71 million—an increase of 2· 82 times or by 182 per cent. We still have not dropped to the denominator of 2· 5 which exists in the warped mind of the hon. Member for Gordon. Those are the average figures given by the local authority. There are plainly other increases between 2·7 and 3.
  In Grampian region—the hon. Member for Gordon plainly does not know this — it is estimated that approximately 25,000 people and businesses will benefit from the Bill to a total of £2·8 million. Broken down, the figures mean that 21,128 domestic ratepayers and 4,416 commercial ratepayers will benefit.
  I support the view that the whole of the £50 million should be used. I prefer amendment No. 4 to amendment No. 3 because I believe that amendment No. 4 covers the point more widely. The two amendments, however, are comparable because they want to achieve the same result —that the £50 million is used.
  I hope that when my hon. Friend replies he will give a firm undertaking that the £50 million will be used. We are all aware that the Scottish Office and the local authorities did not know how much would be required to pay on a factor of 3. Computers have to do their work, and they have not yet been able to complete it. We may therefore find that there will be some £20 million in the kitty. I give my right hon. Friend the Secretary of State great credit for having obtained the money from the Treasury. I take no notice of the rubbish about its being to gain an electoral advantage. It was a first-class job done

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  by an honourable and first-class Secretary of State. [Interruption.] There will never be a Liberal Secretary of State, that is for sure.
  Will my hon. Friend guarantee that that £50 million will be spent? To take the arbitrary figure that the hon. Member for Gordon and his two colleagues, the hon. Members for Roxburgh and Berwickshire (Mr. Kirkwood) and for Orkney and Shetland (Mr. Wallace) have suggested is not the best way to achieve that. Neither of those two colleagues of the hon. Member for Gordon are present; nor are any of the other Liberal Members. There is not even a member of the Social Democratic party present.
  Mr. Bruce: Where is the Secretary of State?
  Mr. McQuarrie: As I said before, he is in Scotland. He has not tabled an amendment. The hon. Members for Roxburgh and Berwickshire and for Orkney and Shetland have.
  If there is to be £20 million in the kitty, the best thing to do is to reduce the factor from 3 to 2·9. If we still find that the £20 million has not been used, the factor can be reduced to 2·8. That is a fair and reasonable way to work. I am sure that the hon. Member for Glasgow, Garscadden (Mr. Dewar) will admit that, if we accept the figure of 2·5, there is no guarantee that the total will amount to £50 million. With that factor we might need more than £50 million. We must be grateful for having £50 million of new money, and we must take advantage of it. I hope that my hon. Friend will take note of that, because I do not agree that we should hand the balance of the money back to the Treasury.
  Mr. Dewar: The hon. Gentleman is making a series of reasonable points which he would expect me to support. There is virtue in amendment No. 3, which provides machinery for achieving what we want. Amendment No. 4 merely provides that the Secretary of State would have the power to alter the factor. Amendment No. 3 provides that the figure can be altered by statutory instrument, as is provided in other parts of the Bill. We can then have a debate in the House and watch what is happening. If we do not receive assurances, I hope that the hon. Gentleman will join us in the Lobby on that point.
  Mr. McQuarrie: I am grateful to the hon. Gentleman, because he has brought the point home to me. I must confess that I had slightly overlooked it. Amendment No. 4 had appeared to me to be more suitable. I accept that amendment No. 3 is probably more in the interests of the Committee, because we do not know the correct factor at the moment.
  I regret that I cannot support my hon. Friend if he is not prepared to give an undertaking to the House that the £50 million will be allocated to Scotland in some form or other.
  Mr. Bruce Millan: The logic of the speech of the hon. Member for Banff and Buchan (Mr. McQuarrie) is that he should vote for amendment No. 3. An assurance from the Minister will not mean anything unless a facility for doing something about it is written into the Bill. There is no flexibility with the way that the Bill is presently drafted. Amendment No. 3 has the advantage of giving flexibility. The factor could then be adjusted to whatever figure is considered appropriate to produce the sum of £50 million.
  With the Bill as presently drafted, the relief granted will not amount to £50 million. We have figures from COSLA.
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  The hon. Gentleman gave us some figures from Grampian region. I have figures for other regions of Scotland. They total slightly less than £30 million. There is a little over £4 million on the domestic side and something over £25 million on the commercial side. We were promised that the domestic relief would amount to £10 million. The available figures show that the relief is less than half for domestic ratepayers. On the commercial side there is a considerable shortfall from the £40 million that we were originally promised. I do not think that there is any dispute about the figures. If there is, no doubt the Under-Secretary will let us know.
  7.30 pm
  The Government rushed into the legislation without doing any calculations. The announcement was made in the House on 14 May, the consultation meeting with COSLA was not held until 29 May and now that the figures based on the Government's proposals are coming forward, we see that there is a considerable shortfall.
  Even now, the Government seem to be making no effort to get additional information. I tabled four questions for answer on Monday, with the idea of getting replies in time for the Second Reading debate on that day, so that hon. Members would have a sensible basis on which to conduct that debate.
  I had considerable difficulty getting the answers on Monday at the normal time. I do not want to make too much of it, but the answers arrived considerably later than they should have done on Monday — literally a few minutes before the debate started. The answers were extremely illuminating. One said:
  "This information is not available."
  It had taken the Government nearly a fortnight to tell me that they could not answer my question. The other answers were equally uninformative.
  I asked the Secretary of State
  "if he will give the total number of domestic and commercial ratepayers, respectively, for each rating authority in Scotland and for Scotland as a whole and his estimate of the number and percentage …who are likely to benefit".
  The Secretary of State replied:
  "Complete information in the detail requested is not yet available."
  I was not even told the number of ratepayers in Scotland. I also asked what the cost would be if the factor were 2·5 or 2·75. I am sure that with a factor of 2·5 the cost would be considerably more than £50 million. The Scottish Office and rating authorities have computers that have been used to make calculations, but the Secretary of State told me:
  "I do not have the information on which to base a reliable estimate, and to ask the rating authorities to do the calculations specially does not seem to me a worthwhile use of resources." —[Official Report, 3 June 1985;'Vol. 80. c. 81-2.]
  The administrative costs of the Bill will be £1 million, but the Government will not even ask local authorities to use their computers to calculate what would happen if different factors were applied. It is a ludicrous position.
  The Government do not deserve to get their Bill in the time proposed, because they have not taken the trouble to do essential research to find out what the Bill will cost and what other methods would cost.
  Applying a single factor of 3 to every rating authority in Scotland is bound to produce anomalies. Without being specific, the hon. Member for Banff and Buchan drew attention to the problem. The impact of the factor of 3 will vary from authority to authority, depending on the

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  revaluation increase for each category of ratepayer. The hon. Member for Banff and Buchan said that the percentage increase on the commercial side in Grampian was 182. The increase in Shetland was only 50 per cent., in Orkney it was 70 per cent, and in Lothian and Strathclyde it was 110 per cent. Different increases will lead to different results when the factor of 3 is applied to every local authority.
  It would have been possible to have a more sophisticated system providing for different factors and allowing greater equity between ratepayers in various rating authorities. It would take account of the different results of revaluation, not, of course, of the different rate increases that are taking place in 1985–86 anyway. However, the Government rushed in with a crude calculation and did not take the trouble to do other calculations to find out whether a more sophisticated and fairer system could be devised.
  Even within regions, there are considerable differences in the minimum rates increases above which ratepayers will qualify for relief. For example, domestic ratepayers in Eastwood will have to pay at least a 43·9 per cent, increase in 1985–86 before getting any relief. Commercial ratepayers in Eastwood will have to pay 62·9 per cent, more before getting relief under the Bill. That is an extraordinarily high threshold and that is only one example.
  In Glasgow, relief will be given to domestic ratepayers only after they have paid a 39 per cent, rates increase, and commercial ratepayers will have to pay 52·9 per cent. more before relief is payable. There are a variety of figures in Strathclyde and other regions. I do not have the figures for districts in other regions, but no doubt COSLA and the individual regional authorities will have produced them.
  All the information is available, but it has not been given to us. When I ask comparatively simple questions, I am told that the information is not available and that the Government will not even bother to find it. I suppose that they do not want us to know, because such information would enable us to raise intelligent questions in debates such as this.
  Unless the Under-Secretary introduces some flexibility into the Bill, there will be a considerable volume of complaints from people who thought that they would get relief, but will have to pay massive rate increases and will get no help. They will also find that other ratepayers paying smaller increases will get help because of the way in which the Bill has been drafted.
  There is no reason why, even at this late stage, we should not introduce some flexibility. It is impossible to do that in a thorough and sophisticated way, because none of us has enough information to allow us to draft amendments to change the Bill and be confident that we shall achieve a satisfactory result. However, amendment No. 3 would at least write in the minimum amount of flexibility.
  The £50 million was trumpeted as a great victory for the Secretary of State. If the Government were serious about helping ratepayers, we could adjust the factor and ensure that all the £50 million was used. That is all that we are arguing for in the amendments.
  I understand why the 2·5 factor has been suggested, but, depending on the revaluation in some areas, that could
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  be extravagantly expensive. However, we are entitled to have answers and it seems that we are not to be given the figures.
  Mr. McQuarrie: It is nonsensical.
  Mr. Millan: It is never nonsensical to ask for information. Amendments Nos. 3 and 4 are sensible, but I prefer the drafting of No. 3. I hope that the Minister will either accept one of them or give us the necessary assurances. If he does not, I hope that Conservative Members will support us in the Division. Otherwise, there will be a breach of faith over the original announcement, because it is clear that the £50 million will not be reached. In view of all the trouble and argument about revaluation in recent months it would be intolerable if concessions were apparently made and then not used to the full.
  Mr. Bill Walker: The right hon. Member for Glasgow, Govan (Mr. Millan) clearly showed that if one attempts to provide rough justice by using just one figure, there are bound to be areas of injustice.
  I believe that I am the first hon. Member to declare a personal interest in the Bill. The cash increase for my domestic dwelling in Blairgowrie is a horrendous 64 per cent., so I shall benefit from the Government's proposals and I welcome that benefit. When I made my plea for action by the Government I proposed that no one should have to pay more than 50 per cent, above the previous year's cash value, and I made that special plea largely for the commercial ratepayers of Angus. With a multiplier of 3, the increase in cash value will be about 52 per cent, for those people, so the Government have come very close to meeting my request in that context and I am grateful for that.
  In making that request, I added the qualification that this should apply until those people's appeals had been heard and had been successful, because on the figures given to me by the Government, I judged that many of the shopkeepers and others substantially affected by the revaluation would succeed in their appeals. I based that judgment not just on the previous rateable values but on the rents actually paid by those shopkeepers who paid rent for premises on main streets in Angus. As valuation is supposed to be based on the rent that could be obtained, it seemed clear from those figures that many of the appeals would succeed.
  Amendment No. 2 is about as wise and sensible as the nonsensical comments and figures bandied about by alliance Members before the Government's proposals were made, When asked by members of the Press Gallery how much money I believed would be required, I suggested that it would be between £90 million and £120 million if my survey in Angus was representative of the whole of Scotland. I could not say whether it was representative because I could not carry out a survey of the whole of Scotland. In my view, amendment No. 2 is the usual exercise in kite-flying designed to obtain publicity rather than to solve difficult and complex problems.
  Ratepayers in Scotland are facing savage increases. We may differ politically about the reasons for those increases, but we must agree that the increases are so savage that they cannot be allowed to remain. The Government have accepted that and have moved very quickly, but I shall be interested to hear their response to amendment No. 3, which seems to provide the kind of flexibility that could not be achieved within the time scale in which the

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  Government brought their proposals forward. I make no criticism of the remarkable speed with which the Government acted—indeed, I am eternally grateful for it because the situation in Angus was even more appalling than that in Perth and Kinross.
  7.45 pm
  I appreciate the reasoning behind amendment No. 4 and I do not argue with it because I believe that it is probably right in principle, but the wording is not all that it should be and I believe that amendment No. 3 achieves the same objectives. I hope that my hon. Friend the Under-Secretary of State will tell us why the Government cannot accept the flexibility proposed in amendment No. 3. Ratepayers in my area would certainly like to believe that the speech made by my right hon. Friend the Secretary of State in Perth means that ratepayers will receive the full value of the £50 million. I am not especially concerned about how that result is achieved but if that sum is available we need to assure ratepayers in Scotland that it will be used in full to mitigate the difficult circumstances in which they find themselves. I believe that many of my constituents will succeed in their appeals against the increases. If that is the case and they do not require the assistance generously proposed by the Government, I shall be delighted.
  Mr. Foulkes: I do not know whether the hon. Member for Tayside, North (Mr. Walker) was present earlier in the debate to hear his hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) laying into the hon. Member for Gordon (Mr. Bruce) with vilification and personal abuse. We in the new, emerging Labour party do not intend to become involved in such dogfights between the old Whig and Tory parties. We intend to concentrate on the merits of the argument and to put a few questions to the Minister.
  No explanation has been given publicly or to the House as to how the factor of 3 was arrived at. According to The Scotsman, the Under-Secretary of State for Scotland said:
  "when the scheme was drawn up a decision had been made on the level of revaluation increase that would create an unacceptable burden"
  and:
  "We decided that level was three times the existing rateable values".
  On what basis was that decided? Why should there be such integer worship in this age of computers? If a factor of, say, 2·9 were more appropriate, the calculation could be made just as easily. The Minister has a duty to explain why he decided on a multiplier of 3. [Interruption.] I see that the other half of the alliance has arrived, in the shape of the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy)—better late than never, I suppose.
  The Prime Minister has promised at least £50 million. What will happen if COSLA is right and only £30 million is spent under the Bill? Will the remainder go back to the Treasury? Will it go into other areas of over-expenditure such as the bottomless pit of fortress Falklands? We need to know. That is why, among many other reasons, I support amendment No. 3 proposed by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), because it provides the flexibility needed to make adjustments in the light of experience when we see the proposals in operation.
  The Minister said that the purpose of the exercise was to assist hard-pressed ratepayers, not to undo the changes that had taken place as a result of revaluation. That makes sense. Presumably the purpose of revaluation was to move
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  the burden from certain ratepayers in the commercial sector to others. If so, who in the commercial sector is gaining? The Under-Secretary referred to a hotel in Dumfries and Galloway. Apart from that one example, who are the gainers?
  It has been said that a 14 per cent, additional burden is falling on the commercial sector as a whole and that the vast majority of people in that sector are suffering. On the other hand, when we discuss reducing the figure—for example, under the Liberal amendment to 2·5, the Minister says that over half the domestic ratepayers would get relief if there were a 2·5 multiplier. Does that not show that the revaluation has resulted in over half of domestic ratepayers having an increase of more than 2·5 times?
  Mr. Ancram: That is what "average" means.
  Mr. Foulkes: Of course, but why 2·5? I would not have expected that to be the average. A retired school teacher, now masquerading as an Under-Secretary, may correct me, but may we be told why, at 2·5, half should be above and half below?
  Why are there so many regional variations? There seems to be a total difference between Strathclyde on the one hand and, say, Tayside, Lothian and Grampian on the other. There seems to have been no co-ordination or collaboration between the assessors. Nor can I understand how the assessors made their comparisons. I understood that the exercise was supposed to be based on rentals that might be achieved for the premises. One gathers, however, that a whole range of matters come into the calculation, including — dare I mention it?—private houses in Ayr such as the one in which I live, the posh type of house that the Minister described earlier. But there are no houses such as that being rented in the area with which we are concerned. In other words, I do not understand how the bases of comparison were worked out.
  It has been said that, because revaluation has taken place north, rather than south, of the border, shops which are branches of United Kingdom multiples can obsorb the increases much better than Scottish-based firms, so that the former can rejoice in the fact that in most of their shops south of the border they do not have the same burden. That is not the case for the Co-ops in Scotland or for all other Scottish-based companies.
  I hope that the Minister will take the Labour amendment seriously. Power would remain in the hands of the Minister and at the end of the day, in the light of experience, the Secretary of State would be free to decide what, if any, action to take. If, as COSLA has predicted, £20 million will not be taken up, the amendment will be necessary, and the hon. Member for Eastwood (Mr. Stewart), if no one else, should support it.
  Mr. Ancram: We have had another interesting debate on this important topic. The remarks of the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) underlined some of the confusions that have arisen in the public mind as a result of the revaluation. Indeed, they underlined also the reason why we are keen to look again at the system of financing local government so as to find a better way of doing that. We are delighted to note that at least he among Opposition Members is with us on that, and we look forward to hearing further from the occupants of the Opposition Front Bench about their views on the subject.

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  There has been some misunderstanding over this issue recently as was clear from the Second Reading debate on Monday. The scheme arose initially from an appreciation by the Government — and by the hon. Member for Glasgow, Garscadden (Mr. Dewar), as he made clear at Scottish Question Time recently — that ratepayers had been hard hit by revaluation.
  I do not want to rub it in, but the hon. Member for Garscadden has in the past welcomed revaluation. He appreciates, however, that a number of ratepayers have been severely affected at the margins of revaluation. He offered the Government co-operation in introducing a mechanism to help the hardest hit. If he did not use those exact words, he used words to that effect. The scheme sets out to do that. It aims—this is what the Bill puts into practice—to remove the worst cases due to the sudden revaluation changes that have occurred.
  The threshold multiplier of 3, which the Government have selected, is not designed—and it would have been wrong had it been designed—to nullify or neutralise the effects of revaluation. It is designed to deal with the harsh and difficult cases on the margins but not, as it were, to re-write the revaluation. Indeed, we should not do that, because if we were merely to re-write it in favour of those who were losers as a result of revaluation, without doing anything for the gainers, we should create a very strange and distorted pattern indeed. We all accept that there are good reasons for changes in valuations, and if those reasons do not apply in the cases of any valuations, the assessors must defend those valuations in the court.
  Thus, we looked at the range between 2·33, which is the average revaluation multiplier for all property in Scotland—that is the level in general or average terms, so that if one is below that level one gains from revaluation and if one is above it, one loses—and ranges beyond that, through 3 to 4, as suggested by the Federation of Small Businesses and the Self-Employed, and at some of the other ranges of revaluation affecting properties in Scotland.
  The difference between 2·33 and the 3 times multiplier leaves a range which allows revaluation still to be effective in the terms that it is supposed to be effective, yet at the same time allows us to protect the hardest hit. Above a multiplier of 3—given that there are variations; the right hon. Member for Glasgow, Govan (Mr. Millan) was right to point to regional variations — the results of the revaluation in terms of the rate effect would have been unacceptable.
  For that reason, we chose a multiplier of 3, and on to that we have built a scheme which is simple and straightforward and, most important, which enables people to understand whether they do or do not qualify. We hope that, as a result, we are meeting the target that we sought to cover in the first place.
  Mr. Dewar: I wish to be clear about the implications of the Minister's remarks. Is he saying that the Government are satisfied that in working the scheme based on a uniform multiplier of 3, they have done enough? Should the scheme cost only £25 million, leaving the other £25 million unallocated, would the Government then not want to use that other £25 million? In other words, is not the impression that £50 million was being found to help
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  Scottish ratepayers a mistaken impression? Are the Government saying that the scheme is complete and that, no matter how big the shortfall, they will not make it up?
  Mr. Ancram: I shall be dealing with that. If we reduced the multiplier trigger in the scheme down towards the average multiplier, we should in effect be removing the effects of revaluation. If the hon. Gentleman believes that revaluations should take place—he pressed us to carry out this revaluation—he will accept that we must set a trigger point which will leave an effective revaluation while at the same time protecting the hardest hit. The scheme is demand led. Once the eligible category has been denned, the amount that the scheme will cost will depend upon how many people fit into that category. There will not be an allocation of fixed money.
  8 pm
  On a decision to focus on a level of valuation above which rebate is to be given reflects the judgment that approximately three times this year's revaluation is about the right level at which to intervene and reduce the effects of revaluation. The amount of money that it will cost has been the subject of a number of conjectures, both high and low, during the last two months. As I said during the Second Reading debate on Monday, I do not believe that we shall know the total amount of money that will be expended on the scheme until the last eligible ratepayer has been paid.
  Mr. Millan: Will the Under-Secretary of State give way?
  Mr. Ancram: I shall give way to the right hon. Gentleman in a minute.
  At that time we shall know precisely what the outturn figure is. As the analyses of the revaluation take place those figures will become more accurate, but I do not believe that we shall know the exact figures until the last ratepayer has been paid.
  Mr. Millan: I do not suppose that we shall know the exact figure down to the nearest pound, but we know that it will not be £50 million. It will be nearer £30 million, and perhaps even less than that.
  Mr. Ancram: The right hon. Gentleman presided over the last revaluation and we saw its effect upon commercial ratepayers. At that stage the right hon. Gentleman never suggested that any scheme of relief should be provided. He is now complaining about what, on any view, is a very generous scheme in terms of both money and eligibility. The people of Scotland have looked carefully at the Government's proposals. They accept that both the financial commitment and the scheme underline the concern felt by the Government for those who have been hardest hit by revaluation.
  Mr. Millan: The Under-Secretary of State is surely not disputing the COSLA figures, which amount to less than £30 million. We know that there will be a shortfall of £20 million.
  Mr. Ancram: As I said on Monday, my understanding is that those figures are not yet complete. We cannot begin to give figures until we know which ratepayers are eligible under the scheme.
  Mr. Gordon Brown: Can the Under-Secretary of State explain why he chose the figure of 3 instead of 2·9 or 2·8? Can he also explain why the

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  figure of £50 million was announced? Were the Scottish Office figures based only upon a random look at the Strathclyde valuation roll? Was there no consideration of the situation facing Fife, Central, Lothian, the Highlands, the Grampians and the Borders?
  Mr. Ancram: The hon. Gentleman has not attended the greater part of our debate today. His question has already been answered. I have already made it clear that, if one reduces too far towards the average multiplier, one effectively writes off revaluation. An element of judgment is involved. The difference is between an average multiplier of 2·3 and a multiplier of 3. Within that area we believe that revaluation will have its full effect. The increase that will be paid by those who are above the multiplying factor of 3 will be rebated to them under the scheme. The people of Scotland appreciate, by and large, that it is those who are over the multiplier of 3 who are the hardest hit. Multipliers of 4, 5 and even 6 have been given to me. Those people are very hard hit and they appreciate what the Government are doing for them. The Opposition are doing themselves no good by cavilling over figures when we are talking about sums of money which are so much bigger than anything that they suggested when they said that there ought to be a scheme of this kind.
  Mr. Maxton: Will the Under-Secretary of State give way?
  Mr. Ancram: No, I have already given way to many hon. Members during both this debate and the last debate.
  The Government's proposals are reasonable and simple. That is important if the scheme is to operate effectively and quickly. The amendments would take rebates beyond the level that we think is reasonable and would complicate the operation of the scheme. The amendment moved by the hon. Member for Garscadden would create vast areas of uncertainty. One of the benefits of the Bill is that those who are eligible will know that they are eligible. That eligibility will continue. According to the amendment moved by the hon. Member for Garscadden, the multiplier could, on occasion, be increased as well as reduced from year to year. Those who are eligible would not know whether they would continue to be eligible under any future scheme. That is not the right way to proceed.
  Mr. Dewar: The Minister has said something which I believe is quite important. Is he saying that, as it is drawn, the scheme can be continued if he exercises his discretion next October and that it would have to be continued in the same way and at exactly the same level?
  Mr. Ancram: It would not necessarily be continued in the same way, because the manner of the scheme is contained within the order. Those who are eligible are defined in the Bill in terms of both their category and of the multiplier that is required to trigger their eligibility. The simplicity of the Bill, which is important to its implementation, is helped by dealing with it in this way. Therefore, I ask the Committee to reject the amendments and to support the Government.
  Mr. Craigen: Having heard what the Under-Secretary of State has had to say, I am now more than ever convinced of the virtue of amendment No. 3. Irrespective of whether it is the Liberal party's 2·5, or the Scottish National party's £50 million, or our amendment No. 3, which proposes a variable but with a full take-up of the £50 million, we want
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  the package that was announced in Perth to be spent for the benefit of Scottish ratepayers. It is clear that the revaluation relief package that was announced was both a platform confidence trick by the Secretary of State for Scotland and an exercise in back-stage bungling. The more time that has elapsed the more evident it has become that the Scottish Office computer is not working. As my right hon. Friend the Member for Glasgow, Govan (Mr Millan) pointed out, all the rating authority computers are busily churning out the kind of information that was quoted earlier by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar).
  I hope that the hon. Member for Gordon (Mr. Bruce) will withdraw his amendment. It was not scientificallycal-culated. He admitted as much earlier. I do not blame him for that. The Government are even more guilty. They have been unable to provide precise figures. I hope that the right hon. Member for Western Isles (Mr. Stewart) will also withdraw his amendment, because we are at one with him. We want the £50 million to be spent in Scotland. Amendment No. 3 provides the mechanism which would make it possible to achieve the lower factor.
  Several hon. Members have asked the Under-Secretary of State how the magic figure of 3 emerged. I know that the hon. Member for Stirling (Mr. Forsyth) thinks in threes. Several hon. Members served on a Standing Committee in which he always spoke of three, or 30 or 300. I wonder, therefore, whether the Stirling factor had something to do with this. When the Secretary of State made his statement to the House on 14 May I asked him how many people would come within the 2·7 and the 3 factor on the domestic side and the 2·2 and the 3 factor on the commercial side. He did not tell. It is now quite obvious that he did not know. Furthermore, he could not even give the number of people on the commercial and domestic side who would benefit from the factor of 3.
  On 16 May I wrote to the Secretary of State about the Government's revaluation relief scheme. I was trying to be as practical and constructive as possible, and I wrote:
  "If, by the end of June, the take-up by domestic and commercial ratepayers is nowhere near the £50 million allocated, will you consider reducing the threshold from three tunes the rateable value to 2-·7 times in respect of domestic ratepayers and 2·2 times in respect of the commercial sector? As I understand your aim, it is to neutralise the effect of the 1985 revaluation increases and you did indicate that 2·7 and 2·2 respectively represented neutral average increases arising from the revaluation."
  On 23 May, the Minister replied, and in his long letter, which did not tell me much, he said:
  "we now think there might be up to a quarter of a million properties which could stand to benefit, including both domestic and non-domestic."
  When the Secretary of State for Scotland announced this scheme in all the paraphernalia after the Perth conference on 14 May, we were led to believe that about 300,000 would benefit from the scheme: 250,000 domestic ratepayers and 50,000 businesses. But the more time goes by, the more the beneficiaries seem to disappear. The Minister still cannot tell us how many beneficiaries there are under the scheme. Indeed, it is quite evident that when the statement was broadcast at Perth, the Secretary of State just did not know. It was all political camouflage
  The delegates at Perth had to be told something. The Secretary of State had to assure them that the Scottish Tory Members at Westminster were not an extinct breed. Consequently, he came up with the £50 million figure. To

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  compound everything, the Chancellor of the Exchequer was then telling the Scottish press that the Secretary of State would not get his £50 million next year. [Interruption.] As has been pointed out, we shall not even get the money this year. Indeed, the figures from the local authorities and the business sector show that the figure is more likely to be about £30 million.
  The Government have put a lot of effort into their revaluation rebate scheme, but it must be seen against the background of Monday's social security review. The same Government who have kidded all their Back Benchers about there being a reform of the rating process propose to get 750,000 Scots on housing benefit to pay rates. The Government say that in order to ensure that those people know what rating is all about, they will have to pay at least 20 per cent, of their rates. On the one hand the Treasury says that it will give £50 million this year to help over the revaluation, but on the other hand the DHSS says that it will begin to bring 750,000 people into the rating network. In the euphemistic terms of the Civil Service, I believe that that is called departmental log-rolling. I refer to the idea that if one Department gives, another has to take away. At the end of the day there are sufferers from all those administrative changes.
  I hope that the hon. Member for Gordon and the right hon. Member for Western Isles will ultimately agree to support amendment No. 3. More importantly, I hope that all those Tory Back Benchers who make speeches to ratepayers want to see that £50 million spent, and will be in the Lobby with us. I hope that they will not sit on the fence and abstain, but will support amendment No. 3.
  8.15 pm
  Mr. Bruce: Having been at the receiving end of an unprovoked and unexpected attack from my neighbour, the hon. Member for Banff and Buchan (Mr. McQuarrie), I was interested to note that the Minister did not say why 2·5 was unacceptable, or what it would cost. Presumably, he was unable to do so. I accept that it would bring many more people into benefit, which was the point of lowering the threshold. Indeed, that was the point of the amendment. If the Minister was anxious to suggest that the figure is unacceptable, I should have thought that he would have some arguments to support him. However, he was unable to produce them. He could not say whether the £50 million would be underspent and if so, by how much, and by how much my proposal would put the figure over £50 million.
  The hon. Member for Banff and Buchan seems to think that the Government's proposals will be greeted with rapture by ratepayers. If he goes to areas in my constituency, including parts that he used to represent, he will find the reception less than enthusiastic. If Banff and Buchan is compared with Gordon, hon. Members may understand why the hon. Gentleman can afford to be slightly more complacent. The average increase in domestic valuations in Banff and Buchan is 260 per cent, compared with 280 per cent, in Gordon and 290 per cent, in the city of Aberdeen. In cash terms, the average increase in the domestic rate element for Banff and Buchan is 6·7 per cent., but in Gordon it is 15 per cent, and in Aberdeen 1·1 per cent. When the commercial factor is considered, the figures are even more interesting. The increase is 230 per cent, in Banff and Buchan, 260 per cent, in Gordon
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  and 280 per cent, in Aberdeen. In cash terms, that is 9·1 per cent, in Banff and Buchan, 27·5 per cent, in Gordon and 27·1 per cent, in Aberdeen. I am sure that the hon. Gentleman must recognise that people facing such rate increases are looking for much more relief than the Government are offering.
  It is a cause for concern that the Government have now implied that if the Bill is enacted unamended there will be no opportunity to adjust, in the way that the hon. Member for Banff and Buchan implied would be acceptable, if the full allocation is not taken up. Clearly, the best way of allocating any extra cash is to lower the threshold to ensure that more people benefit. But that possibility will not be open to the Government if they do not accept any of the amendments.
  In the interest of ensuring that we unite behind one amendment that gives the flexibility that the Bill needs, and that the Government will need, I am willing to withdraw my amendment and to urge my colleagues to vote for amendment No. 3. However, if the Government resist it, they will find that the outrage of this year will be as nothing compared with next year, because the people will realise that they have been conned and bought off for a year. Those Conservative Members who have said that they are keen to ensure that there is a full take-up should vote with us and demonstrate that they are not prepared just to use weasel words for the benefit of their constituents but are also prepared to stand up and fight. Accordingly, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Amendment proposed: No. 3 in page 1, line 13, after 'value', insert
  'or such other figure as shall be set by statutory instrument which shall not have effect until approved by resolution of the Commons House of Parliament'.—[Mr. Dewar.]
  Question put, That the amendment be made:—
  The Committee divided: Ayes 108, Noes 181.
  Question accordingly negatived.
  8.30 pm
  Mr. Paddy Ashdown: On a point of order, Mr. Walker. I apologise for interrupting the flow of this important debate, but I have a matter that needs to be drawn to the attention of the House and which touches on the safety of those who work in the House and of those who visit us. The facts are as follows. Midway through yesterday afternoon, the secretary of a colleague of mine was taken seriously ill in Norman Shaw South and immediately moved to Westminster hospital where she was put into the intensive care unit. I understand that word filtered back that part of the reason for her condition was, to use the word received, the "poisoning" of the water supply system at Norman Shaw South. Early this morning, before staff had arrived, an announcement was made on the public Tannoy system in Norman Shaw South saying that the water supply should not be used for drinking, but no further steps were taken and none of the staff who arrived later than 9 o'clock was so informed, although in due course notices were put on the taps.
  About midday, my secretary, who was involved in the incident yesterday, informed me that there was considerable concern among hon. Member' secretaries in Norman Shaw South; they were unclear about what had happened and of the danger in which they stood. I asked the Serjeant at Arms to provide information as to what had happened and to assure me that appropiate steps had been taken to ensure that our staff were being adequately informed so that they could protect their health.
  I was informed that investigations into the water supply were going on, but that they would not achieve any results

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  until later. Meanwhile, I received assurances that staff would be informed. The Chief Whip of my party, my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), received similar assurances that it was not known what had gone wrong with the water supply but that investigations were underway.
  It has now come to my notice that the press has been told that what happened was that at 11·30 yesterday morning, some 22 gallons of anti-corrosion liquid, intended for the central heating system in Norman Shaw South, were poured into the water supply system by accident, and that that liquid contained certain unpleasant chemicals. I am also told that the press was informed, although hon. Members—in particular my hon. Friend for Berwick-upon-Tweed and I — were not, that these facts were known at 8.50 last night. The facts will be published tomorrow morning.
  It is important that we should know why this has happened, why such hopelessly inadequate steps were taken to inform our staff this morning, why the situation was not explained to us, and why were we not told the facts. Further than that, why were we positively misled? Some of our staff and some who visit the House may have been endangered by the appalling accident that occurred yesterday, but some of them may also have been endangered by the fact that such inadequate steps have been taken. I have no doubt that if the facts that I now have are true and if we were formal employers, we would be liable to action under the Health and Safety at Work Etc. Act.
  We must now have a clear statement on the current position and clear instructions that will provide for the safety of our staff and others who visit the House. We need assurances that there will be a full investigation of the matter. I hope that you, Mr. Walker, agree that it will be appropriate for the responsible Minister to come to the House to give some assurances.
  The Chairman of Ways and Means (Mr. Harold Walker): There is one difficulty—we are in Committee at the moment and, strictly speaking, we should not be discussing such a matter. However, in view of the seriousness of what the hon. Gentleman has told the Committee, I felt that it was proper to allow the hon. Gentleman to go on. I see that the Leader of the House is present and wishes to speak.
  The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): I should like to respond to the points that have been raised, which I realise have caused great anxiety. I am sure that hon. Members in all parties will be anxious for Mrs. Jacqueline Winter, hope that she will make a speedy recovery, and feel concern about the incident. The hon. Member for Yeovil (Mr. Ashdown) has made a number of accusations and raised a number of points that are clearly of substance. I shall arrange for a statement to be made at the earliest possible moment.
  The Chairman: I think that it will be sensible for us to leave the matter at that now and return to the debate.
  Clause 1 ordered to stand part of the Bill.

  Clause 2
  FINANCE
  Question proposed, That the clause stand part of the Bill.
  Mr. Craigen: I should like the Minister to tell us something about the working of the clause. It relates to the reimbursement to rating authorities of the payments that they make under the scheme. We tabled an amendment about administrative costs, but it has not been selected. However, perhaps the Minister will reply to some of the points that I and other hon. Members made on Second Reading, but to which he did not have the time or opportunity to reply in detail.
  For example, I note that the Secretary of State will be determining the conditions as to records, certificates, audits and other things over which the payments will be made. Will the audit be at the end of the financial year? Will local authorities be involved in outlays earlier in the current financial year, for which they will not be reimbursed until the end of the financial year?
  On Second Reading, we raised a number of points about interest charges to local authorities. Clearly, although the Government are proposing to reimburse local authorities for the payments that they make under the scheme, the payments themselves may involve local authorities in extra costs. I think that the Secretary of State referred to the payments not involving local authorities in any breach of guidelines. However, in his winding-up speech on Second Reading, the Minister did not answer my question as to whether the costs that rating authorities would incur in administering this scheme would bring them into difficulty in complying with the Government's guidelines over rate support grant and expenditure.
  Will the Minister take the opportunity today to answer a point that has been left in the air? Nobody knows precisely what the position will be. Therefore, I should be grateful if the Minister will dispel some of the lingering doubts and anxieties.
  Mr. Ancram: I am always keen to dispel the doubts, lingering or otherwise, of the hon. Member for Glasgow, Maryhill (Mr. Craigen). The hon. Gentleman will find that on Monday I answered one of his specific questions about the difficulties that might be faced by local authorities which might have to wait for reimbursement. I said that we would consider whether there was some way in which we might help them by making advance reimbursement before final certification was completed.
  In regard to administrative costs, I listened carefully on Monday to my hon. Friend the Member for Stirling (Mr. Forsyth) and to other hon. Members. Having given the matter consideration, my right hon. Friend proposes, in exercising powers already available to him, to disregard for guideline purposes certain local authority expenditure on the administration of the rebate scheme in 1985–86. My Department will be discussing with the Convention of Scottish Local Authorities the exact terms of the disregard.
  The hon. Member for Maryhill was rightly concerned that in some circumstances authorities might find themselves penalised for the cost of the administration of the scheme. I hope that I have clarified that point to the satisfaction of the hon. Gentleman. In view of what my hon. Friend the Member for Stirling said on Monday, I hope that he will feel that we have responded to the valid points that were made.
  Mr. Craigen: I am grateful to the Minister for reassuring me about the disregard in respect of payments incurred. This is not really the time to raise the matter, but I still think the Government are being unfair in burdening rating authorities with the cost of administering the scheme. Although the Bill refers to £1 million, that is only an estimate. In view of the earlier discussion about the take-up of £50 million, I wonder whether the calculation will be any more realistic.
  Mr. Ancram: If the hon. Member is right in his first estimate, compared to the estimate that we made, he will find that the cost of administration will go down commensurately.
  Mr. Craigen: I wonder. I was about to say to the Minister that in view of the fact that there will be reclaims of rebates already made, where a person has succeeded in his valuation appeal it seems that the rating authority will be involved in a second set of expenditure. The Government have rightly left it to the rating authorities to identify those ratepayers who will be eligible under the scheme. As rating authorities are being given this direct responsibility, it would make more sense for the Government to acknowledge that they should have direct responsibility for the administration of the scheme.
  Question put and agreed to.
  Clause 2 ordered to stand part of the Bill.

  Clause 3
  CITATION, COMMENCEMENT AND EXTENT
  Mr. Dewar: I beg to move amendment No. 7, in page 2, line 38, leave out 'which'.
  The Chairman: With this amendment it will be convenient to discuss amendment No. 9, in page 2, line 39, leave out from '1985' to the end of line 40.
  Mr. Dewar: We are now galloping towards the close. There has been a slightly ungracious welcome for the amount of co-operation that we have given to the Bill. We are allowing it through in a remarkably expeditious fashion. As an instance of that, in the normal Committee stage I could have been happily entertained for many hours discussing the amendments now under consideration. I say that unashamedly. I shall now dispose of them in about 90 seconds, to my considerable regret. It is an exercise in self-discipline that surprises me.
  This matter arose on Second Reading. The Committee will remember that clause 3 says:
  "This Act … shall come into force on the expiry of 2 months beginning with the day on which it is passed."
  I want an assurance about whether that means that the Bill does not come into force until two months after it has completed its passage through the House of Lords. While I accept that their Lordships will not delay the Bill, that means that the two months will start in some weeks' time.
  8.45 pm
  The order is an essential part of the apparatus without which we cannot have positive action to disburse money. If it cannot be laid until the Act is in force, I suspect that, because of the parliamentary timetable, we could not have it until the autumn. That will delay the whole business of calculation and disbursement so far into the financial year as to raise substantial difficulties for local authorities and for the Scottish Office.
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  Can we have an assurance from the Minister that if he insists on keeping the time lag of two months in the Bill it will be possible to lay and debate the statutory instrument within that two-month period without having to wait until the Bill comes into force? If the answer is yes, it will remove my fear to some extent.
  The Minister might take a minute to explain the matter, I am not sure why we need the provision that the Bill shall not come into force until two months after it completes its passage through Parliament. There does not seem to be any rationale in that. Obviously there must be, and perhaps the Minister will explain it.
  The real problem is that it seems illogical if the statutory instrument depends upon the Bill. If the Bill does not come into force for two months, can we start the statutory instrument on its way before the expiry of that two months? If we cannot, there will be considerable problems. I am sure the Minister has followed the point and I shall be grateful for his answer.
  Mr. Ancram: As I said in reply to the Second Reading debate, the Bill is in accordance with normal practice in coming into force after two months. Much requires to be done before effect can be given to the Bill. We have to give local authorities and ratepayers a period of two months to make the necessary arrangements. The order setting out the details of the scheme must be brought before the House after the Bill has been enacted. To answer the point the hon. Member was making, this can be done after Royal Assent has been given to the Bill and does not have to wait until the Bill comes into operation in two months’ time.
  We are working towards a period of two months during which certain administrative arrangements will have to be made. The order will have to be laid and approved by both Houses of Parliament. Thereafter, at the end of two months the scheme will be capable of being operated. We wish to see the scheme in operation if possible before we get to the stage when rate bills have to be paid in September. The timetable in the Bill will allow that to happen.
  If the amendments were to be accepted they would not in practice make any difference to the timetable because the work will have to be done in any event. The timetable does not delay the operation of the Bill in the sense of making sure that it achieves what it set out to achieve within the time scale that both the hon. Gentleman and I want. On that basis, I hope the hon. Gentleman will be prepared to withdraw the amendment.
  Mr. Dewar: I will be prepared to withdraw the amendment on that assurance. Like the Minister, I am anxious to see the machinery in operation as quickly as possible. Many people will already be paying their rates on the 10-month instalment basis. The first instalment will have been paid in May so adjustments will have to be made, presumably in the subsequent instalments towards the end of the financial year. A new book will be issued showing a lower rate of contribution for those who are getting something out of the rebate scheme.
  If the Minister is satisfied that he does not need to delay the statutory instrument and that the period of two months is really of no importance, I am prepared to take that assurance. Therefore, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 3 ordered to stand part of the Bill.

  New Clause 2
  LIMITATION OF RELIEF
  'The total rebate payable will be restricted to a maximum of 10 premises and a total maximum of £50,000 for any one corporate body.'—[Mr. Bruce.]
  Brought up, and read the First time.
  Mr. Bruce: I beg to move, That the clause be read a Second time.
  The new clause is an attempt to provide a further targeting element in the Bill. I was taken aback by a phone call two or three weeks ago from a shopkeeper who thinks that the Bill does not prevent large companies with chain stores from receiving substantial benefit. I believe that the measure should concentrate on small businesses and small shop units. I do not want to repeat my argument about the threshold being too low, but the Bill should not enable large amounts to be refunded to relatively large companies.
  It is difficult to be specific, but some companies have many branches consisting of small shops such as newsagents and supermarkets which might be able to claim rebate on each of their premises. That could mean that tens of thousands of pounds could go to one enterprise. That would be regrettable if the money was then not available to assist small businesses with only one or two outlets. The measure is designed to try to save businesses which might cease to trade as a direct result of rate increases.
  The shopkeeper told me that she operated two shops —one in Aberdeen and the other in York. The shop in York, which is six times larger than the shop in Aberdeen, pays rates of £850 and the much smaller Aberdeen shop, under the new revaluation, will pay rates totalling £1,400. The Bill will give that shopkeeper rate relief, but she will still have to pay substantially more for her shop in Aberdeen than for her larger shop in York.
  I appreciate that the Bill is confined to Scotland and that therefore the comparison is not valid, but the point will not be lost on the Minister. Many of the larger groups which trade throughout the United Kingdom might be able to claim substantial rebates.
  As the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) said, a major store moving into a town centre is an asset and we must consider that. However, that is a wider problem and might be resolved by the abolition of the rating system. Businesses should not have to pay more rates in Scotland than they pay in England and Wales. That possibility is causing concern and might affect future investment and development in Scotland.
  The new clause ensures that no chain store operator receives a substantial rebate. The money saved could be redirected to ensure that the benefit goes to those who need it most. If nothing else, it could be used by the Government to assist small businesses in other ways by reducing the costs of their overheads.
  Most hon. Members will have received representations from the National Federation of Small Businesses and Self-Employed which is looking for a £10,000 limit. That is probably too narrow a boundary. It restricts assistance to a maximum of 10 premises and a maximum figure of £50,000. That would ensure that all medium-sized businesses would receive full benefit but that the large businesses which are best able to carry the burden would
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  be restricted to a £50,000 rebate. The Minister says that he does not want to neutralise the effect of revaluation, but that is a different argument.
  Mr. McQuarrie: I oppose the new clause because the hon. Member for Gordon (Mr. Bruce) is wrong again. He spoke about chains, but he has forgotten that the chains operate individual shops in different towns. An example is C and J Clark, the retail shoe operator, which has over 100 retail shoe outlets throughout Scotland in the names of Peter Lord, Ravel and K shoes. They are individual businesses employing managers and staff. If they cannot enjoy the benefits that can arise from revaluation they will be penalised. The firm estimates that the increased rate burden for all its Scottish shops will amount to an additional £300,000 this year. It estimates that £75,000 will be returned as a result of my right hon. Friend's scheme announced on 14 May. Without that the firm will have to pay an additional rate poundage throughout Scotland of £225,000 this year. That would be unfair because we are talking about small businesses.
  I totally support small businesses. There are two such shoe shops in Aberdeen and three in my consituency and I am sure that there are more in the hon. Gentleman's constituency. If they are forced out of business it will be because they have not enjoyed the advantages of the Government's scheme. I urge hon. Members to reject the new clause. We are talking about small businesses in 100 places in Scotland.
  Mr. Foulkes: I shall be brief because for once I agree with the hon. Member for Banff and Buchan (Mr. McQuarrie). I doubt whether the hon. Member for Gordon (Mr. Bruce) has thought about co-operative societies. I am sure that if the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) were here he would not support his hon. Friend because he is a good and active co-operative supporter, and always has been. The new clause could be devastating for some co-operative societies. It is certainly not welcomed by the co-operative movement. The hon. Gentleman should withdraw the motion.
  Mr. Dewar: I shall be brief because I recognise that other issues are battering at the door. I have sympathy with the motives behind the new clause. We want help to go to the right people in the right degree, but the hon. Gentleman's case in based upon a fallacy. The hon. Member for Gordon (Mr. Bruce) argued that, if money were saved, it could be given to others.
  The Minister has made it painfully clear that that is not an option open to us and that there will be a substantial underspend, and I think that we can now be confident on the scheme.
  Considering the real situation in Scotland and some of the figures with which the Retail Consortium has been supplying us, the case is perhaps not as clear-cut as the hon. Member for Gordon may have thought when tabling the amendment. I could think of a large number of complications about firms which have premises in different regions and different districts and the problems that would arise therefrom.
  Therefore, although I have sympathy with this, my advice to my hon. Friends is not to support the amendment.
  9 pm
  Mr. Ancram: The hon. Member for Glasgow, Garscadden (Mr. Dewar) has made one of the basic points

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  which I intended to make about the amendment—that it would clearly severely complicate the Bill as well as be unfair. In particular, where there are, for instance, different stores belonging to the same company or chain but within different valuation areas, it would create difficulties to ascertain where they were and what their relationship was. I am sure that the hon. Member for Gordon would not wish unnecessarily to complicate the scheme.
  The spirit of the amendment has been met, in that we have already announced that we are putting a £10,000 limit on the amount of rebate that can be obtained by any one rateable subject. I believe that that is a necessary safeguard. It was in response to a number of representations that one would find certain subjects qualifying for a lot more than that. We believed that it was necessary to put a safeguard on this. That will be included in the order. On that basis, I hope that the hon. Gentleman will withdraw the amendment.
  Mr. Bruce: I have listened with interest to the points made. The hon. Member for Banff and Buchan (Mr. McQuarrie) highlighted my concern — that, given our present lack of information, some chain store operators could still take up a substantial amount of the money available. If that were the case and there were an overspend, I think that most hon. Members would appreciate the need to provide some limit.
  As to the co-operatives, I accept the point made by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), although I could also argue that many of the co-operatives are organised in groups which would probably leave them outside the limit.
  Allowing for that point and reaffirming my concern that £10,000 per premises could add up to a substantial amount for any one company, but because there is a desire to terminate the Committee and because the point has been made and registered, I can only hope that I am not proved wrong and that there are no circumstances in which it will be found that a substantial amount of money has been taken up by rebates to individual companies. Given all our assumptions on the basis of our lack of information that we are discussing amounts of £30 million or £40 million but under £50 million, and in view of the comments that have been made. I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Bill reported, without amendment; considered.
  Motion made, and Question, That the Bill be now read the Third time, put and agreed to.
  Bill accordingly read the Third time, and passed.

  Appropriation (Northern Ireland)
  9.2 pm
  The Minister of State, Northern Ireland Office (Dr. Rhodes Boyson): I beg to move,
  That the draft Appropriation (No. 2) (Northern Ireland) Order 1985, which was laid before this House on 8th May, be approved.
  The order is being made under paragraph 1 of schedule 1 to the Northern Ireland Act 1974. The order provides the balance of the money necessary in 1985–86 for the services provided by Northern Ireland Departments and certain other public bodies. On 7 March the House approved a total of £1,323 million as "a sum on account". Today I seek the balance of £1,733 million, making up a total estimate for 1985–86 of £3,056 million. This is the figure which appears on the front of the Estimates volume which is available from the Vote Office. It is this Estimates volume which gives full details of projected expenditure.
  The draft order also appropriates an additional £4 million to cover excess expenditure in the 1983-84 financial year in class VII, vote 1, which covers protective services such as the fire service, and class X, vote 2, which covers non-contributory social security benefits. These two "excess votes", as they are termed, have been examined by the Select Committee on Public Accounts which has raised no objection to them being voted. Details of the excess expenditure are set out in the "Statement of Excesses" pamphlet which has also been placed in the Vote Office.
  Before dealing with the detail of the Estimates, I think it is appropriate to reflect upon the broad economic prospects. The United Kingdom as a whole is about to enter the fifth year of continuous economic growth. Recent economic indicators show that Northern Ireland continues to share in this revival. The trend for total industrial production has been upward since mid-1983 with output in 1984 3 per cent, above the level for 1983. Manufacturing production also rose by 3 per cent, in 1984 following a similar rise in 1983. As I have said before, the recovery in manufacturing has been fairly broadly based with most sectors showing some improvement. The most recent employment figures for the Province are also encouraging. Although the trend is still downwards, the rate of decline has fallen significantly. In the second half of 1984, total employment actually rose by over 4,000. However, last year as a whole there was a net decline of 660. This compares with declines of around 3,100 in the year ended December 1983 and 14,500 in the previous year.
  Unemployment at around 21 per cent, remains the major economic problem in the Province. As the population of working age continues to rise, the trend in unemployment remains upward. Nevertheless, there was an overall decrease of 1,370 in the unemployment figures published on 31 May compared with the previous month, plus a decrease of 500 in the seasonally adjusted unemployed.
  Recent surveys of the Province are in general agreement that investment and future employment prospects present a more cheerful picture than we have seen for many years.
  Turning now to the Estimates, class I covers agriculture, fisheries and forestry and provides for expenditure of £73 million in the current financial year.

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  The basic aims of this expenditure are, within overall United Kingdom priorities, to help create in Northern Ireland the conditions for efficient production, processing and marketing of the products of this very important industry and to maximise the sector's contributions to the development of the · regional economy. The major constituents of the ongoing agriculture programme are £15 million for education, research and development. Some £12 million is for direct agricultural support; £27 million for administration and miscellaneous services, including support to the industry by way of advisory and veterinary services; £18 million for drainage and forestry; and £5·5 million for continuation of the milk consumer subsidy which enables a higher wholesale price to be charged by the Milk Marketing Board for milk for the liquid market while ensuring that Northern Ireland consumers pay about the same retail price for milk as their Great Britain counterparts.
  While on the subject of milk, I again emphasise that I recognise the serious concern in the farming industry in the Province. The right hon. Member for Lagan Valley (Mr. Molyneaux) and other right hon. and hon. Members have been pressing the case of the particular difficulties facing certain categories of Northern Ireland producers. I want to assure the House that my right hon. Friend the Minister of Agriculture, Fisheries and Food and the Secretaries of State for Scotland, Wales and Northern Ireland are still in consultation on this question. I can say no more at the moment.
  I should perhaps add, for the information of the hon. Member for Antrim, North (Rev. Ian Paisley), that it is from vote 3 of this class that we will provide a grant for the new dredger for Kilkeel harbour. I know that our decision to approve this project was welcomed by the fishing industry, and hon. Members will be interested to know that the contract has now been let at a figure of almost £400,000 over the next two years.
  While on the subject of fisheries, the right hon. Member for South Down (Mr. Powell) has drawn my attention to the concern being expressed by Mourne fishermen about the scallop beds close to the Northern Ireland coast which they fear may be overfished when the beds elsewhere in the North Irish sea are closed. We are fully aware of this concern and, as promised to those who made representations last year, the scallop fishery is being closely monitored with a view to having scallop beds closed if stocks are endangered. I recognise that the right hon. Member may have other points to raise on this subject, and I will listen with interest to his remarks.
  Class II, votes 1 and 2, provide for the activities of the Industrial Development Board. More than half of the £22·7 million sought in vote 1 will be directed at infrastructural developments such as factory building, site and estate developments, and £3·6 million has also been earmarked to underpin the IDB's efforts in promoting Northern Ireland as a location for inward investment. In vote 2, some £62 million is being sought for selective assistance to industry. Hon. Members will be aware that the creation and support of viable employment in Northern Ireland is a major element in the Government's economic strategy for the Province, and that we are committed to the provision of adequate resources to maintain securely based industrial projects in Northern Ireland.
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  Under class II, vote 3, some £93 million is being sought to provide support mainly for the Local Enterprise Development Unit, the small firms agency, the aircraft and shipbuilding industries of Shorts and of Harland and Wolff, •and for assistance under the standard capital grants scheme. Of that amount, £16·7 million has been provided for LEDU, £32·6 million for Harland and Wolff, and £6·6 million has been allocated to Shorts. Right hon. and hon. Members will be aware that Shorts has been successful in winning three highly competitive contracts since the beginning of the year. They will keep Shorts in the forefront of the aerospace industry and increase its share of defence work on the aircraft aerostructures side of its business. All those contracts should provide a secure base for employment at Shorts.
  We have had the disappointing news about Lear Fan. The decision by the company to cease trading was taken in the light of further setbacks to the aircraft's certification programme and the recent steep decline in the market for executive turbo-prop aircraft. When the company ceased trading the Government's remaining commitment was $4·79 million and, obviously, that amount will not now be paid. Both the Government and the major private sector consortium involved in the project were released from their remaining funding commitments. The Department of Economic Development appointed a receiver on 28 May 1985 to secure the company's assets in Northern Ireland, and to represent the Government's interest in the assets and technology in the United States of America.
  The total amount invested by the Government in the project has been some £56 million over five years. Private sector investment has been almost $100 million. I must emphasise that the failure of the project cannot in any way be blamed on the Northern Ireland work force and, indeed, their loyalty and contribution to the project is to be praised. If the project had succeeded, it would have brought very welcome high technology and employment opportunities to Northern Ireland.
  Finally on the industrial sector, I should like to pay tribute to the progress made by the Province's two job promotion agencies, the Industrial Development Board and LEDU. In the year to 31 March 1985 both exceeded their targets for new job promotions. The IDB achieved 5,267, of which 4,719 were within home industry and 548 from new inward investment. Of the total of 5,267 new jobs, almost 3,400 were in companies with headquarters outside Northern Ireland.
  I put that on record because, with the failures of De Lorean and Lear Fan, it is important to recognise that two thirds of the new jobs in Northern Ireland promoted by the IDB this year have been jobs in which the base owning companies are outside Northern Ireland. We want more gilt-edged companies of that type in the Province — those which are established in various countries, and whose efforts in Northern Ireland are part of a chain, not an experiment taking place in Northern Ireland and no other country. That is part of our policy and my determination at present.
  LEDU achieved its best ever performance, with 4,009 jobs in the financial year 1984–85. That is an increase of 550 over the previous year.
  Class II, vote 4, also makes provision for the development of tourism. The sum of £5·5 million is allocated to it. My hon. Friend the Member for Epping Forest (Sir J. Biggs-Davison) is extremely interested in that, and let me know of his interest before the debate.

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  Indeed, at Question Time the right hon. Member for South Down and I paid tribute to tourism as an important factor in the earning of wealth and the provision of jobs. Some 10,000 full-time jobs are provided by tourism at present in the Province.
  Class III, vote 1, totals £24·2 million. That includes £12 million for 1984–85 deficit support for the gas industry, £6·3 million for conversion scheme assistance and £5·8 million for other costs, of which the main element is redundancy payments. The £6·3 million for conversion grants assumes that substantial progress can be made this year in implementing the rundown programmes of the smaller gas undertakings. As already announced, the Government will pay the full cost of conversion to the cheapest alternative method of domestic energy.
  I can also tell the House that industrial and commercial consumers will receive grant of 30 per cent, of the least-cost conversion or replacement. In setting the rate at 30 per cent., consideration was given to the fact that many industrial and commercial consumers would be able to claim tax relief in relation to capital expenditure, thus effectively reducing the net cost to the consumer. In addition, some industrial and commercial consumers may be able to apply for energy conservation grants. They will be advised on this by fuel technologists from the Department of Economic Development's industrial science division.
  I should also say, because the matter has been raised from time to time by right hon. and hon. Members, that churches, which as charitable organisations do not pay rates, will be treated as domestic consumers. Therefore, the Government will cover their full costs of converting to the cheapest alternative appliances for central heating.
  The £5·8 million for redundancy payments is a broad estimate of what might be required in 1985–86 if reasonable progress is made. The payments to individual workers will show considerable variations depending on the age, length of service and wages of employees. The Government will underwrite redundancy terms to the level of those paid by the British Gas Corporation — a significant enhancement over statutory redundancy terms. Employees aged over 50 can also participate in the local government superannuation scheme for early retirement benefits in addition to their redundancy lump sums.
  I have previously spelt out the reasons why the Government could not support the rescue plan prepared on behalf of the gas industry joint working group. I very much regret that this had to be the decision, but, facing facts frankly, I had no alternative. I had to ask myself whether the proposal, as put to me, would lead to a viable gas industry; or whether heavy and ever-increasing demands on Northern Ireland's limited public expenditure resources would continue to be made in support of gas. This £12 million per annum subsidy covering only 2 per cent, of the energy produced in the Province has risen from £2 million a year in 1974 to 1980, to £10 million a year from 1980 to 1984, to £12 million a year now.
  The plan would be viable only if gas consumption in Northern Ireland increased 10 times over, and this at a fuel cost one third to one half higher than that of solid fuel. Domestic central heating by gas in the Province would have to increase from the present 3 per cent, to 50 per cent. We also considered that costs of more than £70 million were underestimated. It is as well to remember that all the gas pipes in Northern Ireland are such that one fifth of the gas put in on production does not come out on completion
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  —four times the leakage rate of Great Britain. They would need replacement if the gas industry were to continue.
  Gas has had a question mark over it since 1977 at least, and a decision had to be made not to close the gas industry, but to say that the ever-rising subsidies would end and that we would pay for the rundown. Interestingly, one private gas company at Portadown, believing that it can continue to run at a profit or at least not at a loss, is continuing.
  Turning to electricity, £95·6 million is being sought in the Estimates for payments to the Northern Ireland electricity service to compensate for the Government's present policy of pegging Northern Ireland electricity tariffs to the level of the highest in England and Wales. This necessitates a large subsidy from within the Northern Ireland public expenditure block. The burden is considerable and one which the Government view with increasing concern. There is a need to reduce NIES costs — in particular, fuel costs. Hence the recently announced plan to convert Kilroot power station fom oil to coal firing. The conversion is a major capital expenditure programme, involving some £94 million, which will take the station out of service in the years 1986 to 1988. After the station is recommissioned in 1989, we anticipate reductions in fuel costs of £25 million to £30 million per year. It will pay for itself within three to four years and represents significant public expenditure savings. It will be one of the most versatile generating stations on earth. It was originally oil-fired. It has switched to coal but remains capable of returning to oil and can switch to lignite in the future. It can be a tourist attraction as one of the most versatile electricity generating stations in discovered space. We are always looking for ways to increase morale in the Province.
  We are also conscious of the contribution which local lignite might make to reducing generating costs elsewhere in the Province, and we are seeking detailed information on the planning, design and costings of a minemouth power station which will enable decisions to be made. The prospects for involving private sector investment in the development of lignite-fired electricity are also being examined.
  Some other items will be dealt with by the Under-secretary, my hon. Friend the Member for Bath (Mr. Patten), when he replies. They are his responsibility and he knows much more about them.
  Roads and transport are covered in class IV of the Estimates. Northern Ireland has an excellent road system which is an important factor in the development of the Province's economy. There are about one third the number of cars per mile in the Province compared with the rest of Great Britain. That is an attraction to people moving around the Province as well as an advantage to industry and commerce. Some £22 million has been provided for new construction and £56 million for operation and maintenance, within an overall budget of £98 million.
  In his statement of 12 December, my right hon. Friend the Secretary of State reaffirmed housing as the highest priority among Northern Ireland's social and environ-mental programmes. Since the strategic approach to housing was agreed in 1981, total gross expenditure on housing services in Northern Ireland has grown from £325 million in 1980–81 to £545 million in 1985–86. Allowing for inflation this is a real increase of 22 per cent. A farther review of the housing strategy undertaken in 1984 confirmed the validity of the switch in emphasis made in

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  1983 towards improvement and maintenance and concluded that for the future the main issues to be addressed concern housing conditions rather than overall supply. That is reflected in the provision which has been made for housing services in 1985–86. The Housing Executive's capital and revenue budgets for 1985–86, totalling over £500 million, make provision for expenditure of £78 million on the rehabilitation and improvement of the executive's existing housing stock. Only — I am sorry; I mean over—£52 million is for maintenance.
  Mr. Ken Maginnis: Only. The Minister was right the first time.
  Dr. Boyson: Knowing how carefully my words are noted, I shall be careful when I start a sentence with a four-letter word. What we spend on one thing we cannot spend on another. A Government who have increased the amount by 22 per cent, have nothing to apologise for.
  In gross terms some £42 million has been made available to housing associations for 1985–86, of which £26 million has been allocated to general housing association work to fund the completion of work already on the ground and a programme of 1,250 new starts.
  In class VI, vote 1, over £78–6 million is sought for water and sewerage services throughout the Province. Of that amount, approximately £25 million is required for capital works. A major problem identified by a recent review of the future needs of the water service was the wastage of water with the percentage of water unaccounted for at some 30 per cent, of the total supply. An intensified programme of waste detection is expected to be fully under way by the end of 1985. We need to do that or to build another reservoir. The water leakage is almost as acute as the gas leakage, but I am told that it is easier to deal with. The gas leakage will not interest us in the future.
  Class VIII of the Estimates seeks a total provision of over £614 million for education, libraries and arts. Some 37 per cent, of this provision relates to the payment of school teachers’ salaries.
  The cost of nursery education is provided for in class VIII—a total of over £3·5 million this year. I know that the right hon. Member for Lagan Valley is concerned about this matter and intends to speak about it tonight. I shall listen with interest to what he has to say, and my hon. Friend will, of course, reply.
  In class VIII, vote 2, where total provision of £106·5 million is sought for higher and further education, I am particularly pleased that provision has been made to start the development of the Magee campus of the university of Ulster. The capital cost of the project will be in the region of £6·5 million at today's prices. The full plan, which is to be implemented in three distinct phases, will provide approximately 750 additional places for higher education in Londonderry and will bring the total capacity of the Magee campus to 1,000.
  Class IX provides for health and personal social services. A net total of £642 million is sought to maintain the services already provided, and to allow for their further development. The largest single element in vote 1 is the revenue expenditure of the health and social services boards, estimated at £521 million.
  Finally, in class XI, a net total of £18·3 million of the £23·1 million is required to service Department of Finance
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  and Personnel's central management functions such as resources control. The balance is to provide for the running costs of the Exchequer and Audit Department and the Northern Ireland Assembly.
  I thought it right to go into some detail on Lear Fan and the gas industry, but generally I have tried to outline briefly the main features of the draft order, and to expand upon some of the main policy issues underlying the provision sought. I know that, as usual on these occasions, right hon. and hon. Members will wish to express their views on these and a great many other matters. I shall listen with great interest to the points raised by hon. Members, and my hon. Friend will reply.
  9.27 pm
  Mr. James Nicholson: I wish to examine class V, which deals with housing, and to raise some matters that have affected my constituency for a considerable time.
  The availability of renovation grants is causing concern. Many people find it difficult to qualify at one of the so-called entry points and that suggests to me that the conditions are too rigid, lack imagination and require a rethink.
  I shall outline some of the difficulties that I have faced in dealing with constituents’ problems. We seem to be getting different interpretations from the Housing Executive in different areas. More important, we are getting different interpretations from different grant officers in the same areas.
  It is not acceptable to be informed by the Housing Executive grants department and its officer that they have learned a lot in recent years. One would expect that, but constituents are having to wait 12 months or even 24 months for approval for a renovation grant for a house that badly needs renovating. That causes serious concern.
  Many houses which do not meet the so-called entry requirements badly need improvement. The owners cannot afford to carry out the work but unless they are in receipt of supplementary benefit or other state benefits they do not qualify for assistance at the higher rate. I have never understood how or why we have developed a system whereby people have to be in receipt of state benefits to be able to renovate houses, as I should have thought that people on such benefits would be in no position to consider renovating their dwellings.
  I should make it clear that this is a personal view, but I have long believed that the system lacks proper balance. Many people who do not qualify for grant aid are encouraged to improve their houses, when, if they had the choice, they would opt to build new ones instead. I ask the Minister seriously to consider adopting a more balanced approach to renovation and new building so that those in a position to choose can set the cost of renovation against that of building a new house, including whatever size of grant is available. The difference between the two amounts would then be less than it is now, thus allowing people more realistic alternatives than they have at present.
  The problems of Orlit houses, of which there are many in my constituency, were being discussed in the House long before I joined its ranks, but we are still nowhere near solving the problem and alleviating the plight of the tenants, many of whom have had to accept continual increases in rent. I ask that every effort be made to ensure that progress is more rapid than it has been so far. I believe —I have argued this with local officials of the Housing

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  Executive and I do not think that many disagree—that where possible the Housing Executive should sell the houses to the tenants at a price which reflects the condition of the houses. I believe that that would be more attractive both for the potential purchasers and for the Housing Executive. Many tenants of Orlit cottages in my area have told me that they do not want their houses to be pulled down and they do not wish to move elsewhere. They are content to stay in their present homes. I do not believe that sufficient consideration is given to that fact.
  There is also growing dissatisfaction not just in my constituency but throughout Northern Ireland among Housing Executive tenants who keep their homes in an excellent state of repair but are awarded no consideration for that. That can no longer be acceptable to the vast majority of responsible citizens. Many estates in my area were built a very long time ago and require modernisation and rehabilitation, including rewiring and better heating systems. The tenants rightly insist that they should be given consideration, and I agree.
  Tenants on some estates in Armagh city such as the Folly in Dobbins Grove and the Orangefield estate are angered when they see tenants who wreck the kitchens and bathrooms in their accommodation being transferred by the Housing Executive to new houses in other areas. When I am asked by tenants who have looked after their homes how the Housing Executive can justify neglecting them, yet helps tenants who have wrecked their houses, I find it impossible to justify.
  Houses on an estate at Sinton Park in Tandragee are supposed to be equipped with a so-called kitchen-dinette. In fact, it is nothing of the sort, being too small to be of any use to the tenants. That estate requires modernising and improving.
  I protest strongly on behalf of tenants living in houses on the Greenpark estate in Markethill. Their doors and windows are rotten and people have to stuff up holes, in the windows and elsewhere, with polythene. A rehabilitation scheme for that estate has been postponed for another 12 months. That is totally unacceptable to the people who live there, and I find it intolerable.
  In Killylea there is an estate of old people's dwellings, and other houses in the main street, and Eskes Park which to this day have not had their roofs or walls insulated. Nor do they have proper heating systems. That, too, is an unacceptable state of affairs. The walkways to the houses are dangerous, yet we expect old people to walk on them. I cannot understand how contractors have been paid for some of the tarring that they are supposed to have done there. It is difficult to see what supervision the Housing Executive exercised before payment was made for that work.
  We require a change of emphasis in the Housing Executive's policy, particularly to the rural areas. Northern Ireland does not end at the suburbs of Belfast. Other areas outside the main conurbations need improving. People who have been paying their rents as honourable and honest citizens are now demanding what they should have received years ago. "We want our homes brought up to an acceptable level. Why should others have had their houses improved, while ours have remained in this condition?" they are rightly asking.
  Houses on the Mourneview estate at Tandragee have caused me to have much correspondence with the Under-secretary of State for Health and Social Security in recent months. That estate was built many years ago, before the
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  motor car became popular, when most of the tenants, used bicycles or walked. Tandragee council—long before the Housing Executive came into existence—constructed a green area in front of the houses so that people would have a pleasant aspect. That was all very well then, but today every household on that estate has a car. Some have two and I know of one that has three.
  That area of what was green grass has been trampled on to such an extent that in the winter it has to be seen to be believed. The children from neighbouring estates find it an excellent track for their BMX bicycles. They tear through the mud and the residents have difficulty getting to their homes. The footpaths have been allowed in recent years to get into an atrocious state, with the flagstones so unbalanced as to be dangerous.
  The Department of the Environment roads service informs me that it does not propose to spend money on the estate because such expenditure would result in no traffic benefit to the area. Meanwhile, the Housing Executive is willing to pay 50 per cent, of the cost of making improvements. The Department says that such improvements would not benefit through traffic, but the roads service cannot wash its hands of its responsibilities unless they are clearly defined as a Housing Executive responsibility. I should be quite happy for such improvements to be made the responsibility of the Housing Executive because it might be prepared to solve the problem. It is unacceptable that people should be asked to live in out-of-date accommodation.
  Although I have said a few harsh words about it, at this stage I should like to say a few words in praise of the Housing Executive. It has tried to respond to the requests that have been made for housing repairs. Its response could have been better, but there has been an improvement.
  Rates offices have been centralised throughout Northern Ireland. The rates office in Armagh city was closed and removed to Lurgan. Most of the people in the area would have gone to Armagh to pay their rates bills. Either they decided to pay them within the allotted time and to accept the discount that was offered or they decided to pay their bills outside the time limit and by waiting long enough, hoped that it would amount to more than the value of the discount.
  Lurgan is not very far away but it is far enough away not to tempt anybody in the Armagh district to jump in his car and go to Lurgan to pay his rates bill. So they now pay their rates bills by post. One of my constituents paid his rates bill by post three days before he would have lost his discount, but the Post Office decided not to deliver his letter for four days. Therefore, he lost his discount. It ought to be possible for the postmark to be taken as a verification of payment having been made before the expiry of the discount period. May I ask the Minister of State seriously to·consider that point?
  The Minister of State referred eloquently to the excellent roads system in Northern Ireland. The Armagh county council left as an inheritance to the people of the county of Armagh a roads system that was second to none. But that cannot be said today. The main roads have deteriorated seriously. The byroads have gone beyond the stage of deteriorating; some of them are beginning to break up.
  There are all sorts of problems. I do not propose to deal with them at any length, because that would take up so much time that I might deprive another hon. Member of the opportunity to speak. However, I am seriously

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  concerned about road conditions in Northern Ireland as a whole, and particularly in my constituency. I am also concerned about minor roads and voiced my concerns about them before I became a Member of Parliament.
  One road in Armagh was first known as the road to nowhere. Now it services a housing estate, but it has never been finished. It was designed as a link road between the Markethill road and the Portadown road, and was supposed to cross the Hamiltonsbawn road. That road was never completed to a point at which it could at least provide some assistance. Thus, I hope that the Minister will seriously consider the fact that the road needs to be finished.
  We have a good industrial estate on the Hamiltonsbawn road. It needs to be serviced and needs further work to be done so that more jobs can be brought to the Armagh city area. If there are no roads to such estates, we cannot expect industrialists to give them serious consideration. The Minister must give that point top priority in future.
  The Under-Secretary of State, the hon. Member for Bath (Mr. Patten), need not look so worried, as I shall now deal with class I. I know how proficient he is on agriculture, as I have heard him reply in the past in the House. Farm capital grants are important to our farmers. Indeed, it would be fair to say that in Northern Ireland we have in the past used the grants available to improve and modernise our farm buildings. But even more importantly, improvements to our grasslands by re-seeding, shoring and cleaning out drains have benefited the whole agriculture industry. When the grants were drastically cut last December, there was some alarm. Of the £40 million saved from those cuts in the United Kingdom, £14 million will come out of money that would have gone to Northern Ireland. That shows the importance that Northern Ireland attaches to the grant system and the use to which it can be put.
  Some counties require an on-going drainage policy. County Fermanagh is an excellent example of where such a policy has improved the land and subsequently the livelihood of farmers in that area.
  I am very concerned that areas that have been substantially improved in previous years will now deteriorate. The view now appears to have entered Government thinking that the removal of hedges has been in some way uniform throughout the United Kingdom, but that is not so. Anyone who has been to Northern Ireland will know that conservation has always been of paramount importance to Northern Ireland farmers. We have not been guilty of damaging conservation, and could not be accused of that. The Minister's colleagues may not be as aware as he is of the different circumstances prevailing in Northern Ireland. We need an on-going policy of improvements to grasslands in Northern Ireland.
  If agriculture is to develop, research and development must continue to receive the necessary support. There must be no diminuition in the current standards. We would be opposed to the reduction of any of the current services offered by our experimental stations, veterinary research laboratories, plant breeding stations and many of the other services. Major companies presently take part in some of the work carried out by Government Departments, and while such a policy should be encouraged where feasible, it should never be considered to be capable of taking over from what currently exists.
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  Production of beef in Northern Ireland provides great support not only for the farmer but for ancillary industries, mainly in the boning of beef. Agriculture in Northern Ireland must look towards preparation and marketing to give the housewives what they wish to buy. That aspect has been sadly lacking over the years. However, that requirement now seems to be recognised. If we are to survive in the comparative market of the large multiples buying the highest quality at comparative prices, there is much to be done on marketing. We still have a great deal to learn if we are to compete effectively with the continent. To that end, I urge the Government to maximise their efforts in helping our firms to initiate new ideas, evolve new markets and adopt new ideas to the benefit of the industry.
  One requirement has been sadly neglected for some time—cold storage and blast freezing facilities. Due to the large supply of cattle available in the autumn, intervention is required to stabilise the market, but intervention is of little consequence if there is no storage space. I understand that the stores are now almost full. If that is true—I have no reason to suppose otherwise— that does not hold out much hope for the coming season. We experienced problems last autumn but, thankfully, we coped. We may not be so successful this year.
  I ask the Minister to give serious consideration to providing alternative facilities. I fall short of saying what we said 12 months ago, when we requested that freezer ships should be made available. But that is something that the Minister must seriously consider, because that facility may be required this year in view of the additional cow beef that has filled our cold stores. The Minister should not hope for the best—he should prepare for the worst.
  Since I came to the House two years ago, I have repeatedly said that some way must be found to bring to Northern Ireland at a realistic price the grain that is currently housed in costly intervention storage in Europe. It should not be beyond the scope of our Ministers and officials to negotiate within the CAP a way in which grain could be shipped to Northern Ireland, stored and sold to Northern Ireland farmers at a price no more or less than that in any other part of the United Kingdom. Such an initiative would immediately stabilise the intensive sector and would be of great help in creating further employment in the ancillary and support industries that supply it. I urge the Minister to take the necessary initiative to ensure that the problem is seriously considered.
  I apologise to the Minister for not having been in the Chamber to hear his opening remarks on milk quotas. Like many other hon. Members, I was taken by surprise by the speed with which the previous debate ended. The issue of milk quotas has caused those of us who present the Northern Ireland agriculture case a great deal of concern, and we have spent much time trying to find a solution to the problem.
  The problem was created by the Minister of Agriculture, Fisheries and Food. When quotas were first introduced 14 months ago, Northern Ireland should have been awarded 65,000 tonnes in recognition of its dependence upon the milk industry. That would have placed Northern Ireland farmers in an interim position between the Republic of Ireland and the remainder of the United Kingdom.
  That is the background to the position. However, now the dairy farmers of Northern Ireland are at a serious disadvantage compared to their counterparts in the rest of

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  the United Kingdom. Not only did they not receive the 65,000 tonnes that we were awarded, but we were manipulated out of the commitment by a jumbling of figures to suit the requirements of the Ministry of Agriculture, Fisheries and Food.
  The Minister introduced throughout the whole of the United Kingdom a milk cessation scheme whereby fanners could, if they wished, sell their quota back to the Ministry and go out of production. That extra quota could then be redistributed. In England and Scotland the scheme received a favourable response, but not in Wales, where in many ways the position of the farmers is similar to that of those in Northern Ireland. The target set for milk quotas has almost been reached on the mainland, but not in Northern Ireland, because the scheme there was a flop.
  When the Minister of Agriculture made his announcement offering the scheme as a solution to the difficulties in Northern Ireland, he did not heed the warnings given by myself and other hon. Members that the scheme would not work. It never had a chance to work, because in Northern Ireland the farmers have no alternative. They cannot turn to cereals as farmers in other parts of the United Kingdom can. It has been suggested that other choices are available—we could grow rape, flax, peas and, unbelievably, caravans.
  In Northern Ireland, we depend mainly on the grassbased sections of milk, beef and, to a lesser extent, sheep, those involved cannot sell their quota and go out of production. Our dependence on this sector is now more pronouned than ever. The dairy produce panels set up with the approval of the House to help farmers in the United Kingdom as a whole and to investigate their appeals is now working to the detriment of one part of the United Kingdom.
  The same legislation and criteria should be used throughout the United Kingdom. Recently, the Minister announced that dairy farmers in England, Scotland and Wales are to receive 100 per cent, of their exceptional hardship awards, but in Northern Ireland they are to receive only 36 per cent. In England, Wales and Scotland, the small producer of 200,000 litres is to receive an extra 11 per cent, over the next 12 months, but in Northern Ireland, he is to receive nothing.
  Such treatment is unacceptable to Northern Ireland. It is wrong that a farmer living in England, Scotland or Wales should be 11 percent, better off than his counterpart in Northern Ireland, who is in the same circumstances but who, because he farms in the Province, will not receive equal treatment. Northern Ireland farmers have been told to cut milk production by 1 per cent, from 1 April, but small farmers in the rest of the United Kingdom are 11 per cent, better off.
  It was fair 14 months ago to equalise the hardship, and the Government have a duty now to ensure that all citizens receive the same benefit. There is no difference in being an exceptional hardship case in the county of Armagh, part of which I have the honour to represent, and being an exceptional hardship case in the county of Devon. Hardship is the same wherever one happens to live. No justice or fair treatment has been accorded to Northern Ireland fanners on this issue. Tonight I am asking for that —nothing more or less than equality will suffice.
  9.59 pm
  Rev. Ian Paisley: I want to refer to a matter that has just been dealt with by the hon. Member
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  for Newry and Armagh (Mr. Nicholson) in regard to the Department of Agriculture. Lord Lyell, who is responsible for agriculture, advised us that expander cases in Northern Ireland would receive 49 per cent, of tribunal awards. In Scotland they will receive 57·5 per cent, and in England and Wales 65 per cent. If the outgoers quota is used exclusively for exceptional hardship cases and additional quota is not transferred from Great Britain awards of 36 per cent, will be granted.
  The Secretary of State for Agriculture announced on 7 May that exceptional hardship cases in England and Wales would receive 100 per cent, of the tribunal award. Small producers in England and Wales will be restored to their mean level of production in 1983 but again, unless quota is transferred from Great Britain, small producers in Northern Ireland will receive absolutely nothing.
  It is all very well for the Minister of State to come to the Dispatch Box tonight and tell us that he cannot make further comment. What are the dairy farmers of Northern Ireland to do? Lord Lyell told the Ulster Farmers Union on 2 May:
  "I would wish to register my most sincere sympathy with all those who still do not know how they stand for 1985–86. I can only assure you that I am doing everything I can to get a fair settlement as quickly as possible."
  The dairy farmers of Northern Ireland deserve not sympathy but action, and action needs to be taken immediately. We are in an intolerable position when we discover that the Minister who will be answering tonight can make no statement about further progress on the matter while the rest of the United Kingdom gets full information. There is no equality between the rest of the United Kingdom and Northern Ireland. The hon. Member for Bath (Mr. Patten) should be well briefed so that he can give some satisfaction to the people of Northern Ireland.
  I wish to protest at the limitation on the time available for the debate. Why can we not have proper time to discuss matters that range from Dan to Beersheba? It makes me thank God doubly for an Assembly, where we have time to discuss some of the matters that should have been dealt with in the House tonight. We have a deplorable state of affairs.
  When I arrived at the House today I had a telephone call from a lady in County Antrim who told me that she could not get any satisfaction from the Department of Agriculture in Northern Ireland or from the Department here. Therefore, she sent to Mr. Andriessen, the Commissioner for Agriculture in Brussels, a long telex which cost her £60. This is a serious matter because the dairy farmers do not know where to turn. They may have 100 or 120 cows and they are being told that they will have to cut back. They do not know how they will make ends meet. Mr. Andriessen replied to this lady. She got no reply from the Prime Minister or from the Secretary of State for Agriculture, both of whom she had written to. She was ignored by them but the Common Market Commissioner replied. He said that he had instructed
  "my services to get in touch with the United Kingdom so that further details and a proper explanation be obtained of the way that hardship quotas and other special case quotas are now being determined in Northern Ireland differing from the rest of the United Kingdom".
  The alarm bells are sounding in Europe because of the way in which the Secretary of State dealt with the 65,000 extra tonnes that we should have received last year.
  What is happening is deplorable. It is so bad that it would be impossible to believe if Lord Lyell had not

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  appeared before the Northern Ireland Agriculture Committee to confirm in person what I am saying tonight. He said that the only answer lay in the permanent transfer of quota from Great Britain, but that there was very strong opposition to this from producers in England, Scotland and Wales. In other words, those producers are not prepared to stand for equalisation and Northern Ireland has to be put out on a limb.
  Northern Ireland's prime agriculture industry has to suffer because the Minister of Agriculture, Fisheries and Food has ceased to be the Minister responsible for the whole of the United Kingdom. He has become responsible only for England and Wales. He is doing something for his own fanners but nothing for farmers in Northern Ireland.
  It was obvious to the Agriculture Committee that that would be so. Indeed, we put it to Lord Lyell that a political decision would have to be taken to transfer quotas from producers across the water.
  I am sure that the leader of the Official Unionist party will not mind me saying that he has received correspondence from the Prime Minister on the same subject. I have also written to the Prime Minister about the problem. Lord Lyell told us that the Secretary of State had been negotiating at Cabinet level and that we would have to leave it to him to fight the political battle.
  Representatives of the Ulster Fanners Union came away from a meeting with the Minister of Agriculture, Fisheries and Food and immediately passed a vote of no confidence in him because he offered no change and no hope.
  I appeal to Ministers to convey to Lord Lyell and to the Secretary of State that time is running out. In the past two weeks we have heard that producers in the Republic of Ireland have received an additional 58,000 tonnes. In England and Wales there has been a restoration of the 1983 levels of production and claims by essential hardship cases will be met in full.
  It is time for Northern Ireland's position to be resolved. We must receive the full benefit of the European Economic Community award of 65,000 tonnes. It must be seen that we receive that award. Surely Ministers have learnt their lessons by now. There must be a permanent transfer of quota within the United Kingdom to protect the jobs of those for whom alternative employment is not available. There are no alternative jobs for farmers. We have a grass, land-based industry.
  Mr. Nicholson: Does the hon. Gentleman agree that we can thank membership of the EC for our present position, and for having ruined our intensive sectors, thus making us so dependent on the grass-based sectors?
  Rev. Ian Paisley: The hon. Gentleman knows my views about Europe. I warned the Ulster Farmers Union, but they went against me and said that Europe would be the greatest thing that ever happened. The leaders of the farming community in Northern Ireland campaigned to go into Europe. The farming community was warned about what would happen. What annoys me is that Europe has given us extra and we are not getting it. It is hard for the farmers of Northern Ireland to accept that producers in the Republic will be so much better off than we are. But how much worse it is now for those in agriculture in Northern Ireland to find that matters cannot be resolved on an equitable basis within the United Kingdom, that we are not
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  getting our place as farmers within the United Kingdom, that we are being discriminated against. There must be a realisation of the inequities between producers in the United Kingdom.
  Justice surely demands that quota purchased from outgoers should be used equitably throughout the country. The Government cannot say that the money is not available, because the money is available. They were to purchase 66 million litres, and they have been able to purchase only 12 million litres. They have £7 million in hand to pay for this. That money must be used to get extra milk quota for Northern Ireland. The money is available. A simple calculation shows that a total of £7 million is unspent. The Government must make that money available for milk quota.
  I leave it to the Minister to reply on milk quotas when he sums up, and to give some hope to the farmers of Northern Ireland. I do not want him to say that he is sorry, he can do nothing and he has nothing to say to me, because that will inflict more misery and take away any hope that there may be in the hearts of the fanners of Northern Ireland.
  There are many other agricultural matters on which I would like to comment, but many other hon. Members wish to take part in the debate and some have been waiting since 7 o'clock. I will, therefore, curtail my remarks.
  I welcome the statement of the Minister of State that there is absolutely no criticism of the workmanship of the people of Northern Ireland in the De Lorean case or in the Lear Fan affair. These companies coming in and making a botch has caused a reflection to be cast across the world suggesting that there is something wrong with Ulster workmanship. There is nothing wrong with Ulster workmanship. I welcome this statement by the Minister, and he needs to go on repeating it, because no reflection can be cast on Ulster workmanship.
  I welcome the progress that has been made in Shorts and in the Shipyard, and I welcome the jobs that are coming to Northern Ireland. There is a lot of work to be done, and the IDB and those responsible need to get their skates on and get at this job with all their might.
  I wish to ask some questions on class IV, the Department of the Environment. Can the Minister give the House a recent updating in regard to Ballintoy harbour? I thank the Minister for what he told me about the Kilkeal dredger. I want to say that I was not going into the constituency of any hon. Member. The hon. Member for Newry and Armagh (Mr. Nicholson) and I at a meeting in Stormont were asked to bring this matter to the House. As chairman, I was asked to do this, and that is why I did it. When hon. Members came into my constituency at the time of the discussion of the barracks at Ballymena, I did not protest. If hon. Members come in and help my constituency to get better and more jobs, more power to them. It is the same if they come into Shorts in the constituency of my hon. Friend the Member for Belfast, East (Mr. Robinson). Nobody will hinder me. When representations are made to me as chairman of the committee in Stormont to raise matters in the House, I will raise them.
  I welcome the fact that the Minister gave us the report, but we had already had it from the chairman of the fisheries board in Northern Ireland who came and told us what had happened. Nevertheless, we welcome the announcement today.

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  I want the Minister to tell us about the updating of Ballintoy harbour. Extensive works have been done there, but the project has developed into a fiasco resulting almost in the closing of the harbour because of the way that the work has been carried out. Will he also say what progress has been made on Rathlin island harbour and on the Ballycastle harbour project as these are very important to my constituency?
  Class V deals with housing. I want to ask the Minister to start an investigation into why houses of the same age and of the same construction and size in one area in Northern Ireland get more done to them when they are being rehabilitated than the same type of houses in other areas.
  I refer to Cookstown and to Ballymoney. There, two estates are made up of exactly the same type of house, but the political connotations are different. One is Republican and the other Unionist. One is Roman Catholic and the other Protestant. A tenant goes to the estate office and is told, "We are sorry, but you are not getting a new window here and a new door there and you will not have this or that fixed. At the end of the day, people in Ballymoney found that inferior jobs were being done on their houses and less money was spent on them although their houses were in a worse condition than those in Cookstown.
  I have had the Housing Executive on this job, because the only way to deal with the Housing Executive is to take its representatives to an estate and allow the tenants to get at them. That is my policy. I allow them to say what they have to say to the Housing Executive in the presence of their Member of Parliament. I got promises galore that all would be well. However, I was summoned back and the tenants told me that they were getting nothing and that the Housing Executive representatives had gone back on their agreement. I say to the Minister that what is fair must be done in Northern Ireland.
  I resent the fact that in my constituency Republican housing estates get preference over Unionist estates. They should all be dealt with in the same way. Instead, Republicans destroy their properties, they refuse to pay rent, they go on rent strikes and, when renovations are to be done, the Housing Executive says that their houses are in worse condition and that work on them must be done first.
  Good tenants in Housing Executive property must be given some incentives. I understand that the Government believe in incentives, as I do. A good tenant who keeps his house well, does the odd repair without fuss and keeps it in good repair should be given some incentive. I am disgusted by the way that some of these rehabilitation jobs are done. Tenants are put out for a few weeks, but they are brought back before the jobs are finished. Other tenants are kept in their houses and have to endure all the inconvenience. I went into a house the other day where the occupants were going to bed after performing a balancing act over the rafters of the floor. That was a rehabilitation job. That is not fair to anyone, and the Minister should see that it does not happen.
  Class VI deals with historic monuments, and I have two questions for the Minister. The first concerns the Walker monument in the city of Londonderry. Incidentally, I congratulate the Minister on calling it "the city of Londonderry". Because we have murdering thugs as members on the council, is the planning for that monument to stop, with the project being called to a halt?
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  I want also to ask the hon. Gentleman about the monument to the Rev. Hugh Hanna that used to stand at Carlisle circus. What has happened to it? Why has the monument not been restored to its rightful place now that the roads in the area have been sorted out?
  Mr. Peter Robinson: While my hon. Friend talks about monuments, will he give the Minister the opportunity to tell us what is delaying the cleaning of the Carson monument which is on the route to my hon. Friend's offices and which he must see and deplore every day, as it is turning green and corroded?
  Rev. Ian Paisley: I thought that my hon. Friend would speak in the debate and I knew that he, as chairman of the committee in Stormont, had made representations about that matter, which is why I did not mention it. We could not get a better trio than Walker, Hanna and Carson and, therefore, I trust that those three names will stick in the mind of the hon. Gentleman the Member for Bath and that he will remember that that monument of Carson needs a bath. Perhaps he will look after that for us.
  Regarding class VIII, I register my strongest protest against the decision that Northern Ireland will have something less than the rest of the United Kingdom in that we are not to have a Provincial library or copyright privilege for our central library. It was proposed that we should have a Provincewide reference library and a copyright privilege. Only one library in Ireland has that copyright privilege — the university library in Dublin. Why should a library outside the United Kingdom have that privilege when it is denied to the people of Northern Ireland? Wales, Scotland and England all have their own national library. Why should Northern Ireland not have one to serve the entire Province? I regret that it has been refused to us. Will the Minister tell us why?
  I wonder whether the Minister will tell us what is happening about hospitals at Downpatrick. All hon. Members have deputations with them about that. I hope that the Minister will update us on that.
  Class XI vote 4 deals with the expenditure of the office of the Northern Ireland Parliamentary Commissioner for Administration. Will the Minister take on board the fact that a small leaflet is needed to state clearly how many cases have been brought since the two offices came into existence? How many cases have been sifted through, tried and a verdict given? What was the religious discrimination and what were the numbers? Those numbers are vital to show that the vast claims of discrimination simply do not stand up. It is time that the facts were published so that everyone knows what is happening.
  One of the classes refers to the contributions to local revenues. I think that I can deal with this matter in class IV vote 6. The Minister knows what has happened as a result of the Northern Ireland local government elections. I do not want the Government to think that the problem will go away. Sinn Fein is wholly unacceptable to the people of Northern Ireland. To have to sit on a council and have councillors shouting, "Up the IRA", and calling our security forces murderers, and to know that Sinn Fein has killed our kith and kin is something that we shall never accept. The Government need to get that into their mind. If they think that in two or three months, or a year, the position will settle down, everyone will shake hands and work together, they are wrong. If the Minister thinks that

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  he can push Sinn Fein down our teeth, he has another think coming. The Government need to get that into their mind and heart. What they have seen so far is only a Sunday school picnic. Our people are enraged at what has happened. The Minister and the Government will not sit with Sinn Fein, discuss business with them, or have them on deputations, yet they would force the elected representatives of Northern Ireland to sit with them. It cannot be done. I hope that when the Minister replies, he will clarify the statement that he is reported to have made, on which there has been great comment, that he would have to recognise the chairman of a council even if he was a member of Sinn Fein. What is the Government's thinking on that? If a council such as that in Omagh sends him a deputation led by a Sinn Fein chairman, will he receive it? If he goes to Omagh, will he be received by a Sinn Fein chairman?
  Those are urgent matters, and the House had better understand the feeling of the people of Northern Ireland. I cannot express it strongly enough. I have already expressed it to the Minister in person. This cannot be swept under the carpet, and it will be opposed by the people of Northern Ireland. In Enniskillin—I regret that the hon. Member for Foyle (Mr. Hume) is not here tonight — the official Unionists were prepared to vote into office an SDLP man to keep Sinn Fein out of the chair, but the SDLP said, "We will not even run for office. We will let Sinn Fein have the chair." We know what the end of the story will be. I am not a prophet or the son of a prophet, but at the next general election, we shall see the real pact between the SDLP and Sinn Fein. I believe that the right hon. Member for Lagan Valley (Mr. Molyneaux) said in the House that we are seeing the forging of another all-Republican pact. The House must be warned about it and about the feelings of Ulster people.
  10.26 pm
  Mr. J. Enoch Powell: It may seem a poor response to the witty and informative speech with which the Minister of State introduced the order if he is obliged once again to listen to a litany to which he has already on three separate occasions made some reply. All of us hope — that hope is reinforced by the absurdly limited time for this debate—that this will be the last occasion when we must reap the absurd fruits in procedural terms of the old determination to maintain a separate financial organisation and Consolidated Fund for Northern Ireland.
  It would be unreasonable to expect Ministers to anticipate what we believe the Government will say if, later this month or at the beginning of July, they must once again excuse the renewal of direct rule. Equally, I am sure that Ministers will understand that right hon. and hon. Members on this Bench, who were returned to the House to bring about the end of that colonial status of direct rule under which the Province labours, would be falling if they did not mark their purpose again by formally voting against the order.
  As a result of a communication between us, the Minister of State anticipated one point that I shall raise this evening. I am grateful to him for recognising that the Northern Ireland Office and the fisheries division of the
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  Department of Agriculture are alive to the risks to the scallop fishermen on the Down and Antrim coasts. Something went wrong somewhere.
  In the early months of 1984, it was proposed that the entire northern part of the Irish sea should reasonably, for conservation reasons, be closed to scallop fishing for four months from June to October. That was accepted by the Northern Ireland fishermen and their representatives. However, when the order was made, it excluded from the ban the coastal scallop beds of the counties of Antrim and Down. That is an extremely serious matter, for there are fishermen in the smaller ports of those two counties who are dependent for a considerable part of their livelihood upon the special scallop fishery to which their fishing methods are adapted off their own home ports. If, during this close season, which does not apply off Mourne and Antrim, part of the fishing effort of the remainder of the Irish sea proves to be concentrated, as is feared, upon those beds, there may be disastrous consequences from which those resources may take years to recover.
  I hope that when the Minister replies, he will be able to reiterate more precisely the pledge which was given by the Minister of State that the Government will stand ready, if there is any evidence of incursion into those fisheries, to extend the ban which exists in the remainder of the northern Irish sea. I believe that I caught an affirmative indication. I shall look forward to hearing it verbally when the Minister replies.
  The other matter that I wish to raise concerns the Minister's responsibilities for the Department of the Environment. One of the few functions—I hope that it will soon be widely extended — of the existing local authorities in Northern Ireland is the disposal of refuse. I am not for one moment suggesting that that function should be taken away from them. We should be looking for functions that can be given to, not taken away from, district councils. I am not the only Member representing Northern Ireland who has been disturbed by the evidence of the sporadic efforts of the different district councils to solve their problems of tipping and rubbish disposal in apparent isolation from what other councils may be doing and without any connected plan or forethought as to what the demand in future years will be.
  There is a function here for the Department of the Environment. It is a function that the Department would have even if we in Northern Ireland possessed, as we hope to possess, a full system of local government—that is, of co-ordination and stimulus. The district councils ought, each in their respective areas, not merely to be encouraged but to be required to provide the Minister with a forecast of the expected disposal requirements of coming years and their intentions for coping with their problems. There should be a survey of the manner in which the total requirements of the Province in coming years can be met without any breach of planning requirements or damage to amenities.
  At present, the district council picks upon a site, causing widespread alarm and dismay in the area, and puts in a planning application for its use as a tipping site. After many months, a decision is rightly taken that it is not a suitable site and the same blight lands in another place.
  It is absurd that that should be going on simultaneously in one district area after another, and it is only the Minister and officials in his Department, with their oversight of local government and environmental functions, who can deal with that problem.

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  I know that it has been brought to the Minister's attention, but I hope that he will tonight say that he will not allow district councils to prevaricate, but will insist by a given date on having an intelligent and intelligible plan for the next 10 years of refuse disposal throughout the Province. The matter needs to be looked at Province-wide and on that scale.
  As the Minister with responsibility for the Department of the Environment is to reply and as housing has been mentioned more than once, I cannot resist returning to one point which was touched upon by the Minister of State when he referred to the change in emphasis which had taken place in the activities of the Housing Executive. The emphasis has changed from new building and addition to the total stock to improvement, maintenance and the improvement of the distribution of existing stock.
  Year after year, we have called for — and then welcomed—that change of emphasis. I know that it has the full support of the Under-Secretary and it is, therefore, a cause of dismay to find in one's own constituency that the Housing Executive is apparently still contemplating vesting large areas to create new and, in some cases, massive estates. Will the Under-Secretary put in hand an inquiry to see what sites for new building are being acquired by the Housing Executive outside Belfast and how those acquisitions are related to the policy of the executive, as it has been expounded to the House in successive debates? Some of us suspect that the Housing Executive, or certainly some of its departments, may be failing to respond to the general policy of shifting the emphasis from the creation of new housing estates to the maintenance and improvement of existing houses and the facilitation of transfers so that families match the accommodation much better than they do at present.
  I know that I am appealing for something which is close to the Under-Secretary's heart, and I hope that he will emphasise that when he replies.
  10.36 pm
  Sir John Biggs-Davison: The right hon. Member for South Down (Mr. Powell) has announced that the House will again be divided. I regret that, if only because it separates him and his right hon. and hon. Friends from Conservative Members who wish them well.
  Northern Ireland is fortunate in the devotion and energy of the Secretary of State and his ministerial team. If I pay a particular compliment to the Minister of State, my hon. Friend the Member for Brent, North (Dr. Boyson), it is because I wish to speak about tourism, which falls within the purview of the Department of Economic Development and is a subject in which my hon. Friend takes a keen personal interest.
  Expenditure on the development of tourism in the last financial year is recorded in class II, vote 4. The fact that a surplus of over £213,000 is to be returned is indicative of prudent administration. The Minister of State said that in the present financial year there will be expenditure of £5·5 million. The question is whether we are getting value for that money.
  In 1967, about 1·8 million tourists visited Northern Ireland. Then came the troubles. A low point was recorded in 1981, with only 588,000 tourist visitors. By last year, there had been a remarkable change for the better—to 908,000 tourists, an increase of 6 percent, on 1983 figures and 27 per cent, up on the 1982 level. There was also last
  402
  year the highest occupancy rate of hotel bedrooms—40 per cent.—since 1973. I saw that the Minister of State was quoted as predicting that the 1 million tourists mark will be passed this year, although, as that will not take us back to the pre-troubles level, we cannot rest content.
  Northern Ireland is fortunate in Sir John Swinson, who was reappointed chairman of the tourist board in 1983. He and his officials have been busy promoting Northern Ireland in London, Birmingham, Scotland and West Germany—the earnest anglers from Germany love the Fermanagh lakes.
  Northern Ireland has been receiving about 52,000 tourists a year from North America, many of whom come because of their roots in Northern Ireland. It is estimated that 20 million North Americans, 850,000 Australians and no fewer than 200,000 New Zealanders consider themselves, as I do, to have ancestral origins in the Province. It was wise of the Northern Ireland tourist board to carry out a promotional tour of Australiasia last October. It is also gratifying that more Members of this House are visiting Northern Ireland.
  Many new visitors to the Province express surprise at the tranquillity of the matchless countryside and at the normality of Ulster life. Terrorism is there, but terrorism is almost worldwide in what Churchill described as this terrible 20th century. The British are insular and inclined to think that they are the only people who have troubles, whether it be unemployment or terrorism. Other countries much favoured by holidaymakers — France, including Corsica, as well as Italy and Spain — are also and perhaps worse plagued by the men of the bomb and the bullet. Statistical comparison shows that Northern Ireland is much safer than New York and we should do all that we can to encourage further growth of the tourist industry by bringing out the true position of Northern Ireland. Due regard must at the same time be paid to natural amenity, historic monuments and archaeological sites such as the one in the constituency of the hon. Member for Newry and Armagh (Mr. Nicholson) which I understand is to be the subject of a public inquiry.
  I repeat that we cannot rest on our oars. I suppose that the fact that only 300,000 visitors come from Great Britain results from the concentration of our media on the killing and the violence. That figure compares with 350,000 from the Irish Republic. Tourism figures in the cross-border studies and co-operation with Bord Failte makes sense. I conclude by quoting Mr. De Valera, no less, who described Ulster as the province that every Irishman loves most next to his own.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I am grateful for the co-operation of Members on both sides of the House. It may help the House if I say that the Minister is anxious to catch my eye at 11·15 pm, so I appeal for even more brevity.
  10.42 pm
  Mr. Stuart Bell: I shall seek to follow your grave consign, Mr. Deputy Speaker. I shall limit my comments to one aspect of the Minister's opening remarks and not seek to equal the interesting, in-depth speeches of hon. Members who have gone before me.
  I wish to deal briefly with the scrapping of the Lear Fan jet project, which the Minister described as disappointing

  403
  news. The Minister told the House that the 4·79 million dollars outstanding would not now have to be paid. Great effort has been made to distance this matter from the De Lorean affair, which was the subject of a previous debate, but it is right and proper that the House should also discuss the Lear Fan affair in some depth, and I shall seek to do so, albeit briefly.
  The Lear Fan jet was to be made almost entirely of a lightweight carbon fibre, powered by two turbo-prop engines coupled to a single rear propellor and designed to fly at speeds of up to 400 mph using less fuel than some cars; but the project has now been scrapped. It is significant that the announcement of the decision came not from the Industrial Development Board but from Lear Fan Ltd. in Los Angeles. In a written answer to the hon. Member for Hazel Grove (Mr. Arnold) about the Lear Fan company's decision to cease trading, the Minister said:
  "I understand the directors took this decision because of continuing delays encountered in obtaining certification of the Lear Fan 2100 aircraft and the steep decline in the market for executive turbo-prop aircraft which had resulted in a serious deterioration of the long-term prospects of the company." —[Official Report, 3 June 1985; Vol. 80, c.86.]
  However, I suggest that the Lear Fan project collapsed because of the inability of Lear Fan to get an airworthiness certificate. Thus, the second reason given by the company is as redundant as those workers who are still at the plant in Carnmoney in Northern Ireland.
  The Minister is to be congratulated on being forthright with the House in saying that £56·28 million had been lost to the Exchequer. Lord Lyell—whom the hon. Member for Antrim, North (Rev. Ian Paisley) described as being the Minister responsible for agriculture—referred to the losses in a statement that he made in the other place on 19 December 1984. He thought that the Government exposure was $24 million. That was obviously wishful thinking, because the proper figure given tonight by the Minister is £56·28 million.
  As with the De Lorean affair, the Lear Fan issue raises a number of questions. Most of my questions relate to the administration of the former Minister of State, the present Minister of State for Defence Procurement, to whom I have given notice that I should be raising matters within his jurisdiction.
  Why, in the first place, were the contracts for Lear Fan entered into in dollars, which meant that, with a strengthening dollar, the transaction across the exchanges cost us more than was necessary? Is it right that the Government should have used taxpayers’ money in dollars rather than in pounds? What chances are there of recovering as much as possible of the nearly £57 million that has been poured into the venture? Is it a fact, as stated in the press, that the Industrial Development Board's directors nominated to advise the Government recommended the Government to pull out of the Lear Fan project a year ago and to salvage what money could be recouped? If so, why was that advice not heeded?
  Is it true that there is a legal possibility on the other side of the Atlantic that the Lear Fan company might be able somehow to close down the present operations, lose for the British Exchequer £57 million and open up again with other backers? In short, is it still thought that the Lear Fan jet is a marketable commodity?
  I read that Mr. De Lorean is seeking to resurrect his car project in the United States and therefore, in a sense, begin
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  where he left off in Northern Ireland. I doubt whether that is so; and if I do not believe in miracles, I can believe in the gullibility of some people elsewhere in the world.
  Why did the Government take a 5 per cent, equity stake in Fan Holdings Incorporated, which in turn owned Lear Fan Ltd.? What was the value of such a parsimonious holding? Why were the original interim loans waived in favour of royalty payments of up to $33·75 million?
  We see here the shades of the De Lorean affair: a plan for a jet aircraft that had no prospect of obtaining an airworthiness certificate, yet the British Government bartered away taxpayers' money for royalty payments on an aeroplane that was destined never to fly.
  Why was the original loan, which might have been recovered by the receiver in different circumstances, turned into a per capita employment grant to be secured against the achievement of the original Northern Ireland employment target of 1,250? By means of this debate I draw the attention of the receiver to the novelty of a situation in which a loan was to be converted into a grant on the achievement of an employment target of 1,250. That employment figure was never achieved, so £9·07 million could be recovered by the Exchequer.
  Why did Her Majesty's Government waive their right to recover the original grant, and upon what financial criteria was this decision based? If additional assistance was to be linked to an increase in the number of employees above 1,250, why was that assistance given when there was no — I repeat no — increase in the number of employees above that figure? In fact, the number of workers employed on the Lear Fan project never rose above 560. If the Government had decided that no financial assistance should be provided unless it was linked to jobs, why did they agree to extend a bank guarantee totalling $15 million to 31 December 1986 and to provide additional public funds up to a maximum of $30 million in what they described as "a predetermined ratio with private sector money"? It was a question not of throwing good money after bad but of throwing good taxpayers' money after private investment capital and relying upon the judgment of the private investor to get it right. That is a matter that the Government and the Industrial Development Board ought to take on board. It is not sufficient simply to say that private money should be added to any particular project, because that, too, might not be backed up by expertise. Where was the expertise on carbon fibre, on aviation fuel consumption or on private jet market research? The British public are entitled to be told the criteria for such an investment.
  I was as much surprised in this case as I was in the case of De Lorean to see who were the people who influenced the Government of the day. The greatest enthusiast for the scheme was the wife of the inventor. She had no financial, commercial or aircraft expertise that was worthy of the attention of the British taxpayer. Even Mrs. Lear had to confess in 1981 that the company was over its budget and behind schedule. What was the Government's response? They appointed a new chairman who was an independent oil operator and a banker from Denver, Colorado. Where was his aircraft expertise?
  The Government announced that any new funding of the Lear Fan project was to be by way of a secured loan, the security being the premises in Northern Ireland which, in a sense, belonged to the taxpayer and which were meaningless in terms of collateral. Even then the

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  Government hinted that such a loan would be set off against further grants. These are all matters for the Public Accounts Committee, which looked very carefully into the De Lorean affair and threw light on a number of coiners that required light to be shed upon them. It must be the same here. Any analysis of this project shows clearly that there has been a waste of taxpayers’ money, a waste that has been brought about by Government incompetence, ignorance and mismanagement. The only good thing to be said is that it cannot be laid at the door of the present Minister, who was not in post at the time. But it can be laid at the door of the Government of whom he is a member.
  If the Minister cannot be held responsible for the financial arrangements made by his predecessor in 1982, he does hold some responsibility for the wayward fashion in which announcements have been made concerning the cessation of trading of Lear Fan. The Opposition sometimes offer the Government a fair wind —to borrow a phrase from my right hon. Friend the Member for Islwyn (Mr. Kinnock)—if not an entirely bipartisan policy when we deal with Northern Ireland matters. But we categorically condemn the Government for the cavalier, inopportune and, quite frankly, callous way in which important announcements concerning employment are made out of this House, out of the reach of the probing questions of Members of Parliament, out of the reach of those who are seeking to do their duty by their constituents, by whom I mean those who live not only in Northern Ireland but in the United Kingdom as a whole.
  The Minister touched briefly upon the closure of the gas industry in Northern Ireland. Perhaps, through the usual channels, there may be an opportunity to discuss that matter. But the announcement was made on a "Long Good Friday"—to borrow the title of a recent film— and we have not yet had the opportunity of a full debate on the whys and the wherefores.
  The announcement of the collapse of the Lear Fan project was leaked in a Sunday newspaper over Whitsun, and followed by a response to a written question from the hon. Member for Hazel Grove. To his credit, the Minister sought to inject a new reality into the project with his statement on the Floor of the House on 19 December 1984, when he declared that with new money available from private sources he hoped that the original agreements would be implemented quickly so that the work in Northern Ireland factories could be restarted as soon as possible. The fact remains that £57 million of taxpayers’ money was poured into a project that was to yield not an aircraft manufacturing plant in Northern Ireland, but a plant to manufacture component parts. The real essence of the whole investment was that the manufacturing was to be done in Reno, Nevada.
  I associate myself with the Minister's statement tonight — which he also made in response to the written question — and the statement of the hon. Member for Antrim, North that there is no reflection on the work force in Northern Ireland. There is nothing wrong with that work force. Like their counterparts on the mainland, they have lost their jobs, in one sense through clumsiness and incompetence, while those on the mainland have lost their jobs through the ideological bludgeoning of the Government. They have been
  406
  exemplary in their standards of work and in their loyalty to their project. But loyalty, like patriotism, is not enough.
  While conceding that it was a high-risk venture, little comfort can be garnered from the Minister's words that, had it succeeded, it would have contributed greatly to employment in and the economy of Northern Ireland. We all wish such projects well, but we must be alert to the dangers. It is that alertness that no doubt prompted my predecessor, my hon. Friend the Member for Hammersmith (Mr. Soley), to ask the former Minister to
  "give a clear assurance that the Government are fully satisfied that they are getting all the information they need, especially of a technical and financial nature, to enable them to judge the future prospects of the company as well as the aircraft?"
  The Minister responded:
  "Yes. The financial and technical monitoring exercises that have been carried out are satisfactory. We are getting all the information that we need."—[Official Report, 23 February 1984; Vol. 54, c. 968.]
  I doubt whether that information was available, and whether the Ministers and officials whose salaries we shall be voting tonight knew the difference between anhedral and dihedral wings.
  Who checked out whether the Federal Aviation Administration would even give an air worthiness certificate because of the new technology involved? Who analysed the priorities of the Lear Fan company from a commercial standpoint and perceived that they were wrong, first, to get the certification, secondly, to produce the jet, and, thirdly, to market it? The potential market for an eight-seater private jet should have been tested and known and the prospects of getting an air worthiness certificate should have been thoroughly assessed before the taxpayer put even his financial little toe into the water.
  The high risk lay in the fact that the aircraft was unlikely to receive, and has not received, an air worthiness certificate. One has to draw the parallel with De Lorean in that the same receiver is being used as in that case. His first duty is to secure the fixed and floating charge on the company's assets in Northern Ireland, and his second is to represent the Government's interests in the assets and technology of the Lear Fan company in the United States.
  As we debate this order, we call into question not the Government's good faith, but their competence. They were singularly incompetent in the handling of the Lear Fan proposal, and they have done the taxpayer a disservice in the way that they have approached a technical problem, which should have been examined in much more depth.
  "Though the mills of God grind slowly, yet they grind
  exceeding small; Though with patience He stands waiting, with
  exactness grinds He all."
  In the cases of De Lorean and of Lear Fan, He has ground exceedingly small and revealed the great difficulties and weaknesses in Northern Ireland for those who were looking for high investment and technology with little success.
  I have taken on board the Minister's remark that two thirds of the work that had come to Northern Ireland had come from firms outside the Province, but that is no excuse for the incompetence with which this matter has been handled. It should be noted by the House, and no doubt it will be noted by the country.

  Appropriation (Northern Ireland)
  11.2 pm
  Rev. William McCrea: If there is a Division, we shall be voting for money coming to Northern Ireland. We believe that money is needed for agriculture, housing, jobs, roads and education. We also do not like direct rule. We want a fully devolved Government and Parliament in Northern Ireland, and the full democratic process honoured. That is shown by the fact that in the short time that we have tonight, we have to deal with such a wide range of matters that seriously affect the lives of the peoples of Northern Ireland.
  Mr. Peter Robinson: Does my hon. Friend accept that we want one other thing in Northern Ireland — decent local government? Recently, however, we have seen the introduction into local government in Northern Ireland of the mouthpieces for murder and mayhem in our society. Will my hon. Friend ask the Minister what his response will be to the introduction of Sinn Fein chairmen?
  Rev. William McCrea: I thank my hon. Friend for his intervention. Over the past few hours even the Minister may have realised that there are members of councils in Northern Ireland who will not welcome Sinn Fein, who will not let this pass easily and who will not allow it to be a one-night or a one-afternoon wonder. The hon. Member for Bath (Mr. Patten) will find that there are still in Northern Ireland Unionists worthy of that name and of the heritage that they thank God for.
  My hon. Friend the Member for Antrim, North (Rev. Ian Paisley) has already mentioned councils. Unionists will not socialise with Sinn Fein, nor will they be used in any way to keep going a system which allows not only the representatives of murderers but murderers themselves to be councillors. If the Government think that we will sit down and look across at Sinn Fein councillors while they measure us up for coffins, they have another think coming. I have no intention of sitting there to be measured up for a coffin by any gunman of the IRA. Ulster needs good local government. Decent local government was destroyed when Sinn Fein councillors were allowed through the doors of the council chambers.
  I come from a large agricultural constituency. I hope that for a change the Minister will give us some good news tonight for that industry. Lord Lyell told us that he had sympathy for our farmers. When the bank manager wags his finger to call a farmer into the bank, Lord Lyell's sympathy does not go far. We want more than sympathy. My hon. Friend the Member for Antrim, North mentioned the £7 million that is there to help them out. The Minister should tell us how that money will be given to Northern Ireland farming and agriculture.
  The Minister of State has recognised the upward trend of unemployment in Northern Ireland; I think he genuinely appreciates the seriousness of the problem. I come from a constituency that has, the highest unemployment rate in the whole of the United Kingdom. What hope can the Minister give to my constituents in Mid-Ulster? What message can I take back to them concerning future employment? I want viable employment and genuine jobs. I do not want fly-by-nights. I do not want those who come in like De Lorean to use the British taxpayer and the
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  United Kingdom and then disappear. Has the Minister any announcements to make about jobs for my Mid-Ulster constituents? I hope to get an answer to that question concerning the future well-being of my constituents.
  Class III, vote 2, deals with expenditure by the Department of Economic Development on subsidies to electricity tariffs. May I draw the attention of the Minister once again to the unbearable burden on Northern Ireland industry, which is disadvantaged because the electricity tariff is pegged to the highest in England. There is a need for a fairer pegging of electricity tariffs to assist industry in the creation of jobs.
  Class V deals with roads. I accept that Northern Ireland had some of the best road systems in the United Kingdom, but the roads are now in a deplorable state. What is to be done?
  The Castledawson bypass issue may be a hardy annual, but the sooner the Minister moves the sooner the problem will disappear. I should be more than delighted to be able to forget about it and move on to the next town.
  What about the Moneymore-Magherafelt road? The Minister promised to see whether works could be completed to make the road safer.
  I have written to the Minister about Orlit housing. When will the legislation come into operation? When will the Housing Executive be able to buy back those houses and give the people their money?
  The Watson park bungalows are also causing worry because they are still defective after money has been spent on them. I wrote to the Minister asking him to put in writing that his chief officers in the Northern Ireland Housing Executive are sure the money already spent is well spent. I fear that the money will be poured down the drain, as it was with De Lorean and Lear Fan. That will not solve the problem and the people will be left in an intolerable position after they have been moved out of their houses three or four times.
  When shall I be able to close the file on the case of Mr. Crozier from Cookstown? I shall be happy to give the Minister my file on the case so that he can sift through it. I have written to the Prime Minister, to the Secretary of State, to Lord Hailsham and to the Under-Secretary of State for Northern Ireland. Mr. Crozier is to be given a pension for health reasons, but no one will provide the health reasons. All he wants is to be told why he is being pensioned off on health grounds; then he will take the pension. I do not want another letter saying, "We have nothing more to add", or, "I am sorry, the case has been looked at before, we have nothing more to say." I want an answer.
  Fundamental changes are proposed in health and social service benefits. The Prime Minister has failed to tell the Leader of the Opposition what figures can be applied to the suggested benefits. Perhaps the Minister will disclose them to his hon. Friends from Northern Ireland who can pass them on to the Leader of the Opposition and our constituents.
  11.14 pm
  Mr. Ken Maginnis: I intervene, I must admit, as a protest at the length of time available for debate tonight. I do not intend to hold back the hon. Member for Bath (Mr. Patten) from replying to the debate. I am frustrated because this is the third time in succession that I have sat through debates. Two debates ago, I got about three minutes, I was not called on the last

  409
  occasion, and I assure the House that at one minute before quarter past eleven there is not adequate time for me to deal with the problems of my constituents in Fermanagh and South Tyrone and the difficulties that hon. Members representing Northern Ireland face under direct rule in trying to serve our constituents.
  11.15 pm
  The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Chris Patten): It is a pleasure once again to wind up an appropriation order debate which, as is customary, travelled far and wide, albeit, as the hon. Member for Fermanagh and South Tyrone (Mr. Maginnis) indicated, for a rather shorter period than has sometimes been our good fortune.
  I wish to try with the minimum of fuss to answer the main points raised in the debate. Any issues that I am not able to cover in the course of these necessarily abbreviated remarks I or my hon. Friends will follow up in correspondence with the hon. Gentlemen who raised them.
  The hon. Member for Newry and Armagh (Mr. Nicholson) raised two substantive issues about housing. He spoke first—and this point was touched on by other hon. Gentlemen — about renovation grants, and in particular about the delays experienced by his constituents in receiving them. I am conscious that there has been criticism of the Housing Executive administration of the renovation grant scheme, but I know that the executive is keen to improve its performance as much as it can. It is important to note that in the year ended 31 December 1983 almost 27,000 improvement, conversion, intermediate and repairs grants were approved, and grant was paid in just over 24,000 cases. These figures increased to almost 32,000 and 27,000 respectively in 1984, illustrating the scale of the grants operation. While there was a backlog of grants applications which reached 8,400 in March 1984, this has now fallen back to just under 3,000. This situation arose from the substantial increase in demand for grant aid resulting from the 1983 housing order, which widened the scope of the renovation grant scheme in a number of respects. While I am satisfied with the steps taken to reduce delays in the processing of grant applications, I shall continue to keep the executive's performance in this area under review.
  Mr. Maginnis: I am grateful to the hon. Gentleman for giving way, because this is one topic on which I wanted to spend some time tonight.
  I hope that the Minister recalls the letter that he sent me on 24 February 1984 after I wrote to him about the possibility of ensuring that grants were paid to those people who were most in need, stating that this perennial difficulty of excessive demolition was preventing the most needy people from getting grants for houses. He told me that the 1979 house condition survey was out of date and that there would be a new house condition survey shortly. That was over a year ago. That house condition survey I have not seen, but I have heard that the contents prove that the single unfits, as they are known, are as numerous as they have ever been, and we have not even begun to scrape the surface. Would the hon. Gentleman comment on that?
  Mr. Patten: I am glad to have the opportunity to do so. The house condition survey will be published shortly. The hon. Gentleman is correct to say that one of the matters that it has shown clearly is that, while we have
  410
  made considerable progress in reducing unfitness, we have an increasing problem of disrepair. That has led me to feel even more strongly than I did when I replied to the hon. Gentleman last year that we have to look at the whole of our renovation grant aid to make sure that it is directed towards those people who are in greatest need and to properties that most need assistance. Therefore, I have set up a small committee composed of officials of my Department and of the Housing Executive which is looking at how we can target grant aid more effectively within the existing legislative framework. I hope very much that we shall have proposals to discuss with hon. Members before too long. The point made by the: hon. Member for Fermanagh and South Tyrone is extremely important, and I hope that we shall be able to demonstrate that we are responding to it in good faith as soon as may be.
  The hon. Member for Newry and Armagh also referred to Orlit dwellings and asked for greater speed in dealing with the Housing Executive stock of Orlits. The hon. Gentleman may be aware that the Housing Executive is already considering the options for individual estates following its technical investigations. Announcements will be made by the executive on an estate-by-estate basis as soon as possible after consultation with the tenants. I know that the executive is fully seized of the need to take action as quickly as possible.
  The hon. Gentleman asked me to consider the sale of Orlit dwellings to tenants at a cost reflecting their condition. I shall look at that proposal, but I wonder whether the hon. Gentleman would see very much advantage for the tenant in becoming the owner of a dwelling which in some cases could have a life span of only five to 10 years without expensive remedial action.
  The hon. Member for Mid-Ulster (Rev. William McCrea) asked about legislation to bring the position in Northern Ireland into line with that in Great Britain. We had slightly more difficulty than we anticipated in drafting the legislation. However, I hope that we shall be able to lay an order before the House very soon. In the meantime, as I have made clear time and again, any special hardship cases will be dealt with, as two have already, on an administrative basis. If the hon. Gentleman has other similar cases, I should be more than happy to consider them.
  The hon. Member for Newry and Armagh asked about a number of agricultural matters, beginning with the shortage of cold storage facilities for intervention beef. He knows about my status as a tyro in these matters, but I can say that we are aware of the potential difficulties arising from limitations on freezing and storage capacity for intervention beef, and we have arranged for a study to be undertaken on the facilities available, the current incentives, the employment prospects, the future needs and how they might be met.
  The hon. Member for Antrim, North (Rev. Ian Paisley), the hon. Member for Newry and Armagh, the hon. Member for Mid-Ulster and others mentioned, quite understandably, their concern about milk quotas. They spoke of the special difficulties facing the Northern Ireland dairy industry. I can assure the House that we are doing all we can to achieve the maximum possible relief for the Province's milk farmers. We accept that without additional quota for Northern Ireland, individual producers may find themselves in difficulties. The very low uptake under the outgoers scheme was most

  411
  unfortunate and, as my hon. Friend the Member for Brent, North (Dr. Boyson) said, we are continuing to seek a solution to the problem. As the hon. Member for Antrim, North asked, I shall convey the concern expressed by hon. Members to my noble Friend who is responsible for these matters in Northern Ireland and also to the Secretary of State.
  The hon. Member for Antrim, North referred in the context of Lear Fan to Ulster workmanship. He was entirely right to say that it is second to none, as the success of Harland and Wolff, Shorts and many other companies has made clear.
  The hon. Gentleman also asked about the future of Ballintoy harbour, which I enjoyed visiting with him on one memorable occasion when the sun shone, as it always does on the righteous. I shall look into the latest state of of play on Ballintoy and write to the hon. Gentleman about it.
  The hon. Member for Antrim, North referred to the arguments for a regional library, and protested about the recent decision that the Belfast central library should not become a regional reference facility independent of the Belfast Education and Library Board. There is not the necessary support from the boards for such a change to the existing arrangements. They are apparently largely content with the provision under existing legislation enabling all boards to take advantage of the services provided by the Belfast central library.
  The hon. Gentleman referred to the extent to which Carson's monument is turning green. My hon. Friend the Member for Belfast, East (Mr. Robinson) understandably raised that point. I have nothing to add to what I have already said to my hon. Friend, but I note the importance that the hon. Gentleman properly attaches to the cleaning of that statue.
  The hon. Gentleman and the hon. Member for Mid-Ulster referred to the position in local government following the elections. I should like to make it clear again, as I did in a series of radio, television and newspaper interviews yesterday, that there has been and will be no change in the Government's policy towards Sinn Fein. No reasonable construction of my remarks yesterday could conceivably suggest that there would be. Finally, as the right hon. Member for Strangford (Mr. Taylor) said in a series of letters to newspapers, I hope that hon. Members will keep the electoral failures and successes of Sinn Fein in perspective. It did worse in the local elections than in the European elections or the general election, and considerably worse in the local government elections than three out of the four main constitutional parties.
  The right hon. Member for South Down (Mr. Powell) asked me to give him an undertaking about scallop beds. He referred to the fisheries close to the coast of Northern Ireland. I reiterate the assurances given by my hon. Friend the Member for Brent, North in his opening speech, that the fisheries are closely monitored. If there is any evidence of their stocks being endangered, steps will be taken to have the beds closed. I hope that the right hon. Gentleman finds that assurance satisfactory.
  The right hon. Gentleman asked about waste disposal and the relative responsibilities of district councils and my Department. As he knows, district councils have the statutory responsibility for the development of a waste disposal strategy for their areas. The identification and
  412
  preparation of suitable sites is not a matter in which I can intervene. However, my Department is actively involved with district councils about waste management. We shall assist where possible. The right hon. Gentleman made some valuable suggestions about the extent to which we should take a greater lead in co-ordinating the various tasks of district councils in this respect, and I shall certainly come back to him on that point as positively as possible.
  My hon. Friend the Member for Epping Forest (Sir J. Biggs-Davison), whom we always welcome to our debates, referred to the welcome increase in recent years in the number of extremely wise and perceptive holidaymakers, who come to Northern Ireland, and to the increased number of hon. Members who visit the Province, which is also to be welcomed. My hon. Friend will be pleased to know that my hon. Friend the Minister of State will shortly be chairing a conference on tourism to see how we can attract even more tourists to our shores.
  The hon. Member for Middlesbrough (Mr. Bell), in a thoughtful speech, asked many detailed and serious questions about Lear Fan, which he will not expect me to answer during the next 60 seconds. However, they will be answered in due course in as full and open a way as possible—in other words in the fashion for which my hon. Friend the Minister of State is well known and respected.
  I believe that I have answered most of the main points raised in the debate. I repeat that any detailed points will be answered in subsequent correspondence. This appropriation order shows once again that the Government are attempting to grapple with the extremely difficult problems of Northern Ireland in a reasonable and imaginative way, with a fair and reasonable allocation of public expenditure to support our policies and objectives. I trust that that will also be the view of the House.
  Question put:—
  The House divided: Ayes 133, Noes 5.

  Division No. 229]

  [11.30 pm

  AYES

  Alexander, Richard

  Cranborne, Viscount

  Amess, David

  Dorrell, Stephen

  Ancram, Michael

  Emery, Sir Peter

  Arnold, Tom

  Evennett, David

  Ashby, David

  Fallen, Michael

  Baker, Nicholas (N Dorset)

  Fenner, Mrs Peggy

  Baldry, Tony

  Forsyth, Michael (Stirling)

  Beith, A. J.

  Fox, Marcus

  Bellingham, Henry

  Fraser, Peter (Angus East)

  Biggs-Davison, Sir John

  Garel-Jones, Tristan

  Blackburn, John

  Gregory, Conal

  Bottomley, Peter

  Hamilton, Hon A. (Epsom)

  Bottomley, Mrs Virginia

  Hampson, Dr Keith

  Bowden, Gerald (Dulwich)

  Hargreaves, Kenneth

  Boyson, Dr Rhodes

  Harris, David

  Bright, Graham

  Haselhurst, Alan

  Brinton, Tim

  Hayes, J.

  Brown, M. (Brigg & Cl'thpes)

  Heathcoat-Amory, David

  Bruinvels, Peter

  Hicks, Robert

  Burt, Alistair

  Hind, Kenneth

  Butcher, John

  Hunt, David (Wirral)

  Butterfill, John

  Jones, Gwilym (Cardiff N)

  Carttiss, Michael

  Knowles, Michael

  Channon, Rt Hon Paul

  Knox, David

  Chope, Christopher

  Lang, Ian

  Clarke, Rt Hon K. (Rushcliffe)

  Lennox-Boyd, Hon Mark

  Clegg, Sir Walter

  Lester, Jim

  Conway, Derek

  Lightbown, David

  Coombs, Simon

  Lilley, Peter

  Cope, John

  Lord, Michael

  413

  Lyell, Nicholas

  Shaw, Sir Michael (Scarb')

  McCrea. Rev William

  Shelton, William (Streatham)

  Maclean, David John

  Shepherd, Colin (Hereford)

  McQuarrie, Albert

  Silvester, Fred

  Major, John

  Skeet, T. H. H.

  Mather, Carol

  Spencer, Derek

  Mayhew, Sir Patrick

  Spicer, Jim (W Dorset)

  Mellor, David

  Stanbrook, Ivor

  Merchant, Piers

  Stern, Michael

  Meyer, Sir Anthony

  Stevens, Lewis (Nuneaton)

  Miller, Hal (B'grove)

  Stevens, Martin (Fulham)

  Mills, lain (Meriden)

  Stewart, Allan (Eastwood)

  Mitchell, David (NW Hants)

  Stewart, Andrew (Sherwood)

  Morris, M. (N'hampton, S)

  Stradling Thomas, J.

  Murphy, Christopher

  Sumberg, David

  Neale, Gerrard

  Terlezki, Stefan

  Neubert, Michael

  Thompson, Donald (Calder V)

  Nicholls, Patrick

  Thompson, Patrick (N'ich N)

  Morris, Steven

  Thurnham, Peter

  Oppenheim, Phillip

  Tracey, Richard

  Ottaway, Richard

  Twinn, Dr Ian

  Paisley, Rev Ian

  Walden, George

  Patten, Christopher (Bath)

  Waller, Gary

  Pawsey, James

  Wardle, C. (Bexhill)

  Peacock, Mrs Elizabeth

  Watson, John

  Penhaligon, David

  Watts, John

  Percival, Rt Hon Sir Ian

  Wells, Bowen (Hertford)

  Portillo, Michael

  Wheeler, John

  Powell, William (Corby)

  Whitfield, John

  Powley, John

  Winterton, Mrs Ann

  Proctor, K. Harvey

  Winterton, Nicholas

  Rhodes James, Robert

  Wolfson, Mark

  Rhys Williams, Sir Brandon

  Wood, Timothy

  Robinson, Mark (N'port W)

  Yeo, Tim

  Robinson, P. (Be/fast E)

  Roe, Mrs Marion

  Tellers for the Ayes:

  Rumbold, Mrs Angela

  Mr. Peter Lloyd and

  Sainsbury, Hon Timothy

  Mr. Tony Durant.

  Sayeed, Jonathan

  NOES

  McCusker, Harold

  Molyneaux, Rt Hon James

  Tellers for the Noes:

  Nicholson, J.

  Mr. William Ross and

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

  Mr. Ken Maginnis

  Walker,Cecil (BeIfast N)

  Question accordingly agreed to.
  Resolved,
  That the draft Appropriation (No. 2) (Northern Ireland) Order 1985, which was laid before this House on 8th May, be
  approved.

  Manchester Steel Ltd. (Closure)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Major.]
  11.40 pm
  Mr. Robert Litherland: I have chosen this subject for the Adjournment debate to give some of the facts about the context within which the Manchester Steel closure decision should be seen. Why is the closure of Manchester Steel Ltd. so exceptional? It is not just another isolated set of redundancies, because we have had such closures and redundancies in the past. The gradual decline in manufacturing goes back over a long period to the mid-1960s. In recent years the position has deteriorated rapidly, to such an extent that east Manchester has been ravaged by closures and redundancies.
  How dramatically the situation has changed. East Manchester, once the workshop of the world with its expanding and prosperous light and heavy engineering industry, coal mining, chemical firms and textiles businesses, is barely recognisable now, with its deserted factories bearing witness to the changed fortunes of that part of Manchester.
  In 1978, manufacturing employment accounted for some 63 per cent, of jobs in the area. Since then, job losses in manufacturing in east Manchester have become far more dramatic. Between 1979 and 1983, 12 firms employing more than 100 people have closed. They include Laurence Scott with 650 employees; Richard Johnson and Nephew with 610 employees; Easicut tools with 350 employees; Walkden and Makin with 270 and more recently GEC Switchgear has announced that it will be shedding about 270 jobs from its Openshaw factory.
  Between 1971 and 1985, 20,000 jobs have been lost in east Manchester and the redundancies between 1981 and 1984 account for about 4,500 jobs. With such job losses the social impact has been catastrophic. Until 1980, unemployment in that part of the city compared with the national average. The effect of the closures and redundancies in east Manchester has resulted in the unemployment rate almost doubling between 1980 and 1981.
  The environmental consequences of those changes can be seen in the vacant, under-used land and buildings and the unattractive image that that gives the area. Nearly one quarter of the industrial land in east Manchester is now vacant. Manchester city council, through its east Manchester initiative, has taken steps to try to remedy the situation and to date some £8 million has been spent on acquiring land and buildings to carry out demolition, but more funding will be required by the city council. It has pressed the case for funds to be made available on a more regularly programmed basis, arguing that £10 million is needed over the next three years to reclaim derelict land and buildings.
  Every closure adds to the enormity of the problem, and now we have Manchester Steel. It is part of the process of losing manufacturing in east Manchester. It is another nail in the coffin of this once vibrant working area and another attack on workers who have the skill and the will to work, but who are having their pride torn from them by a notice of closure which says that they are expendable and are no longer required. To add insult to injury, the decision to close Manchester Steel was taken in secret, behind closed doors in a foreign country. The company was owned by

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  Elkem of Norway and discussions had been taking place for nine months and the news broke through a leak of information.
  In 1982, the unions and the management, assisted by the city council, had combined to save the firm. The workers were left in the dark about what was taking place. Their thanks was no consultation but merely a statement of the cold hard facts that Manchester Steel in my constituency and the Bidston plants on Merseyside were to close. Elkem acted in a dishonourable and underhand way.
  What about the Government's attitude? Hiding behind the smokescreen of commercial confidentiality and not being prepared to intervene in a free market commercial transaction, they did nothing. In doing nothing, the Government acquiesced to the takeover by Allied Steel and Wire, which is owned by British Steel and GKN.
  We have the ridiculous situation of workers paying their taxes, and money from those taxes being allocated to Allied Steel which uses it to allow foreign firms to sell their steel involvement in the United Kingdom, and the plants are shut. How nice and convenient for the Government and their rationalisation programme.
  When a deputation from Manchester Steel met the Under-Secretary of State for Trade and Industry, he professed not to know that negotiations for the takeover were under way. Yet the takeover was being considered by the Commission of the European Community. A press release of 20 May said:
  "The Commission has authorised Allied Steel and Wire Holdings Ltd … to acquire the entire share capital of Manchester Steel Ltd … under article 66 of the ECSC Treaty."
  In a conversation with Mr. Keith Donoghue, who made the decision on Manchester Steel, the local MEP, Mr. Eddy Newman, was told that those consulted included the Department of Trade and Industry, which not only gave its authorisation, but pointed out to the ECSC that the takeover would suit the development of the steel industry. Who is running this country? Are diktats coming from the European Community?
  To the workers, terminology such as "rationalisation" means extinction. They can see the effects on the lives of their families, on the suppliers to Manchester Steel, on services dependent on the purchasing power of the money earned by Manchester Steel workers, on the local shops, pubs and clubs and on home service suppliers. They recognise that the closure creates fears for job security elsewhere.
  More families will go on to supplementary and housing benefit, and there will be more mental strain from unemployment. I was told that there were four suicides after the closure of Richard Johnson and Nephew, which had been in existence for 200 years before it was bought by a South African consortium and closed within 18 months. The locks were on the gates when the workers returned to the plant.
  There will be family breakdowns and more referrals to health and welfare services. Because of what is happening to the workers and their families and to the area where they live, they will fight the closure to the bitter end. I know these workers and I represent the area. They have my fullest support and they are supported by their union and the community, which is sick and tired of the relentless attack on its living standards. The workers have the
  416
  support of all Labour Members in the Manchester area. I received a letter today from my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) expressing his support. In addition, my hon. Friend the Member for Birkenhead (Mr. Field) will be speaking in the debate.
  I have spoken of the local interest, but what about the national interest? In their submission to the Office of Fair Trading the solicitors acting for the Amalgamated Association of Wiredrawers and Kindred Workers state:
  "There are a number of reasons why our clients believe that this transaction would be against the national interest. In effect it would concentrate the production of 5·5 to 13·5 mm rod in the hands of one company alone in the United Kingdom. It should be noted also that Manchester Steel is the sole manufacturer, in the country, of 100 to 110 mm concast billet for re-rolling, in the main. These observations touch the surface only of a potentially serious situation and it is our clients' wish, through us, to forumulate a detailed complaint supported by evidence."
  The evidence is that Manchester Steel is the only independent manufacturer of 100 mm billet selling its products on the market, as British Steel at Scunthorpe ceased production of 100 mm billet about two months ago. There is an increasing demand for this product but also a shortage. If manufacture was in the hands of Allied Steel alone, the re-rollers would have to purchase from that company or import the product, so Allied Steel would be in a position to control both the supply and the price. We believe that the matter should be referred to the Monopolies and Mergers Commission, because if Manchester Steel ceased production Allied Steel would become the major source of supply.
  Many independent wiredrawers obtain their rod requirements from Manchester Steel. Closure would mean that they would have to purchase their requirements from Allied Steel and would have to pay "the price". The alternative for both wiredrawers and reinforcement engineers would be imports.
  The Manchester and Bidston rolling mills are flexible and produce small quantities with relatively short lead times, an essential service to many of the small independent wiredrawers. That facility to the market would be lost if Manchester Steel was closed. Allied Steel is not geared to that degree of flexibility. Furthermore, its own downstream interests are in direct competition with the small independent companies to which I have referred.
  The Manchester Steel plants are modern. A great deal of finance was put into refurbishing the plant in my constituency. The company has flexible working practices. Closure would leave less flexible plant to meet the market requirements.
  The United Kingdom generates about 8 million tonnes of scrap per year, of which 4 million tonnes are exported, mainly to Spain. The scrap, converted to steel, is then exported to other countries, including the United Kingdom. If Manchester Steel closes, it is likely that much of the 500,000 tonnes of scrap used by that company would be exported and that some would return to this country as the finished product.
  I believe that the observations made by the unions should receive consideration by the Monopolies and Mergers Commission. We insist upon that. The Government's replies to my questions are just not good enough. When I talk about the future of Manchester Steel I receive the bland reply that it is up to the new lords and

  417
  masters of the company to make the decisions. What part do the Government play? The diktats seem to come from Europe or from high finance somewhere while the Government just stand back and wash their hands of the problem as though they had no moral obligations in the matter.
  The Government have a moral obligation to be helpful should any interest be shown by an organisation wishing to acquire Manchester Steel. It is understood that members of senior management of the company were instructed not to look for a bid in the open market. It would be in the interest of the nation in general and of east Manchester in particular if Manchester Steel survived. We want the Government to act before the situation becomes irretrievable.
  When we talk about closures and so on, we are talking not simply about statistics and percentages: we are talking about people, human beings, whose only crime is a desire to work. The workers believe that Elkem has sold them out and that the Government have betrayed them. They are left wondering to whom to turn and what hope there is for them and their families. Most of them are youngsters with mortgages and other commitments. They see ahead a path of hopelessness. We want the Government now to say exactly where they stand on this issue and whether they have become allied to the takeover and closure of Manchester Steel.
  11.56 pm
  Mr. Frank Field: I thank my hon. Friend the Member for Manchester, Central (Mr. Litherland) for initiating this debate and for permitting me to intervene. I do so because, as he explained, Manchester Steel also owned a plant in Birkenhead.
  I wish to underline many of the points that my hon. Friend made, particularly the fact that Manchester and Birkenhead already suffer from massively high unemployment. In Bidston, in my constituency, the unemployment rate is in excess of 40 per cent. The mill in Birkenhead, like the one in Manchester, has turned the corner financially.
  We are talking also about a takeover in both areas by a company, the main aim of which is to destroy rather than to promote jobs. We are speaking of a takeover bid of a company which, with full union support, has seen a major programme of modernisation and reform.
  While I do not wish to deflect thought from the main thrust of my hon. Friend's main comments—particularly when he asked what the Government proposed to do in the present situation — I must comment on the role that Elkem has played in these proceedings. My hon. Friend noted that the negotiations to sell the company and to destroy so many jobs had been going on in secret for nine months.
  This Norwegian company not only prides itself on having good industrial relations but it usually talks of worker involvement. However, when we consider Elkem's involvement in this matter, we see that it is not just a question of what is left to be desired but that practically everything is left to be desired about its behaviour. Elkem has behaved badly. It now has a moral responsibility to use its influence to ensure that as many jobs as possible, in Manchester and Birkenhead, are saved.
  This is in some respects an unusual Adjournment debate. A number of Back-Bench Members are present,
  418
  as are two Ministers. I am sure that the Parliamentary Under-Secretary of State for Energy, who has taken a close interest in the future of the steel mill at Bidston, will be interested in what his hon. Friend the Parliamentary Under-Secretary of State for Trade and Industry has to say in replying to the debate.
  12 midnight
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): First, I thank the hon. Member for Manchester, Central (Mr. Litherland) raising this question. He has every right to do so, bearing in mind the dramatic impact that this closure is having upon his constituency and the unhappy history of unemployment in this sector of Manchester, to which he so vividly referred.
  The hon. Member for Birkenhead (Mr. Field) drew attention to the fact that this is an unusual Adjournment debate because an unusually large number cf hon. Members are present. I acknowledge also the interest of my hon. Friend the Member for Bury, North (Mr. Burt) as the secretary of the north-west group of Conservative Members of Parliament. He has pursued his inquiries in correspondence with my hon. Friend the Minister of State. I hope to be able to answer all of the questions that have been asked.
  As a matter of general principle, the Government recognise that the manufacturing sector in the United Kingdom produces a far higher proportion of internationally tradable goods than does the service sector. For that reason, I join the hon. Member for Manchester, Central in stating that we believe that this country's manufacturing sector is our prime generator of wealth and that this will always be the case. Therefore, we share he hon. Gentleman's concern that skills in the manufacturing sector should be used to the fullest possible extent. However, we are faced with some excruciating dilemmas in the steel industry, not only on a United Kingdom but on a European basis. I should therefore like to deal with that area of influence, because it is possible that the hon. Gentleman has confused one or two matters in that area.
  I was able recently to gauge the depth of feeling of the hon. Gentleman and his constituents when I met a delegation of representatives of the work force from Manchester Steel. It was led by the hon. Members for Manchester, Central and for Birkenhead, whose constituency includes Manchester Steel's other plant at Bidston.
  I propose to respond to the points that have been made under two broad headings: first, to make clear the Government's position on the proposed closure of Manchester Steel and to set it in the wider context of the problems faced by the steel industry, outlined by the hon. Member for Manchester, Central, and, secondly, to draw attention to the steps which the Government are taking to encourage job opportunities in Manchester.
  I fully recognise the disappointment and frustration which must have been caused by the closure announce-ment, because the company had survived an earlier threat of closure in 1982. Manchester Steel remained in business at that time largely because the work force agreed to a cost reduction programme. That made their pain, in the light of the recent announcement, that much more difficult to bear.

  419
  Considerable improvements were made, but regrettably they have not been sufficient to persuade Elkem to retain the production facilities at Manchester and Bidston in the face of stagnant markets.
  Many of the problems of the industry which existed in 1982 still remain. Depressed demand for steel products continues and substantial overcapacity exists, with consequential effects on efficiency and profitability. Other parts of the steel industry face the same difficulties, both here and throughout Europe.
  Painful measures have had to be taken throughout the EC to stabilise the market, to restructure the industry, and to remove excess capacity. Behind those terms lie the social and human difficulties about which we have heard. This process has been difficult and has resulted in large-scale redundancies both here and on the continent. That point has been raised by my hon. Friend the Member for Wirral, West (Mr. Hunt) who is here this evening. But only by this means can an efficient and profitable industry be re-established, with reasonable hopes of longer-term job security for those remaining in the industry, although that is of no consolation to those who are the casualties of this process. In this context, it is estimated that in Manchester Steel's product area, capacity utilisation is between only 65 and 70 per cent. Much higher levels are needed for sustained profitability and viability.
  The Government's position on further restructuring in the steel industry is quite clear. Where private sector firms, such as Allied Steel and Wire and Manchester Steel, are concerned, it is for the firms themselves to decide what rationalisation is necessary and what form it should take. The firms in the industry are best placed to know what measures are needed, and to take decisions based on their commercial judgment. It would be wrong for the Government to second-guess or seek to influence their plans.
  The Government were therefore not involved in the commercial negotiations which led up to ASW buying Manchester Steel from Elkem. We were, however, kept in touch with developments on the usual commercially confidential basis by ASW.
  There have been some suggestions that ASW is not a genuine private sector company because of the British Steel Corporation's major — now 48 per cent. — shareholding. Let me make it clear tht since ASW was set up as a joint venture between BSC and GKN in 1981, the Government have always regarded it very clearly as a private sector firm. It therefore makes its own commercial decisions without any need for Government approval, just like any other private sector business.
  It has been suggested that even if the rolling operations were to close down steelmaking, the steelmaking aspect of Manchester Steel should be kept open because closure could cause problems in the supply of billets to British customers. I understand that ASW has deferred a decision about the future of the Openshaw billet furnace. No doubt it will take into account the market prospects before finalising its decision. But I would emphasise yet again that it is for the company to judge whether the retention of the facilities is viable.
  Equally, if other steelmakers or steel buyers of those products wished to make proposals to ASW about supplies of billet, or the possible purchase of either of the steelmaking plants, they are free to do so. This is not a
  420
  matter for the Government, as the earlier negotiations were not, and it is for ASW to consider any proposals on their commercial merits. I understand that that is its precise attitude.
  I turn now to the wider effects of the planned closure of Manchester Steel on the Manchester area, and north-east Manchester in particular. The Government recognise that this area has suffered considerably from the effects of industrial decline in recent years. Government policies as a whole, both in the steel industry and more widely, are designed to re-establish efficient and internationally competitive businesses. But success will not necessarily result in increased job opportunities in the same sectors as those where job losses have occurred in the past.
  Against that background, the Government have ensured that considerable resources are directed to the Manchester area to alleviate the worst effects of industrial decline. As the hon. Gentleman will know, the Government made part of Manchester, including the north-east of the city, an assisted area last November. That means that the area now benefits from a number of schemes of support for industry which would not otherwise be available. These include regional selective assistance. Since assisted status was granted, the north-west regional office has received 18 firm inquiries about regional selective assistance from firms in north-east Manchester, of which one is currently at an advanced stage of appraisal. I very much hope that the number of good projects submitted for appraisal will increase.
  North-east Manchester is also eligible for derelict land clearance grant, designed to assist the economic recovery of rundown areas by providing resources for clearing derelict sites. The sum of £600,000 was provided in 1984–85 for north-east Manchester to clear sites for industrial or residential development, or to improve housing conditions and community facilities. If the Openshaw plant were to close, it is possible that assistance under that scheme could be provided towards the clearance of the site.
  North-east Manchester receives considerable help from the Department of the Environment's inner city policy. Three industrial improvement areas have been designated and the inner urban area of Manchester benefits from partnership area status — the highest designation under the urban programme. Since 1982, that has made available some £4 million of aid for 198 industrial and environmental improvement projects in Manchester.
  Manchester is also the focus of one of five city action teams we launched in April. The teams' task will be to look at ways of helping east Manchester, through the combined schemes offered by my Department, the Department of the Environment and the Manpower Services Commission.
  Through all these measures, the Government are doing a great deal to help the industrial base of north-east Manchester, and the job prospects of those who live there.
  Tonight's debate has raised a number of very broad as well as understandably specific issues. I say to hon. Members on both sides of the House that the Government do not underestimate the social cost of these closures. Neither are we unsympathetic.
  We are unanimous in condemning the unwelcome pressures that come from an increase in unemployment in any local community. But I am bound to say that, faced with that, we must look also at those other broader

  421
  industrial implications. We believe that there is a suite of policies available that will help us to address each side of this particularly difficult equation.
  422
  Question put and agreed to.
  Adjourned accordingly at ten minutes past Twelve o'clock.

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

Lord Butterworth
John Blackstock Butterworth, Esquire, CBE, having been created Baron Butterworth, of Warwick in the County of Warwickshire, for life—Was, in his robes, introduced between the Lord Elton and the Lord Scarman.
Lord Griffiths
The Right Honourable Sir William Hugh Griffiths, Knight, MC, a Lord Justice of Appeal, having been appointed a Lord of Appeal in Ordinary and thereby created a Baron for life, by the style and title of Baron Griffiths, of Govilon in the County of Gwent—Was, in his robes, introduced between the Lord Bridge of Harwich and the Lord Brandon of Oakbrook.

Overseas Project Board
2.43 p.m.
Lord Hatch of Lusby: 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 have noted the concern expressed in the fourth report of the Overseas Project Board over Government policy towards it and whether they intend to take any action.
Lord Brabazon of Tara: My Lords, the Government have noted the board's concern. My right honourable friend will be discussing their views with the board's chairman shortly.
Lord Hatch of Lusby: My Lords, I thank the Minister for that Answer. I should like to ask him whether his attention has been drawn to the statement in the board's fourth report, which reads:
"Recently we have become very concerned at the Government's apparent ambivalence as reflected in delays in handling ATP cases, some curtailment of ECGD's facilities and pressure on ECGD to adopt a more cautious attitude to country risk than that taken by many of the UK's competitors".
Has the noble Lord also read in this morning's press a report on the National Economic Development Office's report to the Treasury which supports the view that the Government are apparently unaware of the importance of supporting our manufactured exports trade?
Lord Brabazon of Tara: My Lords, we have noted carefully the report of the Overseas Trade Board; and a most useful report it is. The action that we are proposing to take is by international effort to reduce by multilateral agreement all forms of export subsidies so
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that British companies can compete on equal terms for project business worldwide. We are determined to maintain and, where possible improve the effectiveness of existing support mechanisms, including the aid and trade provision and the ECGD's fixed rate export finance scheme, by selective financial support on a repayable basis towards the bidding costs of companies pursuing major work overseas.
Lord Hatch of Lusby: My Lords, that really does not answer the question as to what the Government have been doing. Is it not the case that leading industrialists, along with many Members of both Houses of Parliament, have for years been urging the Government to give our exporters at least an equal opportunity with their foreign competitors? Why is it that even now the Government are cutting down the money which they are putting into their own statutory bodies designed to support exports and therefore reducing their opportunities to support our exporters?
Lord Brabazon of Tara: My Lords, there are criticisms. As far as ECGD is concerned, it provides a wide range of facilities for capital goods exporters, but from time to time changes to existing schemes and their terms and conditions will have to be made. The Government accept that changes are needed to make the ECGD more commercially orientated and responsive to industry's needs. It is for this reason that a study is currently in hand to consider how the needs highlighted in the Matthews Report can best be met within the existing institutional structure.

"Plasmaquad" Mass Spectrometer
2.47 p.m.
Lord Rodney: 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 many "Plasmaquad" mass spectrometers are in use with, or on order for, the National Health Service.
The Earl of Caithness: One, my Lords, recently installed at the Supra-Regional Assay Service Laboratory at Southampton General Hospital.
Lord Rodney: My Lords, I should like to thank my noble friend for that Answer. Can he tell the House what is the export potential for this unique, all-British product?
The Earl of Caithness: My Lords, I am not too certain about the export potential for this product as the Question on the Order Paper relates to its use with, or on order for, the National Health Service. I can perhaps help my noble friend a little by saying that we will study the results of the work at present being carried out at Southampton to see if there is beneficial use for the machine. If there is, then I am sure that it has export potential.
Lord Ennals: My Lords, may I congratulate the noble Earl on knowing what is a "Plasmaquad" mass spectrometer? Perhaps I may ask him whether it is

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purely for research, and whether he can confirm that the cost of the one which he said was available to the National Health Service was £150,000. Would he not be wary of expending too much on expensive capital equipment when there is a desperate need for funds to be used for patient care?
The Earl of Caithness: My Lords, I am pleased to hear that the noble Lord, Lord Ennals, knows quite a lot about this machine. He spoke to my officials, I know, recently about it; and I hope that I shall give the same answers to him as they did. With regard to research, the "Plasmaquad" is a research-orientated machine. Its cost varies between about £130,000 and £150,000, as the noble Lord rightly says. As to whether we should be spending this money on it, the "Plasmaquad" was acquired by Southampton University with grant support from the Department of the Environment for the purposes of isotopic lead studies. Therefore there has been no cost to date. If there is beneficial use in the National Health Service then, as the noble Lord will be aware, it will be up to the district health authorities to order it.
Lord Elwyn-Jones: My Lords, would the noble Earl enlighten the House as to what a "Plasmaquad" mass spectrometer is and what it does, and not keep it a secret between himself and my noble friend?
The Earl of Caithness: My Lords, I have no wish to keep such an important machine a secret. One of the great benefits of this House is its number of experts, and there are many in the House who are more expert on this subject that I am. I can briefly say that it is a machine that measures not only the quantity of lead in the blood but also where the lead came from. This could be very useful for environmental purposes.

Swindon Railway Engineering Works
2.50 p.m.
Lord Davies of Leek: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government on what grounds they made their decision to close rail engineering works at Swindon.
Lord Brabazon of Tara: My Lords, Her Majesty's Government made no such decision. Decisions on the future of railway engineering works such as those at Swindon are a matter for the British Railways Board and their subsidiary, British Rail Engineering Limited, who have put a proposal for closure to their trade unions. As I explained to your Lordship's House on 16th May, British Rail and BREL have concluded that workshop capacity must be reduced to match the fall in repair and maintenance workload which is resulting from British Rails' investment in new rolling stock.
Lord Davies of Leek: My Lords, I thank the noble Lord the Minister for that attentive Answer. The purpose of this exploratory Question was to ask whether any effort had been made to use all this engineering know-how in Swindon for overseas
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exports in the railway industry. Was any exploration made to find further jobs abroad for any of these people, who have such great skill in engineering in connection with the railways?
Lord Brabazon of Tara: My Lords, it is hoped that some of the people at Swindon will be able to go to other British Rail engineering workshops. Indeed, it is hoped that with an efficient British Rail Engineering Limited they will be able to secure valuable export orders.
Lord Shinwell: My Lords, did I understand the noble Lord the Minister to reply to my noble friend to the effect that the Government do not intervene because it is not the Government's business, it is a matter for the Railways Board? If that is so, surely we cannot leave the matter of providing equipment for the railways of this country—railways being associated with the need for communication, and communication being one of our first priorities—to the decision of the Railways Board? Surely this is a matter in which the Government must intervene and declare a national policy?
Lord Brabazon of Tara: My Lords, I did indeed say that the closure of these particular works was a matter for the British Railways Board. However, the Government are obviously keen that British Rail Engineering Limited should make itself as efficient as possible. To do so, unfortunately it needs to rationalise its operation. As I think I said on 16th May, when I made the Statement, it is fortunately through the large investment being made by British Rail that the equipment used is becoming so much more efficient that it needs a good deal less maintenance.
Lord Parry: My Lords, could the Minister tell the House whether, in circumstances such as these, when our heavy industrial base is shrinking and when decisions have to be taken for internal reasons by a board, the Government then monitor the changes in the community and have discussions with community leaders as to how the blow can be absorbed?
Lord Brabazon of Tara: My Lords, in this case at Swindon, British Rail Engineering Limited has set up a company called Swindon Holdings to develop the site and to assist with alternative employment. It initially made a contribution of three-quarters of a million pounds, which will probably have to be raised to one-and-a-quarter million pounds.
Lord Glenamara: My Lords, is the noble Lord aware that these workshops are not the only railway workshops which have been closed? Is he aware that the closure of the Shildon Workshops in County Durham has caused enormous hardship in an area which already has the highest unemployment rate in Great Britain? Will the noble Lords say why we cannot compete for railway work in other parts of the world?
Lord Brabazon of Tara: My Lords, we can and will compete for railway work in other parts of the world, but the only way we can do it is by rationalising the operation, making it more efficient and, therefore, competitive.
Lord Diamond: My Lords, will the Minister help me in relation to something I cannot understand about current Conservative policy? Will he explain why he always equates the rationalisation of operations with the need to cut labour rather than with the need to increase production? If you have more production you use more labour. As this falling off of orders could have been foreseen many months, perhaps years, ago (I do not know, but it did not arise suddenly), could the Minister tell us what steps were taken by British Rail to seek different kinds of work, not necessarily merely export orders, in order to make use of the enormous skills of the people concerned, and of the plant?
Lord Brabazon of Tara: My Lords, Swindon is a repair workshop and, as I said, the amount of repair needed now is very much less than it was. A new diesel multiple unit train requires 40 to 50 per cent. less maintenance than a train of the old stock, and you need only two of them for three of the old ones. Therefore, the overall reduction in work is something in the region of 50 to 60 per cent. In addition to that, other factors, including major refurbishment progammes and the stripping of asbestos from older vehicles, are now coming to an end.
Lord Ross of Marnock: My Lords, did I understand the noble Lord the Minister to say to my noble friend that the men displaced at Swindon might be able to get jobs elsewhere with British Rail? Will he advise them where to go? Could he tell me where those jobs are? Certainly no advice to that effect has been given to the men who have been decimated at the last British Rail workshops in Glasgow, at Springburn. Where will they find jobs with British Rail?
Lord Brabazon of Tara: My Lords, I merely repeat what I said in the Statement on 16th May, that British Rail and Britsh Rail Engineering Limited will do all that they can to find alternative work for redundant employees by offering them opportunities to transfer to other works and by encouraging business development and job creation at both Swindon and Glasgow.
Lord Harmar-Nicholls: My Lords, could my noble friend tell me when the rules were altered, if I am right? I understood that, under the nationalisation legislation brought in by the party opposite, Parliament and the Government were in no way responsible for the day-to-day running of those industries. Indeed, one was not supposed to ask Questions—they would not be allowed in another place—because the Act itself did not allow it. I am all for the exchange of as much information as possible, but are we now saying that the Government can be charged in respect of actions which are the full and entire responsibility of the Railways Board? How do these questions and answers suddenly become allowable when it seems to be contrary to the original Act?
Lord Brabazon of Tara: My Lords, I thank my noble friend. He is more familiar with the original Act than I am. I have merely tried to do my best to answer the questions. Perhaps I should not have done that. As I said in my original Answer, it was not a decision made by the Government.
Lord Bruce of Donington: My Lords, in view of the Government's well-known history in a number of fields of intervention in the affairs of public boards that are ultimately responsible to the Government, could the noble Lord say whether he has had any consultations with British Rail about the subject matter of this Question? And could he say what advice the Government gave to British Rail on this matter in view of the very considerable social implications of the action taken?
Lord Brabazon of Tara: My Lords, the British Railways Board indeed gave my right honourable friend the Secretary of State advance notice of these proposals. As I have said, they are a matter for the British Railways Board, and not for the Government. The Government put no pressure one way or the other on the board in regard to the decision.
Lord Somers: My Lords, is there not a danger that "rationalising" is becoming a convenient euphemism for cutting down and doing away with?
Lord Brabazon of Tara: My Lords, I hoped that I had explained that through increased investment in British Rail the consequences are that the equipment had become more efficient and more effective and therefore needs less maintenance.
Lord Gisborough: My Lords, would my noble friend agree that the fundamental fallacy underlying the views of the party on the other side is that there is no difficulty in the Government arranging as much employment as they wish, and no difficulty in making as many goods as they wish, but it is quite impossible to get those goods sold if they are not at the right price?
Lord Brabazon of Tara: My Lords, my noble friend is absolutely right.
Baroness Fisher of Rednal: My Lords, would the noble Lord visit Euston Station occasionally? Announcments are made daily that owing to difficulties with the appliances a certain train will be delayed one hour, or will be delayed an hour and a half. My personal experience travelling from Birmingham to Euston over the last month is that five delays have taken place which have made the journey over three hours long, and every explanation has been something to do with the engine or that the brakes have been faulty, or that something else has. Is the Minister saying that he is running down British Rail?
Lord Brabazon of Tara: My Lords, certainly not. At the risk of repeating what I said in quoting the Statement on 16th May, this Government have a record second to none as regards investment in the railways.
Lord Davies of Leek: My Lords, as well as thanking the Minister for his attention, may I ask him finally whether, in view of the interest of all of us on all sides of the House, any further exploration will possibly be made in relation to these people who are employed in the depots concerned, prior to the closing down?) Will exploration still go on to try to find work for these people?
Lord Brabazon of Tara: My Lords, British Rail Engineering Ltd. are trying to find work for them by having set up this company to which I referred, Swindon Holdings.
Baroness Sharples: My Lords, can my noble friend say how many small businesses it is anticipated may be helped on the site that will be available when the Swindon works are closed?
Lord Brabazon of Tara: My Lords, I cannot say how many, but one very much hopes that the site will be a popular one. Swindon is in a growth area and many small businesses could prosper there.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware, in spite of what some of his noble friends have said, that where the actions of public undertakings are of profound public importance it has always been possible in either House to raise such matters? Is the noble Lord aware that they have always been raised both by noble Lords and by honourable Members in another place?
Secondly, in view of the implications of what he has said and the obvious changes that are taking place in the organisation of British Rail, which are not known to noble Lords in the House, would he now consider speaking to his right honourable friend and asking him to publish a White Paper which will set out precisely what is taking place in British Rail Engineering Ltd. and in other areas? That would ensure that the facts are made known to this country, which 100 years ago led the world in railway engineering but which today is lagging, as it is in so many other areas, and that not only both Houses of Parliament but the Britsh public as well have the information.
The Earl of Swinton: My Lords, since the noble Lord the Leader of the Opposition has asked a question on the way business is conducted in this House and in another place, I think that perhaps I should answer that question. I quote from the Companion to the Standing Orders:
"The tabling of Questions on nationalised industries is considered undesirable save for those asking for statistical information on a national basis or raising matters of urgent public importance".
I think I should say in all fairness, especially to the noble Lord, Lord Davies of Leek, that this matter was raised in a Government Statement and I think that in the circumstances the noble Lord was quite in order in putting this Question on the Order Paper.

Business
3.3 p.m.
The Earl of Swinton: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lady Young will, with the leave of the House, repeat in the form of a Statement the Answer to a Private Notice Question in another place on the potential famine disaster in the Sudan. That will be followed by my noble friend Lord Trefgarne who, again with the leave of the House, will repeat a Statement on airports policy.

Scarborough Borough Council Bill
Read a second time, and committeed to an Unopposed Bill Committee.
Harrogate Stray Bill
Read a second time, and committed to an Unopposed Bill Committee.

Privatisation and Wealth Creation
3.4 p.m.
Lord Thorneycroft rose Lord Thorneycroft rose to call attention to the process of returning some public sector activities to the private sector and to its effect upon the important national objective of wealth creation; and to move for Papers.
The noble Lord said: This Motion is deliberately couched in these unprovocative terms suitable, I think, to a discussion of this character. Indeed I intend no attack, obviously, upon the public sector; nor for that matter do I claim that all the problems in the world can be solved by the private sector. I hope for a quiet, adult discussion about the roles and responsibilities of the public and private sectors of industry as we approach the last 15 years of the 20th century.
In most of my life the tide has moved steadily towards state enterprise: coal, transport, health, aviation, ports, steel and shipbuilding. In fact, it used to be said, "If it moves, nationalise it." The Labour Party—enriched, if I may use the term, by some of the present leaders of the SDP—were I suppose responsible for that period. But, in truth, the responsibility lay with more than a party. It was a national trend; it was the age of centralisation; it was the age of economies of scale. The Conservative Party were in office from time to time during that period, but very little was reversed. Steel was nationalised, then denationalised, and so forth. Sometimes the undertakings were unsaleable, and that may have been one reason. But in a way it was considered unsporting or unethetical to change the ownership backwards and forwards, and quite a lot of distinguished industrialists used to complain to the Conservative Party: "You are upsetting things by changes of that character". And so the ratchet effect grew.
Then in the last six years we have seen a reverse of that: British Aerospace, Cable and Wireless, Amersham, National Freight, Sealink, Jaguar, Inmos and British Telecom. The trend has also been illustrated by the sale of council houses, by the use of private contractors in the service of public institutions and by the very substantial growth of self-employment, which was pointed out by the labour survey published last week. The move has been to, "Do your own thing".
Nor has this trend been limited to this country. It has been seen in the United States, in socialist Scandinavia, in France, in West Germany, and even in

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the Anhui province of China where a Mr. Cheng has managed to mobilise the local talent and engage it in manufacturing and marketing reed mats, with immense personal profit all round. Even in Russia, Mr. Gorbachev has been watching over experiments in the use of incentives and the price mechanism in order to help the rather failing agricultural economy of that country. Against that trend, I think your Lordships would agree that it would have been remarkable if Mrs. Thatcher had not moved somewhat modestly in the same direction.
Therefore I make an assumption, which is that no party is going to seek wholly to reverse the trend to privatisation. It is just as inevitable as the trend the other way was in the earlier part of my life. Labour will continue to privatise housing and indeed, if I read Mr. Kinnock and his supporters correctly, they may even carry it a bit further. They will not be, to use his own delicate term, "copping out to the Tories". They will not be doing anything of the kind. What they will be doing is swimming, as good politicians tend to do, with the tide happily behind them. Therefore I regard privatisation not as a doctrine. I think it should be judged not on doctrinaire grounds but on the tests of practical achievement and of what is best for us at this particular moment in our history.
There are 56 million of us in this country, and that population is supported by a workforce of 24 million, of whom fewer than 6 million are in manufacturing and 17 million in all are in the private sector. These are the men and women between the ages of 18 and 60 reaching full physical and mental maturity. They are the pillars of this society. It is from their efforts that the rest of us live and are supported.
The true wealth creators are, I suppose, those who provide goods and services for profit; profit so high that they invest it in the making of still more profit. They can use the money in investment; in the payment of high wages, and, importantly, in the creating of surpluses which can be taxed and used for all the things for which politicians normally ask. So the working population at any moment in our history supports 11 million children, 9 million old-age pensioners, 5 million administrators, and 3 million, tragically, seeking work. They support the armed services; they support the hospitals and the universities; and they support the huge apparatus of the welfare state.
Faced with that situation, any Government must, I think, have two roles. First, they are bound to control and direct the enormous state spend that is seen on the wealth consumption side. That is vast, and, if it grew too much, it would crush the efforts of the wealth creators. That is why, over the months ahead, we shall he having a very great debate over the whole question of the scale and the direction of wealth consumption that can be achieved in this country. Secondly, the Government obviously have to consider how best to maximise the wealth creation of the country.
I do not stand here to say that the public sector is not engaged in wealth production. Of course it is. But it is now possible to study these things in rather greater detail than it once was and to make comparisons with other countries. On the whole the return on capital in the public sector tends to be small and the industries
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tend to be less innovative, less competitive and less profitable. That is not a condemnation. They do things other than make profits—many of them. But those are factors which are relevant to the public sector. The test of the private sector, and the answer to the question of whether we move things into the private sector is: can they contribute more to wealth production? I emphasise that I believe in an objective test; not doctrine, not whether they contribute to the revenue of the Chancellor of the Exchequer—though as one who has filled that office, I would not be against that. The real test is what wealth they create.
Let us look for a moment at the ones that have been privatised: Cable and Wireless, of which the profits have doubled; Amersham International, where profits have been increased four times; National Freight, who have gone from a break-even position to being 28 per cent. in profit; Jaguar, who are increasing staff and profitability. But one should not judge it just by those who have been moved. The wealth creators are men like the noble Lords, Lord Hanson, Lord Forte and Lord Weinstock in this House, and the huge industries that create massive profits which are tax-creating and which are turned into other things to support all the admirable objectives to which I have referred. The public enterprise is obviously important. It will remain on a large scale.
If the present Government went on privatising at this rate, say at £2 billion a year for the next two years, then at the end of this Parliament they would have privatised less than 10 per cent. of the public sector. There is no question that the public sector will be hugely important in this country, and not only in ownership, for I am bound to say that I believe one of the largest responsibilities of the public sector is in leadership, in laying down strategy, in creating the background and in following the example of some other countries like France and Japan where the public sector has an enormous role, not so much in ownership but in leadership of the national effort.
I therefore conclude that parties, when they are debating between elections, tend somewhat to exaggerate the possible differences between them. In all my experience, when parties are in office the differences appear to be much narrower, the room to manoeuvre is very little. Take men like R. A. Butler: in the days when he was in power he was moving very close to Mr. Gaitskell—indeed the era saw the coining of the term "Butskellism"; or Mr. Denis Healey, who was one of the most eloquent and brilliant defenders of the monetarist policy, better than some of our own people, I sometimes used to think, and standing for the nuclear deterrent with a passionate devotion which exceeded even Michael Heseltine's.
They battle cautiously, if I may say so, across the middle ground; and the middle ground today is different from the middle ground of my youth. We do not talk so much about the scale of enterprise, the central controls and the rest. We talk of innovation, of enterprise and of adaptability. It is more an opportunity economy that we are moving into and it is those countries which recognise this which are going to be the most successful. Oddly, the pressure groups in the two parties are both facing firmly in the opposite direction. The Centre Forward—for whom God be

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praised—are for taking risks with inflation. This is where I came in with the noble Earl, Lord Stockton; or perhaps where I went out! Then in the Hard Left they are still searching for the commanding heights of the economy—and barren heights they are today to search for.
I would recommend, if I may, with respect and humility, the policy-formers in any party not to pay too much attention to the pressure groups today. They are not as good as the pressure groups of some years ago. Instead, Governments should stand for radical approaches, with a radical approach to the containment of public expenditure. That takes courage. That requires Governments to consider not what is popular but what is possible, and, that is not easy. I compliment Her Majesty's Government on their courage in that respect. I think they need a radical approach to enterprise and they will find that—not in everything, I do not exaggerate, but in many things—a steady move to the private sector will increase the wealth of this country and enable it both to support the ambitions that we have and, finally, but not least, to have a positive, direct and modern approach to public enterprise itself.
My Lords, I beg to move for Papers.
3.20 p.m.
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie): My Lords, my noble friend Lord Thorneycroft said of his own career in his marvellous and, as always, enjoyable speech: "In most of my life the tide has moved steadily towards state enterprise". My noble friend was one of those who watched the tide turn—indeed, who saw that it was turning and who channelled it in useful and benign directions. I therefore particularly welcome his Motion, which rightly makes the connection between the Government's policy of transferring state activities to the private sector and our general strategy of providing the right conditions for creation of wealth, which is in our judgment really about the limits of what Government activity should be.
It might be as well for me to restate very briefly the objectives at the outset. Too often where privatisation is discussed, interest centres on the sale proceeds, and this is understandable because an auction or a sale is always a newsworthy and interesting thing. There are indeed sometimes substantial additions to Exchequer revenues, and since I know very well as a spending Minister in another field that there is no very great diminution of pressure on spending Ministers to spend, these additions to Exchequer revenues are always welcome. But raising money is not the primary objective here. Selling state assets is of course no substitute for the sound fiscal and monetary policies which this Government—and I dare hazard, in the ecumenical spirit of my noble friend, all governments nowadays—perforce have to pursue.
The objectives of privatisation are three-fold. They are: to improve the efficiency and the performance of the enterprises concerned; to increase the incentives and the motivation of those people who work in the enterprises; and to widen ownership of property
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generally. May I look quickly at these in turn and, first, at the objective of improving efficiency and performance?
I have no doubt that since the war the interests of consumers and employees have overall been damaged by public ownership as it is presently defined. Governments of different colours have of course all behaved similarly in setting targets to improve the performance of state industries and they have been right to do so. But targets and rewards contrived by the Government are unlikely to be successful for very long. Indeed, Government interference can be positively harmful with centralised decisions, restriction of management freedom and an industry strategy subject to political fluctuation. I believe that this was probably an inevitable, rather than in any sense a malevolent, result of state ownership of industry. I do not believe that very many people can now argue with great force that our record in this sphere over the past 40 years or so has been such as to convince us that "business as usual" is the best slogan for these industries.
By contrast, the results in terms of increased efficiency which are already clear from the performance of the privatised companies suggest that business in a different way is very good business indeed. May I give some examples? Noble Lords will no doubt have others. I have to say that I disagreed with only one thing that my noble friend Lord Thorneycroft said. He said that the profits of Cable and Wireless had doubled since privatisation. They have not; they have trebled. The chairman has said on the 1983–84 results:
"The outstanding results achieved by the group reflect to a large degree the increased vigour with which business objectives have been pursued since the company was privatised in November 1981".
More recently he also stressed the value of new management freedoms when he said:
"A striking example of this was our completion—in four days—of arrangements to acquire control of the Hong Kong Telephone Company … Reference back to the Treasury and other Government Departments would have made this impossible".
Then, again, British Telecom suggests that there have been direct benefits to consumers very quickly, and I know that this is a House of Parliament where the interests of consumers dominate the minds of people on all sides of the House. The waiting list for new telephones has suffered a dramatic fall. I should like to mention, too, that industries, as well as peopled by consumers, are the people who work in them. There have been signal benefits to employees as well as to consumers. I believe that it is a false tendency to see privatisation as harmful to employment; though of course all industries now, public or private, are subject to the forces of competition and efficiency. It is of course true that some companies have reduced manpower before and after sale—an inevitable part of the rationalisation processes which have been taking place all over the world, but which perhaps in these fields are all the more severe because of the failure of the organisations to adapt quickly enough while they were in the public sector.
Public ownership, by contrast, is also no guarantee nowadays of jobs. Look, my Lords, at the large job losses in British Steel or in the coal industry. Nor has

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being in the public sector been a guarantee of good labour relations, as was hoped and promised over 40 years ago. But by transferring businesses to the private sector, where future job prospects will depend on performance and responsiveness to consumers rather than to Government guarantees and taxpayers' subsidies, we are in fact enhancing the job prospects of the great majority of their employees. And once in the private sector, the chances of increasing employment are improved. For instance, Amersham International announced last April 250 new jobs in Cardiff, and Jaguar has created over 1,100 new jobs since last September.
The second objective that I mentioned was that of increasing incentives. Employees can take a direct stake in their companies, and they can see that efficiency and profitability are therefore in their interests. More efficient working practices and better industrial relations are likely to result. Four hundred thousand jobs have already transferred to the private sector—a significant, even a revolutionary, achievement. Three-quarters of these employees have acquired shares in their companies. For example, 96 per cent. of British Telecom employees are shareholders. The National Freight Company has more than 10,000 employees. Their families and pensioners subscribed for no less than 82½ per cent. of the equity, and the great majority of employees have retained their shares. The value of the National Freight Company's shares has risen 12 times since privatisation in 1982. Only three-and-a-half days have been lost through strikes since then, and the company is now increasing staff numbers after years in which these numbers were in decline.
The third objective I mentioned was that of widening ownership of property, which is central to the Government's strategy because this gives everyone the opportunity to own a real share of the nation's assets. It is, if you like, my Lords, our policy of public ownership. Wider share ownership should increase understanding of how business works and the need for profits and good management, just as—and my noble friend made this correlation himself—wider home ownership enhances a sense of personal pride and responsibility. In time, the result may be that people become less inclined to look to the state for solutions to problems, and in my view that is a development which is essential for the health of a free society.
My noble friend was right to say that there is still a long way to go, but under this Government good progress has already been made. The number of shareholders in the country has probably doubled, and 1·7 million British Telecom shareholders, for instance, have retained shares out of the original 2·2 million. On this issue of retention, I should say that I for one of course see no objection to selling to people who themselves decide to participate in our capital markets through institutions like unit trusts, but it is a welcome development that so many in these industries have decided to retain shares. I think that this is a figure which is comparable to the three-quarters of a million council tenants who, under our policies, have bought their own homes.
However, a great deal remains to be done; and notably there is the sale of British Gas, the National
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Bus Company, British Airways and, as I understand my noble friend Lord Trefgarne will shortly announce, the British Airports Authority. The announcement of the British Gas sale has brought some argument into the debate generally about privatisation of industries which are monopolies or near monopolies. Some people argue: why sell public utilities into private ownership? What is the point if effectively they are not subject to competition? This is an important argument and I think that I should take it head-on.
First, it seems to me that it is not at all clear from the record that monopolies in the public sector are necessarily good for customers or employees. The same point put more positively argues that considerable benefits should flow from privatisation even in industries where competition is difficult or impossible to achieve. For instance, there is greater management freedom to react more quickly and effectively to market opportunities. Then there is the access to the private capital markets for expansion along with the ensuing disciplines of such markets; for instance, the need to earn an adequate return. Then there are the opportunities for employees and customers to own shares directly and to participate in the future of their companies. Employees become more involved and committed and customers less alienated, and all can press for better service and performance.
Then there is the furthering of the general aim of wider share ownership, which I mentioned previously. Again—and I believe that this is most important—these advantages of privatisation should improve the lot of the consumer even where there is little competition for the products or services of the privatised businesses. In addition, the Government are most concerned to defend the general public interest through tough regulation in the interests of the consumer. Our aim is to protect consumers and also to ensure that returns expected by private investors are not earned by high prices, by low efficiency, and through monopoly, but rather by the reverse.
British Telecom of course has market dominance, if not a monopoly, and is now flourishing and expanding in the private sector. But at the same time its consumers—and they surely include all of us here—are protected, for example, by the limits on price increases—the RPI-3 per cent. formula, as it is known—and the requirement to provide rural phone-boxes. I believe that this demonstrates the Government's pragmatic approach. We are keen to see benefits of privatising British Telecom but, at the same time, we have made proper arrangements to deal with its great power in the market.
The same pragmatic approach is being applied in a rather different way to the bus industry. Here we see scope for privatisation, more competition, and some continuing subsidy. Already consumers are deriving benefit from deregulation. Fares on long distance coach services are now from 15 to 40 per cent. lower in real terms than they were before deregulation, and both the NBC and the independent operators have gained from the resulting increase in demand. NBC's National Express services grew by 50 per cent. between 1980 and 1984 in terms of passengers carried, and the market share of independent operators is up

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from almost nothing at the beginning of that period to no less than 30 per cent.
However, on local services local authorities will still be able to subsidise loss-making routes; but these will be opened up to competitive tender in order to protect the interests of ratepayers and bus users. I would argue with my noble friend that this is a thoroughly pragmatic rather than a doctrinaire approach, and it is an approach certainly in some contrast to that taken by Opposition parties. Some of your Lordships may recall a recent and keynote speech by Mr. Roy Hattersley which seemed to me to be a rather vain attempt to give a veneer of rationality to his party's policy. He made much reference to "social ownership" rather than "an extension of nationalisation". I certainly welcome his admission—and these are his words not mine—that,
"A society in which a higher percentage of productive capacity is owned by the state is unlikely to be highly efficient or truly free".
However, in spite of Mr. Hattersley's brave words, the fact remains that Clause 4 is still flying above Transport House. Labour is pledged to renationalise British Telecom and other privatised businesses, and I very much look forward to the statement of Labour's position by the noble Lord, Lord Barnett—he of the British Petroleum share sale, as noble Lords will remember—when he comes to wind up this debate on behalf of the Labour Party. Even Mr. Hattersley has referred to,
"Socially owned counterweights in banking, brewing, sugar refining, provision of concrete and construction material and construction itself".
He says that,
"A substantial public presence must be recreated"
in the airlines and oil industries. This is not at all far from the 1983 Labour manifesto which said that Labour would,
"return to public ownership the public assets and rights hived off by the Tories, with compensation of no more than that received when the assets were denationalised".
Perhaps we shall learn this evening whether or not that is still the position.
By contrast, the Alliance, while nearer to ourselves on these issues, seems to favour giving away British Gas shares. I rather doubt whether that is consonant with getting a fair price for taxpayers. Is it not rather a gimmick than a serious widening of share ownership? There are surely great administrative problems in distributing very small quantities of shares for each of 40 million adults. However, the more important objection which I have is that a true sense of ownership seldom comes with free handouts. It comes rather when people assess what is being offered and decide whether it is worth buying. Free shares have been made available to employees in many privatised companies to encourage commitment to their company. I had something to say about that earlier. But it is better if the general public can choose whether to put money into shares—money that otherwise might be spent or left on deposit—and better too that those who manage their savings should also be able to do so.
In conclusion, transferring assets to private ownership is a vital part of Government policy. It embodies several key elements of our general strategy
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to assist wealth creation and disperse its effects. It is also in line with the need for less Government interference and a smaller public sector. At the same time, we are not pursuing this policy blindly without regard to consumer interests or other objectives. Arrangements for British Telecom and proposals for the bus industry—examples I have given—show clearly that we are always ready to put in place protections for individuals who might suffer.
I very much congratulate my noble friend on his Motion and on the way he put it forward. I welcome this debate and the chance it gives me to say that this Government are determined to build on the progress that we have already achieved in this Parliament and in the next.

Sudan: Food Supply Situation
3.41 p.m.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, with the leave of the House, I will now repeat in the form of a Statement the Answer to a Private Notice Question being asked in another place concerning the food situation in the Sudan. The Statement is as follows:
"We have been closely monitoring the very serious food situation in the Sudan. There are substantial supplies in Port Sudan. The problem is internal distribution.
"We are providing £650,000 for the charter of a Hercules, to be placed at the disposal of the Save the Children Fund within the next few days, for a period of one month. This will airlift emergency food supplies to Western Sudan, where distribution problems have been particularly acute. We are also providing up to £130,000 for the purchase of a light aircraft for use by voluntary agencies for moving supplies and personnel.
"The European Development Council agreed on 23rd May to my right honourable friend the Minister of State for Overseas Development's proposal to use emergency procedures to approve a £6 million project to rehabilitate the railway to Western Sudan. I understand that the first phase, which provides special food trains, is already in operation.
"We are holding further urgent discussions with the British voluntary agencies operating in the Sudan to establish what additional immediate help we can give."
My Lords, that concludes the Statement.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Baroness for repeating the Answer to the Private Notice Question in another place. Like everyone who has read about the appalling famine and its consequences in the Sudan so soon after the tragedy in Ethiopia, we are deeply anxious that everything should be done to assist. We welcome the immediate action taken by the Government and the knowledge that they are monitoring the situation carefully, as the noble Baroness has just indicated.
We are also glad that the problem of communication is being taken into account and that an aircraft is being provided. Is it the case that we are

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dealing with this matter in co-operation with our friends in the European Community? Is it a joint venture or are we doing this separately? Is it the case that other countries in the Common Market are taking similar action?
I must at the same time draw attention to the criticism that has been made by the Foreign Affairs Committee in another place; namely, that Her Majesty's Government have failed to provide fresh funds for the African famine relief operation. In view of its gravity, this matter must be clarified by the Government. It appears that the money provided by the Government has been taken from the existing budget of the Overseas Development Administration Fund. The Foreign Affairs Committee in another place expressed,
"its profound disquiet at the position whereby large stocks of grain, grown and held at considerable public expense, cannot be made readily available for emergency aid. We recommend that the British Government initiate urgent action to make this possible in any future emergency".
I shall be grateful if the noble Baroness will comment on that point.
Can the Minister further say what the Government's attitude is to the International Fund for Agricultural Development? This is one of the most effective United Nations agencies, as the noble Baroness is well aware. Is it not the case that this fund has been in crisis for some time and that it has far too little money? Can the Minister say what the British contribution is to be? Are we to give the extra money that is needed if this fund is to carry out its work? Is it true that Britain's emergency aid to Africa for the current financial year is little more than half last year's spending? If so, how can the Government justify this, in the light of the fact that it is well known to everyone that the dreadful famine in Africa is, unhappily, a continuing tragedy? It is not something that will come to an end in Ethiopia with a shower of rain.
We shall have to take the situation there into account over a very long period—not this country alone but also other countries throughout the world, including our partners in the Common Market, the United States and Canada, and the Commonwealth countries as well. These are the matters I would draw to the attention of the noble Baroness. I hope that she will be able to give the House satisfactory replies.
Lord Walston: My Lords, I too should like to thank the noble Baroness for repeating the Answer given to my honourable Alliance friend in another place. I should also like to thank her for telling the House of the arrangements already made and in the course of being made by the Government to deal with the beginnings of the problems in the Sudan. It is clear from this that, at least in theory, the Government will not be caught short—as was the case with Ethiopia last year. Warnings are being heeded. I am particularly happy that the Government are consulting with the voluntary aid agencies, whose knowledge of these situations and of the countries in which they take place in unrivalled.
The noble Baroness has told us, if I understand her correctly, that £650,000 is being made available for the charter of a vessel. Perhaps she will confirm that
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this means the availability of a vessel with a capacity of possibly 7,500 tonnes. I think the noble Baroness will agree that that is not a very large capacity. It will make a worthwhile start, but does the Minister not agree that far more money than that is needed in the very near future?
Can the noble Baroness further tell the House what plans are being made to ensure not only that adequate supplies of food arrive from the stocks which the Community Already has—and which are causing it so much embarrassment—but also that they can be dealt with properly when they arrive at Port Sudan or elsewhere? Can the Minister also assure us that there will be adequate facilities not only for unloading that food but also for transporting it to the places where it is needed?
Can the Minister confirm that when the food arrives at its destination, both the Government and the European Commission—and I emphasise what I believe was in the mind of the noble Lord, Lord Cledwyn: that this should be a Community as well as a national obligation—will ensure that it is equitably distributed; that it goes to where it is most needed; and that there is no risk of that food falling into the hands of those who are more interested in making a quick profit than in distributing the food to those who, in the minds of the donors, are the most needy recipients?
3.50 p.m.
Baroness Young: My Lords, I should like to thank the noble Lords, Lord Cledwyn and Lord Walston, for the way in which they have received the Statement. The Government recognise that we are dealing with a very serious situation. I hope that the information I have been able to give indicates both our immediate response and our action in the preceding weeks.
The noble Lord, Lord Cledwyn, asked a series of questions. I am grateful for the welcome he gave to the Statement. He asked how much co-operation there has been with other countries in the Community. I can assure him that other European Community countries are co-operating with the airlifting of supplies but the Hercules itself and the light aircraft that we are supplying for use by voluntary organisations have been provided by the Government. Perhaps I may add that, so far as concerns Community aid to internal transport, on 23rd May the development council agreed to waive the normal procedures for the emergency project approved by the European Development Fund committee on 31st May which is already being implemented.
The project provides £6 million, of which the United Kingdom share is £1 million, to rehabilitate locomotives on the railway to Western Sudan. The first phase is already working with the help of an adviser seconded from British Rail and provides "block" trains to carry food supplies to the west.
The noble Lord, Lord Cledwyn, went on to ask about our response to the criticisms that have been made by the Foreign Affairs Committee report. I can assure him that the Government are considering the report and will be responding to the committee's recommendations as soon as possible. The noble Lord asked about the money that the Government have already given to Africa. In the financial year 1984–85

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the Government gave a total of £100 million in aid to the drought-related projects in sub-Saharan Africa. In the current year we plan to spend at least £60 million and we have already indicated that we will add more should that prove to be necessary.
The noble Lord, Lord Walston, for whose response to the Statement I am grateful, asked about the aeroplane. We are contributing £130,000 for the purchase of a light aircraft for use by voluntary organisations which should help in the distribution. He also asked about ensuring the equitable distribution of the food supplies when they actually reach the refugees and others in the Sudan. A great deal of course is being distributed through voluntary agencies. Indeed, as is indicated in the Statement, the Hercules aircraft is being placed at the disposal of the Save the Children Fund in order to get food supplies that are currently in Port Sudan to where the trouble is in Western Sudan.
3.54 p.m.
Lord Walston: My Lords, the noble Baroness understood me as asking about the light aircraft. My question was about chartering a vessel, which I understood the noble Baroness to say had taken place. According to my rapid calculations this would carry between 7,000 and 7,500 tonnes of grain. My question was: is that all that is being done, or is more similar chartering of vessels in mind?
Baroness Young: My Lords, I think that is a misunderstanding by the noble Lord, Lord Walston. I did not mention the chartering of a vessel. I said that we were providing for the charter of a Hercules aircraft and money for a light plane.
It might be helpful if I expand on what we are doing to improve the capacity of the railway which is so important for distribution. We have provided expert assistance for an emergency scheme to improve the distribution of supplies by rail to Western Sudan through what are called "block" trains devoted exclusively to food and relief supplies. We understand that the first "block" trains are now in operation. The Community is also providing funds for an associated programme of emergency locomotive rehabilitation.
Lord Gisborough: My Lords, can my noble friend say whether any effort is being made to invite Airship Industries to partake in this relief? I was in the Sudan a few years ago and it was obvious that due to the lack of air strips, fuel, roads, and so on, that the airship was the implement for that area. Does the company have anything that would carry goods at this stage? It would be an opportunity to enhance the British airship industry and an opportunity for it to provide something which would be most useful. Is it not true that with the Ethiopian relief about half of the corn sent out was sold in order to meet the cost of transport? That rather backs the point made from the other side of the House that this should not be allowed to happen in the Sudan.
Baroness Young: My Lords, I take the second question of my noble friend Lord Gisborough first. We are conscious of the difficulties and I hope that I have
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said enough this afternoon to allay the natural anxieties of your Lordships about distribution; both by the contribution that we are making to the rehabilitation and improvement of the railway line and also by the help we are giving with aircraft. Clearly this is the most essential need at the present time.
On my noble friend's first question about airships, I have certainly noted what he said. It is a new suggestion and I am sure that my right honourable friend the Minister for Overseas Development will note it when he reads Hansard tomorrow.
Lord Oram: My Lords, was not our aid to Ethiopia kept within the confines of the contingency reserves of the Overseas Development Administration? Will not the famine in the Sudan, according to the experts, be considerably more serious even than that in Ethiopia? If so, will the Government this time make funds available beyond the normal budget of the ODA?
Baroness Young: My Lords, the noble Lord asked about prospects for this year, and this of course depends very much on the rain which, as I understand it, should start this month. Therefore, it is difficult to predict what might happen. I understand that the cause of this immediate tragedy in the west of the Sudan is a consequence of the failed harvest in the main grain producing areas last November and the small reserves that people held have now been exhausted. Transport from the port to the West has been the major problem and that is why we have been doing what we can to alleviate the position.
I have already discussed on previous occasions the point made by the noble Lord, Lord Oram, about whether or not the money has come from the contingency reserve. The Government's point, quite properly, is that the contingency reserve is there for precisely this kind of emergency, and it has of course been used for help in Ethiopia and could be used for help, should it be necessary, over and above what we are already putting aside.
Lord Oram: My Lords, are not the results of the drought in Africa far more serious than the normal tragedies for which the contingency reserves are budgeted? Is this not something that needs to be dealt with on a larger scale than normal budgeting?
Baroness Young: My Lords, I think that we all understand the immensity of the tragedy in sub-Saharan Africa and now in the Sudan. As I have already indicated, the Government have set aside considerable sums of money—£ 100 million last year and £60 million in this financial year—and have indicated that they will consider more should this prove to be necessary.

Airports: Government Policy
3.59 p.m.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, with your Lordships' permission I should like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Transport

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about the Government's policy for airports. The Statement is as follows:
"It is the responsibility of Government to ensure that sufficient capacity can be provided at United Kingdom airports, where it is required, and in due time. Our policy of encouraging competition in the air requires that there should be enough capacity, available (so far as is possible) to all airlines on equal terms. We cannot direct flights to airports they do not wish to use; airports must use the opportunities open to them to attract as many flights as they can through providing a cheap and efficient service, for the benefit of the passengers.
"To make airport managements more responsive to their customers, and to further assist the growth of our most important and successful airline industry, the Government have decided to introduce legislation first to make every major airport into a limited company; and, secondly, to convert the BAA into a holding company and to privatise it with its seven airport companies. I hope that local authorities will follow this lead and introduce private capital into their companies too; but we do not intend to force them to do so. A system of regulation will be proposed to control the monopoly aspect of airports (including charges), to regulate traffic distribution when necessary, and to safeguard essential national interests.
"Our air transport industry is the envy of the world and a great success story. It has a turnover of £4 billion, and earns £ ½ billion of foreign exchange. It is a growing industry, already employing 85,000 people. It is essential to the continuation of this success, and to the provision of more jobs, that there is sufficient airport capacity. Equally important, this must be done with minimum damage to the environment and to the lives of people living near airports.
"It is solving this dilemma—adequate capacity with minimum environmental damage—that first the inspector at the airports inquiries, and more latterly the Government, have had to grapple. I would like to pay tribute again to Mr. Graham Eyre QC for his thorough and comprehensive report. In announcing our decisions today, I want to stress that we have sought a solution which meets both objectives as far as is humanly possible.
"The success of our regional airports depends on them handling more traffic—which in turn depends on a growth in demand and on more airlines deciding to operate services from them. The signs are good: traffic grew by 12 per cent. last year, and is expected to increase by one-third more by 1990. The year 1985 has seen the introduction at regional airports of many new scheduled services to international destinations, and more are planned. The Government will do everything they can to increase flights to and from the regional airports, first and foremost by British airlines. As regards foreign airlines, we recently reached an agreement with the Government of Singapore which allows Singapore Airlines to operate to Manchester. We expect shortly to begin discussions with the US Government about the basis on which scheduled
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traffic rights to Manchester for US airlines may also be granted.
"We will continue to study, with representatives of regional airports, how to increase traffic still further. We will be ready to approve worthwhile investment in new facilities, and the improvement of road and rail links where they are justified. We will ensure that competition between all airports, both BAA and local authority, will be on fair and equal terms. We recognise the importance of maintaining access for domestic flights to Heathrow and Gatwick.
"Even after taking account of all these efforts to attract traffic to the regions and away from the South-east, the Government, after careful evaluation, have concluded that it is necessary to provide capacity in the South-east for between 72 and 79 million passengers per annum by 1995. This is consistent with the inspector's planning figure of 75 mppa. We intend to achieve that figure as follows:
"First: my right honourable friend the Secretary of State for the Environment recently announced approval of the STOLPORT in London's Docklands. This will provide 1 mppa.
"Second: the Government have decided to invite Luton Borough Council to come forward with proposals (which would be subject to the necessary planning procedures) to increase the capacity of Luton Airport from its present throughput of 2 mppa to 5 mppa.
"Third: Gatwick Airport is expected by that time to be capable on present plans of handling 21 to 23 mppa. We have no plans for a second runway at Gatwick.
"Fourth: the capacity at Heathrow in 1995, when all four terminals will be in full operation, is expected to be 38 to 42 mppa. It is very possible that this will be adequate to handle as big a throughput of passengers as runway capacity will allow. The Government have decided to accept the inspector's recommendation that air transport movements at Heathrow should not be artificially constrained, and to ask the House to accept the abandonment of the proposed limit of 275,000 air transport movements a year. Even with this, and with all foreseeable technological improvements to the full use of runways, it seems likely that runway capacity, not terminal capacity, will be the limiting factor at Heathrow for some years ahead. Nevertheless, it seems prudent to ask the BAA to pursue with the Thames Water Authority the possibility of moving the Perry Oaks sludge works elsewhere. Only if and when this has been done, and in the light of traffic forecasts at that time, would it seem sensible to see whether extra terminal capacity should be provided and if so how much. My right honourable friend the Secretary of State for the Environment, on whose behalf the Minister for Housing and Construction has acted throughout, has turned down Uttlesford DC's application for planning permission for Terminal 5, and no terminal can be built at Perry Oaks in the future without planning permission. We are setting up a study of improved surface access to Heathrow.

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"Fifth: Stansted. It will now be abundantly clear, Mr. Speaker, that the only way we can provide sufficient capacity to sustain the growth of our successful aviation industry is by terminal development at Stansted, thus bringing into more effective use the spare runway capacity which is available there. My right honourable friend the Secretary of State for the Environment and I have therefore decided to accept the inspector's recommendation to the extent of granting the BAA outline planning permission for development at Stansted. The application was for 15 mppa. The inspector recommended initial permission for this 15 mppa, rising later to 25 mppa at Stansted. Although we have granted permission for the 15 mppa recommended by the inspector, we have decided to impose conditions requiring that the development be phased and limiting the first phase of development to 7 to 8 mppa. The initial development will thus amount to less than one-third of what the inspector recommended ultimately. Apart from the planning decision I propose to seek powers to limit air transport movements at airports. Subject to Parliament giving me the necessary powers, I intend to impose an initial limit on air transport movements at Stansted equivalent to 7 to 8 mppa. Any further increases in traffic at Stansted would be subject to control by Parliament, by means of an affirmative resolution. As a result, further growth of traffic at Stansted would only take place when it was seen to be necessary, with Parliament having the decisive role. This should provide reassurance to people in the area. We have rejected the possibility of the construction of a second runway at Stansted.
"In the past we as a nation have shirked the decisions needed for the growth of air traffic and the jobs that go with it. We are in danger of stifling one of our most enterprising industries and losing out to our continental rivals. Schiphol, Paris and Frankfurt are building capacity well ahead of growth. They no doubt hope that we will shirk the decisions once again. The Government are determined not to.
"The decision letters on the planning application and the White Paper, all of which are now available in the Vote Office, set out the arguments for these decisions at length and with clarity. When they have read them, I hope that honourable and right honourable Members will feel that our responsibilities to all the many important and often divergent interests concerned have been adequately discharged".
My Lords, that concludes the Statement.
Lord Carmichael of Kelvingrove: My Lords, perhaps I may first of all thank the Minister for repeating the Statement made in the other place and also for arranging that a copy of the White Paper was sent to this side of the House. Unfortunately it has just newly arrived, and obviously it will take some studying. I am sure that the noble Lord is aware that it is a very important Statement and that it will not have total and universal approval on all sides of the House, far less throughout the country. It has a far-reaching effect in
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terms of regional policy. I notice, for instance, that there is no mention of the Scottish position although regional policy is mentioned briefly.
I believe that in his usual way the Secretary of State has decided that when in doubt—and there is a great deal of doubt even about the Statement—the answer is to privatise and to set the airports free. But it appears from the Statement that at the same time he is taking steps for himself and the CAA to have more control over allocating traffic. That part of the Statement appeared to me at least to be rather muddled. Perhaps the Minister can expand a little on what the powers will actually be.
The Statement also says that the capacity at Stansted will be increased only to a throughput of between 7 and 8 million passengers per annum in the initial stages and that a further increase would require parliamentary approval. How can people take even the phasing seriously when in the Statement the Minister has gone back on his previous view that he would stick to 275 mppa at Heathrow? That was what I gathered from the original debate on the inspector's report—that 275 mppa would certainly be held to.
The figure of 1 mppa at the London Docks seems to be put in almost for balance. From my reading of the inspector's report and the later material on STOLPORT it appears that most of the traffic would come from Heathrow or Gatwick. It would not be new traffic. Even if it relieved them of any traffic, it would produce a lower load factor on Heathrow and Gatwick. One of the problems—and the Minister actually said this in the Statement—is not terminal capacity but runway capacity. I do not see that he can claim a 1 mppa reduction because of STOLPORT.
I think that the Minister has chosen the fastest way possible to expand, against all the advice from many sources—but perhaps not from the inspector's report—including originally the Thames Water Authority about the impossibility of moving the Perry Oaks sewage works. I wonder why he has suddenly decided that this is something that should be done.
Although I agree that there are problems in the South-East, I think that the outlook for regional airports, and particularly Manchester and Birmingham, is bleak after this Statement. I hope that the Minister accepts that before legislation is brought forward there should be an important debate on the White Paper when we have had a chance to read it.
4.14 p.m.
Baroness Burton of Coventry: My Lords, in thanking the Minister for repeating the Statement, may I say that I hope to remember that this is a Statement and not a debate, which doubtless we shall have at a later date? I am looking at one phrase with which we all entirely agree—that:
"Our air transport industry is the envy of the world and a great
success story".
I believe that every one of us here today, whatever our feelings about details, would support that and hope that we keep the industry in the forefront of world affairs.
I note that the Government say that their policy is that there should be enough capacity available so far as possible to all airlines on equal terms and that flights

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cannot be directed to airports that airlines do not wish to use. We accept that entirely. We hope very much that the Government will see that there is enough airport capacity available for all who need it.
I come now to the legislation, the BAA, and so on. Obviously we shall have to wait to see what arises. At this stage I would say only that I welcome the proposal to control the monopoly aspect of charges. I think that the Minister will agree that airport charges have been a bone of contention for all airlines. We should all very much welcome their control.
We on these Benches were glad to note the development of STOLPORT which the Government have decided for the London Docklands. Everyone with whom I have spoken, I think, and certainly I myself, very much welcome what is said about Luton. Although Luton has had all the necessary facilities, it has seen a fall in traffic, as I mentioned in our debate, simply because of a subsidised Stansted which took traffic from Luton. Luton will now be able to go ahead, as it says in the Statement, to 5 million passengers per annum which it can well do.
We who believe in the second runway at Gatwick think that the Government have made fundamentally a wrong decision. Of course we shall continue to press for the second runway. I think that we seem to be making some headway. Whether we are making an impression I do not know, but we are certainly making headway. We on these Benches, and I hope others, believe that the refusal to lay down a second runway at Gatwick makes absolute nonsense of Government declarations about sufficient airport capacity. But I shall leave that for a debate and not weary the House with it now.
However, may I ask the Minister a question about charter airlines which arises from the decision not to lay down a second runway at Gatwick? I have strong sympathy with the charter airline industry, as have my friends and the Civil Aviation Authority. We suggest that the industry has a legitimate case for demanding security of tenure at Gatwick. Can the Minister help me? It has been suggested that charter services should be moved from Gatwick to Stansted. I ask the Minister a straight question: is that true? We suggest that such a move would be damaging both to the consumer and to the airline industry. Furthermore, I would point out that the charter airlines were largely responsible for building up Gatwick to the major international airport which it now is.
I think that we would all accept that we must await developments at Heathrow, and I hope that the Government will be able to give us more details in the ensuing debate. That brings me to Stansted. Any major development at Stansted, particularly a subsidised Stansted, would militate against development in the regions. Is the Minister aware that that feeling is strongly held?
Let me ask him two specific questions. In the Government's Statement the first phase of development is limited to 7 to 8 million passengers per annum. Can we take it from the Statement that that does not necessarily imply moving up to 15 mppa? If it implies moving to the higher figure, what would be the cost? In the recent debate in the House I asked the Minister whether he could give us the estimated cost
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for development at Stansted as recommended by the inspector—namely, to one runway and a capacity of 15 mppa, and he did not give me a reply. Perhaps he could do so today.
I had hoped for a maximum limit of 5 million; but if we have a suggested limitation in the first phase of between 7 million and 8 million, can he tell the House what the cost of that development will be? That is important. Secondly, can he tell us whether Stansted will continue to be subsidised? Of course, Stansted does not pay for itself. It exists by cross-subsidy from Gatwick and Heathrow. It takes away money that the regions feel could be better used in their particular area. In the last two or three years it has greatly damaged Luton. Stansted is not self-sufficient and it will not yield a return.
I think we should all like more definite plans for the regions. Whatever the Minister has said, there is a very strong feeling in the regions that they have been neglected, that there are not definite plans for their development. While I was very glad to note what had been agreed about Singapore Airlines flying into Manchester, I think I am correct in saying that that will not happen until well on into next year. Will the Minister bear in mind what we feel about that?
I have tried not to be too lengthy. I hope the Minister will give us the replies for which I have asked. One thing I should like to say before I sit down is this. Not only we on these Benches but I think all parties in both Houses of Parliament are very glad that that proposed limitation of air traffic movements has gone. If it had reached this House in the Civil Aviation Bill as was originally proposed, I should have upset my Leader by proposing that we threw it out. It was a most shocking Bill and if ever there was an attempt to pre-empt matters in favour of Stansted that was it. However, thanks to the Standing Committee in another place, it has now died. I am very glad it has died. I hope the Minister will take note of the points that I have made and give us an answer.
Lord Trefgarne: My Lords, I am very grateful to both the noble Lord and the noble Baroness for their reception of this Statement.
In answer to the noble Lord, Lord Carmichael, whose supplementaries were not quite as far-ranging as those of the noble Baroness, perhaps I may just clarify one point. The limit that we have decided to abandon so far as Heathrow is concerned was not a limit on passengers, as I think the noble Lord sought to imply, but a limit on the number of air transport movements. It was originally proposed that the ceiling should be 275,000 air transport movements per annum and it is that that we have now abandoned.
The noble Lord said he thought that this Statement would not receive a universal welcome. I think it is beyond the wit of even the noble Lord to devise a Statement on a matter such as this which would achieve universal acceptance across the land and across both sides of your Lordships' House. However, we have had a good stab at it.
The noble Lord also referred to the modest capacity that will be provided by the STOLPORT, which was approved recently. Those movements which will take place at that new and exciting venture are movements

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which might otherwise have used Heathrow or Gatwick. They will be confined to aircraft of a specific genre so that they can use the very limited runway length that is available there. They will be relieving some of the stresses and strains on the other two airports, but I agree that that will only be to a marginal extent.
The noble Baroness, Lady Burton, asked me a large number of questions. The noble Baroness may prefer that I write to her on some of them, although I think that I can provide an answer to most of them if your Lordships will bear with me for half an hour or so. However, that may be trespassing unduly upon your Lordships' patience.
Baroness Burton of Coventry: My Lords, perhaps for the benefit of the House and to save the noble Lord trouble, he will give the answers now and not write.
4.24 p.m.
Lord Trefgarne: My Lords, I will give as many as I can. The purpose of the announcement that we have made today, incorporating the decisions which it does, is of course to ensure that we provide sufficient airport capacity into the 1990s for the demand as we believe it will arise at that time. The noble Baroness commented upon the regulatory machinery that we have referred to in the Statement. That will require legislation and will be brought forward as soon as an opportunity can be found. It will be very necessary that that legislation provides for some control of the monopoly aspects of airports because certainly there are some airports in the land which enjoy something of a monopoly in the position which they occupy.
The noble Baroness accepted, and I think welcomed, the thoughts that we had for Luton Airport. That will of course be a matter for the owner of Luton Airport, which is not the British Airports Authority: it is the Luton Borough Council. We have invited the council to bring forward the kind of proposals that would meet the increased capacity that we have suggested. That no doubt will be happening in due course.
The noble Baroness asked, too, about the question of charters and whether they would be moved from, say, Gatwick to Stansted. We have asked the Civil Aviation Authority to have a careful look at the distribution of traffic around the London airport complex and we shall look forward to hearing their views on that matter in due course. However, I hear what the noble Baroness says about the importance of Gatwick to the charter airline companies. I am certain that the CAA will bear that point very much in mind.
The proposal as far as Stansted is concerned is that it should initially be allowed to develop up to about 7 or 8 million passengers per annum. Any increase above that will be subject to Parliamentary approval—and I understand it is proposed that that should be the approval of both Houses of Parliament. Thus, when the time comes, if it does, to authorise that increase, your Lordships and Parliament will have a clear voice as to the way forward.
The noble Baroness asked me, too, about the costs, particularly the costs at Stansted. I am advised that the initial phase is likely to cost very much less than the
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estimate of £400 million at mid-1981 prices which the BAA gave to the inquiries. We shall certainly expect the BAA to show that the investment, whatever it may turn out to be, will earn an acceptable rate of return. The £400 million was of course for a significantly greater expansion at Stansted than is now anticipated, so clearly the figure at which we are now looking will be very much less than the figure originally proposed.
As for the question of the regions, which was a thought in the mind of both the noble Baroness and the noble Lord, Lord Carmichael, I am afraid it is the case that one cannot move demand in great chunks around the countryside. The fact of the matter is that the 75 per cent. or so of the passenger demand arising in this country arises in the South-East of the country. It really is not possible to dragoon the population up to the North-East or to the North-West, or to wherever the regional airports may be. However, there is clearly a significant and growing demand in the regions. We are determined that that demand should be met. That is why we have taken the steps that we have, particularly with regard to Manchester but also with regard to the other aerodromes in the regions. Since 1979 we have authorised something like £200 million-worth of expenditure at the regional airports. I believe that they are now ready to cope with the demand as it arises. It is now a matter for the passengers and for the airlines to show that that demand is there.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that the fact that these decisions have now at long last been made and announced will cause great relief in all who are interested in the development of our civil aviation, who have been very much concerned about the delay in dealing with this admittedly difficult matter?
Is he also aware that many people will congratulate the Government most warmly on abolishing the preposterous 275,000 movements limit at Heathrow? May I ask him whether that abolition is to take effect at once in view of the fact that we are now at the stage of the early summer traffic rise which happens every year?
With respect to Stansted, may I ask my noble friend also whether the first phase of development will be undertaken in a way which does not in any way prejudice or prevent a move to the second stage? In other words, can he assure me that the appalling mistake made years ago at Gatwick will not be repeated? In the Stansted context, may I also ask him whether the difficulties in respect of air traffic control, that used to stand in the way of a Stansted and Luton development such as he has announced have now been resolved so that there will be no difficulties air traffic control-wise in the interaction of flights in and out of those two fairly adjacent airports?
Finally, can my noble friend say whether the Statement which he has repeated, which is of course the Statement of the Government, carries, or does not carry, the general support of their expert advisers, the Civil Aviation Authority?
Lord Trefgarne: My Lords, I am grateful to my noble friend for his welcome for the Statement. So far as removing the limit of 275,000 movements at Heathrow is concerned, that limit has not yet in fact

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been imposed. It was to be imposed had the legislation passed through the other place at the time that Terminal 4 was opened. The legislation did not pass the other place, and indeed Terminal 4 has not yet been opened. So the limit has not yet been imposed. Thus the question of lifting it does not arise. It will not now be imposed at all.
My noble friend asked to be assured that there would be no inhibitions—I think he was anxious to ensure that the initial phase should not in any way prejudice the second phase—on the development at Stansted. I can assure him that this is our intention. I am not aware of any difficulties over the question of air traffic control constraints either at Luton or Stansted, although I am aware that there were some difficulties of that kind in the past. If I am wrong about that, I can perhaps write to my noble friend. I can assure him that the Civil Aviation Authority has of course been closely consulted in all this.
Lord Dean of Beswick: My Lords, the noble Lord the Minister will not be surprised if some of us do not accept one of the main thrusts of the Statement, not, I think, raised so far by any noble Lord, that an industry which in the terms of the Statement is doing so well should be privatised at this stage. It is obviously for no other reason than to suit a particular, narrowminded political philosophy. It is also obvious that the Government, or the Minister involved in another place, have had no regard at all to points made in a recent debate in this Chamber by some of us who come from the hinterlands in the North. The points that we made have been almost totally ignored. To include the bare announcement that development at Stansted will eventually involve 15 million passengers a year will be seen once again in the North as a death blow in favour of the South. The maximum development that could have been attained in the North will be killed by that statement alone.
Will the Minister accept that the Statement will not be seen in the North, as I remarked in the Chamber some time ago, simply as a declaration on airport policy? It will be seen once again as selling out the people in the North to assuage the view of people in the affluent South. The unemployment figure in the Stansted Airport catchment area is 4.5 per cent. In parts of the North and certainly in the catchment area of Manchester Airport the figure is well above—I emphasise "well" above—the national average. That is the context in which this decision will be seen in the North of England, where other noble Lords and myself come from.
I should like to ask the Minister one specific question. The Statement said that the Government had no intention whatever in the forthcoming legislation to privatise the municipally owned airports. Can he give an undertaking that at no time during the passage of any such legislation the Government will accept from any quarter amendments to carry out that particular exercise? I give the undertaking, for my part, that those of us from the North, who are bitterly disappointed with the exercise that is to be carried out, will do our best to ensure that the North, through the legislative process, gets a fair crack of the whip even if this means at times that we have to be less accommo-dating to the Government than is normally the case.
Lord Trefgarne: My Lords, I am sorry that the noble Lord takes the Statement that way. I believe that we have been accommodating to the regions. Over the past five or six years we have provided as I said earlier—or authorised at least—some £200 million for expansion and redevelopment at those airports. We have adopted a most liberal licensing regime for new air services operating from those airports. The noble Lord may be aware of the recent regional air services directive that has emerged from the European Community in which we took a leading part. Indeed, if we had had our way it would have been much more liberal even than it is. We have now authorised the operation of Singapore Airlines from Manchester. That is a major step forward. It was implied that we had taken some time to reach that decision. In fact the Singapore Government lodged the application with us only in March this year, and it was authorised a few weeks ago. Only a month or two was taken by us in our consideration of that matter.
I believe it is not justified to suggest that we have been neglecting the regions. In the end, the prosperity of the regional airports will depend upon the local people, the passengers and the airlines. The Government do not have it in their power to wave a magic wand over the regional airports and to create some great new enterprise where none exists.
Lord Leatherland: My Lords, I wonder whet her the Minister can answer a simple, non-political question. How many new houses will it he necessary to provide in the Stansted area to cater for the staff?
Lord Trefgarne: My Lords, I do not have the number of houses before me, but we anticipate that in due course Stansted will be offering employment opportunities for some 10,000 people.
Lord Mountevans: My Lords, I should like to give a slightly more generous welcome than has perhaps been most recently given to the Statement, which is, I think, one that will tive a great deal of encouragement to those of us involved in aviation, in transport and/or in the tourism industry. I agree wholeheartedly with the Government's plans as stated today to meet demand as and when it arises both in the South-east and in the regions. I wish really to ask only one question. Can the Minister amplify on the remark in the Statement that the Government will look sympathetically at cases submitted to them for access to airports by rail and road? As the Minister knows, Stansted, without decent rail access, will not be a particularly attractive proposal to the many airlines which will be encouraged to use it.
Lord Trefgarne: My Lords, there are two aspects to the point raised by the noble Lord. We have decided to commission a study into surface access generally to Heathrow. In regard to Stansted, we are also asking British Rail to look at the possibility of providing a rail link to Stansted Airport. At present, as the noble Lord may know, the railway proceeds as far as Bishop's Stortford. I suppose that the most obvious solution would be a spur from Bishop's Stortford to the airport. That would of course be a matter for British Rail. We have asked British Rail to look into the matter and to bring forward proposals, with some idea of the cost.

Privatisation and Wealth Creation
4.37 p.m.
Debate resumed.
Lord Bruce of Donington: My Lords, we on this side of the House are most grateful to the noble Lord, Lord Thorneycroft, for having introduced the Motion, and particularly for doing so in such pleasant terms. His remarks were not entirely devoid of the odd political crack that we have come to expect from him. He did permit himself of the remark, in one of his more controversial moments, that the original idea of the Labour Party was, "If it moves, nationalise it". I can perhaps reply to that by saying, from our point of view, that if it moves well, then the policy of the party opposite is to privatise it.
We are also grateful for the contribution of the noble Earl, Lord Gowrie, who spoke in such pleasantly persuasive terms. I almost sighed for the days when there was talk of rolling back the frontiers of the state, The noble Earl this afternoon was at his most constructive. He referred almost in poetic terms to the tides—tides moving in the particular direction which he himself propounded. I should perhaps therefore reply to the noble Earl in terms that he will equally appreciate.
The essence of tides is that they come in and then they go out again. What the noble Earl must realise is that he cannot make the tides permanent, as he would wish. The noble Earl feels that he is on the tide at the moment, and he produced some figures concerning the performance of certain industries since they had been privatised. I shall deal with that point a little later because I have the figures for both before and after privatisation, and I may have some observations to make on the comparisons that he has made.
Going back to the noble Lord's Motion, one observes that he wishes,
"To call attention to the process of returning some public activities to the private sector".
That is his first objective. Then he wishes to call attention to the,
"effect upon the important national objective of wealth creation".
I think that it is fair to say that neither the noble Lord nor the noble Earl was very effective about the process, although they hazarded some observations as to what the likely effects would be.
We are talking in the first instance, therefore, about the creation of wealth. Wealth has been defined as:
"A collective term for those things, the abundant possession of which constitutes riches or 'wealth' in the popular sense".
I suppose we could now add to that:
"the services which, among other things, facilitate their enjoyment".
We are talking about the creation of wealth, but I sincerely hope that we are not talking in the abstract about it. We are talking in the real world in which we live, in which we have our hopes, and in which we hope to be able to survive for the average, or above average, period of time. The first thing about which I would venture to remind your Lordships is that at the moment there are some 4 million of the adult population not permitted to take part in the process of wealth creation. That is something which should colour all our thoughts upon matters of this kind.
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The second thing we can perhaps bear in mind is that some 21 million of the adult population own all but 4 per cent. of the disposable wealth in this country, and that the other half, the other 21 million, are confined to the ownership of 4 per cent. of the national wealth. This is the context within which wealth creation should be discussed.
Now let us deal with the process of privatisation. From the Government's standpoint their policy of privatisation has been put foward in a number of manifestos. It is done for reasons which will emerge clearly from the actions in practice that they have taken. The first part of the process of privatisation is to create the slogans and to establish the myths to justify the actions. One of the first myths that has to be created is that all nationalised industries make losses, although I observe that matters have tended to be moderated these days.
The myth has to be established somehow by slogans. When, as he then was, Sir Angus Maude was co-ordinating the publicity activities of the Government he delivered himself, subsequent of course to his departure, of this observation:
"I went on the old propaganda maxim that unless you say something at least 25 times nobody ever hears it, and if one could get every Minister to say the same things over and over again, it did begin to work".
Over the last five years this is exactly what we have had. We have had it from the Benches opposite. Automatically the myth is created that nationalised industries, per se, are unprofitable, less efficient, and so on.
Then the next part of the argument that is put forward is that one of the reasons that they are inefficient, one of the reasons why they are not creative, is that they are all subject to Government interference, and the Government's interference is really one of the reasons these public boards, or public industries, cannot function.
They have not any particular theoretical argument to put forward in that respect. What they did in order to drive this point home was to interfere themselves on an unprecedented scale. They had to make their point by doing it themselves. In some cases they fixed prices; in some they engineered price increases by limiting capital expenditure, or by bringing forward debt repayments by the concerns themselves to the Government. They made compulsory levies, particularly in the gas industry where in one year alone they took £579 million out of it. In the case of BNOC they were directly responsible for its losses by taking a price gamble, by ordering BNOC to keep a price that made a considerable loss, as a result of which they felt capable as a matter of personal experience—engineered by themselves—to say that Government interference was one of the reasons why nationalised industries were inefficient.
So much was this so that they produced a feeling among the leaders of nationalised industries that after all it would be better to be privatised—anything to get the Government off their backs. Of course the moment that the leaders of the nationalised industries expressed themselves in agreement with privatisation, the Government themselves would give publicity to the opinions they had themselves been instrumental in creating. From the standpoint of the chiefs of

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nationalised industries it was, "Hit me over the head with a hammer; it is so nice when it stops". And who can blame them? That was the first process: to create the myth; to establish the slogans; and directly to interfere.
The next thing was to consult with the City authorities—with the accountants, brokers, and everybody else—as to the best way of proceeding. Then finally the Bills were brought to Parliament, the prospectuses were in due course issued, and the issues were made. This was the process to which the noble Lord, Lord Thorneycroft, referred. What has happened during that process in financial terms? The first thing is that the vast sums of taxpayers' money—I must use the words "taxpayers' money"—are spent in that process on fees and commission to the City of London, to firms of accountants and brokers, and the total of that admitted by the Government so far is £173 million. The figure is estimated by the Financial Times at some £200 million. That is one of the things that happened in the process.
The second thing that happened in the process of privatisation was that the Government made a loss of at least £1½ billion in terms of the sale of their interests in the companies concerned. That is only calculated by reference to the initial price at which these going-concern industries, or the shares in them, were disposed of. In real terms there is probably a loss to the British taxpayer, to the public, of something close on £3 billion. These are once-and-for-all sales. There are several more, we are given to understand from The Times of 30th May, scheduled for the current year and the two succeeding years calculated to yield approximately £10 billion which again, according to sources close to the Prime Minister, will be extremely useful to finance the bulk of the tax cuts which they hope to provide before election time comes.
The third thing that happens is that the shares are then disposed of. The theory is that they are very widely dispersed—this is part of the whole motive for what is being done—to diversify, to return to the public or, as the noble Earl, Lord Gowrie, put it this afternoon, to transfer back to the public. But what happens in practice? The latest survey of the number of individual shareholders in the United Kingdom, which was published only a month ago, is that share holding is limited to a number of individuals comprising rather under 5 per cent. of the adult population, which is a very small number indeed. The total is two to two and a half million or thereabouts. These are comprised not within the 50 per cent. of the population who have between them 4 per cent. of the national wealth. It does not go to the seven million who are at or near the poverty level or anything of that kind. It goes to 5 per cent. and this is what the private sector is.
The private sector, aside from the institutions, comprises some two million people or possibly slightly more who are all within the top and medium income brackets. Let nobody be under any illusion that the person who buys some shares in British Telecom will hang on to them indefinitely. Some do so; but perhaps the noble Earl will bear in mind the figures. For example, in Cable and Wireless the initial number of subscribers was 150,000. The figure is now 26,000. In British Aerospace there were 44,000 initial individual
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shareholders and the number is now down to 3,300. So let no one say that the shares are by any means transferred to the general public.
In the course of his reply to a Question on the privatisation programme the noble Earl said:
"My Lords, any government should be proud to have redistributed capital from the Executive to the public. That is a thoroughly good thing to do and the Government should be doing more of it".—[Official Report, 16/5/85; col. 1252].
To the public, my Lords? When the largest number of individual sales in the country, the better heeled section at that, of the population comprise at most two to two and a half million of the adult population—
The Earl of Gowrie: I am grateful to the noble Lord for giving way. My Lords, I do not consider that two to two and a half million is a negligible number of people; but as I said in my remarks, those who participate through institutions in share ownership—which is well over half the population one way or the other—should be taken into account as well.
Lord Bruce of Donington: My Lords, this is something over which they have no control. If the noble Lord is putting forward the capitalisation of some remote and ultimate interest in pension funds, before he starts getting too definite about that he should consult his right honourable friend the Minister for Social Services who at the moment is playing hell with the whole pension system in any event. There is no security in that.
The Earl of Gowrie: My Lords, that is unbelievable rubbish; it is nonsense.
Lord Bruce of Donington: My Lords, I am well aware that the noble Lord would not care for that very much; but he made the definite statement to which I reply.
The Earl of Gowrie: My Lords, I care for rational debate, not irrelevance. I made a serious point which is that the vast number, over half the population of this country, participates one way or the other in institu-tions which hold shares. I for one have no shares whatsoever. I do not consider that a merit or a demerit. I prefer to participate through professionals in which respect I share this habit with well over half the population. It is a complete irrelevance to talk about any proposed and highly sensitive reforms in the pension industry.
Lord Bruce of Donington: My Lords, I note that the noble Lord has described my remarks as irrelevant. If they were irrelevant there is no reason why he should be stung like lightning into a response. I am quite willing for the Official Report to be read and for the public at large to be able to judge whether what I have said is in broad consonance with the facts themselves.
I now pass to the effects of privatisation. Here one must not be too dogmatic. There will undoubtedly be some cases where a transfer of ownership from one set of shareholders to another can be beneficial. But it does not automatically follow by any means. In general terms—and most of your Lordships will have had experience in commerce or industry, whether actively, as consultants or professionals—noble Lords

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will know that a change in the ownership of a company, unless it is highly personalised by the acquisition by one person like a Murdoch or a Maxwell, for example, has absolutely no effect on the company whatsoever. The mere act of a change of ownership has no such effect at all. It has no effect on the creation of wealth. Some firms, although private, succeed.
In fact I shall give those who believe in private enterprise the point that in the Financial Times of November last year there was published a whole list of companies which showed that out of the 500 leading companies in Europe no fewer than 222 were in this country. That may not generally be known. It is a very considerable reflection, I would suggest, on the power of privately-owned firms. I certainly do not begrudge that. The process of the creation of wealth is not particularly influenced—aside from the highly personalised sector where an individual gets control—by the shareholders themselves. In fact, any good company chairman will tell your Lordships that when he has an AGM he expects it to be over in a couple of minutes so that they can adjourn for drinks in the anteroom. This is always known. Shareholders as such have very little control over the affairs of their companies. The process of creating wealth is putting money to work together with human endeavour. This is the process by means of which wealth is created.
One of the extraordinary things in relation to the privatisation programme is that every one of the 11 companies so far privatised during this Government's period of office had a profit record prior to being privatised. We do not have one instance of a company making a loss before it was privatised—which one would think would be a very desirable and logical thing to do, bearing in mind all the incentives that emerge. So we are left with the real reasons for the privatisation programme. The first is that the profitable industries and their control are, in political terms, a dagger at the Government's policies. The Government are scared of the public becoming progressively aware that nationally-owned industries in most cases make very substantial profits indeed.
This is something that the Government do not like, because if the public apprehend that nationalised industries are successful—and these have been success-ful; that is why they have been taken over—then the public might be much more sympathetic to a continued programme which, in the event, gives the Government of the day some control over the macroeconomic policies of the country. The second reason is the provision of cash requirements to finance tax cuts. The third is to benefit that limited class of people who comprise in their number a very large majority of their own supporters, particularly in the City of London, by way of fees, by way of commissions on the scale that I have described.
The fourth motive is to cripple any government who follow them. They must be glowingly aware of this possibility because they are financing expenditure out of the sale of public assets. They are depriving future Governments of the revenue that they would normally receive or be entitled to receive from the nationalised industries themselves. Sooner or later, even though they sell the lot, even though they sell all their capital
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to pay for the groceries, it will mean that any succeeding Government are going to have difficulty in balancing the books with the same unscrupulous ease with which the Government are now seeking to do it for their own purposes.
5.4 p.m.
Lord Diamond: My Lords, I want to start by thanking the noble Lord, Lord Thorneycroft, for the very moderate way in which he introduced a most important topic and gave us an opportunity to discuss what the theory was, what the theory now is, and how it is substantiated by what happens in practice as to transfers between public and private sectors in one way or the other. He spoke with great moderation and with immense experience, as we all know; and, if I may add to that, with the wisdom of middle age. We welcome all that. I am also grateful to the noble Earl for everything that he said with regard to the theory of what we are discussing, but I am bound to say that I draw a complete distinction between a discussion of the issues and an appraisal of the actions of the Government and their motivation. I shall come to that later on.
Let me discuss first of all—and, I hope, in the same moderate and objective way as that of the noble Lord who led the debate—the arguments for and against the public sector and the private sector. I know of no economic rule which would guide us as to the proper absolute size or proportion of a public sector. There will always be a public sector; every country has one. The size of it will depend upon what we think about the individual elements which comprise it. I and all my friends on the Liberal and SDP Benches take the same view that, as to action, we have no urge—we certainly have no dogmatic urge—either to nationalise or to privatise. Our view is that every case should be considered on its merits and on previous experience. We would add that, unfortunately, the argument is too narrow as between nationalisation and privatisation.
There is a third sector, the co-operative sector, to which we should also have great regard. We should bear in mind the great success that has been achieved by workers' co-operatives in Northern Spain; and any one of your Lordships who has had the same experience as I have had recently of travelling in a bus in Israel will have been impressed by the efficiency of the service, by the cheapness of the fare and by the smile on the face of the driver—because he, of course, is part owner. He and his fellow-drivers are the owners of the bus services there, and are doing very well out of it, thank you! So we must have regard for that which I might call the third sector, as well.
I am bound to agree with the noble Lord, Lord Thorneycroft, that many of the arguments which we promulgated in 1945 and which we accepted with sincerity as being in favour of transferring from the private to the public sector no longer apply. They have been seen to become invalid. We were all quite sure then—and I, certainly, was quite sure—that one would get better labour relations if the problem, the attitude, of "we" and "they" could be removed. Of course, if you removed "they"—"they" being the bosses—by nationalisation, it was perfectly logical to assume that better labour relations would result. It was perfectly logical to assume that one would have much easier

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wage discussions, naturally, because previously in the private sector the wage earner who did not claim the maximum amount that he could claim realised that the balance that he was not claiming was going into the pocket of the owner. Now, of course, there was going to be no owner, and no longer could there be any argument about regarding wages in any other but an objective way.
These advantages did not mature. It is quite impossible to say, in the light of what happened in the nationalised industries, that labour relations are better there than anywhere else; but, perhaps not surprisingly, the sense of ownership which one hoped would arise has not arisen. The ownership is too widespread and diffuse for it to be perceived. It is not surprising that a miner, for example, on contemplating a piece of mining machinery, does not find his breast swelling with pride in saying to himself, "One fifty-millionth part of that is mine!" It is too little to appreciate. Those arguments therefore no longer apply.
On the other hand, it has been necessary to nationalise where one had not thought there were the arguments, or that nationalisation would be appropriate. It has been necessary to nationalise to safeguard industries vital to the national interest which were threatened with bankruptcy. I refer to motor cars, shipbuilding, steel, and Rolls-Royce. They all survive today. They would not be here if it were not the fact that wise decisions were made by both Governments to nationalise them and give them that temporary or permanent protection. Those of my age will remember that at the time interest was shown in motor-cycles, the British motor-cycle industry was dominant throughout the world. The motor-cycle industry was not nationalised: it does not exist any longer. In place of the British motor-cycle industry we have massive Japanese imports.
I do not say, either, that the arguments which applied at the time are necessarily permanent arguments. For example, I could imagine a case being put forward with regard to Rolls-Royce that it had to be nationalised for a period, that it had to be protected, that it had to be strengthened in the national interest. It is conceivable—we would have to look at the case—that after a period of strengthening it may be appropriate for it once more to be returned to the private sector. I do not know. I am not saying it is right. I am not saying I have looked at it. All I am saying is that the arguments are not permanent arguments. It was right, essential and inevitable at the time, as I know full well from my government experience, that Rolls-Royce should have been nationalised by the Conservative Party when they came in. That does not mean that it is essential that it should remain nationalised for all time.
Similarly, there are arguments for privatisation which do not hold in practice. I have heard what the noble Earl has said. I want to challenge some of his figures and conclusions. The first argument he used was the spread of shareholding. I want to make it quite clear that all of us on these Benches share that goal. We think the spread of shareholding is a good thing. Nevertheless, in the only case where I know that the figures have been fully analysed—that of British Aerospace—we find that within the course of the first
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11 months after privatisation the number of small shareholders (and by "small" shareholders I mean those holding under 100 shares each) fell 14 times, to one-fourteenth. We also know that the large shareholders (those holding over one million shares) rose in that same period 13 times. There vv, as an enormous concentration of shareholding among the larger shareholders in that short period.
The noble Earl says that that may be so; we all know how concentrated the ownership of shares is in the very top wealth sector of the community. But, says the noble Earl, no doubt these large shareholders holding over one million shares were the institutions; and no doubt the institutions were holding monies for pension funds, insurance companies' funds, and so on. No doubt they were. But I am bound to ask the noble Earl: has he any figures which break down the ultimate holdings within those pension companies? We on the Royal Commission on Distribution of Income and Wealth, of which I had the privilege to be the chairman for some six years, throughout its life, looked at this time and time again. We could not find any way of getting back down to the ultimate shareholders. I do not think the noble Earl said he had the figures, but no doubt he will be able to clarify this point.
We on the Royal Commission—I am relying on my memory here, but I think it is right in this respect—concluded that there was no evidence at all to show that the distribution of wealth within pension funds was any different from the distribution of wealth among individuals. As you would expect, and as is most likely, the wealthier and larger income groups within the community would naturally have the larger pensions and the larger element within the pension funds which would be represented ultimately by shareholding. One would have the same distribution among the population within the funds as one has outside the funds. We are therefore still left with the conclusion that the argument that one of the benefits of privatisation is that one automatically secures for a long period the benefit of a wide distribution of shares—and I agree it is a benefit—does not hold.
Similarly, with regard to employee shareholding, again, we on these Benches are very much in favour of promoting employee shareholding. But where you have access to the figures—and there may be others to which the noble Earl has access but to which I have not—again, in a breakdown of those in the case of British Aerospace one finds certainly that there was a vast proportion of employees who were interested at the very beginning as a result of the special terms and advantages offered to them—sometimes free shares; and sometimes there was an inclination to indulge in a little private stagging—and who took up shares. Some 75 per cent. of the employees became involved. But what was their shareholding? Their shareholding, even at the start, was only some 2½ per cent. of the shares of British Aerospace. If one assumes (as is a reasonable assumption) that the same thing happened to the employee shareholders as happened to other small shareholders, then their present shareholding would be very small indeed.
Suffice it to say that I am not satisfied that the argument that you automatically get these two benefits from privatisation is valid. Nor is the argument valid

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that privatisation necessarily produces better management. Reference has been made to Jaguar—most unfortunately from the point of view of the other side. We all know that Jaguar is a star case where, under public ownership, new management was introduced—this was the case with British Aerospace—and as a result of that new management there was a startling and remarkable turn-round in profit-making. That was under public ownership. All that that demonstrates, as one would expect, is that good management produces results. Bad management does not produce results, irrespective of whether it is in public or private ownership.
Then, again, there is the argument, now produced very frequently, that privatisation automatically frees management and the board of directors to enable them to produce better results. Here again, I think this has not yet been demonstrated. First, I am bound to say that I am not impressed by the arguments of a Government who say, "We must privatise in order to remove Government interference". Government interference is the amount of interference which the Government decide to apply. The Government can stop interfering without privatising. It is just as simple as that.
We are all bound to recognise also that there may be cases where Government interference, Government leaning on a nationalised industry to take some action which does not contribute to the maximisation of its profits, may still be in the national interest if by so doing it is helping another British company. That has been the case in one or two instances, particularly in aircraft production, where "buy British" has been promoted by governments very naturally, and has meant waiting times for those like British Airways, waiting to fly 'planes, who would have preferred to buy them direct from America and get on with the job. But overall that has proved to be in the national interest. One will not get that happening in the private sector. In the private sector one company will not say, "I am going to withhold maximising my profits so that another company in the private sector can benefit".
So there is that possibility. I do not believe that constraints in the private sector do not exist: they do exist. One has the very obvious constraint of the calendar. Every year one has to produce in the private sector a satisfactory balance-sheet showing satisfactory results in order to satisfy the market because of the possibility of raising further finance, and so on. That is a constraint against developing those long-term activities which can be done in nationalised industry because there one is required to break even, taking one year with another, and not each year. These are constraints within private industry which are well understood, and I am only saying that it is not proven that by the sheer, simple act of privatisation one necessarily increases the freedom of management and their possibilities of making better profits—or, as the noble Lord, Lord Thorneycroft, would put it, of increasing their wealth.
Finally, one comes to the question of greater profitability which is now being promulgated as an automatic assumption. It is not an automatic assumption, and if I may I shall spend a moment or two examining it. May I preface that by saying that
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when I look at these figures I remind myself of two caveats. The first is that it is very difficult to compare like with like in this field, and indeed it is quite impossible ever to say what a nationalised industry would have done had it not been privatised, or the other way round. One can only draw conclusions and make estimates.
The second thing is, I remind myself, the dreaded stupidity of post hoc ergo propter hoc. At the moment, I cannot think of a better example than the 146 jet of British Aerospace. That was a 'plane designed largely before nationalisation. It was developed during nationalisation; it was sold after privatisation and it features in the post-privatisation profits of that company. Where is one to give the credit for those profits? Clearly, the fact that the profit was made subsequent to privatisation does not deny the fact that it was due to the design and development periods just as much as it was due to the sale period. Therefore, it is not easy to make the comparison and one has to have regard with care to the studies that do exist. There are such studies. The Pryke studies are probably familiar to most of your Lordships. They have shown—and I accept their conclusion—that the nationalised industries performed well in the 1950s and 1960s and not so well in the 1970s. I think that is part of the explanation of the trend which the noble Lord, Lord Thorneycroft, quite properly discerned. They found that nationalised industries performed much better in France, and somewhat better in Italy than they did here—indicating that it is not necessarily and exclusively a question of nationalisation but of how the nationalised industries are managed.
When comparing the results of similar activities—which is the only thing one can do—comparing the result of an activity carried on by a nationalised industry with a similar activity being carried on at the same time by private industry, the study I have referred to found that British Airways compared very unfavourably with British Caledonian. But of course that was before the period when British Airways had new management and the noble Lord, Lord King, took over. They have had new management and the profits have increased enormously. That did away with that argument. There were two other comparisons, with rather small and purely commercial activities—that is, ship and hovercraft services, and sales of gas and electricity appliances—where the private sector was found to be more profitable. I accept their conclusions on that.
However, when we look at some of the larger conclusions, we find that closer examination may reveal different results; and I come back again to British Aerospace, since they have been frequently quoted, with their larger profits since privatisation. One finds in fact that those larger profits since privatisation were due entirely to two things. One is inflation and the inflated figures, because it is no good giving absolute figures in a comparison: you have to give the deflated figures to get at your comparison. The second factor is increased capital. If your Lordships were to look at the same figures—and I have done the exercise—in terms of the true measure of profitability, that is to say, the rate of return on the total assets in the company, you will find that, contrary to what has been widely stated and superficially shown on the mounting

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profit and loss accounts, the first three years after privatisation show on average a fall of 20 per cent. on the results of the last three years before privatisation. Therefore, it is not easy to draw a general conclusion that automatically one moves from a loss-making period and into a profit-making period immediately one moves from nationalisation to privatisation. It is because of the difficulty of doing that that I think any general conclusions are misleading.
We should stick to the policy which we on these Benches have adopted, that each case should be examined on its merits. As a transfer is a very costly exercise (and indeed, as has been made very clear already, the expenses involved amount to some two per cent. of the total assets involved) and it is very costly in the diversion of management from their normal functions of looking at questions relating to the transfer, we also feel that the onus of proof should be on those who wish to see a change in the present structure. If one wants to privatise, one has to demonstrate that in a particular case privatisation is appropriate; and vice versa.
I have said I do not take the view that the Government have examined each case with the care that they should have done and they have reached their conclusions on the basis of the same objective approach as the noble Lord, Lord Thorneycroft, proposed. Indeed, quite the opposite has happened, to my mind. All they are indulging in is, as I have previously indicated, what I must call a mad scramble for cash. Why do I say it is mad when I previously said it was only a scramble? That is because if your Lordships take all the nine major flotations over the last four years of privatisation, on average the amount undersold was something like 25 or 30 per cent.—demonstrated often on the very first day. Of course there was one exception, Britoil, which was affected by a drop in the world market price of oil just at the time of its flotation, and which has recovered now to more than the flotation price.
However, if you take all of them together, then you find that the market value today is exactly double the flotation values of those shares. If you had had a given sum of money in your hands which enabled you to buy a share in each of these nationalised industries throughout the present Government's tenure of office, you would have twice that sum of money in your hands now. Or put it another way: if the Government had waited until today, they could have secured, for the benefit of the Revenue and the taxpayer, exactly twice the amount which they have done on the sales.
I do not know how this has happened; but one is hound to draw the conclusion that the Government were in a great hurry—what I call its mad scramble—to turn the assets, and it is a fixed store of assets, into cash which it can use, as has already been said, for paying for the groceries. Selling the silver to pay for the groceries is what I called it previously. I am reminded of what someone said about the wisdom of saying everything 20 times over. We are getting towards that point now, and perhaps it will sink in with the Government that they are selling the family silver to pay for the groceries. I think that is very true, and it is disgraceful. I really think it is disgraceful for a Conservative Government to behave in that way.
The Earl of Gowrie: My Lords, before the noble Lord sits down, can he please deal with the issue of whether the Government have sold the family silver to the family?
Lord Diamond: My Lords, I really did not expect an argument of that kind. The noble Earl has used it before. He is trying to equate public ownership with the ownership of a very small minority. We have said this so many times. If your Lordships would be good enough to look at any one of the eight reports of the Royal Commission on Distribution of Income and Wealth, you will find—and it will be reproduced in all the later Inland Revenue reports—that the shareholding is held by a very small sector of the community alone; that which is right at the top. It is absolute nonsense to say that what was previously held by the Government as trustees for the whole of the population—there is no other way in which the Government are entitled to hold it of course because they are trustees for the whole of the nation—is still held by them, if it has been dispersed in this way. Would the noble Earl please have regard to simple question? At the end of this Government's period of office, they will have denationalised so many companies that they will have turned a large portion of this national, limited stock into cash and they will have spent the cash. What have they then got to show for it? They have spent an investment. What new investment do they have to show for it? What new roads? What new infrastructure?
The Earl of Gowrie: My Lords, the noble Lord really tempts me into analysing the scale of public spending by this Government. It is colossal.
Lord Diamond: My Lords, I know it is colossal. The noble Earl is speaking to a very sympathetic audience. The scale has always been colossal. It is the problem of certain Treasury Ministers to try and limit the size of it. Of course I understand that. But the noble Earl is merely accepting my point. It is so colossal. It is so difficult to find the funds to meet that expenditure, and pressure for that expenditure comes from every source and every individual, on whichever side of whichever Chamber in Parliament he sits. Every single one of them approaches the Chief Secretary and says: "We want a reduction in taxation, but, incidentally, the one thing that I am interested in—my hospital, or my regiment, or whatever it is—that needs funds; that needs help." That was so; it still is so; and it always will be so. Of course, the temptation to use ready cash out of your capital in order to meet current commitments is strong and must be resisted. I am still astonished that Conservative philosophy accepts what has been happening.
Lord Renton: My Lords, in the longest speech that we have so far had in this debate, the noble Lord, Lord Diamond, has been at pains to proclaim the neutrality of himself and of the Alliance on this great national issue of public ownership, and in doing so he has given us a welter of figures which we will need to study carefully. I do not have the advantage of being either an accountant or a member of the Royal Commission, nor do I have the more doubtful advantage of formerly having been Chief Secretary to the Treasury, but I feel

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bound to draw your Lordships' attention immediately to the fact that what the noble Lord has said about the effects upon minor ownership and employee ownership of shares is at variance with the information which has so far been given by the Treasury, from which, if I may, I will quote a little. As the Treasury pointed out,
"The privatisation of British Telecom alone has resulted in a massive extension of share ownership in the UK".
Those are their words, not mine.
"Over 2 million individuals applied for and were allotted shares and almost half of those applied for 200 or 400 shares, and those applications were met in full."
I think one should also point out that in the case, for example, of Cable and Wireless, 99 per cent. of the workforce participated in the issue of shares. The same went for Amersham International. At Associated British Ports, 90 per cent. of the workforce participated; and in the case of British Telecom it was again 96 per cent. That I think was a considerable advance in distributed ownership.
Perhaps I may come now to what I really rose to say. Listening to my noble friend Lord Thorneycroft, may I say that I had a pleasant feeling of nostalgia? Hearing him brought back memories of our efforts in another place from 1946 to 1950, and our opposition to the nationalisation of transport in particular. He was, in those days, already a doughty debater. One of the arguments that he used against nationalisation was the difficulty of unscrambling, and this is one of the things that the Government have been courageous enough to face. My noble friend's speech today was, of course in character. We are grateful for it, and I was very glad that he put this subject into its historical perspective. He put forward what my noble friend Lord Gowrie called an ecumenical approach.
It is right that we should try to achieve some continuity in our national institutions, so long as it does not mean that acceptance of unworkable compromises which have been shown to be unworkable, and my noble friend Lord Thorneycroft rightly praised the Prime Minister's courage in rejecting such compromises. In those years, 1946 to 1950, the Labour Government went a long way towards creating a socialist state by nationalising not only transport but, as has been said, coal, gas, electricity, steel, airways and so on. I think we should pay tribute to the noble Lord, Lord Diamond, for the candour which he displayed in revealing that he and many others, especially those who moved from the Labour party to the SDP, had had a change of mind. Of course the postal and telephone services had been nationalised years before—the Post Office in the days of my predecessor at Huntingdon, one Oliver Cromwell. I say that he was my predecessor only in the sense that I had his constituency as a tiny part of my huge constituency. He was elected by 100 hereditary freeholders. I was elected first by 39,000 people over 21 and later in an electorate of 93,000 people over 18. I ask your Lordships to forgive the digression.
But, as a result of all these state controlled activities, the, strictly speaking, nationalised industries accounted by 1979 for no less than 10 per cent. of the gross domestic product and they employed 1½ million people. In addition to those, there were many others in
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central and local government, in ordnance factories, in the armed forces, in the airways and airports industry and so on.
In spite of what the noble Lord, Lord Diamond, said, the return on capital in those nationalised industries was very disappointing and it was public capital. Their over-manning and their generally poor performance, and the public dissatisfaction which that created, as well as the disappointment of many Socialists who had had great hopes, as the noble Lord, Lord Diamond, had, of this, caused us to think about it when we obtained power in 1951.
My noble friend Lord Thorneycroft was, I remember, placed at an early age in an important position in the Cabinet as President of the Board of Trade, and I dare say that he and my noble friend Lord Boyd-Carpenter and others will agree that during the years we were in power, from 1951 to 1964 and again from 1970 to 1974, we tried hard to make a success of the nationalised industries. My own part was a very minor one. I was the junior Minister in what is now called the Department of Energy. It used to be called "Fuel and Power" and the noble Lord, Lord Shinwell, was the first Minister of that description. It is so refreshing to see him sitting there in his place with all his memories.
I can assure your Lordships that we were keenly anxious to see our nationalised industries of coal, gas and electricity do well and we improved the structures wherever we could. For example, in the Electricity Act of 1957 we changed the monolithic structure of the Central Electricity Authority and established a separate generating board and area authorities. That was a useful thing that had to be done. I wish that we had done the same with British Rail. It would have been somewhat better.
We poured public capital into all those industries and as a result they achieved some technical advances. But financial success was elusive and that was not always the fault of management or of labour, most of whom were doing their best, although, as the noble Lord, Lord Diamond, so very properly said, bad labour relations sometimes soured the situation.
No, my Lords, the fault was the fault of the systems which generated bureaucratic organisation and practices; systems where the lack of market disciplines and, as has been said, of incentives was a serious impediment to obtaining good results or indeed, sometimes, of obtaining technical progress that should have been obtained. In my opinion, it was indeed a courageous and wise decision of the present Government, of the Prime Minister and her colleagues, to apply clearly radical solutions to this problem.
The sale of the assets has already provided, or brought back to the Treasury, no less than £5 billion of capital cash, if there is such a thing. The noble Lord is an accountant and he knows whether or not there is. I cannot find a better expression for it. The noble Lord, Lord Diamond, may think I am on dangerous ground when I say that. He regards it in one light and I regard it in another and more favourable light.
Lord Diamond: My Lords, the noble Lord means that it was capital and is now cash that disappears.
Lord Renton: But, my Lords, it was capital which was not earning its keep and it is now cash which is at the disposal of the Government and the nation for what we hope will be good purposes.
I shall not weary the House by again contradicting the noble Lord, because the Treasury has already issued the figures and my noble friend Lord Gowrie, perhaps selectively, can give some more at the end of the debate, but there have been some impressively improved financial results from the nationalised industries and companies which have been sold.
One of the other results of privatisation has, as I said, been a considerable increase in the number of small shareholders and employee shareholders, and this development, coupled with the sale of council houses and the encouragement of owner-occupying, takes us a big further step towards making us into a property-owning democracy. That is a great practical ideal which was formulated in 1947, as your Lordships will remember, by my noble friend Lord Stockton, working on that occasion in close partnership with the late Lord Butler of Saffron Walden—
Lord Boothby: My Lords, may I interrupt the noble Lord for one moment to say that he should add that the original man of them all was the late Mr. Noel Skelton? He used for the first time the phrase "property-owning democracy". He was Member of Parliament for Central Perth for many years and he ought to be remembered in that connection.
Lord Renton: My Lords, this is a matter in which the noble Lord has the advantage of me—
Lord Boothby: I am so old.
Lord Renton: —because he is speaking of a political time whereunto my memory does not reach. But I am very grateful to him for pointing out the initiative. However, the translation of that initiative into a blueprint was the joint effort of my noble friends Lord Stockton and Lord Butler, as they ultimately became.
I would hope that the noble Lord, Lord Bruce of Donington, who lamented—and was perfectly justified in doing so—that 21 million people still own only 4 per cent. of the wealth, will go along with us in this advance towards the property-owning democracy, in an advance towards wider share ownership and wider house ownership. One of the most interesting things that has already emerged from this debate is the bold but wise prediction of my noble friend Lord Thorneycroft, that if by some mischance the Labour Party ever gained power again they would not put the clock back. However, meanwhile, we look for the support of the noble Lord, Lord Bruce of Donington.
Those who oppose privatisation and the sale of council houses thereby oppose a property-owning democracy. That includes all those Socialists who prefer to see our people bossed about by Left-wing politicans and union leaders with the obedient help of swarms of rubber stamps. I think that it was our dear and late lamented friend Lord George-Brown who said that if socialism did not kill bureaucracy, bureaucracy would kill socialism.
As I do not want to speak for too long, I should like to say a few brief words about the privatisation of
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hospital services. This is indeed necessary but more difficult and more controversial than denationalisation. It is necessary because our hospital services are costing far more than they should. Altogether the National Health Service is costing £17 billion, much of it being spent on administration and domestic and cleaning services. If the cost of those services could be reduced, even more money would be available for the care and treatment of patients. It is a more difficult process because there is a relatively new and still fairly small range of private enterprise to do the work required. It is more controversial because the unions mostly strenuously oppose it and make much of any little thing that goes wrong, and because, being experimental, success cannot always be guaranteed.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord for giving way. Will the noble Lord concede that cleaning is also part of the care of the patient?
Lord Renton: My Lords, yes, most certainly it is. That is a perfectly fair point to make. But if an unnecessary amount of money is being spent on ancillary services, there is less money available for the highly expensive and very technological equipment, such as X-ray equipment and so on, on which obviously we want to see more spent. Progress is very costly in that field. To the extent that we can save—and legitimately save—on these ancillary services, so much the better.
As to local authority services, there is enormous scope for privatisation in this area. I have a list of nearly 40 different local authority services which could be privatised. Some progress has been made. So far over 100 local authorities have saved £17 million by privatising some of these services. I understand that, if necessary, the Government will introduce legislation next Session to speed up the process, but I must point out that it can be done without legislation if only people will do it. I hope that we shall see further progress.
We all want good social services, education, hospitals, defence and civil defence, but we need to avoid unnecessary costs so as to provide more of what is really needed and help those in greatest need. We cannot pay for the welfare state and all these other services out of either losses on nationalised industries or poor returns on public capital. As has been stressed, we must produce the wealth to pay for them; and that can only be produced from the profits of private industry which can be taxed to provide what the nation requires. That is why, in my opinion, the Government are fully justified in what they are doing.
5.55 p.m.
Lord Rochester: My Lords, I have been intrigued by one word in particular in the Motion of the noble Lord, Lord Thorneycroft, calling attention to the process of returning some public sector activities to the private sector. I am referring to the word "some", because it raises the basic and highly controversial question of what those activities should be. In my contribution to the debate, which your Lordships will be delighted to learn will be brief, I should like to suggest that, if we are to achieve the important

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national objective of in the words of the Motion, "wealth creation" it is vital to seek—though I am bound to say, having listened to a number of speeches this afternoon, that I think it will be hard to find—a consensus on what are the activities which should take place in the public sector. I am not now concerned to identify precisely what they should be, but simply to pose the question as one which it seems to me is of fundamental importance to the debate.
The point that I wish to stress concerning the effect on wealth creation of the distribution of activities between the public and private sectors is the paramount need for stability in the interests of the economy in general and of manufacturing industry in particular. In my view, the economic and industrial measures needed to control inflation and to reduce unemployment are of such a controversial and unpalatable kind that no single political party will prove capable of implementing them on its own. In the end international competition, from which, as a trading nation, we cannot exclude ourselves, will dictate that the decisions to be taken affecting British industry—whether or not nationalised—will have to be based primarily on long-term commercial considerations and not on short-term political ones.
I have never withheld from this Government credit for having reduced the rate of inflation, but their policies have been carried out at a cost which, in my view, will not in the long run prove sustainable. That cost is to be measured in terms of unemployment and of pay increases which, in the private sector, have been in excess of improvements in productivity and in the public services are increasingly perceived to be unfair in relation to settlements reached elsewhere. Your Lordships have only to look at the present state of morale in the teaching profession and in the Civil Service to recognise that.
This is not the time to put forward yet again suggestions as to how agreed new procedures for pay determination might be sought. I last did that in our debate two months ago on the Government's Budget proposals, and shall gladly do so again when a suitable opportunity arises. However, I wish to offer the opinion that our greatest national problem is how to mark out ground on which more of us can stand together for the purpose of creating additional wealth instead of devoting so much of our energy to squabbling over how such limited wealth as we possess is to be distributed.
A particular reason—and here I can speak from some experience—why there is need for a greater measure of consensus in determining policies in the industrial field is that the time span over which industry now has to plan ahead is incomparably longer than the expectation of life of a single Government. In terms of national planning, it is surely unforgiveable that in recent years the policies of the Government of the day have often proved so unacceptable to the Opposition that they have been reversed within only a few years. It is industry which is then left to pick up the pieces.
In relation to the Motion before us, I suppose that the most glaring example of that process is the fate of the British steel industry. Since the last war it has been
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threatened with nationalisation, then nationalised, denationalised, and renationalised. It is now being reduced, through lack of a coherent, long-term investment policy, to a situation where it is literally having to fight for its very existence. That is only one example of the damage which has been caused by basic changes in Government policy in the industrial field.
There have been others: in aerospace, shipbuilding, regional policy, the establishment and then the dismantling of the National Enterprise Board, and so on. I believe that these fundamental shifts arise directly from our adverserial, first-past-the-post electoral system. In saying that, I realise that it will not be music to the ears of all of your Lordships.
Again, this is not the time to dwell on the need for change in the electoral system but it seems to me that the question is highly relevant to this debate. In my view, such a change would help enormously in the process of wealth and job creation, by strengthening the hands of those—and they are by no means to be found only in the alliance parties—who perceive the need for more continuity and consistency in our economic and industrial policy to be of overriding importance.
I conclude by asking this question: how otherwise can industry plan 10, 15 or more years ahead (as nowadays it needs to do) and how otherwise are we as a nation to achieve our objective of producing goods and services profitably, for the benefit of the community?
6.2 p.m.
The Earl of Lauderdale: My Lords, it is not often that one has the pleasure of following the noble Lord, Lord Rochester, who has such a reputation in this House—and, if I may say so, outside it—for taking a moderate, constructive and friendly approach to labour relations, inter-party relations, and matters of great concern to everyone in this House, whatever their party allegiance. The noble Lord has just adverted to a topic favourite on his own Benches—proportional representation—on which I will not follow him. But the noble Lord referred also to the shuttlecock between party purposes and the interests of the steel industry. It is my intention to refer to another industry which, mercifully, is at this moment exempt from that particular shuttlecock.
In the quiet, adult discussion to which my noble friend Lord Thorneycroft proposed we should devote ourselves—as to the private and public sectors and their respective roles—the noble Lord, Lord Diamond (who I always want to call "my noble friend"; but I suppose that in parliamentary terms I must call him "the noble Lord", even though he is an old personal friend of mine) referred to the co-operative approach. It was a kind of glancing blow and I propose to return to it in relation to the coal industry, to which there has been no reference this afternoon.
The coal industry is, mercifully, omitted from the present published catalogue of privatisation targets. It is as well that it should be—at any rate, meantime—while it is emerging from a trauma which many, and possibly most, miners did not want in the first place. The trauma was brought on under slogans about jobs for now, jobs for grandchildren, and preserving

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communities. Perhaps it is as well to remember that politics is really the systematic organisation of hatreds, and so everything is true except the facts.
I speak on this subject because many years ago I sat for a mining constituency in Scotland. I knew every colliery and I knew almost every coal face in those colleries. I was wonderfully treated with courtesy and friendship by the men. In fact, I do not recall ever hearing a hard word, except in political terms, said against me. I came to respect the men working in those colleries very sincerely.
I believe that, despite all that has been going on, there may be a ray of hope. It is important to bear in mind that this is a context in which tribal loyalties and emotions have developed over the years among people who are very much cut off from the ordinary run of other people's lives because of the hours of work they have to endure in many cases and because of other circumstances. In a way, they may be likened to fishermen. They are very much up against the elements and they lead lives of danger. They lead lives which are, in a communal sense, somewhat inbred.
Only group and tribal hysteria can explain such wanton violence of the peaceful as led to the loss of some 20 or 30 good, long-run faces with about £100 million-worth of equipment simply through deliberate neglect. But while that aspect has been played up by the media—and during that period of controversy there were exaggerations from many quarters in following the coal strike—it is important to get matters into proportion. Though there were another 40 or more faces lost some 25 of those were doomed anyway, and so one can write them off. And that is out of a total of 500 faces. So we are talking of only something like 15 per cent. of the faces altogether. Perhaps that is one useful thing to say in reducing the picture to its proper proportions.
It is not generally realised but I am informed—and I believe my informants—that the coal industry is already 75 per cent. back to normal and producing about 2½ million tonnes a week. Whatever the Central Electricity Generating Board may wish to do or should be allowed to do in the future, it is imporant to realise that some 90 per cent. of the Coal Board's markets have been retained. Sales to the generating boards of England and Wales, of Scotland, of Ulster and of Denmark, and Électricité de France, have all been retained. The British Steel Corporation and the chemicals industry are still buying as much coal as ever. Indeed, I understand that ICI is going ahead with its plan for a £100 million conversion to the use of coal. The paper and board industries continue to be firm clients of coal as well. The fact that 90 per cent. of the coal industry's market holds firm is already a credit.
The second credit—which is not usually known—is that the surviving bitterness between those who were for and those who were against the coal strike is much more patchy than might generally be supposed. It is bitter indeed in Fife but not greatly noticeable in the Lothians, which are only the other side of the Firth of Forth. Likewise, I understand that bitterness remains very sharp indeed in the Doncaster area but less so over the rest of Yorkshire. So the picture is not one of unalloyed gloom.
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In an extractive industry, of course, massive investment on a rolling basis will always be needed for as long as the industry exists. In the coming years, it will be needed for better collieries with richer seams and greater mechanisation in Staffordshire, Warwickshire, Oxfordshire and elsewhere. In the next century, when the techniques of the oil industry are applied to in situ gasification under the North Sea, to introduce oxygen so that coal can be burnt underground and turned into gas, then again enormous volumes of capital will be needed.
There is absolutely no hope whatever, under any solvent economy, that such investment will be available unless there is a proper return on it. It is perhaps worth mentioning, in that connection, that the £1·5 billion of investment in the Selby colliery has still resulted in only two-shift working when certainly there should be three shifts.
The major question hanging over this industry is how realism can be made more general. How do we purge the tribal hysteria which has triumphed hitherto? That is indeed a task for giants. But this takes us back to the days of the noble Lord, Lord Shinwell, who I am always glad to see in his place, as indeed we all are, when he is there. I spoke to him a day or so ago about what I am about to say and he gave me his approval to draw attention to certain quotations from what he has said. He was Minister of Fuel and Power at the time the coal industry was nationalised, so he has vivid memories of the very important and, as he has since said, rather disappointing discussions which took place then with the leaders of the National Union of Mineworkers.
In this House on 19th February, as reported at col. 476 in Hansard, he said that,
"if the miners … had accepted the offer of several places on the Coal Board—it was a definite offer which is on the record of the Ministry of Fuel and Power—we could have avoided this Scargill business. In the public sector, in nationalised industries, there must be partnership".
That is a term which the noble Lord, Lord Shinwell, has used more than once. I believe it is a phrase which is in fact more implicit in the Conservative approach than may perhaps have been recognised so fat in this debate.
I take just two more quotations from the noble Lord, Lord Shinwell. I treat your Lordships to this extract from Lead with the Left,the noble Lord's comments on his first 96 years. On page 136 he says:
"I should have expected the miners' leaders to have immediately agreed to what was likely to produce a new situation in the industry. As part of the partnership proposed they were offered two seats on the National Coal Board, but they refused".
In Shinwell Talking: A Conversational Biography to Celebrate his Hundredth Birthday, which was such a joy to us all, and is a series of interviews with the noble Lord, he is quoted on page 24 as having said that,
"when I was nationalizing the mines, preparing the legislation, and I met the miners' leaders … I said, 'What I want you to do is select a few of your number, an elite, as designate members of the Coal Board. And I want you to regard yourselves not as employees but as partners in the industry' ".
He went on:
"Do you know what they did? William Lawther replied, 'No, we're not interested in that' ".
That is a very important series of revelations about what happened when the mining industry was

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nationalised. For various reasons of discretion the noble Lord felt it proper not to say until recently what I have just quoted.
It is also interesting that he recently put a Question to the Government. I was disappointed that the Government did not immediately seize the opportunity that the noble Lord put before them. In a Question for Written Answer on 28th January, the noble Lord asked the Government,
"Whether, in any possible future reconstruction of the National Coal Board the National Union of Mineworkers might be invited to nominate a few of their leading members—possibly three or four—to share in mutual discussion".
The noble Earl, Lord Avon—alas, he is temporarily absent in hospital—gave what I can only call a typical Civil Service reply which suggested to me that they were at their wits' end—and it did not take them long to get there. He replied:
"The machinery for such discussions with coal mining unions already exists".—[Official Report, 28/1/85; col. 552.]
Of course, they missed the point. It is this missing the point which is serious and could be an important factor in the present situation, because it may well be that a new situation is emerging.
The past 20 years have seen a deepening crisis of confidence between managers and the men. But is not a different crisis now beginning to appear? The NUM executive, with centralising and overt political aims supported, one is told, by a clandestine brains trust of West Midlands university dons—but never mind about them—is more and more at odds with a regional resistance. Do not let us drop into this silly habit, which is common in the press, of saying that some people are moderate and some extremists. In coal everyone is an extremist. Nobody is a moderate. On the other hand, in a sense everybody is moderate and nobody is extreme. The ordinary labels simply do not apply and it is silly to say that one lot are baddies and the others are goodies.
What I am trying to say is that it does appear that something new is happening in the coal industry on the side of the NUM in that in Nottinghamshire, Derbyshire, the West Midlands, perhaps Lancashire and certainly South Wales, there is a regional resistance to centralised leadership. It may well be that what I chose to call a new left is being generated. Unless it is seen to be left it will lack credibility—just as some Bishops may be suspect not only because of what they think but because of doubts about their apostolic succession. The credibility of any movement in the coal industry must be its leftward appearance. So do not let us be confused, misled or particularly upset because that leftward stance is necessary to the case.
As in theology, so in politics, there is much merit in presenting an idea to ensure some chance of serious consideration instead of having it strangled at birth. For that reason the word "privatisation" is out, out, out. It is absolutely out for ever. It is a silly word. It does not apply, and it cannot apply, to this industry. I am happy to note that, at any rate, the so-called privatisation of coal is not in the catalogue of targets made public by my party.
But if that is out, there is another term which is well-established and respected: that is,
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"licensing"—pay for co-operative partnership. If the new left do mean to make a better living out of the mines—after all, that is what they have to propose to their chaps; not quantity of words but success, better wages, better conditions and better investment—could not licensing offer a route? In the oil industry there is the widespread practice of companies farming into or farming out into other people's blocks of development opportunities. I wonder whether possibly the principle of farming out or farming in may not provide a new approach to the need to attract investment and the consequential creation of wealth.
All great truths start as blasphemies, but the fact is that the operations of the open cast executive under licence have been relatively trouble-free. I wonder whether licence terms to co-operatives—to come now to the oblique reference of the noble Lord, Lord Diamond—could not be contrived, either colliery by colliery or even face by face. The terms would vary with prospective profitability, salted by team bonus incentives on the one hand and adjusted for carried or shared overheads on the other. But the key to profitability and to the attraction of investment, whatever government are in office, and wherever capital is to come from, must be free market pricing and the opening, therefore, of the right of the Central Electricity Generating Board to coal imports. Only so can a market price be established by which the Coal Board can judge and measure its performance.
As a matter of fact, in volume terms coal imports could never be very great for a score of different physical reasons. Perhaps the most important one is the problem of landing coal from abroad, and the other one is shipping it from abroad. At any rate, in volume terms it is bound to be relatively small, but its effect on the market for coal and on coal prices could very well be something like the Rotterdam spot market in crude oil.
The Coal Board has to compete. The Central Electricity Generating Board as the largest single customer must also be free to compete. The competitive climate alone can regenerate, in my view, a sense of proportion, and the new left, be it within the coal industry or, for that matter, within the Labour Party, surely faces a worldwide growth of competitive economies. China is the most obvious recent example. It either faces that fact of the world or it withers into insignificance. I believe that both should learn that life is neither a spectacle nor is it a feast; it is a predicament.
6.23 p.m.
Lord Shinwell: My Lords, since the noble Earl is about to sit down, may I venture, since my name has been mentioned and as I have to go in any event, to correct an impression? Something has been quoted from my writings about my submission to the miners on the occasion when I was engaged in preparing legislation for the nationalisation of the coal industry. I beg Members of your Lordships' House not to pay the slightest attention to my writings, whether they be in the book that was mentioned, Lead with the Left, or in I've Lived Through It All, Conflict without Malice, The Britain I Want or the other books, or in my articles in Sunday newspapers. Pay no attention to them.

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What I ask your Lordships to do is what I was myself forced to do. For my book I've Lived Through It All, published by Cassells, I wanted the documents associated with my submission to the miners. I approached the Ministry of Fuel and Power. They refused to let me have them. What was I to do? I noticed the noble Earl, Lord Stockton, here today. I could have said this in his presence and he would have understood it. As I was in some difficulty, I approached him. He was then Prime Minister, and I was on very friendly terms with him. He was always very magnanimous, even when he was provoked, and I found his a very friendly disposition. I told him my story. He insisted at once on telephoning to the Ministry of Fuel and Power: "You must let Mr. Shinwell", as I then was, "have all the notes, a complete record of the discussions that took place, which were taken down by my official people".
The documents are there at the ministry (the Ministry of Fuel and Power as it was then) and there it will be found that I realised, as I was bound to realise, that there would be a great deal of turbulence in the mining industry. I was warned by the late Lord Linlithgow and by his father, and by Lord Lambton and many others of the famous coal land-owners of the period way back 70 or 80 years, about the turbulence that was going to occur in the coal-mining industry over the years. Do not forget Arthur Cook! Never mind about Scargill: Arthur Cook was something far worse than Scargill. We have a great deal of trouble with him. He was a horrible person to deal with.
However, we had this situation, and because of my apprehensions I decided that something must be done. Therefore, I proposed to the miners' union, led by Sir William Lawther—l0 men as leaders; all gone now, I say regretfully—"In the future, I do not want you to regard yourselves as employees of the Coal Board. The Coal Board members are not yet elected, but they are about to be elected. I have singled out some names, but that is as far as I have gone. Before I decide on all the names, I do not want you to regard yourselves as employees but as partners in the industry".
I was horrified when I received their answer. I expected a reasonable answer—or, anyway, a friendly answer. Sir William Lawther said: "Nothing of the sort. We haven't come here for that. You have been talking about the benefits of nationalisation. So have we. We want them now. We want a five-day week; we want three weeks' holiday with pay; we want more rations". They had 12 points in their charter, and they wanted every one of them. I said: "I don't own the coal industry. It's still in the hands of private owners. They are waiting for their compensation, and they are going to get it. There is going to be no confiscation". They gave way on the question of whether we should take the industry over, but we have heard about that. The result was that Sir William Lawther would have nothing to do with it; and he was supported by every one of his team.
Eventually, I tried to get three members to join the Coal Board. There was Ebbie Edwards, a previous secretary of the miners' union; there was Arthur Horner, a communist member; and there was another member whose name I have forgotten for the moment. I approached Horner privately. He was a very reasonable person to deal with, although communist.
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On the question of our national politics he was all right, and certainly he was all right about the mining industry and its future. He agreed he would become a member of the board, but he said I must ask Harry Pollitt, the secretary of the Communist Party. I said, "All right". Pollitt told him: "Your job is not to accept anything in the nature of administration. You have got to fight them"; and Horner came to me and said, regretfully, "I am sorry; I can't take it on".
That is why I dropped from three to two as was mentioned by the noble Lord. First it was three, then it became two because Horner had gone, and then I decided not to proceed any further. Eventually, I came to the conclusion that I must consult my officials and some prominent members of the Cabinet—Attlee himself, Ernie Bevin and one or two others—to get their views about it. They had nothing to do with my submission about partnership. I never discussed that with them; it was never mentioned in the Cabinet. I would have forced this through Parliament without difficulty. The result was that they said, "Go ahead". But the miners would not accept it, and what a pity that was. There would have been no Scargill, and we should not have had the terrible incidents that we have had in recent months. I believe that it would have been the beginning of better relations between the workers and those who are regarded as their employers, whether in state-owned or privately-owned industries. That must be right.
That is the story. Noble Lords need not take it from me. They can take it from the records that were in the possession of the Ministry of Fuel and Power.
6.30 p.m.
Lord Molloy: My Lords, the noble Earl, Lord Lauderdale, said that no one had mentioned the coal industry, but, with the help of my noble friend Lord Shinwell, he certainly made up for that. It has had a very good run indeed. But neither of them made one fundamental point which I think ought to be made, bearing in mind the traumatic experiences in the mining industry over the past 12 months which the noble Earl mentioned. When there is an examination in depth I think that it will be clearly revealed how very nearly the distress caused in the steel industry was caused in the mining industry. But that is not the point of this debate today.
I should like to make this point. The League of Nations in its industrial relations world report, which was carried on by the United Nations, showed that from just before 1938 up to the mid-1970s—and I ask the House to listen to this—British miners were top of the world league for the lowest number of strikes and the minimum amount of industrial unrest. Much has been said about the miners by journalists, television commentators and other horny-handed sons of toil who risk their lives five times a day facing the danger of being impaled on their fountain pens, and it is about time that we stated something good about the miners, which the noble Earl, supported by my noble friend, did so well this afternoon. It gives me great pleasure to support both of them.
I am bound to say that in opening the debate the noble Lord, Lord Thorneycroft, took me by surprise with the moderation of his speech and his well

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informed data. What he said will satisfy everybody who has this one basic idea—to get our country back on its feet. That was the fundamental contribution which he made. At one time I thought that anyone entering the Chamber could be forgiven if he made the mistake of thinking that he was listening to a well-informed Fabianist.
But we must also try to understand this: the industrial base of our country, whether in the private or the public sector, is out of date, and we are not catching up. Something has to be done about that. If I may I say this to the noble Lord, Lord Thorneycroft, we do not want to go back to the period of total political inertia from 1952 to 1964 which is known by world economists as Britain's Rip Van Winkle period, where everyone seemed to be asleep and nothing much was being done. The people who paid the bill were the incoming Labour Government in 1964. They tried to do things, and I think that in 18 months under my noble friend Lord Wilson they did quite a lot. That is the sort of thing that we must try to understand. We must never allow that to happen again, and, as the noble Lord, Lord Thorneycroft, said, neither must any party fix its face rigidly against any form of private enterprise. That would be banal stupidity, but it would be equally silly to say that there must be no form of nationalisation.
I remember when I was in the other place with noble Lords on both sides of our Chamber seeing one of the swiftest acts of nationalistion in the whole record book when Mr. Heath and his Government took Rolls-Royce into public ownership. We must understand that it was vital that that was done. There was no argument about it. The chairman of the directors' organisation, the CBI—not the present one, who is hurtling fast for the 17th century—the president of the TUC and everyone else realised that it was urgent to do that. I believe that this adds up to a number of conclusions, and it is for the good of the nation that these things are done.
I hope later on to say why we in the valleys where I come from believe, for example, that the steel and coal industries should be in public ownership. But we also believe that all these big industries are there to create wealth—to create wealth for our welfare state, as has been said. One cannot have it both ways. We cannot on the one hand say that all private enterprise is making a massive contribution to the welfare state and then set about destroying the welfare state. That is political hypocrisy.
There is another thing that we must take into account. While we want to see the private sector creating wealth, we should also concentrate on preventing death. Before public ownership, nearly 400 miners every year were slain instantly, as I have said before, and another couple of hundred died from what was called "the dust". They have a posh word for it today—pneumoconiosis. These are some of the good things of public ownership. As has rightly been said, there are bad things about public ownership—for instance, in its management—and there are also bad things about management in private enterprise.
For example, in the 1970s the nationalised industries were unsatisfactory in their productive
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targets, but so was much of the private sector. It would appear that to a degree both suffered from low productivity because of poor management. That is not a comforting thought. One cannot point to the great monopolies and say how good they were. They were just as bad. That is why I say that the fundamental issue is for all Great Britain's industries is to start modernising at the very base. When the opportunity is provided in the House I hope one day to enlarge on that.
In preparation for this debate I read in some depth the books of Mr. Richard Pryke. By and large he is hostile to publicly-owned industries, but he is fair too. He points out that we must never forget that in the private sector efficiency dominates because the inefficient go out of business, leaving only the profitable to survive. Despite the fact that he is not particularly enamoured of nationalisation, he says that the nationalisation of shipbuilding, Rolls-Royce and other parts of the motor industry were necessary because those great industries were going to the wall. In his book, Public Enterprise in Practice, in 1971, he makes favourable comments on the productivity of many of the publicly-owned industries.
I turn briefly to a matter which perturbs me and which I know is perturbing people outside the House, particularly active trade unionists who are by no means extremists. As the noble Earl, Lord Lauderdale, said, we must get away from that assumption. I am talking of thinking men and women who are concerned. They go to their branch meetings and have to face the sort of thing that I am talking about. I read an article in the paper only the other day, and we have heard about this before. Civil servants who have worked in the Treasury join big companies to teach them how to pay only the minimum amount of tax—these well-heeled, well paid patriots! Another element is now causing some disturbance, and this is the action of former Ministers. Sir John Nott, who was our Defence Minister, is now chairman of Lazard's, which handles the Government's privatisation business. Admittedly it has great skill and it advises on privatisation, but it is giving advice on the Royal Ordnance Factories, British Aerospace and British Shipbuilders, all of which have connections with the Ministry of Defence.
People in the industrial world are asking, "What is going on here? What sort of a line up is this when an ex-Minister can indulge in this sort of thing?". I do not say that there is anything wrong in that whatsoever, but the Government ought to make it quite clear that there is nothing wrong. Their silence indicates that perhaps there is something that they ought to have said, and I hope that they will say it. These things disturb people on both sides of industry—knowledgeable people who are in management, as well as the real trade unionists who are desperately interested in raising the welfare and standard of life of their members.
I should like to give another example. That is the example of Amersham International, which was formerly Radiochemical Centre, with shares held by the United Kingdom Atomic Energy Authority. Over years it has been involved in massive research in a very risky area, costing millions of pounds. This research has demanded great skills in handling radio-activity

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safely. Their achievement is to their great credit. That should have remained with the nation. It should not be handed on a plate to people whose biggest contribution is merely the fact that they have lots of money. That is bad.
British Aerospace was a public corporation. In February, 1981, Kleinwort, Benson, on behalf of the Secretary of State, made the public sale of 100 million of ordinary shares. The Secretary of State now has about 48 per cent.; the trustees of the employees organisation have a measly 3.24 per cent., and all the other shareholders have 48.3 per cent. That is taken from this year's annual report of British Aerospace.
I think I had better quote word for word what they have to say:
"whilst profit in cash terms has been rising steadily since 1979 and deflated turnover since 1978, profitability (return on assets) was below its 1978 and 1979 level in 1983 after almost 3 years of privatisation".
This is quoted from that official report. I cannot guarantee that it is correct but it has never been challenged. I believe, as the noble Earl, Lord Lauderdale, has said, that these are the matters we must bear in mind in order to keep a balance of what is going on.
I think we should also acknowledge this. In the great publicly-owned industries there is literally a myriad of small firms that depend on the extraction industries such as the coal mine industry, the fuel industry, the big steel industries, the gas industry and the United Kingdom atomic energy industry. Hundreds of small private firms absolutely depend upon them. Sometimes we do not take enough cognizance of this. We think that when such an industry is nationalised it means that everything comes under the State, when in fact there are hundreds of small firms, employing thousands of people, who gain a great deal from that industry.
There is another matter which we have to acknowledge. It is acknowledged by sensible private industry. It is this. In those years immediately after public ownership there was a great leap forward in relation to public safety at work. Social responsibility at work was increased enormously. I think that is to the credit of the nation as well as of the publicly owned industries.
A moment ago I was explaining why we in the South Wales valleys believed that public ownership, or nationalisation (which was the word we used) of the coal industry and the steel industry was absolutely necessary. It was not because Sankey and those other 10 judges in 1924, after their examination, were totally unanimous that nationalisation was the answer. We knew it before they did. They merely confirmed what my grandfather had been saying. What I want the House to try to understand is this. They did not say it because they wanted us all to own a coal mine so that we should become millionaires. It was not said for that reason. It was because we really believed that our country could best be served if the nation itself would accept responsibility for this great industry.
I happen to believe that the mixed economy is good, that it is a sensible way of working, so long as the fundamentals are of the property-owning democracy. The first person that I heard say that was Lord Attlee, when he was Mr. Clement Attlee. He said that in a
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debate held actually in this Chamber when this Chamber was used as the House of Commons. It was when one of the great public ownership Bills was being introduced. He said that a property-owning democracy meant that a democracy owned the fundamentals of the property and the caretakers of the people were those who they had sent to the House of Commons. I thought that was a very formidable argument.
The same applies to all other forms of public ownership. Will we really privatise the roads when the GLC is abolished? Will there be a system like that in some places in America, where one must throw a handful of coins into a gate before one can move on because that little piece of road may be privately owned? I do not think that the nation will stand for that for one moment. If it was said that every road and every pavement throughout Great Britain, from Land's End to John O'Groats will be returned to private enterprise, there is no way the nation will stand for that. It is an absurdity. That same argument applies to many other matters.
In conclusion, I should like to say this. I happen to believe that nationalisation and public ownership, together with private industry, can tremendously help this nation. In the early years after the war I think we developed the principle of the mixed economy. I do not know what is happening to my country at the moment. I am not very happy about it. I have not been happy for the past 10 years. Earlier this afternoon it was said to me that we were suffering from a kind of arteriosclerosis. Well, we must get over it. It happens in public industry and in private industry. This must be fundamental.
I believe we have also to acknowledge this. All that has happened in relation to privatisation is this. As something has been privatised, so unemployment, the greatest scourge of all our nation, has gone up. That ought to be given priority. Before it is decided whether anything should be privatised or nationalised, we must consider what we can do to make it efficient and to bring skilled men back to work.
Any poll will indicate to your Lordships that the greatest concern of the British people this afternoon is unemployment and the awful scourge that it is. Therefore I believe that if we are to work together in both private and public enterprise to see that the scourges of unemployment and bankruptcy are reduced until they have vanished and are vanquished, what is required is a brand new base for British industry. I have not time to develop that tonight. When we attack this scourge of our falling behind Japan, falling behind France, falling behind America, whether in the private or public sector, whether we work in or favour either the public or private sector, we should at least acknowledge this. We must move towards an agreement on the principle of a sensible, mixed economy. The motto on all sides of that economy must be to serve the British people.
6.48 p.m.
Lord Bruce-Gardyne: My Lords, I should like to join with other noble Lords in thanking my noble friend Lord Thorneycroft for introducing this subject this afternoon. Personally, I always find it rather alarming to speak in a debate initiated by my noble friend. That

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is because he always sets such a remarkable standard of charm of delivery and coherance, and effectiveness of arguments that the rest of us always feel rather muted by comparison. He certainly has provoked a wide-ranging debate this afternoon. I must admit that until the noble Lord, Lord Molloy, told us, I had not realised that one of the objectives of the nationalised industries was to set an example in preventing death. I must say that that sounds to me like an ambitious target.
A number of my noble friends, including, most notably, my noble friend Lord Gowrie, have advanced what they see as being the main purposes of privatisation. I should venture to put forward my own brief list, which overlaps with but does not entirely coincide with that which was advanced by my noble friend from the Front Bench.
In ascending order of significance and importance, it seems to me that one can identify four objectives to be achieved. The first is the financing of the PSBR. The second is the release of the management of public corporations from the trammels of state intervention. The third is the opportunity for both thousands of employers and potentially millions of private citizens to participate in the direct ownership of these businesses through shareholding. The fourth is the restoration to the customers of the benefits of choice and competition. It was the fourth of those objectives which I do not think my noble friend mentioned from the Front Bench. It seems to me that that was perhaps not a wholly unimportant omission.
Perhaps I may take those four objectives in order. The financing of the PSBR has always seemed to me to be a vastly overdone element in the affair. I sometimes think that the Treasury is a little bemused by its own book-keeping. I am not at all sure that that bemusement is not sometimes shared by other noble Lords on both sides of the Chamber. In fact, I thought I detected an element of bemusement even in the speech of the noble Lord, Lord Diamond. Surely to the extent—and it is to the overwhelming extent—that the purchase of shares by the institutions in companies that are privatised comes from money that would otherwise go into investment in gilts, we are really talking about two sides of the same coin. All we are really talking about is not reducing the PSBR, but an alternative method of financing it. This, to my mind, is something that the Treasury and some of its critics are all too inclined to overlook. I would therefore put this a very long way down the scale.
The argument of the independence of management achieved through privatisation I think is important. It is all very fine for the noble Lord, Lord Diamond, to say that there is no reason to denationalise for that purpose and that Governments can simply desist from interfering. There is something to be said for putting temptation beyond arm's reach in this world, and that applies to Governments as it does to individuals.
For my money, the last two arguments are crucial. We have talked, certainly in this party, as my noble friend Lord Renton pointed out (he was corrected by the noble Lord, Lord Boothby, on its precise origins) about the achievement of a share-owning democracy for all of 30 years.
Lord Renton: My Lords, the phrase that we have always welcomed, and I believe supported, in our party is not a share-owning democracy but a property-owning democracy, which includes the ownership of one's home.
Lord Bruce-Gardyne: My Lords, I accept entirely that correction from my noble friend. I should have said that the concept of a share-owning democracy was a rather later evolution of the same concept. Nevertheless, I would argue that it has been a professed objective of successive Tory Governments since the late 1950s to achieve wider share ownership. In practice, we have seen a steady contraction of the share of individual equity owners in the totality of equity ownership—until, that is, this Government arrived. This Government, for the first time, have actually begun to achieve, on a major scale, a reversal of that tide. It is an enormous achievement.
I was astonished when the noble Lord, Lord Diamond, talked about an analysis of the share register of British Aerospace. What about British Telecom? Here we see, at one single stroke, the totality of individual equity share ownership almost doubled. I am amazed that the noble Lord could talk about the spread of share ownership, or rather the absence of it, without any reference so far as I could detect to what has happened in the case of British Telecom. That is, I believe, a fantastic achievement.
Lord Diamond: My Lords, it is good of the noble Lord to give way. First, British Telecom is a very special case. Shareholders either have vouchers that last three years, I think, or, as in my case, a bonus issue under which you have to hold the shares for three years before you receive your bonus. Secondly, it has only just been made. One has to wait until at least three years after the event to see how many free shares are still held.
Lord Bruce-Gardyne: My Lords, yes. I accept entirely that we must wait and see. Nevertheless, I find it extraordinary that the noble Lord. Lord Diamond, could conduct his strictures on the absence of the spread of share ownership without any reference to what has happened so far at any rate in the case of British Telecom.
Having said that, all these considerations, to my mind, should properly take second place to the argument of competition and the widening of consumer choice. That is not just my own estimation. I should like to call in evidence the present Financial Secretary to the Treasury, who in a most important speech in November 1983 pointed out, first, that,
"activities such as electricity generation, the production and marketing of gas, coal production and sale, telecommunications, bus transport, sewerage treatment and disposal are in no sense natural monopolies. The monopolies in these areas were created (not natural) and it is by no means self-evident that they are necessary or even beneficial".
He went on from that to say, even more specifically:
"On its own, privatisation is not the cure for all ailments. We are not so naive as to think that an unrestrained monopoly in the private sector would be less inclined to exploit its position than the monopolies in the public sector. The key here is to ensure that greater competition goes hand in hand with returning industries to the private sector".

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Finally, he stated categorically:
"The primary objective of the Government's privatisation programme is … to encourage competition".
That was the precept. I am bound to say that I have some slight qualms as to whether the example precisely follows that precept. In the case of British Telecom, yes there is an element of competition introduced. But it cannot be said to be a very broad or extensive element of competition. In the case of British Airways, its dominant market position has been retained.
In each of these instances it can be argued that there were extenuating circumstances, at any rate to the extent that the Department of Industry was absolutely hell-bent on the protection of what it called the concept of the flagship for British industry. In the case of British Telecom there were reports—I do not know whether they were true—that some interesting bargains were supposed to have been struck with the trade unions on the understanding that competition would not be allowed much rein after privatisation. In the case of British Airways the whole question of injecting genuine competition was undoubtedly complicated by international agreements regarding the pooling of airlines which it was not within the ability of Her Majesty's Government alone to change.
I cannot see any particular explanation or extenuating circumstances in the case of British Gas. What we are proposing, I must say, has me not merely bemused but somewhat alarmed. We were told at the time of the last election that it was the Government's intention to inject additional competition into the gas industry. That seems to have passed us by. I was interested to read this morning in the Financial Times the suggestion that the regulatory agency to control the British Gas Corporation after privatisation might be called OGRE. That seems to me to be a very appropriate name, because it takes one to recognise one. I have always thought that the prospect of Sir Denis Rooke rampaging free throughout the private sector was one to scare the daylights out of some of us.
I listened with great care to what my noble friend Lord Gowrie said this afternoon on the subject of the supervision of the British Gas Corporation. I hope that my noble friend will cast a glance sometime at what Sir Denis Rooke himself has had to say about this prospect. In the Observer newspaper the other day he talked about what he planned to do with his gas showrooms, saying:
"We could team up with other companies to develop integrated sales of not just gas appliances, but possibly other goods as well. There is the North Sea. For the last few years we have been restricted from applying for licences in certain areas deemed to be oil provinces. It is illogical. We would certainly go back into oil—exploration, not refining, that is",
he said most generously.
Furthermore, we read:
"Just what sort of regulatory body"
is to be introduced,
"Rooke says he hasn't yet worked out".
That, I must say, is big of him. All that I can say is that it will need a pretty powerful regulatory body to keep a grip on that gentleman once he is released from any degree of ministerial supervision and control.
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An opportunity is being missed in this instance. I believe that there is every reason to seize the opportunity to widen the area of competition, in particular for the supply of gas from the North Sea. I realise that there is the opportunity for the Gas Corporation's pipeline system to be used as a common carrier by other potential suppliers under the Oil and Gas Enterprise Act, but nothing much seems to have come of that and I am not in the least surprised. I should think that trying to pump gas through one of Sir Denis Rooke's pipelines would be a highly hazardous operation, and even more so once he has gone private.
We need to look carefully at this again. We should recognise above all that if we are to introduce competition into these industries the time to do it is before they go private, because once the share sale has been completed it becomes a great deal more difficult to change the whole basis on which the share sale was undertaken.
I do not wish to delay your Lordships much longer. I want to raise one specific matter, which I certainly should not ask my noble friend to comment on tonight. Although a narrow matter it is one which is of some concern. When Britoil was originally privatised in 1982 the offer for sale, which was a document which took up 12 pages in the national newspapers, announced in large headline letters on the front page of the offer document that individuals, in the plural, who retained their shares until the qualifying time at the end of this year, 1985, would be entitled to a fidelity bonus issue.
Back on page 12 of this prospectus, in very small writing, there was the warning that share applications in the names of husbands and wives together would be disallowed for the purpose of the bonus issue. I am bound to say that I have the impression that large numbers of small shareholders who filled in the coupon for that equity offering were quite unaware of this small print stipulation. I know that some of them have already raised the matter with the Treasury and have been told that that was clearly spelt out in the prospectus, and that cannot now be changed.
I would be slightly more convinced by this argument if we had not seen something which to some of us looked suspiciously like a retrospective change in the prospectus in the case of Enterprise Oil when it was deemed necessary to prevent RTZ taking a slice of the equity that had not been foreseen. In any case, I put it to my noble friends that if this small print provision in the Britoil share offer is not reviewed before the bonus issue takes place this winter, I suspect that there is going to be a good deal of unexpected indignation. That is a warning I think we should bear in mind.
I want to conclude by simply saying that I go along entirely with what the Financial Secretary said to us two years ago:
"The essence of privatisation is the achievement of competition and the opening of consumer choice".
I do not believe that it is necessarily a better place for a monopoly to be in the private sector. I sometimes suspect that the right place for a monopoly, if that is really all we can achieve, is to leave it where it is under the supervision and control of Ministers.
7.4 p.m.
Lord Taylor of Gryfe: My Lords, it is always a pleasure to follow the noble Lord, Lord BruceGardyne. I want to take up only two points which he made briefly in this lengthy debate. One is the element of consumer choice, which obviously concerns the noble Lord deeply. I accept what he has said, that even with the provisions of the watchdog for British Telecom we have not yet guaranteed a situation which protects the public against the abuse of monopoly.
It is too early to say how far the limited powers of Oftel will safeguard the interests of competition as the noble Lord, Lord Bruce-Gardyne, requires. But I welcome the noble Lord's comment because the same problem exists in relation to the projected sale of British Gas. Like the noble Lord, I commend a reading of the article in today's Financial Times which analyses this problem in great detail. I do not believe that it is justified to move into this uncharted area without some fairly good guarantees that consumer choice and protection against the abuse of monopoly power will be taken care of. In the case of British Telecom and also in the case of British Gas, we may simply be exchanging a public monopoly for a private monopoly. In my view a public monopoly is more likely to be reassuring and protective of the interests of the consumers against the abuses of monopoly.
The other point which the noble Lord, Lord BruceGardyne, made was that privatisation inevitably relieves management from the trauma of Government inteference. There is no reason in the world why we cannot devise a structure for relations between Government and management which gives management the powers and responsibilities of management and permits it to exercise its imagination and initiative without necessarily transferring the undertaking to private ownership. It should not be beyond our wit to achieve that end.
This debate has gone on a long time, and I am not referring simply to this afternoon's debate. Of the nine speakers who preceded me in this debate seven were Members of Parliament and have pursued these matters over a long period in another place, and this afternoon, they have fought battles of long ago. Nothing divides the parties more clearly than the subject of this debate. Privatisation and state ownership, are matters of deep ideological commitment on the part of both parties, and they have divided the main parties over the years. It is this which distinguishes the Alliance from both these parties. The noble Lord, Lord Diamond, has stated our case this afternoon, taking a totally pragmatic approach to this problem, recognising that ownership is not necessarily the critical area, that efficiency in running the business and the ability to give management its head are important, and that sometimes even the question of ownership can be irrelevant.
These are widely diverse industries. Some are in high technology, some in coal mining, some in gas, and some in other areas of important national activities such as shipbuilding, defence, and so on. All of these are different in their operations, their experience and their problems. If there has been one thing which has plagued consideration of nationalised industries it has been the desire of successive
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Governments to produce blanket solutions for a great diversity of industry. We have suffered for it.
The Social Democrats and our Liberal allies take the view that we should be quite pragmatic about this, and examine these industries in the light of whether what we are doing will achieve maximum managerial efficiency and will contribute to the creation of greater national wealth.
I must say to the noble Lord, Lord Thorneycroft, that his opening speech was a reasonable speech. Indeed it moved close to some of the things that have been said from these Benches this afternoon. It is argued that somehow or other the privatisation of industry will automatically achieve a greater degree of efficiency. The case of British Aerospace was mentioned by the noble Lords, Lord Diamond and Lord Molloy. But let me quote another, perhaps independent authority. I refer to the Financial Times' editorial on this matter last week. In talking about the experience of Volkswagen in Germany, it says:
"In spite of a large public shareholding in Volkswagen, that company has successfully acted like a member of the private sector.
"As this example shows, public ownership, whether complete or partial, is not a bar to efficiency. Privatisation is not a panacea. In some cases, notably the utilities, there are real disadvantages in converting a public monopoly into a private one".
That is our case. It might even be said by the Government—and the noble Lord, Lord BruceGardyne, mentioned this—that privatisation will liberate companies from the rigidities of the public sector. As was said in another article:
"This never stood much examination because virtually all the companies privatised were pretty well run anyway and quite a few, (Enterprise Oil, Britoil, Amersham International, Wytch Farm, etc.) would never have existed in the first place but for the entrepreneurial initiative by the public sector".
There is no justification for saying that because it is in the public sector there is induced inefficiency. That is not demonstrated by the facts.
In the balance sheets of the great clearing banks one can see the vast provision now being made for failures and bad debts. That is some indication the private sector is not by any means free from inefficiencies or even failures. The fate of great companies such as Dunlop is another example of this. British Leyland is another case I might cite.
Lord Bruce-Gardyne: My Lords, does the noble Lord not agree that the experience of some of the banks with their bad debt provisions might suggest that it is not only the managements of the manufacturing and commercial companies that need some scrutiny, but the managements of the banks themselves?
Lord Taylor of Gryfe: My Lords, I take the point, but I was about to make my point by mentioning one of the interesting companies mentioned in the press today, British Leyland. How glad we are to see that its corporate plan has at last been approved, although it has been in the Government machine since last November. Let us look at the background to that great industry. While under private ownership it should have been restructuring and should have been investing substantially in new plant and equipment to be competitive with Germany and Japan, but it continued to pay our dividends until it was practically

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bankrupt. Only now, under public ownership, and only now after giving Sir Michael Edwardes free rein under public ownership to exercise his managerial skills has that company been restored to some degree of viability.
We cannot argue that we have to transfer these businesses into private ownership to achieve efficient management. I want to say something about the use of resources. As has been said by the noble Lord, Lord Diamond, what we are doing now is to realise a capital asset. We are spending what is on two things. We are spending it on promised tax cuts which have not been delivered by monetarism so far. These tax cuts will be passed on to the consumers. Some of the money may be saved but a good deal of it will necessarily be spent on imported goods. The other thing for which we shall use it is to pay for the vast burden of social services, notably unemployment benefit. If that money or a part of that money were invested in capital projects creating new capital assets we should not have the substantial burden that falls on us as a result of this ever-increasing army of people who are denied the right to create wealth. We are concerned that the resources being realised from this exercise are being dissipated in this way.
I want to say another word about the impact of all this on the financial market. A considerable programme lies ahead. We are talking about £2 billion per annum, which will require to be generated in the market for the shares of the privatised companies. It means that in 1986–87 there will be a third call on British Telecom of £1,200 million; on the National Bus Company another £200 million; on the ordnance factories presumably £300 million; and on British Nuclear Fuels perhaps £350 million. To this must be added British Gas with a possible flotation which will bring the total up to £8 billion.
On top of that the Government quite rightly and courageously have decided to go ahead with, or at least have given a fair wind to, a Channel Tunnel. They have said also that the Channel Tunnel will be required to be financed by the private sector and from the market. What kind of impact will this have on the market when we are talking about a demand for £8 billion from the market for these industries that I have mentioned plus the Channel Tunnel? I should like the Minister to address himself to the question of crowding out. If this demand is made on our resources it could limit the capacity of private industry to raise finance.
The Earl of Gowrie: My Lords, it is a global market.
Lord Taylor of Gryfe: My Lords, I am aware that British Telecom and others, obviously including British Gas, will require to be floated internationally, but the substantial impact will be on the United Kingdom market. Lord Diamond mentioned something like 80 per cent. The overall outlook for the equity market in this context does not appear so rosy as it might with the prospect of having to find as much as £8,000 million by 1998, even assuming that only part of British Gas is floated. That is a serious matter which has to be thought about, because I hope private industry will make some demands on the market in
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the light of the anticipated improvement in our economy.
Finally my credentials for speaking in this debate are the fact that I served on the board of a nationalised industry for 11 years and that I was chairman of a minor nationalised industry. I lived through the problem of Government pressures on nationalised industries. I was in British Rail. In British Rail we had to justify all our plans to our sponsoring Minister, then we had to take the plans to the Treasury. The Treasury in turn examined the plans and there was the management audit team appointed by the Monopolies and Mergers Commission who also had to look at our investment plan. We had two public accounts committees next door and the Treasury set up another audit committee to look at the affairs and the corporate plan of British Rail.
We shall never run nationalised industry with such a burden of bureaucracy and oversight frustrating management in its best endeavours. Neither shall we attract to the nationalised industries the kind of people who are imaginative and bright. They will not operate in that environment. What we should be looking at in this debate is how we can relieve the nationalised industries—and there are very good people and vast resources invested in those industries—of this great burden of bureaucracy which both the Conservative Government as well as the Labour Government have imposed upon them. How can we relieve them so that they can be as inventive and imaginative as the private sector? Tht is what this debate should be about, and not about this and question of privatisation versus nationalisation.
That ideological debate is past. This country cannot afford a switch in the future if a Labour Government gets into power. We cannot afford to have the industries switched back to public ownership as has been promised about British Telecom and other of the public issues. This country cannot afford that sort of exercise. Let us stop this ideological nonsense and let us look at things practically with a view to achieving the greatest degree of wealth creation to the benefit of our country.
7.21 p.m.
Lord Campbell of Alloway: My Lords, no doubt most noble Lords would agree with the noble Lord, Lord Taylor of Gryfe, that we simply cannot afford a switch back. Furthermore, all noble Lords, I suspect, would agree that this is an issue which divides the political parties. But where the dividing line lies has not yet been made plain in this debate, and one awaits, as the French might say, with impatience, the speeches of the noble Baroness, Lady Seear, and of the noble Lord, Lord Barnett, in winding up. The importance of this debate was reflected at the outset by the manner in which it was opened by my noble friend Lord Thorneycroft. Without hint of condemnation, skirting the arena of extremist political contention, he held fast to the middle ground of what is possible, what is practical and what is sensible. He justified the selective transfer of business activities from public to private sector on the objective test of wealth creation in the best interests of the nation.

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"Privatisation" is a horrible word. It does not give full credence to the process of selection—and this is a policy and process of selection. My noble friend gave his unqualified support from the wealth of his own experience to this hallmark of policy of the Thatcher Administration. The noble Lord, Lord Diamond, also drew our attention to the absence of any economic rule as to the size of the public sector which all countries have to have. In this regard, as I understood it, he supported the approach of my noble friend Lord Thorneycroft in principle. But the policy of the Government which claimed the support of my noble friend Lord Thorneycroft was a process of selection. It was a process of examination of each case on its merits, which is the principle espoused, as I understand it, by the SDP.
But then we find the mailed political fist in the SDP's velvet glove of neutrality. The charge made by the noble Lord, Lord Diamond, is that in the implementation of this policy of selective transfer, first, we did not make the right selection; secondly, we undersold (to use what seems to me to be, perhaps because I am a Conservative, a rather unattractive phrase) in a mad scramble for cash; and, thirdly, the cash was misapplied.
These triple charges are wholly without foundation or justification, as the record of events demonstrates. First of all, those selected went into profit; secondly, as to price, the only reason why it doubled over two years was because it went into profit; and, thirdly, if it is applied in the reduction of taxation, whether directly or indirectly, it is not misapplied. To suggest, as the noble Lord, Lord Diamond, suggested, that this is an example of post hoc propter hoc seems perhaps—and I say this with the greatest respect to him—to have reduced the order of reasoned debate to manifest absurdity.
The noble Lord erects, furthermore, a theoretical Aunt Sally of automatic profit instead of loss, an automatic improvement in long-term investment plans. But the noble Lord must know far better than I, who has no experience of Government and no experience of politics, that there is nothing inevitable, there is nothing automatic, in any rearrangement of business. It is a question of selection. It is a question of judgment, and, so far, events have vindicated the judgment on these scores. As my noble friend Lord Gowrie said in his speech, this selective transfer from public to private ownership is but a facet of general policy to mould and establish in our country a new order of society which is far from inconsistent with the general trends elsewhere in the world, to which my noble friend Lord Thorneycroft happened to refer.
Privatisation, as it is called—and how I hate the word; it is so imprecise; but there it is—is partial. It is not total; it is selective. It is not, assuredly—and this is the problem that using this awful word creates—the sort of Land's End to John o'Groats idea which germinated in the mind of the noble Lord, Lord Molloy, where all the paving stones from Land's End to John o'Groats were nationalised. The concept is a total misconception. Furthermore, this concept of the selective transfer from public ownership to private ownership on the principles enunciated by my noble friend Lord Thorneycroft is not to be considered in isolation but in context with the general policy and the
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new order of society which has already taken root under our very feet.
The ideal, first of the property-owning and then, under the Thatcher Administration, of the share-owning society is on the way to becoming a reality, in part (one must not over-emphasise the extent, but to some degree) as a result of the transfer of this business activity. But it is nonetheless a significant part. There is now in the process of wealth creation a new dignity, a new importance, a new sense of personal involvement, accorded to each and every member of the trades unions; and industrial relations have entered a new phase. Think back for eight years! They have entered a totally new phase: a new dimension of partnership, a new dimension of trust. We now have (which we never had before) unprecedented training schemes to meet the demands of the new technology. We have contained the ravages of inflation. All this so that by the creation of wealth, by selling to the markets of the world, we shall balance the books. The sole source of wealth creation is the pursuit of profit from business activities.
I am sorry that the noble Lord, Lord Bruce, is not in his place at present, but I truly sought to understand what he was saying to your Lordships. It seemed, with the greatest respect to him—and I would say more if he were in his place—that he stood the subject on its head with the skill of a practised accountant. He created a myth. He established the slogans. Then we got to the stage of the interference. We got to the position of being hit on the head with a hammer. Then we got to the computation of loss which suddenly seemed to be criticised on the ground that it was used for the reduction of taxes. Perhaps it is my own inadequacy—it probably is—but all I can say to your Lordships is that to me this exercise of HumptyDumpty economics simply is not understood.
Furthermore, the noble Lord, Lord Bruce, seemed—and one will have to look at Hansard, and it is a matter for your Lordships' impression—to confuse the creation of wealth with the sharing of wealth. Those are two entirely different problems. One is economic, with which this debate is concerned; the other is purely political, with which, as I understand it—I may be wrong—this debate is not concerned. Furthermore, he sought to define the creation of wealth, of putting money to work, with human endeavour. Is it not quite obvious that that process may either result in a profit or a loss; and a loss creates no wealth.
Lord Molloy: My Lords, before the noble Lord leaves that point, may I tell him—he having made his comments about me—that there are still a couple of important roads which cause great hazard and havoc in London which are privately owned and are toll roads, where one pays a toll.
The other point that my noble friend mentioned was the argument which was submitted by what can be called—simply for purposes of identification—Right-wing economists, that they are doubtful whether the Government are on the right tack when they are simply privatising big industries to collect large sums of money for the Chancellor in the hope that this will make some tax relief for the rich and they feel that that is not a correct way to go about it. That is not only the

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point of view of my noble friend Lord Bruce of Donington but even journalists in substantial journals and Sunday newspapers who would not agree with much of what he says.
Lord Campbell of Alloway: My Lords, I gave way to allow the noble Lord. Lord Molloy, to ask a question. But in fact he made a statement. With the leave of the House, I should prefer to leave it to the noble Lords who wind up to deal with the issue that he raised if that would not be considered discourteous to the noble Lord, Lord Molloy.
The point I was coming to in my speech was that when this administration took office, 15 per cent. of the total investment in our economy, 10 per cent. of the GDP, 1½ million workers, were all within the ambit of state control. If the present policy of privatisation were to be pursued until the end of this administration it is suggested by my noble friend Lord Thorneycroft, on whose judgment I totally rely, that only about 10 per cent. of this system of state control will have been dismantled. If that is right, one has not only to look at the process of selection but one has to look at the question of proportion.
It is essential therefore in any debate on this subject to keep a sense of proportion as well as a sense of objectivity. Only where the creation of wealth demands this selective process of transfer should we then unhitch certain business affairs from the lumbering wagon of Government service and the ceremonial plod of the departmental dray horse. Whether we like it or not, we have to bring our manufacturing service industries into line with the exacting standards of the new technologies and sell in the markets of the world. These are markets and technologies which we are no more able to control or regulate than King Canute was able to tame the waves of the sea. We cannot set some easy striking rate for change. We have to react at the speed dictated by the commercial environment.
The ethos of Government service is incompatible with aggressive drive essential to viable business. Public service administration suffers from inherent defects which inhibit the creation of wealth. The debilitating feather-bed subsidy of state saps the vitality of a competitive spirit. The interests of consumers are discounted, the standards of efficiency lapse, and this selective process of transfer from public to private ownership is not only justified but, as my noble friend Lord Gowrie said, vital and essential.
The means of implementation of course vary according to the circumstances; from hiving off as in the case of Jaguar, or the British Rail hotels, to the wholesale dismantling of the state monopoly as in the case of British Telecom. Our inventive genius, technical skills, the strength of our institutions, are second to none in the world. We must therefore harness these and, by selling to the world, maintain and augment our living standards; and the transfer of activities from the public sector to the private sector has already afforded an important contribution. The details of this have already been dealt with by other noble Lords.
It is wholly inappropriate for a late speaker—and I apologise, I would not have been so late but for an
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intervention—to refer to statistics in any detail, many of which can be found in the Economist of 23rd February, 1985, under the engaging subtitle "Making the Modern Dinosaur Extinct". What do we do with the extinct dinosaur? We set up new top management which combines the expertise of the old guard with the competitive urge of the new. We convert the mentality of order taking into the art of selling. We bring decision-making into line with the requirements of customers and the taking of commercial risks. We inculcate a sense of involvement, realism and leadership in the workforce. We encourage technical innovation. We ensure that pay, promotion and staffing are not dependent upon length of service or grade structures, but are dependent upon merit, motivation and aptitude. We introduced those longterm investment policies. I disagree, with respect. with the noble Lord, Lord Diamond. The records show that those investments, certainly with Cable and Wireless, with the telephone exchange in Hong Kong and the investment in China, would never have been possible under state control.
In conclusion, as my noble friend Lord Gowrie said, there is still a long way to go. The selective transfer of business and activities from public to private ownership affords an important opportunity for employees to gain a stake in the business which provides their livelihood. I simply do not understand the noble Lord, Lord Diamond, when he says, "but it is not automatic". Why should it be automatic? What matters is that there should be the opportunity, the free choice. Indeed as everybody knows, 96 per cent. of British Telecom employees are shareholders.
All this of course is the antithesis of the Clause 4 dogma of state control of the sources of production. As my noble friend Lord Gowrie has said, the flag still flies over Transport House. The Labour Party is said to be committed to reversing this policy. The militants in the Labour Party are overtly dedicated to obstructing it. The other day, at a Labour solidarity meeting in London, Mr. Hattersley said:
"Party members do not have to choose between socialism and common sense."
Perhaps he knows that it is about as easy to eradicate this hallmark of Conservative policy as to unscramble an egg. Is this the harbinger of the prophetic tidings of my noble friend Lord Thorneycroft, surprisingly echoed by the noble Lord, Lord Taylor of Gryfe?
7.42 p.m.
Baroness Seear: My Lords, I think it will be agreed that in your Lordships' House the lunatic fringe in both the Conservative and Labour parties is grossly under-represented. No doubt for that reason there has been, I think, common agreement on all sides that we shall continue to have a mixed economy. No speaker today, so far as I have heard—and I apologise because I have not been able to hear every speech in the debate—has suggested that we should go totally for what I suppose has to be called privatisation; though I wish that somebody would give a prize for finding a different title.
The Earl of Gowrie: My Lords, may I suggest "liberalisation" to the noble Baroness?
Baroness Seear: My Lords, I should be delighted to accept "liberalisation", with some modifications—
The Earl of Gowrie: My Lords, with a capital "L"!
Baroness Seear: My Lords, the noble Earl was attempting to trap me and I was about to fall into the trap.
As I said, nobody has suggested that we should have total free enterprise or total public control. So what we are really confronting and what we have been considering during most, if not all, the speeches we have heard this afternoon is: how do we get the best possible public enterprise and how do we get the best possible private enterprise, since we are going to have them both for the foreseeable future?
I think it has to be admitted that we have never really worked out a satisfactory theory of public ownership in relation to the inevitable link between public accountability and the proper running of a large-scale business. I speak now from memory—I have not checked my sources, and I see that the noble Lord, Lord Shinwell, is no longer here—but I understand that the noble Lord said, when he became Minister of Fuel and Power (I paraphrase): "I thought, after all the discussion about nationalisation, when I took over this office I would find a blueprint with all the thinking worked out as to how nationalisation was to be introduced; but I found nothing".
A great deal of thought had been given to the politics of nationalisation and practically none to the organisational problems of nationalisation and the all-important problem of the relationship—the inevitable relationship, since it is public—between Government and the industry itself. Nor have we ever satisfactorily solved the problem of the position of the consumer in a public monopoly. With almost 50 years of experience behind us, and with a great many very good brains in this country thinking about it, we have never solved those problems.
I believe that some of my noble allies have suggested that there is no reason why there should not be a satisfactory relationship; and in theory no doubt that is true. But I remember the late Lord Beeching-saying on one occasion that what really justified paying a decent salary to the chairman of a nationalised industry was that he kept the politicians out of the hair of the people who were trying to run the industry. He said that was the most difficult job, and that was the job for which he needed the highest reward.
I remember also that some 10 years ago, together with the noble Lords, Lord Chapple and Lord Kearton, I had the privilege of serving under the noble Lord, Lord Plowden, on an inquiry into the structure of the electricity industry. As your Lordships would expect with personnel of that calibre, we produced an extremely good report. But it was completely mucked up by the politicians. In fact, after lengthy political arguments it was buried. Of course it was not the first inquiry of a very distinguished nature into the electricity industry which had been buried by the politicians. But that industry was unable to make the moves it needed to make without political action, and so it limped on. I must say that from what I saw of it, though I would not claim to be competent to judge its efficiency, it seemed to me in many ways an extremely well-run industry with very devoted and highly
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qualified people in it, determined to make it a good industry. But it was being seriously handicapped by the fact that it could not make the organisational changes that were necessary without political sanction in the first place; and that political sanction was not forthcoming.
That cannot be a good way in which to run public enterprise. I do not know what the answer is, and nobody has produced an answer. Unfortunately in the nationalised sector if things get too bad they are not replaced by the normal processes of decay followed by death, because nationalised industries suffer from the burden of immortality. You cannot kill them; they go on indefinitely, however much they may limp in the process. So the first thing I would say is that if we are going to continue with nationalised industry, as indeed we are, we really need to give some very much more effective thought to what that relationship is to be than we have succeeded in doing so far.
We also need to think much more about the position of the consumer. I do not think that anybody seriously believes that the consumer councils have done the job of protecting the consumer in the monopoly nationalised industries. For example, my noble friend Lady Burton is constantly pointing out how handicapped and hobbled the consumer councils are in their job of trying to look after consumers in an economic situation in which the market does not give them the protection that free competition would give them.
Therefore on the one side we need to give a great deal more thought as to how to get the best possible results out of public enterprise. But then it does not follow that private enterprise is necessarily so good, so efficient and satisfactory from the consumer's point of view. In particular, it is going to deliver the goods only if it has what to a large extent the public sector does not have: that is, the benefit of genuine competition. Indeed, almost my only quarrel with the speech of the noble Lord, Lord Bruce-Gardyne, was that he took the words out of my mouth, and particularly in respect of the prospective denationalisation of gas. It seems to us on these Benches, as it seemed to the noble Lord, Lord Bruce-Gardyne, unlikely to say the least that a private monopoly is any improvement on a public monopoly from the point of view of the consumer. It could be a satisfactory wealth-producer, given certain circumstances; but as to whether it will really serve the needs of the consumer, unless we can find ways of injecting genuine competition into these industries which are privatised. I cannot see that there is any advantage at all.
I thought that the noble Earl, Lord Gowrie—who, I must say, has made the very best of a bad job—was hard put to it to advance much of a defence for the kind of situation that is going to arise in the gas industry, in which there will be very little competition indeed; and what he was suggesting for the protection of the consumer did not convince me, at any rate. Genuine competition is surely the first requirement if we are to have the benefits of the private sector and it is to be worthwhile moving from the public sector to the private sector.
Then, as we move these industries into the private sector, can we not take advantage of the changes that are being made to deal with some of the defects of the

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private sector and to improve on some of the many things which greatly need improvement, particularly in the area of industrial relations? I must say, having been brought up on the Liberal Yellow Book, that I am rather entertained at the death-bed conversion of the Conservative Party to so many of the doctrines that were preached 55 or 56 years ago in the Liberal Yellow Book. I must say that I should have thought, too, that there might be a little more recognition of what has been put forward and preached for half a century by people who were opposed by the Conservative Party, who have not in the past been known for their attacks on monopoly, who have been extremely half-hearted in the development of genuine competition and who have not been known, until very recently, to press for wider share ownership.
For 20 years I was a member of the Council for Wider Share Ownership, and year after year we went to both Conservative and Labour Chancellors of the Exchequer to beg them to do something for the extension of share ownership, and we got pretty dusty answers from both of the two major parties. So it is a very recent conversion. We welcome it, of course, and we consider that repentance is always very good to see. But it is a very late decision to turn in that direction.
But is the noble Earl really satisfied that what the Government are doing in relation to the privatised industries will produce the results that he wants to see? I have some reason to believe that some, at any rate, of the people inside these industries are more than a little doubtful as to the changes which will be brought about by the policies of the Government in this direction. They may need to go a great deal further and look a great deal more deeply into the problems of these industries if they are to achieve the results that they hope for; in particular, in the field of industrial relations. It is a sad commentary on what was thought 50 years ago about the benefits of nationalisation, but the fact is that industrial relations have been worse in the public sector than they have been in the private sector, and the position will not change overnight.
We have the chance now, if we really give our minds to it, to bring about a totally new climate of industrial relations in these industries. The opportunity of ownership is part of it, but only part, if we are to get the benefits of good relationships, both for their own sake and also because of what that improvement would bring in terms of greater efficiency. We must all know that in many parts of industry, if people were really devoted to the idea of making those industries run effectively they could do so. If people at all levels thought that it was in their interest and worth their while to do it, those industries could be transformed. The range of opportunity for change here is enormous. But you need new thinking about industrial relations, and new structures.
May I say, just as a starter here, that it will not be done merely through agreement with the trade unions—and this is a problem that the Labour Party will most certainly have to face. But you cannot do it without the agreement of the trade unions. What is needed is that everybody should be involved, and they should be involved in believing that the success of the enterprise is in their own interests. Sadly, the union tradition has been based on the acceptance of the
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inevitability of conflict, rather than on acceptance of the advantages of partnership.
This is not going to be done just by words. We need, at the present time, to think extremely hard, and we need to put the best brains we have into these two areas; how do we get a much better relationship and control in the public sector, and how do we really mobilise the ability, the enthusiasm and the commitment of all sections inside the private sector?
7.55 p.m.
Lord Barnett: My Lords, I should like to join others who have congratulated the noble Lord, Lord Thorneycroft, on introducing this Motion and on the way that he introduced it. As has been said, he did so moderately—indeed, he was so moderate that he was even kind to the Prime Minister, who, after all, has not been altogether kind to her predecessors in Government in either party. So it was very kind of him to be kind to the right honourable lady. But while he was moderate, there was one phrase that he used which I hope, on reflection, he might even care to reconsider. I took it down because I was surprised that he used it. He said:
"The true wealth creators provide goods and services for profit".
I hope he did not really mean that, because we must all know of many very fine people in our community, including the public sector as well as the private sector, who provide the most magnificent services, but not for profit. One thinks of nurses, doctors, those in the social services, any number of people, dedicated people, who do a first-class job, and they are not doing it for profit. Let me make it quite clear that that is not to say that those who provide these services or goods for profit are doing anything wrong—they are also doing very well—but there are many others who are not providing those services for profit.
Lord Thorneycroft: My Lords, I fully accept what the noble Lord has said. Many people do magnificent things and not for profit at all. I was talking about how you create the wealth to help those people who cannot help themselves, and for that purpose somebody has to make a profit; otherwise there is no surplus with which to do it.
Lord Barnett: My Lords, I entirely agree with the way the noble Lord has just put it—and, indeed, I shall be coming to that. I entirely agree with the way the noble Lord has now put it. My noble friend Lord Bruce of Donington dealt primarily with the first half of the Motion, the process of returning parts of the public sector to the private sector. I want to deal, if I may, with the second part of the Motion which was dealt with again briefly just now by the noble Baroness, Lady Seear, and a number of other noble Lords; that is to say, how can we produce more efficiently as a nation; how can we create the wealth which we can then decide in our different ways how to distribute? That is the side of it that I want to deal with.
Let me say at the outset to your Lordships that of course I accept the evidence that there has been some improved performance since privatisation from the public sector to the private sector. But as has been said by a number of noble Lords in the debate today, it is

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far too soon to argue conclusively that there has been a permanent improvement or indeed that all or a greater part if it has been due to privatisation. Jaguar was mentioned, as we know, by the noble Lord, Lord Diamond, and of course one of the major reasons why Jaguar had such a wonderful period in the last year or so was the strength of the dollar. We all know that. We also know that the management in Jaguar had improved enormously long before privatisation.
That applies equally in the case of British Airways. I nearly said "my noble friend" but the noble Lord, Lord King, whom I do consider a friend, has done a first-class job in British Airways while it is still in public ownership. The noble Lord, Lord Taylor of Gryfe, mentioned British Leyland. Of course we would not have a British Leyland if it were not for the public sector and the successive governments ensuring that they put in the right kind of management to turn it into a successful enterprise. Let me make it quite clear to your Lordships that that is not to dismiss—I certainly would not dismiss—the obvious advantages to management of the removal of ministerial and Civil Service interference. Having done some of the interfering, I can well understand that those who have to manage major nationalised industries will not like it at all and will find it very difficult to get on with the real job.
I can understand that very well and it makes the job very difficult, particularly in the fields of pricing, capital investment and acquisitions. And it is not just interference. It is the slow interference; it is the time that it takes to interfere. We all know what goes on. Some of us have sat on Cabinet committees that have discussed interminably whether we should interfere or intervene in some way. So of course I understand that any decent management would rather not have that kind of interference and would be able to get on much better if they did not have it.
On the other hand, one is also bound to say, if one takes a longer view of our industrial history, that one cannot readily produce evidence that private manufacturing industry has done brilliantly on all our behalfs. Indeed, far from that being the case, I would take the comparison between private manufacturing industry in the United Kingdom and private manufacturing industry elsewhere. One can go back a very long time and one is bound to concede that we have done less well than most of our competitors abroad. That is under successive governments. I am not blaming any particular government, but the plain fact is that on any reasonable comparison, with some very fine exceptions, private manufacturing industry has not served this country well, for all sorts of reasons.
Even if one accepts, as I do to some extent, that in the short-term there are some results that are evidence not of long-term permanent improvement but of some improvement—although, as I said, an objective observer must surely accept that it is too soon to say that they will be permanent—I had hoped that this debate would have been considering, in the terms of the Motion, whether wealth creation should be the only national objective by privatising major parts of the public sector.
In endeavouring briefly to answer the question, I want to pose three additional questions. First, to the
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extent that a privatised industry may be more efficient, why is that so? Secondly, should wealth creation be, in the terms of the Motion, "the important national objective" to the exclusion of other considerations? Thirdly, is it possible to do better with industries within the public sector?
I come to my first question. Why, if it is more efficient, is it more efficient? I have already conceded to your Lordships that one of the advantages is noninterference, which in turn affects the vital decisions on investment, prices and acquisitions. I would also concede that it is bound to some extent to affect the ability to recruit high quality and well motivated managers, although even that has to be qualified. Sir Denis Rooke has managed very well, as have other top people in the nationalised industries, such as the noble Lord, Lord King, in British Airways, who has managed to recruit excellent people to do a first-class job.
Nevertheless, I accept to some extent that there will be some of those disadvantages. So let us assume that, other things being equal, the prospects, as has been argued from the Benches opposite, are better in the private sector than in the public sector. But other things are definitely not equal, and that is why I bring myself to the second question that I posed.
Should wealth creation be the national objective to the exclusion of other considerations? Surely, only the most hopelessly biased would argue that wealth creation should be the only national objective. Nobody is arguing that. Indeed, the Government do not argue it. That is why in the case of British Telecom they require licences with 44 complex conditions and why, in other industries such as gas, which are to be privatised, there will be all kinds of restrictions and controls. Wealth creation is not the only objective. It is important that we should recognise that, because if we do we have to go along with what the noble Lord, Lord Bruce-Gardyne, said about monopoly industries.
Should the Government be privatising large monopoly industries? Will that be the best way to create wealth, in the sense of creating wealth for the community? Once you have the various controls over prices, and the various compulsions on those so-called private sector industries to provide their services and goods to major sectors, which they would not otherwise want to do, then we have to consider something other than purely wealth creation.
I assume we all accept that wealth creation is not the only criterion. Even if we accept that it is not the most important criterion, if you let it have its head and hand over the public sector to the private sector, we all know that the private sector will say "That is not a profitable part of this industry and we are going to hive it off. We are not going to provide telecommunications to parts of the country where it is very expensive to provide that service." There is a variety of other areas where I would hope no Government would allow wealth creation to be either the sole or the most important criterion, not to mention the question of job losses, and major sections of British industry, which would go if it were left purely and simply to the profit motive.
That is what we are talking about. The nice words for it are wealth creation, but once something is transferred to the private sector we are talking about the profit motive. We therefore must answer my

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second question by saying that it is not necessarily in the national interest, or not necessary, that wealth creation should be so important a criterion.
That brings me immediately to my third question. If it is in the national interest, as has been shown by the noble Lord, Lord Bruce-Gardyne, and others, to keep important parts of the public sector in that sector, or at least to have a considerable degree of control over those industries, is it possible to do better with those industries than we have done so far? Few will doubt the need to try to improve the efficiency and performance of both the public and private sectors of British industry.
To answer that question, I come back to the major reasons why the present method of ministerial and Civil Service control has important disadvantages. I have referred to interference and slow interference, and to the failure to take decisions. I hope that I do not do my noble friend the former Prime Minister, Lord Wilson of Rievaulx, under whom I served, a disservice. But I think it was he who said that a decision deferred is a decision made. This happens all too frequently in government. Defer and defer until management of an industry get more and more concerned about how on earth they are going to manage that industry. That is one of the problems.
But one of the major reasons why governments and civil servants defer and delay, apart from the fact of running anything by committee, is the Treasury's concern, as I know the noble Lords, Lord Thorneycroft and Lord Diamond, will understand, about the public sector borrowing requirement. I am not sure whether it was called that in the noble Lord's day, but it was the same kind of thing.
The fact is that it stems directly from the nonsense which has been perpetuated from the days when I was Chief Secretary of treating current and capital expenditure as in government accounting. It leads therefore directly to the equal nonsense of the use of short-term sales of very exhaustible public capital assets to fund public current expenditure. I am not suggesting for a moment that a new accounting method is the whole answer to the problem—of course it is not—but it must help. It would surely be sensible in its own right, and it would also stop some of the more foolish interference in public sector management's power to manage, if we separated the area between capital expenditure and current expenditure in public accounting, in explanation of the way we manage our affairs. As I say, that is not the whole answer.
However, as has been accepted by many noble Lords in this debate, nor is privatisation. As I hope I have shown, good management can do well in the public sector and there is no evidence yet that large private firms are inherently more efficient than large public firms. The public firms are at least accountable to Ministers and, through Ministers, to Parliament. It is not unimportant that we should have that accountability in major sectors of British industry.
However, for other reasons—social obligations, certainly at the very highest level, and not least employment—it is surely right to keep important major industries in the public sector rather than take the dogmatic hard line stance that privatisation is
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right, full-stop. We should be considering ways of creating more efficient industry, both in the public as well as in the private sectors. Certainly it does not help wealth creation to sell off public capital assets and use the proceeds to finance public current expenditure.
When the noble Earl, Lord Gowrie, spoke earlier he said—and I took down his words:
"selling public assets is no substitute for sound monetary policy".
But the Government are doing precisely that. They are selling public capital assets in order to balance the PSBR. The noble Earl's noble friend Lord BruceGardyne did not complain about it: he said that that is what they are doing. Of course that is what they are doing, and the noble Earl must know it. I know that the noble Earl becomes very angry when we accuse him of these matters, so if he is going to get angry with me about it, perhaps at the same time, he will also get angry with the noble Earl, Lord Stockton. I should like to end by quoting what the noble Earl said in the debate on 23rd January this year. At col. 254 of Hansard he said:
"… the monetarists have left us only one alleviation of their austere regime. They have invented the one new law that there is no difference between capital and income".
The noble Earl, Lord Stockton, then went on to say:
"Some of the nicest fellows I have known in my life have experienced this confusion between capital and income, but they usually ended up in rather dreary lodging houses".
I have no wish to see the noble Earl end up in a lodging house, but I should like him to end up recognising that there is a difference between capital and current expenditure and that, in so recognising, we might just help to produce a more efficient public sector.
8.13 p.m.
The Earl of Gowrie: My Lords, I suppose there is a sense in which your Lordships' House is a rather elegant constitutional lodging house, and we have all ended up in it, including my noble friend and the noble Lord, Lord Barnett. However, this has been a lively and elegant debate, and the noble Lord, Lord Barnett, has closed it with a lively and elegant speech. Although what I am about to say perhaps strays a little far from the subject of privatisation—or perhaps it does not—I should like to start with the celebration of a notable private achievement associated with your Lordships' House today, in that my noble friend Lord Howard de Walden has won the Derby, and that is surely good news on all sides of the House.
I enjoyed the speech of the noble Lord Lord Barnett, as I did the closing speech from the Alliance of the noble Baroness; but I feel a certain frustration with both speeches. I was waiting like a hungry man confronted with two great chefs for just a hint, just a sniff, at what might lie under the platters with which they covered the policies of their respective parties with regard to this particular Government programme.
One specially noticeable feature of this debate—a debate which should give my noble friend Lord Thorneycroft considerable pleasure—is that there were no real criticisms of any particular or individual sales, except possibly that of British Gas, and I shall comment on that in just a moment. The Liberal and SDP speakers argued for a pragmatic approach, and in

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my opening remarks I tried to demonstrate that that was also the Government's intention. Again, with the qualification in connection with British Gas, I did not detect any particular dissent from past sales.
The Labour Party studiously avoided any reference to Clause 4; but, as I said in my opening speech, it is still flying bravely over Transport House and I wondered whether the noble Lord, Lord Barnett, was going to have a go at hauling it down. However, he did not. We are still very tantalised at what re-nationalisation proposals they have in response to this policy of freeing the industries or, as I still prefer to think of it, returning the family silver to the family. The noble Lord, Lord Diamond, and I have debated this up and down this Chamber for many hours. On this issue I am afraid that the noble Lord will never persuade me that he is right, and I suspect that the other criticism may also apply on his side.
The noble Lord, Lord Bruce of Donington, said that privatisation was expensive to taxpayers. All changes involve some cost. The noble Lord mentioned the figure of £183 million to £200 million. Out of £5 billion that does not seem too bad to me, and we hope that there is a considerable return for many people on that money as the years proceed. I would argue that there has already been a very considerable return. The noble Lord said that we were depriving future governments of revenue; that the next Government would not be able to use the income of these assets to balance the books. I think that my noble friend Lord Bruce-Gardyne answered that very well when he said that there is something to be said for putting temptation out of the reach of governments. I firmly expect my right honourable and noble friends to form the next Government, and I do not want them to be in the way of temptation.
More seriously, the noble Lord gave figures for the concentration of wealth. I rather agree that too narrow a concentration of wealth has bedevilled this country, its growth and its progress. I have to say that since the war Labour Governments have had a reasonable share of office; I think that it has balanced out, if not quite evenly, then reasonably equitably, between the two great parties. They have not been able to alter this concentration very much. However, the noble Lord and I are in agreement that it is too narrow. Therefore, I think that it is a little mean-minded of the noble Lord, Lord Bruce of Donington, who is usually a very generous speaker—in personal terms at any rate—not to suggest that the Government are making a strenuous effort to widen the ownership of wealth.
It is very much our policy to spread wealth through, for instance, the sale of council houses, and through our efforts to promote owner occupation as well as wider share ownership. Owner occupation is now at a record high; it is 61 per cent. in Great Britain and, as my noble friend Lord Renton recognised—and this was also echoed by my noble friend Lord BruceGardyne, who was otherwise quite critical—the Government's measures have probably doubled the number of individual shareholders since 1979. It is one thing to argue that it is not sufficient or that it is still too concentrated; it is another thing to argue that in some way it should not have happened at all.
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There was the argument that privatisated companies were profitable before privatisation. The noble Lords, Lord Bruce of Donington, Lord Diamond and Lord Barnett, all made that point. Of course I acknowledge it. It is true in some cases. Indeed, it is necessary in preparing enterprises for privatisation to ensure that the profitability and performance improves. The goal of privatisation is an important incentive for Government and management to improve performance while the industry is still under state ownership. Without that goal it is hard to believe that quite the same progress would have been made. I would argue that the earlier profitability was under the goal of privatisation or under the lure of privatisation. It is certainly hard for me to believe that the higher quality management which made this progress—and I echo the tributes paid to the noble Lord, Lord King, and others—would have been prepared to work in the organisations concerned had we not been planning privatisation.
Various speakers echoed the noble Lord, Lord Bruce, in saying that all this was simply a device to finance tax cuts. That is not the case. The proceeds are of course welcome on public borrowing—and, if public borrowing allows, tax cuts will be very welcome, not least by many of those who support the parties opposite. But, as I said at the beginning, that is not the main objective. In any case, as the noble Lords, Lord Diamond and Lord Barnett, know very well, decisions on tax cuts are taken in the context of the overall fiscal position and the need to limit Government borrowing.
I confess to a certain frustration—though not for the first time, and I doubt whether it will be the last—at many of the comments made by the noble Lord, Lord Diamond. In debating terms I thought he was answered very well by my noble friend Lord Campbell of Alloway. I do not propose to engage in that kind of debate now, as we have had it and enjoyed it. I thought that the noble Lord had a habit of putting up clay pigeons of his own, rather than mine, and then shooting them down. It interested me that he said nationalisation had been a mistake. He was very honourable in admitting that he had been in favour of nationalisation in the 1940s but thought now that some or most of its promise had not been fulfilled. But he then said that privatisation was a mad scramble. So, again, we did not really know where that was leaving us.
It would be quite impractical to echo St. Augustine (as I thought the noble Lord, Lord Diamond, did) by saying, "Privatise me, Lord, but not yet", which appeared to be the noble Lord's policy. It would be impractical to wait. These businesses cannot be sold all at once. I agree with the argument about the need to have an orderly progress through the markets. We must also reflect the fact that different companies take different periods of time to prepare for privatisation.
After the speech of the noble Lord, Lord Diamond, the tone of the debate altered; it changed gear a little. We found ourselves in a very interesting but somewhat different set of arguments about existing publicly-owned industries and industries where there are not at present plans for privatisation. The coal industry was spoken about a great deal. That part of the discussion answered the charge of the noble Lords, Lord

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Diamond and Lord Barnett, that we are selling capital and translating it into cash. Whatever criticisms may be made about the Government in respect of the nationalised industries, very few people could doubt that we have invested enormously in steel and coal, at a higher level than previous Governments in real terms. I believe that this fact is acknowledged on all sides.
That money comes from the public purse and the profits or assets of privatisation go back into the public purse. It is a very easy debating point, but it is not at all a real one, to say that in some way those assets are financing social security. They are also financing investment. I confess to a certain impatience (which is a very unfashionable and unpopular emotion to display in your Lordships' House, and quite rightly, so I apologise) with the reiterations, particularly of the Alliance, that this Government do not invest in infrastructure. Even in my own ministry—and mine is the smallest of all the free-standing or independent ministries—I am concentrating very much on the superstructures of the museums rather than on their contents. I happen to have on my budgets (and a lot of headache it causes me) much the biggest public work of the century in the new British Library. I am quite happy to say that some privatisations are helping to pay for that work.
I say to the noble Lord, Lord Molloy, that small suppliers can still supply the privatised industries, or industries which have yet to be privatised after that happens, and that health and safety legislation—and I echo his praise for the executive—will still operate there. My noble friend Lord Lauderdale entered that part of the debate in a characteristically robust and vigorous way, and made many of the points I should like to have made if I had more time.
A note of enthusiasm tinged with scepticism was introduced by my noble friend Lord Bruce-Gardyne. This added a lot of spice to the debate because my noble friend was until very recently a Treasury Minister of great distinction. We all felt during his speech, therefore, that we might be trembling on some great revelation. Happily, or unhappily, my noble friend pulled up just short of making it. Instead, he gave us a delightful masque; appropriate to the season, which I think I would call, "Who's afraid of the big bad Rooke?" He introduced the major note of scepticism in the debate, which was about the British Gas issue. It is no secret that this matter did cause my right honourable and noble friends a great deal of heart-searching and anxiety.
The best way of dealing with this point is to ask: if we are to go for greater competition in the gas industry, then how are we to achieve it? It is quite a difficult industry. Gas is in some ways a natural monopoly. It is very difficult, where an industry has the vast bulk of its assets used in gas distribution, to consider it very practicable to split them up. We believe that privatisation will increase efficiency by exposing the company to private sector attitudes and pressures, and to the disciplines of the capital market. The tough regulation of monopoly will benefit consumers.
I recognise that we still have some way to go to provide reassurance on this point. We are therefore
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proposing legislation to provide for the protection of the consumer by establishing regulatory arrangements for, among other things, the oversight of gas prices to the consumer and the terms and conditions of supply. My right honourable friend Mr. Walker, in his announcement in another place on 7th May, went into his ideas for wider share ownership as far as the gas industry is concerned. I recommend that your Lordships study his remarks on that occasion.
The noble Lord, Lord Taylor of Gryfe, spoke about the impact of privatisation on financial markets. He raised also the issue of the Channel tunnel—and I am a very firm "chunneller" myself. There is no real evidence of crowding-out; provided that there is, as I suggested earlier, reasonably orderly progression of the sale. There is no fixed quantity of funds available for investment. Increased amounts have gone into equities in recent years. British Telecom was successfully absorbed. That was the largest stock market flotation ever carried out in the United Kingdom or anywhere else. There are plenty of new issues other than privatisations going ahead now, and we are planning the programme carefully. I believe the evidence is that privatisation may be increasing the funds available for equities generally, by stimulating the appetite of private investors for shares and increasing confidence.
In sum, the point was put very well by my noble friend Lord Campbell of Alloway that privatisation is only part of the Government's general policy towards wealth creation. We are also very interested in contracting-out and competitive tendering (that is of great interest to small businesses) in the sale of council houses, as I have said, and in a wide range of measures concerning deregulation.
My noble friend's Motion, and the way he introduced it, has given me the chance to pose the very simple question, and to try to answer it: why privatise? The answer is: because privatisation is a major element in a strategy to promote efficiency, increase incentives and widen ownership. Transferring state business into private ownership, in our view, increases efficiency, whether through competition or in other ways. It allows employees to take a direct stake in the companies in which they work—and I think the Liberal and Alliance Benches might have made a little more of that. We believe that that will lead to a major change in attitudes. It gives everyone an opportunity to own a real share in the nation's assets. I do not believe that the future significance of these changes can be overestimated, whether people want to own directly or through participation in institutions, as I said earlier.
Of course I accept that privatising alone will not solve all our problems, overcome labour relations difficulties, and the rest, but if you look at it as part of an overall programme which also embraces substantial changes in other fields—in taxation, in employment legislation and the like—it is coherent; and I am encouraged by the fact that neither opposition party suggested tonight that they propose to change it.
Lord Thorneycroft: My Lords, I rise simply to thank those who have participated in the debate and to express my special thanks to the noble Baroness, Lady Seear, and to the noble Lord, Lord Barnett, for

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replying to the discussion in such fascinating and interesting speeches. I particularly thank my noble friend Lord Gowrie for replying to them in such able terms. Perhaps I may be permitted to ask leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Coal Industry Bill
Brought from the Commons endorsed with the Certificate from the Speaker that the Bill is a Money Bill; read a first time, and to be printed.

Copyright (Computer Software) Amendment Bill
8.32 p.m.
Viscount Colville of Culross: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Viscount Colville of Culross.)
On Question, Motion agreed to.
House in Committee accordingly.
[The VISCOUNT SIMON in the Chair].
Clause 1 agreed to.
Viscount Colville of Culross Viscount Colville of Culross moved Amendment No. 1:
After Clause 1, insert the following new clause:
("Computer storage.
References in the Copyright Act 1956 to the reduction of any work to a material form, or to the reproduction of any work in a material form, shall include references to the storage of that work in a computer.").
The noble Viscount said: This is not a particularly easy point, but I hope it is one that I can explain fairly briefly to the Committee. The scheme of the Bill is to build upon the protection of copyright which is given to literary works under the 1956 legislation. The 1956 legislation has been augmented by some recent additions which increase the penalties for reproduction of copyright works in the way that I explained at Second Reading. Nevertheless, the basic scheme depends on the part of the 1956 legislation which deals with literary works. This entails the idea of having an author and the idea of producing something which can be recognised as a literary work.
From that concept there follow two things. First, you have to identify the creation of the work which is going to be protected by the laws on copyright. Secondly, you then have to make proper provision to prevent the unlicensed reproduction of the work which is so protected. That is the scheme of the Act which has been in operation for a long time now. Of course, the concept of the creation and reproduction of a literary work, which usually involves print on a piece of paper, is not immediately apt, to some people's minds at least, to describe what goes on in the electronic world of computer programs. It is probable that the 1956 Act, in this particular series of passages, did comprehend, because it was very broadly drafted, computer software as we know it and as we may try to
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envisage it coming about in the future. However, the whole point of the Bill is to make sure that it does and to close any loopholes.
There appear to be two loopholes which are left. The first arises out of the concept of the creation of what might constitute a work of copyright. The noble Lord, Lord McIntosh of Haringey, uses his computer a great deal more than I have ever used one in my time, but I know that you can put the raw material, as it were, of a program into a computer and that that material is then contained in the electronic memory of the machine. Into that electronic memory you can introduce material which is going to be a valuable piece of intellectual property. You can go on doing this by altering the properties of the contents of the machine until you have something you consider to be perfect.
If you switch off the machine at any time the electronic memory is erased and you have nothing left. The matter may not be complete at the time when such a disaster occurs, either by mistake or on purpose; but at the end of the time, of course, if you succeed in getting through to the perfected program you still have something which is only contained in the electronic memory of the machine. It is not written down, it is not recorded anywhere else, it is not palpable in any shape or form. Therefore, what has to be dealt with is the creation of a copyright work which can be protected by the legislation. Thus, in the amendment we are referring to the storage of the work in the electronic memory of the computer so that when you put in something which you consider constitutes a work which deserves to be protected by copyright the Bill will, in fact, protect it; that is, the creation of the work.
The Committee can imagine that if, perhaps, the composer of this program left his brainchild on the machine and went out to lunch and someone chose to print it out, it would, as the law stands at the moment, be arguable that the person who printed it out and first put it on paper was the author of the program rather than the person who actually used the brainpower to put it into the machine in the first place. Therefore we need to make sure that it is the latter person who obtains the benefit of the copyright protection.
We then come to the process of the reproduction which, of course, is one of the matters protected under the copyright law. Again, having introduced the new program on to the electronic memory of the computer it would be possible these days—and I have no doubt that further electronic developments will take place—to transmit the contents of that computer's memory to another computer without anything going on to paper, without anything written and without anything palpable except a collection of electronic impulses which can go over a telephone line. They could go over the telephone line abroad, to Jersey, the Continent, or wherever it is that someone might like to reproduce them outside the jurisdiction of this country. Therefore, in this legislation it is also necessary to cover the reproduction of what is on the electronic memory of the computer so that, in whatever form it may be transmitted, it is, from the moment of its creation, protected by copyright law against unlawful reproduction.
I am afraid that that is a fairly complicated explanation. The only comfort I have is that a number of noble Lords who are very expert in the law of copyright have been examining not only the Bill but the amendments I have tabled. I may perhaps mention, because he specifically told me I might, the noble Lord, Lord Lloyd of Kilgerran, who at the moment is enjoying the beauties of Cumbria. He agreed that I could tell the Committee that he has looked at both the amendments and that he thinks they will improve the Bill and that it will be an advantage to have them on the statute book. Subject, therefore, to anything that members of the Committee may think, I would suggest that this is an improvement which will cover some of the possible difficulties and stop up some of the loopholes. I beg to move.
Lord McIntosh of Haringey: The Committee must be grateful to the noble Viscount for that professionally expert and very clear explanation of what, as he said himself, is an extremely difficult concept—extremely difficult not only to those who have some experience of computing, but even more for those like myself who have no particular knowledge of copyright law.
On this side of the Committee we are not disposed to oppose the amendments. We accept that the argument of professionals is that this must improve the Bill, and we shall not offer any opposition to it. I would only say in addition to that that to me the concept of the storage of work in a computer, unless it is allied to the concept of access to that work and the use of that work, is a peculiarly sterile concept. I did refer at Second Reading to the practical problems raised by access to a computer program from, for example, a series of networked computers where the vendor of a computer program states in the contract that the program shall be used only from a particular machine with a metal plate on the back numbered such and such. That cannot be achieved by many users of computer software because they have this problem that they do not know which piece of electronic machinery is actually being used for access to the program. Therefore, it does seem to me that access and use is a much more active consideration than the storage itself.
The second consideration which we ought to bear in mind is the shelf life, if I may put it that way, of computer software. A pirate user of computer software—which is what we are concerned about—has to put up with a number of problems which the authorised user does not have. We referred at Second Reading to the fact that the manual of use of a software program is itself, and always has been, copyright under the 1956 Act, and if the pirate user of the software does not have access to the manual he is going to have a great deal of difficulty in understanding the software he has. There is also the undoubted fact that software becomes corrupt for electronic and sometimes for electrical and communications reasons as well, and unless the pirate user has some way of correcting the corruption he is going to find the value of his pirated possession very much diminished or even eliminated.
The most common way of correcting corruption is to pip across, to transfer from a backup copy, the
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program which has become corrupted and to replace it by an uncorrupted version. As I understood it—the noble Viscount will correct me if I am wrong—the Bill as originally drafted covered that point, because it covered always the reproduction of a computer program as if it were a literary work as envisaged by the 1956 Act. But, in addition to the problem of simple corruption of a program, there is the fact that there are defects in programs which are encountered when they are put to new uses, when they are applied to new data or new conditions. Here again, the pirate user of a program has no access to software maintenance to enable him to deal with those new problems he is facing, and in the extreme case it is possible that in the absence of maintenance the only way to deal with the problem may be by an amendment of the source code of the unprotected version of the software program. Here again, I understood that the Bill as drafted before these amendments clearly secured that the adaptation—that is the word used in the Bill—of the source code in order to amend computer software was encompassed within the purposes of the Bill and was adequately covered.
In am not going to dispute that the argument of the noble Viscount that storage of a work is a link in the chain which has to be protected as well as the other links in the chain, but I have not yet been fully convinced that it is as important a link as the other elements in the chain, as the elements of adaptation, of publication, of use, of communication. To that extent, if he can enlighten me in my ignorance I should be extremely grateful.
8.45 p.m.
Lord Brabazon of Tara: On behalf of the Government I support this amendment to incorporate a new clause. As my friend has explained, it concerns another aspect of the relationship between copyright law and computers which is in urgent need of clarification. The Bill as it stands is concerned only with the application of copyright law to computer programs, but it is clear that computers have a much greater impact on copyright than that. It is an everyday occurrence for many copyright works to be stored in, or even created within, computers and how copyright law at present applies in these cases is subject to some doubt.
Under existing law there is some uncertainty as to whether a work which is actually created directly in a computer by someone typing in from a keyboard, and which exists only in this form, can be protected by copyright. The amendment is particularly important in relation to computer programs, which are, of course, commonly written in this way. However it will also apply, for example, to a novel or to any other sort of work being written directly into computer storage. In so far as there is any doubt now that such a work is "fixed in material form", and therefore qualifies for copyright protection at the instant of its creation within the machine, the amendment will remove that doubt.
There is also uncertainty as to whether, if an existing work is copied into a computer, this constitutes a "reproduction in a material form" under copyright law, so requiring the copyright owner's consent. An

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important example would be the incorporation of an author's work in a database. It is certainly right that the copyright owner should be entitled to control this use of his work since it opens up possibilities of major exploitation. The amendment will perform an important service by removing any uncertainty in this area. It will also apply equally to the loading of computer programs as to the loading of other works.
The Government consider that clarification of the law in both the situations I have just described will give to the creators of computer programs and other copyright works the protection they need. I therefore have pleasure in supporting the incorporation of the new clause.
I also support the amendment of the Long Title. It is clearly necessary as a consequence of the inclusion of a new clause in the Bill to cover computer storage of copyright works.
Viscount Colville of Culross: I am very grateful to my noble friend Lord Brabazon. I had not actually thought of all those arguments, and they seem to me to be very telling.
If I may just go back to the points made by the noble Lord, Lord McIntosh, I think we should start by realising that this new clause does not in any way detract from what is in the Bill already. We went into all this at Second Reading, and I think we are on absolutely common ground that most of the things that he mentioned were discussed then, and we came to a satisfactory conclusion that they were in the Bill, that they ought to be in the Bill, and that they probably will work. One never knows absolutely for certain on these things, but they probably will work.
Where I think perhaps it is just worth saying a word is this. One has to realise that this is being, as it were, keyed in to the existing law on copyright, and the existing law on copyright does not really deal with the question of access because access is not normally a problem with the printed work. Very well, one gets it out of the library, but somebody has had to reproduce it in order for it to be on the library shelf in the first place, and somebody in the process of printing it has infringed the law of copyright in reproducing it. The whole concept of creating something that is not written down at all but is only in an electronic memory was not really envisaged, I think, by those who drafted the 1956 legislation. One has to bear in mind that the context of this small Bill is an adaptation of what was thought suitable for a literary composition about 30 years ago.
When that is appreciated I think that the noble Lord, Lord McIntosh, will see that, although of course in our terminology and in our practice access is all-important—and it was access that I was talking about when somebody took it away at lunch-time or when somebody transmitted it unlawfully to an overseas pirate—that is not the way in which you get at the protection that you want. You have to look at it in the terms of adapting the creation of the work, and that is why one uses the term "storing" it.
It is perfectly true, as my noble friend said, that one can put a novel on to a word processor just as much as one can an ordinary piece of computer software, and
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it only exists in the memory of the word processor while it is switched on; and that is also a way of creating a literary work through electronic means. Similarly, when it comes to the reproduction and the transmission of the program, we do not in any way detract from or backtrack on what is already in the Bill about the illegality of that if you can get at the thing. We are simply making sure that if it is taken in the form where it has not yet been written down it is still protected. That I think deals with the two points of substance that the noble Lord brought forward.
I am sorry that it has to be convoluted in this way, but it is because we are adapting a slightly old-fashioned, in this context, form of legislation to modern electronic conditions. I hope that if he has followed what I have been saying he will see that this is a sensible addition to the Bill. It is an additional protection. It deals with things that have not perhaps been fully worked through, although I think that they were in the original 10-minute Bill in another place in the previous Session, and therefore it is a valuable addition to the protections that we are trying to introduce in this little piece of legislation. I hope that the noble Lord will be satisfied and that the Committee will be too.
Lord McIntosh of Haringey: I just want to express my appreciation to the noble Viscount. I think that the explanation he has given is not only clear but entirely satisfactory. I want to say only one more thing. The noble Lord, Lord Brabazon, in his speech made reference to the possibility of doubt about the applicability of copyright now under existing legislation to the work of an author keyed into a database. I hope that he will think very carefully about the words that he used. It is not just the work of a novelist, as the noble Viscount said: the whole "copyrightability", if I may coin that awful word, of the material in commercial databases could be at risk between now and the passage of the Bill if it were to be stated here that there is any genuine doubt about the copyright status of material provided by information providers into commercial databases. I had always understood, and I hope that I am not wrong about this, that the arrangements that they make under copyright legislation ensure that hosts for the databases which provide access to their material are legally valid and that there is no doubt about their copyright status. It would be useful to have that assurance repeated by the Government.
Viscount Colville of Culross: I do not know whether I can fill in a moment before the Government repeat it, but I think the answer—and I shall immediately be proved wrong—is that this Bill is really only reinforcing what is probably the law already. Therefore the gap between today and what I hope will be Royal Assent in a comparatively short time ought not to be material in this respect. There is a very strong probability that the majority of what is in this Bill is already the law if the judges had to interpret it after an enormously long and complicated argument in front of them. I think that the noble Lord opposite may be reasonably happy that there will not be a nasty lacuna in the legal protection, and I shall now sit down and see whether I am right.
Lord Brabazon of Tara: I can very quickly say that my noble friend is correct.
On Question, amendment agreed to.
Clauses 2 and 3 agreed to.
In the Title:
Viscount Colville of Culross Viscount Colville of Culross moved Amendment No. 2:
Line 1, leave out from ("1956") to end of line 6 and insert ("in its application to computer programs and computer storage.").
The noble Viscount said: It was not just my noble friend Lord Morris who drew our attention at the Second Reading to the Long Title of the Bill. A number of other noble Lords made the point. There is no doubt that it can be simplified. There is no point in having a complicated Long Title, and there is in addition the question of storage which we have just been discussing. I am very pleased to have heard already that my noble friend on the Front Bench approves of this amendment.
The only other thing that I think I should say, although the noble Lord, Lord Kilbracken, is not here, is that I have had a certain amount of correspondence with people who, if your Lordships will be pleased to think of it, have followed the debate on this Bill on Second Reading, and the buffs of the computer world say that it is absolutely right that we should spell "program" with only one "m" and not another "m" and an "e". He is not here to argue, but I have taken advice on this and I believe that it is correct. It is still in the Long Title in that form, and I think that the Long Title would be improved by this amendment. I beg to move.
Lord McIntosh of Haringey: We can only be grateful to the noble Viscount for cutting the Gordian knot of the Long Title. I would only say to the Government that if they do, as we have heard, accept the amendment, we on this side shall find occasion to use this precedent to seek to adapt long titles of Bills in this way to avoid some of the difficulties which have in the past inhibited the kind of amendments that we should like to see to Government legislation. A long title, as the noble Viscount rightly said, ought not to seek to contain all of the conditions of the Bill. Governments have very often sought to use long titles in that way. We shall use this precedent to seek to prevent them.
Lord Brabazon of Tara: I have already said that I support the amendment. I should just say to the noble Lord, Lord McIntosh, that obviously we shall have to take each case on its merits.
Viscount Colville of Culross: I think that I shall leave that matter on the basis that we are agreed on this occasion this evening, and I shall leave the noble Lord to fight it out with those on the Front Bench on any other Bill that attracts his attention in this respect.
On Question, amendment agreed to.
Title, as amended, agreed to.
House resumed: Bill reported with amendments.

Local Government (Access to Information) Bill
9 p.m.
Baroness Carnegy of Lour: My Lords, I beg to move that this Bill be now read a second time.
The Bill comes to your Lordships' House from another place, where it was the responsibility of my honourable friend the Member for Hornchurch. It comes with all-party support and with the backing of many hundreds of local groups and individuals across the country. During its passage so far, the Bill has been the subject of continuous consultation. At the outset some anxiety was expressed, particularly by the local authority associations in England and Wales and in Scotland. All were in favour of the Bill in principle, but there were fears as to certain impracticable resource implications and the possibility of being required to breach delicate personal, commercial or contractual confidentiality.
After much discussion (and I should pay tribute to the time and trouble local authority associations have devoted to this) accommodation has been reached whereby the aims of the Bill's sponsor are achieved and the practicalities for local authorities are realistic. I hope therefore that noble Lords will find this measure now is fair and balanced and will be able to give it a smooth and speedy passage through your Lordships' House.
The purpose of the Bill is threefold. First, it is intended to increase between-elections accountability of councillors to their electorate and to their ratepayers by making it easier than it frequently is for the public to know, and take an interest in, what issues are under consideration, what decisions are pending and what decisions have been made. The second purpose is to improve the quality of the decisions made by ensuring reasonable access to the facts and arguments on which proposed policy options are based, so that concerned members of the public may challenge or add to those facts and, if they so desire, put forward alternative arguments. The third purpose is to strengthen the relationship between councils and public by reducing the frustration and sometimes the suspicion and alienation which occur when information is hard to come by, and decisions appear to be pre-determined behind closed doors.
The Bill seeks to fulfil this purpose in England and Wales and in Scotland. It does so by making mandatory greater public access to local authority meetings, agendas, reports and background papers, at the same time enabling specified matters to remain private if the authority so desires. It also requires certain information to be published.
The existing legislation at present is contained in three Acts. The Public Bodies (Admission to Meetings) Act 1960 applies to the whole of Great Britain and extends to other bodies besides local government. It was in fact introduced by the present Prime Minister, who had an early piece of political luck when, as a newly arrived Back-Bencher, she was successful in a ballot and was able to make her maiden speech in moving the Second Reading. The other two Acts are the Local Government Act 1972 and the Local Government (Scotland) Act 1973, which apply to England and Wales and to Scotland respectively.

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Broadly speaking, these three Acts give public and press the right to attend the meetings of the full council and its committees, but not its sub-committees. The press can see agendas and reports of council meetings, and press and public can inspect council minutes; but these obligations do not apply in the case of committees or sub-committees. In all instances an authority can exclude press and public if they judge this to be in the public interest, without a requirement to say why.
Existing practice vary widely, as noble Lords experienced in the ways of local government will be well aware. Some councils allow access to subcommittees; some hold them in private; some have no sub-committees at all. For visitors to meetings, some provide easily followed agendas and reports; others do not. Some have easily penetrable systems for obtaining information and others do not. If all practice was like the most open practice, further legislation would be uncalled for, but that is not the case. Difficulties for the public occur in councils of varying political hues. My honourable friend in his Second Reading speech, and other honourable Members on all sides of the House, at various stages of the Bill, gave examples from their own experience of councils who do very well, and others whose information-providing efforts are in effect far from satisfactory.
The gist of this Bill is quite simply that all information relating to decision-making in local authorities should be available to public and press unless there are specific, stated reasons to the contrary. Building on work done by the Prime Minister some 25 years ago, it now puts all local authority meetings on the same footing, requiring public and press access to council, committees and sub-committees. It opens to public inspection the background papers on which reports are materially based and enables, on payment of a reasonable charge, copies to be taken.
The extended obligations are qualified by local authorities' clear discretion to withhold papers or access to meetings in specific circumstances which are listed in schedules to the Bill. These include such matters as private personal information, financial and business affairs of people or companies, actions liable to lead to criminal proceedings, and industrial disputes. The Bill contains requirements regarding access of elected members to documents, including documents not available to the public; also that authorities maintain a register of significant delegation to officers.
The Bill is structured so as to insert appropriate clauses into the England and Wales Local Government Act 1972 and the Local Government (Scotland) Act 1973. This accounts for the rather strange numbering of some of the clauses. Clause 1 is for slotting into the 1972 Act. Clause 2 has virtually identical content for insertion in the Scottish 1973 Act. These two clauses confer the overall rights of public access qualified by local authority rights to choose to keep private such matters as are set out in the schedules. The provisions are in part new and in part derived from existing legislation. Schedule 1 contains within it two new schedules for insertion in the 1972 and 1973 Acts respectively. I only hope that what I have said reads more clearly in Hansard than it
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sounds at present, because this structure is really very complex.
Clauses 3 to 6 are relatively minor. I do not intend to detain your Lordships now by going through the clauses section by section. With the agreement of noble Lords, I shall respond to points made in the debate in a general way leaving any details until the Committee stage. I simply conclude by saying that, in my own experience, the need for this Bill is not because of deliberate unwillingness of councils to be open to the public they serve. It is more that practices, probably begun for excellent reasons, tend over a period of time to become established, elaborated and, in a sense, sheltered behind by elected members and officers alike, with the result that the public can find the system untransparent and even manipulative. No friend of local government wants that. With the best will in the world, councils need an up-to-date legal framework to underpin the particular form of answerability that our local government system demands of them. This Bill does, I believe, offer that framework. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Baroness Carnegy of Lour.)
9.10 p.m.
Baroness Stedman: My Lords, I should like to thank the noble Baroness for the clear and able way in which she has put forward the case for the Bill. Like her, I hope it will have all-party support in this House and go through fairly quickly. Throughout England and Wales, too many things are being or have been, discussed in private, raising serious questions about local democracy and about accountability. When electors are denied access to information themselves, they expect that their elected representatives will be informed and will be able to advise them accordingly. But this has not always happened. In some places like Liverpool and Bromley the majority parties have made use of the denial of information to weaken their elected opponents. Even more scandalous is the position where the largest single party's representatives are systematically denied the necessary facts by a coalition of the minority parties acting together. In Hammersmith, for example, the largest single party does not have one member sitting on the Leader's co-ordinating committee because of an alliance between the people's elected second and third choices. This inevitably means that a large number of electors are not really represented when the council meets in closed session.
Even more ludicrous were the examples given in another place of the closed sub-committees—of the Straying Animals Sub-Committee in Blaenau Gwent which meets in private as does the Bottle Bank Donations Sub-Committee in North Bedfordshire. Why ever they should want to meet in private or what they have to hide I have not a clue. The parish councils, the town councils and the parish meetings are really at the grass roots of local government. They are down at the lowest possible level. They are very much in support of the Bill and what it is trying to do.
The ADC initially showed some concern at the extent to which information had to be disclosed and whether there would be a breach of confidentiality to the serious detriment perhaps of personal relationships

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or delicate commercial and contractual obligations. It now sees that most of those potential dangers have been eliminated in another place. The balance, it feels, has now been struck between openness and genuine confidentiality. I believe that the ADC now thinks that the Bill in general provides greater public access to information without impeding the proper administration of an authority. It also gained more support as a result of the Gamper v. Hackney Council case. The ruling given by Mr. Justice Lloyd in that case has changed the ground rules, and many authorities since that case have significantly changed their position.
I believe that this Bill goes some way towards increasing public accountability between elections by allowing the public a closer and more detailed insight into the decisions of their elected representatives, thus enabling the electorate to judge more accurately the performance of their elected representatives, and helping to break down the growing suspicion and hostility which many electors have begun to feel towards local government.
The wider accessibility of reports and the availability of those reports to the public attending the meetings can only help them to understand much better what is going on. Many councils already do this, and it is hoped more will now act in the same way. I understand that there are three authorities—Bradford, Brent, and Derbyshire, two Conservative and one Labour—who already act as detailed in this Bill, with no apparent problems. Indeed, the chief executive of Bradford, Gordon Moore, who was one of the arch-people in the report on the management of local government, has said:
"Our three party group leaders have estimated the annual cost at around £2,000—a minimal sum to pay for democratic accountability".
In both this House and the other place, we set an example because the proceedings of both this House and another in Committee are open to the public. ILEA has also opended its doors to the public. We believe that this Bill, when it gets on the statute book, will make for much healthier and more open local government and should encourage more public participation.
From these Benches we would support the Bill before us. Several major amendments were made to it in another place, and I believe that as it comes to us the Bill is broadly acceptable to all those who will be concerned, including the local authority associations and the professional organisations, and we wish it a speedy passage through this House and on to the statute book.
9.16 p.m.
Baroness Nicol: My Lords, we too welcome and support the Bill. I should like to congratulate the noble Baroness, Lady Carnegy, for taking us through a rather difficult, complicated few passages with great efficiency. There is a "Hear, hear" from the noble Baroness's Front Bench. I too was glad to note that the Bill had the support of the ADC and of the ALA. The ALA particularly were enthusiastic about it. I wish that the ADC had been a little warmer, but I understand their position in that they will no doubt hope to persuade some of their members to accept it.
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We support a policy of more open government and this Bill is a step in the right direction. The public have a right to know why and how decisions are made, as has already been said, especially when they are decisions which affect their lives as closely as the decisions made by local authorities, subject, of course, to sensible rules of confidentiality to protect the interests of individuals and the financial interests of ratepayers.
Secrecy and confidentiality are often contused. Secrecy in government, local or national, has no place in a true democracy. While we acknowledge and appreciate the help and encouragement which the Government have given this Bill, we wonder how much support and encouragement would have been given if the water authorities, the health authorities, and certain of the Government's own activities were included in the provisions. I hate to introduce this sour note, but I personally would have preferred to see a much wider approach to this Bill. We believe that public access to the mechanics of decision making by all public undertakings is a right which should be enshrined in legislation.
Turning to the Bill itself, there are at least two areas which need close examination and to which we expect to return at Committee stage. One is the schedule of exemptions. The list is long, and for the most part sensible, but some inclusions in that list may need to be questioned. Another question mark relates to clause 100D and the provision for access to relevant documents.
At first sight—and I must apologise for saying, "at first sight" but the Bill was only available on Monday and there has been little time to absorb it—the new arrangements appear capable of being manipulated with more ease than the old. Since this is surely not the intention of the sponsors of the Bill, we hope to explore the situation at Committee stage and seek amendments if necessary.
I was a member of a local authority before, during, and after the 1972 Act, and I well remember the shock and dismay from officials and councillors at the prospect of opening up committee meetings to the press and the public. Dreadful warnings were given about pressures on decision making, about trivialisation of events, and above all about the public's inability to understand enough of the background to see why decisions were being made. None of it happened. As the noble Baroness, Lady Stedman, has already said, many authorities are already implementing the provisions of this Bill, including the admission to sub-committees. My own ex-authority already practises almost all of the provisions of the Bill and it is right that those who still operate in an atmosphere of secrecy should be brought up to the standards of the best, as the noble Baroness, Lady Carnegy of Lour, said. We wish this Bill well and we look forward to the day when legislation to bring other areas of public concern under public scrutiny are before us. My Lords, we support the Bill.
9.21 p.m.
Lord Skelmersdale: My Lords, speaking from this Dispatch Box I should like to congratulate my noble friend Lady Carnegy for bringing this Bill before your

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Lordships. It is no easy matter, as I know from practical experience. She deserves (and has had) the plaudits of the House for having had the courage to grapple with its undoubted complexities and for having set out so clearly its basic underlying principles. These principles have remained constant since the Bill was first introduced in another place, and with my noble friend at the helm I have no doubt that they will remain so throughout its passage through this House.
The Government attitude too has been consistent. We have supported the purpose of a measure which seeks to add to the information available to everyone as to what goes on in local government. Too often this is shrouded in mystery, and penetrated only by speculation. The noble Baroness, Lady Stedman, made this point forcefully to illustrate the need for this Bill. The noble Baroness, Lady Nicol, however, was, I feel, a little lukewarm. Unlike her, I am not prepared to speculate on what is not in the Bill and what might be the Government's attitude if it were. I should like, however, to make two passing observations.
First, the Bill is about local government and is confined to local government. As such, it has no repercussions beyond local government. The constitutional position of local authorities is not directly mirrored elsewhere in the public sector. It would therefore be mistaken to assume that the contents of this Bill could apply simplistically and uncritically to other bodies. The noble Baroness mentioned the water authorities and the health authorities.
Secondly, this Bill is timely because the concerns which underlie it are similar to those which have prompted my right honourable friends the Secretaries of State for the Environment, for Scotland and for Wales to ask Mr. David Widdicombe, QC, and his committee to inquire into local authority practices and procedures. Wisely, however, the Bill does not attempt to deal with areas of very considerable difficulty where the case for legislative action, let alone the content of any legislation, must be considered in the light of the Widdicombe Committee's findings.
Like other noble Lords who have spoken I have no doubt that this Bill will receive a Second Reading tonight. Should we look critically at the detail of the Bill at some future stage I have no doubt that the House is fully able, willing and capable of correcting it.
9.24 p.m.
Baroness Carnegy of Lour: My Lords, I should like to thank the two noble Baronesses for their welcome
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for the Bill, which is enormously encouraging to myself and to the sponsor. I should like also to thank my noble friend on the Front Bench for the fair wind that he has given to the Bill.
The points which have been raised are probably not large ones. The list of exemptions in the schedule needs to be looked at carefully. Noble Lords will have seen that it is provided in the Bill that they can be altered subsequently by the Secretary of State, so they are adjustable elements in the Bill. Nevertheless it is important that we try to get them right the first time. We should, I am sure, do that.
The arrangements for access to documents again is a detailed matter, and it is encouraging that the noble Baronesses who spoke on this subject are people of such enormous experience in local government. I am sure that their thinking will be both positive and wise. On the question of the limits of the Bill and the fact that it relates only to local government, it is not for me to comment because I think the remark was made to the Government. But I think that this Bill is all about the form of answerability that is particular to local government, and to that extent it has an implicit relationship to that which concerns the Widdicombe inquiry, because they are dealing with local government relationships between officials and councillors, among other things. It has a relationship, but it steers clear of their remit. It is only about local government because it is about that particular relationship, although the subject in general can be taken as wide as one likes.
May I just thank the noble Baronesses and my noble friend on the Front Bench, and hope that at Committee stage we can improve the Bill even further.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Associated British Ports (No. 2) Bill
The Queen's Consent signified; Bill reported from the Unopposed Bill Committee with amendments.
House adjourned at twenty-six minutes past nine o'clock.

  LOCAL GOVERNMENT BILL: RESIDUARY BODIES
  LOCAL GOVERNMENT BILL: RESIDUARY BODIES
  HAZARDOUS WASTE INSPECTORATE: REPORT
  HAZARDOUS WASTE INSPECTORATE: REPORT
  AID FOR AFRICA: AGRICULTURAL DEVELOPMENT FUND
  AID FOR AFRICA: AGRICULTURAL DEVELOPMENT FUND