Sitting of 19 June 1985

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

  BERKSHIRE BILL [LORDS]
  Order for Second Reading read.
  To be read a Second time tomorrow.

Oral Answers to Questions
  SCOTLAND

    Paediatric Beds
    Mr. Robin Cookasked the Secretary of State for Scotland what is the number of paediatric beds per thousand of client population which his Department uses as a yardstick in determining the adequacy of health provision.
    The Parliamentary Under-Secretary of State for Scotland (Mr. John MacKay): There is no officially accepted target level of provision of designated paediatric beds, but I am satisfied that there is adequate provision of paediatric beds in Scotland as a whole. It is primarily for health boards to determine the pattern of provision in their own areas.
    Mr. Cook: Is the Minister aware that, due to pressure on its forward budget, Lothian health board has now dropped the provision for a paediatric ward in the new hospital being built at Livingston? Is he further aware that one fifth of the population of Livingston are under the age of 10? Whatever the general standards employed, does the hon. Gentleman, as Minister responsible for the Health Service in Scotland, regard it as satisfactory to provide a new hospital which will not cater for such a large chunk of the local population? If not, will he give my constitutents an assurance that the new hospital will cater for their children?
    Mr. MacKay: Phase 1 of the West Lothian district general hospital will provide about 400 beds, including a paediatric department of 26 beds. That project is now under construction and, as I understand it, there is no intention of altering the plans for phase 1.
    Mr. Malone: I accept that this is a health board responsibility, but is my hon. Friend aware that in Aberdeen there is a surplus of paediatric beds but a need for neonatal care? Does he agree that it would he possible to reallocate resources in such a way as to meet that need?
    Mr. MacKay: My hon. Friend is quite right. Health boards have to ensure that the facilities provided accord with current population and demand. The decrease in the
    278
    child population means that there is undoubtedly an oversupply of paediatric beds in Scotland as a whole, but more beds are needed in certain sections.
    Mr. Dalyell: Are the running costs available for the paediatric unit under construction in Livingston?
    Mr. MacKay: The problem with the running costs—
    Mr. Dalyell: Answer the question.
    Mr. MacKay: I am about to do so. The problem of the running costs of the West Lothian district general hospital is more attendant on phase 2. As I have explained, phase 1 contains the paediatric unit and I understand that the running costs are available.
    Mr. Bill Walker: Does my hon. Friend agree that the provisions made in Tayside, and particularly in Blairgowrie, where the cottage hospital has now become a community hospital, have achieved a sufficiency of paediatric beds and an increase in the number of geriatric beds?
    Mr. MacKay: My hon. Friend is quite right. In relation to all kinds of hospitals, health boards must consider the total needs of patients in the area. One of the principal needs to which I draw the attention of health boards is the need to provide more geriatric beds.
    Mr. Ewing: How can the Minister claim that there is an oversupply of beds in hospitals in Scotland when waiting lists and waiting time for admission are beginning to increase again? With regard to the paediatric department of the West Lothian district general hospital, if my hon. Friend the Member for Livingston (Mr. Cook) is correct, as I suspect he is, and the project has been dropped, although the Minister seems to think that it is going ahead, will the Minister instruct the health board to ensure that the paediatric unit is included?
    Mr. MacKay: I have explained that phase 1 is already under construction and a paediatric unit of 26 beds is included in it. I also explained to the hon. Member for Livingston (Mr. Cook) that phase 1 can be run without phase 2 being on stream.

    Housing Benefit
    Mr. Millanasked the Secretary of State for Scotland what steps he is taking to give local authorities increased powers to deal with abuses of the housing benefit system.
    The Secretary of State for Scotland (Mr. George Younger): The Government accept the housing benefit review team's recommendation that powers to prevent abuse of the housing benefit scheme should be strengthened. Our Green Paper proposes in particular that my right hon. Friend the Secretary of State for Social Services should have a reserve power to limit the level of rent eligible for housing benefit.
    Mr. Millan: Is the Secretary of State aware that there are slum landlords in Glasgow and elsewhere who are letting out appalling properties at scandalously high rents to those on supplementary benefit? These rents are paid by district councils as agents for the Department of Health and Social Security. As the Government have abandoned their proposals to abolish the Rents Acts — their

    279
    abolition would make the abuses even greater—what justification can there be for denying Scottish local authorities a power which is available to English local authorities to initiate the fair rent procedure? The implementation of that procedure in Scotland would allow authorities to get at bad landlords and would save money for the public purse. Why cannot that action be taken?
    Mr. Younger: I appreciate the problem that the right hon. Gentleman has raised. He will know that local authorities are already empowered under the housing benefit regulations to reduce benefits where they judge accommodation to be unnecessarily large or the rent to be unreasonably high when compared with other accommodation that is available in the area. I am advised that the powers that are available to English local authorities are comparatively rarely used. We are keeping the matter under close review and if it is necessary to take action we shall have to consult COSLA before embarking on the introduction of legislation.
    Mr. Craigen: I find the Secretary of State's reply entirely unsatisfactory. When the Government are planning to cut housing benefit for the needy, how can the right hon. Gentleman permit the greedy to be able to abuse the present housing benefit system? The Opposition would assist in the passage of minor amending legislation to ensure that tenants are protected and that landlords are not allowed to abuse the system. Surely the right hon. Gentleman agrees that it is essential for local authorities in Scotland to have the right which English local authorities already have to apply for the rent officer to register a rent.
    Mr. Younger: I can only assume that the hon. Gentleman did not hear my reply to the right hon. Member for Glasgow, Govan (Mr. Millan). There are two ways in which this wrong can be put right. First, a local authority can use its existing powers, as I have described, to limit the amount of benefit that is given where it considers that that is necessary. Secondly, tenants and their advisers have plenty of powers to demand the registration of a rent. They can demand the presence of the rent officer at any time that they wish to do so. They should be encouraged to use that right whenever they wish.

    Rural Aid Fund
    Dame Judith Hartasked the Secretary of State for Scotland what consideration he is giving to the proposal submitted to him for a rural aid fund.
    Mr. Younger: My hon. Friend the Minister with responsibilities for industry and education is to meet the Convention of Scottish Local Authorities to discuss a proposal submitted by Strathclyde regional council for the creation of a rural aid fund for Scotland.
    Dame Judith Hart: May one hope that if such a meeting takes place the prospects are somewhat hopeful? Is the Secretary of State fully aware—I know that the district council within his constituency is one of the authorities which have supported the proposal—of the importance of such a fund, given that so many rural areas have suffered considerable deprivations over the past 10 or 20 years and will suffer further deprivation under the Transport Bill when it is enacted? Does the right hon.
    280
    Gentleman appreciate how valuable even a modest rural aid fund would be to restore and maintain many rural communities?
    Mr. Younger: I appreciate the right hon. Lady's views on this issue. I can assure her that the consultation that we shall be having with Strathclyde regional council will be genuine. I look forward to hearing from my hon. Friend the details of the ideas put forward by the council. I appreciate that there is much concern about how we can help rural areas,. There is a vast array of powers available for helping rural areas, and large sums are directed specially to rural areas in many different ways. We must consider whether a rural aid fund would add significantly to the present powers. If so, would it be worth while to introduce such a fund?
    Mr. Henderson: Is my right hon. Friend aware that the greatest need in a rural area is good transportation? In that context, the assistance that is to be made available as a result of the Transport Bill to encourage new developments in rural areas is much to be welcomed. Does my right hon. Friend agree that it would be helpful also to arrange for some focus on the passing of knowledge between those who carry out experiments in rural areas about new forms of transport which it may be possible to introduce following the Bill's enactment?
    Mr. Younger: Yes. I agree entirely with my hon. Friend that the special arrangements that are being written into the provisions for transport in rural areas reflect clearly the high priority that the Government give to ensuring that rural areas are properly looked after. There has been a vast increase in the subsidies to the Highlands and Islands ferry service. That is only one example of many of the special aids that are given to rural areas.
    Mr. Donald Stewart: Will the right hon. Gentleman accept that one of the most damaging actions to rural areas is the slashing of agricultural advisory services by 41 per cent.? If the English Minister of Agriculture, Fisheries and Food does that, does the Secretary of State for Scotland have to pursue the same line like a puppy dog?
    Mr. Younger: We are still consulting all interests concerned as to how best to change those services. However, I never expected the right hon. Gentleman to complain. The integrated development programme, which is more than half funded by the Government, is pouring vast sums into his area in every way. I should have thought that the right hon. Gentleman would express some thanks for that.
    Mr. Forth: Is my right hon. Friend not concerned that, following demands for urban and rural aid, the next demand will be for suburban aid? Is he not worried that, although many people now demand aid, the money has long since run out and we shall not be able to find any more resources with which to meet their demands?
    Mr. Younger: My hon. Friend is perfectly correct, in that as long as funds are limited we must ensure that they are targeted towards the most important areas. This Government have added to the aid for urban areas, and that aid is used extensively. We have new schemes for the rural areas, including the programme for regional industrial development and the development of rural area workshops scheme, both of which have recently been introduced to give extra help to rural areas.
    Mr. McKelvey: Does the Secretary of State realise that the people of Scotland would broadly welcome his launching the rural aid fund by handing back the £15 million that he has just taken out of the Estimates to cover the rise in rates relief, from 3p to 8p, which he engineered in order to call off the hounds who were chasing him?
    Mr. Younger: I am not sure how the hon. Gentleman would like the money to be spent other than on helping the ratepayers. I should have thought that he would be pleased if the money helped ratepayers in Kilmarnock and Loudoun, as well as everywhere else.
    Mr. Home Robertson: As many successful rural schools are under threat because of the Government's education cuts, will the Secretary of State make a statement on the future of funding for rural, community-based primary schools?
    Mr. Younger: Alas, the first part of the hon. Gentleman's question shows that he is, as usual, completely ill-informed. The amount of money allowed for education in Scotland is at its highest level per head ever. Indeed, the Government have raised it. As the hon. Gentleman knows, the closure of schools is a matter for the regional council in the light of its priorities. The hon. Gentleman asked indirectly about assistance for rural areas, but his area gets as much help as any.

    Rates
    Lord James Douglas-Hamiltonasked the Secretary of State for Scotland what is his most up-to-date assessment of the numbers of (a) domestic and (b) commercial ratepayers in Scotland who will benefit from the terms of the Rating (Revaluation Rebates) (Scotland) Bill; and what is his latest estimate of the total cost, taking reductions on appeal into account.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): The Convention of Scottish Local Authorities has now obtained returns from all the Scottish rating authorities which show that some 133,000 domestic and 62,000 non-domestic, including commercial, ratepayers will qualify for revaluation rate rebates at a total cost in 1985 of around £30 million. These figures are a reasonable measure of the likely demand for rebate.
    Lord James Douglas-Hamilton: Will not the final figure be known only when all the appeals have been resolved? Is it not true that all those most substantially affected, whose rateable value has risen more than three times, will be assisted by the Bill, and that the commitment is open-ended?
    Mr. Ancram: My hon. Friend is quite correct. The final figure will not be known until the last eligible ratepayer has been paid. [Interruption.] I agree that the scheme is most generous. I am surprised that Opposition Members should laugh at the provision of £30 million when many of them were asking for much less only four weeks ago. I find it hard to understand why they do not appreciate the scheme as much as Scottish ratepayers do.
    Mr. Bruce: The hon. Gentleman has just revealed what he was unable to reveal two weeks ago. Should he not now recognise that the cut-off point has been set too high and that many small businesses which still face extinction should have the benefit of a greater reduction
    282
    than he has allowed for? Does the hon. Gentleman not realise that there is still very considerable discontent among small businesses in Scotland? If he thinks that the rates issue is dead in Scotland, he should bear in mind that it is not as dead as his party will be at the next election.
    Mr. Ancram: I am glad that the hon. Gentleman has been converted from the view—expressed only eight weeks ago in the House—that this is a warped priority, but I fear that, like all converts, his zeal has taken him further than his common sense might do. If he studies the scheme, he will discover that we set the level of a three times multiplier because we appreciated that we could not undo revaluation altogether and, as the hon. Member for Glasgow, Garscadden (Mr. Dewar) said, we had to set it at a level that would help those who were hardest hit. That is what has been achieved by the scheme, and it is much appreciated in Scotland.
    Mr. Douglas: The Bill is still going through Parliament and is now before the House of Lords. As about £20 million might be available for distribution, will the Minister consider amending the legislation so that all the funds that the Secretary of State has won from the Treasury can be used?
    Mr. Ancram: I do not know whether the hon. Gentleman was here when we debated the issue the other night, but I made it clear that the scheme was demand-led. I explained that the three times multiplier gave adequate protection without undoing the revaluation. We are distorting revaluation, but we are not claiming that those who have gained should give anything back. According to the latest figures available, that demand-led scheme will cost about £30 million.
    Mr. Bill Walker: Does my hon. Friend agree that even after the three times multiplier has been used there will be an increase of over 50 per cent. in the cash to be paid for rates in the Angus district, and only a little less in Perth and Kinross? Does my hon. Friend agree also that we must apply pressure to get rid of this iniquitous system, which has produced such a massive increase in rates in that part of the country?
    Mr. Ancram: I appreciate that under this scheme, even with the help provided by domestic relief, some ratepayers in Scotland are faced with high rate increases. The Government are studying the whole system of local government finance. We hope to be able to make proposals towards the turn of the year.
    Mr. Dewar: I welcome the Under-Secretary's admission that he knew, but would not admit in Committee, that there would be a substantial shortfall—probably of about £20 million — on the £50 million package about which the Secretary of State boasted at Perth. Can the hon. Gentleman confirm press reports that of the sum that would be available for the small business man and other non-domestic ratepayers, about £3 million is likely to go to the owners of poster sites in Scotland and not to small businesses?
    Does the Minister accept that an element of flexibility must be built into the legislation and that if that £20 million is not paid out as advertised it will be seen by many who face rate increases of 50 or 60 per cent., with not a penny of aid, as the political equivalent of a serious breach of the Trade Descriptions Act?
    Mr. Ancram: I do not like to accuse the hon. Gentleman of deliberate political cynicism, but as £30 million has been made available by the Government to help those who are hardest hit—the phrase that he used in the House when he said that he would co-operate with the legislation—I find the last part of his question hard to understand.
    The figures have become increasingly robust as the analysis of the revaluation has continued. The figures that I have given today were made available by COSLA on 12 June and were confirmed to an extent by the Minister of State in the debate in the House of Lords on Monday.
    We have no central information about the poster sites. I understand that in the one area that has been considered in respect of poster and advertising sites they represent a small proportion in terms of numbers, qualifiers and cost.
    Mr. Wilson: Did the Secretary of State not claim that he had negotiated with the Treasury an extra £50 million to spend on domestic and non-domestic ratepayers? Does the Minister agree that if he does not change the multiplier he will gratuitously hand back to the Treasury £20 million which otherwise would be available to those badly affected by rate changes in Scotland? Does he agree that to fail to claim the money for Scotland would be iniquitous?
    Mr. Ancram: The hon. Gentleman is on record as saying that revaluation is good and I am sure that he will not withdraw that opinion. The agreement with the Treasury was that it would provide new money to underwrite the scheme, which is demand-led. At the time that the announcement was made in May, the best estimate of the cost of the scheme was £50 million.

    Sporting Events (Safety)
    Mr. Canavanasked the Secretary of State for Scotland whether he is satisfied with standards of safety and crowd control at Scottish sporting events; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): No one can ever be wholly satisfied about matters of safety and crowd control, and I have therefore arranged that the inquiry under Mr. Justice Popplewell should include Scottish sports grounds. My officials have asked Scottish fire brigades to visit sports grounds in their areas to advise managements on any necessary safety measures. With the co-operation of the police, a programme of such inspections is currently being undertaken. The governing bodies of sport have been asked to make constituent clubs aware of the free advice available, as the clubs have a responsibility to ensure the safety of the public.
    Mr. Canavan: Instead of imposing crippling rate burdens on Scottish football clubs in comparison with English football clubs, will the hon. Gentleman consider introducing a system of financial assistance for ground improvements? Will he support the representations that I have made to the Belgian Government to follow the example of FIFA and UEFA and draw a distinction between Scottish and English football, rather than impose a ban on Scottish as well as English football clubs? In effect, this ban is punishing Scottish clubs and their supporters for the gross and deplorable behaviour of some English fans during the Brussels tragedy a few weeks ago.
    Mr. Stewart: One of the results of the revaluation is that the rating burden on many Scottish football grounds has declined. I have every sympathy with the hon. Gentleman's point about European matches. I think the House will agree, however, that the Belgian Government's announcement in those tragic circumstances was understandable. We have passed on to the Foreign Office the representations that we have received.
    In recent years, Scottish football club supporters have had an excellent record in away matches. I am sure the House agrees that, in the present circumstances, it was sensible for the five clubs involved in European competition to announce that they would do everything possible to dissuade their supporters from travelling to away matches next season, except in the case of cup finals on neutral ground.
    Mrs. McCurley: Does my hon. Friend agree that, although the Government have had a significant influence by the banning of alcohol at football matches, ultimately every sporting club must bear a greater responsibility for the safety and care of those attending sporting events at their premises?
    Mr. Stewart: I entirely agree with my hon. Friend. She is absolutely right to point to the responsibility of clubs. There is no room for complacency about the control of hooliganism in Scotland. That is why I have arranged to meet the Scottish Football Association, the Scottish Football League, the chief constables and the British Transport Police on 1 July to review existing arrangements and to consider whether, in the interest of the huge majority of fans, further action should be taken to improve behaviour at football matches next season.
    Mr. O'Neill: Does the hon. Gentleman agree that it is not enough simply to suggest that free advice will be available? If safety at football grounds in Scotland is to be improved, money must be forthcoming. The parlous state of the finances of most of the small Scottish clubs makes it difficult for them to find the necessary funding on their own. The Government must give greater support to help small clubs to make their grounds safe.
    Mr. Stewart: Substantial sums of money go into football, including £7 million a year to the Football Trust. Last year, the Football Grounds Improvement Trust distributed £3·3 million retrospectively. I am a member of the working group on financing improvements at football grounds, which is under the chairmanship of my hon. Friend the Member for Sutton and Cheam (Mr. Macfarlane). The FGIT surveyors' report will include surveys of all non-designated grounds in the Scottish first and second divisions.
    Mr. Malone: Does my hon. Friend agree that one of the most important contributions to crowd control is an all-seated stadium? Does he agree that Aberdeen has been able to show an example of crowd control not only in Aberdeen but when Aberdeen clubs have travelled abroad? Aberdeen's supporters are ambassadors for the game, rather than the reverse.
    Mr. Stewart: Yes, Sir. I had the pleasure of attending Pittodrie at the beginning of the season to present the championship flag to Aberdeen. There is no doubt that it has an excellent stadium. The McElhone report emphasised the importance of seating.
    Mr. Ewing: When the Minister refers to £7 million going to the Football Grounds Improvement Trust, does he appreciate that that money comes from the pools companies for the use of the fixtures list? In terms of their take from betting, the Government take far more from football pools than the football clubs have returned to them for ground improvements. Does the hon. Gentleman appreciate that a ground at which we have trouble—not in terms of controlling crowds, but in relation to crowds entering and leaving—is Hampden Park, because the design of the reconstructed stadium had to be changed as a result of the Government cancelling the £5 million grant that was to have been made available? Will the Minister, as a contribution to solving the problem in Scotland, restore that grant and give the money to the Scottish Football Association at Queen's Park so that the reconstruction of Hampden Park can be completed?
    Mr. Stewart: The reconstruction of Hampden is going ahead, and I visit Hampden regularly. There are sources of Government assistance which are potentially available, for example, the leg-up and the urban programmes. The hon. Gentleman should accept that the tax on betting to which he refers is a tax on gambling, not a tax on football, and that is an important distinction.

    Peripheral Housing Estates
    Mr. Hugh Brownasked the Secretary of State for Scotland what proposals he is considering in response to the report on peripheral housing estates by CES Ltd., "Framework for Action," a copy of which is being sent to him; and if he will make a statement.
    Mr. Ancram: The study was commissioned by four local authorities, including Glasgow district council, and it is for them to consider in the first instance how best to respond. I shall, nevertheless, study with interest the proposals of relevance for central Government. I welcome in particular the emphasis in the report on the need and scope for joint ventures between the public and private sectors to tackle the problems of peripheral estates.
    Mr. Brown: In the light of that reply, will the Minister indicate, even informally, to Glasgow and Strathclyde that he would be willing to meet them to discuss in what way a new structure might be evolved — be it a town development or urban development corporation—to fit the needs of Easterhouse?
    Mr. Ancram: The hon. Gentleman will accept that I must, first, look at this quite complex document and evaluate it, and obviously I cannot make a commitment as to timing. I believe that the emphasis must be on co-ordinated action, which recognises the priority needs of Easterhouse within existing programmed expenditure. As he will be aware, the SDA is already involved in the new greater Easterhouse partnership and the new joint initiative for Easterhouse. The agency will, within the terms of its remit, continue to respond positively to the problems of such areas.
    Mr. Henderson: Does my hon. Friend agree that the hon. Member for Glasgow, Provan (Mr. Brown) has drawn attention to a constructive proposal for dealing with one of the many problems that arise from past mistakes by local authorities, often egged on by Governments of the day, in housing policy? While recognising that much has to be done to rectify these errors, does my hon. Friend
    286
    accept that that should not be done at the expense of the housing needs of those local authorities which have pursued wiser policies?
    Mr. Ancram: I am grateful to my hon. Friend for making that point, and I am sure he realises that it is the Government's concern to promote and encourage private sector involvement in public sector estates, both to diversify tenure and to enhance the amenity. I hope that authorities will not stand in the way of these types of development for political ideological reasons.

    Iron and Steel Industry
    Mr. Tom Clarkeasked the Secretary of State for Scotland when he next plans to meet the Scottish representatives of the Iron and Steel Trades Confederation to discuss the current state of the iron and steel industry in Scotland and the economic implications thereof for Scotland.
    Mr. Younger: A member of the Iron and Steel Trades Council was one of the STUC representatives whom I met on 7 June. Also, the ISTC was represented on the works committee at Ravenscraig, which my hon. Friend the Minister with responsibility for industry and education in Scotland met when he visited the works on 3 June.
    Mr. Clarke: What is the Secretary of State's response to this morning's press speculation, and reported remarks of Sir Robert Haslam, on the future of Ravenscraig? Does the right hon. Gentleman accept that the closure of Ravenscraig and, consequently, Gartcosh, would be a devastating blow to the Scottish economy? Is he prepared to give a lead to the Scottish ministerial team by saying that he is prepared to resign on this issue because he is not prepared to see Scotland becoming an industrial desert?
    Mr. Younger: I appreciate the concern that the hon. Gentleman has mentioned. I, too, have seen the speculation in newspapers this morning. It is just that: it is speculation. The remarks made yesterday before the Select Committee were in that vein as well. The position, as I confirm again, is that there is no sign yet of the corporate plan being presented to the Government. When it is presented to the Government it will have to be carefully considered by Ministers before any decisions can be agreed to or otherwise. That is the position and, as I think the chairman confirmed in his evidence yesterday, that is likely to remain the position for some considerable time yet.
    Mr. Hirst: May I reassure my right hon. Friend that he will have the undivided support of Conservatives in any efforts that he makes to persuade the British Steel Corporation and his ministerial colleagues that Ravenscraig should not only continue but should enjoy new investment in coke ovens? May I further urge, if the newspaper reports are correct, that he and his ministerial colleagues plan and mount the type of skilful and successful campaign that they mounted in 1982, to ensure that Scotland retains its steel-making capacity?
    Mr. Younger: I am grateful to my hon. Friend for the first part of his remarks. As to the second part, all of us have to wait to see what is in the corporate plan, and then we will have to formulate our responses very quickly.
    Mr. James Hamilton: The Secretary of State is very conscious of the fact that I am one of the hon. Members

    287
    in whose constituencies Ravenscraig lies. As the right hon. Gentleman is aware, there is a conference at the civic centre in Motherwell on Friday at which there will be representations from the STUC, all the councils, all the Churches, the ISTC and all the other trades unions. Depending upon the decision, which I am sure will be a unanimous one to fight for Ravenscraig, will the right hon. Gentleman give us a categorical assurance that at Cabinet level he will lead the fight for the retention of Ravenscraig?
    Mr. Younger: I well appreciate the importance of the meeting, and I am glad that the hon. Gentleman will be present. I am anxiously awaiting news of what will be in the corporate plan when it comes. I can give the assurance that, when it does, I shall be heavily involved in dealing with responses to it.
    Mr. Teddy Taylor: As the current uncertainty seems to stem largely from the advice of the European Commission that Britain should further reduce its steel-making capacity, can my right hon. Friend give us a clear assurance that the Government will not contemplate further reductions until the other member states of the Common Market have carried out their agreed obligations to reduce steel-making capacity? Is he aware that Members of Parliament who represent English constituencies are fully conscious of the superb battle that he has put up so far for Scotland's steel industry?
    Mr. Younger: With regard to the European scene, as my hon. Friend knows, my right hon. Friend the Secretary of State for Trade and Industry and his colleague have, on a number of occasions in Brussels, forcefully made the very points that my hon. Friend has just made. That is a matter on which the Government have taken a very strong stand.
    Mr. Buchan: Many hon. Members are concerned about the adjective "anxious" which the Secretary of State used to describe his views on the forthcoming plan. Only one question remains: will he put the future of Ravenscraig before his own job?
    Mr. Younger: I think that my views on this subject have been widely known for long enough. I have given the assurance—and nobody with any sense could expect me to go further at this time—that I am waiting to see what the corporate plan says. Thereafter we shall all have to work out our responses to it.
    Mr. Bruce: Will the Secretary of State acknowledge that the future of Ravenscraig is crucial to the future of Scottish industry, that the suggestion that it should be closed is something that should be considered as totally unacceptable within Scotland and that he should say so unequivocally? It is not just a matter of Ravenscraig and the jobs there, but of all the jobs dependent on it in British Rail, in the support industries and so forth. Will he acknowledge that without the steelworks Scotland cannot have a credible industrial base, and that he should say so and fight every inch of the way to ensure that the steelworks remains?
    Mr. Younger: I appreciate the hon. Gentleman's continuing concern about the matter, but I suggest to him and to others that they should be careful not to close Ravenscraig before anyone has even proposed it.
    Mr. Lambie: When will the Government make the announcement about the new investment at Hunterston?
    288
    Will it be made tomorrow before the meeting on Friday referred to by my hon. Friend the Member for Motherwell, North (Mr. Hamilton)?
    Mr. Younger: I do not expect any such announcement to be made tomorrow.
    Mr. Bill Walker: Does my right hon. Friend agree that the Government have been saying to the workers and management in all industries that we have to increase productivity if we are to maintain our markets? Is it not true that, by that standard alone, Ravenscraig has excelled and we should not let anyone outside Scotland be misled by the fact that the European Community has certain levels of production which it says must be maintained throughout Europe? Is my right hon. Friend aware that we in Scotland and Britain have made our contributions, and that Ravenscraig has shown that it is the plant of tomorrow and not of yesterday?
    Mr. Younger: I agree with my hon. Friend. My right hon. Friends and I have made it clear on numerous occasions that we consider that when capacity in Europe is being discussed it must be clearly understood that it is not expected that this country should do all the reducing of capacity, but that there should be an agreed system between the European countries.
    Mr. Milian: In view of the recent damaging reports, and of early reports emanating from the BSC, why can we not have from the Secretary of State a straightforward and unequivocal commitment that Ravenscraig will not be closed?
    Mr. Younger: The right hon. Gentleman has been in the higher reaches of Government and he will know that in nationalised industries the principle that is rightly followed is that the industry runs its own concerns and refers to the Government for the major decisions. It would be wrong, in whichever direction the proposal goes, to preempt the decision on any part of the plan before one sees the plan as a whole. Everybody concerned must wait for BSC to produce its corporate plan, and I assure the right hon. Gentleman that there will then be a clear reaction.
    Mr. Wilson: As it is no secret that BSC is deeply hostile to keeping Ravenscraig open, will the Secretary of State not delay too much his attack on this matter, because if he holds back decisions could be taken on the corporate plan by other Ministers? It is urgently necessary that he puts his full weight behind Ravenscraig, and I assure him that he will have every support from my party on this matter.
    Mr. Younger: I am grateful for that support from the hon. Gentleman. The views of all of us in Scotland on this matter are well known, but it is prudent to wait to see a target before one starts firing at it.
    Mr. Dewar: Is the Secretary of State not being a little disingenuous in suggesting that this is all speculation? It is known that options were presented to the Government in the middle of last year, and that those options included the closure of a major steel plant. Is it not a fact that Sir Robert Haslam said to the Select Committee yesterday that discussions were under way on those options? In those circumstances, if the right hon. Gentleman has not seen those options, it must be because the Secretary of State for Trade and Industry has not shown them to him. Is it not essential that the Secretary of State for Scotland gets his

    289
    oar in now and makes it clear that the future of Ravenscraig is non-negotiable and that it must continue to play a central role in the Scottish economy? Does the Secretary of State recall that the Minister of State, Department of Trade and Industry, said on 3 June after visiting Ravenscraig that he did not think there was any uncertainty about the future of the plant? Is not the only way that the Secretary of State can end the uncertainty started by yesterday's events is to make it clear that there will not be a closure of one of BSC's three major strip mills under this or any other Government?
    Mr. Younger: I appreciate the hon. Gentleman's first point, but he must appreciate that what was said yesterday, which was not surprising, was that there were a number of different options, which were all being considered. That is as it should be. The hon. Gentleman will also know, as was made clear yesterday, that discussions are always going on between the sponsoring Department and the nationalised industry. Preparations for a corporate plan form part of a process that does not stop. However, it is essential that the industry should first make its proposals about what it thinks is the best plan for the industry's future. It is then for the Government to consider whether they are prepared to approve or reject the proposals. That is the Government's role.

    British Leyland (Bathgate)
    Mr. Dalyellasked the Secretary of State for Scotland if will make a statement on his most recent discussions with British Leyland about the future of the Bathgate commercial vehicles plant.
    Mr. Allan Stewart: British Leyland tells me that discussions are continuing to try to find a purchaser for the engine plant, although some earlier interest has receded. I understand that approaches have been made to British Leyland about developing the site for alternative use. The company has made it clear that if there is a purchaser for the engine plant, any alternative use for the site must ensure the continuation of the engine manufacturing facility.
    Mr. Dalyell: May I ask the Minister a question, of which notice has been given to his office for a considered reply? Will the Scottish Office help West Lothian district council, Lothian regional council and Bathgate area support enterprises to obtain co-operation from Leyland for the conversion of the Bathgate premises to accommodate incoming manufacturing industry?
    Mr. Stewart: I am grateful to the hon. Gentleman for giving me notice of the question. First, I emphasise that Locate in Scotland has carried out the most comprehensive promotion ever undertaken for a single site, in addition to the Government's general role in improving the climate for industry in the area following the working party's report. The initiative for specific uses of the premises must lie with those who have proposals to put to Leyland. However, I assure the hon. Gentleman that my office stands ready to be involved in any discussions on such specific proposals.
    Mr. Robert Atkins: Does my hon. Friend agree that the new range of commercial vehicles made by Leyland Vehicles has been amazingly successful, and that that is evidence of the great changes in productivity and
    290
    efficiency of management and, above all, in the work force, and of the Government's commitment to British Leyland in the interests of the British public as a whole?
    Mr. Stewart: I entirely agree with my hon. Friend. There is no doubt that British Leyland has made substantial strides. The problem regarding Bathgate is that British Leyland has more than enough capacity at its Leyland plant to accommodate even a substantially increased demand for trucks.

    Improvement Grants
    Mr. Maxtonasked the Secretary of State for Scotland when he intends to make a statement on improvement grants for private housing in Scotland.
    Mr. Ancram: A comprehensive review of private sector house improvement policy in Scotland is virtually complete, and I hope to publish proposals for consultation fairly soon.
    Mr. Maxton: Is the Minister aware that there are 1,000 closes, that is 6,000 to 8,000 houses in Glasgow, which are subject to a section 24 order, which require immediate and urgent repairs to be carried out? Is he further aware that Glasgow district council will require £25 million extra on its budget to ensure that those improvements are carried out? Despite the fact that he is carrying out a review, will he ensure that Glasgow district council is given the money to provide more jobs in the building industry and to give people a decent home to live in?
    Mr. Ancram: I have heard what the hon. Gentleman has to say, and I have heard those facts quoted before. I do not believe that that should have been the case, and I shall explain why. The capital allocation on the private sector non-HRA last year in Glasgow was £86·6 million, which was 50 per cent. of the Scottish total, or 11 per cent. of the Scottish total of private housing. Of those resources, £2 million was unspent, and the council chose to transfer that to its HRA block allocation rather than to augment this year's non-HRA allocation. This year the council has had about £8·5 million more than its forward commitment Indeed, the amount that has been made available to it is considerably more than its own estimate of expenditure on grants related to section 24 repairs and notices.
    Mr. Steel: How does the Scottish Office justify a lower rate of housing improvement grant in Scotland than in England and Wales when more houses require improvement in Scotland and when we have a higher rate of unemployment among construction workers?
    Mr. Ancram: I am surprised at the right hon. Gentleman's question. The eligible houses in Scotland are on a much broader base than those in England. In England the eligible date is pre-1919, whereas in Scotland it is pre-1964. Obviously, considerably more houses are involved in Scotland. To suggest, as I infer from the right hon. Gentleman's question, that the Government's record on private housing is not good, is to fly in the face of the facts. During the past five years we have had 171,000 grant applications approved, compared with 41,500 approved in the previous five years under the Labour Government.
    Mr. Henderson: Can my hon. Friend give some indication of the scale of housing improvement grant support that the Government have provided in money terms during the past five years, and how that compares

    291
    with the previous five years? Does he agree that at this stage we should be getting a better consensus between the Government and local authorities about the criteria that should be applied to improvement grant applications?
    Mr. Ancram: My hon. Friend asks for the figure for the past five years compared with earlier years. In cash terms, during the five years of the Labour Government £51 million was spent in this area, compared with £311 million under this Government. In real terms the Labour Government effectively spent £123 million compared with £329 million spent by this Government. Perhaps more indicative than that, is the fact that in each of the last two years this Government spent more in real terms than the Labour Government spent during their whole term of office.
    Mr. Kennedy: On the subject of improvement grants to the private sector, will the Minister reconsider his policy for those who have had the cavity wall foam insulation process carried out in timber-framed houses, in that he will not at present allow them specific grants for it to be removed unless that process is part of a general improvement and repair process that qualifies for grant? Many of the houses in the Highlands where such work has been carried out are comparatively new, and therefore do not require other improvements. Will the Minister put pressure on the building societies, in the light of the Building Research Establishment report, not to take such a severe line on mortgages on the subsequent resale of property as a result of the process? Will the Minister reconsider his policy?
    Mr. Ancram: I shall obviously take account of what the hon. Gentleman said in the second part of his question. He and I have corresponded on the first part, and I have made clear to him the criteria for grants. When we publish our consultation paper, I think he will find that we are looking at the whole area of improvement grants on a much broader basis.

  SOLICITOR-GENERAL FOR SCOTLAND

    Travelling People (Crown Office Attitude)
    Mr. Hendersonasked the Solicitor-General for Scotland if he will undertake a review of the Crown Office attitude to complaints against travelling people, and invite representations from local authorities, the police and public
    The Solicitor-General for Scotland (Mr. Peter Fraser): The policy in relation to complaints of unlawful encampment is reviewed from time to time and has recently been revised to link toleration to achievement by local authorities at district level of the provision of pitch targets. As I informed my hon. Friend on 31 October 1984, complaints against travelling people of other breaches of the law are normally dealt with by the police and procurators fiscal in the normal way.
    Mr. Henderson: Accepting that the Scottish Office as well as the Law Officers have an important responsibility in this matter, does my hon. and learned Friend agree that if all travelling people were well behaved and good neighbours there would be very little problem in their finding sites? Does he further agree that during the past year or so there have been examples of incidents and behaviour which entitle us to consider bringing to an end
    292
    the quite extraordinary privileges which travelling people have in being able to settle anywhere in encampments regardless of planning considerations, environmental health and property ownership, and free of rent and rates?
    The Solicitor-General for Scotland: As I have said before, and wish to emphasise again, the toleration policy extends only to unlawful encampment and does not in any way extend to other breaches of the law. The travelling people, as much as anyone else, are under the ordinary obligation to ensure that they observe the law of Scotland. My hon. Friend will also be aware that where there are large, random groups moving around the country in a nontraditional pattern the toleration policy observed in the past does not apply.
    Mr. Ron Brown: In this year of youth, is it not quite disgraceful that many youngsters are forced to be regarded as travelling people simply because they are looking for jobs? Is not the DHSS being encouraged to lean on them and to make it intolerable for them to exist as human beings? Is it not true that these youngsters—the new travelling people — deserve to be protected? They deserve basic rights, just like anyone else — just like tinkers, and I do not knock tinkers by any means. If this Government lead in anything, will they come forward—dare I ask?—with a youth charter to support and protect those youngsters who form a lost generation in Scotland today?
    The Solicitor-General for Scotland: If the hon. Gentleman has a point, it is certainly nothing to do with the problem that we have in Scotland of trying to accommodate traditional travelling people, who have encampments in various areas. I would have thought that those of us who are aware of the problem would want to ensure that the provision of sites throughout Scotland for travelling people were established. What the hon. Gentleman raises has nothing to do with that very real difficulty.

    Housing Benefit
    Mr. Millanasked the Solicitor-General for Scotland how many prosecutions there have been in Scotland in the last year for fraud in relation to the housing benefit system.
    The Solicitor-General for Scotland: Precise figures are not available, but inquiries with procurators fiscal indicate that there have been approximately 15 such cases.
    Mr. Millan: I am interested to hear that reply. Is the Solicitor-General aware of the abuse of the housing benefit system by slum landlords in Glasgow? We understand that in some cases the abuse goes over the borderline into deliberate fraud. I do not expect the hon. and learned Gentleman to comment on individual cases, but will he give me an assurance that where evidence of fraud is obtained the full rigour of the law will be applied and the landlords concerned prosecuted?
    The Solicitor-General for Scotland: I am aware both of the matters that the right hon. Gentleman has raised and of what was in the Glasgow Evening Times. He will appreciate that although the matter is not sub judice it would be inappropriate for me at this stage to comment specifically on the allegations that have been made. I

    293
    confirm to him that although I am not in a position to make any comment immediately, he may take it that the matter is being carefully investigated.
    Mr. Martin: Does the Solicitor-General know that since my days as a councillor in Glasgow there have been complaints about the company mentioned in the Glasgow Evening Times? The complaints are still continuing in my constituency. I have heard tales of people's belongings being thrown out on to tenement landings and of the locks being changed on the doors. Surely as a Minister of the Crown the Solicitor-General should investigate these matters. He should ensure that tenants are properly protected and that we do not go back to the Rachman landlord system.
    The Solicitor-General for Scotland: Again, I have to say that it would not be appropriate to make comments on the particular company, nor do I know how long that company has been in existence. I emphasise that the reserve I place on my remarks is not idle. I am aware that serious allegations have been made, including those that involve harassment of tenants, which would be illegal under the Rent Acts.

    Defence Policy
    Mr. Canavanasked the Solicitor-General for Scotland whether he will publish in the Official Report the full text of complaints lodged with procurators fiscal alleging the illegality of Her Majesty's Government's defence policy and the reason why no action was taken.
    The Solicitor-General for Scotland: No, Sir.
    Mr. Canavan: In view of the complaints lodged with the procurator fiscal at Stirling by students at Stirling university to the effect that, under the terms of the Geneva convention, it is a crime in international law to target the civilian population, and in view of the fact that the Government's nuclear arms policy presents a threat to the civilian population as well as to military personnel, is there not at least prima facie evidence for bringing a prosecution against the Prime Minister and her Government for conducting a defence policy that is criminal?
    The Solicitor-General for Scotland: There is no general multilateral convention outlawing nuclear weapons, nor under international law is the use or possession of nuclear weapons prohibited. Indeed, the existence of such treaties as the one on non-proliferation would seem to indicate implicit acceptance of the legality of possession of nuclear weapons by some nuclear states. In any event, I would scarcely have thought that Stirling sheriff court was the appropriate forum to arraign before it every Prime Minister and Secretary of State for Defence since this country acquired a nuclear capability.
    Mr. Forth: Does my hon. and learned Friend not regret these misplaced and misguided attempts to bring into the judicial sphere that which correctly belongs to the political sphere? Does he agree that the electorate of the United Kingdom wholeheartedly endorse the Government's defence policy?
    The Solicitor-General for Scotland: My hon. Friend is right. What is being sought by the question and by the approach that was made to the procurator fiscal is the introduction of a political element into legal proceedings.
    294
    In any event, as I have sought to emphasise, it is the view of the Government that the possession of nuclear weapons is not a breach of international law.

    Procurator Fiscal (Staff Vacancies)
    Mr. McKelveyasked the Solicitor-General for Scotland if he will list the vacancies in the Procurator Fiscal's Department.
    The Solicitor-General for Scotland: As at 31 May 1985 there were vacancies for five legal assistants, one executive officer and nine typing posts.
    Mr. McKelvey: Because of the worsening working conditions of the service of the Procurator Fiscal in Scotland, has the Solicitor-General had any indication from the staff that they intend to take some form of industrial action, which may culminate in strike action, to pursue their claims? If they put pickets on a Crown Office building, which police force will monitor their activities?
    The Solicitor-General for Scotland: Unfortunately for the hon. Gentleman, he got the wrong answer. He was anticipating that the number of vacancies would be increasing rather than decreasing. In any event, such is my respect for the procurator fiscal service as a whole that I have no doubt that industrial action of the sort that he suggests would be considered wholly inappropriate.

    Crime Statistics (Strathclyde Region)
    Mr. Hirstasked the Solicitor-General for Scotland how many prosecutions there were for crimes and offences in Strathclyde region in 1984; and how this compares with 1983.
    The Solicitor-General for Scotland: Provisional figures for 1984 indicate that 103,150 persons were proceeded against in Strathclyde region for crimes and offences. This compares with a figure of 114,336 for 1983.
    Mr. Hirst: Does my right hon. and learned Friend agree that, if Strathclyde regional council brought the Strathclyde police force up to established strength, more police on the beat would do a great deal to detect crime and so increase the number of prosecutions? Does he further agree that Strathclyde regional council's refusal to increase the number of police is profoundly damaging and wholly unjustified?
    The Solicitor-General for Scotland: Yes. Although I have said that there is a decline in the number of people proceeded against, I should have thought that there was nothing in that figure to justify the action being taken to withhold from the chief constable the funding that he needs to bring his force up to full strength. I understand that there is a shortfall of about 200 police officers and 704 civilian support staff in Strathclyde region.
    Dr. Godman: Would not the statistics concerning those proceeded against in Strathclyde courts for drunkenness and related offences be improved considerably by the establishment of designated places?
    The Solicitor-General for Scotland: The action that has been taken in Aberdeen has shown that the problem can be dealt with much more satisfactorily in that way. If the hon. Gentleman examines the figures that I have given,

    295
    I believe he will appreciate that what my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) said was valid.
    Mr. Nicholas Baker: On a point of order, Mr. Speaker. My point of order concerns Question 15, which I had hoped to have the opportunity to ask, and a significant mistype. The mistyped word is "liability". I had no intention of asking about the liability of the Scottish salmon fishing industry, but wanted to raise the issue of its viability. You will be aware, Mr. Speaker, that good beats of Scottish salmon rivers have never seen fewer salmon—
    Mr. Speaker: Order. I am not aware of that and I am sorry that we did not reach the hon. Gentleman's question. We did not make very good progress today. However, I have done my best to call those hon. Members who tabled questions lower on the Order Paper. I shall ensure that the correction is made.
    Mr. Foulkes: On a point of order, Mr. Speaker. It has not escaped your notice that, in spite of your excellent efforts, we managed to get only as far as Question 9 today. So that we might proceed more quickly and ask more questions of Scottish Ministers, who represent the equivalent of seven United Kingdom Departments and a wide range of issues—we did not reach some important questions today, such as that on the salmon industry and one on Pratt and Whitney, in which I was especially interested—would you consider refraining from calling some Conservative Members again and again when there
    296
    are only a handful of them and when some of them have not tabled questions at all? Would you also consider making representations through the usual channels to the effect that Scottish Question Time should take place more frequently than every four weeks? The Welsh are able to question their Secretary of State every three weeks and I think that we should be doing it at least every fortnight.
    Mr. Speaker: If the hon. Gentleman looks at the Order Paper, he will see that I gave preference, as is my practice, to those hon. Members with questions on the Order Paper. [Interruption.] Order. If the hon. Gentleman is referring to hon. Members from English constituencies, may I say that they have as much right to take part in Scottish Question Time as Scottish Members have to take part in English Question Time. I called some of them today, though I think not as frequently as I called Scottish Opposition Members. If the hon. Gentleman consults the Order Paper, he will see that I made a judgment on important issues in Scotland and that hon. Members with questions further down the Order Paper were called.
    Mr. Bill Walker: Further to the point of order, Mr. Speaker. I understand that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has just drawn attention to the fact that, unusually, I do not have a question on the Order Paper today. The reason is quite simple—
    Mr. Speaker: Order. I cannot think that that is a matter for me. I hope that the hon. Gentleman is not dissatisfied with being called three—or was it four, times?

Questions to Ministers
Mr. Dennis Skinner: On a point of order, Mr. Speaker. Yesterday at Question Time, during the course of the questions and answers on the National Health Service, I raised the issue of a young girl in my constituency, Sara Kelly, aged 22 years of age, who had died, with reference to the fact that she had needed an nebuliser under the NHS scheme. I was told by the Minister—indeed, the House was told by the Minister—in answer to my question:
"The hon. Member"—
he was referring to me—
"therefore immediately turns to another story, that of a girl in Pinxton. That is why the hon. Member asked his question, because he has not put it to me before … We can sort out the problems if the hon. Member will put the cases to us in a proper way and not seek to exploit them for his own purpose."—[Official Report, 18 June 1985; Vol. 81, c. 163.]
The clear implication of that was that I had never raised the case of Sara Kelly with the Ministry. The fact is, of course, that on 1 May, before Sara Kelly died, I wrote to the Department of Health and Social Security and asked for an investigation into the case of the nebuliser. I was calling upon the Minister to provide a nebuliser for Sara Kelly at that time. Some days later I received a telephone call from Sara's parents telling me that she had got a nebuliser, but unfortunately had passed away. I got a reply from the DHSS on 7 June—
Mr. Speaker: Order. Could the hon. Gentleman make his point of order to me, because it seems to me that this point of order is rather more for the Department than it is for me?
Mr. Skinner: The point I am making, Mr. Speaker — and I am absolutely certain that my hon. Friends understand it—is that the Minister misled the House. He was saying to the House yesterday that I had never raised the question of Sara Kelly in the proper fashion, and I have a copy of the reply of the Parliamentary Under-Secretary of State for Health and Social Security, the hon. Member
298
for Oxford, West and Abingdon (Mr. Patten) of 7 June. I rang up the DHSS yesterday and asked whether they knew that their Minister had misled the House. He has a duty to come to the House and rectify the matter, but he has not got the guts to come.
Mr. Speaker: Order. These are not points of order for me. The Minister who was answering at the Dispatch Box yesterday is here and I am sure that, if the hon. Member will give him an opportunity he will wish to say something.
The Minister for Health (Mr. Kenneth Clarke): Further to that point of order, Mr. Speaker. I accept that yesterday I unintentionally made an unfair comment about the hon. Member's constituency case. I came to the House armed with the particulars of two cases with which he had been dealing and one on which I had been corresponding with him. I thought that I had complete knowledge of the cases that he had raised. I therefore, I am afraid, misunderstood what he said and thought that he was raising a new case about which I had not heard before. He quite correctly says that he had written to the Department on 1 May and received a reply from my hon. Friend the Parliamentary Under-Secretary. I afterwards discovered that the hon. Member was not, as I had believed, raising a totally new case.
I have written the hon. Member a letter apologising for that and saying that it is an open letter. I am sure that he can reassure his constituents that he had raised the case in the proper way. I also repeat my undertaking to him yesterday to try to sort out the remaining cases that he has, and I believe that if he continues to pursue his constituency cases we shall be able to sort out the problems in Derbyshire.

SCOTTISH ESTIMATES
Ordered,
That the Estimate Class XVIII Vote 5, Rate Support Grants to local revenues, Scotland, be referred to the Scottish Grand Committee.—[Mr. Archie Hamilton.]

Consumer Guarantee Protection
3.34 pm
Mr. Michael Hirst: I beg to move,
That leave be given to bring in a Bill to oblige traders offering long-term guarantees when providing goods or services to make suitable arrangements to ensure that such guarantees remain effective in the event of the trader ceasing to trade.
Adam Stewart is a retired constituent of mine and he and his wife like nothing more than to sit in their home and admire their garden. Some months ago they succumbed to the blandishments of a salesman from Coldshield Double Glazing and spent a lot of their life savings installing double glazing in their home, largely relying upon an assurance they were given by the salesman of a five-year guarantee for the work.
After installation of the windows, problems emerged and Mr. Stewart spent several frustrating months trying to have the work put right. Alas, in the meantime Coldshield went into receivership and Mr. Stewart discovered to his alarm and anger that his guarantee was worthless. By the time he contacted me, nothing could be done to help him.
Many hon. Members will be uncomfortably aware of similar cases and will know of the heartache, worry and financial loss experienced by people who discover that they hold worthless guarantees. Hon. Members will have experienced the frustration of writing impassioned letters to the Director General of Fair Trading, to the Minister with responsibility for consumer affairs and to the receivers or liquidators of companies, only to receive sympathy but no recourse for our hapless constituents.
The spate of insolvencies in recent years has left millions of people unprotected against defective goods or workmanship in relation to double glazing, dry rot and dampness eradication, loft conversion, servicing of domestic appliances, rustproofing, and so on. The extent of the problem is confirmed by a Which? report stating that, of 850 wood preservation firms surveyed, 600 had ceased trading two years later.
A company does not have to go into insolvency for the consumer to discover that his guarantee is ineffective. The small print often excludes apparently reasonable grounds for a claim.
These are not isolated occurrences. According to the receiver to whom I wrote on behalf of aggrieved constituents, the recent collapse of Coldshield has left tens of thousands of people with worthless guarantees. Wallguard was advertising 30-year guarantees for its damp treatment the week that it went into receivership. Servis washing machines, Multi Guarantee, Mulberry home extensions and countless other failures tell a tale of misery for people who paid good money in the hope and expectation that the work done was properly guaranteed.
The impressive growth of home ownership in recent years has been comfortably outstripped by the growth in home improvements, and many people have spent a great deal of money improving their homes—an objective that we all regard as thoroughly desirable. The private sector home improvement market is estimated to be worth about £6 billion per year. Inevitably, however, the cowboys have come in looking for the potentially rich pickings. Due to their ability to undercut reputable traders by accepting cash payment, the cowboys are believed to command about 40
300
per cent. of this lucrative market, with disastrous results for penny-wise, pound-foolish, home improvers who give their business to cowboys.
The guarantee is used as a hard marketing tool in advertising literature and in the sales pitch of high pressure salesmen. Purchasers believe, usually reasonably, that they are buying peace of mind and that the guarantee that comes with the goods or services gives them the right to have defective work put right during the guarantee period. Few customers are aware of the terms of the guarantee. Often they do not see the terms before they are committed to buy or the work is executed. Frequently, the guarantee turns out to be heavily qualified, excluding consequential loss, often non-transferable in the event of sale and containing other unnecessarily restrictive conditions.
A parliamentary answer last November to my hon. Friend the Member for Congleton (Mrs. Winterton) revealed a sharp increase in the number of complaints referred to the Office of Fair Trading in relation to construction, double glazing and home insulation. With complaints running at almost 50,000 per annum, the Office of Fair Trading is understandably worried about the problem and its discussion paper confirms its concern about the imperfections of guarantees and the position of holders of worthless guarantees.
In fairness, I should point out that a number of trade federations have made efforts to ensure better standards of workmanship and better guarantee cover, but despite the many worthwhile initiatives traders can still offer guarantees which mean virtually nothing in practice.
The purpose of the Bill is to simplify and strengthen the meaning of the term "guarantee" and to oblige traders who offer guarantees in excess of one year to make suitable arrangements to ensure that those guarantees remain effective throughout the entire period in the event of a firm ceasing to trade. Such a guarantee would be effected either by direct insurance between the consumer and an authorised insurer or by an approved trade association scheme or indemnity scheme which, one hopes, would have an independently insured backstop. The use of the word "guarantee" would be outlawed in all other circumstances. I must stress, however, that nothing in the Bill in any way affects the existing statutory rights of consumers under the Sale of Goods Act or the Supply of Goods and Services Act.
Most importantly, my proposals do not depend upon statutory regulation or the licensing of individual firms, nor are they designed to protect people from their own wilful stupidity. People will still be free to deal with the firm of their choice, whether it is a cowboy firm or a reputable company. Firms unable to offer a guarantee would confer on consumers no guaranteed rights and they would trade with them at their own risk. With proper publicity and the education of consumers in the risks of trading with a non-guarantee company, it is to be hoped that there would be a significant reduction in complaints of the sort which have been aired in Esther Rantzen's programmes or which have appeared on the consumers' problem pages in the tabloid newspapers.
An indirect benefit of the Bill would be encouragement for trade federations, membership of which would presumably enable a trader to obtain more competitive terms for guarantee provision. Building societies and banks also have a part to play, as much home improvement work, which is the source of so many complaints about worthless guarantees, is financed by them. They should,

301
if only to protect their underlying guarantee for the loan, require the borrower to use a trader offering a proper guarantee.
It is not my intention that those guarantee requirements should inhibit the small trader or the new entrant to the industry. These people would still have every opportunity to develop their businesses. I am sure that many of them grow from small beginnings by operating locally and enjoying personal word-of-mouth recommendations.
I accept that there would be an extra burden in arranging guarantee insurance, but that would be a small price to pay for the extra business which would be forthcoming from those seeking the security of a guarantee.
People may well ask whether the result of the Bill would be yet another step along the road to the nanny state. I remind the House that deposit taking, credit sales and hire purchase, and the operation of banking and insurance, are already subjected to stringent statutory control. The clients of lawyers, accountants and stockbrokers have the security of an indemnity fund. Holidaymakers are protected by a Government-funded scheme. I am looking not for Government funding but for a legislative framework to ensure that a guarantee is in reality what it purports to be.
Question put and agreed to.
Bill ordered to be brought in by Mr. Michael Hirst, Mr. Spencer Batiste, Mrs. Virginia Bottomley, Mr. Hugh Brown, Lord James Douglas-Hamilton, Miss Janet Fookes, Mr. Charles Kennedy, Mr. Austin Mitchell, Sir Hector Monro, Mr. Stuart Randall, Mr. James Wallace and Mr. Gordon Wilson.

Consumer Guarantee Protection
  CONSUMER GUARANTEE PROTECTION
  Mr. Michael Hirstaccordingly presented a Bill to oblige traders offering long-term guarantees when providing goods or services to make suitable arrangements to ensure that such guarantees remain effective in the event of the trader ceasing to trade; 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 164.]
Opposition Day
[15TH ALLOTTED DAY]
Opposition Day

  Prices
  Mr. Speaker: We now come to the important debate on Government-imposed price increases. I have selected the amendment in the name of the Prime Minister.
  3.49 pm
  Mr. Roy Hattersley: I beg to move,
  That this House condemns the Government's policy of intentionally increasing public sector prices through rising tariffs for gas and electricity, increased rents, rates, water charges and bus fares, higher charges for school meals, meals on wheels, home helps and prescriptions, which will result in disadvantage for all but the richest sections of society; deplores the increases in private sector prices resulting from the Government's extension and imposition of higher levels of value added tax; and strongly disapproves of the Government's mismanagement of the economy which has produced record interest rates and a consequent level of mortgage repayments which for most families greatly exceeds any gains from changes in income tax.
  Inflation is the area of the economy in which the Government most often proclaim victory, but an examination of the facts shows that boast to be largely bogus. For five years, the Prime Minister has claimed credit for a falling inflation rate, and has rejected all blame for increases in unemployment. In both cases, the truth is almost the exact opposite of what she asserts. That is a demonstrable fact, and it was so even before the increase in the retail price index over the past five months.
  I simply draw the attention of the House to the statistics. During the past six years the British inflation rate has fluctuated between 9 per cent. above the OECD average—that was in the year in which the Government increased VAT from 8 to 15 per cent., and pushed up the RPI by four points at a stroke—and 1·8 per cent. below it. The latter figure came about immediately before the last general election.
  But over the period as a whole, the average rate of inflation in the OECD has fallen from 9 to 5 per cent., whilst in the United Kingdom it has fallen from 10·1 to 7 per cent. That is a comparison of our inflation record with that of our competitors and partners in the developed world. We have certainly done no better—and, indeed, have probably done worse — than the average in the other OECD countries.
  There can be no dispute about unemployment. It is a question not of perhaps having done worse but of certainly having done worse, continually having done worse and remorselessly having done worse. In 1969, United Kingdom unemployment stood at 0·5 per cent. above the OECD average. In 1980 it was 1·1 per cent. above; in 1981, 3·9 per cent. above; in 1982, 4·1 per cent. above; and in 1983, 4·4 per cent. above; and in 1984 it was 5 per cent. above the OECD average.
  In the five years for which there are statistics and in the five years of this Conservative Government, our unemployment rate has continually and remorselessly increased as compared with unemployment in the OECD countries of our partners and competitors.
  Mr. Patrick Nicholls rose—
  Mr. Hattersley: I shall give way to the hon. Gentleman in a moment. So far I have given only the official statistics, but perhaps he wishes to argue with them.
  Mr. Nicholls: Was there one single month under the last Labour Government when the rate of inflation was lower than it is now?
  Mr. Hattersley: As I develop my case, the hon. Gentleman will discover that the problem that he has to face—[HON. MEMBERS: "Answer the question."]—is whether the present rate of inflation is the lowest that the Government could achieve, or whether, through their wilful policy and despite the advantages that they have enjoyed, they have behaved in such a way as to produce a rate of inflation that is worse than that in the countries of our competitors and collaborators in the OECD. The answer to that question is a categorical yes, and I am glad that the hon. Gentleman is wisely not prepared to argue with that contention.
  The contention is that, as compared with other developed countries, our rate of inflation has continually and inexorably deteriorated. That has happened at a time when commodity prices have remained relatively stable and when almost all the external factors—I draw the hon. Gentleman's attention to oil prices — have encouraged an improving inflation rate. The things that have pushed up inflation in this country during the past five months are domestic factors, just as they were in 1979 and 1981. The causes of inflation are VAT, rents, gas, electricity and, overwhelmingly, mortgages. Things that are the direct result of Government policy have escalated the inflation rate to the 7 per cent. figure at which it now stands. All the increases that I have listed have come about either directly as a result of Government edict or indirectly as a result of Government incompetence.
  It is now accepted that the most immediate cause of the increase in the retail price index is the increase in mortgage rates. About that I want to ask the Chief Secretary an immediate question. If he cannot answer it now, I warn him that we expect the Secretary of State for the Environment to answer when he winds up in five hours' time.
  When official statistics prove the inadequacy of Government policy, it is the Government's practice not to change the policy but to change the statistics. That happened when the retail price index was replaced by the tax and price index; that happened when the method of calculating the unemployment total was altered to give a better figure; that happened when the method of estimating the number of people in work was altered to improve the total.
  Is the same about to happen with the retail price index? I understand that the retail prices index advisory committee has been asked by the Government to consider the removal of mortgage rates from the inflation calculations. That is a simple matter to which the Chief Secretary can answer yes or no. If he cannot, the Secretary of State for the Environment can answer later. Perhaps the answer is known already. I shall be pleased to give way to hear the answer to the question. Have the Government, or have they not, invited the retail prices index advisory committee to consider the removal of mortgage rates from the RPI? We look forward to the Chief Secretary enlightening us as the afternoon progresses.
  304
  Whether or not the Chief Secretary admits that what I say is true, the increase in mortgage rates played a major part in the April and May inflation increases. The May increase was described by the Secretary of State for Employment as a "blip" in a downward curve. When he made his usual statement on the unemployment figures, the Secretary of State did not say that there had been a blip in April, a blip in March, a blip in February, a blip in January — that is five blips in a row. Many commentators believe that if blips are the euphemism for upward movements, there will be another blip next month.
  Five blips in a row — possibly six — requires a collective noun. The word of course is "trend". The trend has been upwards since Christmas. The trend has been established not by external factors, because commodity prices are relatively stable and the pound has not significantly deteriorated since January. The cause is domestic Government policy and the principal cause is the increase in the mortgage rates, for which the Government are wholly and directly responsible.
  The story of the mortgage rates increase is well known, but it bears repetition. For 18 months, the Chancellor of the Exchequer insisted that the pound must float free and find its natural value in world markets. While he was insisting upon that throughout 1984, commentators were saying that, since oil is priced in dollars, depreciation would increase oil revenues, the oil revenue increases would extend the fiscal adjustment, the extended fiscal adjustment would increase the Chancellor's scope for tax cuts, and therefore the Chancellor was in positive favour of depreciation. Not once did the Chancellor do anything to contradict that view.
  The Chancellor of the Exchequer (Mr. Nigel Lawson): Rubbish.
  Mr. Hattersley: Will the Chancellor say when he contradicted the view that he welcomed depreciation? Will he give an example now? The Chancellor did nothing to contradict that judgment. As a result, on 10 January the pound seemed likely to depreciate to the value of a single dollar. As a result of that, the Chancellor stepped in on 11 January and manoeuvred an interest rates increase, which did not work.
  The following day, not only the Chancellor, but all in Downing street, took a hand. At No. 10, The Observer newspaper was told that intervention to support the pound was imminent, while next door, at No. 11, The Sunday Times was being assured that intervention was out of the question. The result was chaos in the market and panic in the Government. On Monday 14 January, the Chancellor reintroduced minimum lending rates and began the process that ended with base rates at 14 per cent. and the highest real interest rates that this country has endured for 50 years.
  The cause of those interest rates rising to that level was not the old theory of crowding out or the new excuse of international rates. It certainly was nothing to do with the money supply, even though the Government were not meeting their money supply targets. Interest rates in Britain are now 6 per cent. above those in Germany, America and Japan, for reasons that are special to the United Kingdom. Those reasons are and remain the incompetent management of sterling by the Chancellor and the panic that affected the Government thereafter. As a result of that unique increase in interest rates, mortgage

  305
  rates rose to 13·75 per cent. and 14 per cent.—4 per cent. higher than at the time of the last election and 2 per cent. above the level that the Government inherited in 1979. In fact, those mortgage interest rates have been surpassed only once in our history, and that was under the Tory Government in 1981.
  On 1 April, mortgage interest rates rose by a full 1 per cent. That added £9·60 a month to the repayments on a £20,000 mortgage, which is the average new mortgage taken out. That increase in repayments on the average new mortgage more than swallowed the £7·50 tax relief provided in this year's budget for a married couple. Thanks to the Government, during the past five years, that family with a £20,000 mortgage has faced a 4 per cent. increase in its mortgage repayments and an actual increase of £40 a month. The Conservative party, which claims to be the party of home ownership, has made home ownership more expensive than ever before.
  For some families, especially young couples, the Government have made the price of home ownership prohibitive. Yet, if those same young couples want or have to live in rented accommodation, especially municipal rented accommodation, the cost has increased just as much. Thanks to the Government's decision virtually to abolish housing subsidies, increases in rents have escalated at a speed that no hon. Member, whatever his persuasion, would have regarded as tolerable five or 10 years ago. In 1978–79 — the last year of the Labour Government — the average council rent was £5·90 a week; last year, it was £14·77. The estimate for 1985–86 is £15·50 a week—an increase over seven years of 163 per cent. gross and 41 per cent. in real terms. These are massive increases which ordinary families find it almost impossible to face and bear.
  The increases in mortgage repayments and in rates are borne by home owners and house renters who are desperately affected by another item of policy for which the Government are generally and directly responsible—the continuing increase in rates. I know that it is the practice of the Government's propaganda machine to blame the rates increases on individual councils. It may well be the whole absurd paraphernalia of rate capping and all that goes with it was not so much a device for holding rates down as a device for finding scapegoats on whom to blame the increasing rates.
  Whatever the purpose of all these schemes introduced by the Chancellor and his many predecessors who escaped before he arrived, none has worked. Between 1974–75 and 1978–79—that is the period of the Labour Government, for hon. Members who enjoy making such comparisons—rates rose by 73 per cent. In fact, the real cost fell by 5 per cent. Between 1978–79 and 1984–85 the rates rose by 146 per cent.—the real cost rose by 46 per cent. Between the first year that this Government were in office and the estimate for next year, the rates increase will be 169 per cent.—a real increase of 44 per cent. That is 44 per cent., to which an additional escalating payment must be made for water rates, which continue to grow at a speed that is inexplicable to most people who have examined the industry.
  The Government blame all this—a 44 per cent. real increase in rates plus the increase in water charges—on spendthrift councils. They justify their blame and substantiate their accusations by giving examples of items
  306
  of spending which I freely admit are sometimes absurd, but which are almost always trivial in terms of a borough's total rates bill.
  If councils are to blame for escalating rates, then Conservative councils are at least as guilty as Labour in local administration. I ask the Chief Secretary to consider the average domestic rates precept this year in the shire counties, where the Conservative party believes itself to hold sway and in some areas exercises undisputed power. In the 10 shire counties where Labour sets the rates, the figure is £4·83; in the 19 shire counties where the Conservatives set the rates, the figure is £5·31; and in the 10 counties where there is no overall control the figure is £5·34. By dividing the shire counties into three groups—Labour, Conservative and others—one can see that, according to the Government's criteria, the Labour party has a better record of thrift than the other parties.
  I am not blaming the independents, the Social Democrats or the Liberals, who have increased the precept the most. I am not blaming the Tory councils which have increased the precept more than Labour councils. To blame them for the increase in rates would be as absurd as to blame all the other groups which have had the unpleasant task of imposing and passing on the price increases required by the Government. Those councils have increased their rates for two reasons — first, because the Government have increased councils' costs by imposing extra duties on them, such as the administration of housing benefit, and, secondly, because the Government have neglected services, such as local transport, which councils rightly thought it their duty to rescue.
  At the same time as this Government have increased councils' costs, they have remorselessly and ruthlessly cut the rate support grant, which is central Government's contribution to local authority spending. In 1978–79 which was the last year of the Labour Government-this is another comparison which will be noted by assiduous hon. Members who like to make these comparisons — the RSG was £12·226 billion; this year it has sunk in real terms to £8·489 billion. If this Government had kept RSG at the level they inherited, local authorities would have received a sum so much greater than the sum they now receive that none of the increases about which there have been so many complaints would have been necessary or imposed.
  In such circumstances, it is dishonest and absurd to blame the rates rises on local councils. It is as dishonest and absurd as it would be to blame the chemists for the increases in prescription charges from 20p to £2, to blame the dentists for the increased patient costs which come from open-ended charges, or to blame the opticians for the increased prices which result from the abandonment of NHS glasses and lenses. The Government are responsible for all those items, just as they are responsible for the rates increases.
  Mr. Tim Eggar rose—
  Mr. Hattersley: I am always happy to give way to the hon. Gentleman.
  Mr. Eggar: Before the right hon. Gentleman leaves the question of rates, may I ask him to recollect that the Government imposed a limit on the GLC? Does he remember that the GLC then voted voluntarily to go below that limit and announced that it was able to do that without

  307
  any reduction in the standard of services being offered to the people of London? Did the right hon. Gentleman welcome the move by the Government which forced the GLC to reduce the rate, or did he believe that his friends at county hall should have been allowed to raise the rates as high as they wished?
  Mr. Hattersley: I will now demonstrate why I said that I am always happy to give way to the hon. Gentleman. Perhaps he will recall what happened when the GLC reduced the rate below the figure that the Government anticipated. That required the Government to give more money to county hall, and because that had to be done, they had to take money away from Lancashire and every one of the shire counties.
  Mr. Eggar: No.
  Mr. Hattersley: It is no good the hon. Gentleman saying, "No", because that is exactly what happened. It is what I told the Prime Minister would happen and it is what the Prime Minister justified having happened. Because the GLC remained within the law, the shire counties, many of them Conservative-controlled, were penalised. If the hon. Member for Enfield, North (Mr. Eggar) regards that as a sensible way of distributing the rate fund, I shall give way to him frequently in the future.
  Mr. Nicholas Soames: Get on with it.
  Mr. Hattersley: I long for the hon. Member for Crawley (Mr. Soames) to intervene.
  Mr. Soames: Just wait.
  Mr. Hattersley: The people whom I have described — those who are paying higher mortgage rates and higher rents, both of whom are paying additional rates bills—are also the people who are now faced with massive increases in the cost of gas and electricity.
  I have no doubt that, when the Chief Secretary makes his valedictory speech, he will say that gas and electricity prices rose between 1974 and 1979. I congratulate him on his perception in discovering that. During the lifetime of the Labour Government, gas prices, although they increased by 73 per cent. in nominal terms, fell by 39 per cent. in real terms. Between May 1979 and August 1985, gas prices rose by 128 per cent. in nominal terms and 56 per cent. in real terms.
  Electricity prices rose much more quickly under Labour than they have under the Conservatives. However, I hope that, as the Chief Secretary entertains us with a detailed recital of the figures that I have offered him, he will also give the history of those price increases.
  The Labour Government of 1974 inherited from their predecessor annual losses on gas of £41 million and on electricity of £176 million. I know that it is not fashionable for the present Government to defend their lineal predecessor, and the Chief Secretary may say that many of the problems that the Labour Government faced with gas and electricity prices were the direct result of the Heath Administration. He must make his own judgment on whether he wants to offer that condemnation.
  The facts are beyond dispute—a £41 million deficit on gas and a £176 million deficit on electricity—and the Labour Government moved slowly towards a break-even point. As one of the Ministers who was responsible for this area of policy, I vividly recall that the criticism of the
  308
  Labour Government was not that we were putting gas and electricity prices up too quickly but that we were increasing them too slowly—that we were subsidising the gas and electricity consumer.
  Mr. Eggar rose—
  Mr. Hattersley: No, I must get on.
  Mr. Robert Atkins: The right hon. Gentleman said that he always gave way to my hon. Friend the Member for Enfield, North (Mr. Eggar).
  Mr. Hattersley: While I could not lose by giving way, I am motivated solely by compassion. Therefore, I will not give way again to the hon. Gentleman.
  The Government's attitude towards the gas and electricity industries has been diametrically different from that of a Government who struggled—not completely successfully — to make the industry break even. The Conservatives have used gas and electricity to raise revenue and collect taxes, and I will quote two authorities for saying that.
  I remind the Chief Secretary of what the National Gas Consumer Council said about the gas tariff:
  "We strongly opposed and fought vigorously against the suggestion that the tariff should rise higher than the commercial needs of the industry in order to provide a convenient source of revenue to the Treasury."
  It went on to say that its opposition to the gas industry being used
  "to provide a convenient source of revenue to the Treasury"
  failed and that the fight to stop the gas tax was lost. It added that the
  "three-year Government imposed programme of rapid gas price rises was…a programme that more than doubled the price of gas."
  The same rule applies to electricity. I have quoted the report of the Select Committee on Energy in the House before. When I last raised it in debate, the Chief Secretary did not comment on the issue. I invite him to comment on it today. That Select Committee said:
  "the proposed electricity price increase…is not justified on the grounds either of the Financial Target or the Government's economic pricing policy. The only possible reason for it is the Government's desire to raise additional revenue."
  Mr. Andrew MacKay rose—
  Mr. Hattersley: I had better not give way to the hon. Gentleman, or his hon. Friend the Member for Enfield, North will feel cheated
  The Select Committee added:
  "the industry has been required by the Government…to make payments to the Treasury in 1984–85 of some £360 million over and above the figure of £380 million which would be consistent with Financial Targets."
  The Government now impose a purchase tax on gas and electricity. It is a surreptitious tax, but it is a tax nevertheless on electricity and gas.
  Mr. Andrew MacKay: The right hon. Gentleman is rightly concerned about price rises. I am sure that he is keen to enlighten the House and the country on his party's policy. Do he and his party believe in a statutory prices and incomes policy, or would he have some sort of fudge or compact with the trade unions?
  Mr. Hattersley: My answer to the alternatives that the hon. Gentleman offers me is that I do not believe in a statutory incomes policy. I do, however, believe, as I have always believed, that an agreement must be forged between unions and Government — [Interruption.] I

  309
  know how concerned the Government are by the increase in wages reported today. I hope that they will understand, if they are concerned about wage increases, that they should not be surprised by today's news. If the Prime Minister preaches the doctrine of every man and woman for himself and herself, she must expect the trade unions to do exactly the same. As Mr. Sid Weighell once said:
  "If we live in a pigsty economy, everybody will try to get their snouts in the trough.
  As the Conservatives have encouraged the belief that every man and woman should fight for himself and herself and damn the consequences, they should not be surprised if trade unionists take them at their word.
  Several Hon. Members rose—
  Mr. Speaker: Order. I do not think that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) is giving way. There will be ample time for other hon. Members to contribute to the debate.
  Mr. Hattersley: I return to the subject on which—[HON. MEMBERS: "Keep to the point."] I have not left the point. If Conservative Members will concentrate, when I say that I am returning to the point, it means that I have not left it. I am on exactly the same point.
  The surpluses in the gas and electricity industries which the Government have arranged and have imposed—they would be called profits in private industry, and I suppose that they will be called profits if those industries are privatised — are used to reduce the public sector borrowing requirement. They are taxes, and they are intended to assist in the achievement of the massive tax cuts which the Chancellor pursues so frenziedly but never actually achieves.
  I suspect that this frenzy will increase as the election approaches — not surprisingly from a party which promised to cut taxes but has in fact increased the annual tax bill by £29 billion. That means, I suspect and fear, that there will be additional assaults on public services such as the assault mounted by the Secretary of State for Transport in his direction to the London Regional Transport Board to reduce its level of revenue support. The assault resulted in fares being increased on average by 9 per cent., short journey fares being increased by 25 per cent. and children's bus fares being increased by 50 per cent. Those are the sort of prices that real families pay for the Chancellor's frenzied and vain pursuit of a surplus big enough to provide the tax cuts which he once promised and has failed to provide.
  There will be the pathetic pretence that the problems of the economy, while all this is going on, can be solved by the belief and the pursuit of the superstitions which have so failed the economy for the last six years. I have absolutely no doubt that when the Chief Secretary speaks we will hear a repetition of all the old shibboleths that we have heard from him week in, week out, since he first became a member of the Government. He will announce that the policy which has visibly failed is really an invisible success and he will urge us to be patient, telling us that in the end the policy which has so damaged the economy will save the economy. To most people the absurdity of that blind faith is now obvious.
  We were once told that, if the Government held down inflation, every other aspect of the economy would improve. What they have done is to attempt to hold down inflation by damaging every other aspect of the economy.
  310
  The 2 million extra unemployed, the record level of company liquidations, the deficit on manufacturing trade, the net decline in investment and the negative net investment in manufacturing, construction and transport, are all the prices that we pay for the Government's belief that, if they hold down inflation, everything will come right. Not even in that particular have the Government succeeded. Not even in that promise have the Government managed to do what they asserted would be done.
  The most recent of these promises was made by the Prime Minister somewhere in south-east Asia. I cannot recall the exact country—that does not matter; the right hon. Lady cannot either — but I do remember the promise. The promise was a 3 per cent. inflation rate by polling day. Therefore, I ask the Chief Secretary whether the Government are still committed to that figure or are now edging away from the Prime Minister's indiscretion. If the Government still believe that 3 per cent. is possible by polling day, let me remind them what they have to do. They have to cut inflation by 4 per cent. in the next two years. What the Government have achieved in six years is a reduction of 3·1 per cent. What they have achieved since the last election is an increase of 3·3 per cent.
  Notwithstanding that, I make my position clear about what I fear most—that the Prime Minister will cynically attempt to keep her promise by further collapsing the economy, by adding to record unemployment, by adding to the number of company liquidations, by increasing the deficit on manufacturing trade and by worsening the position in transport, manufacturing and construction, where net investment is already negative. My fear is that the Prime Minister will cynically deepen the damage in the vain hope of having a least one semi-plausible claim to make about her economic record. I do not think that it will do her reputation very much good. The country no longer believes her economic prescription—how could it when so many promises have been broken and when so many forecasts have proved risibly wrong?
  I conclude with one recent example. On 21 March the Chancellor spoke to the House about inflation which he said
  "will stay low and will get lower."
  Since then, the retail prices index has risen twice. What is more, even when the Chancellor gave his assurance on 21 March, he must have known that it was going to rise in April, but what he said to the House was that inflation
  "will stay low and will get lower."—[Official Report, 21 March 1985; Vol. 75, c. 973.]
  It is conduct such as that and words such as those—
  Mr. Lawson: That is not what I said in the Budget speech.
  Mr. Hattersley: The Chancellor is assuring the House that he said something different in the Budget speech. It is a sort of defence to say that one said one thing on one day and another on another day, but I do not think that it is a defence that will take him very far. I believe that it is defences like that and statements of the sort that I have just described which make the comment that the Chancellor offered the House on 21 March wholly apposite—apposite not to the inflation rate, but to the Government's reputation—that it will stay low and will get lower.
  4.26 pm
  The Chief Secretary to the Treasury (Mr. Peter Rees): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  'supports the Government's sound financial policies to reduce and contain inflation, to provide the basis for a fifth successive year of economic growth and to secure a sustained rise in living standards.'.
  The motion standing in the name of the official Opposition covers an enormously wide area, in the hope, presumably, that it may hit a few targets—
  Mr.Jack Straw: The right hon. and learned Gentleman is a sitting duck for a start.
  Mr. Rees: Just give me a chance to see whether I can fly. The hon. Gentleman is usually more generous than that.
  In the hope that echoes of the debate may reverberate in the valley of Brecon and Radnor, the amendment attempts to give a little more coherence to the debate. The difficulty is that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) makes most of his interesting speeches outside the House. Taking my cue, however, from his most recent interview with The Guardian, and his recent Crosland lecture at Oxford, I shall direct my remarks today to the broad priorities of the Government's economic policies and the question of nationalised industry prices.
  The Government's economic policies have been clearly stated and consistently followed since the day on which they assumed office in 1979. I think that our record stands close comparison with that of other countries of the OECD and so far out-tops the record of the last Labour Government that I am rather surprised the right hon. Member for Sparkbrook should even have tabled the motion.
  We inherited a situation where inflation, starting from a figure of around 17 per cent. in the autumn of 1974, which the right hon. Member for Leeds, East (Mr. Healey) represented as 8·4 per cent., had accelerated to 26·9 per cent. in 1974, before falling temporarily as a result of the short-term expediency of incomes policy. By May 1979, inflation was 10·3 per cent. and on a sharply rising trend.
  Those rates of inflation were bidding fair to destroy our economic base and social cohesion. The right hon. Member for Sparkbrook will well recall those days, as he was Secretary of State for Prices and Consumer Protection from 1976 to 1979, so some of his observations had an added piquancy. He will recall the policies with which his Government tried, without success, to contain the situation. He will also recall his clear statement of priorities in February 1978, when he said:
  "in terms of promoting employment opportunities throughout the country as a whole, nothing is more important than containing inflation."—[Official Report, 7 February 1978; Vol. 943, c. 1271.]
  I applaud that clear statement of principle. Would that the Labour Government had applied it. I ask the right hon. Gentleman whether this is one of the old shibboleths to which he referred, one to which he has returned, or one which he has never left.
  Does that quotation still represent one of the priorities of Labour party policy? The right hon. Gentleman did not touch with sufficient clarity, either in his Crosland lecture or in the interview in The Guardian, on his priorities and how he hoped to achieve them. Let me chart the Government's record on inflation.
  312
  In May 1979 inflation was 10·3 per cent. and rising, as the previous Administration's attempts to impose bureaucratic short-term solutions were collapsing. If ever there was a pigsty economy, it was in those dark winter months of 1978–79, when the noses of certain sectors of the trade union movement were in the trough and the right hon. Gentleman and his friends did nothing to remove them.
  In 1980 the Government set out in place of the previous bureaucratic short-term solutions a medium-term financial strategy to promote honest finance and sound money and a sustained fall in inflation. We have stuck to our strategy, and it has been successful. Inflation has been steadily squeezed from the system.
  Mr. John Maxton: What about interest rates?
  Mr. Rees: The hon. Gentleman must learn to control himself. We are no longer in Committee Room 10.
  Under the previous Administration inflation averaged 15·5 per cent. Under this Administration it has averaged 9·7 per cent. Since June 1983 inflation has averaged 6·2 per cent. Inflation is under control in a way that it has not been since the late 1960s.
  The right hon. Member for Sparkbrook made much play of the upturn in the RPI figures this spring and summer. In May the RPI showed an annual increase of 7 per cent., compared to 6·9 per cent. the previous month and 5 per cent. earlier in the year. Of course these figures are unwelcome, but Opposition Members should not pretend that they come as a great surprise or signal the failure of our policies.
  My right hon. Friend the Chancellor of the Exchequer made it clear in his Budget speech that he expected inflation to edge up in the middle of this year. This increase in the RPI is due largely to temporary factors and, as the right hon. Member for Sparkbrook is right to point out, mortgage interest plays a great part. The rise in inflation followed a certain upset in the exchange markets at the beginning of the year — a clear sign of the problems that would assail any Government not committed to the firm financial and fiscal policies that we are implementing.
  The right hon. Member for Sparkbrook made some points about the activities of the retail prices index advisory committee. He will know, having occupied the position that he did, that this is an independent advisory committee, with representatives of the TUC, the CBI and the Government, and is to report towards the end of 1985. The Government have asked it to look at a range of factors, but if the right hon. Gentleman is suggesting that it is likely to be prejudiced in favour of the Government, he is being grossly discourteous to the independent members who form it.
  Mr. Hattersley: No matter what I am suggesting about the advisory committee, I am asking about the Government. Have the Government asked the committee to look at the inclusion of mortgage rates?
  Mr. Rees: We have asked it to look at a range of factors, including in particular the contribution made by housing.
  Dr. John Cunningham: That means yes. Where are the figures?
  Mr. Rees: If the hon. Member for Copeland (Dr. Cunningham) is suggesting that the independent advisory committee is likely to put its name to a figure, he should reflect a little more.
  Dr. Cunningham: It is a fraud.
  Mr. Rees: No, it is not a Government fiddle. Let me remind the hon. Gentleman, who has perhaps not considered his question as closely as has the right hon. Member for Sparkbrook, not having held the same range of posts in the last Administration, that most other countries do not include mortgage costs in their RPI.
  Mr. Hattersley: Answer the point.
  Mr. Rees: I have given a clear and explicit answer, and these matters are for the decision and recommendation of the independent advisory committee. The right hon. Gentleman should contain himself. Does he wish to assert that the committee is not advisory and not independent? I have given a clear explicit answer to his question. If he is not satisfied with it, he should have formulated his question in a different way. He clearly has not thought through the charge which he is rather apt to throw around the Chamber.
  Let me point out that every monthly statement of the RN under the last Labour Government was higher than the 7 per cent. figure recorded a fortnight ago. The right hon. Gentleman went grudgingly a little way to conceding that, but he did not deal satisfactorily with that rather striking comparison.
  Sir John Page: Will my right hon. and learned Friend say that again, because I should like to memorise it?
  Mr. Rees: My hon. Friend is right. It is a simple proposition that should remain in the memories of every hon. Member, and, I hope, the electors. Every monthly statement of the retail prices index under the last Labour Government was higher than the 7 per cent. figure recorded a fortnight ago. That is the most telling and succinct epitaph on the counter-inflationary policies of the last Labour Government.
  The figure of 7 per cent. still concerns us, but it also emphasises how right we have been to make the containment of inflation our first priority, to rest upon the shibboleth which the right hon. Member for Sparkbrook enunciated so admirably and clearly in February 1978.
  In his Budget speech my right hon. Friend the Chancellor made it clear that we expect inflation to turn round again by the end of the year, falling to around 5 per cent., and further in 1986. We still do, and we can say this with confidence because we are sticking to our financial strategy, which we set out in 1980. Monetary conditions are sufficiently restrictive to squeeze inflation from the system. Our fiscal policy has public borrowing on a sensible track. The PSBR was equivalent to 5·4 per cent. of GDP in 1978–79. In the last financial year, despite the coal strike, it was about 3 per cent., the lowest figure since the early 1970s. For this year we are looking for a further reduction to £7·1 billion, or 2 per cent. of GDP, to underpin our strategy for lower inflation.
  Of all the subjects on which the right hon. Member for Sparkbrook has touched in his speeches outside the Chamber, this is one to which he has never given a clear and succinct answer. I address this question specifically to him, as I have on previous occasions. What proportion of
  314
  GDP to go on the PSBR does he regard as acceptable in the present circumstances? I shall willingly give way if he wishes to answer.
  Mr. Hattersley: That is a ludicrous question.
  Mr. Rees: The right hon. Gentleman is shifting uneasily in his seat. The question is ludicrous for him because he cannot answer it. He has not worked out the position on that. He has not really worked through the Labour party's counter-inflationary policies.
  If ours is called a dogmatic and monetarist approach, I shall plead guilty. I shall be in the good company of most of the Finance Ministers of the developed world. These are the very policies which were so strikingly endorsed at the last OECD ministerial meeting in Paris. In the words of the Bonn economic summit communiqué:
  "In order to sustain non-inflationary growth and higher employment, we have agreed that … we will follow prudent, and where necessary strengthen monetary and budgetary policies with a view to stable prices, lower interest rates and more productive investment."
  Does the right hon. Gentleman dissent from that and from the views of his presumed friend the President of France?
  If the debate is to be more than a mere exercise in rhetoric by Opposition Members, it is right to consider what alternative policies they advocate. The right hon. Gentleman has told us, or The Guardian readers, that within days of a Labour Government taking office, whenever that may be, he will produce a medium-term economic strategy.
  Mr. Maxton: In October 1987.
  Mr. Rees: I am glad that the hon. Gentleman knows with such precision the day and outcome of the general election.
  It is interesting to note that the right hon. Gentleman describes his policy as a medium-term economic strategy, not a medium-term financial strategy. I have got the point that the right hon. Gentleman, in his expansive way, is taking a broad view of the problem. Therefore, he should give us his broad views of the problems, instead of confining himself to one or two rather trumpery pieces of rhetoric. I hope that he will tell us what he would propose. As the hon. Member for Glasgow, Cathcart (Mr. Maxton) has told the House exactly when the general election will be, and what its outcome will be, the right hon. Gentleman will have devoted considerable thought to these matters and will no doubt produce his plan only a few days after the general election.
  The right hon. Gentleman has not mentioned that plan in this debate. Nor was there a serious mention of the level of the borrowing requirement in his speech. This afternoon he resisted my blandishments again and described my question as ludicrous. Is it not a question which he would address in his medium-term economic strategy? The right hon. Gentleman did not mention the money supply. I pay tribute to him for the fact that in his interview with the Tribune on 10 May 1985 he said of the money supply:
  "We shall regard it as a tool for managing the economy in the way that we want."
  Perhaps he is to a tiny degree a monetarist. I welcome him to the club.
  The right hon. Gentleman promises us a new form of non-enforceable social contract on pay with the trade union movement. I hope that that theme will be developed during the debate, because it will be particularly interesting to hear the views of the Liberal and Social

  315
  Democratic parties. They not only believe in a social contract, but believe that it should be statutory, enforceable and extended to prices.
  Mr. Richard Wainwright: Will the right hon. and learned Gentleman tell the House where he picked up the words "social contract" in either the Liberal or Social Democratic party manifestos?
  Mr. Rees: I apologise deeply to the hon. Gentleman if he does not fancy the words "social contract". I thought that after the years when he and his hon. Friends underpinned the Labour Government, the words "social contract" had passed into Liberal and SDP currency. Perhaps the hon. Gentleman can catch your eye, Mr. Deputy Speaker, and explore such interesting semantic questions.
  Even over a period of years the country will recall the failure of those policies. For a party which has put down this motion to take as the centre plank of its policies an incomes policy, enforceable or unenforceable—either of which in the long term is unenforceable in practice—reveals a remarkable failure of memory or an obstinate incapacity to learn. We can only murmur in the words of Dr. Johnson:
  "The triumph of hope over experience".
  The right hon. Gentleman has been more expansive on prices. In his Tribune interview of 10 May he said:
  "I favour the reconstruction of price controls … but not blanket price controls … the sort of selective price controls that were beginning to evolve which prevented unreasonable price increases"—
  not observable to the rest of the country—
  " — increases that were the product of a company's monopolistic power in the economy and which prevented exploitation—I want to see again … Some sort of control on prices ought to be one of the sanctions we used to influence industrial behaviour.
  The hon. Gentleman might have enlightened us on whether he believes in some sort of statutory control or arbitrary powers such as he was prone to use in 1978, or whether he merely advocates an increased and strengthened Monopolies and Mergers Commission. It appears that, while the right hon. Gentleman has forgotten the lessons which his Government learned painfully at our expense during the intervention in our affairs of the International Monetary Fund, he remembers the one aspect of policy which failed so signally in whatever form it was introduced.
  I shall now deal with the more startling charges in the Opposition's motion—nationalised industry prices. To have a sensible debate on this issue it is important to establish, or re-establish, to return to, or not to leave, the facts, because they have been stated on many occasions from these Benches. The right hon. Gentleman gave the House some of the facts, but in a highly partisan and selective form.
  Domestic electricity prices increased between 1974 and 1979 under the Labour Administration by 170 per cent., while between 1979 and February 1985 they increased by 84 per cent. The right hon. Gentleman is right to draw our attention to the fact that the rate of inflation was more acute in the period in which he presided as the protector of consumers than it has been under our Government at any time.
  Industrial electricity prices increased between 1974 and 1979 by 133 per cent., compared with 65 per cent.
  316
  between 1979 and 1985. Indeed, domestic electricity prices were frozen for two years to April 1984, and electricity price increases are expected to be at or below the rate of inflation during the next two years. In short, under the Labour Administration electricity prices increased by 2 per cent. every six weeks, whereas under the present Government they have increased by 2 per cent. during the past two years. I hope that my hon. Friend the Member for Harrow, West (Sir J. Page) will also record that particularly important point.[Interruption.] My hon. Friend can read Hansard, but hon. Gentlemen may be more disadvantaged.
  Between 1974 and 1979, industrial gas prices rose by 288 per cent. If the competitiveness of British industry was a concern of the right hon. Gentleman, that is an extraordinary figure. Between 1979 and 1985, the increase was only 94 per cent.
  Between 1974 and 1979, domestic gas prices increased by 73 per cent. Because gas remained substantially under priced in economic terms, which created severe distortions in the market, gas prices had to be increased in real terms during the following three years. Once that step had been taken, gas prices rose no faster than inflation. Domestic gas prices did not increase during the 15 months to January 1984, and Sir Denis Rooke told the Select Committee on Energy on 20 November 1984 that he expected to be able to hold gas prices to roughly the rate of inflation for the next three or four years because of efficiency savings.
  Mr. Hattersley: I am trying to follow the logic of the Chief Secretary's argument. Does he believe that the Labour Government were wrong to increase those prices and, therefore, approach break-even? Would he have preferred us not to do that and to leave a bigger deficit for him to deal with when he came to office?
  Mr. Rees: I am coming to the principle. I am sure that the right hon. Gentleman, who is well known for his courtesy in debates, will allow me to develop my speech. There is an important principle to be debated here. I hope that we will be able to establish a little common ground between the two sides of the House on the principle by which nationalised industry prices should be regulated. The right hon. Gentleman is right to say that we should focus on the general principle, and I shall derive much support from the White Paper which the Labour Government produced in 1978.
  Mr. Tam Dalyell rose—
  Mr. Rees: If the hon. Gentleman will allow me, I shall develop my speech. I am sure that he wants to make a relevant intervention, but I hope that he will have an opportunity to catch your eye, Mr. Deputy Speaker.
  Under the Labour Administration, domestic water charges increased by 86 per cent., while between 1979 and February 1985 they increased by 83 per cent. Opposition Members will no doubt object to the fact that water charges are to be increased by about 11·5 per cent. this year, but they may have overlooked the fact that under the Labour Government the water authorities' investment declined by a third in real terms, while between 1979 and 1983 investment increased by a sixth in real terms.
  In 1984–85 capital expenditure was about £750 million, and it will increase by almost £200 million by 1987–88. The right hon. Gentleman was anxious about the levels of investment. I remind him that during the last financial year

  317
  there were record levels of investment across the country totalling about £55 billion, and that is likely to be matched this year. I have drawn his attention to the figures for the water industry. That is why we have planned for higher water charges. Following a summer of drought last year, I hope that the country will see the good sense of that. It is pointless advocating increased investment in infrastructure if measures to pay for it are not supported.
  I come now to the point raised so perceptively by the hon. Member for Copeland—to reflect on the principles which should underlie the pricing of nationalised industries. I assume that both the last Labour Government and this Government accept that the prices that industries charge should cover their marginal costs of supply, including a satisfactory return on the capital they employ. In case Opposition Members have forgotten, the energy policy Green Paper presented to Parliament by the right hon. Member for Chesterfield (Mr. Benn) in February 1978—I am sorry that he is not here to contribute to the debate—said:
  "Energy prices should give both consumers and producers reasonably accurate signals about the costs of energy supply".
  Those are impeccable economic sentiments.
  "Underpricing encourages consumers to waste gas resources … prices should therefore at least cover the cost at which supplies can be provided on a continuing basis, while yielding an adequate return to investment."
  I really wonder what we are debating.
  If Opposition Members ask what is a reasonable return on investment, I can only refer them to the nationalised industry White Paper of March 1978, which indicated that the required rate of return on investment should, in normal circumstances, be 5 per cent. in real terms.
  I have to admit that the required rate of return on capital for the gas industry, under its targets, is about 4 per cent., for the electricity industry about 3 per cent., and for the water industry under 2 per cent. That leads me to cite the well-worn words of Clive of India:
  "I am astounded at my own moderation."
  Mr. Dalyell: If I were to send the Treasury the evidence that West Lothian district council gave yesterday, figures and all, on the loss of income tax and many other related benefits in relation to the Polkemmet closure—which is the subject of a major public inquiry about the pit that was flooded—would I be assured of a full answer once the Treasury had the figures?
  Mr. Rees: I should not like to commit myself until I have seen the hon. Gentleman's letter, as it may not be entirely a matter for my Department. I understand what the hon. Gentleman is saying about tax loss. I hope he recognises that whenever he and I have corresponded I have endeavoured to answer his questions very fully. I shall look at his letter, and if parts of it are matters for my right hon. and hon. Friends, I hope that he will forgive me if I pass it on to them.
  Mr. Nicholas Budgen: Will my right hon. and learned Friend inform the House whether the figures for the rate of return on capital are on a current or a historic cost basis?
  Mr. Rees: On a current-cost basis.
  Mr. David Maclean: We have been talking about revenue loss. There is one other statistic which I should like my right hon. and learned Friend to give me, which I could memorise and pass on
  318
  to my constituents. How much has been lost to the country and to the energy industries as a result of the strike last year, led by Arthur Scargill and aided and abetted by Opposition Members?
  Mr. Rees: My right hon. Friend the Chancellor of the Exchequer in his Budget, gave the best figure that we were able to provide for last year. It is a little too early to say exactly what the consequential costs will be for this year. If my hon. Friend tables a question later in the year, I hope to be able to oblige him. The figure will certainly be in hundreds of millions, not tens of millions.
  Mr. Robert C. Brown: The debate is clearly about prices, costs and comparisons between this Government and the previous Labour Government. The one cost to which the Chief Secretary has not referred——and he should have done—is the human misery inflicted by the Government's policies. Will he make a comparison between the unemployment rate during the last 15 months of the Labour Government—when it was falling steadily—and the figure after six years of this Conservative Government, when 2 million more people are unemployed? If, as the Prime has suggested, getting inflation down to 3 per cent. will cost another 1 million jobs, will the Chief Secretary support that? Is that the price that we will have to pay?
  Mr. Rees: I hope that I can deal with that intervention as courteously as I know how. If the hon. Gentleman will cast his mind back—although I do not know whether he was in the Chamber—he will recall that his right hon. Friend the Member for Sparkbrook said that the first priority for employment was the containment of inflation. That is my answer to the hon. Gentleman.
  Even a most cursory examination of the facts must show that this is a most ill-conceived Opposition motion. The Government's record in reducing and containing inflation since 1979 is vastly superior to that of the previous Labour Government. Despite the last few months' figures, there is little reason to doubt that the RPI will be back on a declining path before long.
  Our methods are plain and proven. We have a consistent strategy, which we have sustained for the past five years, and which we will sustain through the next five years. In 1980 we set out a medium-term financial strategy to promote honest finance and sound money. We have stuck to it and concentrated on what Governments can realistically influence. We have secured monetary conditions which are sufficiently restrictive to squeeze inflation out of the system. We have buttressed those with a fiscal policy which has put public borrowing on a sensible downward path.
  Nor is there any conflict between reducing inflation and creating more jobs. The one is dependent upon the other, as the right hon. Member for Sparkbrook recognised in February 1978 and, perhaps more authoritatively, as the Bonn summit recognised in its communiqué. We reject, as the country has rejected on various occasions, the distortion, the inefficiency, the bureaucratic complexity of price controls, wage controls and dividend controls.
  The Labour party — whether inside or outside the Chamber — has offered us nothing but a torrent of synthetic indignation and a tepid rehash of the policies of yesteryear.
  The alliance, perhaps recalling the Lib-Lab pact of the 1970s out of which it was conceived, has offered us a

  319
  statutory prices and incomes policy—so much for its moderation, detachment and imagination. Our policies have been proved and they have yielded results. They provide a framework of success and stability for the years to come.
  I invite my right hon. and hon. Friends to reject with contempt the Opposition motion and to support the Government amendment.
  4.58 pm
  Mr. Richard Wainwright: Alliance Members welcome the opportunity provided today by the Labour segment of the Opposition to debate one of the most important indicators of Government economic policy—an indicator at the sharp end where things matter to people, not one of those intermediate targets discussed in terms of witchcraft and voodoo that have fatally beset Treasury Ministers during this and the previous Tory Administration.
  It will be of interest throughout the country that at last the House of Commons is debating prices rather than monetary aggregates. The people of mid-Wales will listen to the debate on prices with rather more satisfaction than hitherto when they have had to listen to stories about M3 —which, when that proved to be a useless indicator of money, was changed to MO, which has now proved to be even more useless. We await the next fantastic indicator of monetary aggregates that the Government may dream up.
  It is also a good time for the debate because, as everybody knows, the Government's medium-term financial strategy lies in ruins. The Financial Times this morning pronounced a stately funeral oration on the Chancellor's policies. The question of the hour, which I suppose will not be answered in today's debate, is how the Prime Minister can find someone reckless enough to come in to sweep aside the witchcraft and try to get the show on the road in reasonable economic terms. She has little time left before the run-up to the general election in which wholly to recast her financial and economic policies.
  Some of the worst manifestations of state-imposed prices flow from the appalling mismanagement of interest rates during the regime of the present Chancellor. This country has the highest nominal interest rates of any major European country, or of Japan or the United States, except for Italy. Not only mortgage interest but interest paid by new and struggling business men has become crippling and has led to a record rate of bankruptcies and liquidations.
  The Government orate about competition, but they are destroying real competition in many spheres of business. It is not the cash-rich monster companies or the companies that donate so generously to what they consider to be a Conservative party suffering from the record high real interest rates, but the very engines of competition, the small new businesses, the up and coming businesses, whose directors do not sit in lordly state but take their coats off, and, if they have to have a board meeting, have it in the gents because they are really running the business and making it go. Now many of them are going to the wall, not because of their own failings but because of the extortionate demands of the banking system.
  Mr. John Maples: I am sure that we would all like to see lower interest rates not just for
  320
  small businesses but for everyone. Having castigated the Government, does the hon. Gentleman agree that the two major influences on interest rates — oil prices and interest rates in the United States — are outside the control of the Government?
  Mr. Wainwright: It is late in the day for the hon. Gentleman to echo the parrot cry of Treasury Ministers, who know better but have nothing else to say, that it is all the fault of United States interest rates. The hon. Gentleman must understand that prime rates today in the United States—thank goodness—are only 9·5 per cent. As everyone knows to his cost, prime commercial rates in this country are over 13·5 per cent. To blame the United States is not only years out of date but wholly fallacious.
  The interest rate factor has a major effect in producing crippling price levels. Another obsession of the Government that is largely responsible is the Prime Minister's obsessive fear and hatred of any alternative centre of power. It is rumoured that she is even jealous of power at the highest level in the constitution, but that is not germane to this debate.
  Wherever alternative sources of power exist, the Prime Minister is determined to root them out; hence the lunatic obsession with abolishing the metropolitan counties and the GLC. In many cases, it is local administration, local budgeting and local financial control that ensure a reasonably low level of keen pricing. The centralisation that is the driving motive of the Government, not just on Whitehall but on 10 Downing street, is pushing up the prices of a whole range of public utilities.
  Mr. Francis Maude: How can the hon. Gentleman square his concern with localising decision-making with his concern to introduce a statutory price control system?
  Mr. Wainwright: On another occasion I should be delighted to lecture the hon. Gentleman on the fact that alliance incomes policy is decentralised to the greatest possible extent and would consist of local and regional tribunals which would make their own decisions in an arbitration fashion. If the hon. Gentleman is trying to tax us with a centralised incomes policy, he should look back to the Government of his right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath).
  The cutting out of the transport support grant and the crippling of the passenger transport executives in all the metropolitan areas are having a disastrous effect on the successful policy of lower bus fares to encourage more passenger use.
  Mr. Maxton: Particularly by Labour-controlled authorities.
  Mr. Wainwright: By many authorities, some of them supported by Liberals.
  One of the most significant giveaways in the social security Green Paper, which has just been debated by the House, is the crazy suggestion that free school meals should be abolished, and that instead the proposed family credit system should include sufficient cash to cover school meals for children of poor families. What an absurd centralisation of a service that is dealt with economically on a local basis. Anyone who reads the Daily Telegraph weekly bulletin of food costs will have noted the wide variations between different parts of the country. The provision of a uniform cash allowance, which would

  321
  inevitably have to cover the higher range of food costs, instead of allowing local education authorities to carry on their duty of providing free school meals economically, would add considerably to that branch of education costs.
  The Government are even jealous of the water authorities, which were the creation of a previous Conservative Administration. The Prime Minister is not content with being able to control the nominations to those authorities and the appointment of their chairmen. She is not satisfied with enabling them to fix prices secretly, without the press being allowed to attend the meeting; she wants to interfere with the price mechanism that they adopt.
  No doubt all hon. Members have taken note of the shrewd observations of the chairman of Thames water authority as to how the Government frustrated his authority's intention to make only a modest price increase. The Government insisted on a negative external financing limit which forced Thames water authority to put up its prices by about twice the rate of inflation. Interference with local decision-making is a major contributor to the scandal of unnecessary price rises in these important parts of the economy.
  There is an even greater evil. Many of us used to think that the ultimate in selfish cruelty was the forced feeding of Strasbourg geese to provide pate de foie gras in fashionable restaurants. The fattening of public utilities to enable the Government to sell them off to people who have wealth to spare for such investments is an even greater cruelty inflicted on poor families and on people on moderate wage levels who have to pay the higher prices so that the Government may make dramatic sales of the public utilities to their friends and to the better off.
  I do not believe that even the Prime Minister's Fleet street knights will be able to disguise this scandal for much longer. The electorate will cotton on to it or smell it out soon. It is a shoddy device aimed — I think unsuccessfully — at enabling the Government to make spectacular cuts in income tax on the eve of the election.
  I remind the House what the Treasury and Civil Service Select Committee had to say about this sort of dodge in its third report earlier this year:
  "We are also concerned at the Government's insistence on using nationalised industries' finances to offset public expenditure … it seems likely that the nationalised industries will resort to using their monopolistic power to raise prices."
  That is exactly what has happened. It is happening throughout the whole range of nationalised and public utility prices which are mentioned in the motion. The Confederation of British Industry has observed with acerbity on the penalties which large industrial users of energy have to pay as compared with their competitors.
  There is another aspect of state-administered prices which must be mentioned, because it is important for our younger generation and it is not mentioned in the motion. My right hon. and hon. Friends regard the recent increases in dental charges as a savage blow to good health and sensible preventive medicine. Since the present Prime Minister came to power, dental charges have increased from £7 to £17 for a treatment, plus an open-ended 40 per cent., which could make treatment cost as much as £110. That is an absurd way to encourage heathy practices among younger people.
  We need a proper mechanism for controlling and monitoring the pricing policies of nationalised industries and all other nationwide public utilities. The alliance,
  322
  given the opportunity, would ensure that all nationalised industry and public utility prices of nationwide application would be subject to specific and affirmative detailed approval in the House and to continuous monitoring thereafter.
  Mr. Maxton: I am a little surprised at what the hon. Member is saying about a national price for electricity and gas. Surely he is aware that although, in Scotland, especially in the west of Scotland, electricity and gas prices are marginally lower than in other parts of the United Kingdom, the total amount spent in a year on energy by people in that area is 20 per cent. higher than in the south of England. Surely that difference ought to be taken into account.
  Mr. Wainwright: Yes, indeed, and the matter should be debated in the House. Nothing that I have said, as the hon. Gentleman will find when he reads Hansard tomorrow, suggests there should be a uniform price throughout the country. The pricing policies of these industries should be debated fully and not on some obscure order late at night. They should be subject to major and proper debate.
  I must protest at the shoddy procedure into which the House has slipped recently — debating the public expenditure White Paper on a take note motion. At the end of such a debate, the Government—the Secretary of State for the Environment is the worst offender—take the House's decision as meaning approval of everything in the public expenditure White Paper. That is contrary to the facts, because the House merely takes note of the White Paper. It is also contrary to reason, because a vast area of public expenditure, including estimated local government expenditure, cannot possibly be settled in one or two days of debate. The proper procedure is to disentangle those various items into their separate components and to debate and vote on them on a substantive motion.
  We shall not get out of this dreadful plight until the management of the economy is put on a realistic basis and the Government's targets are employment, prices and the exchange rate. Until there is a greater disposition to encourage locally administered pricing and local control of services, we shall not get the best bargain or the best value for money for taxpayers and ratepayers. Because the Government have signally failed on this count, Liberal Members will join the Labour segment of the Opposition in the Division Lobby tonight.
  5.15 pm
  Mr. Martin Brandon-Bravo: The circumstances of this debate are extraordinary The public would be forgiven if they were not aware that this afternoon's debate has been called by the Opposition because they feel there is an important subject to debate. But what do we see? One duty shadow Minister on the Front Bench, I believe two Opposition Whips and someone who sits there more in hope than in anger. Such is the seriousness with which the Opposition treat this debate.
  Mr. Austin Mitchell: Only because the hon. Gentleman is here.
  Mr. Brandon-Bravo: With respect to the intervention from the television personality—
  Mr. Maxton: Do not praise him.
  Mr. Brandon-Bravo: I would not praise him—no, Sir.
  Not surprisingly, I oppose the motion and support the amendment. It is also not surprising that the Opposition have the nerve to table a motion in these terms. I well understand that oft-used phrase, "It is politics, lad." The Opposition must think that we are a nation of fools if they expect us to believe that, with Labour in government—Heaven forbid — public sector prices would remain steady and all would be well with the long-term health of the nation.
  I recall a certain right hon. Opposition Member saying after the last general election that the Labour party had promised to spend 17 billion without any thought for how such enormous expenditure could be funded. He then implied that the electorate were not fools and rejected Labour's manifesto. We are two years on and the Labour party is at it again, in the vain hope that just enough people will fall for such irresponsible and undeliverable nonsense.
  During the past two years, no matter what subject is being debated, the Labour party has announced that, if it were in government, it would spend X amount more. If we sat down with pen and paper and added up all these X amounts we would probably exceed the 17 billion that the right hon. Gentleman to whom I referred said was bogus in the first place. The Government have been involved in the rise in gas, electricity and water charges and, if we are honest, why should they not? They are national resources and their use and management are the long-term, if not day-to-day, concern of the Government of the day. The absence of any cost balance between the competing types of fuel under the last Labour Government left commercial and domestic consumers in an unreal and unstable position.
  The House will recall that, under Labour, the cost of gas to domestic users was reduced in real terms but that commercial users faced massive increases. My right hon. and learned Friend the Chief Secretary to the Treasury mentioned those increases. I suppose that it can be said, without fear of contradiction, that there were short-term votes to be had but long-term damage to industry—but then, the Labour party rarely concerns itself with the long term. The problems of industry, if the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) is to be believed, began only in 1979.
  My own company relied heavily on the constant supply of steam for its manufacturing process. We had a dual-fired boiler—we could switch instantly from gas to oil—originally to cover us against strike action. We would have had a triple choice if it had been technically possible or available. That was around 1972. The point I am making is that we were lucky, we had and made a choice while there was time. Many commercial users did not and they were stuck with an expensive fuel source, either because at that time gas simply was not available or the demand to be converted to gas was refused. Then, in a couple of years, as the House knows, the Labour Government increased gas charges for industry in real terms by, I believe, 112 per cent.
  I said that we were lucky. Indeed we were. We had a commercial advantage in those years over other users. But I am not sure that it was fair or just, and certainly it was not in the national interest. Energy prices are the concern of what ever party is in government and so long as the guidance is objective and rational I see no criticism of that involvement.
  324
  I pay water rates, like everybody else, and I do not like it any more than they do. I find it extraordinary, however, that demands for greater investment in our water supply and sewage and for environmental provision are wholly at variance with the implications by Her Majesty's Opposition that the cash for those provisions should not be generated from within the water industry. The money has to come from somewhere. That is not to say that I like the present method of assessment of water rates — I most certainly do not — but the principle that the industry should generate its own resources is not, in my view, unreasonable.
  I take it that the reference to rents is directed to the public sector of council properties; again I say, why not? We have seen much hand-wringing on this subject. It will be recalled that the hon. Member for Bootle (Mr. Roberts) said that when he was chairman of his local authority's housing department rents remained static. He forgot to consider that there was perhaps a link between his policy of static rents and the deplorable state that he admitted his housing stock got into. Clearly, the lack of a sensible renting policy led directly to a decline in the quality of the housing stock in the hon. Gentleman's constituency.
  I believe that it is sound common sense in both the long and the short term to have a rent policy that provides the necessary income to ensure that housing stock is kept up to scratch and provides the necessary surplus to ensure security and make proper environmental provisions on all estates and in all flats and tower blocks. Whatever party is in government then has the duty to ensure that those who cannot meet those reasonable rents get the necessary financial help. Static rents and declining standards of provision help no one — certainly not those in need. Furthermore, an aggressive right to buy policy produces much revenue for a local authority with which to improve the position of those who, for whatever reason, wish or have to stay in rented accommodation.
  The hon. Member for Copeland (Dr. Cunningham), the hopeful shadow Minister, laughs.
  Dr. Cunningham: I thank the hon. Gentleman for giving way. The reason I was smiling was that he was suggesting that capital receipts from the sale of council houses were available to local authorities at their discretion. He clearly does not understand the policies of the Government he is supporting, because he must surely know—he ought to know—that capital receipts are more heavily controlled and restricted by this Government than ever before and that councils cannot spend their own money in the way they want.
  Mr. Brandon-Bravo: Perhaps, if the hon. Gentleman had been listening instead of dreaming of greater things, he would recall—he can check Hansard tomorrow—that I said quite clearly "produces much revenue for local authorities". If he will stop grinning for just two seconds, I should like to point out to him that the revenue gain from the right to buy policy in my local authority was greater than the subsidy lost as a result of Government policy. This has nothing whatever to do with capital receipts. Perhaps if the hon. Gentleman studied his subject a little more instead of trotting out the usual knee-jerk reaction to capital spending, he might be able to contribute a little more accurately.
  I emphasise that, in our local authority, the profit—not capital receipts—that flowed from the right to buy more than made up for any loss of subsidy.

  325
  I am puzzled by the criticism of bus fares, because I believe that the Opposition are on very shaky ground here. Certainly, from my own experience, this Government have not forced local authorities to put up bus fares.
  Mr. Maxton: Where do you live?
  Mr. Brandon-Bravo: I live in Nottingham, a most beautiful city, in the centre of this fair land.
  Most sensible local authorities have raised bus fares in line with real costs, inflation and the need for sensible provision for capital replacement. I see nothing wrong in that policy and therefore certainly cannot see how any criticism of the Government can be made. But some authorities—the hon. Member for Leeds, Central (Mr. Fatchett), who sits in hope and anger, will probably say, "Hear, hear," to this—have simply said, "Where are their votes? Let us dump the rising cost of provision on to the rates. Let commerce and industry pick up the bill; they do not have a say in local affairs." That, sadly, has been the practice in the republic of Sheffield and in other areas like it.
  I come to yet another item on this agenda. I, too, have a mortgage and I, too, do not like the higher charges. Buying one's own home is the best investment of one's life and, if it is a strain to begin with, at least it is a declining cost in real terms on an increasing asset. If recent statistics are anything to go by, my advice to council tenants is to make a start now. The current situation, because of high interest rates is holding house prices static. We should make no mistake, however—interest rates will come down and house prices will then rise. So I say again to council tenants that they should make a start now because, whoever is in control of their local authority in future years, one thing is absolutely certain—rents will rise substantially over the lifetime of their mortgage and those who are paying rent will at the end have nothing to show for it.
  Mr. Maxton: Does the hon. Gentleman give the same advice to the 13 per cent. of the council house tenants in my constituency who are unemployed, with only unemployment benefit or supplementary benefit? Does he say to them that they should start to consider purchasing their houses?
  Mr. Brandon-Bravo: I should like to be able to say yes to the hon. Gentleman. However, I do not believe that there is any logic or sense in saying that if everybody cannot have something, nobody should have it. I hope sincerely for a rapid decline in the percentage, of unemployment in the hon. Gentleman's constituency and I hope that in due time his constituents will be able to buy their own homes. I also hope that the present system, with the Government helping even the unemployed to buy their own homes by means of assistance on mortgage interest, will be supported. I hope that the hon. Gentleman will agree that that is a right and proper provision.
  On this matter of mortgages and mortgage interest rates, I do not think that we should forget the reality that, while higher mortgage charges are short-term pain for some of us who pay them, they often represent for others—frequently old-age pensioners with just a little bit put by — a little bit of much-needed extra income. That other side of the mortgage equation is often forgotten. I am not sure what the figures are, but I believe that about five or six times as many people have a little money in building societies as are currently borrowing from those societies.
  326
  Most important of all, if all these matters were held down by simple Government intervention and funded, as indeed they would have to be, by higher direct or indirect taxation, we would find that we had embarked on yet another horrendous upward twist to unemployment—and that national tragedy is monstrous enough already. We may have a long haul, but I believe that over the past few years the policies that a Labour Government would have imposed would have been ruinous. Our sound money policies are the best long-term future for this country and for all concerned.
  5.31 pm
  Mr. Derek Fatchett: It is always fascinating to engage in a debate when what one intends to say has been trailed with so much interest by the previous speaker. Before replying to some of the points made by the hon. Member for Nottingham, South (Mr. Brandon-Bravo), I wish to refer to the speech of the hon. Member for Colne Valley (Mr. Wainwright). I was disappointed to hear the announcement of a split in the alliance that was so evident at the end of the hon. Gentleman's speech. He said that the Liberals would be supporting the Opposition tonight, but he could not speak for the Social Democratic segment of the alliance. I am not surprised that he cannot speak for the Social Democrats. It is a difficult task, given that the nature of that organisation is such that only one person speaks for it. It is sad that there should be such a sharp division in the alliance, particularly at a time when, to some extent, it may be trying to paper over the cracks.
  The hon. Member for Colne Valley has sung the praises of cheap public transport. That delighted me, because I am a great believer in the political process of conversion and persuasion. It is a pity that the hon. Gentleman is no longer present. If he were, he would recall that, when the Labour party was elected to office in west Yorkshire in 1981, very much on the basis of a public transport policy, it had to seek a supplementary rate to implement that policy, and it may come as no surprise to learn that it ran into certain opposition from Liberal councillors. The memory of the hon. Member for Colne Valley may be somewhat clouded on this issue, or perhaps it is useful to talk about a Liberal commitment to cheap transport while forgetting its record in other respects.
  Mr. Maxton: It could be that the argument advanced by the hon. Member for Colne Valley (Mr. Wainwright) for decentralisation and regional and local decision taking extends to Liberal policy matters as well.
  Mr. Fatchett: That is a valid point. Many of us read the Liberal newsletters with interest, which reveal differences up and down the country, and, indeed, from ward to ward. However, I shall not be tempted into going down that path as it takes us away from the major issues in the debate.
  The hon. Member for Nottingham, South made several points that to some extent I dispute. On capital receipts and the right to buy, it was peculiar that he did not bring himself up to date with the current regulations. That point was made by my hon. Friend the Member for Copeland (Dr. Cunningham).
  Earlier this afternoon, I went with a delegation of tenants from Leeds to see the Minister for Housing and Construction. He asked, "How much money will Leeds

  327
  raise this year in terms of capital receipts?" He was told that it would be in the region of £5 million, but that only £1 million could be spent. Given the keen interest of the hon. Member for Nottingham, South in the sale of assets, I should have thought that he would be keen to ensure that local authorities should be able to spend much more than 20 per cent. of the sum raised in that way.
  Mr. Brandon-Bravo: The hon. Gentleman appears to be even less informed than his hon. Friend the Member for Copeland (Dr. Cunningham). I was not talking about capital receipts. When a council house is sold and a local authority acts as the estate agent and building society, that authority makes a profit on the interest, just as a building society does. I assure the hon. Gentleman that in Nottingham that profit, which has nothing to do with capital receipts, is about £7 million—well in excess of the loss of Government grant.
  Mr. Fatchett: Many studies of Nottingham would challenge those figures and suggest substantial revenue losses there. I was referring to the capital implications arising from the sale of houses in terms of capital receipts.
  The hon. Gentleman also talked about bus fares and said that Labour authorities had held down for cheap, short-term political gain. That is strange. If it was for cheap, short-term political gain, why did the Government run away fom this year's metropolitan county council elections in areas which operate cheap transport policies? If his argument was so correct, would it not have been appropriate for the Conservative party to hold those elections and to put that view to the electorate in order to gain support? I am convinced that there would have been an endorsement of the cheap fares policy among many county councils, but the Government removed the right to vote from 13 million people.
  Subsidised public transport may well be of great help to industry. Indeed, there is evidence to suggest that such policies are popular not only with the electorate but with commercial interests in city centres. In areas that have pursued such policies, there has been very little opposition from commercial interests. Therefore, it may be worthwhile for the hon. Gentleman to pursue those matters further.
  The Chief Secretary regularly spoke of sound finance, to which he seemed to attribute a sacrosanct definition. That may well be the subject of much argument, but I make the assumption that there is a sacrosanct definition that allows us to understand exactly what sound finance means. To make that concept a reality in terms of managing the economy, one must turn sound finance into pounds and pence in relation to the PSBR, targets for monetary growth and various other measurements of monetary aggregates.
  I indict the Government not for getting caught up in damaging dogma, but for the fact that, even in terms of their own dogma, they have been regressive and redistributive, and have pushed the burden of their policies on to the weakest members of our community. If a figure for the PSBR is needed and it is decided that it should be sacrosanct and cannot be altered, one can arrive at it by various means. In other words, the objective can be set, but the means can vary.
  The Government cause the public anxiety because their methods push the burdens in one direction. We have
  328
  discussed rents, mortgage costs, water rates and the cost of fuel. Those burdens have increased as a result of Government policies. The Government have no need to go in that direction, even on the basis of their own targets, but the means chosen are redistributive. It is a simple test to consider those burdens alongside the cuts in taxation for the rich in our society. The burden has been taken off the rich and has increased on those least able to carry it. That is my indictment and the country's indictment of the Government.
  Mr. Nicholls: It appears that the hon. Gentleman is honest enough to admit that taxes will have to increase if a Labour Government come to office. In fairness to the hon. Gentleman, he is prepared to consider a problem which the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) avoided. The hon. Gentleman has implied an increase in the PSBR. Will he tell us by how much the next Labour Government—if there ever is one—would increase the PSBR?
  Mr. Fatchett: I get somewhat disappointed with the hon. Gentleman. He rises regularly with enthusiastic questions, but one feels that he wastes most of his energy getting up and it is not reproduced intellectually. If the hon. Member had been listening, he would have realised that I was arguing within the limitations of the sacrosanct dogma of the Government. Many other arguments could be made, and I am sure some of my hon. Friends will make them.
  According to the Government, rates have become a major domestic burden. The Government tell us that the rate burden is so great that they will do something about it. The Prime Minister has rates at the top of her agenda, although I suspect that football hooliganism and violence have now taken over. The Government have not yet produced any legislation on rates. The abolition of rates was at the top of the agenda in 1974, 1979 and 1983, and I suspect that it will be in 1987. Rates have become an acute embarrassment to the Government as a direct result of their policies.
  The projection by the Chartered Institute of Public Finance and Accountancy for 1985–86 is that local government expenditure will increase by 2·9 per cent. That is considerably less than the rate of inflation. However, the average domestic rate bill is estimated to increase this year by 9 per cent. We have an increase in spending of 2·9 per cent. but an increase in the cost to the domestic ratepayer of 9 per cent., which is above the current rate of inflation. As the Under-Secretary seems to acknowledge, the individual ratepayer is paying more but getting less value in services. Those who have served in local government will recognise that that means pressure from ratepayers and tenants for better services, yet the squeeze continues and the bills and rents go up. The Government have forced a reduction in services, but at the same time they have forced the average domestic ratepayer to pay more. That has come about because, given the sacrosanct nature of the Government's targets, they have cut central Government support to local government, thus forcing up rates and reducing services. The Government are thrashing around trying to find an alternative to rates, but they are creating problems in the current rating system.
  The Government could get rid of many of their problems with the rating system if they would give back the money that they have taken from local government, but

  329
  they are not prepared to do that. They have reduced the level of rate support grant funded from 62 per cent. under the Labour Government to about 46 per cent. now. That vacuum, created by the Government, is pushing up rates and increasing the burden on individual ratepayers. The Government must explain to the country why they have adopted a policy of rate increases above the rate of inflation.
  Mr. Brandon-Bravo: No one disputes that rate support grant has diminished, but I hope that the hon. Gentleman will be honest enough to admit that the process began under the Labour Government. More specifically, will he confirm that, despite a reduction of rate support grant in percentage terms, his city and mine, like others with special needs, have had additional specific grants and are thus no worse off and that the combination of rate support grant and additional specific grant means that many programme authorities are better off than before? Does he admit that that is true?
  Mr. Fatchett: I think that that is very far from the truth. The equation certainly does not work in that way in Leeds. Like so many other cities, we have lost money as a result of the Government's cuts in rate support grant.
  I make the challenge once again. Why have the Government followed a deliberate policy of pushing up rates? If rates are a regressive tax, why are the Government increasing them? The Government's pricing policy is redistributive from the poor to the rich. The Government have not yet answered that indictment, but sooner or later they will have to do so. Moreover, I suspect that if the hon. Member for Nottingham, South goes to the Minister on this, he will get a correction rather than confirmation of his claim.
  I repeat, if the Government are so concerned about local government finance and the rating system, why will they not give local authorities a chance and give back the money that they have taken from them?
  Government policy on public sector housing costs and rents is equally absurd and redistributive from poor to rich. At 1983–84 price levels, public housing subsidies in England and Wales amounted to £1,852 million in 1979–80, but only £391 million in 1983–84. In other words, the Government have taken £1,500 million out of public housing subsidy. In so doing, they have pushed up council house rents, again placing the burden on those least able to afford it.
  Mr. Austin Mitchell: I warn my hon. Friend to be prepared for more Conservative interventions of the asinine character that we have seen so far. One wonders where they come from and whether it is the role of civil servants to brief Tory Back Benchers on their inaccuracies.
  Mr. Fatchett: I am grateful to my hon. Friend for his concern about my future safety.
  Mr. Maxton: On a point of order, Mr. Deputy Speaker. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) has raised an important constitutional issue and I ask you, Mr. Deputy Speaker, to resolve it. It is my understanding that every Back Bencher in this place enjoys equality. That applies whether the individual sits on the Government Benches or on the Opposition Benches. If a Minister is prepared to assure me that I can approach those who sit in the civil servants' Box to consult them on
  330
  figures, I shall be prepared to accept that the action of the hon. Member for Nottingham, South (Mr. Brandon-Bravo) was legitimate. If I am told by you, Mr. Deputy Speaker, that it would be out of order for me to talk to those who occupy the civil servants' Box, an important issue will have been raised.
  Mr. Deputy Speaker (Mr. Harold Walker): I cannot see any Boxes. If an hon. Member goes behind my Chair, he is outside the House. If an hon. Member does so, who he talks to and what he does have nothing to do with me.
  Mr. Brandon-Bravo: Further to that point of order, Mr. Deputy Speaker. I can assure you, Mr. Deputy Speaker, that I had a conversation with those in the civil servants' Box and that no questions were asked.
  Mr. Michael Forsyth: On a point of order, Mr. Deputy Speaker. Is it in order for Labour Members to introduce filibustering tactics to spin out the debate when one of their colleagues is addressing the House?
  Mr. Deputy Speaker: The hon. Gentleman's point of order is bordering on the bogus. He is committing the sin of which he is complaining.
  Mr. Fatchett: In a sense, Mr. Deputy Speaker, I am grateful for your ruling. I accord with it, of course. You cannot see what happens behind your Chair, but if anything happens behind it that educates Conservative Members, that activity has a value. That is the point that I was about to make to my hon. Friend the Member for Great Grimsby (Mr. Mitchell).
  Before I was interrupted by the points of order, I was saying that cuts in housing subsidies and rents have increased and that the consequent burden has been placed on those least able to carry it. The total spent on public housing has declined by about 28 per cent. since the Government took office. That is a sign of the low priority that the Government accord to public sector housing.
  The cuts and the administrative chaos that has been created by the Government should be a cause of concern for Conservative Members. The social security reviews tell us that there has been a sharp increase in the money spent on housing benefit. The forerunner to the housing benefit scheme was the rent and rate rebate scheme, the cost of which was £1,380 million in 1979–80. By 1983–84 the expenditure on housing benefit was £3,790 million. The latest estimate of expenditure on housing benefit for 1984–85 is £4,160 million. The benefit will be taken up by about 7 million households. That means that basically one in three households would be claiming housing benefit. By taking money away from public sector housing in terms of rate subsidy, the Government will cause many more people to claim housing benefit.
  The Government are saying that they cannot afford to continue the housing benefit scheme and that they will have to make cuts in it. The direct result will be more and more people finding themselves with housing costs that are difficult to meet and with burdens that are difficult or impossible to carry. Again, that will be the direct result of Government policy.
  There have been increases in rents in the public sector and local government finance has been cut. There have been savage increases in water rates. When the Chief Secretary to the Treasury said that the rate of return of the water authorities was under 2 per cent. and that the target set in the White Paper of 5 per cent. was not being met,

  331
  I was fearful that that was the prelude to an announcement of even further increases in water rates in subsequent years. Water rates are yet another example of the burden that is being carried by those least able to bear it.
  The effect of the Government's economic policy can be described only as socially divisive. It has deliberately increased unemployment, and unemployment has been used as a tool of economic management. The Government's economic policy has pushed up prices in a way that again can only be described as socially divisive. At the same time, the Government have given priority in their taxation policy to benefiting the rich and the very rich. A Government who behave in that way stand indicted before the public. The Government's priorities are wrong and need to be reversed. The reality is that they can be reversed only when the Government are kicked out of office and we have a Labour Government who are committed to social justice and economic efficiency.
  5.55 pm
  Mr. John Maples: It is interesting that, in a debate on prices called by the Opposition, the only Labour Back Bencher to participate in the debate so far, the hon. Member for Leeds, Central (Mr. Fatchett), should make an interesting speech about local authorities and housing finance.
  Mr. Maxton: Read the Order Paper.
  Mr. Maples: The hon. Gentleman is interjecting from a sedentary position, as he does frequently in Committee. Essentially, the hon. Member for Leeds, East made a speech about local government and housing finance.
  Mr. Maxton: Will the hon. Gentleman give way?
  Mr. Maples: I have only just begun my speech. I am sure that the hon. Member for Glasgow, Cathcart (Mr. Maxton) will be able to catch your eye, Mr. Deputy Speaker, if he wishes later to contribute to the debate.
  Perhaps the hon. Member for Leeds, Central was as surprised as my right hon. and hon. Friends and I were when the Opposition chose inflation and prices as a subject for debate. For Conservative Members, it is rather like being asked to debate crime with the inhabitants of Wormwood Scrubs. The Opposition have chosen an astounding subject for debate.
  Mr. Fatchett: It might be useful to remind the hon. Gentleman of the motion that appears on the Order Paper in the name of my right hon. Friend the Leader of the Opposition. The motion refers to the Government
  "intentionally increasing public sector prices".
  It refers to a range of items, including rents, rates and water charges. Those items are central to the motion. It is a sign of the priorities of Conservative Members when they take the view that water charges, rents and rates are not important to the British people.
  Mr. Maples: I was not trespassing on your authority, Mr. Deputy Speaker, in suggesting that the hon. Gentleman was outside the terms of the motion. However, it is interesting that, in a debate that is generally about prices—certainly one would gain that impression from those who have spoken from the Front Benches—an Opposition Back Bencher should address himself to the narrow topic of local authority finance, interesting and relevant though that is.
  332
  As my right hon. and learned Friend the Chief Secretary to the Treasury observed, although the increase in the RPI tipped 7 per cent. this week — the Opposition were fortunate that that should happen shortly before the motion came before the House—that percentage is lower than the increase for every month of the period that the previous Labour Government were in office.
  My right hon. and learned Friend could well have responded to the debate by putting that fact on a continuous tape and playing it for 20 minutes. It is all that needs to be said in answer to the assertion that a Labour Government would do better in controlling inflation. It is perhaps for that reason that there are so few Labour Members in the Chamber. Perhaps I should be more charitable and assume that they are filling the Labour benches at Ascot. On reflection, if that were so, the hon. Member for Great Grimsby would be there.
  Under the previous Labour Government, the retail price index increased by over 100 per cent. and the average increase was 15 per cent. a year. Over the past five years of this Government, it has increased by 50 per cent. If one takes account of the fluctuations that have been caused by changes in the mortgage interest rate, the increase has been about 5 per cent. for over three years. Our inheritance from the previous Labour Government was an increase in the RPI of very nearly 20 per cent.
  Mr. Austin Mitchell: That was not an inheritance. The Conservative Government increased the RPI when they took office in 1979.
  Mr. Maples: When the Conservative Government took over from the previous Labour Government, inflation was rising. After the Conservative Government had been in office for four months, inflation was 17·5 per cent. Almost anyone who studies these matters will agree that that was the result of the policies of the Labour Government. The Government have been successful in bringing inflation down to 5 per cent. and in keeping it pretty steady at that level. That is a considerable and creditable achievement by the Government. It is difficult for Conservative members to take criticism on that front from those who succeeded in doubling prices over a period of five years. It is particularly galling to take it from the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who was Secretary of State for Prices and Consumer Protection for much of that period.
  We should not forget that a partner in that duet of Secretaries of State during those five years was the present president, I believe, of the SDP. In October 1974, she told us that inflation was running at, I think, 8·4 per cent., only for us to find out about six months later that it was running at more than 20 per cent. The only thing that temporarily reduced inflation under the Labour Government was the intervention of the IMF. By the time the Labour Government left office, inflation was once again rising and a considerable number of blank cheques were left for their successors to pick up. To put the right hon. Member for Sparkbrook back in charge of prices and inflation in order for him to have a second go would be a bit like the Irishman who lost £100 on the cup final; £50 on the match and £50 on the action replay.
  The Opposition make a great deal of nationalised industry prices, so it is worth looking at our respective records in two or three cases. Nationalised industry prices are important to the consumer, and are a substantial

  333
  element of industrial costs. The motion criticises us for increases in the electricity tariff. In the past three years, electricity prices have risen by an average of 2 per cent. a year, but they rose by the now well-known figure of 2 per cent. every six weeks under the last Labour Government.
  Under this Government, there has been a fall of 8 per cent. in real terms over the past three years. The one utility where the Opposition can claim to have reduced prices, or at least not to have increased them by much, is gas, and more specifically, domestic gas prices. However, the Labour Government deliberately suppressed domestic gas prices and increased industrial gas prices. Indeed, they increased industrial gas prices by more than 100 per cent. in real terms during that period. That was a very shortsighted and self-defeating policy.
  The policy led, by 1979, to selling gas to domestic consumers at a loss, which cannot make any sense. It was also nonsense for the importance of such elements as efficiency and resource allocation in industrial costs, the creation of employment and the holding down of prices in the industrial sector. There is fairly good authority for that in the Labour Government's Green Paper on energy policy, which was published when the then Secretary of State for Energy was the present right hon. Member for Chesterfield (Mr. Benn). That Green Paper said:
  "Energy prices should give both customers and producers reasonably accurate signals about the cost of energy supply. Under-pricing encourages consumers to waste scarce resources and may discourage additional supplies."
  None of us could claim to be able to put it any better than that.
  The Conservative party was left to correct that situation when it came into office, and it has done so. But it is worth reflecting on what happened to some other nationalised industry prices between 1974 and 1979. The cost of telephone calls rose by 200 per cent., of rail fares by 153 per cent., of domestic coal by 150 per cent. and of the post by 133 per cent. Given the Labour party's record, we do not need any lectures or instructions on nationalised industry prices.
  Despite our differences in approach to other matters, all hon. Members would like to see inflation fall still further. No doubt there are almost as many opinions as there are economists, but we could probably all agree on a shortlist of inflationary causes. I believe that they fall into two groups: those that affect the demand side, and those that affect the cost side. On the demand side, I would put money, the creation of credit and to some extent wages. On the cost side, I would say that wages are perhaps the biggest factor, although commodity prices and interest rates are also involved.
  On the demand side, the expansion of the money supply and the rate at which consumer credit is created are obviously enormous factors. There are a variety of causes for them, such as the level of the public sector borrowing requirement, the level of interest rates, the rate at which bank lending is expanding, loan demands, credit terms and so on. We have a certain amount of control over some of those factors. For example, we have some control over the level of the PSBR. We also have some qualitative controls that we can exercise over consumer lending.
  In addition, taxation policies can have some effect. Unfortunately the hon. Member for Colne Valley (Mr. Wainwright) is not in the Chamber at present, but he took issue with me over what was the main factor in the level
  334
  of interest rates. I believe that, although we have some control and influence over domestic interest rates through domestic economic policies, it would be a terrible mistake to assume that we could buck the trend of worldwide and American interest rates, particularly when there is some doubt about oil prices and their importance for the strength of the pound and our balance of payments. Unfortunately, such things are outside our control.
  A variety of market forces, both national and international, are at work. If the money supply is squeezed too hard, the velocity of its circulation simply increases to compensate for that. Thus, although there are some elements of control which we are using, there are also some factors over which we do not have any control. In addition, we have very limited control over other factors.
  On the cost side, many commodity prices are also largely outside our control, except to the extent that the exchange rate influences their performance as input prices to British industry. We have considerable influence over the prices of commodities produced in Britain and particularly over the prices of nationalised industry products such as energy. In such cases, one person's price is another person's cost, and it is vital to try to keep nationalised industry prices as low as possible and to try to keep rises reasonable, so that they do not become an exorbitant cost to the industries or their customers. This Government have made considerable progress in improving the efficiency of nationalised industries in an effort to keep down industrial costs.
  The reduction in corporation tax, which represents a substantial cost to companies, businesses and producers, and the reduction in national insurance contributions for employers are very positive steps towards controlling price rises. However, I should like us to go a little further with employer's national insurance contribution. Wherever the Government have a direct influence over industrial costs, they would do well to exercise it as much as possible in a downward direction. That would also have a beneficial effect on employment, and there may be more that we can do there.
  The difficult question is that of wages. Unit labour costs are a vital ingredient in our international competitiveness. High wages are fine if they are earned in increased productivity. If they are earned from profits, that is fine. However, if they are paid in a way that results in price increases, they must inevitably end up being inflationary. Under the last Labour Government wages rose by 140 per cent. During the same period, we saw output fall by 4 per cent. That must be a recipe for inflation.
  We must see a general moderation in wage and salary rises in the private sector, because the interrelation of unit costs and international competitiveness is vital. One of the big factors, particularly under the Labour Government, was the enormous upward pressure on wages that was generated by the trade unions. Unfortunately, we now see the Labour party in opposition supporting almost every wage demand that comes along, regardless of its merits, or of its consequences for inflation or the competitiveness of the industry involved. Labour Members know from their experience in government that they cannot go on doing that. That is what eventually landed them in a lot of trouble. Moderation is a vital factor in controlling inflation.
  The control of pay in the public sector involves some other considerable, but different, difficulties. It will be difficult to continue to maintain a level of general wage

  335
  increases in the public sector that is considerably below that in the private sector. It was reasonable to expect to do it for a certain period, as there are other compensating advantages in the public sector, but we cannot go on for ever. We must look at ways of trying to find a more flexible framework for discussing, and deciding on public sector pay increases.
  Mr. Gerald Bermingham: Perhaps the hon. Gentleman can explain why, for example, in the recent Army pay settlement, those holding the most senior ranks seemed to obtain a much higher percentage than those who hold the most junior ranks. Indeed, it would seem from recent industrial settlements that those who are chairmen and managing directors of very large public companies obtain much higher percentage pay increases than those who produce the goods on the shop floor. Does the hon. Gentleman not agree that there seems to be an inequality in our society these days, in that, the higher up someone gets, the more likely he is to receive an enhanced rate of pay? Those at the bottom of the pile seem to get very little.
  Mr. Maples: I do not know about that, but it is a perhaps unfortunate fact that senior executives among the top three or four executives in major international companies work in an international market. If we do not pay the salaries which they can earn abroad, they are likely to move abroad. That has already happened. The salaries paid here are nothing like as high as in the United States. I agree that that creates an extraordinary discrepancy, but few people can command such large salaries.
  The cost to a large company of paying its chairman £100,000 is minuscule compared with the cost of giving all its employees a 10 per cent. pay rise. Raising unit labour costs has an impact on the international competitiveness of a company. The argument by the hon. Member for St. Helens, South (Mr. Bermingham) is valid, but he is really talking about a public relations exercise which does not have enormous economic consequences.
  If artificial efforts are made to hold down the salaries of top executives, many of them will move to the United States where they will be paid considerably more.
  It would be interesting, in the context of both private and public sector pay, to know exactly how the Labour party proposes to deal with the problem. I understood that the hon. Member for Copeland (Dr. Cunningham) was to reply on behalf of the Opposition, but perhaps the hon. Member for Birmingham, Perry Barr (Mr. Rooker), who is present now, can tell us. We know that the Labour party favours an incomes policy because the right hon. Member for Sparkbrook has mentioned it on several occasions and that usually causes him trouble in some parts of the Labour party. He says that he does not favour a coercive incomes policy but he has said:
  "We ought to become the party of an incomes policy, but I do not want a statutory incomes policy and I do not want a coercive incomes policy."
  Exactly what kind of incomes policy does he want?
  The nub of the debate should be to ask which party has the best chance of bringing inflation down. The Conservative Government have succeeded in bringing it down from nearly 20 per cent. to 5 per cent. Which party
  336
  has the best chance of bringing inflation down from 5 per cent. to zero? It is obvious that that is more difficult than bringing it down to 5 per cent.
  Is the best prospect to be found in the continuation of the present Government's policies? The answer must be yes. With the promotion of efficiency in the public and private sectors, a sound public sector financial policy with the public sector borrowing requirement and public spending under control, with a reasonable control over the money supply and bank lending, and with moderate wage demands, we have a reasonable prospect of reducing inflation to well below 5 per cent.
  What is likely under a Labour Government? Their record is not good. Public spending would rise enormously, and probably go out of control if history is anything to go by, with serious consequences for the PSBR and the money supply. There would be further nationalisation and the active promotion of inefficiency in the nationalised industries. That is what happened under the last Labour Government and history has a horrible way of repeating itself. Loose money would be in pursuit of low interest rates. Taxes would be high and in the early years of a Labour Government substantial wage increases would be granted. All that would be incredibly bad for prices and inflation.
  The evidence is there. The Labour Government's record is very bad and ours is very good. [Laughter.] Opposition Members laugh because no arguments are left at their disposal. Our record is good. We have succeeded in bringing down inflation to 5 per cent.
  To think that a future Labour Government would be good for prices requires one to ignore all the evidence. The Opposition cannot sell that argument to the House. They have not succeeded in selling it to the electorate and while they have no policy on wages other than to dance to the tune of their puppetmasters, they are unlikely to do so.
  With inflation, as with other aspects of economic policy, the proof of the pudding is in the eating. I am afraid that the right hon. Member for Sparkbrook tastes no better now than he did when he was Secretary of State.
  6.15 pm
  Mr. John Cartwright: I welcome the opportunity to take part in the debate, because it allows us to talk about the problems experienced by ordinary people in our constituencies. Few of my constituents lie awake at night worrying about the PSBR, GDP, the medium-term economic strategy or monetary aggregates. They and many people throughout the country are most worried about how to balance the family budget each week. That task has been made more difficult by Government policies on many of the issues to which the motion refers.
  I shall pick just three of the issues from the broad and attractive menu set out in the motion. First, I shall deal with Health Service charges. Everyone who is realistic about the Health Service accepts that some charges are a regrettable necessity, but the scale and frequency of the increases made by this Government impose a considerable burden on many ordinary people.
  The increase in charges introduced on 1 April this year was the seventh since 1979. The prescription charge stood at just 20p in 1979, and now it is £2. That is a tenfold increase in six years, which inevitably causes ordinary people problems.
  Mr. Nicholls: Is not the hon. Member for Woolwich (Mr. Cartwright) forgetting that the biggest percentage

  337
  increase in prescription charges was in 1968, when the leader of his party was a Labour Minister? He did not feel the need to resign. Will the hon. Gentleman put the issue in context by reminding the House that prescription charges were introduced by Hugh Gaitskell, a Labour Minister?
  Mr. Cartwright: I have said that any realist accepts the need for charges. The Labour Government cancelled charges in 1964 and promptly reintroduced them in 1967. That is what I mean by being realistic. The hon. Member for Teignbridge (Mr. Nicholls) is a fair man, so I am sure he will accept that massive, rapid and frequent increases in charges cause problems.
  Perhaps the Government believe that because of exemptions in the Health Service charging system there is no serious impact on patients. That is not the view of the experts. The British Medical Association, hardly a revolutionary body, says that it regards the charges as
  "a further erosion of the National Health Service and a further restriction of the service."
  The BMA says that it is concerned that some people who should go and see their doctor might well be deterred because of the scale of Health Service charges.
  A similar comment was made by the British Dental Association, which said that the charges might persuade people to have their teeth extracted and not conserved because extraction is cheaper than filling. It added that the charges
  "set dental health back a generation."
  The experts think that high charges have an impact on those who have to find the money.
  Perhaps the most interesting comment was in the Daily Telegraph of 13 March, which said:
  "Conservative Governments have seemed equally unsure whether they related prescription charges to the cost of living, the cost of drugs or the rate of inflation."
  The Daily Telegraph decided:
  "There is nothing scientific or principled about it."
  That interesting judgment underlines the point that I am making about the impact on ordinary people.
  Hon. Members have referred to charges for essential public services such as gas, water and electricity. Those of us who live in the Thames water authority area would agree that the TWA has not been a much-admired institution among consumers. However, the campaign which the authority and its chairman put up against the Government earlier this year with respect to water charges won it a great many friends among ordinary consumers.
  The original Thames water authority board was reduced substantially in October 1983 and was replaced by a new board of 15 people appointed by the Government. One of the new board's objectives was to run
  "the authority as a major well-run business."
  To execute that objective the board produced a plan for the current financial year involving a reduction in borrowing of £18 million and capital investment of £121 million to make improvements in the system. Most importantly, it involved increases to the consumers of only 3 per cent. I believe that most consumers would have regarded that as a good piece of business and one that carried out the duties which the Government gave to the authority.
  The Government had a different view. They demanded that the authority should make higher profits and larger debt repayments and, as a result, that the increase to the consumer should be 10 per cent. rather than the 3 per cent. proposed by the authority. The TWA predicts that, if the
  338
  Government's longer-term plans come to fruition, the Treasury will be able to cream off £270 million from Thames consumers in 1985 prices. The authority says:
  "Not surprisingly the Board of Thames argues that this includes a tax on water."
  There has been a similar approach with respect to gas. The gas levy, which is a separate charge in addition to the taxation that is paid by the gas industry, produced more than £521 million in 1983–84. In the two years 1982–83 and 1983–84 the gas levy produced almost £1 billion for the Treasury. The public expenditure White Paper suggest that in the three years to 1987–88 British Gas is expected
  "to remain self-financing after paying over £2,900 million in gas levy and taxation".
  There are 16 million gas consumers, and the levy costs about 3p per therm on the overall charge of 40p per therm.
  A similar situation is developing in the electricity industry. The London electricity board has told me that its prices are about 5 per cent. higher than they need to he to fulfil its statutory obligation to break even. Because of the Government's policies, London electricity consumers are paying about £3 more every quarter than they need pay.
  Conservative Members have argued that these price increases are less than the increases under the Labour Government. They totally miss the point. Clearly, consumers do not like paying high prices, but I think that they are prepared to accept them if they know that they are forced on the utilities concerned because of external pressures. I think that consumers resent the idea that they are paying more than they need pay simply to provide a back-door source of funds for the Treasury. Managers of the industries concerned resent that as much as, if not more than, the customers.
  The idea of using essential public services, such as gas, water and electricity, as a means of collecting a hidden tax is extremely unfair, because that taxation falls much more harshly on the less well-off. The results of that pricing policy can be seen in many cases — for example, heating. Many of us who represent inner city constituencies know only too well that many people can no longer afford an adequate level of heating in their homes. Many of the problems of condensation and dampness in local authority blocks of flats stem from the fact that people can afford to heat only one room and cannot afford to heat, say, the bedroom. No doubt the advice given by local authorities to those of my constituents who talk about the problems of condensation is sensible, but it is hardly practical. They are told to switch on the heating and open the windows. One might as well tell people to burn pound notes, because that is not practical advice. Imposing higher prices than are necessary so that the industries can be used as milch cows for the Treasury results in much hardship for ordinary people.
  I agree with those Opposition Members who have argued that the major cause of the growth in the rates bills during the lifetime of this Government has been the Government's policy of reducing the proportion of local authority expenditure that is met by central Government from 61 per cent. in 1979 to less than 49 per cent. during this financial year. I believe that this approach will continue and that a great many problems will be faced by a number of ratepayers because of some of the proposals in the Green Paper "Reform of Social Security". The

  339
  impact of rents and rates on the most needy households was understood by the independent review team, which said:
  "100 per cent. help with housing costs for those on the lowest income is the only fair way of meeting their needs within the present vagaries of the housing market."
  The Government accepted that point when it came to rents but they certainly did not do so with respect to rates. The Green Paper states:
  "The Government's view is that, while domestic rates continue to be a significant element of local authority spending, every household should be required to make some contribution towards them."
  The Green Paper suggests that every supplementary benefit claimant should meet about 20 per cent. of his rates bills. We have been given no sign that that additional burden on supplementary benefit claimants will be compensated by an equivalent increase in their income support scales. Even if that were done, the compensating help would be given only on a rough averaging basis. It would certainly leave many supplementary benefit recipients with higher than average rates and paying out more in rates than they receive in supplementary benefit. That must mean that they will face the risk of debts and hardship.
  Hon. Members on both sides of the House have frequently commented on the fact that the burden of rates falls most harshly on single pensioner households. We all have examples in our constituencies of single pensioners—often widows—living in a home on their own and paying exactly the same rates as the better-off family next door which has more than one breadwinner. That unfairness will become harsher if the Government persist in extending it to those pensioners who now receive 100 per cent. rate rebates. We are talking about substantial numbers of pensioners. The Association of Metropolitan Authorities estimates that in London and the metropolitan areas alone 1 million pensioners in households qualify for 100 per cent. rate rebates.
  The policy of imposing part of the rates burden on supplementary benefit recipients also has implications for families in which the parents are in low-paid jobs or are unemployed. There is a large number of such people. In inner London, one child in four comes from a family that is dependent upon supplementary benefit. In other metropolitan areas, such as Manchester and Liverpool, the figure is as high as three children in every 10.
  The Government argue that there is a case for placing this element of responsibility for rates on individual consumers, irrespective of their income, in order to increase the accountability of local government. The independent review team rejected that argument, saying:
  "there is little evidence to suggest that low-income households have any real control over their housing costs."
  Many hon. Members know from practical experience that few tenants distinguish between the rates element in what they pay in rent and all other charges that go to make up the total. The Government's approach will mean more hardship if people must meet that rate element irrespective of their income.
  Another aspect of the Green Paper will involve additional hardship. This is the proposal to combine the rent and rate assessment for housing benefit in one taper. This is bound to hit owner-occupiers particularly hard when they have only their rates bills to pay. Their benefit
  340
  will be withdrawn at a much steeper rate than has been the case in the past. This will be a problem for about 1·5 million owner-occupiers, most of them pensioners. They are the sort of thrifty people who have provided for themselves throughout their working lives. They will now find themselves hit hard by the new approach of the Government.
  The London Housing Aid Centre's analysis suggests that the rate rebate proposals alone will mean cuts in benefit for perhaps 5 million recipients. Worse still, many people will totally lose their housing benefit. The review team suggested that there would be a 15 per cent. cut in the housing benefit caseload. That implies 1 million people being taken totally out of the housing benefit system. Other estimates have suggested that as many as 1·8 million claimants will lose housing benefit altogether.
  That is an insensitive approach to the problem and it demonstrates again the Conservatives' lack of concern to share burdens in a reasonable way, as we have seen in many of their policies in the last six years. For that reason, all alliance Members will unite in voting for the Labour motion and against the Government on this issue.
  6.32 pm
  Sir John Page: I have always been a believer in thought transference. It was therefore particularly pleasing when the Chief Secretary returned to the Chamber, having received through the means of extra-sensory perception the news that I was about to speak.
  I congratulate my right hon. and learned Friend on his excellent tour de force, putting succinctly all the facts of real life, includig the way in which people suffered under previous Labour rule — something that often gets forgotten. At my request my right hon. and learned Friend repeated one of his bon mots, and tomorrow I shall tear from Hansard the pages on which appear his speech and keep them, if not next to my heart, in my notebook, because they will provide useful ammunition.
  Having given my right hon. and learned Friend that bouquet, he will be less attracted to me when I tell him that I am supposed to be leaving right now, accompanied by my hon. and recently knighted Friend the Member for Bury St. Edmunds (Sir E. Griffiths), to address several hundred people in my constituency. I hope that hon. Members will forgive me if I am not able to stay for long after my remarks, particularly as I shall ask a question and not be here to receive the answer.
  We have learnt something this evening of the Liberal party's policy on prices and incomes, and we have had a glimpse from Labour Members of their party's attitude towards a prices and incomes policy, although they gave us only a view through a chink in the door.
  My question to my right hon. and learned Friend is connected with charges by the nationalised industries. Can he explain why, when the Post Office controlled the telephones and wished to spend, say, £500 million on new capital investment, it might have been difficult for permission to be given for that money to be spent? Indeed, the Post Office might have been told to defer that investment. However, if British Telecom wants to invest, say, £500 million on identical equipment, there is nothing to stop it from doing that. Indeed, it is all virtue. I have always been mystified, as a small business man, by the way in which the Government do not seem to separate capital and revenue expenditure. I had hoped that a change in that attitude would occur.

  341
  I should at this stage declare an interest, being a director of a water company. I make that declaration because I wish to discuss water charges and possible reorganisation of the industry. I have always taken the view that the water industry and other nationalised industries should, from revenue, save and make a greater contribution towards the capital investments that they wish to make.
  Government policy, recently announced, calling for the upping of the return on such investment is right, although the ground may not have been sufficiently prepared before the ideas involved in that policy were made known. I have not thought it right that with substantial, or even moderate, new capital investment, water authorities should be expected to borrow the money. That has been the tradition over the years. I speak on this issue for myself and not as a spokesman for the water companies or water authorities. Might not the simplest way of dealing with the issue be to introduce into the water authorities—not in one go, and not wholesale privatisation—arrangements to put them in a similar position to statutory companies, which the water companies now are? That would have a major advantage. They would, within the statutory limitations, be able to invest in the water industry and borrow money on the open market. By that means, they would not cause worry in respect of increasing the public sector borrowing requirement.
  Mr. Maxton: Will the hon. Gentleman give the House an assurance that he would not wish to see his proposal extended to Scotland, where we do not have water authorities? The water authority is the local regional council, elected by the people, and by that means the water is under the democratic control of the local authority.
  Sir John Page: I am grateful to the hon. Gentleman for that intervention. Having taken part in the Committee proceedings on the Water (Fluoridation) Bill, I now know more about the water industry in Scotland. My comments refer to the non-Scottish water companies, although if immense success resulted from a limited amount of private enterprise being injected into the water authorities, that might influence the people of Scotland to demand similar privileges and advantages for themselves.
  I make that suggestion as a contribution to the debate because I believe that a degree of private enterprise in the water industry would be of great advantage. However, in view of the monopolistic position in the supply of water, the same competitive edge does not exist to enable a new type of water authority or company, reorganised, to be competitive in its prices and services to the people.
  I congratulate my right hon. and learned Friend again and hope that the realities of modern life, about which the Government have been very successful in educating people, will continue to be reinforced and that further progress will be made in facing real problems in a real way.
  6.40 pm
  Mr. Austin Mitchell: I will not pursue what the hon. Member for Harrow, West (Sir J. Page) said, because I was hoping to give a few encouraging words to the Conservative wets whom I hoped would be speaking in order to put more pressure in their pipes and more holes in their spray. The wetness of the hon. Member for Harrow, West was professional only, so I will not follow up that argument. The Conservative
  342
  Members who have spoken have been the dries, dredged in by the Whips and provided with Central Office briefing sheets on the rate of inflation from 1974 to 1979 as compared with the rate of inflation since then.
  Mr. Maude: Will the hon. Gentleman inform the House how many hon. Members on the Labour Benches are not either Front Bench spokesmen or Whips?
  Mr. Mitchell: I am not, and I think that there are two of us.
  I welcome the motion because it does the important job of getting away from the world of abstractions, jargon and alphabet-soup letters with which we deal in this place—the PSBR, the M3, the MO, the PSL, all those bogeymen created by the City to frighten Governments and make them panic-stricken about abstractions — to the preoccupations of real people and what affects ordinary lives. That is the pressure of Government—enforced cost increases in the basic services provided by Government or local authorities—in other words, the kind of things that matter in Grimsby rather than those that matter in the City of London.
  On those basic matters, the Government's record in using prices particularly the prices of fuel, as a form of taxation, pressing heavier prices on ordinary people, as distinct from the tax burden on their friends which they have been so concerned to lighten in their six years in power, has been one of increasing misery, demonstrable in every item listed in the motion. The prescription charge increased massively after their Government denied in their 1979 manifesto that they would carry them through.
  They promptly increased the prescription charge, and it has increased again well ahead of the cost of inflation. This has placed a particular burden on those people at the margin who do not qualify for free prescriptions and who find them an oppressive burden. Rates are up 169 per cent. from 1978–79 to 1985–86, and 82 per cent. in real terms. This is a wholly unacceptable rate of increase. Nationalised industries' charges, in particular the basic fuel charges for gas and electricity, have gone up faster than the cost of living, because they have been used as a form of taxation. The test is whether they have gone up faster than the cost of living. On that test, the Government have been using them in that fashion. Council house rents, transport costs and water charges have increased substantially and are about to go up again, thanks to the change in policy.
  Hanging over it all are increased interest rates, and particularly mortgage rates, which are up 4 per cent. since the election. On an average mortgage of £20,000, £40 per month extra is paid by householders, not to the Government but to the financial community—the banks, the building societies and the interests of finance—because of the Government's curious illogical position that, to defeat inflation, prices and interest rates must go up.
  Those interest rates have become a cross on which not only British industry but British householders and the British population, including anyone buying anything on higher purchase, are being crucified. That applies particularly this year. That is a tax on every man, woman and child in the country for no purpose, strangling the economy and the household budget. All those increases are regressive tax increases. They are more painful to those who have less and who are therefore hit harder. They

  343
  are easily carried by the better-off sections of the community that the Government represent, but they hit severely the people that Labour Members represent, the middleman and the ordinary person.
  It is particularly insulting that the Government should be carrying through this shift in purchasing power and imposing such burdens on people, because they have given away in tax concessions, especially over capital taxation, to the better off section of society about £3,000 million every year, while imposing increased charges through this machinery on those least able to bear them. All this hurts the quality of life of the mass of people, making life meaner, harder, shabbier and more of a struggle. This is doubly sordid compared with the give-aways to one section of society, that small wealthy class which essentially the Tory party represents and which has benefited so lavishly from what the Government have done.
  One critique of the Government's performance, and perhaps a superficial one, is that all this is a confidence trick. In other words, the Government set out to cut taxes and, finding that they could not do it in the easy, glib way that they said they would, they decided to do it by optical illusion, by shifting burdens, by shifting deck chairs around on the Titanic, by increasing the charges of nationalised industries, by increasing indirect taxes and by putting up taxation. However, it would be superficial to make an attack on those grounds.
  At this stage, the increases in costs and interest rates represent something more significant. The Government have not achieved the real cut in taxes that they said they would achieve, and they have not effected a cut in interest rates. The Government said that their obsession with cutting public spending and increasing the charges of nationalised industries to hold down the public sector borrowing requirement was dedicated to bringing down interest rates. Real interest rates currently are, I think, the highest since the war. They are certainly at record levels and much higher than the interest rates of our major industrial competitors. Thus, the Government have not achieved the objective of their policy.
  These increased costs and interest rates are a symptom of the total failure of the economic policies on which the Government were elected—a failure which, to be fair, the Opposition pointed out from the start. We said that the policies would never work, but perhaps the country has to experience the pain and agony before the lesson comes home. Perhaps we have to have this tragic experience, in which, because of the failure of the Government's policies, what are now blithely called blips are becoming a way of life. There is a blip in the figures every month. The Minister assures us that it is abnormal and that things will soon be back on course, but the trend in inflation, interest rates and unemployment is ever upward despite the hope that these are just blips.
  The light at the end of the tunnel that Ministers have been glimpsing now for four years, as is rapidly becoming clear, is the light of an approaching train. There is no light at the end of the tunnel in which the awaited downturns in these atrocious figures become consistent upturns. The Government clearly have been and are pursuing a mirage which they will never grasp and which will never materialise. This failure will result in the end of the Government. They may have two or three years in which
  344
  to hang on to power but, because their policies have failed, there must be three years of a downhill run in which there is now no possibility of turning round. The only way to get out of the trap and the mess is to change the policies, but the Government have made a virtue of never changing and not turning round. The only way out is to turn round, and if they will not turn round, it will be a downhill run for them and the country.
  There is now no possibility of pulling rabbits out of a hat. Tragically, nobody can take the Prime Minister—who has imposed these policies on the country and her Cabinet—by the elbow and say, "Enough is enough, we have to change and turn round, as Mr. Macmillan did in 1962, if the Government are to be saved." A change is unlikely to save them, but even if it could, it is impossible because of the domination of this overwomanned Government by the prejudice of the Prime Minister.
  There is no way out for the Government, although it is clear that all the holes into which they are stumbling—the holes of poll taxes rather than rates, of SERPS and of the abolition of the metropolitan counties — have all been dug by one person in the Government. They can get out of them by the elimination of that one person, but there is nobody man enough to move in that direction, so I shall not pursue the argument. That is the reality of the trap in which the Government are stuck.
  The strategies on which the Government came in—monetarism and incentive — have failed. They could never work, because the Government were essentially imposing not a considered, worked-out philosophy that had a prospect of changing the country's fortunes, but a morality. Under the guise of that philosophy, the Government were imposing a morality, a discipline, a tightening and toughening of the restraints. They were proposing a massive deflation through the over-valued pound.
  The Government talked about sound money. It is appropriate that the Prime Minister should talk about sound money because she has more of it than most people, so its soundness is more important to her than to other sections of the community. What they were talking about was an over-valued sterling that strangled British industry, reduced our share of world trade and financed a flood of imports to destroy jobs.
  As soon as a Government become obsessed not with the real economy — jobs, growth, manufacturing, exports, expansion and survival in a competitive world — but with the abstractions of the PSBR, M3 or whatever it has changed to lately—I gather that it is MO and that the Government are controlling MO because it represents only banknotes and banknotes are being taken out of circulation or are falling to pieces, so MO has come down, which is the Government's one success in their money supply policy—and manage the economy so as to control those abstractions, they inflict ruin and damage on the real economy, jobs and unemployment. That is what they have done with the massive deflation and high interest rates to achieve those targets. That is the opposite of what was necessary, and that is what has produced these increased charges.
  The only way to cut the burden of taxation, to ease the burden of welfare and to allow the economy to carry the burden of public spending is to expand the economy—making it grow, getting more jobs, and making our industry more competitive and able to survive in the world. That is the real economy of jobs and exporting.

  345
  By growing, I do not mean the faltering growth of the past couple of years, which is really a bounce back from the extent of the deflation inflicted on the economy in 1980–81, or being dragged along as we have been in the wake of the American recovery. I mean a recovery stimulated and primed in this country. The Government have done the opposite, and all else follows from that.
  It is true that, when the Chancellor took over after the last general election, he saw a way out. That was to pretend that the pound was not important and he had no exchange rate target, and then to let the pound go down — in other words, to walk backwards towards growth while pretending to do something else. He did that behind the Prime Minister's back—he had to do so, because she is obsessed with the exchange rate against the dollar and wants it to be the same when she goes out as it was when she came in, although it will not happen.
  At the same time, the Chancellor was running an accommodating money supply by subterfuge — by gobbling up commercial bills and by overfunding so as to keep down M3. He was doing both those things until January this year, when the market sussed him out. It realised what he was doing and the consequences of it in their financial terms. At that point, the Prime Minister intervened. She could not face parity with the dollar. She intervened, interest rates were jacked up massively and the pound subsequently went up.
  The increase in the value of the pound has tightened the noose around the neck of the British economy once again. The noose, which was easing, has been tied on increasingly hard. The increased value of the pound will not only make life more difficult for us in the American market, where we are still quite competitive, but will make it excruciatingly, agonisingly more difficult for us in the European market, which the Government say is so important to us. In January, the pound was still over-valued in real terms against the deutschmark. Compared to the last quarter of 1976, it was over-valued by about 40 per cent. The fact that it has appreciated against the deutschmark, the yen, the franc and the lira since then will make it far more difficult for us to survive in a market in which we were already running a horrendous deficit in manufactured trade.
  The Government are trapped because they cannot make the economy more competitive unless they get the pound down, but they cannot get the pound down, against the European currencies in particular, because they fear that that will increase the rate of inflation, which is already rising, and because the Prime Minister is obsessed with exchange rates. At the same time, they must get the economy more competitive because our unit labour costs are rising more rapidly than those of any of our competitors.
  Effectively the Government are trapped, and with them the British economy. With that trap, the brave experiment ends. It means the end of the line for the experiment. It means a long dying whimper at the whim of the bankers for the Government and the country. Everything else that we are debating today follows from the trap in which they are now. It follows that nationalised industry charges must be increased, as they have been, and the increases will go on because the Government need to raise more taxation. They will not do that, because they are obsessed with tax cuts, so they will increase charges. It follows that the flogging off of nationalised assets that belong to all of us will have to go on at the kind of ludicrous prices with the
  346
  ludicrous commissions that the Government have been giving away over the past few years, simply so that the Government can survive financially. That is not prudence, wisdom or competitiveness. There is no change if one flogs a public monopoly off to make it a private monopoly. There has been no increase in competition.
  The cuts in welfare implicit in the Green Paper published two weeks ago will be massive, because the Government are trying to finance an increasing burden of expenditure to cope with increasing unemployment on a shrinking productive base, and that cannot be done. Unless we expand the production base, we cannot finance the increasing burden of unemployment. One could solve two problems by expanding the base and bringing down unemployment, but the Government will not do that because they are trapped.
  The cuts that must still come this year will have to be heavy. Despite the Chancellor's apparent finality, the Government are now embarked on a programme of cuts that will cause agony for Tory Back Benchers and for the country. Believe it or not, the right hon. and learned Member for Dover (Mr. Rees) will be disposed of because he is too kind-hearted and nice to carry through the necessary cuts. The Whitelaw star chamber will have to be beefed up and given more muscle. It will have a jamboree.
  Mr. Maxton: I go along most of the way with my hon. Friend, but I just cannot believe what he has said about the Chief Secretary to the Treasury.
  Mr. Mitchell: No more will we hear those merry quips and japes in the Finance Bill Committee, no longer will we hear the friendly kindly remark from the sober-minded right hon. and learned Member for Dover because he is too kind to carry through the excruciating cuts that are now necessary.
  I think Woodrow Wilson said that the essence of conservatism was to say nothing and to ask one's grandfather. The essence of the Government's policy is to say nothing, do nothing and axe one's grandmother. That is the scale of the cuts. The Government have been pursuing these policies for six years. It is all very well for Conservative Members to ask what the Labour party would do, and to go on about the horrendous inflation of 1974, but these policies have been applied for six years. When shall we see the rewards? When will we see what the Government said the policies would produce? When will we see the lower interest rates to which all the cuts in the PSBR have been dedicated? When will we see the lower unemployment, which was implicit in the promises made in 1979? When will we see inflation vanishing, in the way in which the Chancellor had been describing? If inflation were completely eliminated, what would bring growth? Growth does not merely spring like a phoenix from ashes. Inflation does not abate automatically; the abatement must be generated, pumps must be primed, and money must be spent. There is nothing in a zero inflation figure which will bring growth.
  When will we see a lower inflation figure, and the revival of our economy and manufacturing industry? When will our share of world trade increase, and replace the long whimpering decrease which has occurred every year since the Government came to office? A share already too low has been whittled away by the destructive policies of the Government. We shall not see those aims, becasue

  347
  the reverse is happening. Inflation is increasing, interest rates are at record levels, unemployment continues to rise and manufacturing continues to suffer. What can stop that? What can the policies deliver?
  In economics, virtue, discipline and morality are not rewarded. It is not merely a question of chanting slogans about sound money and doing nothing, but of investing, encouraging, stimulating, spending and competing for expansion and growth, yet the Government are not doing that. They are only inflicting pain and discipline on us. Economics is not for a Sunday school. We live in a hard cold world, and the Government have harmed the real economy of the country.
  It is no use talking about small businesses replacing the massive job losses in big business, unless the Government provide the climate and framework for expansion, the stimuli, and low interest rates for small businesses to flourish. The Government's policies can never work. They could not have worked, and we warned the Government of that from the start. These policies have been a long tragedy for the country.
  The Government came to office desperate for power, and the Prime Minister was blinkered by her prejudices. The essence of the Government's strategy in 1979 was: "If only people would be more like the Prime Minister, all would be well." The Government were so blinkered that they did not see that they were defending, in terms of incentives, PSBR cuts, and lower inflation, policies which directly favoured the Prime Minister and her friends, and which placed the sacrifices, inevitable in the depression that the policies generated, on the section of society least able to bear it—the poor, the old, and the ordinary. They are all suffering under the charges which we are lamenting today. They have the rough end of the stick and must pay the increased bus fares, rents and gas, electricity, rates and prescription charges. Life for those people has become more of a struggle, meaner, shabbier and more bitter. That is the Government's final crime against our people.
  The essence of the Government's achievement has been to make our country shabbier and meaner, and to set us on a course different from that of the rest of the world—from the wealthy European Community countries, expanding America, and growing Japan. Ours is a unique case of self-inflicted agony and decline, with the sacrifices of that decline placed on those that cannot bear them. The sacrifices are carried by the poor, those who carry the burden of interest rates and the mass of the people. That is what the Government have achieved in their six years.
  Now we are witnessing one of those rare and massive changes in the mood of the country which occur in British politics when our people begin to realise what the Government's prejudices, follies, simple ignorance and sheer wrong-headedness are doing to our economy. The tide is turning, as it did between 1961 and 1964. Although the Government have two years, that change in mood makes them irrelevant, out of date and out of court. Those who bear the sacrifices, who see that society has not improved as they wish, and that the Thatcher follies have failed, will throw out the Government in two or three years' time. The Government will probably stay on until the bitter end, and the end will be bitter. That mood is building up and is irresistible.
  348
  Disraeli attacked Gladstone's Government as a range of exhausted volcanoes, but the present Government were never big enough, nor had enough fire in their bellies to be volcanoes. We are seeing a row of squeezed pimples and boils on the body politic of the Government Front Bench, whose evil pus has been squeezed by what they have done to our society. That is what the Government are. That is their level, and size. The British people realise what has been done and how horrendous the Government's mistake has been. There is no chance now that the Government will change, but the people will take their revenge because they have been betrayed and because the sacrifices made necessary by that betrayal have been placed on their backs.
  7.7 pm
  Mr. Francis Maude: I am a comparatively new Member, having been here for just over two years. I had a slight advantage in knowing a little about the House before I came. I had always thought that a good day was an Opposition Supply day because that was when the Opposition carefully selected their subject and the Government had their back to the wall and were indicted. I thought that today of all days would be such a day because the Opposition, in their wisdom, had chosen to debate prices and to take on the Government on the Government's ground. I expected to hear high drama today.
  I came into the Chamber at about 3.30 and heard the speech of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). I am a stranger to the usual channels that operate in the House, and I do not know, nor wish to know, anything about the way in which the Opposition choose their subject. It seemed that the speaker had been chosen, rather than the topic. The Leader of the Opposition had his day yesterday, and presumably today it was to be the Deputy Leader. I suppose that he was thought to know something about prices as he had been responsible for them for three years, and I thought that I might have a chance to inform myself and to end up knowing a little more about prices. I came and listened, but I am none the wiser.
  Today we have had not high drama, but a remarkably serene debate, until the hon. Member for Great Grimsby (Mr. Mitchell) rose to his feet. We then heard a great deal of hot air. However, I suppose that when talking about energy prices hot air is appropriate.
  Mr. Norman Hogg: The hon. Gentleman has spent the opening minutes of his speech lecturing us on how this is not turning out to be a great day. He could do us a favour and make a great speech and make our day.
  Mr. Maude: I am grateful to the hon. Gentleman for his encouragement. I shall do my humble best.
  I had hoped that there would be a lifting of the veil by the Opposition. They have spent a great deal of time telling us that they will form the next Government. I thought that we were heading towards the time when we might be told a little more about what they are proposing. Are they a party of price controls? Do they favour a statutory price control policy? As part of that, do they favour a statutory wages policy? These are matters on which the right hon. Member for Sparkbrook has been delphic, to put it kindly. He did not lift the veil.

  349
  The motion mainly concerns price increases imposed by nationalised industries. That is something into which politicians have delved far too often. Governments inevitably have to delve into that matter, and I suppose that where Governments delve, Parliaments must follow. It is a difficult subject. Let no one pretend that any Government of any party have ever found it easy.
  We maintain the fiction that there is an arm's-length relationship between the Government and nationalised industries, that the Government set the targets and that the nationalised industries simply continue to operate in a commercial way to meet the targets and to render to the consumer the services which they are statutorily bound to render. But how are the Government to determine, in so far as they have the power, the pricing policies of nationalised industries? I understand that there has been a certain amount of consensus on that point. My right hon. and learned Friend the Chief Secretary quoted at some length from the energy policy Green Paper produced by the right hon. Member for Chesterfield (Mr. Benn) in 1978, which said:
  "It should be the aim of nationalised industries to secure something in the region of a 5 per cent. return on capital."
  That 5 per cent. is calculated on the same basis as that on which the Government operate today — a current-cost basis. Not many nationalised industries manage that. I understand that the Government operate the same broad principle, that they set their targets in terms of a return on capital. It does not matter what the percentage is, it is the broad principle of setting a target for a term.
  Nationalised industries are not, and never can be, subject to ordinary commercial pressures, especially when they operate, as most of them do, as monopolies. I do not know whether 5 per cent., or 1·5 per cent. for the water authorities, or 2·75 per cent. for electricity, or 4 per cent. for gas, are the right returns, because I am a politician, not a business man. If I had wanted to meddle with the running of a nationalised industry, I would have gone into that business rather than into politics. That is one of the ghastly problems with the whole range of nationalised industries. We take them into the public sector and they end up being meddled with by politicians.
  Mr. Kevin Barron: Will the hon. Gentleman comment on the Government's gas levy, which is being forced on the British Gas Corporation? Last year the Government raised the sum, directly from consumers of gas, of £522 million. That is a direct energy cost put on by politicians. How does that policy align itself with the hon. Gentleman's remarks?
  Mr. Maude: The hon. Gentleman's point supports my case. When an industry is taken into the public sector it is subject to Government control, and politicians will meddle. Nationalised industries are a tempting source for politicians to meddle with. They are a little bag of goodies, and who can blame politicians if they dip their hands into it? I want politicians to get out of business and industry and leave them to operate in the private sector where they belong.
  Mr. Robert B. Jones: Will my hon. Friend reflect on the fact that there is not necessarily an equation between setting a target for a contribution to the Exchequer from an industry and the price level imposed by that industry? For example, the British Gas Corporation reached an agreement with its unions in 1973
  350
  that it would phase out the use of private sector contractors for the laying of small-scale pipelines, irrespective of whether that was efficient. That is still happening. There is no great drive for efficiency in the BGC along the lines that would keep down prices while making a contribution to the Exchequer.
  Mr. Maude: My hon. Friend makes a valid point. When a utility or an industry remains in the public sector, it is not subject to proper competitive pressures. Even within a natural monopoly there are many ways to introduce competition. The first step towards that must be to remove the utilities from the public sector and return them to the private sector where they belong.
  I have one point of agreement with the hon. Member for Great Grimsby, who I know is a compassionate and even fanatical follower of competition. He said that if we transferred a monopoly into the private sector we would often not be better off. I think that we would be a little better off, but not as better off as we could be. I am concerned about the Government's intention to transfer British Gas en bloc to the private sector. I would rather it was broken up so that some limited competition could be introduced into the system.
  If we start—as I hope we will before too long—to talk about selling the water authorities to the private sector, I hope that we can obtain a competitive framework. One possibility would be to lease the capital utilities to someone prepared to bid for them, someone prepared to contract to operate the industry in an area for, say, five years at a given charge to the customer. The customer would know where he was and the operator would be subject to competitive pressure, because he would know that in five years other people would bid against him. That is one way to obtain a proper competitive pressure in the system in order to protect the rights of the consumer.
  Mr. Robert B. Jones: Is my hon. Friend aware that that is precisely what happens in France, where nearly half the water supply is provided by private contractors operating the plants on behalf of local authorities of all political persuasions, including Communist?
  Mr. Maude: Once again I am grateful for my hon. Friend's deep and wide knowledge of this subject. It is an eminently practical solution to a problem which needs addressing in the near future.
  I want to discuss the way in which electricity prices have operated. There is always a temptation for politicians to meddle with the pricing processes of nationalised industries. That has not always been beneficent, but almost always the opposite. Mention has been made of the way in which the last Government manipulated gas prices, perhaps to try to buy support by artificially holding down the price of gas to the domestic consumer and artificially increasing it to the industrial consumer. There was the inevitable consequence of the loss of jobs in those industries affected by artificially high energy costs.
  The Opposition were unwise enough to include electricity prices in their indictment of the Government. I make no apology for reiteraing a point that has been made. It is a commonplace, but that does not stop its being true. Under the last Labour Government electricity prices rose by 2 per cent. every six weeks. Under this Government they have risen by 2 per cent. over the last three years. That is a good record for the Government.

  351
  There is one way in which electricity prices could be reduced. Of the fuel used to generate electricity, 75 per cent. comes from the National Coal Board.
  Mr. Barron: It is 80 per cent.
  Mr. Maude: The hon. Gentleman says that it is 80 per cent. I bow to his superior knowledge. As a proportion I expect it to diminish slightly, although the CEGB will continue to buy the same bulk volume from the National Coal Board. The CEGB could buy that coal more cheaply elsewhere. There is nothing magic about British coal that makes it perfectly suited to generating electricity in Britain. Much of the coal used by the CEGB could be bought more cheaply elsewhere. It is not even as though the NCB is making a profit by selling the coal at a high price. Electricity prices could be reduced if there were a reduction in the price of coal.
  I represent a coal mining constituency and 4,000 coal miners. I also represent some 50,000 consumers of electricity. There is a strong connection between the two. It is often the same people in the Opposition who in one breath complain about high electricity charges and the damage that they are doing—in high-flown phrases the hon. Member for Great Grimsby referred to the Conservative party putting the boot in on pensioners and those least able to pay — yet in other circumstances complain about pit closures and moving from high-cost pits in the coal industry to low-cost capacity. They should be able to see that the two are directly related. It is only by getting out of the old high-cost coal mines and into low-cost mines that we can begin to get the cost of coal down, and hence reduce the cost of electricity.
  The motion that we are debating in this serene fashion covers a wide range. I have touched on only one or two aspects. When the Opposition have a chance for calm reflection, I think that they will come to the conclusion that they have chosen badly today. They have tried to take on the Government on the Government's favourite ground. A cursory examination will show that when the Labour party was in government it had a bad record on prices. The record of this Government is not perfect; no one can pretend that. Inflation at 7 per cent. is far too high, but it is worth repeating that it is a lot lower than the figure for the lowest month under the last Labour Government. This may be the last debate on this subject in Opposition time. It would serve the Opposition well to call it a day on this one.
  7.24 pm
  Mr. Kevin Barron: I am tempted to ask the hon. Member for Warwickshire, North (Mr. Maude), as I am also a relatively new Member, about a colliery in his constituency. At the time when he and I dealt in Committee with the Coal Industry Act 1983, that colliery, according to the report of the Monopolies and Mergers Commission, was making a loss. Has the hon. Gentleman checked whether it is now making a profit?
  Mr. Maude: The two large capacity coal mines in my constituency are making good profits. Two are making small losses. Everyone in the coal industry in Warwickshire knows that in not many years' time the two loss-making collieries will close. There is no secret about that. In one pit village there have been rumours for 60
  352
  years that the pit would close the following year. It probably will close within the next few years. There is nothing dreadful about that. The people there do not regard it as the end of the world.
  Mr. Barron: I am glad that the hon. Gentleman has said that. I should be pleased to have his support for keeping uneconomic collieries open because of the consequences to the communities and the need for employment opportunities in that area.
  What the hon. Gentleman said does not ring true if we consider the rising cost of energy. About 80 per cent. of electricity generation is done by coal bought in this country. Yet in 1983–84 the CEGB still made a profit of £623 million. In those circumstances, it should remain a public corporation. It should keep in balance and not be a burden on the public sector, but that does not mean that it should make profits of £623 million.
  In the same year the British Gas Corporation made a profit of £668 million. Most of that profit comes directly from consumers, although the British Gas Corporation can make some revenue by providing services in the private sector. Last year there was a gas levy of £522 million.
  The profits of the energy undertakings must be set against the 92,000 cut-offs of electricity in domestic households that took place from December 1983 to December 1984. In over 4 per cent. of those cases the householders were pensioners. We are talking about 4,000 pensioners' homes which may have the energy supply cut off because the householders cannot afford to pay the bills.
  In many cases the standing charges are a burden. It is an absolute scandal that both the gas and electricity undertakings can make such huge profits while making high standing charges. Until five years ago many householders did not have to live on state benefits and were not classified as being on the poverty line. One of the major growth areas in the last five years has been the number of households that have to rely on state benefits.
  The Labour party has been saying consistently that when the energy undertakings are making such high profits, standing charges are too high. Pensioners and people on low incomes should not be under threat. I am sure that at some time every hon. Member has been approached by someone who was under threat of having the gas or electricity supply to his house disconnected. I have many times, and I have not been a Member of Parliament long. Only this week I tried to help a constituent, who is now unemployed and was about to have his supply disconnected. The Government must stop interfering by forcing levies on consumers. They should recognise that they are merely creating more upset in homes that can do without the pressures of present energy charges.
  Mr. Maude: Bearing in mind his objection to their profits, where does the hon. Gentleman suggest that new investment in the gas and electricity industries should come from?
  Mr. Barron: I am talking about profits over and above what is being invested. I could go on at length about the British Gas Corporation, but I shall save it until about November when we shall debate the matter in great detail. We should consider how the British Gas Corporation has been attacked in the past five years and has been stopped by the Government from going into areas where it could have earned more revenue to invest.

  353
  Rising energy costs have been made worse by many of the Government's actions, not least the 1984 Budget which put VAT on building alterations and central heating equipment. That was disgraceful. There have been indirect increases in the prices of petroleum products. In May 1979, 44·8 per cent., or 39·9p, of the price of a gallon of petrol was tax. In January this year, 54·3 per cent., 102·6p, of the price of a gallon of petrol was tax. That was an increase of more than 9 per cent. The price of derv affects public transport and the moving of food, and hence food prices. The tax on a gallon of derv has increased 3 per cent. since 1979. That is another example of the Government increasing prices when they should have been lowered.
  Worse, there have been increased charges in the National Health Service. Prescription charges £2 as from 1 April. On 25 April 1979, the Prime Minister said that the Government had no intention of increasing prescription charges. They have increased by about 1,000 per cent. since she said that. It is easy to say that 75 per cent. of prescriptions are exempt from charges, but many people have difficulty getting exemption certificates. I recently came across a person who is £1·21 short of getting exemption. He was told that if he collected the five prescriptions that he gets each month in one week, there would be no problem and he could claim the money back. He has had those prescriptions for years, but getting £10 together in one week is extremely difficult for somebody who has lived on state benefit since coming out of the armed forces.
  Dental charges also increased earlier this year, and they particularly affect people on low incomes. The matter did not get much debate in the House, although it deserved more than the increase in prescription charges because 90 per cent. of people who need treatment after a free inspection pay the full basic amount, which has increased to £17. The costs of crowns, inlays and bridges—an expanding area of dental treatments — have also increased between 6 and 10 per cent. That is substantially higher than the rate of inflation, although inflation is now higher than when the increase was announced.
  Since 1979, there has been a massive increase in council house rents. Nobody can deny that the increase was started by the Secretary of State for the Environment. Whitehall has directly forced rents up. I never thought that I would experience that.
  The hon. Member for Warwickshire, North mentioned water rates. About five months ago, I received a memo from the Yorkshire water authority complaining about its being forced to increase water rates by 12 per cent. per annum for three years. That instruction came direct from Whitehall. People find it difficult to get rebates of water rates. It is disgraceful that Ministers should force up water rates when people are getting nothing like the same increase in income or state benefits.
  A worse example of shoving public sector prices up is the Government's ideological attack on local government and the rate support grant. They have forced local authorities to decide, for example, whether home help provision should remain, whether elderly people who live on their own must be left completely alone or whether home helps will have to charge. Local education authorities have been forced to increase the price of school meals or to do away with them altogether.
  My local authority, the Rotherham metropolitan borough council, has lost more than £24,000 in the last
  354
  five years through the attack on the rate support grant. That money has had to be found by ratepayers and by cutting back services and losing some council jobs. It does not help to see local authorities having to put up prices and make charges for services such as meals on wheels, which, by good housekeeping, they were formerly able to provide to people in need.
  In 1979 the Government laid great stress on the right of people in this country to be home-owners and the right of council house tenants to buy their own homes. I notice that they have not done so much shouting about private tenants having the right to buy their homes as well. However, they shouted again in 1983 about how they felt that the people of great Britain had the right to own their own homes.
  Mr. Maxton: My hon. Friend will remember that not only are they not shouting about private tenants having the right to buy — which, if they were true to their principles, they would give them—but, because of cuts in improvement grants, they have actually been forcing people out of private ownership and private rented tenancies into the public sector and therefore putting a greater burden on public sector housing.
  Mr. Barron: That is quite true.
  I want to recall what has happened since the 1983 election and the increase in the mortgage interest rate. The mortgage interest rate in this country at the present time is 6 per cent. higher than in the countries that we normally term our main competitors, such as America and West Germany. The Government, who claim to be the friends of people who want to own their own homes, have failed miserably to keep down interest rates and to protect the interests of the many people whom they encouraged to take on mortgages.
  An average mortgage of £20,000 means a payment for every 1 per cent. increase in the mortgage interest rare of an extra £10 a month. So a person with an average mortgage since the last general election, when I came into the House, is paying an extra £40 a month.
  That will go on record as one of the major ways in which the Government failed to honour their commitments as far as home ownership is concerned. I have not checked the figures recently, but I have done so over the past two years, and they reveal that the number of people who are having to surrender their mortgages and lose the houses that at one time were sold by public bodies, such as the National Coal Board or local authorities, is constantly growing.
  If the Government fail to take action to stop the rapid rise in mortgage interest rates, they will get everything that they deserve at the next general election, because people who voted for them and their ideological slogans about home ownership will find that they have been led up the garden path and put into the hands of the moneylenders—the friends of Conservative Members.
  7.43 pm
  Mr. Patrick Nicholls: If the debate has not shed very much light on the subject, we have at least learned one thing—that it is going to be the Labour party's policy when they fight the next election to choose those areas in which it has been most signally unsuccessful and then have the nerve to attack the Government for the successes that have achieved in those fields. We can

  355
  sympathise with the Labour party in this, because if they had to debate a motion like this tonight on their own successes in office they would never get the thing off the ground.
  The hon. Member for Rother Valley (Mr. Barron), in a spirited speech, went through a number of points, trying to suggest that it was the Labour party which had something to offer the electorate. To hear a member of the Labour party proclaiming himself the champion of the home owner and those who are struggling to pay their mortgages is quite incredible. One only has to think of the proposals made recently by the hon. Member for Oldham, West (Mr. Meacher), which were going to take away income tax relief for those who have mortgages—although when the implications of that were realised by his colleagues, they quickly shut him up. But that showed as nothing else could what the real attitude of the Labour party is to income tax relief for house owners. We saw an element of it also in 1983, when one of the last acts of the Labour Opposition before the last election was to ensure that the Government's Budget proposals for increasing the amount of income tax relief for those with mortgages were blocked.
  The hon. Gentleman talked about council houses and tried to suggest that there was something dishonourable, or not very praiseworthy, in the Conservative party's attitude to them. It must be borne in mind, however, that our legislation which enabled council tenants to buy their own homes has led to a massive increase in house ownership. I refer the hon. Member to a document which is still an excellent read—and indeed an excellent buy at 60p—entitled "The New Hope for Britain", to see what threats the Labour party had in store for those who purchased their council houses. If the hon. Gentleman wants to remind himself about that he need only look at page 23, the last paragraph in the left-hand column.
  Mr. Barron: The hon. Member has not said that householders were a lot better off under the last Labour Government than they are now. I understand from the press that my hon. Friend the Member for Oldham, West (Mr. Meacher) was talking about mortgage tax relief for people on salaries of £20,000 a year-plus. If that is true—I do not know if it is—would that not be correcting the massive imbalance in personal taxation since 1979, when this Government have been giving massive tax cuts to people with salaries of £20,000 a year-plus?
  Mr. Nicholls: If the hon. Gentleman wants to know what his hon. Friend had in mind, he had better ask him. It was clear to anyone who read his proposals that they represented a threat to the principle that a person is entitled to income tax relief if he is purchasing his own home.
  The hon. Member for Rother Valley chided the Government and cited the American experience. I wonder if he would want this Government to approach unemployment in the way in which it is approached in America — where, after six months, the rate of unemployment benefit, or the American equivalent, is reduced to such a level that if a person does not then take the work offered, he suffers real hardship, in a way that would not be countenanced in this country. That is one part of the American experience, but it is typical of the hon. Gentleman to choose one aspect of the American experience and ignore the things that go with it. If the hon.
  356
  Gentleman were standing up in the United States Congress tonight he would find his political views so far to the left of what he would be hearing there that he would not get a very good reception.
  The hon. Gentleman picked up the question of prescription charges. It really is remarkable to hear the Labour party now talking about the evils of prescription charges. They were first introduced—as I am sure the hon. Gentleman knows — by Hugh Gaitskell. The biggest increase ever was in 1969 under a Labour Government. The hon. Gentleman tried to brush aside the fact that 75 per cent. of the prescriptions are filled free. All those members of society that we would all agree should not have to pay prescription charges are exempted. From what the hon. Gentleman has said, one would expect him to approve of the way prescription charges are now applied, because those who cannot afford it do not pay them and those who can afford it do. We see that approach everywhere we look—both in the motion and in what has been said in the debate.
  The Labour party now claims to be the champion of the old-age pensioner, but it has forgotten that it was the party which was so stuck for cash that it had to abolish the Christmas bonus. It has forgotten that it was the party which changed from the historic method of assessing pensions to the forecasting method. That was not designed to help the pensioner, because in due course Mrs. Barbara Castle pointed out in her memoirs that it was done purely and simply to save money. In fact, she described it as "dishonourable".
  The last Labour Government introduced legislation to link the rise in old-age pensions to earnings rather than prices, but in three years out of five they had to get out of that legislation. When a former Labour Secretary of State for Social Services was chided for not taking the earnings link into account, he said, "Oh no. We had to take it into account, but there was no obligation on us to get it right." Wherever one looks, it is clear that it is in precisely those areas where the Labour party's record is worst that it has sought to attack us.
  At times it is extremely difficult to work out precisely what the Labour party is saying about prices in the public services. Is it saying that those prices should never go up? If one is seeking inspiration, or even some light relief, one can turn to the Labour party's manifesto at the last election, which said that, were it elected, it would freeze all council house rents for a year. Why a year? Why not nine months or 15 months? What would have happened in the meanwhile to the expenses that would have been borne by the taxpayer? What about the increased costs for repairs, maintenance and servicing of the debt? Where is the logic in saying, "We will freeze rents for a year."? What does that tell us about a sensible and responsible attitude to maintaining costs in public industry?
  Mr. Peter Pike: Does not the hon. Gentleman realise that we said that we would freeze rents for a year to give us sufficient time to work out the future of housing finance policy? Had we been elected, we could not have sorted that out in a matter of weeks. It would have taken a year. That was a sensible and fair proposal.
  Mr. Nicholls: I am prepared to accept that the hon. Gentleman thinks that that was the position, but the more accurate version of events was that that would be a good vote winner among the people to whom Labour was

  357
  supposed to appeal. The singling out of that one tiny point in overall housing policy and the offering of such an obvious and manifest bribe cannot bear any other interpretation.
  The only way in which to assess rising prices is to look at the rate of inflation. This debate has revolved around one central point that I put to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), which he did not address. Whatever one says about the current temporary increase in the rate of inflation, the fact remains that under the last Labour Government there was no month in which the rate of inflation was as low. We believe that it has now peaked, but given that that has been achieved without dividend, price or wage controls, one begins to have a framework in which one can assess what the Labour party has on offer and what we have on offer.
  The depressing thing is that there is nothing new in what the Labour party has said. Even worse, there is not the slightest sign that it has learned anything from its own history. That point has already been made several times and it will have to be made again, because the Labour party still does not realise it.
  We are being criticised for a rise in electricity prices of about 6 per cent. over three years, which contrasts with a rise under Labour of about 2 per cent. every six weeks. The Labour party may say, "Look what we achieved on gas prices." During the period of the last Labour Government there was a price reduction of about 19 per cent. for domestic gas users, but there was an increase of about 112 per cent. for commercial gas users. It ought to be self-evident that in the end one does not do the domestic consumer any good by selling him gas at a loss and by penalising industry which will inevitably pass that price increase back to the consumer.
  Even if one does not accept that argument, but believes in penalising the business user while letting the domestic user off lightly, it is clear that at the time the Labour party did not believe in it. Its Green Paper on energy policy, published when the right hon. Member for Chesterfield (Mr. Benn) was Secretary of State, clearly stated:
  "policies will be working under a severe handicap if price signals are not pointing in the same direction."
  Whatever one thinks of the principal argument, what can one say of a Labour party that adopted a policy in which it did not believe?
  To hear the Labour party talk about price rises in the nationalised industries, one would think that while it was in office such prices did not go up aggressively. But they did—telephone calls by 200 per cent., electricity prices by 163 per cent., rail fares by 153 per cent., domestic coal by 149 per cent., finished steel by 136 per cent., second-class postage by 133 per cent. and gas by 69 per cent. That is the reality of what the Labour party achieved when in office.
  Having listened to the entire speech of the right hon. Member for Sparkbrook, one still does not know what the Labour party now has on offer. One can gain an indication from the last Labour party manifesto, and when pressed in an intervention, the right hon. Gentleman to some extent gave the game away. Labour's manifesto — the longest suicide note in history—stated:
  "Give powers to a new Price Commission to investigate companies, monitor price increases and order price freezes and reductions … Take full account of these measures in the national economic assessment, to be agreed each year with the trade unions."
  358
  The national economic assessment is presumably the unworthy successor to the social contract, which was neither sociable nor contractual. It is also the worthy successor to the concordat, and it is not surprising that the Labour party has not referred to that. The dictionary definition of concordat is a composition made by a bankrupt with his creditors. That just about says everything there is to say about the way in which the last Labour Government conducted their arrangements.
  That is the profoundly depressing thing about the Labour party. To be fair to the alliance, it is at least prepared to admit the errors of its ways, although it is not prepared to do anything about them. The hon. Member for Woolwich (Mr. Cartwright) said that in an imperfect world prescription charges would have to be levied, yet he criticised our prescription charges even though they are lower than those which were levied when many of his hon. Friends held office in the last Labour Government. In a remote way there may be some hope for the alliance, but there is no hope at all for the Labour party, which has clearly shown that it is incapable of learning anything at all from its history.
  All it has offered are the same policies and remedies that have failed in the past, and there is not the slightest reason to think that they will ever succeed in the future. Labour Members need not take my word for that, because I am mindful of a good speech made at a party conference some years ago, when it was said:
  "We used to think that you could just spend your way out of recession and increase employment by cutting taxes and boosting government borrowing. I tell you in all candour that that option no longer exists; and that in so far as it ever did exist; it worked by injecting inflation into the economy. And each time that has happened, the average level of unemployment has risen. Higher inflation followed by higher unemployment. That is the history of the last 20 years."
  That speech was made by the last Labour Prime Minister, the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan).
  Mr. Barron: If the hon. Gentleman has only scorn to pour on the Labour manifesto and the Labour party conference, why has he spent the past 15 minutes using them to avoid having to defend the massive increases in public sector pricing since the Tory Government came to power?
  Mr. Nicholls: I have referred to the Labour manifesto because, since then, Labour Members with memories long enough to remember when Labour was in office and who still crave office have done their best to ensure that the public forget what was in their manifesto. In those circumstances, it is legitimate and honest to point out that, in so far as it has been possible to prise out of Labour Front Bench spokesmen what a future Labour Government would have in store, it is clear that they have learnt nothing whatever in the meantime. I make no apologies for quoting the words of the last Labour Prime Minister, because the sad fact is that the Labour party has moved on from the days when its senior statesmen recognised common sense when they saw it. The right hon. Member for Cardiff, South and Penarth was an example of that, but he is not here today.
  Because the Labour party has nothing new to offer, a Labour Government would mean more of the same. Not only the rich but the middle classes in the broadest sense of the term would be squeezed, as they always have been. The same old policies would mean the same old inflation

  359
  and the disabled, the poor, the sick and others on fixed incomes would suffer most as a result. The right hon. Member for Sparkbrook talks about squeezing the rich. That is all very well for him, for Labour party grandees and minor light essayists who are earning so much that they can afford to be squeezed and make a virtue of it and still have enough left over. The pity is that if we ignore people in that position and consider those in the real world, there is every reason to believe — and no reason to believe otherwise — that if a Labour Government come to power at the next election they will simply do what they have always done, and that is far too high a price to pay.
  8.2 pm
  Mr. John Maxton: I pay tribute to the Labour Government for many of the policies that they carried out, although I do not deny that I went on marches against public expenditure cuts when Labour was in power. Even if we had the same old policies, my constituents would offer up a great prayer of thanks that at least we had a Government who cared, with much lower unemployment rates and a far higher standard of public services than we have now. But we shall not have the same old policies. We shall have new policies.
  The hon. Member for Teignbridge (Mr. Nicholls) said that one of his interests or recreations is historical research.
  Mr. Barron: Hysterical?
  Mr. Maxton: No, historical. If the hon. Gentleman was a genuine student of history, he would know that the term "concordat" had a much wider meaning than that which he tried to give it. For instance, the use of the word in the history of the Roman Catholic Church is quite different from that suggested by the hon. Gentleman. I shall not, however, go any further down that historical road.
  It is true that many people do not pay the current exorbitant prescription charges, but the existence of these charges merely adds to the poverty trap. A man who gets a 10p pay rise may suddenly find that he has to pay the £2 charge for prescriptions for himself, his wife and his teenage children, so his 10p pay increase may cost him a great deal of money.
  Mr. Nicholls: Does that mean that the hon. Gentleman will support the social security Green Paper, which proposes that benefits should be based on net income rather than on gross income so that the poverty trap which the hon. Gentleman rightly describes will disappear?
  Mr. Maxton: On prescription charges, my answer is to get rid of them altogether and go back to a Health Service that is free at the point of use to all within it. That is the best way to organise the Health Service.
  The hon. Member for Teignbridge berated the Labour party for defending the old-age pensioners. If the Government had not excluded the earnings-related element from the pension increase calculations, pensioners would have £4 per week more than they now have. That action was taken by the Conservatives, not by the Labour Government.
  Mr. Nicholls: The Labour Government did not pay it.
  Mr. Barron: My hon. Friend should not take the hon. Member for Teignbridge (Mr. Nicholls) too seriously. The
  360
  hon. Gentleman suggested in his small contribution to the debate that 20p per prescription before the 1979 election was somehow a greater charge than £2 per item in 1985.
  Mr. Maxton: That is why I suggested that the hon. Gentleman's interest was in history rather than in mathematics.
  Talking of inflation, one or two things should be made clear. In this context, insufficient attention has been paid to unemployment. Conservative Members may ask what that has to do with inflation. The percentage rate is not the only measure of inflation. Inflation is about what people can buy with the money that they receive each week and whether they will be able to buy as much next week and in subsequent weeks. For the individual, the largest inflationary factor may be unemployment. If a person earns £190 per week, which I understand is the average household income, and pays £10 per week for electric light and heat, his electricity bill represents about 6 per cent. of his income. If he suddenly finds himself on £45 unemployment benefit or supplementary level he will still have to pay the electricity bill, but it will represent about 25 per cent. of his income. Indeed, the electricity bill is likely to be bigger because an unemployed person spends a great deal more time at home than a person who goes out to work. Unemployment thus creates inflation for the individual, and even Conservative Members cannot deny that the creation of unemployment has been part of the Government's economic policy.
  I am sorry that my hon. Friend the Member for Great Grimsby (Mr. Mitchell) is no longer present, as I have to disagree slightly with some of his comments. He referred to the failure of the Government's economic policy, and I think that he was probably right, but there are times when I am not so sure. The economy is not an end, but a means by which to obtain social and political ends. I am not convinced that the Government are not achieving their social and political aims, which are twofold.
  First, they want to create an ever better and more secure standard of living for the small wealthy class that gives them so much support. The Government have been extremely loyal to their most loyal supporters and have given them more or less what they want. They have given them higher incomes. I gather that the Government will be embarrassed when they release the details of the salaries of those in the upper echelons of the nationalised industries. It is probable that the report will reveal salary increases that are way above the general rate of the increase in earnings and the rate of inflation. I gather that the Government are delaying the publication of the report. It will be rather interesting to see what happens when it is published. However, the Government have satisfied the needs of their most loyal supporters. Secondly, the Government want employers to play their part in establishing a low-pay economy for the rest of the people. They want trade unions to be suppressed. They think that unemployment is a tool by which they can put down the unions.
  I am not convinced by the argument that we must be wary in thinking that the Government have failed to achieve their economic and political objectives, but there is something in it. I am not sure whether the Government will achieve exactly what they set out to do. Of course, in a democracy the people will get rid of them at the next general election.

  361
  The hon. Member for Teignbridge suggested that our consideration of inflation should be confined to the rate at which it is running. That is inaccurate. Our consideration of inflation should be much more sophisticated. First, the poorer someone is, the harder he will be hit by inflation. The prevailing rate of inflation will, in effect, be higher for those who are poor than for those who are rich. One of the anomalies of our society is that the poorer someone is the more likely he is to pay for the goods that he acquires. I have in mind those who are unemployed who live in large council house schemes and who do not have the ability to own a freezer or a motor car. Those who are in that position have to use the corner shop, where, on average, prices are much higher than in supermarkets. Such people cannot buy in bulk, so they have to shop daily. That means that they pay a higher price for everything that they purchase.
  Mr. Lewis Stevens: Is the hon. Gentleman aware that many supermarkets run buses so that people can be taken specifically to their supermarkets? This means that those who live out of town can shop at a supermarket.
  Mr. Maxton: I accept that there are some stores which operate buses, but they are few and far between. I know that most of those who live in a large housing scheme in my constituency do not use a supermarket bus. The bulk of them have to shop daily, and consequently have to pay higher prices for the goods that they purchase.
  Mr. Pike: Does my hon. Friend accept that when the Transport Bill is enacted many people who do not live on main and popular bus routes — I accept that those who live on or near such routes may benefit from the Bill—will be forced into the position that my hon. Friend is outlining? In other words, they will be forced to use more expensive shops as a result of Government legislation.
  Mr. Maxton: My hon. Friend makes a good point. The poor often have to pay higher prices for the goods that they buy. Secondly, a much larger percentage of their income is used to buy items which, to use an economic term, are inelastic. They spend a higher percentage of their income on the services provided by public utilities than do others within our society.
  Mr. Nichols: I hope that I shall not embarrass the hon. Gentleman too much by saying that I agree with everything that he has said about the effect of inflation on the poor and the vulnerable. Everything that he has said about that is absolutely right. However, he is presumably content that under the previous Labour Government inflation peaked at 25 per cent. Even now, when inflation is at a peak of 7 per cent., it is better than the rate achieved by the previous Labour Government at any time during their period in office. Given his compassion and concern, that is the problem to which he should be addressing himself.
  Mr. Maxton: The hon. Gentleman tends to forget that there was an inflation rate of 19 or 20 per cent. following the election of a Conservative Government in 1979. However, I do not necessarily blame all inflation on the Government who are in office. The two large increases in oil prices in 1974 and 1979 have been major causes of inflation over the past 15 years. That applies to Britain and to the world generally.
  I contend that housing costs for the poor are higher than for those who are wealthy. That can be said of electricity
  362
  and gas charges, and of the charges that are made for other forms of heating. The poor pay more for the use of public transport as a percentage of their income than do others. They cannot spend large sums in areas where, in part, the rate of inflation has been kept down. I am thinking of consumer durables such as television sets, video recorders, home computers and cameras. The same can be said of holidays abroad. The level of inflation in those areas is considerably lower than it is in basic foodstuffs. It is lower, too, than the self-imposed inflation that the Government have introduced to the public service sector. The Government have imposed inflation upon us, and especially upon those who can least support it. It is that element of their policy to which I object most strongly.
  It seems that I shall be the only Member representing a Scottish constituency to participate in the debate. The effect of inflation on energy costs — for example, gas and electricity charges — is greater in Scotland than in England, although I accept that the average energy cost per therm for gas and electricity tends to be lower in Scotland than in the rest of the United Kingdom. However, regard must be had to climatic conditions in Scotland. The same can be said of northern England. Climatic conditions become more unfavourable the further north one goes. This means that the energy burn over the year of someone living in Scotland is considerably greater than that of someone living in the south. For example, a person who lives in Glasgow spends 20 per cent. more on energy throughout the year than someone living in Bristol, and someone living in Aberdeen will spend 30 per cent. more.
  There are other differences. Basic foodstuffs in Scotland, especially in the west of Scotland, are higher in price than those in the rest of the United Kingdom. The price of such items in Scotland is even higher than in the south-east. When addressing ourselves to inflation we must give more consideration to these factors.
  The Government are implementing policies that are designed to increase the level of inflation. They are doing so deliberately and they disregard the problems that the people have to face. I have dealt with the problems of higher electricity, gas and transport charges as well as the problem of higher rents and rates.
  There are those who argue that many of the basic items in a household budget are paid for by the Government when unemployment strikes. The Fowler review, if its findings and recommendations are implemented, will make it harder for the poor to ensure that the basics in life are paid for by the Government. That will apply especially to housing benefit.
  One of the promises on which the Government came to power was that they would increase the difference in income between a man who worked and a man who was unemployed. I remember that promise being made at the 1979 general election. It is curious that the Government's policies are reducing the gap. Whenever there is an increase in bus fares, the man who has to buy a bus ticket to travel to work finds that the differential between himself and someone who is unemployed is decreasing, and not increasing. The unemployed person does not have to pay that bus fare. Thus, the Government are again reneging on that promise.
  I am sorry that my hon. Friend the Member for Leeds, Central (Mr. Fatchett) is not in the Chamber, because he pointed out that the average rise in local authority costs was 2 per cent., whereas the average rise in domestic rates was 9 per cent. Of course, he was talking as a Member of

  363
  Parliament for an English constituency. This year, the average domestic rate rise in Scotland is 16 per cent. That is the average. There are people who will pay 2·9 times more than before. I accept that the Government have agreed to a rebate on the proportion that is over three times the amount paid last time, but people will still have to pay enormous increases in their domestic rates.
  As in England, there is a teachers' pay dispute in Scotland. Teachers rightly feel that their salary increases have not kept pace with inflation. Indeed, I know of a senior teacher who is not far off retirement. He lives in a decent house in a decent area of Glasgow, but the salary increase of 3·5 per cent. which the Government are prepared to pay would not even cover the rise in his rates bill this year, let alone any other price increases. Most Conservative Members will not suffer greatly from price rises. The percentage of their incomes that is spent on Government-imposed increases in the public sector and in public services which are well above the level of inflation is minute compared with the percentage spent by the poor people of my constituency.
  For real people, the Government have made life more miserable by increasing unemployment and imposing cuts in public services. People live in public and private sector housing which is poorer than it was in 1979. The hon. Member for Teignbridge said that nothing more could be offered. Surely he is not trying to boast that the Government's economic policy has been good for the people of this country or that people are better off under this Government. The people of this country, and particularly my constituents, are poorer, live in worse housing, have poorer public services and face higher health costs than before. They are desperate to see the end of this Government. I assure the hon. Gentleman that the opinion polls in Scotland are right, and that Conservative Members will be looking for a shadow Secretary of State for Scotland from among the English constituencies after the next general election.
  8.23 pm
  Mr. Edward Leigh: It is a great pleasure to speak in the same debate as the hon. Members for Great Grimsby (Mr. Mitchell) and for Glasgow, Cathcart (Mr. Maxton), as I shall deal with some of the points with which they dealt.
  My constituency is, of course, nowhere near Cathcart, but is is within three or four miles of Great Grimsby. I often enjoy reading the comments of the hon. Member for Great Grimsby in the Grimsby Evening Telegraph. Indeed, seldom a day passes when that populist Member is not talking about the ordinary man—[Interruption.] I do not know whether he is popular. Hardly a day passes without him talking about the effect of the Government's policy on the ordinary man — a subject that he dwelt on at length today.
  The burden of the speeches of both hon. Members was that the Government are so blinded by their adherence to economic dogma and to concepts such as the PSBR, inflation and their "friends in the City"—as Opposition Members call them—that they are leading the country's economy to destruction. I think that the hon. Member for Cathcart said that the economy was not an end in itself but a means to an end. Of course I agree with that. We are concerned with concepts such as the PSBR, academic
  364
  though they may be, because such concepts directly affect the ordinary people of Grimsby and Gainsborough. They directly affect those ordinary people, because a high PSBR will lead to high interest rates and high inflation.
  It is strange that the motion, which I have read carefully, should deal with prices but fail to mention inflation. It is surely common sense that it is impossible to hold down prices if the Government have not succeeded in holding down inflation. I am sorry that the hon. Member for Great Grimsby is not in the Chamber to hear my comments, but perhaps he will read about them in the Grimsby Evening Telegraph tomorrow. Indeed, I am sure that his speech will be in that paper.
  It is a pity that the hon. Gentleman thinks of inflation as an academic policy. Perhaps he does not want to talk about the Government's record on inflation, because he knows that the Government have reduced it to a quarter of the level that it reached under the last Labour Government. They have succeeded in doing that without having to have recourse to the prices and incomes policy to which the Social Democrats and Liberals are wedded. Incidentally, I am sorry that there are no SDP or Liberal Members in the Chamber. The Government have also succeeded in reducing inflation without having to have recourse to dividend or price control.
  Mr. Maxton: They have used unemployment instead.
  Mr. Leigh: The Government have not used unemployment. Rather, they have adopted sensible policies. They have looked at the PSBR and succeeded in reducing interest rates and inflation, thus making Great Britain more competitive in world markets.
  In recent weeks, the Opposition have made great play of inflation rising to 7 per cent. Surely, that rise points to the need to be even more circumspect in our management of the economy and to ignore the policies of higher Government spending that the Opposition have asked us to pursue today. They would inevitably lead to a higher PSBR, higher interest rates and eventually higher inflation.
  The increase in inflation to 7 per cent. is a result of the strengthening dollar. As hon. Members have said, that has forced the Government to increase interest rates. It shows that we must continue our policies and that we must exercise great care. But the long-term prospects for Great Britain remain good. In May, raw material and fuel prices fell by 1·1 per cent., which is the best figure since 1982. As my hon. Friend the Member for Teignbridge (Mr. Nicholls) said, inflation is still lower than in any month under the Labour Government. At the end of Labour's period of office, the trend was decidedly upwards.
  Thus, I say to the hon. Member for Great Grimsby that the PSBR is not an academic subject, but is of concern to his ordinary voters in Great Grimsby. The hon. Gentleman refused to look at the facts and figures for the PSBR. For 1985–86, the PSBR is £7 billion or 2 per cent. of gross domestic product. That is as low as it has been since 1971–72. In 1975–76, it was £10·7 billion, and rising. Incidentally, shortly after that, the hon. Member for Great Grimsby was first elected to the House with a very small majority. In 1979, his majority increased to about 6,000. However, as a result of the successful policies pursued by the Conservative Government between 1979 and 1983, his majority fell from 6,000 to a matter of hundreds at the last election.
  Mr. Maxton: On that basis, perhaps the hon. Gentleman can explain why my majority rose from 1,700 to 4,250.
  Mr. Leigh: Perhaps it was because the hon. Gentleman was no longer opposed by my skilful hon. Friend the Member for Southend, East (Mr. Taylor). I can speak only for the area that I represent. I think that it is strange that the hon. Member for Great Grimsby's majority should fall so dramatically between 1979 and 1983. His majority fell to the level at which it stood when he won a by-election when the Labour Government were in office and the PSBR was high.
  Opposition Members have told scare stories about VAT on children's shoes and food. They were inaccurate, just as the scare story about VAT in tonight's motion is. Indirect tax changes have little effect on the retail prices index.
  Increases in indirect taxation have enabled the Government to reduce direct taxation. The hon. Members for Great Grimsby and for Cathcart allege that the Government are concerned only about the rich. I tried to intervene earlier, but the hon. Member for Great Grimsby would not give way. If we are concerned only with the rich, why are personal allowances 20 per cent. higher than they were when the Government came to office?
  Personal allowances help everyone—the low income earner as well as the high income earner. Why is it that 1·25 million fewer ordinary people now pay tax than when the Government came into office? Is that because the Government are concerned only about protecting the pockets of the rich? That is an absurd claim, which is not borne out by the facts or by the Conservative Government's record in raising the tax thresholds for low-paid workers.
  The hon. Member for Great Grimsby gave the impression that the economy was grinding to a halt. The facts do not bear that out. This is the fifth year of growth. The growth rate has been 2·5 per cent. each year since 1981. The forecasts are that the United Kingdom will have the fastest growth rate in Europe.
  There is no shortage of demand. The country's problems are related not to a shortage of demand, but to the failure of British industry to meet the demand in the home and international markets. Retail sales were up 4 per cent. in the three months to April this year.
  In 1984 we experienced the fifth year of current account surplus trade in world markets. We have created 600,000 new jobs since 1983. We have created more jobs than the SDP promised to create in its manifesto, in which it also said that it would increase the public sector borrowing requirement by £2 billion.
  I am sorry that the SDP spokesman, the hon. Member for Woolwich (Mr. Cartwright), was not present for the earlier part of my speech. He will not have heard my warnings about increasing the PSBR.
  We hear a lot about the increase in gas prices. How did the Labour Government hold down gas prices between 1974 and 1979? They held prices down at the expense of the industrial consumer—and the industrial consumer provides jobs in Great Grimsby and Cathcart. The industrial consumer in those areas was subsidising the domestic consumer in Surrey.
  We do not hear much from the hon. Member for Great Grimsby about the 30 per cent. of householders in rural areas who have no gas supplies. I represent a large rural
  366
  constituency consisting of 170 parishes and covering over 750 square miles. The village where I live, in the middle of my constituency, does not have a gas supply. Some villages in rural Lincolnshire were subsidising the domestic consumers in the urban areas, and the industrial consumer was also subsidising domestic consumers. That could not be allowed to continue.
  Electricity prices have increased under this Government. No one welcomes that, but it is an economic reality. Under this Government electricity prices have increased by only 6 per cent. in the last three years. Under the Labour Government, electricity prices increased on average by 2 per cent. every six weeks.
  Our gas prices are the lowest in the EEC. Since 1983 gas prices have risen only twice—by less than tie rate of inflation. The Government's policies are encouraging a sense of conservation. Under Labour, between 1974 and 1979, domestic gas prices rose by 19 per cent. and industrial gas prices rose by 112 per cent.
  Water charges are of interest to my constituents. I have received letters expressing anxiety about increased charges by the Anglian water authority. The rate of return for water authorities is only 1 per cent. We are asking the Anglian and other water authorities to increase that return to 1·4 per cent. in 1985–86 and to 1·7 per cent. in 1986–87. I do not think that that is too much to ask.
  The targets compare with the rate of return for other nationalised industries. The figure for the electricity supply industry is 2·5 per cent., for the gas industry it is 4 per cent., and for British Airways it is 5·7 per cent.
  A current cost rate of return averaging 9 per cent. for major non-oil industrial and commercial companies in the private sector in 1983 was reported in the Bank of England Quarterly Bulletin published in September 1984. Making every allowance for the special circumstances and responsibilities of water authorities, a rate of return of between 1 and 2 per cent. is in no way excessive. I am sure that the House shares that view. The improved rate of return, while reducing the water authorities' demand on public sector borrowing, will also finance an increase in capital expenditure of £80 million, or 12 per cent., in the present financial year. Further real increases in capital expenditure are likely in the following two years.
  The average increase in water charges in England in 1985–86 will amount to less than 17p per week. Water charges account for only about 1 per cent. of the average householder's budget. That puts the matter into perspective. I am sure that the public will therefore support the Government's determination to force water authorities to achieve a higher rate of return. Unless they achieve that rate, it will not be possible to privatise the water authorities.
  My constituents will support a privatisation policy. The Government's programme of privatisation measures, of which the sale of shares in British Telecom is the best example, shows that privatisation leads to increased efficiency, enterprise and competition and to greater employee involvement through share ownership by the work force.
  In Lincolnshire we have a proud record of self-employment and of people becoming involved in their own industries. I remain confident that the Government's policies on gas and electricity pricing, on water charges and on privatisation, far from leading to the Government's demise, as the hon. Member for Cathcart alleges, will lead to a resounding Conservative victory at the next election.
  8.38 pm
  Mr. Frank Haynes: I have read the Opposition's motion and listened to my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), who stuck rigidly to the motion. He set out in detail where the Government are going wrong in relation to representing all the people in the nation. The Government amendment tries to describe what has happened and what will happen in the future in the interests of the nation.
  Having looked at the Opposition motion and the Government amendment, I come to the Chief Secretary, who presented the Government's case. He reminds me of what happens at Sunday markets. More often than not, those markets include auctioneers. I have another name for them—I call them Flash Harrys. The Chief Secretary made a Flash Harry contribution. We know what will happen during the next couple of years and what will happen when we have our first opportunity to get rid of this Government and put in their place people who are really interested in acting for all the people, not just a few.
  The Chief Secretary's speech clearly showed where everything has gone wrong. People in the lower income groups are suffering. In a flashy contribution, the right hon. and learned Gentleman tied up the problem with a blue ribbon in the hope that he would get away with it. He and his Government will not get away with it. I shall tell the few Conservative Members who have sat here during almost all of the sitting—[HON. MEMBERS: "What about the Opposition?"] I have the Floor. When the Conservative Benches are full, as at Prime Minister's Question time, I have looked along each row and thought how many Conservative Members are involved in financial institutions. That is the problem. They do not know anything about the practical side of life and about how the ordinary folk live. Their minds are stuck on finance all the time. That is where their minds are, even when they go to bed.
  Mr. Brandon-Bravo: Will the hon. Gentleman give way?
  Mr. Haynes: The hon. Gentleman has already spoken and had his bite. Other hon. Members want to have a bite as well. The hon. Gentleman happens to be one of those hon. Members who have their heads stuck in the financial institutions.
  Labour Members clearly understand what is happening, and they do not want any more. The people are demonstrating and saying in no uncertain terms that they have had enough of what the Government are doing. This is particularly so in the towns where by-elections are held.
  Massive profits have been made from gas, yet the Government are making the authorities increase prices at a time when that money is not needed. The same is true of electricity. The electricity authorities have been told to increase charges. I do not want a brush-off from the Secretary of State on this issue.
  What a story there is to tell about water. The Severn-Trent water authority was instructed by the Government to increase water rates by 12 per cent. What did the chairman of the Thames water authority say when the authority was instructed to increase water rates by 9 per cent.? He said on television, "We need only a 3 per cent. increase." Yet, once again, water rates are being bumped up for the ordinary folk. Never mind about the rich; they
  368
  can look after themselves. This Government do a good job of looking after them. The ordinary folk will have to meet the bills that the Government have forced on the public authorities.
  About three years ago, I told the House that this Government would be the first to achieve a price of £2 a gallon for petrol, and they have done it. They can do anything with their massive majority. They do not realise what this means, because their heads are stuck in the clouds and financial institutions. When petrol prices are increased to that level, every price in the shops is affected because of the cost of transportation. The Government are half asleep. They cannot see that side of the argument. In fact, they do not want to see it.
  Mr. Don Dixon: What about prescription charges?
  Mr. Haynes: Hon. Members have referred to prescription charges. The Secretary of State for the Environment, who is a former Secretary of State for Social Services, is sitting on the Treasury Bench at the moment. He played a big part in the increase in prescription charges. He should be ashamed of himself. The right hon. Gentleman can grin, but this is a serious matter. When he was Secretary of State for Social Services, the Government were planning behind closed doors — no doubt the right hon. Gentleman will deny this, but the many leaked documents have informed us of what happened—to charge patients for going to a doctor. The right hon. Gentleman may deny it, but we know that it is true. This is the way in which the Government make the ordinary people pay.
  What about rates and local authorities?
  Mr. Dixon: The Secretary of State is responsible there too.
  Mr. Haynes: That is right. We shall probably refer to him again in relation to increases in rates and prices. Because of the reduction in RSG, rates have had to be boosted—
  Mr. Brandon-Bravo: Will the right hon. Gentleman give way?
  Mr. Haynes: I am not a right hon. Gentleman, and I shall not give way.
  Mr. Brandon-Bravo: Will the hon. Gentleman give way on this point?
  Mr. Haynes: I shall not give way.
  Because of the reduction in RSG, local people will have to put their hands in their pockets again to pay for increased rates.
  Before the 1979 election, the Conservative party said that there should be less Government control. The present Secretary of State for Defence was bawling and shouting — just as I am doing now—that there should be less Government control. I remember when the present Secretary of State for the Environment was speaking from the Dispatch Box one night and Mr. Speaker could not control this place. He had to adjourn the House for 10 minutes. The Secretary of State was saying that local authorities had to increase their rents by £2·50 a week. He set a precedent. Previously, local authorities had determined their own rates. The Secretary of State wanted a massive rents increase, and this has continued ever since under his administration.
  Mr. Brandon-Bravo: Will the hon. Gentleman give way?
  Mr. Haynes: I shall not give way. Will you tell the hon. Member for Nottingham, South (Mr. Brandon-Bravo) to sit down. Mr. Deputy Speaker?
  I do not deny that the sale of council houses is a good measure. Nevertheless, we have had arguments about it. What has happened? We do not hear Conservative Members talk about their surgeries. I shall tell them about the people who have bought their council houses. They have come to my surgery on a Saturday morning and told me that they cannot keep up with the repayments because of the Government's policy. The Government are driving people from their homes. This is happening in the public and the private sectors.
  These serious subjects are not funny. We are talking about a Government who are doing the wrong thing and making life rough for the lower income groups. The message is getting through. The people of Britain have had a bellyful of Conservative policies and they do not want much more of them.
  I recall listening to some comments made one night by the right hon. Member for Old Bexley and Sidcup (Mr. Heath) when the present Home Secretary was speaking. We were told that the nation was getting up off the floor and that the economy was improving. The right hon. Member for Old Bexley and Sidcup said that, in his view, we had not yet reached the bottom. I fear that, even now, we have not yet reached the bottom. The trouble is that, the longer the recession lasts and we have Conservative policies, the worse the situation becomes.
  What the Government are perpetrating today is a racket, a con trick. I regularly visit pensioners' groups and hear their complaints. I tell them what the Conservatives are doing. Among their complaints is the present situation of TV licences. Friction is bound to be generated among elderly groups when some pay only 5p and others have to pay the full whack. My hon. Friends and I twice tried to persuade the Government to remedy that state of affairs, but they refused to take action, complaining that public expenditure had to be reduced. They can find millions for the rich, but cannot help the poor pensioner.
  Standing charges represent an enormous rip-off. Whenever the Treasury is looking for money, standing charges are increased, and those in the lower income groups and the pensioners suffer. They must find the extra money to finance the idle rich—that is what I call them — who are raking in the money at the expense of the poor.
  I made a discovery the other day, which I trust will be noted by Conservative Members. I gather that an allocation of cheap EEC butter was made to the House of Commons. Despite the salaries that we in Parliament receive, 1½ tonnes of EEC butter came here. I did not notice any price reductions in this place. It is disgusting that cheap butter should come here. It should have gone elsewhere, where it was needed.
  Mr. Dixon: Is it not a fact that the Government would sooner give cheap butter to Russia to feed their troops than to Britain's old-age pensioners?
  Mr. Haynes: My hon. Friend makes a valid point. We frequently hear the Prime Minister — in this place, on television and at meetings — referring to the "rotten Russians" and saying that we must stand up to them. She
  370
  claims that we must have nuclear weapons so that, if necessary, we can knock them about a bit. As the Government are party to the EEC, why are they permitting butter to be sold to Russia at 10p per lb?
  Mr. Peter Hardy: Is my hon. Friend aware that, in addition to giving the Russians butter at concessionary prices, for five successive years the EC has allowed the Russians to double their purchases of wine at about 4½p a litre, presumably to promote alcoholic euphoria?
  Mr. Haynes: My hon. Friend is obviously an expert on the subject. I am obliged to him for that intervention, because I did not know that fact. It is clear that, the more one talks about these problems, the worse the situation becomes.
  When the present Foreign Secretary was Chancellor of the Exchequer, he was questioned about how much was involved in the black economy, and he replied that the figure was about £4 billion. When asked what he intended to do about it, especially from the income tax point of view, he replied that he did not have the money to put more people on the job of chasing up the money that was due. He had just sacked 160 people from the Treasury; they could have investigated the matter.
  We are still in much the same situation, with the black economy as large as ever. All that income tax is owed by people who get away with it, while the ordinary workers pay their tax through PAYE. It is clear that those getting away with it contribute to Conservative party funds. As always, the Government are looking after their own kind.
  The hon. Member for Teignbridge (Mr. Nicholls) spoke about history. My hon. Friend the Member for Glasgow. Cathcart (Mr. Maxton) replied to that speech, but even he did not go back far enough. It is clear, for example, that the policies that were being pursued in the 1920s by the then Tory Administration are the very policies that are still being pursued by the Conservatives. History is repeating itself.
  I must comment on the remarks of the hon. Member for Gainsborough and Horncastle (Mr. Leigh), who took a swipe at my hon. Friend the Member for Great Grimsby (Mr. Mitchell) and spoke of my hon. Friend's majority. As usual, the hon. Member for Gainsborough and Horncastle got it wrong. I agree that my hon. Friend's majority fell at the last general election, but we have had the Conservatives in office for the last six years and, as part of their actions, we have had boundary changes. Those changes, as usual, have been in favour of the Government of the day. Some rich Tory areas were included in Great Grimsby, and down went my hon. Friend's majority.
  Mr. Leigh rose—
  Mr. Haynes: I will not give way to the hon. Gentleman, who made his point, which I have disposed of.
  The people of Britain have got the message. They have had enough. They have had a bellyful of the lot who are now in power. The sooner we get the opportunity to kick them out, and put our lot in, the better off we shall all be.
  8.58 pm
  Mr. David Maclean: I apologise for not being in my place for about one and a

  371
  half hours of the debate. I hope that during that period something more enlightening was said than I heard during the opening stages of the debate.
  Having read the motion and heard the opening remarks of the right hon. Member for Birmingham. Sparkbrook (Mr. Hattersley), I was not sure which side to support. I was in a bit of a quandary. It appeared to me that the Labour party was being converted to the fight against inflation and that I might have to lend it my support in the Lobby. However, I was wrong on two counts. First, the Opposition were not converted to the fight against inflation. Only three or four Opposition Members were present in the Chamber. Half a dozen Opposition Members are present now, but this is a major Opposition attack and it is the Opposition's 15th allotted day.
  The Conservatives do not need massed ranks on their Benches to defend themselves. This is not a Government motion, with all the Conservatives being wheeled in to vote for it. This is a major Opposition attack, during which three or four Opposition Members have been present. Of those Opposition Members who have been present, most have had no policies to offer, but merely humbug—the same old humbug that we have had from the Opposition over the last few years. We have had humbug over inflation from the party which continually presided over an inflation rate of more than 20 per cent. when it was in office.
  Mr. William Powell: My hon. Friend will recall that for most of the time the only five Opposition Members present on the Back Benches were four current Whips and one ex-Whip.
  Mr. Maclean: My hon. Friend is right. That is why they attempted to filibuster. They have nothing else to offer.
  We had humbug over inflation, and humbug over taxation from the party which promised to tax the rich until the pips squeaked. The hon. Member for Oldham, West (Mr. Meacher) believes that the rich are families with incomes of £15,000 to £20,000 and over.
  We then had humbug over electricity prices from the party which put up electricity prices by 2 per cent. every six weeks when it was in office.[Interruption.] Sedentary interventions from Opposition Members will serve only to delay me further. If Opposition Members had spoken more shortly, there would be more time for other Back Benchers to speak.
  We had humbug over mortgages from the party which hates home ownership and which fought against 1 million people in the country owning their own homes. The final example of humbug was over water rates from the party which urges the Government to spend more on water infrastructure.
  There are many matters which I could mention, but I wish to mention only one. It was not referred to by any Opposition Members who spoke, because the Opposition do not like mentioning it. I am referring to food prices. During their period in office the Labour Government presided over inflation rates of 18 per cent. in 1974, 26 per cent. in 1975, 23 per cent. in 1976, 17 per cent. in 1977 and 10 per cent. in 1978. Food prices, which always rise at only half the rate of inflation, were creeping up at exactly half those rates. When Opposition Members talk
  372
  about the misery of the unemployed and the poor, it should be borne in mind that food prices are a major contributory factor and are rising at only half the rate of inflation.
  The final point that I make so that Opposition Members may be allowed to continue the humbug with which they began the debate is this. I asked the Chancellor of the Exchequer in a written question some weeks ago to give the relationship between food prices and the average incomes for the ordinary average industrial worker in 1973–74 and now, because that is the crucial point. Do people today have to work longer and harder to buy the basic foodstuffs than before? The answer is no. If one considers every major commodity — milk, eggs, beef, pork, lamb, back bacon, chicken, butter, cheese, tomatoes—one sees that the ordinary average worker can pay for those commodities today by working for a fraction of the time that he had to work in 1974. The only exceptions are sugar and potatoes. That is a typical point, and one which has been ignored by the Opposition.
  Food prices are the most important part of the fight against inflation. Those who are most affected are the poor, pensioners and those on fixed incomes, and they will be protected by our guarantee to increase social security benefits by 7 per cent. The country and the House owe a debt of gratitude to British farmers for keeping food prices at half the level of inflation. [Interruption.] The Opposition cannot stand that. That is why they do not mention it.
  I hope that my right hon. Friend will pay attention to the level of food price increases in the country, which are only half the current level of inflation of 7 per cent., and to the fact that that figure is much less than the figure in any month when the Labour Government were in office. I know that the hon. Member for Kingston upon Hull, East (Mr. Prescott) cannot stand my telling him that when the Labour Government were in office the rate of inflation, every month, was greater than it is now. That is a fact, and it will not go away when I finish my speech.
  I hope that my right hon. Friend will not tolerate the humbug that the House has had to tolerate during the four or five hours of the debate. The people of this country are better protected by this Government and by their control of inflation than they would be by all the ratbag nonsense that we have heard from the Opposition.
  9.4 pm
  Dr. John Cunningham: This debate has been about prices, but it has also been about the Conservative Government's philosophy and the practical implications of that philosophy for the people of Britain and the British economy. It has been a somewhat mixed debate. There have been a number of combative speeches from both sides of the House. A few minutes ago, I was feeling rather sorry for the hon. Member for Penrith and The Borders (Mr. Maclean) because I thought that he would not be called to speak. I regretted that quietly, but when he was called, I regretted that more, because his time was not effectively used.
  The House has again heard the well-rehearsed Tory arguments against public service provision, against the cost of such services and about the need to reduce public expenditure. The debate has provided another opportunity for us to demonstrate the huge and increasing gap between current Tory thinking and Labour party policies about the

  373
  future provision, finance and cost of services that are not only essential for social well-being in a plural democratic society but for the economic success of the country.
  Since 1979, and increasingly since 1983, we have seen a remorseless attack on the public services so necessary for people's everyday lives — their housing, energy, education, health, transport and local government. Through deliberate acts of policy, the Government have forced people to expend more of their family incomes to pay for such services, while increasing the tax burden on everyone except the highest paid in our society. Those points have been made effectively by my hon. Friends the Members for Glasgow, Cathcart (Mr. Maxton), for Leeds, Central (Mr. Fatchett) and for Great Grimsby (Mr. Mitchell).
  While we renounce that approach and the whole market forces philosophy of the Government, and the social market policies of the alliance as well, we complain that even now the Adminstration seek to disguise the true nature of their intentions from the country. Nowhere is that charge more true, and more clearly illustrated, than in the Government's treatment of the social security review and the tawdry attempts to withhold figures and deny Parliament and the people the truth.
  As a central part of that political philosophy, the Government continue to shift burdens from the well-off, the large income earners, to those less able to bear them. As a cornerstone of Tory policy, like all previous Tory Governments, the Administration undermine the foundations of community provision and introduce higher charges at the same time, requiring people to pay more for a less effective, and often lower-quality, service.
  In addition to this attack on the belief in public services and the indifference of Conservatives, which we have seen amply demonstrated in the debate, to the consequences for millions of people who have no choice but to use those services, Ministers argue that, for economic policy reasons, such charges are essential. I was astonished by one facet of Conservative contributions to the debate. In the time that I was in the Chamber, not one Conservative Member mentioned unemployment and its consequences.
  Mr. Brandon-Barvo: I did.
  Dr. Cunningham: I may not have heard all the hon. Gentleman's speech, so I apologise. However, I did not hear any Conservative Member talk at any length about the consequences for the nation or for individuals of the inexorable growth in unemployment as a result of six years of these policies.
  The Prime Minister, perhaps above all, has made, and continues to make, grandiose claims about her Government's approach, but the reality is different. No matter how fine the phrases or quotations from St. Francis, the talk of more freedoms and more choice, the rhetoric is a million miles from the facts. The facts are that the Government's policies blur decency and kindness, breed ill will and discontent, and cheapen human life and our society. The Government have acted deliberately and directly to increase prices across the rang of family expenditure, as the record of the past six years clearly demonstrates. VAT has doubled, and there has been a tenfold increase in prescription charges. The hon. Member for Teinbridge (Mr. Nicholls) in an aggressive attack on the Labour party, said that prescriptions did not cost as much as they did under the Labour Government. Yet under
  374
  the Labour Government a prescription cost 20p, whereas they now cost £2 per item. That seemed a strange bit of economics or even simple arithmetic to me.
  With such cuts, the Government have cynically cast aside their election promises. Housing costs have rocketed for all families, whether they pay rent and rates or mortgages and rates. Indeed, the Government have deliberately forced up rents, mortgages and rates. Average rents have increased by more than 166 per cent., and in some areas by much larger figures. Some Tory councils subsidise the council's activities by making huge transfers from the housing account, thereby effectively taxing local council house tenants. In addition, more and more of the costs of maintenance and repair fall on the tenants as financial support for local authorities to maintain their housing stock is reduced.
  My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said that mortgage interest rates are at record levels and have been consistently high throughout the Government's term of office. Rates have been deliberately forced up by the systematic reduction in rate support grant, which has been continued by the Secretary of State for the Environment. That view is held not only by the Opposition, as some Conservative Members have suggested, but by the Audit Commission, the Comptroller and Auditor General, a Select Committee and every local authority association.
  Average weekly rates payments, including water charges, have risen from £3·19 in 1978–79 to £8·27 in England and Wales. In Scotland, the increase is even higher, from £2·54 a week to £7·63 a week—a threefold increase. That is a measure of the impact of the Government's policies on housing costs to millions of families. At constant prices, those figures represent a weekly extra cost of £2·20 in England and Wales and £2·70 in Scotland.
  Those additional costs, which are the deliberate and inevitable result of Tory policies, strike at the heart of family budgets and family life. It is no wonder that a major consequence in the public sector and among owner-occupiers is that 3·5 million houses are now in an unsatisfactory state of repair, as the right hon. Gentleman's Green Paper on improvement grants confesses on the first page. It is no accident that a second consequence of these policies is that homelessness is on the increase.
  Mr. Brandon-Bravo: Does the hon. Gentleman accept that, as a direct result of the Government's policies, the right to buy produces for 50,000 families in Nottingham a rent reduction of £3·60 a week? That is the value to the housing revenue account in a city such as Nottingham of the profit from the right to buy. I have tried more than once to get the hon. Gentleman to understand the difference between capital receipts and the revenue benefit that flows from them.
  Dr. Cunningham: If the hon. Member for Nottingham, South (Mr. Brandon-Bravo) says that that is true in the city of Nottingham, I believe what he says. I am not suggesting that he is trying to mislead the House. I assume that he is referring to the Labour-controlled Nottingham city council when he talks about the good administration of the city's affairs. As for his point about revenue and capital receipts, of course I understand the difference — [Interruption.] I regret that the hon.

  375
  Gentleman, from a sedentary position, is being offensive even though I gave way to him. If I misheard what he said earlier, I apologise, but I thought that he was making a spurious point and I said so.
  I was making a point about the deteriorating state of the national housing stock and about homelessness increasing. The Royal Institute of British Architects — hardly a bastion of Socialism—in a recent publication described what it saw as "decaying Britain." It said:
  "The Government's attitude to the built environment can best be described as conditioning people to the death of the places in which they live, work and bring up their children."
  That is a graphic description of what is happening to the built environment in Britain.
  Yet worse is to come. We learn from the Green Paper that improvement grants are likely to be reduced in scope and value, thus exacerbating the decline in the nation's housing stock. In addition, between 3 million and 4 million pensioners and families face extra burdens with their rates because the social security review suggests that in future they should contribute up to 20 per cent. themselves. They are currently receiving 100 per cent. rebates because of their low incomes. They include about 1 million pensioners.
  Over the same period, the record is similar for energy charges—a tax on gas, public transport fares, charges for school meals—where they still exist—and, under some Tory authorities, additional charges for home helps and meals on wheels.
  I was much taken by comparisons with what has been happening with energy prices and rising costs between the last Labour Administration and the present Government. Every Conservative Member — including the Chief Secretary — carefully omitted to mention that between 1974 and 1979 there was a world energy crisis. Oil prices were being hiked up by colossal amounts. Britain had massive import bills for oil running into billions of pounds. The Chancellor and the Prime Minister—and, indeed, everyone on the Treasury Bench — have enjoyed a unique opportunity among western industrial nations. We are the only country in the western industrial world to be self-sufficient in energy—to be producing more oil than we need and even, currently, to be producing more than Saudi Arabia. It is a massive advantage and a huge difference between the circumstances in the middle to late 1970s and those of the present time.
  The reality is that that massive opportunity is being recklessly squandered by the Government. We have it on good authority—it has been confirmed by Conservative speakers today—that the Government's stated intention is that more of the same is to follow—what of the intended claims for this philosophy and its attendant economic nostrums. Millions of people are worse off than ever before; unemployment is rising inexorably; investment and industrial output has slumped—that is the price that the country has paid for the failed economic doctrines of Thatcherism.
  I contrast starkly what the Chancellor said during the general election campaign about unemployment—that it was likely to fall. His best estimate was that unemployment would go down. Shortly after his appointment he was interviewed on the television programme "Face the Press". In boxing parlance, he was
  376
  caught cold. I have the transcript here and I shall quote the right hon. Gentleman verbatim. When he was asked about his promise that unemployment would fall he said:
  "I didn't believe with, with ah, ah, particular confidence, I just said that speaking purely personally, ah, my ah best guess was that there was a good chance that that might happen. Ah, it's very very difficult to — to predict the course of unemployment".
  Having recently been promoted to his important, senior position in the Government, that was what the right hon. Gentleman had to say. The story has been different since that interview. Ever since then, and ever since the right hon. Gentleman's appointment as Chancellor of the Exchequer, unemployment has continued to get worse and worse and worse. That is the biggest price that the people are paying for the failed economic doctrines of this Administration.
  It is not as though the goals look like being achieved in the time scale of the right hon. Gentleman's famous medium-term financial strategy. In regard to the Government's claims about public expenditure, in 1979 it was taking 39·5 per cent. of national income. Last year, it took 42·5 per cent. The Government, having committed themselves to the control of public expenditure, are presiding over the taking of a bigger share of the national cake.
  In Britain, in 1979, inflation was 0·6 per cent. above the OECD average. In 1985 it is 1·4 per cent. above that average. Taking the figure of 100 for national income in 1979, in the OECD, national income has risen on average by 9·7 per cent.; in Britain the rise has been 3·9 per cent. In 1979 unemployment in Britain was 5·5 per cent. compared with the OECD average of 5·1 per cent.; today the British figure is 13·5 per cent. and the OECD average is 8·2 per cent. Those are the records of the Government in international comparisons. The goals are not being achieved and they do not look like being achieved.
  The Prime Minister in opposition once said of the Labour Government:
  "The Labour Government loves to blame every ill and error on nameless world trends."
  Now she enjoins us to consider world conditions. We do. Her record is miserable when compared with the top six industrial nations which are equally, if not more, adversely affected by prevailing world conditions than Britain, particularly because of our energy self-sufficiency. Not one of those countries — the United States, Canada, Japan, the Federal Republic of Germany, Italy or France — has enjoyed the massive economic boost and the security of self-sufficiency in energy that Britain and this Prime Minister, alone of all Prime Ministers, have enjoyed.
  The British people are told to be patient. In 1981, in 1982 and again in 1983, the right hon. Lady, the present Foreign Secretary and, more recently, the present Chancellor of the Exchequer all forecast recovery and success for their policies. In his contribution to the debate, the hon. Member for Gainsborough and Horncastle (Mr. Leigh) urged people to be patient. He said that, in the face of the difficulties, the Government should go on being prudent; Patience and Prudence—a pair of Tory twins in tweeds and twinsets.
  Mrs. Edwina Currie: And pearls.
  Dr. Cunningham: And pearls, if the hon. Lady says so.
  Mr. Straw: Fake pearls.
  Dr. Cunningham: The country is running out of patience. That was demonstrated last year in the local government elections, it was demonstrated again this year in the county council elections, it will be demonstrated in the Brecon and Radnor by-election and it will be demonstrated even more forcefully next year in the local government elections. The Government are on the way out, because the nation's patience is running out.
  There are no successes for the Government's philosophy and there are no successes for their economic policies. Some years ago, the Foreign Secretary said that, in two or three years, the Government would have inflation down to 3 per cent. As my right hon. Friend the Member for Sparkbrook said today, the Prime Minister repeated that claim on her tour of south-east Asia. I offer the Chancellor of the Exchequer or the Secretary of State for the Environment the opportunity to intervene now or to say in winding up when inflation will be at 3 per cent. The Prime Minister's promise to the nation is that it will be there before the next general election—perhaps two or two and a half years from now. Rather like the right hon. Lady's frequent promise to abolish the rates, it is rather hollow.
  I have said that unemployment is the Government's biggest failure. It is a huge failure and the biggest price that we all pay. We are told that, with patience and prudence, unemployment will start to come down. I am reminded of Ambrose Bierce, who wrote:
  "Patience is a form of despair disguised as a virtue",
  and of an old Chinese proverb which sums the Government up:
  "Prudence stretched too far blocks the road to progress."
  The Government are indeed blocking the road to progress for the British people. The price for the Government's appalling and contemptible failures is being paid by the British people. The money cost of unemployment is about £20 billion annually. There is a higher price and a greater cost however. It was perhaps best described in the brilliant and enduring work of Jacob Bro—"The Ascent of Man"—when he wrote:
  "The personal commitment of a man or a woman to their skill, the intellectual commitment and emotional commitment working together as one, has made the ascent of man."
  The biggest price being paid by men and women, young and old, black and white, as a result of the Government's failures is the absolute denial of the fulfilment of those commitments.
  9.28 pm
  The Secretary of State for the Environment (Mr. Patrick Jenkin): It might come as news to many of those Opposition Members who have joined the debate in the last few minutes that, for almost all of this debate on an Opposition motion and on a day when they have chosen the subject, there were perhaps never more than half a dozen Opposition Members present.—[HON. MEMBERS: "Look behind you."] It is the Opposition's debate. I must tell the Opposition that that was forecast last Friday in The Guardian under the heading, "Empty Bench Problem." The article said:
  "Labour will do well to have the benches full next Wednesday for their Opposition debate on price increases forced on the public by the Government through the public corporations."
  The Opposition did not do well, because until the last few minutes there have been very few. I imagine that Opposition Members have only recently returned from Ascot.
  378
  There have been some interesting speeches in the debate. I particularly congratulate my hon. Friend the Member for Lewisham, West (Mr. Maples), who made a speech about the causes and origins of inflation which I think would be well worth re-reading by hon. Members. I also congratulate my hon. Friends the Members for Teignbridge (Mr. Nicholls) and for Gainsborough and Horncastle (Mr. Leigh) on having exposed the hypocrisy of the Labour party in attacking the Government on the subject of inflation.
  I listened, too, to the speech by the hon. Member for Great Grimsby (Mr. Mitchell). It was a most astonishing and misguided oration. He did not seem to realise that at present this country is enjoying the highest growth rate in the European Community and that it now has a record volume of investment in the public and private sectors taken together. I do not believe that he can have read the report in the Financial Times this morning—
  Mr. Hattersley rose—
  Mr. Jenkin: No, I have only just started—under the heading, "Five-year peak for industrial output". It says:
  "UK industrial output rose in April to its highest level for five years, according to Central Statistical Office figures."
  It goes on:
  "The figures show the fastest increase within manufacturing in recent months to have been in the capital and intermediate goods categories."
  Dr. Cunningham rose—
  Mr. Jenkin: No. I will give way later.
  Dr. Cunningham rose—
  Mr. Deputy Speaker: Order. The Secretary of State quite clearly is not giving way.
  Dr. Cunningham rose—
  Mr. Jenkin rose—
  Mr. Deputy Speaker: Order. I am trying to protect the Secretary of State by appealing for a fair hearing for him. I want to hear his speech and I hope that hon. Members will allow me to do so.
  Mr. Jenkin: The hon. Member for Copeland (Dr. Cunningham) made a speech about a great many subjects which appeared to have little or nothing to do with the motion. I should like to to come back straight away to what has been the essential theme of the speeches in this debate on both sides of the House, and that is the whole question of prices in the economy.
  It is a fact which seems to have escaped the attention of many Opposition Members that all services provided by the public sector have to be paid for by somebody. They can be paid for by charging, they can be paid for by taxes or they can be paid for by borrowing and leaving future generations to pick up the bill. We could have a sensible debate about the right balance between the methods of payment and about how much the public sector ought to provide in total. What we cannot do, it seems to me, is to have a sensible debate about prices in isolation. Any attempt to hold prices down in isolation from other factors means either that those services are starved of resources or, if the demand is to be met at the reduced price, that taxation and borrowing are higher than they otherwise would be because of the subsidies necessary to ensure supply.
  Of course, a Government can always hold down public sector prices by giving subsidies, but the cost has to be

  379
  paid by someone. There are two kinds of cost. If money is spent on subsidising a service — for example, bus fares, coal or water charges—something else on which that money might be spent goes without. It might be more investment in roads, opening new mines or repairing sewers.
  The hon. Member for Rother Valley (Mr. Barron) referred to coal. What would the Labour party have done had it been faced with Mr. Scargill's demands last year? Would it have stood up to him and kept the subsidy under control?
  Mr. Barron rose—
  Mr. Jenkin: I shall not give way.
  Would the Labour party have sustained investment in new pits?
  Mr. Barron rose—
  Mr. Jenkin: It would not, because in every debate we have had it made perfectly clear that it would have given in to the NUM's demands, sent the coal subsidy soaring and starved the industry of new capital. There is no greater humbug than for the Labour party at one and the same time to castigate the Government because we are not spending enough on capital investment and, as tonight, to castigate us because we do not increase subsidies on public sector prices.
  Let us look at what Labour did when in office. By failing to ensure that the public industries charged economic prices—in effect, by subsidising those public goods and services — the last Labour Government starved the public services of capital investment. When Labour was in office, capital investment in the Health Service fell by 17 per cent., in roads by 30 per cent. and in the water industry by 33 per cent. Conversely, under the Conservatives, investment in hospitals, roads and water has increased. We are making the sensible choice of asking people to pay sensible charges so that we can maintain and increase capital investment.
  Dr. Cunningham: I am grateful to the right hon. Gentleman for at last working up the courage to give way. He boasted about output. When will output under this Government get back to its 1979 level?
  Mr. Jenkin: The hon. Gentleman asks about total output, and that is well above the 1979 level.
  The second cost of subsidy is hidden, and it is perhaps all the more dangerous for that. If a service is subsidised, a whole range of economic decisions are taken on that basis. The pattern of investment is distorted, buying decisions reflect not consumer choice in the market but the political preferences in Whitehall, and the damage is all the worse if this happens in the public sector monopolies, dominated by public sector monopoly unions, where subsidy breeds inefficiency.
  I make no apology for restating these facts. The Labour party has always refused to accept that if we pour out money on subsidy in one direction, we have less money to spend in another. If the Labour party had its way—if the motion means what it appears to mean—we would return to all the fudge of subsidy and price control—no-one knows more about that than the right hon. Member for
  380
  Birmingham, Sparkbrook (Mr. Hattersley) —and all the distortion caused by taking resources from capital spending to subsidise revenue spending.
  Mr. Hattersley: Does the right hon. Gentleman recall that he was the Minister for Energy who in 1974 left the gas and electricity industries with huge operating deficits? How does he justify that against what he said a moment ago? Will he answer the question that the Chief Secretary signally refused to answer? Were the last Labour Government right to avoid the subsidies that he had paid, even though he now preaches quite the opposite doctrine?
  Mr. Jenkin: The right hon. Gentleman knows perfectly well that I was Minister for Energy for just seven weeks, but I want to give him a sensible answer. Yes, the Labour Government were right in their first two years to try to get back to sensible economic pricing in the light of the quotation by my right hon. and learned Friend the Chief Secretary of Mr. Eric Varley's White Paper on energy pricing. But the Labour Government failed to stick to that, and in their last two years they allowed prices to slip further and further behind and the industries to be more and more subsidised.
  We believe in bringing home to people the economic cost of the goods and services for which they pay. At the same time as reducing subsidy, we are reducing monopoly, increasing competition and thus improving efficiency. In that way, costs are being held down, so investment can be sustained without raising taxes or increasing borrowing. The figures prove my case. Under Labour, despite subsidies, the price of goods and services produced mainly by the nationalised industries rose by 18 per cent. per year. In the first two years of the Conservative Government, when we had to correct the massive distortions of the last Labour years, the figure rose to 22 per cent., but in the last three years the average annual increase in nationalised industry prices has been little more than 7 per cent. That is markedly different from the Labour Government's record.
  The hon. Member for Ashfield (Mr. Haynes) is not present, but he and others argue that the Government's record has been achieved at the expense of poorer households—
  Mr. Haynes: On a point of order, Mr. Speaker. The Secretary of State says that I am not here. I am right here.
  Mr. Jenkin: I apologise handsomely to the hon. Gentleman. I hope that he will listen to what I have to say. He will then see that he was wrong.
  Under Labour, prices for pensioner households rose faster than inflation. Since 1979, the pensioner index has risen less than the general level of inflation. Labour's inflation hit everyone, but it hit the pensioners hardest. Even now, the Labour party has not grasped the fact that subsidy is the wrong way to help the worst off because the subsidy goes to all consumers. The better off a person is, the more he can afford to buy and the more he is subsidised. That is not a sensible way to spend money.
  The hon. Member for Copeland referred to the water industry. We have slimmed down manpower in that industry from 63,000 to under 52,000 and we have brought real operating costs down, despite higher volumes and higher standards. We have made the new boards more efficient and businesslike. That is not my verdict. It is the verdict of the Monopolies and Mergers Commission. We

  381
  now want the water industry, like British Telecom, to look to investors rather than to taxpayers for capital. That is why we are examining the possibility of privatising the water authorities. The 33 per cent. cut in investment under Labour contrasts strongly with our policy. In cash terms we are increasing investment over the next three years from £738 million last year to £931 million in 1987–88 —an increase of 22 per cent. The Labour party cut investment. We are increasing it.
  Mr. Barron rose—
  Mr. Jenkin: I am coming to the hon. Gentleman's point.
  The argument in this debate is about who should pay for the investment. Should it be the taxpayer? Should we increase borrowing? This Government were not elected to raise taxes or to increase borrowing. Is it really so unreasonable to ask the industry to increase its return on assets from 1 per cent. per year to 2 per cent. per year? My hon. Friend the Member for Harrow, West (Sir J. Page) regards it as very reasonable, and I agree with him.
  The hon. Member for Leeds, Central (Mr. Fatchett) mentioned rents. He received a good answer from my hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) when he accused the Government of forcing up council rents. It seems that he has forgotten what the Labour party's policy was when in government. The Labour Government's housing policy Green Paper stated:
  "The Government consider that over a run of years rents should keep broadly in line with changes in money incomes."
  That was their policy.
  When the Labour party gained power in 1974, average council house rents in England and Wales represented about 9·4 per cent. of average male earnings, but the Labour Government failed to follow their own policy. Instead, they went for the political option of allowing rent rises to fall further and further behind incomes. By 1979–80, average rents represented only 7 per cent. of male earnings. The Government have recognised that higher rents are necessary to finance management and maintenance. We therefore set rent guidelines substantially above inflation for the first three years. Since then, the guidelines have been in line with inflation. Average rents are now back to where they were 12 years ago in relation to incomes. This year, the proposed rent increase is just 60p per week.
  Mr. Fatchett rose—
  Mr. Jenkin: I want to respond to the debate, and I have only a limited time in which to do so.
  The right hon. Member for Sparkbrook accused the Government of forcing up rates. Coming from the Labour party, that is rich. Under the previous Labour Government the average annual increase in domestic rates was 15 per cent. a year. Under this Government, average rate increases have been in single figures for three years, and that at a time when support from the taxpayer has been falling, quite rightly, to increase accountability to local ratepayers.
  What about Labour's black sheep—the 16 Labour-controlled rate-capped councils? Early this year they told me what they would want to spend if they were free to do so. The figures came to more than £3·5 billion. We proposed a reduction of £400 million, and the rate limits
  382
  were set accordingly. Rate-capping has succeeded. Ratepayers in the rate-capped areas have had the relief that we promised.
  We have been told that high rates do not cost jobs. I am sure that many of my right hon. and hon. Friends have seen the advertisements placed by Leicester city council in mainline London tube stations. What do they say? They state:
  "The lowest rates in the East Midlands. Come to Leicester."
  Why is Leicester district council advertising the lowest rates in the east midlands? The answer is that we made it cut its rate by one third.
  This Opposition day debate is about inflation, and, as a number of my hon. Friends have said, it is on inflation that every Labour Government have come to grief. No Government have ever been more discredited by their failure to control inflation than the previous Labour Government. Between 1974 and 1979 the average increase in prices was over 15 per cent. a year. In the first two years of this Government, it fell below 15 per cent. In tie last three years the average increase has been just over 6 per cent.
  The right hon. Member for Sparkbrook was asked by my hon. Friend the Member for Teignbridge to confirm that this month's 7 per cent. increase in inflation is a lower percentage increase than every month's increase in inflation under the previous Labour Government. Not surprisingly, the right hon. Gentleman declined to answer my hon. Friend's question. My hon. Friend was right. It is true that 7 per cent. was exceeded in every month of every year of the previous Labour Government's term in office. Inflation hits everybody, and the Labour Government made it hit the poor the hardest.
  As my hon. Friend the Member for Penrith and The Border (Mr. Maclean) said, the price of food, on which the poor spend a greater part of their money than others, rose under the Labour Government over 10 per cent. faster than general inflation. Under the Conservatives, since 1979 food prices have risen 16 per cent. less than the general rate of inflation. In today's money, food costs less now than it did under Labour.
  My hon. Friends the Members for Lewisham, West and for Warwickshire, North (Mr. Maude) mentioned electricity. Under Labour, electricity prices rose by 2 per cent. every six weeks throughout their period of office. Under us, electricity prices have risen by 2 per cent. over the whole of the past two years. Why should our record be so much better than that of the Labour Government? The answer lies in a well-known fact: that sooner or later all Labour Governments are forced to choose between looking after the country by keeping down inflation and looking after their trade union paymasters by letting pay rise. Last time pay was allowed to run away—
  Mr. Wainwright: The Secretary of State is now embarking on the last part of his speech. Does he accept that the people of this country, particularly the people of mid-Wales, are no longer interested in the party that was in government six years ago? Will the right hon. Gentleman tell the House what the Government intend to do about prices today?
  Mr. Jenkin: I can understand that the hon. Gentleman should be interested in Brecon and Radnor, as the alliance has a lot to catch up before it enters the race. If the people of Brecon and Radnor are told that the latest increase in inflation under this Government is still smaller than every

  383
  single price increase under the last Labour Government, they will know where to put their crosses. Under Labour—
  Dr. Cunningham rose—
  Mr. Jenkin: Under Labour, pay was allowed to run away until the Government's credit ran out. We were told to pin our hopes on the social contract. That brings me to the recent utterances of the right hon. Member for Sparkbrook. The right hon. Gentleman knows that he has no hope of controlling inflation unless the unions let him do so. We were told before, and we are being told now, that Labour is the party that can manage the unions and that Labour has a special relationship with them. Now the right hon. Member for Sparkbrook has launched his mark 2 version of his pay policy, which he calls a "social compact" — [Interruption.] First, we had a compact, then a contract, then a concordat, and now we have a compact again.
  Mr. Straw rose—
  Mr. Jenkin: The right hon. Member for—
  Mr. Straw rose—
  Mr. Speaker: Order. I do not think that the Secretary of State is giving way.
  Mr. Jenkin rose—
  Mr. Straw rose—
  Mr. Speaker: Order. Mr. Secretary Jenkin.
  Mr. Jenkin: The right hon. Member for Sparkbrook recently wrote that he would need "a pay norm." He is quite honest about it. He says that a Labour Government just cannot govern without a pay norm. He is also quoted in yesterday's edition of The Guardian as saying:
  "It is not weak-mindedness which makes me say we can't go any further than the trade unions negotiate with us or we decide with the trade unions. It is a statement of fact … We can only go as fast as union members will accept".
  The right hon. Gentleman is telling the truth. A Labour Government would be a Government in name only. The union bosses would be at their elbow. I have studied the right hon. Gentleman's writings, and I note that in the New Socialist he wrote:
  "The compact is different, It's offering"
  the unions
  "a new opportunity to take part in Government."
  But, bar the union bosses, who wants that? Labour has tried too often to powder their noses with this compact. The Labour party is showing not a new face, but the same raddled old face, wrinkled and worn. The whole House is sick of Labour's cosmetics.
  If the Opposition table a motion disapproving of the Government's handling of the economy, they must offer credible alternative policies. The only new thing in their jobs and industry campaign is the razzmatazz, the tee-shirts, pop concerts, break dancers and body-bopping—[Interruption.] The right hon. Member for Sparkbrook may laugh, but all that is being done in his party's name.
  As for credibility, Labour is still committed to the policies that lost them the last election. Labour Members still talk about import controls, exchange controls, incomes policy, price controls, the repeal of trade union legislation, more subsidies, massive increases in public
  384
  spending and wholesale nationalisation. They still stand for those policies. They have not learnt a thing. We know what a Labour Government would do. They would impose higher taxes on everyone. The Opposition admit that. There would be more borrowing. Some Labour Members are proud of that. There would be higher inflation. That is featured in the right hon. Gentleman's writings.
  By pushing up inflation, the Labour party hopes to cut unemployment, but under the last Labour Government inflation went up to 27 per cent. and unemployment doubled. The recipe is to tax, to borrow and to inflate. The result would be recession, depression and despair.
  "Labour have lost the economic argument,"
  Those are not my words. They are contained in an internal Labour party document leaked to the New Statesman. Labour's policies are "dangerously opaque." Again, those are not my words. The right hon. Member for Sparkbrook will recognise them as his.
  In Tribune, on 10 May, the right hon. Gentleman is quoted as saying:
  "Very much of the flight from confidence in previous Labour Governments has not been because antagonists abroad did not agree with what we did. It was because they feared we didn't know what the hell we were doing."
  They still do not know.
  Mr. Hattersley: I have been longing for the moment when the right hon. Gentleman could not resist giving way. Will he now answer the question asked at the beginning of the debate and later: are the Government committed to the Prime Minister's promise of 3 per cent. inflation by election day?
  Mr. Jenkin: The Government's settled intention is to manage the economy so that inflation is steadily brought under control. We are committed to policies that will squeeze inflation out of the economy.
  If people will behave sensibly about pay, if they will recognise that higher pay inevitably is reflected in higher costs unless it is matched by higher productivity, and if people can bargain sensibly about pay, bearing in mind not only those in work but those out of work, there is no reason why, by the time of the next election, we cannot get inflation in line with what the Prime Minister said. There is no reason why unemployment should not also begin to come down.
  Dr. Cunningham rose—
  Mr. JenkinBritain is the only country in Europe which is creating more employment. It is only a matter of time before the number of new jobs exceeds the number of unemployed. Then we shall have achieved our objective.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 166, Noes 272.

  Division No. 243]

  [10 pm

  AYES

  Abse, Leo

  Bermingham, Gerald

  Alton, David

  Bidwell Sydney

  Anderson, Donald

  Blair, Anthony

  Archer, Rt Hon Peter

  Boothroyd, Miss Betty

  Ashton, Joe

  Boyes, Roland

  Bagier, Gordon A. T.

  Brown, Gordon (D'f'mline E)

  Banks, Tony (Newham NW)

  Brown, Hugh D. (Provan)

  Barron, Kevin

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

  Beckett, Mrs Margaret

  Brown, Ron (E'burgh, Leith)

  Bell, Stuart

  Bruce, Malcolm

  Benn, Tony

  Caborn, Richard

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

  Campbell, Ian

  385

  Carter-Jones, Lewis

  Lewis, Ron (Carlisle)

  Cartwright, John

  Lewis, Terence (Worsley)

  Clark, Dr David (S Shields)

  Litherland, Robert

  Clay, Robert

  Lloyd, Tony (Stretford)

  Clwyd, Mrs Ann

  McCartney, Hugh

  Cocks, Rt Hon M. (Bristol S.)

  McDonald, Dr Oonagh

  Cohen, Harry

  McGuire, Michael

  Concannon, Rt Hon J. D.

  McKay, Allen (Penistone)

  Cook, Frank (Stockton North)

  McKelvey, William

  Cook, Robin F. (Livingston)

  MacKenzie, Rt Hon Gregor

  Corbett, Robin

  McTaggart, Robert

  Corbyn, Jeremy

  McWilliam, John

  Cowans, Harry

  Madden, Max

  Cox, Thomas (Tooting)

  Martin, Michael

  Craigen, J. M.

  Mason, Rt Hon Roy

  Crowther, Stan

  Maynard, Miss Joan

  Cunliffe, Lawrence

  Meacher, Michael

  Cunningham, Dr John

  Michie, William

  Dalyell, Tam

  Mikardo, Ian

  Davies, Rt Hon Denzil (L'lli)

  Milian, Rt Hon Bruce

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

  Miller, Dr M. S. (E Kilbride)

  Deakins, Eric

  Mitchell, Austin (G't Grimsby)

  Dewar, Donald

  Morris, Rt Hon A.(W'shawe)

  Dixon, Donald

  Morris, Rt Hon J.(Aberavon)

  Dormand, Jack

  Oakes, Rt Hon Gordon

  Douglas, Dick

  O'Brien, William

  Duffy, A. E. P.

  O'Neill, Martin

  Eadie, Alex

  Park, George

  Eastham, Ken

  Parry, Robert

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

  Patchett, Terry

  Evans, John(St. Helens N)

  Pavitt, Laurie

  Ewing, Harry

  Pendry, Tom

  Fatchett, Derek

  Penhaligon, David

  Faulds, Andrew

  Pike, Peter

  Field, Frank (Birkenhead)

  Prescott, John

  Fields, T. (L'pool Broad Gn)

  Radice, Giles

  Fisher, Mark

  Randall, Stuart

  Foster, Derek

  Redmond, M.

  Foulkes, George

  Rees, Rt Hon M. (Leeds S)

  Fraser, J.(Norwood)

  Richardson, Ms Jo

  Freeson, Rt Hon Reginald

  Roberts, Ernest(Hackney N)

  Freud, Clement

  Robinson, G.(Coventry NW)

  Garrett, W. E.

  Rooker, J. W.

  George, Bruce

  Rowlands, Ted

  Gilbert, Rt Hon Dr John

  Sedgemore, Brian

  Godman, Dr Norman

  Sheerman, Barry

  Golding, John

  Sheldon, Rt Hon R.

  Gould, Bryan

  Shore, Rt Hon Peter

  Gourlay, Harry

  Short, Ms Clare (Ladywood)

  Hamilton, James(M'well N)

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

  Hancock, Mr. Michael

  Silkin, Rt Hon J.

  Hardy, Peter

  Skinner, Dennis

  Harman, Ms Harriet

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

  Harrison, Rt Hon Walter

  Soley, Clive

  Hart, Rt Hon Dame Judith

  Spearing, Nigel

  Hattersley, Rt Hon Roy

  Steel, Rt Hon David

  Heffer, Eric S.

  Stewart, Rt Hon D.(W Isles)

  Hogg, N.(C'nauld & Kilsyth)

  Straw, Jack

  Holland, Stuart(Vauxhall)

  Thomas, Dr R.(Carmarthen)

  Home Robertson, John

  Thorne, Stan (Preston)

  Howell, Rt Hon D.(S'heath)

  Tinn, James

  Howells, Geraint

  Wainwright, R.

  Hoyle, Douglas

  Welsh, Michael

  Hughes, Dr. Mark (Durham)

  White, James

  Hughes, Robert (Aberdeen N)

  Williams, Rt Hon A.

  Janner, Hon Greville

  Wilson, Gordon

  John, Brynmor

  Winnick, David

  Kaufman, Rt Hon Gerald

  Woodall, Alec

  Kennedy, Charles

  Young, David (Bolton SE)

  Kilroy-Silk, Robert

  Lambie, David

  Tellers for the Ayes:

  Lamond, James

  Mr. Frank Haynes and

  Leighton, Ronald

  Mr. John Maxton.

  NOES

  Adley, Robert

  Arnold, Tom

  Aitken, Jonathan

  Ashby, David

  Alexander, Richard

  Aspinwall, Jack

  Amess, David

  Atkins, Rt Hon Sir H.

  Ancram, Michael

  Atkins, Robert (South Ribble)

  386

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

  Fry, Peter

  Baker, Nicholas (N Dorset)

  Gale, Roger

  Baldry, Tony

  Galley, Roy

  Banks, Robert (Harrogate)

  Gardiner, George (Reigate)

  Batiste, Spencer

  Garel-Jones, Tristan

  Bellingham, Henry

  Gilmour, Rt Hon Sir lan

  Bendall, Vivian

  Glyn, Dr Alan

  Benyon, William

  Goodhart, Sir Philip

  Best, Keith

  Goodlad, Alastair

  Bevan, David Gilroy

  Gorst, John

  Biggs-Davison, Sir John

  Grant, Sir Anthony

  Blackburn, John

  Gregory, Conal

  Body, Richard

  Griffiths, Sir Eldon

  Bonsor, Sir Nicholas

  Griffiths, Peter (Portsm'th N)

  Boscawen, Hon Robert

  Grist, Ian

  Bottomley, Peter

  Ground, Patrick

  Bottomley, Mrs Virginia

  Gummer, John Selwyn

  Bowden, Gerald (Dulwich)

  Hamilton, Hon A. (Epsom)

  Boyson, Dr Rhodes

  Hamilton, Neil (Tatton)

  Braine, Rt Hon Sir Bernard

  Hampson, Dr Keith

  Brandon-Bravo, Martin

  Hanley, Jeremy

  Bright, Graham

  Hannam, John

  Brinton, Tim

  Hargreaves, Kenneth

  Brooke, Hon Peter

  Harris, David

  Brown, M. (Brigg & Cl'thpes)

  Harvey, Robert

  Browne, John

  Haselhurst, Alan

  Bruinvels, Peter

  Havers, Rt Hon Sir Michael

  Bryan, Sir Paul

  Hawkins, Sir Paul (SW N'folk)

  Buchanan-Smith, Rt Hon A.

  Hawksley, Warren

  Buck, Sir Antony

  Hayhoe, Rt Hon Barney

  Budgen, Nick

  Hayward, Robert

  Bulmer, Esmond

  Heathcoat-Amory, David

  Burt, Alistair

  Heddle, John

  Butcher, John

  Henderson, Barry

  Butler, Hon Adam

  Hickmet, Richard

  Butterfill, John

  Hicks, Robert

  Carlisle, John (N Luton)

  Higgins, Rt Hon Terence L.

  Carlisle, Kenneth (Lincoln)

  Hind, Kenneth

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

  Hirst, Michael

  Carttiss, Michael

  Holt, Richard

  Cash, William

  Hordern, Sir Peter

  Chope, Christopher

  Howard, Michael

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

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

  Clark, Dr Michael (Rochford)

  Howarth, Gerald (Cannock)

  Clarke, Rt Hon K. (Rushcliffe)

  Howell, Rt Hon D. (G'ldford)

  Clegg, Sir Walter

  Howell, Ralph (N Norfolk)

  Cockeram, Eric

  Hubbard-Miles, Peter

  Colvin, Michael

  Hunt, David (Wirral)

  Cope, John

  Hunt, John (Ravensbourne)

  Cormack, Patrick

  Irving, Charles

  Couchman, James

  Jackson, Robert

  Cranborne, Viscount

  Jenkin, Rt Hon Patrick

  Critchley, Julian

  Jessel, Toby

  Crouch, David

  Johnson Smith, Sir Geoffrey

  Currie, Mrs Edwina

  Jones, Robert (W Herts)

  Dickens, Geoffrey

  Jopling, Rt Hon Michael

  Dorrell, Stephen

  Joseph, Rt Hon Sir Keith

  Douglas-Hamilton, Lord J.

  Kellett-Bowman, Mrs Elaine

  du Cann, Rt Hon Sir Edward

  Kershaw, Sir Anthony

  Dunn, Robert

  Key, Robert

  Durant, Tony

  King, Roger (B'ham N'field)

  Dykes, Hugh

  King, Rt Hon Tom

  Eggar, Tim

  Knowles, Michael

  Emery, Sir Peter

  Knox, David

  Evennett, David

  Lamont, Norman

  Eyre, Sir Reginald

  Lang, Ian

  Fallon, Michael

  Latham, Michael

  Farr, Sir John

  Lawler, Geoffrey

  Favell, Anthony

  Lawrence, Ivan

  Fenner, Mrs Peggy

  Lawson, Rt Hon Nigel

  Finsberg, Sir Geoffrey

  Lee, John (Pendle)

  Fletcher, Alexander

  Leigh, Edward (Gainsbor'gh)

  Fookes, Miss Janet

  Lightbown, David

  Forman, Nigel

  Lilley, Peter

  Forsyth, Michael (Stirling)

  Lloyd, Ian (Havant)

  Forth, Eric

  Lloyd, Peter, (Fareham)

  Fox, Marcus

  Lord, Michael

  Franks, Cecil

  Luce, Richard

  Fraser, Peter (Angus East)

  Lyell, Nicholas

  Freeman, Roger

  McCrindle, Robert

  387

  McCurley, Mrs Anna

  Rathbone, Tim

  Macfarlane, Neil

  Rees, Rt Hon Peter (Dover)

  MacGregor, John

  Rhodes James, Robert

  MacKay, Andrew (Berkshire)

  Rhys Williams, Sir Brandon

  MacKay, John (Argyll & Bute)

  Ridsdale, Sir Julian

  Maclean, David John

  Roberts, Wyn (Conwy)

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

  Rost, Peter

  Major, John

  Rowe, Andrew

  Malins, Humfrey

  Sainsbury, Hon Timothy

  Malone, Gerald

  St. John-Stevas, Rt Hon N.

  Maples, John

  Sayeed, Jonathan

  Marland, Paul

  Shaw, Giles (Pudsey)

  Marlow, Antony

  Shepherd, Colin (Hereford)

  Marshall, Michael (Arundel)

  Silvester, Fred

  Mates, Michael

  Skeet, T. H. H.

  Maude, Hon Francis

  Smith, Sir Dudley (Warwick)

  Maxwell-Hyslop, Robin

  Smyth, Rev W. M. (Belfast S)

  Mayhew, Sir Patrick

  Speed, Keith

  Merchant, Piers

  Speller, Tony

  Meyer, Sir Anthony

  Spicer, Michael (S Worcs)

  Mills, Iain (Meriden)

  Stern, Michael

  Mills, Sir Peter (West Devon)

  Stevens, Lewis (Nuneaton)

  Moate, Roger

  Stewart, Allan (Eastwood)

  Molyneaux, Rt Hon James

  Stokes, John

  Montgomery, Sir Fergus

  Stradling Thomas, J.

  Morrison, Hon C. (Devizes)

  Taylor, Rt Hon John David

  Moynihan, Hon C.

  Thomas, Rt Hon Peter

  Murphy, Christopher

  Thompson, Donald (Calder V)

  Neale, Gerrard

  Thompson, Patrick (N'ich N)

  Needham, Richard

  Thorne, Neil (Ilford S)

  Nelson, Anthony

  Thurnham, Peter

  Newton, Tony

  Townsend, Cyril D. (B'heath)

  Nicholls, Patrick

  Trippier, David

  Norris, Steven

  Twinn, Dr Ian

  Oppenheim, Phillip

  Vaughan, Sir Gerard

  Osborn, Sir John

  Waddington, David

  Ottaway, Richard

  Wakeham, Rt Hon John

  Page, Sir John (Harrow W)

  Walden, George

  Page, Richard (Herts SW)

  Walker, Bill (T'side N)

  Parris, Matthew

  Walker, Rt Hon P. (W'cester)

  Patten, J. (Oxf W & Abdgn)

  Ward, John

  Pawsey, James

  Wardle, C. (Bexhill)

  Peacock, Mrs Elizabeth

  Warren, Kenneth

  Percival, Rt Hon Sir Ian

  Watson, John

  Pollock, Alexander

  Watts, John

  Porter, Barry

  Wheeler, John

  Portillo, Michael

  Winterton, Nicholas

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

  Wood, Timothy

  Powell, William (Corby)

  Young, Sir George (Acton)

  Prentice, Rt Hon Reg

  Price, Sir David

  Tellers for the Noes:

  Proctor, K. Harvey

  Mr. Michael Neubert and

  Pym, Rt Hon Francis

  Mr. Mark Lennox-Boyd.

  >Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No.33 (Questions on amendments):—
  The House divided: Ayes 271, Noes 165.

  division No.244]

  10.13pm

  AYES

  Adley, Robert

  Bendall, Vivian

  Aitken, Jonathan

  Benyon, William

  Alexander, Richard

  Best, Keith

  Amess, David

  Bevan, David Gilroy

  Ancram, Michael

  Biggs-Davison, Sir John

  Arnold, Tom

  Blackburn, John

  Ashby, David

  Body, Richard

  Aspinwall, Jack

  Bonsor, Sir Nicholas

  Atkins, Rt Hon Sir H.

  Boscawen, Hon Robert

  Atkins, Robert (South Ribble)

  Bottomley, Peter

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

  Bottomley, Mrs Virginia

  Baker, Nicholas (N Dorset)

  Bowden, Gerald (Dulwich)

  Baldry, Tony

  Boyson, Dr Rhodes

  Banks, Robert (Harrogate)

  Braine, Rt Hon Sir Bernard

  Batiste, Spencer

  Brandon-Bravo, Martin

  Bellingham, Henry

  Bright, Graham

  388

  Brinton, Tim

  Harvey, Robert

  Brooke, Hon Peter

  Haselhurst, Alan

  Brown, M. (Brigg & Cl'thpes)

  Havers, Rt Hon Sir Michael

  Browne, John

  Hawkins, Sir Paul (SW N'folk)

  Bruinvels, Peter

  Hawksley, Warren

  Bryan, Sir Paul

  Hayhoe, Rt Hon Barney

  Buchanan-Smith, Rt Hon A.

  Hayward, Robert

  Buck, Sir Antony

  Heathcoat-Amory, David

  Budgen, Nick

  Heddle, John

  Bulmer, Esmond

  Henderson, Barry

  Burt, Alistair

  Hickmet, Richard

  Butcher, John

  Hicks, Robert

  Butler, Hon Adam

  Higgins, Rt Hon Terence L.

  Butterfill, John

  Hind, Kenneth

  Carlisle, John (N Luton)

  Hirst, Michael

  Carlisle, Kenneth (Lincoln)

  Hogg. Hon Douglas (Gr'th'm)

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

  Holt. Richard

  Carttiss, Michael

  Hordern, Sir Peter

  Cash, William

  Howard, Michael

  Chope, Christopher

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

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

  Howarth, Gerald (Cannock)

  Clark, Dr Michael (Rochford)

  Howell, Rt Hon D. (G'ldford)

  Clarke, Rt Hon K. (Rushcliffe)

  Howell, Ralph (N Norfolk)

  Clegg, Sir Walter

  Hubbard-Miles, Peter

  Cockeram, Eric

  Hunt, David (Wirral)

  Cope, John

  Hunt, John (Ravensbourne)

  Cormack, Patrick

  Irving, Charles

  Couchman, James

  Jackson, Robert

  Cranborne, Viscount

  Jenkin, Rt Hon Patrick

  Critchley, Julian

  Jessel, Toby

  Crouch, David

  Johnson Smith, Sir Geoffrey

  Currie, Mrs Edwina

  Jones, Robert (W Herts)

  Dickens, Geoffrey

  Jopling, Rt Hon Michael

  Dorrell, Stephen

  Joseph, Rt Hon Sir Keith

  Douglas-Hamilton, Lord J.

  Kellett-Bowman, Mrs Elaine

  du Cann, Rt Hon Sir Edward

  Kershaw, Sir Anthony

  Dunn, Robert

  Key, Robert

  Durant, Tony

  King, Roger (B'ham N'field)

  Dykes, Hugh

  King, Rt Hon Tom

  Eggar, Tim

  Knowles, Michael

  Emery, Sir Peter

  Knox, David

  Evennett, David

  Lamont, Norman

  Eyre, Sir Reginald

  Latham, Michael

  Fallon, Michael

  Lawler, Geoffrey

  Farr, Sir John

  Lawrence, Ivan

  Favell, Anthony

  Lawson, Rt Hon Nigel

  Fenner, Mrs Peggy

  Lee, John (Pendle)

  Finsberg, Sir Geoffrey

  Leigh, Edward (Gainsbor'gh)

  Fletcher, Alexander

  Lennox-Boyd, Hon Mark

  Fookes, Miss Janet

  Lightbown, David

  Forman, Nigel

  Lilley, Peter

  Forsyth, Michael (Stirling)

  Lloyd, Ian (Havant)

  Forth, Eric

  Lloyd, Peter, (Fareham)

  Fox, Marcus

  Lord, Michael

  Franks, Cecil

  Luce, Richard

  Fraser, Peter (Angus East)

  Lyell, Nicholas

  Freeman, Roger

  McCrindle, Robert

  Fry, Peter

  McCurley, Mrs Anna

  Gale, Roger

  Macfarlane, Neil

  Galley, Roy

  MacGregor, John

  Gardiner, George (Reigate)

  MacKay, Andrew (Berkshire)

  Garel-Jones, Tristan

  MacKay, John (Argyll & Bute)

  Gilmour, Rt Hon Sir Ian

  Maclean, David John

  Glyn, Dr Alan

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

  Goodhart, Sir Philip

  Major, John

  Goodlad, Alastair

  Malins, Humfrey

  Gorst, John

  Malone, Gerald

  Grant, Sir Anthony

  Maples, John

  Gregory, Conal

  Marland, Paul

  Griffiths, Sir Eldon

  Marlow, Antony

  Griffiths, Peter (Portsm'th N)

  Marshall, Michael (Arundel)

  Grist, Ian

  Mates, Michael

  Ground, Patrick

  Maude, Hon Francis

  Gummer, John Selwyn

  Maxwell-Hyslop, Robin

  Hamilton, Neil (Tatton)

  Mayhew, Sir Patrick

  Hampson, Dr Keith

  Merchant, Piers

  Hanley, Jeremy

  Meyer, Sir Anthony

  Hannam, John

  Mills, Iain (Meriden)

  Hargreaves, Kenneth

  Mills, Sir Peter (West Devon)

  Harris, David

  Moate, Roger

  389

  Molyneaux, Rt Hon James

  Shaw, Giles (Pudsey)

  Montgomery, Sir Fergus

  Shepherd, Colin (Hereford)

  Morrison, Hon C. (Devizes)

  Silvester, Fred

  Moynihan, Hon C.

  Skeet, T. H. H.

  Murphy, Christopher

  Smith, Sir Dudley (Warwick)

  Neale, Gerrard

  Smyth, Rev W. M. (Belfast S)

  Needham, Richard

  Speed, Keith

  Nelson, Anthony

  Speller, Tony

  Neubert, Michael

  Spicer, Michael (S Worcs)

  Newton, Tony

  Stern, Michael

  Nicholls, Patrick

  Stevens, Lewis (Nuneaton)

  Norris, Steven

  Stewart, Allan (Eastwood)

  Oppenheim, Phillip

  Stokes, John

  Osborn, Sir John

  Stradling Thomas, J.

  Ottaway, Richard

  Taylor, Rt Hon John David

  Page, Sir John (Harrow W)

  Thomas, Rt Hon Peter

  Page, Richard (Herts SW)

  Thompson, Donald (Calder V)

  Parris, Matthew

  Thompson, Patrick (N'ich N)

  Patten, J. (Oxf W & Abdgn)

  Thorne, Neil (Ilford S)

  Pawsey, James

  Thurnham, Peter

  Peacock, Mrs Elizabeth

  Townsend, Cyril D. (B'heath)

  Percival, Rt Hon Sir Ian

  Trippier, David

  Pollock, Alexander

  Twinn, Dr Ian

  Porter, Barry

  Vaughan. Sir Gerard

  Portillo, Michael

  Wakeham, Rt Hon John

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

  Walden, George

  Powell, William (Corby)

  Walker, Bill (T'side N)

  Prentice, Rt Hon Reg

  Walker, Rt Hon P. (W'cester)

  Price, Sir David

  Ward, John

  Proctor, K. Harvey

  Wardle, C. (Bexhill)

  Pym, Rt Hon Francis

  Warren, Kenneth

  Rathbone, Tim

  Watson, John

  Rees, Rt Hon Peter (Dover)

  Watts, John

  Rhodes James, Robert

  Wheeler, John

  Rhys Williams, Sir Brandon

  Winterton, Nicholas

  Ridsdale, Sir Julian

  Wood, Timothy

  Roberts, Wyn (Conwy)

  Young, Sir George (Acton)

  Rost, Peter

  Rowe, Andrew

  Tellers for the Ayes:

  Sainsbury, Hon Timothy

  Mr. Ian Lang and

  St. John-Stevas, Rt Hon N.

  Mr. Archie Hamilton.

  Sayeed, Jonathan

  NOES

  Abse, Leo

  Clark, Dr David (S Shields)

  Alton, David

  Clay, Robert

  Anderson, Donald

  Clwyd, Mrs Ann

  Archer, Rt Hon Peter

  Cocks, Rt Hon M. (Bristol S.)

  Ashton, Joe

  Cohen, Harry

  Bagier, Gordon A. T.

  Concannon, Rt Hon J. D.

  Banks, Tony (Newham NW)

  Cook, Frank (Stockton North)

  Barron, Kevin

  Cook, Robin F. (Livingston)

  Beckett, Mrs Margaret

  Corbett, Robin

  Bell, Stuart

  Corbyn, Jeremy

  Bonn, Tony

  Cowans, Harry

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

  Cox, Thomas (Tooting)

  Bermingham, Gerald

  Craigen, J. M.

  Bidwell, Sydney

  Crowther, Stan

  Blair, Anthony

  Cunliffe, Lawrence

  Boothroyd, Miss Betty

  Cunningham, Dr John

  Boyes, Roland

  Dalyell, Tam

  Brown, Gordon (D'f'mline E)

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

  Brown, Hugh D. (Provan)

  Deakins, Eric

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

  Dewar, Donald

  Brown, Ron (E'burgh, Leith).

  Dixon, Donald

  Bruce, Malcolm

  Dormand, Jack

  Caborn, Richard

  Douglas, Dick

  Campbell, Ian

  Duffy, A. E. P.

  Carter-Jones, Lewis

  Eadie, Alex

  Cartwright, John

  Eastham, Ken

  390

  Evans, John (St. Helens N)

  Maynard, Miss Joan

  Ewing, Harry

  Meacher, Michael

  Fatchett, Derek

  Michie, William

  Faulds, Andrew

  Mikardo, Ian

  Field, Frank (Birkenhead)

  Milian, Rt Hon Bruce

  Fields, T. (L'pool Broad Gn)

  Miller, Dr M. S. (E Kilbride)

  Fisher, Mark

  Mitchell, Austin (G't Grimsby)

  Foster, Derek

  Morris, Rt Hon A. (W'shawe)

  Foulkes, George

  Morris, Rt Hon J. (Aberavon)

  Fraser, J. (Norwood)

  Oakes, Rt Hon Gordon

  Freeson, Rt Hon Reginald

  O'Brien, William

  Freud, Clement

  O'Neill, Martin

  Garrett, W. E.

  Park, George

  George, Bruce

  Parry, Robert

  Gilbert, Rt Hon Dr John

  Patchett, Terry

  Godman, Dr Norman

  Pavitt, Laurie

  Golding, John

  Pendry, Tom

  Gould, Bryan

  Penhaligon, David

  Gourlay, Harry

  Pike, Peter

  Hamilton, James (M'well N)

  Prescott, John

  Hancock, Mr. Michael

  Radice, Giles

  Hardy, Peter

  Randall, Stuart

  Harman, Ms Harriet

  Redmond, M.

  Harrison, Rt Hon Walter

  Rees, Rt Hon M. (Leeds S)

  Hart, Rt Hon Dame Judith

  Richardson, Ms Jo

  Hattersley, Rt Hon Roy

  Roberts, Ernest (Hackney N)

  Heffer, Eric S.

  Robinson, G. (Coventry NW)

  Hogg, N. (C'nauld & Kilsyth)

  Rooker, J. W.

  Holland, Stuart (Vauxhall)

  Rowlands, Ted

  Home Robertson, John

  Sedgemore, Brian

  Howell, Rt Hon D. (S'heath)

  Sheerman, Barry

  Howells, Geraint

  Sheldon, Rt Hon R.

  Hoyle, Douglas

  Shore, Rt Hon Peter

  Hughes, Dr. Mark (Durham)

  Short, Ms Clare (Ladywood)

  Hughes, Robert (Aberdeen N)

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

  Janner, Hon Greville

  Silkin, Rt Hon J.

  John, Brynmor

  Skinner, Dennis

  Kaufman, Rt Hon Gerald

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

  Kennedy, Charles

  Soley, Clive

  Kilroy-Silk, Robert

  Spearing, Nigel

  Lambie, David

  Steel, Rt Hon David

  Lamond, James

  Stewart, Rt Hon D. (W Isles)

  Leadbitter, Ted

  Straw, Jack

  Leighton, Ronald

  Thomas, Dr R. (Carmarthen)

  Lewis, Ron (Carlisle)

  Thorne, Stan (Preston)

  Lewis, Terence (Worsley)

  Tinn, James

  Litherland, Robert

  Wainwright, R.

  Lloyd, Tony (Stretford)

  Welsh, Michael

  McCartney, Hugh

  White, James

  McDonald, Dr Oonagh

  Williams, Rt Hon A.

  McGuire, Michael

  Wilson, Gordon

  McKay, Allen (Penistone)

  Winnick, David

  McKelvey, William

  Woodall, Alec

  MacKenzie, Rt Hon Gregor

  Young, David (Bolton SE)

  McTaggart, Robert

  McWilliam, John

  Tellers for the Noes:

  Madden, Max

  Mr. Frank Haynes and

  Martin, Michael

  Mr. John Maxton.

  Mason, Rt Hon Roy

  Question accordingly agreed to.
  Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House supports the Government's sound financial policies to reduce and contain inflation, to provide the basis for a fifth successive year of economic growth and to secure a sustained rise in living standards.

  Frozen Foodstuffs
  10.23 pm
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I beg to move,
  "That this House takes note of European Community Document No. 9402/84 on the approximation of laws relating to quick frozen foodstuffs for human consumption; and supports the Government's intention to oppose Community measures in this field, unless they can be modified to meet United Kingdom interests.
  The Ministry's explanatory memorandum which is before the House sets out the background for this evening's debate concerning a proposal by the Commission for a Council directive relating to quick frozen foodstuffs for human consumption. The directive is an attempt by the Commission to harmonise member states' laws on frozen foodstuffs which they consider constitute a barrier to intra-Community trade. Let me, however, fill in some details about what the Commission is proposing and why.
  The Commission has had plans to introduce proposals for harmonisation on quick frozen food for the past 10 years. The first working group meetings began in Brussels in 1975. The United Kingdom made it clear from the start that it did not favour a directive in this area and was certainly opposed to one applying to the local distribution and retail end of the frozen food chain as these were essentially domestic issues which did not affect intraCommunity trade. Since that time, the Commission has produced various drafts for discussion at working group level, and each time the United Kingdom has argued strongly that there has been no need for such a directive.
  Despite those criticisms, in September 1984 the Commission finally put formal proposals to the Council. Under this directive, all frozen food, with the exception of ice cream, that had undergone a defined freezing process would have to be kept at minus 18 deg C or colder up to the point of retail. Certain upward fluctuations in temperature would, however, be permitted during storage, local distribution and in retail display cabinets. Member states would be required to conduct random checks on the equipment used for quick freezing and on the temperatures of quick frozen products.
  The Commission introduced these proposals because it claims that legislation covering all links in the cold chain guarantees the consumer a high quality finished product regardless of country of origin, and by means of appropriate labelling enables the consumer to distinguish a quick frozen product from refrigerated or other frozen products. It provides figures to show how the consumption of frozen food has grown rapidly over the last few years and which, incidentally, put the United Kingdom at the top of the league, but makes the point that intra-Community trade remains low. Why is that? The Commission claims that, according to the frozen food industry itself, the lack of trade between member states stems from the absence of common rules. To back that up, the Commission quotes examples of national laws made by France and Italy tending to put up technical barriers to trade. It does not believe that the UN-ECE agreement on the international carriage of perishable foodstuffs concluded in Geneva in 1970 solves these trade problems.
  Thus, the Commission says that a directive is necessary to protect consumers by guaranteeing product quality. It
  392
  does, however, recognise that at present some equipment used for local distribution or retail sales of frozen food is not able to run at the temperatures proposed in the directive and that there should therefore be a transitional period of 10 years to allow for normal depreciation of existing equipment.
  The House may ask, therefore, why the United Kingdom, alone among member states, has remained unconvinced by the Commission's arguments that a horizontal directive is required in that area. We do not consider that the Commission has adequately demonstrated that there are real intra-Community trading problems that would be overcome by a frozen food directive. The mere fact that there is a growing market for frozen food products is not in our view a reason in itself to introduce harmonisation measures. The commission cites the example of national laws introduced by France and Italy as proof that there are technical barriers to trade. Certainly in the case of France, whatever the theoretical position, we have had no real evidence that a French decree that has been in existence since 1964 has hindered British exports of frozen food. As to the Italian case, I can only say that if there have been difficulties that were peculiar to the frozen food sector arising from an Italian decree, our own exporters have not so far brought them to our notice.
  However, our chief reservation on the Commission's proposals arises from the fact that the directive would extend right through to local distribution and retail. We feel very strongly that these areas are a national matter, since any shortcomings would have little or no effect on the intra-Community trading position. It is not surprising, therefore, that retailers and wholesalers are the strongest opponents in the United Kingdom of a directive.
  Our retailers argue that there is no evidence that legislation is required on health grounds. They consider that it is inappropriate to introduce measures relating to the quality of frozen food, since quality is determined by a range of factors concerning the handling of the product which cannot satisfactorily be subject to legislation. They are concerned that the temperatures proposed could not be maintained during summer without additional air conditioning and they fear that the energy implications particularly for the small business man could be enormous, not to mention the capital costs involved in re-equipping with new freezer cabinets. These higher costs, they say, could well mean the abandonment by many retailers, especially the smaller ones, of quick frozen foods. In addition, they are proposing to introduce their own voluntary guidelines to regulate retail handling of frozen food.
  The wholesalers have expressed the same fears that the higher costs involved could hit the small businessman hard and in the long term could lead to a less competitive, more expensive market for frozen food. The manufacturers of frozen food have close contacts with other European manufacturers and have not been opposed to the principle of a directive, although they have not argued either that this proposed directive will lead to the removal of trade barriers.
  Mr. Austin Mitchell: What the hon. Lady is saying about the retailers prompts two questions. If we are alone, is it not our intention to use the veto to stop this from coming into force? If we do not intend to do that but rather, as the motion indicates, to seek

  393
  modification of the measures to meet United Kingdom interests, does that mean that the prime modification that this country wants is the omission of the retailers? That would he to get the worst of all worlds. It would create a ludicrous position with a chain that ended before the retailer.
  Mrs. Fenner: No. I hope I can develop the argument and reassure the hon. Gentleman. I am talking basically about the wholesale and retail distributors and the manufacturers, but the view of our consumer organisations is balanced. Consumers see advantages in consistent rules affecting the whole of the frozen food chain, but any reduction in the number of outlets selling frozen food would be a disadvantage for the consumer.
  So much for the position within the United Kingdom. We know from discussions in the past in Brussels that our doubts about the need for a directive are not shared by other member states. France and Belgium see the proposal as a means of overcoming any problems that might arise particularly on the Italian frontier. Germany and the Netherlands also support the measures and the other member states have raised no objections to them. The Economic and Social Committee has given its backing, and the European Parliament is soon likely to. The formal proposals thus have now gained a new momentum. Despite the Government's own strong reservations about the need for this directive, and the opposition—or at least lack of enthusiasm—among our own trade and consumer interests, the Government recognise that serious consideration must be given to the views of other Community members. It may therefore be worth exploring whether amendments could be made to the proposals which would lead to rules which were not onerous and would enable us to move from our present position of outright opposition.
  Mr. Tony Marlow: If I remember rightly—I think I do—the Government were elected on the basis of various promises. One promise was that we would introduce the minimum possible legislation. My hon. Friend has said that she is opposed to this measure but that, if it is modified slightly so that she is not then so opposed to it, she might see her way to agreeing to it. That would mean introducing unnecessary legislation in breach of the promise that we gave to the British people. Surely she can be a little stronger than that.
  Mrs. Fenner: We also, in a referendum, reaffirmed our partnership in Europe.
  Mr. John Home Robertson: But not to this.
  Mrs. Fenner: No, there are indeed occasions when we battle our corner. We are alone in this but believe that there could be amendments which would enable us to move from our outright opposition. We could not do that unless our major anxieties are dealt with adequately in some revision of the present proposals.
  When the first working groups meet in Brussels to discuss the proposals, we shall have a much clearer idea of the possibilities of getting changes to the present draft. However, there have been signs during past negotiations that encourage us to believe that the Commission is not so firmly committed to the present draft that it would try to resist well argued changes in certain provisions. We should prefer the omission of the retail and local
  394
  distribution provisions. However, if they can be modified so that retailers and local distributors have a permanent right to keep quick frozen food at a slightly ligher temperature than required under the directive for the rest of the cold chain, we should have gone a long way to overcome our most serious criticism of the proposals.
  Mr. Douglas Hogg: What is the objection to the temperature of minus 18 deg C?
  Mrs. Fenner: We do not believe that it is necessary for health reasons or for the protection of the food. Minus 18 deg C is 0 deg F, and might have been chosen for that reason.
  Mr. Hogg: I appreciate that. Is my hon. Friend saying that most retailers do not have the equipment to achieve that temperature? Does it impose additional costs?
  Mrs. Fenner: I am so sorry that my hon. Friend did not hear me. I said at the beginning that the temperature will incur capital costs in the form of different freezer cabinets. That is why achieving a slight modificaton so that the temperature can be a little higher than minus 18 deg C would overcome the most serious criticisms.
  There are other changes that we would also like at a more technical level. For example, we will be looking carefully at the scope of the directive to see whether certain foodstuffs and ice cream should be omitted because other rules apply to them. The provision laying down the point at which the temperature of a quick frozen product is to be measured must also be considered carefully. Similarly, the enforcement provisions must be weighed up to see whether they need changing.
  Since the United Kingdom is the largest producer and consumer of frozen food products in the Community, our views on the practicalities of particular provisions ought to carry great weight, and we will not lift our general reserve on the proposals until our essential aims have been achieved.
  To sum up, therefore, we do not consider that the Commission has made a convincing case for the need to introduce legislation on frozen food, but we are prepared to give it further consideration provided that essential amendments can be agreed, particularly to protect our retail and local distribution interests.
  10.40 pm
  Mr. John Home Robertson: The Minister's attitude to this matter seemed to be less than convincing at some stages during her speech. We have learned to expect something called "the resolute approach" from this Government, but I am not sure that that is what we have been hearing about from the Minister.
  The common agricultural policy is in a state of collapse. The European Council has refused to deal with the crucial problems of cereal surpluses. The Commission does not know what to do about all these problems. But when we have the maximum disharmony on matters of importance we can always rely on the European Commission to produce a draft directive for the harmonisation of details. The show must go on, and here we are with a draft directive which would stipulate that the temperature of the centre point of each and every frozen pea in Europe must remain below minus 18 deg-C subject, of course, to permissible fluctuations of 6 deg-C.
  European harmonisation proposals generally start from a serious point and then reduce to the absurd, and this one

  395
  is no exception. This proposal for harmony in the refrigerators of Europe is intended to promote trade and to protect consumers. It will also, I suppose, promote the employment of an amazing new breed of cold store inspectors with special thermometers for taking the temperature at the centre of blocks of ice.
  It seems to me that this directive is most unlikely to promote trade and will do precious little for the protection of consumers. It gets off to a bad start because it is badly drafted. The Minister has already referred to that point.
  Mr. Hugh Dykes: Is the hon. Gentleman not aware that the Consumers Association is enthusiastically in favour of the proposal?
  Mr. Home Robertson: If the hon. Member can contain himself for a minute or two, I will come to that. He and I have for a long time been equally enthusiastic about the principle of European unity on various issues, so I hope we shall not break that unity on this issue.
  There is one very fundamental drafting point which I think we ought to clear up. Why does this directive deal only with quick-frozen foods? If it is desirable to impose common standards for frozen foods, why not apply them to all sorts of frozen foods—deep-frozen, quick-frozen, the whole lot? I know that a number of other detailed points about drafting have been made to the Government by interested organisations and I assume that they will be properly considered by the Government and by the Commission. Perhaps the Minister will say a bit more about that in due course.
  In the interests of consumers, clearly the most important consideration must be food hygiene and the risk of food poisoning. The Minister for Health told me in a written reply yesterday that there has not been a single case of food poisoning caused by quick-frozen food in Britain during any of the last five years. So there seems to be very little evidence of need for change on that account. But on the more general point of the quality of food products, I see that the Consumers Association—this is the point to which the hon. Member for Harrow, East (Mr. Dykes) referred—has welcomed the objective of ensuring what it refers to as
  "a consistent temperature chain for the distribution of frozen foods based on sound practice".
  The Consumers Association has identified a problem in retail outlets. It says that some retail frozen food cabinets are not up to the appropriate British standard. That raises two important points. The first is, as I understand it, that where there is any risk to public health from an inefficient or overloaded retail freezer cabinet local authority environmental health officers should have ample power to deal with the problem already. It would be helpful if the Minister could confirm that point.
  The second point is that, where a retail cabinet may be cold enough to prevent health risk but not cold enough to maintain the texture or the taste of the product, I have no doubt that both the consumers themselves and the manufacturers of the products will take appropriate steps to ensure that the retailer puts his shop in order. Once again, as I understand it, local authority trading standards officers would have the power to deal with such cases. Perhaps the Minister could confirm that point also.
  Mr. Austin Mitchell: Would my hon. Friend agree that a third point arises from the Consumers Association's
  396
  evidence on this matter, because it gives the impression that several retail food cabinets maintain temperatures above minus 20 deg C? If that is so, and if the Government are seeking to get the retailers out of the coverage of this piece of legislation, we are protecting piggy conditions in retailing by imposing severe restraints on the manufacturers, who will be harmed by those restraints.
  Mr. Home Robertson: If there is a problem in a corner shop in Grimsby, that would be most appropriately dealt with by local authority trading standards officers or environmental health officers. I cannot understand what European directives have to do with an issue such as that. I understand that powers already exist, and I would be obliged if the Minister could confirm that they do.
  Mr. Marlow: Will the hon. Gentleman give way?
  Mr. Home Robertson: No. I want to get on.
  It is essential that the interests of consumers be protected. The Government must ensure that local authorities have the resources needed to exercise their duty to supervise the hygiene and quality of frozen food in British shops. There is legitimate concern on this count, especially in view of the cuts in local authority finances in recent years, and the Government must be clear about their duty as well as the duty of local authorities.
  The Minister spoke of the cost to consumers of keeping food colder then necessary. She also mentioned the extra cost of new bureaucratic controls. I suppose that those problems could be overcome by phasing the introduction of any new standards and by adopting more sensible enforcement measures. But if there is any doubt about the correct maximum temperature to protect the interests of consumers, we would want the Government to err on the safe side—the cold side.
  Enforcement is likely to be of exclusively British interest, if experience in other areas of Community rules is anything to go by. I have tried to solve the puzzle of how one establishes the temperature at the centre of a frozen haggis or indeed, a frozen pea. Just how does one locate the epicentre of a fish finger? Even if one has established all those things, how does one do them without horribly mutilating the product with a drill? Even if one gets to the core of the frozen haggis and discovers that it is only minus 12 deg C, instead of minus 18 deg C, who is to say that that temperature rise is not a permitted fluctuation of
  "6°C during local distribution and in retail display cabinets" under article 5.2 of the draft?
  Apart from all that, I foresee some fine arguments about whether a cash and carry store is a local distribution centre. That brings me back to the method of measuring the temperature of products in store. I have done some homework on this, and read an intriguing suggestion by the Royal Environmental Health Institute of Scotland that we should consider the introduction of a temperature control technique that is in use in parts of the United States.
  This apparently involves placing a small thermometer capsule in each consignment in each cold store. I understand from the institute that this capsule comprises a small red ball of frozen liquid surrounded by frozen clear water. When there is a significant temperature rise, the frozen water and the red ball melt and mix. The capsule is sealed and the process cannot be reversed, and any consignment or container found with this defect in the

  397
  capsule is presumed to have thawed and it can therefore no longer be considered to meet the temperature control requirements for frozen food.
  That is one intriguing possibility, but it would be even simpler to improve the standards for refrigeration equipment in distribution stores, lorries and retail premises as well as in domestic freezers, as has been suggested by the United Kingdom Association of Frozen Food Producers, among others. That would be simpler than any of the other things we have talked about to ensure proper refrigeration standards all the way down the chain.
  This exercise is supposed to promote trade in frozen foods. We know that the United Kingdom agriculture, fishing and food industries can produce food products that are second to none. British and especially Scottish meat, fish, vegetables and soft fruit are of the highest quality. We have a highly developed processing, freezing and distribution industry and we now consume 16·6 kg of frozen food per head per year—67 per cent. more than the average for other EEC countries.
  With that combination of high quality raw materials and a highly developed freezing and marketing industry we ought to be able to take full advantage of the export potential of markets such as Italy, France and Germany, but it seems that that is not happening. According to a written answer from the Department of Trade and Industry which I received on Monday, both the value and the volume of our frozen food exports to other EEC countries are falling, while the value and volume of our imports from those countries are rising steadily.
  Since 1980, frozen fish exports have fallen from 24,000 tonnes to 22,000 tonnes, frozen fruit exports have fallen from 7,000 tonnes to 3,000 tonnes and frozen vegetable exports have fallen from 33,000 tonnes to 24,000 tonnes. Meanwhile, imports of frozen fish have risen from 30,000 tonnes to 42,000 tonnes, frozen fruit imports have doubled from 3,000 tonnes to 6,000 tonnes and frozen vegetable imports have increased from 40,000 tonnes to a massive 137,000 tonnes. We should therefore be taking steps to achieve some import substitution and export promotion in the area.
  I have discussed the draft directive with people from Birds Eye, Christian Salvesen and the excellent Scotfresh company which markets frozen vegetables not just from my constituency but from my own farm, so perhaps I should have declared an interest at the outset. None of those firms has complained about restrictive regulations affecting exports which could be relevent to these proposals. Nevertheless, there is clearly a serious problem in our trade balance with our European Community partners, presumably due to the fluctuating value of the pound. I shall be interested to hear the Minister's comments on that.
  The Government should be taking urgent steps to promote exports of British frozen food, but the Minister will be relieved to hear that the Opposition are inclined to agree with her that the directive as it stands is ill considered and could harm the United Kingdom food industry without achieving anything worthwhile for the consumer. We therefore agree with the general position that the Government have adopted on this.
  The message from this House to the European Commission and to the Council of Ministers should be that they are unlikely to achieve much harmonisation or
  398
  harmony even in the rarefied atmosphere of cold stores until they get to grips with some of the more fundamental problems of the common agricultural policy.
  10.53 pm
  Mr. John Watts: I support the robust opposition of my hon. Friend the Minister to the proposed directive. She has explained clearly that it is unnecessary and potentially damaging to our frozen food industry. My concern, however, is that it would reduce our ability to protect British consumers.
  Despite the pious protestations of the explanatory memorandum to the directive that the consumer
  "should be able to benefit from the products that suit hail best regardless of their country of origin"
  and
  "would be offered a range of products of faultless quality,"
  I am not optimistic that it will achieve that happy outcome.
  I am especially interested in paragraph 7 of the explanatory memorandum, which makes a critical reference to an Italian ministerial decree of 15 June 1971. Apparently the decree stipulates that quick frozen food produced abroad may not be imported into Italy unless it comes from establishments which are recognised as satisfactory by the Italian health authorities.
  If we had an equivalent control in our law, one of my constituents might have been spared a most disturbing experience recently. Her purchase of ratatouille, which had been imported from Spain, proved not to be of the faultless quality to which the enthusiasts of the directive have referred. Indeed, it proved not to be wholly vegetable, as there was animal as well. To her horror, she found the tasty morsel on the end of her fork was mouse, not aubergine. She complained to the local environmental health department but found that as the product came from abroad there was no action which could be taken against the producer. The producer in Spain was outside the scope of English law. I have been unable to detect any powers to exclude from our markets products such as the rodentatouille, if I may so describe it, that was purchased by my constituent.
  If the Government's approach is to seek to improve the directive, one essential modification to ensure that it meets the interests of British consumers is the provision of powers to prosecute any producer who supplies unsatisfactory goods. We should have the power also to ban further imports from that source of supply.
  As I hope that the implementation of the directive in English law is far off, both because of my fears of what it would do for the protection of our consumers and for the cogent reasons advanced by my hon. Friend the Parliamentary Secretary, I ask my hon. Friend to review the current regulations on imported frozen foods and to consider whether we need any further powers to protect the interests of consumers, such as my unfortunate constituent.
  10.57 pm
  Mr. Austin Mitchell: Grimsby has the greatest concentration of the frozen food industry within the United Kingdom, so the directive is of particular importance to my constituency, where the fish of the North sea and the north Atlantic meet the vegetables of the rich Lincolnshire farmlands in the factories of Birds Eye, Findus, Icelandic, Chaldur, Ross, Wold Farm and others. Grimsby is Britain's premier freezing and food

  399
  processing town and, therefore, the directive is an important measure for it as it is for the United Kingdom generally.
  Britain leads the world in the freezing industry. It was the first country to develop it on any scale and Britain has the most highly developed industry in the EEC, the highest consumption of frozen food per capita and the highest ownership of home freezers in the EEC. As we have the most highly developed industry, we have the most to lose from inadequate regulations or regulations which will impose harm on the industry. Britain's industry should have been more adequately consulted and its practice should have been taken more closely into account in the development of the proposals. A 10-year gestation period is an enormously long one and that is a measure of the failure to take British practices into account.
  The proposed regulations are remote from the practical side of the industry and that is the source of the main accusations against them. They amount to harmonisation pretty well for the sake of it. That is something with which we want to have no truck.
  It is understandable that the reaction has been adverse. It could be said that the reaction of the industry to the proposals has been a chilled one or that it has been praising the measure with faint damns. The United Kingdom Association of Frozen Food Producers says:
  "unlikely to serve any useful purpose for the UK industry or for UK consumers."
  The Wholesale Distribution Federation says:
  "The proposals would lead in the long term to a less competitive, more expensive and much smaller market for frozen food and one of the first victims would be the small business man."
  The National Cold Storage Federation is unhappy about the proposals'
  "atmosphere and the feel of what they say."
  The British Poultry Federation gives the proposals the bird and says that they are
  "unnecessary so far as the poultry industry is concerned."
  The detailed representation deals several body blows to the draft legislation. The frozen food producers emphasises that the proposal for date marks is misguided. The crucial factor is not the date, but the temperature. It does not matter how long a product has been kept, but whether it has been kept at the right temperature. It would be more sensible to mark the date of sale. If a product is stored at home under less than perfect conditions deterioration will begin when it is sold. Date marking relating to production is not the solution.
  As my hon. Friend the Member for East Lothian (Mr. Home Robertson) asked in his humorous analysis, how will the temperature at the centre be found? Will it have to be smashed, bored, drilled? Will Euro-inspectors armed with braces and bits have to travel around testing centre temperatures? The provision is ludicrous. The peripheries are as important as the centre when one eats.
  Article 13(2) is incorrect because the intention is to give retailers a sensible period in which to bring their cabinets up to standard. However, the tolerances in article 5, which should apply up to 1 January 1995, will not be available until after that date. After then goods must be maintained at minus 18 deg C for the transitional 10 years. That seems to stand the draft provisions on its head.
  400
  The Consumers Association say that tests reveal that the temperature in some retail cabinets is above minus 10 deg C, because they are too old, incapable or overloaded. That is not good enough.
  The standing group on food freezers recommended in 1976 that the trade should be allowed to deal with the problem voluntarily. But it has not been dealt with. We must face the need for reform at the retail end of the trade. It would be wrong to protect that section from its own inadequacies at the expense of imposing burdens on the rest of the trade.
  Why cannot we provide that cabinets be closed, as several EEC countries do? If temperatures rise to unsafe levels, particularly in the top layers, it would be sensible to ensure that the cabinets are kept closed.
  The trade says that it is better to have regulations based on International Standardisation Organisation standards for refrigeration. That is a more sensible way to impose control because it does not necessitate inspectors shoving bits and thermometers into fish fingers.
  Mr. Peter Thurnham: Is the hon. Gentleman aware that a British standard covers refrigeration equipment and that a code of good practice takes care of any inadequacies?
  Mr. Mitchell: Of course I am aware of that, but we are talking about machinery which might have to operate in Spain or Greece as well as in Britain. Therefore, the ISO standards are probably the more relevant standards to which to refer on a European-side basis. They relate to the class of countries in which that equipment can operate.
  The trade has put another point, not in evidence but in informal representations and discussions. The trade knows that, if the regulations are accepted on a European-wide basis, they will be enforced rigorously in Britain, because this is a law-abiding country, but will not be enforced with the same vigour and concern in other EEC countries. The burden that we are imposing on the most advanced industry is greater than the burden imposed on its competitors.
  What should we say in answer to these proposals? As one who has never been known to be a Euro-enthusiast, my answer is that we want to have nothing to do with it. Always be suspicious of Europeans bearing regulations. The firms in my constituency to which I have talked are not keen on these regulations. They see no advantage to be gained from them. My hon. Friend the Member for East Lothian made an important point when he chronicled the decline in our exports of frozen goods and the increase in imports. We imported £34 million of fish in 1980 and £53 million of fish in 1984 while our exports have decreased. Imports of vegetables increased from £14 million in 1980 to £62 million in 1984. This especially affects a firm such as Wold Farm, which is a large exporter of frozen vegetables. This decline in exports is due mainly to the overvaluation of sterling compared with other European currencies.
  We must ask whether the regulations will mean trade advantages. This brings me to the crucial point of the debate. I am suspicious — perhaps unfairly — of the Government's motion. The real question is: are we isolated? The Parliamentary Secretary appeared to say that we are on our own in opposing the regulations. Some trade associations have accepted them. Our key trade association does not think that great advantages will be gained from accepting the regulations.

  401
  If we are on our own in opposing the regulations, will we impose a veto? Do we have the nerve to say, "We are on our own"? The Parliamentary Secretary did not answer that crucial question. What will we do about the regulations? The motion states:
  "unless they can be modified to meet United Kingdom interests."
  I understand from that statement that we will not impose a veto but that we will try to modify the regulations in favour of United Kingdom interests. If those interests are the ones that I have mentioned, OK, but it would be wrong to modify the regulations to defend inadequate sales by retailers and wholesalers. It would mean getting the worst of all worlds. We shall be imposing an inspection regime with increased costs and difficulties on the manufacturers and those involved in the cold stores and the distribution system — the competitive part of our industry which needs to compete overseas — but not imposing it on retailers. We shall gain nothing. It is a case of all or nothing, because the food chain is a continuous process in which food must be maintained at a certain temperature until it gets to the home freezer and the table. Retailers are the weakest link in that chain. There is no point in regulating these other aspects unless they are properly integrated into the food chain. A chain with a weak link breaks, and that is what we shall be creating if we justify the opting out of retailers.
  I should be happier, therefore, if the motion did not contain that provision. If the Government are saying that we should accept it but not have it applied, say, to wholesalers and certainly to retailers, that would be wrong. We should reject it — we should defend the industry by vetoing it—but, if we are forced to accept it, we should accept it all, modified only to make sense of it and applied to the technical points that the industry has raised, not to excuse inefficient retailing.
  11.11 pm
  Mr. Peter Thurnham: The hon. Member for Great Grimsby (Mr. Mitchell) said that he was suspicious of the Government's motives. I am suspicious of the motives of the people in Brussels.
  Indeed, I am disappointed that the directive has reached this point. I thought we had knocked it on the head a long time ago. It is nearly two years since I wrote to the Minister — I also wrote to the Secretary of State for Energy and the Minister of Agriculture, Fisheries and Food—about the problems inherent in the directive. The replies that I recieved then suggested that we were so opposed to it that we would hear no more about it.
  I am disappointed, therefore, that it has reached this stage and that the European Parliament is thinking of proceeding with it. I wonder what is going on in Brussels and what our people are doing there. If we must belong to this club, why not shift its headquarters to this country so that we can run it properly.
  I should declare an interest, because I run a refrigeration engineering business. But all hon. Members have an interest, because the British people consume an enormous amount of frozen food. This is a sphere about which we have considerable knowledge.
  The directive is so wrong that we can find little in it with which to agree. I support the Government in saying that we want to amend it so that we can use it, and the two issues that we must face are the need to reduce burdens on business generally and to remove Common Market barriers.
  402
  The hon. Member for Great Grimsby misses the point when he says that the directive should aim at the retail industry. Nobody will pop over from Brussels or anywhere else to Grimsby to buy a packet of peas. We must make trade in the wholesale product and in refrigeration equipment easier so that we can export freely and have a good market. We should not impose burdens on the retailer when, frankly, they are not necessary.
  I know from my experience of the industry that we have not had many health and hygiene difficulties. My problems are related mainly to trying to make a profit. Any problems that might present themselves are more likely to be related to noise, for example. I should be interested to hear whether any hon. Members have had brought to their attention problems relating to refrigeration. The only one that has been brought to my attention related to noise.
  It is estimated that, if the directive is applied, the energy consumption of equipment in Britain will double, the noise factor will double and the extra investment in equipment will be £500 million—but to what effect? It has been pointed out that there has not been a serious case of food poisoning reported in the last five years.
  The number of people who would be affected by the proposed legislation is great. There are said to be 34,000 independent retailers in Britain selling frozen food. They can already look to British standard 3053 and to the proposed code of practice, which the retail consortium has put forward, entitled,
  "Guidelines for the handling of frozen foods at retail levels."
  I should have thought that they were satisfactory. They comply with long-established practice in this country, where, I remind the hon. Member for Great Grimsby, the climate is not the same as in Italy. It is ridiculous to impose on retailers here the same conditions for retail equipment as would be needed in countries with much higher ambient temperatures.
  All the comments from the industry are that this legislation is not necessary. Why cannot the people who represent us in Europe get the point across? To improve trade, we should be removing the barriers and looking for legislation that finds common factors between member states and builds on them, rather than aiming at something that is way beyond what the country with the greatest experience in the industry is doing.
  We should seek to amend the legislation to include practices that are agreed here and that can be used as the basis for common points throughout the Community. We could then apply that as a directive, so that we do not have any immediate changes imposed here, and build from there. If it is then felt necessary to move towards the stipulation of minus 18 deg C, whether it is applied at air temperature or at the core, it can be done at a rate on which everybody agrees, without imposing burdens on business. Not only in this country, but in the Community as a whole, there are many unemployed people, and I am sure that they are not unemployed because of a lack of directives along these lines.
  11.16 pm
  Mr. Charles Kennedy: I share the apprehension that the hon. Member for Bolton, North-East (Mr. Thurnham) and every other hon. Member have expressed. However, I do not know how far down the line I would go in support of the hon. Gentleman's thesis, which seemed to be in favour of something that I would support—a truer Common Market—while saying that

  403
  there is not a place for some moves towards harmonisation. Although we are not very happy with this directive, we cannot have our cake and eat it—even a frozen one. That is one of the difficulties that we face.
  I agree with the hon. Member for Great Grimsby (Mr. Mitchell) about the difficulties with the sea fishing related industries. He will appreciate that my constituency has similar interests, although they are not as concentrated as in his constituency. I can envisage a similar lack of enthusiasm for the directive in my constituency.
  However, I should be interested to learn about the attitude of Lord Cockfield towards the directive. He has made his name in a more robust and dramatic way than the Prime Minister may have anticipated when she first sent him to Brussels, through his fairly aggressive—and often laudatory — attitude towards the breaking down of barriers within the Common Market. How is the Conservative appointee viewing this development?
  The policing that would be involved in carrying out the directive could lay considerable burdens on the British taxpayer, and doubtless on the industry and the retailing outlets. The hon. Member for East Lothian (Mr. Home Robertson) spoke of the written answer giving facts about the absence of food poisoning as a result of frozen food over the past five years. That shows clearly that our policing, and the standards that we are enforcing, must be pretty good.
  Although we would be interested to learn a little more about the Government's intentions, as one who generally supports the move towards majority voting in Europe—I accept that that might not command much support among certain hon. Members—I would not expect the Minister to say this far in advance whether the Government intend to cast a veto on the directive. That would not be good politics now, and would hardly encourage the granting of concessions, which the Government will look for in due course.
  We wish the Government well in trying to make more sense of the proposal from Europe. We share the anxieties which have been expressed from both the political and the constituency points of view. With that in mind, we hope that, during the remainder of this year and next year, steps will be taken to the satisfaction of Britain and in harmony with our partners in Europe.
  11.20 pm
  Mr. Hugh Dykes: I agree with the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) that the veto is abhorrent, especially in a case such as this, I was glad to see my hon. Friend the Minister shake her head in disapproval of it and to hear her say that that would be too much. In addition to the fundamental rejection of the veto, there is the lack of enthusiasm about revealing the negotiating position. It is good that the United Kingdom Government are becoming more enthusiastic about the idea of banishing veto-itus. Indeed, last week the Government would surely have been tempted to denounce the Germans for an utterly selfish stance on the refusal to consider the reduction in cereal prices and for applying a national veto to a relatively minor matter, caused only by a schism in the two main German ruling parties.
  On this issue one sees the virtues of the way in which Community legislation is originally proposed by the Commission, processed through the Council of Ministers,
  404
  consulted about with the European Parliament, and then passed through a civilised process of consultation and general agreement. That should be the basis on which qualified majority voting takes place, if a vote is necessary. That virtue of the Community is often beyond the comprehension of Members of Parliament. With conflict politics, with which we are all so drenched, we cannot understand having a process of consultation and a gradual elaboration of sensible legislation between various institutions and the countervailing forces that they represent. How awful! How immoral! Surely we must have the gladiatorial clash, a tremendous vote and schism, and the other party saying that it will repeal the legislation when it is in power. Otherwise it is not the macho behaviour to which we as legislators in the British Parliament are used. The Community has shown us another way in which to produce legislation, similar to the habit and custom of other member states, such as Germany and Italy. We must get used to the process, even the hon. Member for Great Grimsby (Mr. Mitchell), because we have been a member of the Community since 1973.
  The Minister has got the matter about right by saying that there are considerable misgivings about the details, including the temperature stipulation, but that we shall have further discussions and elaborate it finally into a rather good directive, which will be good for United Kingdom industry. It was interesting and amusing to see all the contradictions in various speeches. The advice of the hon. Member for Great Grimsby became so tortuous and complicated, one was almost unable to follow it. He advised not to apply the veto—
  Mr. Austin Mitchell: Will the hon. Gentleman give way?
  Mr. Dykes: I will not because of lack of time and because the hon. Gentleman made a much longer speech.
  Mr. Mitchell: I wish to make my advice clear to the hon. Gentleman.
  Mr. Dykes: I am sorry not to give way, but I have been asked to speak briefly, which is why I am rushing my words now. I think I know what the hon. Gentleman meant. However, he reflected to some extent the contradictions that people feel.
  The directive is imperfect now but is potentially extremely good. It would help United Kingdom domestic industry, which is the most powerful among member states. It should be exporting much more. Why does it not? The directive will eventually help the industry to do so. A directive on a technical matter, such as this, always looks rudimentary and primitive when it starts, but 10 years after it has been passed it will be the basis of a great expansion of trade in a particular product or series of products. The directive is good incipiently and will be better if the Government make robust efforts to ensure that the negotiations lead to a constructive conclusion.
  11.25 pm
  Dr. Ian Twinn: I am pleased to note the all-party opposition to the directive. It is a worry to hon. Members on both sides of the House who still have some remnants of a European ideal to see directives rolling from the Commission that can bring no benefit to Europe, and certainly not to this country. We are, for the most part, dealing with a trade that is within this country and not intra-Community trade. There may be some need for

  405
  harmonisation in dealing with intra-Community trade, but not for the bulk of the trade which is within the United Kingdom.
  I cannot share the hope of my hon. Friend the Member for Harrow, East (Mr. Dykes) that consensus will produce sensible results. This directive has been rolling around the Commission for 10 years—it has produced rubbish even after 10 years. I do not know how much longer we need to produce a sensible directive; I suspect that we will not achieve one.
  There are no benefits to this country, certainly not in trade, and it is doubtful whether there will be any for consumers. There is no evidence of a health hazard, and few problems result from that industry. The United Kingdom experience is good. Our standards are higher than the United States, which is the largest consumer of frozen foods—and we have a reasonably healthy trade there—and we hve the highest standards in Europe. Our voluntary code for the large manufacturers and distributors is approaching the standards in the directive. Therefore, we are approaching the standards in the directive by voluntary means.
  The Commission wants us to produce some system of inspectors wandering around the countryside — as we have humorously heard — boring holes in frozen fish fingers to find out their core temperature. That is an amusing thought, but it is technically known as destructive sampling, which is precisely what will happen. It will produce additional costs for retailers, manufacturers and the consumers. The price of a fish finger will rise if the directive goes through. It may not rise by very much, but it will certainly add to the cost of living. We should not contribute towards that.
  There is also the cost to the taxpayer. We have an efficient system of trading standards — something of which we can be proud. However, that creates problems when we start talking to our European partners. We will comply with the directive if it is passed; we will be frighteningly efficient in our compliance with it. We will have more trading standard officers wandering around boring holes in food and saying, "No, no, this food has risen above — 12 deg C, so it has to go."
  Italy has virtually no system of trading standards, so I cannot see how it intends to implement the directive. The same is virtually true for France. The truth is that it has little intention of implementing the directive. One wonders why the country which initiated the scheme in the first place is pushing behind the scenes.
  We need to look at the retail trade and the corner shop, where retail cabinets may fall below standard because they are old or overcrowded, need maintenance or because the retailers bought cheap Italian products that do not meet British standards. However, I recommend that we look to the International Standards Organisation standards. If we want to ensure that we have good standards to protect the consumer and if we are convinced that the consumer needs protecting, we should enforce ISO standards for cabinets. That is relatively simple without raising costs.
  I encourage my hon. Friend to resist the directive and not to lead us down the path of increased costs of an inspectorate, increased costs to the industry and no tangible benefit to the consumer.
  11.29 pm
  Mr. David Maclean: I congratulate my hon. Friend the Parliamentary Secretary
  406
  not only on the substance of what she said, in that she resisted this most meritorious of Brussels directives, but on the fact that she managed to keep a straight face—as an excellent politician should be able to do — when reading out the reasons why the Commission thought the directive was essential.
  The directive started life being so nonsensical that it forced us to go into protracted dialogue with our European colleages and to become more communautaire and more pro-European in the process. It is an interesting exercise, but if, as my hon. Friend the Member for Edmonton (Dr. Twinn) said, we started with rubbish, went through all this marvellous dialogue and came out with rubbish, we will have done a great disservice to the British people and to Parliament.
  There are only two reasons for any legislation on food safety grounds. The first, and by far the most important, is health and safety. Is a particular law necessary to safeguard the lives of our citizens who may eat the product? We all know that this requirement is not necessary. We have heard on numerous occasions tonight that there have been no examples of serious illness or death in the last five years. The reference is to the last five years, because that is the only period for which the Government can answer. If we checked the records, no doubt we would find that over the preceding five years, and the five years before that, there was no death or serious injury caused by any health problem associated with quick-frozen food
  The cases in hospitals and elsewhere that have caught the headlines about terrible outbreaks of salmonella and so on were caused not by frozen food but by poor hygiene in regard to food that had already been cooked and left out all day. So there is no health ground for the directive.
  The second reason for enshrining something in legislation would be sound commercial grounds. Again, this directive fails the test of commerciality. We have already been told that in this country we have one of the most vigorous frozen food industries. We are one of Europe's largest and most successful producers. The British housewife is one of Europe's largest users of frozen food. Therefore, there is no consumer resistance in the United Kingdom to buying quick-frozen food. In fact, one of the biggest worries of many of the farming unions is that there is a move towards easy-to-cook frozen foods and away from the traditional roast. We should recognise that and gear our marketing accordingly. Therefore, there is no consumer resistance to force us to adopt the directive and to persuade consumers that it is safe and good for them to eat quick-frozen food.
  Nor is there any commercial interest in regard to the export market. We have always been poor at exporting much of our food products. We have failings in the marketing of frozen food, as we have in all other commodities that are not within the scope of the directive. The solution is not to go ahead with the directive. It will not open up vast markets overseas that we will be able to capture easily. If our experience of the last 15 years is anything to go by, we know that the reverse is true.
  The only reason why we have the draft directive is that we have a frozen food market that is ripe for plucking. The other EEC countries recognise that, as they have done in other of our commodities in which they wanted to capture a large share of the market. The directive fails the test of commerciality.
  What, therefore, should my hon. Friend do? Being reasonably communautaire, we cannot reject the directive

  407
  outright. We must continue the process of negotiation to get something more sensible. In that regard it is not right to stick to the temperature requirement of minus 18 deg C. That is dangerous and unnecessary. We have heard that it would be impossible to enforce with teams of inspectors checking the insides of peas, fish fingers or Brussels sprouts. I shall not go into the technicalities. I merely repeat that a temperature of minus 18 deg C. is an unnecessary and penal restriction when we have for generations lived on quick-frozen food that may have been colder or less cold. That temperrature is not required for health and safety reasons.
  My hon. Friend the Minister said that there are 38,000 retailers of quick-frozen food. That is an underestimate. There might be that many big retailers, but almost every village in my constituency has a post office or little shop, perhaps even a garage, with freezers containing ice cream and frozen foodstuffs.
  Mr. Thurnham: Does my hon. Friend agree that the one small glint of sense in the directive is that ice cream is not to be included, so that might reduce the number of outlets that my hon. Friend has in mind?
  Mr. Maclean: I was not suggesting that ice cream is not to be included. The freezers that I have seen also have frozen foodstuffs that would come within the scope of the directive.
  It would be iniquitous to insist that all outllets should keep food at minus 18 deg C, or within a tolerance of plus or minus 3 deg. C, at all times. As the hon. Member for Great Grimsby (Mr. Mitchell) said, it would be ridiculous, just to meet rigid but unnecessary European standards, to get inspectors to check food at the point of manufacture, at the point of transport and at the point of distribution, but, when it gets to the final link in the chain, to say, "We will not inspect it at this point." That would be nonsense.
  If we must go along with the directive, the only way forward is to pursue ISO standards or British safety standards for refrigeration equipment. My hon, Friend the Member for Bolton, North-East (Mr. Thurnham) should be pleased about that, as it would generate more business for his company. It is honourable of him to oppose a directive which would generate business for the refrigeration industry because he does not believe that it is sensible.
  There is no point in pursuing the minimum temperature part of the directive, because that would be inherently dangerous for our trade. We should pursue the line of safety standards of equipment. It is easier to police and we could do it alone, just as we have in the past. There is no need for a European directive, but we must harmonise European standards. We must also protect our retailers.
  When I lived in the constituency of the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) and we had one of those terrible winters when we were cut off for nine days, we discovered on the second day that it would be a long time before the electricity supply would be restored, so we emptied the deep freezes and threw the food outside. We were not being profligate. I do not know whether the temperature outside was minus 18 deg C, but it was pretty dashed cold. We buried the food in 6 foot of snow and it tasted pretty good when we dug it out again. No doubt the Sicilians will not understand that story, but I feel quite fit
  408
  and hearty. I went to a Burns supper and used my Skean-dhu to open the haggis. The temperature inside was pretty hot and the whisky made it even hotter. We are alive and kicking today.
  The draft directive has been called horizontal legislation. We should turn it into vertical legislation and put it straight down into the bin.
  11.38 pm
  Mrs. Fenner: There have been some very witty speeches. Perhaps I should follow up the more serious ones first.
  The hon. Member for East Lothian (Mr. Home Robertson) asked why only quick-frozen food is covered. The draft directive imputes a wide meaning to the term "quick-frozen", which includes all products except those frozen in still air. We shall in the working groups seek clarification of the term's coverage, so that there are no anomalies in the directive.
  The hon. Gentleman made much of measuring the centre of the product. There has been a lot of criticism of taking the temperature at the centre of the product. The directive says that it should be at the centre of the product and although techniques exist for this, we shall be discussing with manufacturers and retailers whether they would prefer air temperature or temperature at the centre of the product. There is a risk that temperatures measured elsewhere than at the centre could result in even tighter controls and greater energy expenditure. So we shall have to look at our arguments on that to make sure that we are not imposing an additional burden.
  The hon. Member for Great Grimsby (Mr. Mitchell) asked whether we had consulted industry properly on this. We have consulted repeatedly with our manufacturers in the United Kingdom. We have said that the directive as drafted, however, does not take account—we agree with the hon. Member for Great Grimsby—of their technical or manufacturing expertise, and we shall aim to be correcting this in discussions on the basis of what we regard as our greater technical knowledge in this field.
  My hon. Friend the Member for Slough (Mr. Watts) raised the disturbing matter of the constituent who had ratatouille — rodentatouille, he called it, rather appropriately. But whether or not there is a directive on frozen food will not affect any occurrence such as this, which is due to manufacturers' human error in not checking sufficiently closely at the packing stage that there are no foreign bodies. Incidentally, I spent the morning at a seminar on foreign bodies in food, so I am up to date on that.
  Foreign objects can be, of course, and sometimes are, found in any foodstuffs, whether or not they are frozen. A dead mouse is a pretty horrible object in food, whether it is frozen or thawed. When complaints are made to enforcement officers by the public, if, as in this case, they concern imported food, those officers usually ask the Ministry of Agriculture, Fisheries and Food to approach the embassy concerned and ask them to approach the appropriate enforcing authority in their country for an investigation. As much detail as possible to facilitate identification of the foreign manufacturer is given and the Ministry asks for and often receives the results of the investigation.
  Of course, if an object is found in food produced in the United Kingdom, the enforcement authorities can take action against the guilty parties and prosecutions are

  409
  usually instituted under section 2 of the Food Act 1984—that is, on the ground that the food is not of the nature, substance or quality demanded. My officials will take up with the Spanish embassy the matter raised by my hon. Friend the Member for Slough if he would care to provide me with the relevant details.
  We were asked whether we could tighten up import controls in this respect. We have sent out a consultative document on the review of food legislation. We shall be considering the comments on that document to decide whether steps should be taken to go ahead with changes in food legislation. One of the recommendations of the consultative document is to tighten up the requirements of the importers' code of practice and determine just how much they should do to ensure that their suppliers have followed hygienic production methods, and so on. So the importers would have the responsibility of ensuring that they were importing from a supplier who used hygienic methods.
  The hon. Member for Great Grimsby asked whether, if we are concerned about retail and wholesale distribution standards, we should not be discriminating against manufacturers if we did not carry it right through the chain. There is less problem with maintaining a minus 18 deg C temperature at manufacturing and international distribution levels, partly because those sectors tend to be already geared to working at that temperature and partly because handling conditions are so very different.
  For example, in a retail shop, the opening and shutting of cabinets makes it much more difficult to maintain a very low temperature, even when tolerances are allowed, than in a factory. A retailer might be forced to keep his cabinets well below this level, and might even have to install air conditioning to have any chance of the temperature at the centre of the product being minus 18 deg C. Similarly a van making local deliveries might have to open and shut the door at several shops, and would therefore find it much more difficult to maintain minus 18 deg C. than a long-distance carrier making a large delivery at the end of a long journey to a single depot.
  The attempt in the directive to cover purely domestic arrangements such as local distribution provisions and conditions in retail shops seems to go beyond what can be justified as a directive under article 100 of the treaty of Rome, which is concerned with the removal of obstacles to the establishment and maintenance of a Common Market. I should tell my hon. Friend the Member for Harrow, East (Mr. Dykes) and the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) that we are concerned with maintaining a true Common Market, but we believe that at the local distribution and retail levels this is not concerned with intra-Community trade.
  There is no virtue in maintaining a temperature that is lower than justified on grounds of health and quality. Rather, it constitutes a waste of energy and money. As my hon. Friend the Member for Penrith and The Border (Mr. Maclean) said, it could also reduce the number of retail outlets carrying frozen foods, even though at present they are demonstrably capable of handling a range of wholesome quality products. As a number of hon. Members have pointed out—the hon. Member for East Lothian had this confirmed in a written reply—there have been no health problems at all with frozen foods sold by retailers. We are determined not to be left with a directive that will impose real and unnecessary economic costs, particularly on small enterprises serving local needs.
  410
  As I told my hon. Friend the Member for Grantham (Mr. Hogg), who I believe has had to leave, there is no scientific case for minus 18 deg C. It just happens to be 0 deg F., and we believe that was set as an easy marker.
  My hon. Friend the Member for Edmonton (Dr. Twinn) said that the directive was rubbish. I take issue with him. The hon. Member for Great Grimsby asked for a statement on the use of the veto. The hon. Gentleman will accept that we are the largest producer and consumer of frozen foods in the Community, so our views can be expected to carry considerable weight because we speak from wide practical experience.
  Hitherto, we have argued on the principles of the directive. We have not been greatly concerning with the detailed, technical features of the proposals. But once we address ourselves to these issues, we will be in a good position to influence opinion on this subject.
  The Government will not argue for temperatures to be tolerated that would involve any risk to health, but I reiterate that minus 18 deg C goes far beyond what is necessary on health grounds. We think that quality can be adequately safeguarded by voluntary control The manufacturers already have a code of practice, and the Retail Consortium is in the process of finalising guidelines for the handling of quick-frozen foods. There will be a marked disadvantage to consumers if over-strict regulations lead to closure of retail outlets which previously supplied frozen food or the imposition of unnecessary costs on retailers.
  My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) asked why we had brought this forward when we so resolutely opposed it, and he submitted a paper based on his wealth of experience in the refrigeration industry. We still do not accept that the Commission has adequately shown that there are real intra-Community trading problems which would be overcome by a frozen food directive on the lines proposed. Nevertheless, the Commission's views have gained much support from other member states, they have the backing of the Economic and Social Committee and they will probably be supported by the European Parliament. In those circumstances, it is sensible to re-examine the proposals to see whether they can be made to conform more closely with United Kingdom interests.
  Mr. Thurnham: Will my hon. Friend bear in mind the fact that the directive would mean a massive investment of £500 million in equipment that this country cannot possibly provide and which would have to be imported mainly from the EEC? Does she agree that we should be on our guard against any underlying motive of that kind by other member states, given that the United Kingdom is the biggest market in the Community for such equipment?
  Mrs. Fenner: I have made it clear that we are concerned about the capital investment that would be required if small retailers had to meet these proposals, but I do not think that my hon. Friend should be too pessimistic about motives. We are mindful of the cost, and we take the view that unless the proposals can be made to conform more closely with out interests and the unnecessarily onerous features removed from them, continued opposition is the only possible course. We hope, however, that it may be possible to safeguard our interests by seeking commercially sensible and technically sound amendments.

  411
  I hope that I have covered all the points raised in the debate. It is clear from the number of Members present at this time of night that there is great interest in this matter, and we shall carefully consider the views that have been expressed. There is now considerable momentum behind the proposals and this is an opportunity to consider what is the best course of action, taking into account the various interests throughout the United Kingdom.
  I believe that there is no option but to oppose the directive in its present form. It is unnecessary and goes far beyond what is justified in terms of facilitating intra-Community trade. It fails to take account of the practical realities of local distribution and retailing of frozen food and in some areas it appears to contain technical inaccuracies and confusions. Nevertheless, I believe that it is worth trying to get the proposals modified so that they become sounder and more acceptable to the United Kingdom, particularly at the local distribution and retail levels.
  This approach offers an ultimate safeguard against attempts to impose extensive and unjustified constraints and allows more constructive tactics to be employed. Given the favourable climate of opinion in other member states, it will probably offer the best chance to reach generally acceptable conclusions on the treatment of frozen food.
  Question put and agreed to.
  Resolved,
  That this House takes note of European Community Document No. 9402/84 on the approximation of laws relating to quick frozen foodstuffs for human consumption; and supports the Government's intention to oppose Community measures in this field, unless they can be modified to meet United Kingdom interests.

  Mental Health Act
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert].
  11.54 pm
  Mr. Richard Ottaway: I wish to draw attention in this short debate to what I believe to be a deficiency in the Mental Health Act 1983. Before going into what I believe to be the difficulties with the Act, I shall refer to a case which came to my attention in my constituency involving Mr. Lionel Clarke. I make no apologies for broadcasting his name, as I first heard about the case via the national television channels, so the background to his case is a matter of common knowledge.
  Mr. Clarke, who is a negro in his 20s, has a long history of mental illness, and the social report produced by the Nottinghamshire county council shows that he has a background of aggression and that he is especially difficult to handle. This manifests itself in a number of violent tendencies. He has been in and out of a number of mental institutions. He was in Rampton, and after his discharge in 1980 he returned to his home and was peaceful for a while. However, in 1982 he threatened to kill his neighbour. He went back into a local mental hospital where he caused a considerable amount of damage, including tearing radiators from the hospital walls. His aggression increased over the years until in 1984 he broke down the door of his neighbour's house after he had been refused entry. He threatened his neighbour's children and had to be arrested by the police. It required 12 officers to detain him with a number of police cars and police dogs, and the incident caused a great deal of local concern.
  Mr. Clarke was readmitted into Highbury hospital, which is a local mental hospital, and was released in July 1984. His mother was most concerned about his release and expressed her concern. She felt that she could not cope with someone of such violent tendencies living in her home. Her fears were justified, because a few weeks later he broke into his grandmother's house, broke it up, smashed up the cars of the police officers who came to detain him and generally caused havoc. In January 1985 he broke up his mother's house and threatened to kill her. He was remanded in custody for the damage which he had caused to his mother's house. As there were no suitable settings for him in the local health authority area he was put in Lincoln prison where he was remanded pending trial for the offences which he is believed to have committed.
  It was against the seriousness of Mr. Clarke's background and the nature of his behaviour that Nottinghamshire county council prepared a report for the Nottinghamshire magistrates' court. The council decided that he was a definite risk to his family, to the neighbourhood and to the community generally. In preparing the report for the magistrates' court, no fewer than five psychiatrists were consulted over Mr. Clarke's condition. One psychiatrist came to the conclusion that, though he was a difficult person, he was not mentally ill. Of the other four, they all felt that he should be in a secure unit. Two of the four thought that that secure unit should be Rampton, which is under the control of the DHSS, which is an important feature in this case.
  I shall quote a small extract from the consultant psychiatrist at Rampton. If he does not know what the matter with the man is, no one will. He wrote:
  "I still consider that he presents a grave danger to others and that it is only a matter of time before he causes serious injury to

  413
  someone. I consider that at the present time he needs treatment under the high degree of security, which is provided by Rampton Hospital."
  Faced with reports of that nature, the Nottinghamshire magistrates decided that Mr. Clarke should be the subject of a hospitalisation order under section 57 of the Mental Health Act 1983. Under section 39, a request was made to the Nottingham health authority to provide the court with details of a secure setting for Mr. Clarke so that the magistrates could make a hospitalisation order and put him into a secure setting.
  On 23 April the Nottingham health authority said that there was no suitable secure accommodation for Mr. Clarke in the region, or in any other region. Under section 39 of the Act the authority had been asked to provide details of a place in the region and the authority said that no spare place was available. It was not that a place could not be found but that the man was so dangerous and his condition so serious that suitable treatment could not be found in the region.
  My information after that date is a little woolly, but someone then approached the DHSS, which controls Rampton, and said that the man should be admitted to Rampton. The DHSS admissions panel, in spite of the psychiatrists' report, decided that he should not be admitted to Rampton.
  The magistrates were put in a difficulty because they could not keep the man on remand indefinitely. They had to try him. He was found guilty of offences and fined, and then—lo and behold—he was discharged. This was a man who a consultant psychiatrist at Rampton thought would eventually cause someone injury. No order was made.
  This caused considerable concern to Mr. Clarke's family and the community. It attracted publicity. He was sent home with no obligation except to behave himself. That clearly could not continue, but it was not until his mother applied to start the process again that the man was taken to a local mental hospital. Within a month he was transferred to Rampton.
  I have not mentioned civil liberties, because it is not appropriate, but civil liberties are a concern. I have not mentioned section 41 of the Mental Health Act, which places a duty upon the Home Secretary to protect the public's interest in such circumstances. The case that I have described shows that there is a lacuna in the operation of the Mental Health Act in that a man who is clearly mentally unwell can be set free.
  I should like to ask some questions which if not answered tonight should eventually be answered. First, on what grounds did the DHSS refuse to admit the man to Rampton? The psychiatrist's report was available to the admission panel, but it was ignored. Secondly, why had the process to be restarted? Section 39 of the Act has been shown to be ineffective. The only obligation under that section seems to be to say whether a place is or is not available.
  We should change the legislation to oblige the health authority to find a place for such a person. That was discussed in the Committee considering the measure and the Minister told the Committee that he would rather strengthen the guidelines than rely upon legislation. Clearly, those guidelines are not working. I hope that, if legislation is introduced, they will be reinforced. It is not sensible to set such people free on the streets and cause us
  414
  great concern. I should like to know about the Department's plans to block this loophole, which cannot be left in its present position.
  12.5 am
  The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): I am grateful to my hon. Friend the Member for Nottingham, North (Mr. Ottaway) for raising this point. He is rightly concerned about the welfare of one of his constituents, chat person's family, the community and those who might be adversely affected by his actions. I shall try to answer all my hon. Friend's points in relation to the particular case and by using the case as an illustration of our general difficulties. These difficulties arise not so much because of the Mental Health Act 1983 but because of the nature of a relatively small number of cases, such as that cited by my hon. Friend, which fall within the difficult-to-place or difficult-to-categorise categories or where there is a dispute between clinical specialists about the exact nature of the illness or handicap.
  At least one other hon. Member will remember a similar debate a few weeks ago when my hon. Friend the Member for Plymouth, Drake (Miss Fookes) raised the case of a young woman who fell into a similar category. I should like to use some of the arguments tonight that I used then to show that better placement may be achieved not necessarily by a change in the law but by improvements in practice and better handling of difficult-to-place patients. We are dealing with a small handful of people in this respect.
  A patient can be admitted to hospital for treatment if the hospital thinks that it can help and if the patient is willing to seek such help. The Mental Health Act is specific about detention. Ministers make no apology for the strictness of the criteria.
  My hon. Friend said that he did not want to raise the civil liberties aspect and that this was not an appropriate occasion on which to discuss it. I have read with interest what he has said in the House on another occasion about civil liberties. It is important to remember that to deprive a person of his civil liberty is a serious matter. It is right that such a decision should be taken only after the most careful consideration.
  I make no apology for the application of four strict criteria. The patient must be suffering from one or more—although not necessarily all—of the four forms of mental disorders set out in part I of the Mental Health Act and the mental disorder must be of a nature or degree that makes it appropriate for the patient to receive medical treatment in hospital. Ministers looking at those conditions are immediately and properly in the hands of medical advisers, clinicians and psychiatrists who make these judgments on society's behalf. It is not always easy for those judgments to be made clearly by medical authorities and it is sometimes very difficult for Ministers to make up their minds about particular cases. I would not wish to hide the difficulties that are faced by my right hon. Friend the Secretary of State and other Ministers in the Department. We spend a great amount of time trying to evaluate these cases.
  Furthermore, it must be necessary under the Act for the health or safety of the patient or for the protection of others—in this case, my hon. Friend would probably say for both — that he or she receives this treatment, and it

  415
  cannot be provided unless he or she is detained; for example, should the patient be unwilling to stay in hospital on a voluntary basis.
  Whether those conditions are met in any case depends on at least two medical practitioners making the necessary recommendations. Provided all the conditions are met, the courts have the power, when dealing with someone who has committed offences punishable by imprisonment, to order admission to hospital under section 37 of the 1983 Act.
  The Act did not, however—this point was debated at length during the passage of the measure; my hon. Friend has read the Committee proceedings and referred in his speech to some of those debates—confer on the courts the power to direct either a regional health authority to take or an individual doctor to treat a patient. Those who read the Committee proceedings will see why the Minister argued that that should be so.
  Nevertheless, the ability of the courts to make hospital orders has been enhanced by the Act, especially by enabling them to get information from regional health authorities under section 39. That places a duty on regional health authorities to respond to requests from courts for information about a hospital or hospitals within its region or elsewhere which could give accommodation to a man or woman in respect of whom the courts are considering a hospital order. The section was specifically designed to help the courts to establish what facilities are available and which is the appropriate hospital catchment area for a patient.
  Before coming to the question of patients, and to the particular patient to whom my hon. Friend referred, it might be of interest to the House if I give a resumé of the operation of the Act so far. In the past year the Department has monitored the occasions when section 39 has been invoked by the courts, and we have monitored the outcome. There have been only 29 requests for information by the courts. That represented just over half of cases, 18 patients, being admitted to NHS hospitals, some of whom might have fallen by the wayside and gone to prison instead had section 39 not existed. Thus far, therefore, for those 18 patients, there has been a considerable advance. The 29 references made by the courts gives a picture of the dimension of the problem—a relatively small number of people, but that is not to say that they are not an important handful of people.
  Mr. Ottaway: I was confused when reading section 39 by the fact that no reference seems to be made to consideration of placing patients in very secure units, for use of a better expression, such as Rampton, which are under the control not of the local health authority but of the Department of Health and Social Security. How do those hospitals come within the ambit of section 39?
  Mr. Patten: We have discretion to admit to special hospitals subject to the advice of the panel which assists Ministers.
  It is true that an approach through section 39 is limited to the courts, and that answers my hon. Friend's question. But in the last two years the Department has taken its own initiative—because we have seen some of the problems—by having detailed discussions with each of the 14 health regions in the country involving senior officers of the NHS authorities, consultants and senior nursing staff
  416
  from individual hospitals—we are indeed grateful to the nursing staff in some of these hospitals for dealing with patients who cause such difficulties—directors of social services and prison medical officers. We got all those people together and talked about this single category of difficult to place patients—those at the margin—and by getting those most concerned to look at the problem in that way, we have a much clearer picture of the total pattern of services and what developments are necessary to ensure that there is a comprehensive service in each region.
  Further developments are needed in some regions, but some are not so much to do with bricks and mortar and staff as with a better understanding of how to manage some of these patients and redistribute them through separate hospitals in regional secure units or, as a matter of last resort, in places such as Rampton. There will always be cases that do not readily fit into the pattern of available facilities, so that will be problems in placement.
  That leads me to the case that my hon. Friend has chosen as the subject for his debate. As I have explained before, I do not think that it is proper for me, as a Minister, and it may not be in the interests of the person concerned, to discuss the details of the individual case in public. Sometimes these details are highly personal. My hon. Friend dealt with great delicacy and sensitivity with a case that has already been widely broadcast. None the less, some points raise sensitive issues of confidentiality, and to answer those points I prefer to address my hon. Friend by letter. I am not trying to dodge the issue.
  The case to which my hon. Friend refers is one in which the court clearly wanted to make a hospital order. However, it was prevented from doing so because the Trent regional health authority could not offer a hospital placement either in its region or elsewhere. The court had requested information under section 39. My right hon. Friend the Secretary of State did not consider that a special hospital place was appropriate. My hon. Friend has outlined the sequence of events, and how that decision came to be taken. He has also asked some questions which involve confidentiality and individual details, and I shall write to him about them.
  The court had no option but to impose a custodial sentence. Because of the period spent on remand, the man concerned was released back into the community. However, in this case there had been some disagreement between doctors about the nature of the mental disorder. Sometimes, cases that to lay people look like mental illness may be cases of mental handicap, with additional behavioural problems. Such considerations bore on the region's decision not to offer a place in its secure unit.
  In the event, although strictly speaking treatment in a maximum security unit was not warranted, my right hon. and learned friend the Minister for Health intervened speedily after my hon. Friend's concern was made known and asked if, after looking at the case again, the region decided that it could not look after the man, a place at Rampton should be made available. We try to act as sensitively as possible on individual cases causing concern, such as this, when the way in which the law has worked has left someone falling between all the available stools.
  After further detailed discussions between my Department and the region, the latter, still not being prepared to offer a permanent hospital place, offered a bed as a temporary measure in a local hospital, and the patient was therefore transferred to Rampton hospital. He is there

  417
  now, and treatment is available from skilled staff for that man who needs our help. That also means that the people from the area from which he came—neighbours and relatives—who were concerned, have no more reason to be concerned, and that is important.
  On the wider issues, I hope that I have said enough to demonstrate that there has been some real progress under the Mental Health Act, even if my hon. Friend feels that in this case that progress has not been shown.
  I shall certainly consider the point that my hon. Friend made about the possibility of there being a lacuna in the law. Many, if not all, of the problems caused by difficult-to-place patients, where section 39 is involved, will during
  418
  the next few years be greatly aided by the considerable progress that we are making by keeping in close touch with all the people in the different categories that I listed, who are concerned with this small but important minority of patients who do not fit readily into any system. I suspect that we shall never design a perfect legal system to encompass all those whose needs must be tackled on an individual basis.
  Question put and agreed to.
  Adjourned accordingly at twenty minutes past Twelve o' clock.

HOUSE OF COMMONS
  US Congress (Members' Facilities)
  US Congress (Members' Facilities)
ENVIRONMENT
  Local Authorities (Property Disposal)
  Local Authorities (Property Disposal)
SOLICITOR-GENERAL FOR SCOTLAND
  Football Matches (Offences)
  Football Matches (Offences)
  Legal Aid
  Legal Aid
  Landlords (Prosecutions)
  Landlords (Prosecutions)
  Red Deer
  Red Deer
SCOTLAND
  "Quarterly Economic Commentary"
  "Quarterly Economic Commentary"
  Voluntary Organisations
  Voluntary Organisations
  Rates
  Rates
  Pratt and Whitney (Prestwick)
  Pratt and Whitney (Prestwick)
  Nurses (Pay)
  Nurses (Pay)
  Salmon Fishing
  Salmon Fishing
  Textile and Hosiery Industries
  Textile and Hosiery Industries
  Dundee (Economic Prospects)
  Dundee (Economic Prospects)
  Teachers (Industrial Action)
  Teachers (Industrial Action)
  Asbestos
  Asbestos
  Fife Regional Council (Finance)
  Fife Regional Council (Finance)
  Forestry
  Forestry
  Public Expenditure
  Public Expenditure
  Rents
  Rents
  Tertiary Education
  Tertiary Education
  Job Creation
  Job Creation
  Forestry Commission Roads
  Forestry Commission Roads
  Steel Industry
  Steel Industry
  Scottish Football Association
  Scottish Football Association
  Rural Development Fund
  Rural Development Fund
  Legal Aid
  Legal Aid
  Agriculture (Research and Development)
  Agriculture (Research and Development)
  Crofter Houses
  Crofter Houses
  Higher Education
  Higher Education
  New Towns Development Corporations
  New Towns Development Corporations
  New Towns (Rents)
  New Towns (Rents)
  Food (Self-sufficiency)
  Food (Self-sufficiency)
  Local Government Boundary Commission for Scotland
  Local Government Boundary Commission for Scotland
  Museums Advisory Board (Report)
  Museums Advisory Board (Report)
PRIME MINISTER
  Recycled Paper
  Recycled Paper
HOME DEPARTMENT
  Young Persons (Remand)
  Young Persons (Remand)
  Thorp Arch Remand Centre
  Thorp Arch Remand Centre
  Remand Centres (Closures)
  Remand Centres (Closures)
  Category C Prisoners
  Category C Prisoners
  Remand Centres and Adult Prisons
  Remand Centres and Adult Prisons
  Dogs
  Dogs
  Police National Computer (Commercial Competitions)
  Police National Computer (Commercial Competitions)
  "Television Without Frontiers"
  "Television Without Frontiers"
  Immigration Rules
  Immigration Rules
  Theft Act 1978
  Theft Act 1978
TRANSPORT
  Coaches
  Coaches
  Railway Carriages (Wheelchairs)
  Railway Carriages (Wheelchairs)
EDUCATION AND SCIENCE
  Commonwealth Education Ministers (Nicosia Meeting)
  Commonwealth Education Ministers (Nicosia Meeting)
  Pupil-Teacher Ratio
  Pupil-Teacher Ratio
  School Buildings (Maintenance and Repair)
  School Buildings (Maintenance and Repair)
  School Meals
  School Meals
  Students (Travel Grants)
  Students (Travel Grants)
  Sandwich Courses
  Sandwich Courses
TRADE AND INDUSTRY
  Estate Agents
  Estate Agents
  Industrial Development Unit
  Industrial Development Unit
  Knitwear
  Knitwear
  Product Liability
  Product Liability
  International Tropical Timber Organisation
  International Tropical Timber Organisation
  Gas and Electricity (Resale)
  Gas and Electricity (Resale)
  Japan (Ministerial Visit)
  Japan (Ministerial Visit)
  BT Shares
  BT Shares
WALES
  Nursery Education
  Nursery Education
ENERGY
  Civil Nuclear Power Installations
  Civil Nuclear Power Installations
  National Coal Board
  National Coal Board
NORTHERN IRELAND
  Royal Victoria Hospital, Belfast
  Royal Victoria Hospital, Belfast
  Children (Heart Disorders)
  Children (Heart Disorders)
  Paediatric Cardiology
  Paediatric Cardiology
  Health and Social Services Boards (Accounts)
  Health and Social Services Boards (Accounts)
  Civil Service Manpower
  Civil Service Manpower
  Student Awards
  Student Awards
  Housing Executive
  Housing Executive
  Terrorism (Explosive Materials)
  Terrorism (Explosive Materials)
  Hospital Nursing Provision
  Hospital Nursing Provision
FOREIGN AND COMMONWEALTH AFFAIRS
  Rudolf Hess
  Rudolf Hess
  Arab-Israeli Dispute
  Arab-Israeli Dispute
  Commonwealth Higher Education Unit
  Commonwealth Higher Education Unit
  Diplomatic Relations
  Diplomatic Relations
  Foreign Nationals
  Foreign Nationals
  Women (Discrimination)
  Women (Discrimination)
ENVIRONMENT
  Population Projections
  Population Projections
  Housing Improvements and Repairs
  Housing Improvements and Repairs
  Nuclear Waste (Humberside)
  Nuclear Waste (Humberside)
  Local Authority Housing
  Local Authority Housing
  Ground Rents
  Ground Rents
  Urban Programme (Waltham Forest)
  Urban Programme (Waltham Forest)
  Cartmel and Furness Local Plan
  Cartmel and Furness Local Plan
  Homeless Persons
  Homeless Persons
  Water Supply, Rawmarsh
  Water Supply, Rawmarsh
  Toxteth Disturbances (Compensation)
  Toxteth Disturbances (Compensation)
  Radioactivity
  Radioactivity
DEFENCE
  Royal Ordnance Factory, Cardiff
  Royal Ordnance Factory, Cardiff
  RAF Cottesmore
  RAF Cottesmore
  Property Purchases
  Property Purchases
  European Fighter Aircraft
  European Fighter Aircraft
  Molesworth Cruise Missile Base
  Molesworth Cruise Missile Base
  Laboratories (Research Budgets)
  Laboratories (Research Budgets)
AGRICULTURE, FISHERIES AND FOOD
  Food Products (Shelf Life)
  Food Products (Shelf Life)
  Coast Protection (Hengistbury Head)
  Coast Protection (Hengistbury Head)
  Grazing Livestock
  Grazing Livestock
  Cattle
  Cattle
  Forestry
  Forestry
EMPLOYMENT
  Young People (Clerical Assistant Training)
  Young People (Clerical Assistant Training)
  Factory Inspectorate
  Factory Inspectorate
  Labour Statistics
  Labour Statistics
  Youth Training Scheme
  Youth Training Scheme
NATIONAL FINANCE
  VAT (Refund Claims)
  VAT (Refund Claims)
  EC (Payments)
  EC (Payments)
  Britoil
  Britoil
  Pension Funds (Investments)
  Pension Funds (Investments)
CIVIL SERVICE
  Job Dispersal
  Job Dispersal
THE ARTS
  Exports (Reviewing Committee)
  Exports (Reviewing Committee)
  Galleries (Funding)
  Galleries (Funding)
SOCIAL SERVICES
  Social Security Review
  Social Security Review
  Nuclear Installations (Cancer)
  Nuclear Installations (Cancer)
  Single Payments
  Single Payments
  War Widows (Pensions)
  War Widows (Pensions)
  Drug Abuse
  Drug Abuse
  Hospitals (Infections)
  Hospitals (Infections)
  Infection Control Nurses
  Infection Control Nurses
  Invalid Care Allowance
  Invalid Care Allowance
  Pharmaceutical Companies
  Pharmaceutical Companies
  Retirement Pensions
  Retirement Pensions

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

Ethiopia: Import Levies on Aid
Lord Taylor of Gryfe: 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 can confirm that import or port duties are being imposed by the Government of Ethiopia on aid which has been donated by United Kingdom and United States agencies; whether they can estimate the amount of such levies; and whether representations have been made to the Government of Ethiopia to exempt aid from such levies.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, no Customs duties are levied by the Ethiopian Government on aid goods. The Ethiopian Maritime and Transit Services Commission levies a variety of fees which are used to administer the ports. Among these the agency charge is 12·60 United States dollars per tonne but this is reduced to 3·81 dollars per tonne for aid goods consigned to the Ethiopian Relief and Rehabilitation Commission. Since January this year a separate charge of 1·50 dollars per tonne has been waived for all aid consignments of over 5,000 tonnes. The United Nations co-ordinator, with our support, is seeking further reductions in the fees for aid goods.
Lord Taylor of Gryfe: My Lords, I should like to thank the Minister for that somewhat reassuring reply. Perhaps I may ask her whether import duties and duties at the port are not the same thing. They are a levy on aid which is provided. Will the noble Baroness confirm that, as stated in the Christian Science Monitor last month, the United States Government have been charged 5 million dollars in hard currency for goods donated by the United States to Ethiopian famine relief? Will she also confirm that some of the four-wheel-drive Land Rovers, which were paid for by Band Aid, are still in sheds at the port, while Ethiopian officials are negotiating the appropriate import duty on these vehicles?
Baroness Young: My Lords, on the general question of the fee, the agency fee charged at Ethiopian ports is high, though I understand that Ethiopian port charges are generally in line with those of other African ports. I can confirm to the noble Lord that, in common with other major donors, we have channelled our representations about this state of affairs through the United Nations co-ordinator, who acts on behalf of all donors on questions of this kind. On the two other points the noble Lord made about the charges made to the United States Government and the aid given by the Band Aid group, I have no information and I cannot confirm them or otherwise.
Lord Oram: My Lords, I fully share the concern expressed by the noble Lord, Lord Taylor, and the Minister about the policies of the Ethiopian Government. May I ask the Minister whether she agrees with me that the paramount objective should be getting food through to the starving peasants? Does she agree that the Government and the voluntary agencies must continue to do all they can to achieve that objective, even if there is some expense in overcoming the administrative and fiscal barriers erected by the Ethiopian Government?
Baroness Young: My Lords, I am sure the whole House would agree with the point that the noble Lord, Lord Oram, has made, that what is essential is to get the aid through. Nevertheless, I think we take the point of the noble Lord, Lord Taylor, and we are making representations.
Lord Harmar-Nicholls: My Lords, is not the position that if the media really want to play a part in these humanitarian endeavours they should give headlines to the point brought out in this Question, which must be news to many people who would not have thought it possible?
Baroness Young: My Lords, of course that is a matter for the media.
Lord Avebury: My Lords, is not one of the reasons so much aid is required by Ethiopia that, by conscription, they are removing young men from the land and thus reducing the ability of the peasants to feed the people in the rural areas? Will not the Government, in conjunction with our allies, make representations to the Derg that conscription should be ended and the wars against the subject peoples brought to an end so that Ethiopia does not need so much aid in future?
Baroness Young: My Lords, I note the point of the noble Lord, Lord Avebury. However, I think that he would agree that it is wide of the specific Question that has been raised, which is about the duties levied.
Lord Taylor of Gryfe: My Lords, may I welcome the representations that have been made by Her Majesty's Government and other aid donors in this field—not that these should be directed towards reducing the amount of aid but so that this disincentive to giving aid will be removed and people will feel that the full benefit of their donation is being fully realised in aid for suffering.
Baroness Young: My Lords, yes, I take the point. I should say that there is no evidence of corruption or excess profits on this. However, as I indicated earlier, we shall support the efforts of the United Nations co-ordinator to seek a reduction in the fees levied at the ports.

Ethiopia: Royal Family's Detention
2.42 p.m.
Lord Mackie of Benshie: 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 there has been any response to their appeals on behalf of the members of the former Ethiopian Royal Family who have been imprisoned for 10 years.
Baroness Young: My Lords, we regret that our many appeals at ministerial level to the Ethiopian Government to release the detained members of the former Ethiopian Royal Family have so far been unsuccessful. We shall nevertheless continue to stress our concern at every opportunity.
Lord Mackie of Benshie: My Lords, I thank the Minister for that sympathetic reply. Would she not agree that given the present climate of world opinion and the help being given to Ethiopia, it is time to renew these appeals, and also to ask our allies to do so? Is it not also a fact that those detained have been charged with no offence apart from being members of the former Royal Family? Is it not also a fact that 10 of them are confined in one room? Among the many problems that exist in the world, is it not the case that they deserve our sympathy and our efforts, especially as a number of them were educated in this country?
Baroness Young: My Lords, the Ethiopian Government can be in no doubt about the degree of concern felt in this country for those members of the Royal Family detained still without trial. The matter was raised by my honourable friend Mr. Rifkind when he spoke to the Ethiopian Foreign Minister in July last year. My right honourable friend Mr. Raison repeated our concern during his visit to Ethiopia in December, and my right honourable friend the Secretary of State raised it once again last March when he met the Ethiopian Foreign Minister in London. We have no information to suggest that the prisoners are being ill treated or indeed that they are in ill health. I understand, for example, that they have been given proper medical treatment when necessary.
Lord Boyd-Carpenter: My Lords, can my noble friend confirm that these people have been detained for all these years without trial? Is this not contrary to the general world understanding on human rights?
Baroness Young: Yes, my Lords, I can confirm that they have been detained without trial. That is one of the many reasons why we have expressed our concern to the Ethiopian authorities.
Lord Elwyn-Jones: My Lords, what has been the response of the Ethiopian Government to these proper and desired representations? In regard to human rights generally, is the noble Baroness able to throw any light on the failure to agree on rights accords under the 1975 Helsinki Agreement at a recent meeting? That is perhaps not directly relevant to the Question itself. If however the noble Baroness could throw light on it, it is important.
Baroness Young: My Lords, I understand that nine members of the former Royal Family were released from custody in an amnesty in September 1983. Indeed, one came to the United Kingdom for medical treatment and has subsequently been allowed to stay.
262
It is the other members of the former Royal Family who have been detained. The Helsinki Agreement applies in fact to East-West relations; but the general point about human rights of course stands.
Lord John-Mackie: My Lords, is the noble Baroness able to say whether any help can be offered in the way of asylum by the various countries that have made representations? Would this help the situation?
Baroness Young: My Lords, I think that we have taken every opportunity to make clear our concern about the situation. In the case of the one member of the former Royal Family who has been released, she is now in this country.
The Earl of Kimberley: My Lords, can my noble friend elaborate a little on the question put by the noble and learned Lord, Lord Elwyn-Jones? What has been the answer given to our Ministers by the Ethiopian Government?
Baroness Young: My Lords, my noble friend must understand that we are talking about the nationals of another country in that country. The powers of the British Government in such a circumstance are therefore simply confined to expressing our concern. We have done so on every occasion. We hope that the Ethiopian Government will pay heed to what we have said and will release these members of the former Royal Family.
Lord Avebury: My Lords, is the noble Baroness aware that we are most grateful for the constructive approach taken by various Ministers in the Government in continually drawing this to the attention of the Derg? Is she also aware that their imperviousness to these appeals addressed to them not only by the British but also by friends of the former Ethiopian Royal Family in many parts of the world shows that some further action is necessary? Will not the noble Baroness take the opportunity, with her right honourable friend, of raising this matter in the United Nations with a view to the appointment of a special rapporteur on Ethiopia who would look not only into the continued detention without trial of the relatives of the late Emperor but also into the vicious persecution of the Christian Churches, the assassination of Church leaders and the use of murder as a weapon against political opponents?
Baroness Young: My Lords, I note what the noble Lord has suggested. We shall raise this whole matter, and in doing so add to it the very real concern that has been expressed in your Lordships' House, when my right honourable friend meets the new Ethiopian ambassador. We recognise that the Ethiopian Government have made little effort to improve their human rights record or their relations with the West despite the aid that has been given. This is a fact.
Lord Kennet: My Lords, while the House recognises that the representations made to the Ethiopian Government relate to Ethiopian nationals, can the Minister of State go a little further in her answer to the question about the Ethiopian Government's response? Have they answered in any way the representations

263
made? Have they even acknowledged receipt of the representations made? Or is it as if they have been dropped down a bottomless well?
Baroness Young: My Lords, the representations have been made at the highest level by Ministers who have been visiting Ethiopia or alternatively with the Ethiopian ambassador in London. So there is no question that they are unaware of the representations. What one wishes to see is a result from those representations.
Baroness Masham of Ilton: My Lords, is the Minister aware that one of the Ethiopian princesses was a personal friend of mine when she lived in London? She was educated at Oxford and her two cousins, whom I met, were trained at two of our London teaching hospitals? Does she not agree that it is a great waste of intelligent women to be locked away in prison when they could be helping their country?
Baroness Young: My Lords, I think that all of us would agree. Not only is it a great waste but it is also a very tragic situation. We would wish to see it brought to an end as soon as possible.
Lord Annan: My Lords, why does not the noble Baroness's right honourable friend refuse to give the agrément to the new ambassador for Ethiopia until we get satisfaction on this point?
Baroness Young: My Lords, I note what the noble Lord, Lord Annan, has said on this matter.
Lord Mackie of Benshie: My Lords, I should like to thank the noble Baroness for her interest and her sympathetic action. Perhaps I may urge her to follow the line suggested by my noble friend Lord Avebury, except to confine it to the single objective of getting these unfortunate people released.

International Fund for Agricultural Development
2.50 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 what is their present position on the funding of the International Fund for Agricultural
Development.
Baroness Young: My Lords, we are ready to contribute to the second replenishment of the IFAD's fund as soon as the other participants agree.
Lord Hatch of Lusby: My Lords, I note that the noble Baroness said that the British Government "are ready to contribute". Is it not a fact that the budget which is proposed for the IFAD for the next three years is approximately half what it has been receiving over the past three years, and half what it has been
264
requesting? Can the noble Baroness tell the House what specific monetary offer has been made by the British Government to this budget, and what specific monetary offer has been made to its special sub-Saharan African programme?
Baroness Young: My Lords, we intend to provide the same share as we did of the first replenishment—namely, 4·8 per cent. of the share of OECD countries. Depending on the size of the replenishment and the dollar-pound rate of exchange used, the cost of the aid programme seems likely to be about £14 million. That compares with £12·9 million which we contributed to the first replenishment, and to £18 million which we provided towards the initial funding. On the second point which the noble Lord raised about the special programme, we shall of course consider that in due course. However, our first priority is to get the second replenishment in place.
Lord Oram: My Lords, is not the reason why there is a hold-up in this replenishment the refusal of the United States Government to bring forward their contribution? Is it not the case that in recent years the United States Government have been displaying a particularly negative attitude to international aid agencies? I instance the International Development Association, UNESCO and the World Bank's Special Fund for Africa. Is there any reason why United Kingdom action in these matters should be tied to decisions by the United States? Can we not take a more robust stance in this respect and be independent of American decisions?
Baroness Young: My Lords, the position is that the United States are not yet willing to accept the proposed 60:40 burden sharing between the OECD group and the OPEC group. All the other donors, including ourselves, are willing to do so. I do not think that I would accept that the United States Government have been less than generous in the funding that they have given throughout the world.
Lord Hatch of Lusby: My Lords, did I hear the noble Baroness aright that the offer made by the British Government this year to this invaluable international fund, which has been universally accepted as being cost-effective, is less than it was in previous years? Can it be possible that, in this year of famine, the British Government are reducing their contribution to the IFAD from, if I heard the noble Baroness aright, £18 million originally to something over £14 million this year? When the noble Baroness says that the British Government will consider contributions to the special programme for sub-Saharan Africa in due course, does she not realise that in due course literally millions of Africans will be dying?
Baroness Young: My Lords, I think that the noble Lord misunderstands the position because if we increased our own contribution, in practice it would not benefit anyone. The overall total of the replenishment would remain the same, and it would merely enable another OECD country to reduce its contribution at the United Kingdom's expense.

Social Security: Review
2.55 p.m.
Baroness Jeger Baroness Jeger rose to call attention to the Government's social security review (Cmnd. 9517–20); and to move for Papers.
The noble Baroness said: My Lords, I beg to call attention to the Government's social security review and to move for papers. Your Lordships will be relieved to know that I do not actually mean to press for Papers because if I did we should have to commission several wheelbarrows to transport the documents, and their cost works out at over £26 a head for noble Lords or anyone who wants to read them.
Many noble Lords wish to take part in this important debate, and many have a highly specialised experience and knowledge of various aspects of the Green Paper. We are looking forward with great interest to several maiden speeches. However, noble Lords will no doubt be relieved to hear that I do not intend to examine every detail of the Green Paper documents but rather to look at some of the underlying principles in the context of the Government's general economic and social policies.
First, I want to ask about the status of these documents. I understand that essentially a Green Paper is a discussion document, and indeed the Government invite discussion. But, my Lords, for what purpose? We find that fundamental decisions have already been taken, such as the abolition of the state earnings-related pension scheme, the death grant, the maternity grant and many others.
The introduction to the Green Paper says that the Government will welcome views on the proposals and will consider them carefully. But I have to ask the noble Baroness the Minister whether this applies to the abolition of SERPS (as we have to call it), the death grant, maternity and heating allowances, and the reduction in housing benefits. Are these just discussion points or are they definite decisions by the Government?
I found myself wondering about the origin of this phrase "a Green Paper". Many noble Lords who have been members of another place, as I have, may recall that, although it was not actually called a Green Paper at the time, the beginning of this exercise was a memorandum on the development areas published in 1967 when my noble friend, now Lord Stewart of Fulham, was then Secretary of State for Economic Affairs. In relation to a debate in the other place on the development areas, he said:
"The view is frequently expressed by the Confederation of British Industry, the T.U.C. and other bodies that the opinion of informed and interested parties should be sought and publicly discussed while policy is still in a formative stage. The Government have much sympathy with this view, and it is in this spirit that they put forward this proposal for full consultation and public discussion. Following this consultation and discussion, the Government will decide whether or not to submit a proposal for legislation to Parliament." —[Official Report, Commons, 5/4/67; col 245.]
Therefore, I want to ask the noble Baroness the Minister whether we can consider this Green Paper in the light of those words:
"whether or not to submit a proposal for legislation to Parliament."?
To which of the present proposals do those words
266
apply? It would seem from the press and from statements that have been made in this and other places that there are definite decisions in this Green Paper and not merely subjects for discussion. Judging from the reception which these documents have received, not least from those organisations most concerned at the sharp end, many people will be hoping that, in the light of public discussion, the Government will decide not to legislate on all the proposals. I want to make it clear that the Labour Party is a party of social change. We believe in social change. That is the reason for our existence, and of course we want to see changes.
Although this report has often been referred to as an updating of Beveridge, in fact there have been many changes since 1942, such as, for instance, the bringing in of the earnings-related pensions scheme. But the most important difference in the country's circumstances between now and then is that the original proposals were made in the light of full employment. Beveridge regarded unemployment as the worst form of waste, and how right he was.
I have been reading the first debate in the House of Commons on the Beveridge Report. I was interested to read that the late Sir John Anderson, who was then Lord President of the Council, said on 16th February 1943, at col. 1659 of the Official Report:
"I have been told that 500,000 off the unemployment figure means, on a reasonable calculation, no less than £200 million added to the national income".
If we were to update those figures, many of us would realise how our spending on social security is in effect diminished by the increasing rate of unemployment, and that full employment must be the bedrock of any sensible social security scheme.
In fact, the Green Paper—I must let noble Lords know that I have read it—at paragraph 4.8 says:
"unemployment has now displaced old age as the main reason for low income".
Sixty-two per cent. of the unemployed—many of them long-term unemployed—depend on supplementary benefit. This is estimated, according to the Government's own figures, to cost £40 million in 1985–86. This is a measure not of deliberate self-impoverishment by the British people, but of the failure of the Government's economic policies.
Of course we have to revise the Beveridge Report and bring it up to date, but I must remind your Lordships that there are some fundamental principles in that report. For instance, Beveridge said:
"The aim of the plan for social security is to abolish want by ensuring that every citizen willing to serve according to his powers has at all times an income sufficient to meet his responsibilities".
That is a part of the Beveridge Report which does not need changing.
Now we have Government complaints about the rising cost of the welfare state. Their policies force an increasing number of people into a state of need, and then the Government proceed to attack the poor instead of attacking poverty itself. Yesterday's Statement is another example of the Government's philosophy that welfare consists of a redistribution not of wealth but of poverty, taking from the poor to help the poorer, while the rich go unscathed. I would remind your Lordships that there has already been a

267
serious loss of income because of the abolition of the earnings-related supplement to sickness and uneployment benefits.
The difference between us—and it is fundamental—is that we believe that a fair and adequate welfare state is not a burden on a productive economy, but is an essential political basis for sound economic policies. But that would require bringing together taxation and social security.
I know that there is soon to be a document on personal taxation, but it should have been issued now, because we cannot make sense of these Green Papers—if there is any sense to be made of them at all—without knowing the social purposes of the Treasury's fiscal policies. At present about half of the social security budget is met from general taxation; so why are the Government so hesitant about bringing these things together in the same context?
We have to come, regrettably, to figures, or rather to the absence of figures, but they sit, like Banquo's ghost, at the table. The Secretary of State in another place has told us that they are not relevant at the present time, and that this Green Paper is concerned only with structure. Some of us would think it is more concerned with destruction.
This is like an architect presenting a client with a structure plan without any costings. Why are the Government delaying the figures, as we have been told, until later this year? Are the Government nervous of the public's reaction to what will probably show that many of our citizens will end up in greater poverty because of this report, if it is implemented?
I submit that the Government must have figures. What else was the Cabinet arguing about through all those months of leaking gestation? Are the figures being delayed because the Government are setting the minimum standard too low and they want people to get used to the idea that poverty will be on the increase? In one area we have figures, apart from the figures of the cost of these enormously expensive documents which no one who is most affected will be able to afford to buy.
We have figures in relation to housing benefit. We are told that it is to be cut by £500 million, and that this may affect about 7 million people, many of them pensioners. Are the Government saying to the country that these people, who have been receiving housing benefit under the Government's own scheme, do not need it? Why did the Government construct this scheme? This benefit is often needed because the Government have no coherent housing finance policy. I understand that about 4 million pensioners will be affected, many of them because they have modest occupational private pensions—which another part of the Green Paper tells them they ought to have in the future, and that that is the way forward and the way out of poverty.
There is another figure which the Government have given us. Applicants for rate rebate are to pay at least 20 per cent. of their rate bill no matter how poor they are or how high their rate bill. I know that there has been a big increase in applications for rate rebates, but that is another result of the Government's policy. It is due largely to unemployment and to cuts in the
268
general subsidies to councils for building and social services. I must ask the Minister whether this 20 per cent. is a figure for discussion?
No elector can assess the effect of the proposals on his own affairs. The Conservatives have promised to reduce taxation, but what if they reduce taxation and national insurance contributions go up, and rates go up because of cuts in Government contributions? Prescription charges have gone up from 20p to £2. Under this Green Paper there are to be no free school meals, no welfare milk, and no vitamins for pregnant and nursing mothers. We have to put all these things together if we are to make any sense of the Government's actuarial exercises, and I find it difficult to do that.
I must spend a moment on the most arguable suggestion, and that is for the abolition of the state earnings-related pension. It is political nonsense to abolish this. After having pensions in and out of political rows and argument at last we got a consensus, and I appreciate the work which noble Lords who do not always agree with me, including the noble Lord, Lord Boyd-Carpenter, did in this regard. But now we are putting pensions back into the arena of party politics. If anybody thinks that this party, when it returns very soon to Government, will support this suggestion, they had better think again. It creates uncertainty, which is a cruelty for old people. It is impossible to ask people who are thinking about retirement to accept the suggestion that what they have looked forward to will not happen.
I do not know why the Government seem to be so keen on frightening young people about the increasing numbers of the elderly. This was not the view of the Government's own Social Security Advisory Committee. These threats seem to suggest that even this Government are afraid to look forward to any increase in the country's wealth. What a scenario for a brave future for our young people—that this country will get poorer and poorer and that it will not be able to look after its elderly. I am sure your Lordships appreciate that many countries less advantaged than our own take on the elderly as a social and personal responsibility.
The Government Actuary's Report, Cmnd. 5928, says that,
"hope was based on the assumption that the rate of unemployment would be two-and-a-half per cent. and growth in real earnings three per cent.".
I challenge the Minister to come to this House and say that the Government have abandoned those hopes, that unemployment will go higher than 2½ per cent. and that the growth in real earnings will not reach 3 per cent. I suggest that this whole subject of pensions has been considered in a way that is too actuarial. In my view pensions, whether public or private, are a call on the resources of the whole nation. There is nothing in the Green Paper to explain how the total economy of the next century will be able to support a more numerous idle population. They will be idle either because of arbitrary retirement ages, which we should be considering again, or because of increasing unemployment. These are questions which we should be thinking about rather than just producing these pessimistic figures of demographic forecasting.
The main result that I have been able to find about these changes is that there has been a jump in the share values of life assurance companies. Many of them have suggested that the high administrative costs of dealing with small earnings will be rather a nuisance. There will surely be problems for casual or seasonal workers and agricultural workers, and for small building firms who take on labourers for short periods. At present we have 11 million people who are in occupational pension schemes and 11 million who are not. I hope the Minister will tell us what effect there will be on the incomes and prospects of those 11 million who are not in occupational pension schemes and who are depending on the consensus of the SERPS arrangements.
Some clever gentlemen were on this committee. One of them described the scheme as ingenious and another said it was very elegant. Those descriptions relate more properly to a courtesan than to a serious consideration of poverty in old age. But most worrying are the missing figures. Paragraph 9.8 explains the setting up of the social fund to be administered by the DHSS local offices on a discretionary basis. The fund will have an annual budget, but it is not clear whether that budget will be local or national. Thirty specific benefits given under the statutory regulations will be replaced by discretionary awards, often loans, repayment of which would be deducted from benefits which people receive only if they are on a level of poverty which needs support. This idea can only make the poor poorer. The latest figure I have of single payments which would come under this heading is £170 million. I want to ask the Minister whether it is proposed that the social fund will receive £170 million, or more or less. We really are back to the board of guardians.
I remind your Lordships that in previous times single payment grants were discretionary, but in 1980 the Conservative Government—and for once, I think, quite rightly and properly—introduced regulations to replace the discretionary system with a clear legal structure in which there would be objectively established legal rights in published regulations with a right of appeal to independent appeal tribunals: first, to the social security appeal tribunal, then to the social security commissioners and finally to the Court of Appeal. But now there are to be cash limits and no independent right of appeal except, as I understand it, perhaps to the High Court. How will people who are refused know whether they are refused because their local manager has run out of money, because he does not like the cut of their jib or because there is a genuine case for refusal? Many might fail just on wrong presentation.
I have been on social security appeal tribunals and I know how often we have found in favour of the claimant, because with careful questioning and conversation one finds he has been refused because he had not made his own case very well. In some instances the department won. In other cases we were able to reach compromises and to talk about them. People felt that there was some fairness and some understanding. Will the Minister confirm that only independent appeals can now go to the High Court? How is the claimant to prepare his case?
I do not worry very often about European
270
organisations, but I am worried because I understand that the European Court has said that all administrative and statutory rules should be, to quote one of these awful European words, "justiciable". I am told that means that every rule should contain within it a right of appeal. I want to know what the Minister will make of that.
The family credit scheme to replace income supplement is also open to debate. Family income supplement, because it is means-tested, is taken up by only half the families the Government think are eligible. I think this figure is likely to fall because under the new scheme workers will have to involve their employers in their personal circumstances. This is not always acceptable to workers. We shall see a lower take-up under the new scheme because in most cases the payment will go to the father or husband in his wage packet. At the same time we cannot be sure that while this is linked to the abolition of school meals and welfare foods the father's extra money will be spent on those desirable purposes. That is the strength of child benefit—that it goes to the mother and is more likely to be used for the children.
I have another figure to put forward; and I apologise to the noble Baroness. I hope that I am not giving her too much work. I know that she and I would rather have been at another place today—and I do not mean that "other place". According to the Sunday Times of 9th, June the Government have already put a figure of £750 million on savings from this review. Is that the correct figure? Were these Green Papers worked out on the basis of a nil-cost directive? If the figure that the Sunday Times used is wrong, will the Minister give us the correct figure? What has been the result of this fundamental, splendid, radical, review of the social services? It has been to cause anxiety to many people in great need. It has left the country with no costings and no understanding of the connection between future taxation and future social security benefits. It has left the country with no assurance of the reality of discussion and, above all, with no sense of national unity in which a rich country tries to deal with a poverty situation which is a disgrace in the 20th century.
I pause for a moment before quoting the following;
"Freedom from want cannot be forced on a democracy or given to a democracy. It must be won by them. Winning it needs courage and faith and a sense of national unity: courage to face facts and difficulties and overcome them; faith in our future and in the ideals of fair-play and freedom … a sense of national unity overriding the interests of any class or section … (Signed) W. H. Beveridge, 20th November 1942".
My Lords, I beg to move for Papers.
3.22 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, this debate provides an opportunity for us both to discuss and explain the Government's proposals for reforming social security and to welcome four distinguished maiden speakers. It is now rather over two weeks since we published our Green Paper, and many of your Lordships will have had an opportunity to study our proposals for change. I therefore intend so far as possible to avoid repeating what I said on 3rd June.

271
I was disappointed that the noble Baroness, Lady Jeger, was not more informed in her remarks today than when she had to respond more or less instantly on publication day to the Statement that my right honourable friend made in another place. There has been general agreement on the need to review social security. In doing so, the Government have had the vision and courage to look not only at the immediate future, but also into the next century. I regret that the speech of the noble Baroness contained no hint of this.
Consider if you will, my Lords, the scale of social security operations. Spending on social security accounts for some 30 per cent. of all public spending—about £40 billion a year. About 120,000 civil servants and local authority staff are needed to run the system. Forty-thousand of them are concerned with supplementary benefit alone. That is hardly surprising when you consider that the supplementary benefit system is so complex that the instructions for staff dealing with it occupy 16,000 paragraphs in two volumes. And supplementary benefit is only one of some 30 different benefits and allowances, most of them with their own rules and all of them with complex provisions about which benefit can or cannot be claimed alongside which other benefit. It is no exaggeration to describe the social security system that we have today as a labryinth. It is not only true that, as the first sentence of the Green Paper says, the system has lost its way, but also that many claimants are themselves lost in its complexities.
The proposals for change which we have put forward in the Green Paper are radical and structural ones. They are aimed at meeting real need, simplifying the system and putting it onto a proper basis for the future. And let me at the outset remind your Lordships of our undertaking to illustrate the effects of those changes when we publish firm proposals for the new structure in the White Paper this autumn. It is nonsense to suggest that we are concealing detailed figures about the new benefit system. Precise figures have not been settled; indeed, they cannot be settled until later. At that stage we will of course evaluate fully the new structure to ensure that it provides a fair result for individuals and an economical result for the taxpayer. Until then the debate should be about the important structural reforms proposed in the Green Paper. Here I must pause to reply to the noble Baroness, Lady Jeger, and tell her that we shall, of course, welcome representations about the proposals. The Green Paper proposals are the fruits of a long and thorough examination during which there was widespread consultation and public debate. We do not contemplate any major departure from the broad structure of social security as set out in the Green Paper, but of course there is still a lot of scope for debate about details. This is precisely why we did not include illustrative rates and figures at this stage. There are areas where we have specifically asked for comments, such as the idea of having a decade for retirement and suggestions on how best to encourage the spread of industry-wide occupational pension schemes.
I know that the Opposition do not want to discuss the structure of social security. They merely want to play at doubting Thomases. The smokescreen that
272
they are putting about on the need for detailed figures is being raised because they know that this is the first time that any Government have put forward proposals for a fair and comprehensive system for all income-related benefits together. They have no policy of their own, and they are not prepared to discuss the principles on which the system should be based.
I now come to the major proposals in the Green Paper. I shall start with pensions. One of the reasons for my right honourable friend setting up his pensions inquiry was a growing concern about future pension costs. It is, I think, worth dwelling on these briefly, if only because some of the argument since the Green Paper has been channelled into the rather narrow question of, can we afford the state earnings-related pensions scheme? Certainly the sums involved are awesome. If SERPS were allowed to continue unabated, its cost alone would rise to £23 billion a year by 2033. That, is about half as much again as we spend in total on pensions at the moment. And it would push total pension spending up to between three and over four times its present level—between £45 billion and £67 billion a year. As the Green Paper says, costs on that scale must give anyone pause for thought.
The question of whether we can afford SERPS is an important one, but by no means the only one. I would suggest to your Lordships that we should also be asking ourselves whether it is right to earmark so far in advance such a huge slice of public spending. Will the money be well spent then? I cannot believe that your Lordships will think so. I have said that a major aim in the social security review has been to direct resources where they are most needed. Of that £23 billion in the year 2033, half would go to topping up good occupational pensions. We can be pretty sure that there will be many whose needs will be greater than those of the occupational pensioners whom SERPS is set to benefit indiscriminately.
There may not be complete agreement among your Lordships on whether or not the state should be in the business of providing additional pensions. But the Government are convinced that it should not. We believe that the time has come to put an end to the two nations of people with and without occupational pensions by seeing that everybody gets a pension with his job. There can be no doubt that people actually want this. The Gallup survey carried out for the pensions inquiry showed conclusively that people with occupational pensions were glad to have them and that those without would like them. We see the future shape of pensions as a new partnership between the state and occupational and personal pensions. This is not to deny the invaluable job that many employers have done over the years in providing their employees with good pensions. Certainly that is a partnership; but so long as half the workforce remains uncovered, it can be at best a limited partnership. And the level of occupational provision has remained almost at a standstill for two decades.
Our proposals will put matters to rights. They will place the responsibility for pensions on the twin pillars where they rightly belong. The basic pension will remain at the heart of state universal provision. We are pledged to protect its value in real terms, and we have more than honoured this pledge since coming to power in 1979. Only yesterday my right honourable friend

273
announced that the basic pension for a single person will be raised from November by £2·50 a week, and that for a married couple by £4 a week. That is generous but not extravagant. I make the distinction because your Lordships will have seen the proposals put forward to my right honourable friend's inquiry by the Liberal Party. Their suggestion of a vastly inflated basic pension would raise pension costs immediately by £10 billion a year. Even what they describe as a modest first step would add at least £5 billion to the bill. Your Lordships will not be slow to see what that would mean in terms of overall social security spending and national insurance contribution rates. The Government believe that it is better to target help where it is needed, not scatter vast increases in benefit prodigally and indiscriminately.
We propose to phase out SERPS over three years for all but people within 15 years of retirement. At the same time we intend to phase in a minimum pension requirement. This will mean ensuring that employees, except for those in the age group still covered by SERPS, 16- to 18-year-olds and very low earners, have an occupational or private pension of their own from their jobs. They and their employers would have to contribute at least 4 per cent. of their earnings to the pension, once the scheme is fully in place, with the employer meeting at least half of this.
This arrangement will ensure the near-universal spread of occupational and personal provision in the most sensible way. Because the contribution is expressed in terms of a minimum, it gives both employers and employees the flexiblity to decide how much they want to put aside towards pensions. But the very existence of a minimum, although pitched at a level to keep right down any extra burdens on employers and employees, will ensure that everybody will save for a pension and should have enough in retirement to keep him from having to fall back on income-related benefits.
The new framework will be flexible. Defined benefit schemes will be able to count as complying with its requirements, and those which are contracted out now will do so automatically. And personal pensions will have a vital part to play. Once SERPS is phased out and additional pensions rest where they belong, on the second pillar, personal pensions will become attractive to many people and their employers.
We do not think that employers should be able to make membership of their own pension scheme compulsory. Any employee should have the right to opt for a personal pension instead of joining or remaining in an employer's scheme; and if he does so, he should be able to expect at least the same minimum contribution from his employer. We believe that by framing the minimum contribution requirement in the same way for personal and occupational pensions, we shall achieve the important objective of avoiding any threat to the finances of existing schemes.
Personal pensions will also provide small employers who want to avoid having to set up their own scheme, and who are not covered by one of the industry-wide schemes that we hope to encourage, with an alternative way of meeting the requirements of the new pension framework.
We are proposing a very positive step towards more equal treatment for men and women in occupational
274
pension schemes. The Green Paper suggests that, apart from cover for surviving spouses of either sex being required, equal amounts of savings should at equal ages buy equal amounts of annuity for men and women. That of course applies to the proceeds of the minimum contribution. The Government believe that the provision of so-called unisex annuity tables for this purpose will be well within the insurance companies' capacities, when taken with the equality of survivors' provision that I have mentioned. So long as we have unequal treatment of men and women within a system that turns on a statutory requirement, we cannot claim to be making more than token gestures in the direction of true equal treatment in social security.
Our proposals for pensions build upon the steps which this Government have already taken in the Social Security Bill currently before your Lordships' House to achieve improvements in occupational pension provision. At the same time they will release resources into the next century for direction where they are most needed. I think that when the noble Baroness, Lady Jeger, reflects on that and on the scale of cost that would otherwise arise she may rather regret her remarks in response to the Statement on 3rd June, when she said that it was impossible to say that pensions cost the state money.
I will now turn, if I may, to our proposals on income-related benefits. The present system is frankly a mess. We have different ways of assessing income for different benefits. We have a maze not only of benefits but of bits that are added to benefits. We have the absurd situation where people can be better off out of work than in work, and the equally absurd situation where, for somebody in work, a pay rise can mean the extra he takes home is less than the amount that he has lost in terms of benefit and tax and contribution payments.
The Government's proposals will tackle those absurdities. Most fundamentally, perhaps, we are intending to have a single basis of assessment for income-related benefits. And that basis of assessment will be net income. This will create the structure of a new and much more coherent system than the present one.
The new family credit is an imaginative and positive step towards meeting the needs of low-income families. It will represent a real improvement over present arrangements for working families with low incomes. Family income supplement is not the most satisfactory of benefits. Because it is based on gross earnings, it can create a poverty trap effect. Because family credit is based on net income (and is taken into account for housing benefit), it will be virtually impossible for families to face marginal tax rates in excess of 100 per cent. They should be sure of getting an increase in total family income as their earnings rise.
Secondly, family income supplement is based on a one-child family. There are small additional increases for further children, but this takes no account of the children's ages. This is a point on which differences between family income supplement and supplementary benefit are again relevant. Because help is not provided in a way which mirrors supplementary benefit rates, some families—mostly those with older children—can find themselves no

275
better off, or even worse off, when they are working full time than when they are out of work. This is the so-called unemployment trap.
The new family credit will overcome this problem by using the same basic structure as the income support scheme that is to replace supplementary benefit. At the lowest income levels there will be a substantial premium paid to all families, augmented by allowances for each child. When taken with child benefit, the level of benefit should ensure that a family with children will not be worse off in work.
Choice flexibility and the personal responsibility that goes with exercising them are important features of the review proposals as a whole. We are intending to extend to working families with children, by replacing free school meals and welfare foods with an extra cash element in the family credit. The overall aim of family credit will be to make sure that people actually get enough in their pay packet to help meet the everyday costs of living. For that reason, it is clearly better to give them benefits in cash rather than in kind. But families on family credit will continue to be exempt from National Health Service charges.
The very language of supplementary benefit is a jungle. With scale rates, available scale margins, normal requirements, additional requirements, housing requirements and single payments for starters, it is hardly surprising that few claimants can find their way through the jungle or have any clear idea of how their weekly benefit payments are worked—probably the exception is the noble Lord, Lord Banks. And each one of those phrases from the list of jargon that I ran off a moment ago can conceal a multitude of complexities. Take single payments, if your Lordships will. These are one-off payments for items such as necessary furniture or household equipment or for special expenses. But the level of detail to which the administration of these payments can descend is quite horrific. It is, I assure your Lordships, perfectly possible to have a prolonged argument—which may even go to appeal—about whether or not a particular claimant should be given a payment towards a hot water bottle!
Even with this supposed fine-tuning the supplementary benefit system can still fail to meet people's real needs. In seeking to cut through the complexities and to direct resources where they are most needed, we must first ask ourselves whether in fact the supplementary benefit system is right to try to meet small individual needs, or whether it would be preferable to have a broader approach for regular weekly support, with separate arrangements for really special needs and emergencies. We have concluded that this is the better way.
That is why our proposed new structure of income support, with the social fund providing for those special needs that I have just mentioned, is the right one. In essence, income support will provide a flat weekly rate of benefit, with different rates for people over and under 25. But that flat rate will be supplemented by premium rates. So all pensioners will get a premium, with older pensioners—those aged 80 and over—getting a higher one. People with a continuing disability or sickness will also get a premium, as will lone parents. In addition, all families with children will receive a premium.
276
Our income support proposals will provide a much simpler system and will reduce the number of personal questions asked before benefit is assessed. They will direct resources where they are most needed, fitting in both in aims and in administration with the other important income-related benefits of family credit and housing benefit.
We do not want to inhibit thrift. That is why we are proposing to retain the total disregard of the first £3,000 of capital assets, but also to allow people to have up to £6,000 before becoming ineligible for income support. This will provide a proper protection for people who have built up modest savings over the years and, we believe, strike the right balance between incentives to save and the need to ensure that income-related help is not directed at those who have enough to live on without it. A similar concern lies behind our proposals to change the earnings disregards.
If we are to be compassionate, we must recognise that there will be some really special needs which income support cannot of itself meet. I am thinking of the unforeseen expenses imposed by an emergency and of directing particular help at claimants who have real difficulties in managing on their normal incomes. That is why we are proposing to set up a social fund, run separately from income support and on a discretionary basis, to provide help of precisely this kind. I can assure the noble Baroness, Lady Jeger, that it will be run by staff of my department's local offices who will be specially trained to assess situations and give sympathetic and quick help where needed. Let me say at once that we are confident that the fund will work in such a way that help will be at hand wherever it is genuinely needed, no matter when that need arises. In this, the running and financing of the social fund will be no different from that of many—indeed, most—of the statutory bodies and agencies providing what one might in the broad sense call welfare services.
The social fund will also provide realistic help with maternity and funeral expenses for people on low incomes. And I must make it absolutely clear that the tax-free £1,000 lump sum which we are proposing to give widows instead of the widow's allowance will be completely disregarded in deciding whether or not somebody can get help with funeral expenses from the social fund.
Much of what I have said will apply also to housing benefit. Many of your Lordships will have been struck, as I was, by the elaborate diagram in Volume 2 of the Green Paper showing how housing benefit works now. With its intricate network of tapers—the way in which benefit is withdrawn as incomes rise—it was reminiscent of nothing so much as a chart showing the rowing results at one of the older universities. That is why, in a measure which of itself will make a major contribution to simplification, we are proposing a single taper for housing benefit in place of the six that exist now.
Until now the housing benefit scheme has been only slightly less difficult to grasp than supplementary benefit. This was a point which the housing benefit review team, whose report we have published separately, were swift to grasp. They also pointed out that people in similar circumstances can get significantly different treatment, which can lead to people in work getting less than people out of work

277
with similar incomes. By basing housing benefit on the same test as income support and family credit, we shall remove that danger and ensure that people in work get the same treatment as those out of work with similar needs. So far—
Lord Ennals: My Lords, I am most grateful to the noble Baroness for giving way. Before she leaves the subject of housing benefit, does she accept that the proposal for the simplification of supplementary benefit and housing benefit are to put straight or to make clear legislation that was introduced by the present Conservative Government within the last four years?
Baroness Trumpington: My Lords, I think that the noble Lord, Lord Ennals, could have made that point in his speech.
So far I have spoken about people with equal and undoubted needs. But, my Lords, we are not satisfied that the present housing benefit arrangements, taken as a whole, are concentrated on real need. The way in which both spending and the scope of housing benefit have grown suggests this. We are talking about over £4 billion going on housing benefit in the last year and about 7½ million households benefiting from it. That is over one in three households—a significantly higher proportion than in other countries in a similar position to ours. This means that nearly two households pay for the benefit of one. The review provided us with both the opportunity and the means to direct housing benefit where at is most needed. We have grasped that opportunity, by accepting that households on income support should automatically be eligible for the maximum level of housing benefit. And it follows from what I have said about the unemployment trap that people with the same net incomes as those on income support will similarly qualify for maximum help.
That maximum help will include 100 per cent. rent refunds. We agree with the housing benefit review team that the existing framework of powers will for the most part provide sufficient safeguards to prevent tenants and landlords taking advantage of this, and that the need to provide full help with rents outweighs this danger. There are already powers to restrict benefit in cases where rents seem excessive or where accommodation is bigger than the claimant's circumstances seem to warrant. And, of course, local authorities can themselves refer suspected cases of abuse to the rent officer, who will set a proper rent.
But we believe that local authorities should have a greater incentive to control costs. The price of a simpler system must not be unrestrained growth in rents, at the expense of the taxpayer and the ratepayer. The powers that we are proposing in the Green Paper to vary the amount of direct subsidy to local authorities for benefit expenditure, and the reserve power to set limits to the level of rent eligible for housing benefit, will provide the necessary additional protection.
The question of our proposals for help with rates depends to a degree on what emerges from the review of local government finance. If domestic rates continue to be an important part of local authority revenue, people should have a more direct perception
278
of them and of what is involved than they are likely to do if they can simply expect blanket and total reimbursement of their rates. We believe that it is an important part of local government accountability that everyone should have to pay at least some of their rates; no one should be totally cushioned from the effects of local authorities' policy decisions in this field. That is why we are proposing that the maximum level of housing benefit should fall short of 100 per cent. help with rates. Again, this is the hallmark of a responsible Government, determined to ensure similar responsibility at local levels.
With regard to our proposals on widows' and maternity benefits, we believe that a tax-free lump sum for all widows is a more realistic way of helping them to cope with the immediate expenses of bereavement, and that building on this help, by giving older widows and those with dependant children widows' pension and widowed mother's allowance respectively, on top of the lump sum from the moment of bereavement, is yet again the right way of meeting true needs. So far as maternity benefits are concerned, it is surely right to direct maternity allowance at women who have given up work to have their babies, and to give them more choice about when to give up and when to return to work than they have now, without losing any allowance as a result.
Your Lordships will have noticed that I have spoken at length. I have done so because the Green Paper embodies, by any standards, a gigantic and radical re-examination of a vast structure that affects us all. Reactions to the Green Paper have inevitably varied, though I think that I may say our proposals have been generally welcomed—and rightly so—by those without a particular axe to grind. But on one thing those with axes and those without are agreed—there was a need for a look in depth at social security and for improvement.
Our proposals add up to a system that is modern, effective and compassionate. They take account of changing needs and the responsibility of Government to claimants and to those paying tax and contributions, both now and far into the future. They will make a determined onslaught on the poverty and unemployment traps. At the beginning of my speech I set out the Government's objectives. Those are objectives to which we remain firmly committed. The proposals that I have outlined will meet them in full.
3.54 p.m.
Lord Banks: My Lords, the House will be grateful to the noble Baroness, Lady Jeger, for raising this important subject this afternoon. It has provided us with the opportunity at an early date to discuss the Government's proposals. The noble Baroness, Lady Trumpington, has given us a fairly comprehensive resumé of those proposals. I think the Government are to be commended for undertaking the reviews; but it seems to me that they have left a pretty short period of time for consultation to take place. Three-and-a-half months, covering the holiday period, does not really seem long enough. There are in the proposals some measures which we would support and many about which we will want to be strongly critical.
I should like to begin with a regret, and follow with a complaint and two questions. The regret is that the

279
review, lengthy though it is, as we realised this afternoon, is not fully comprehensive in that it does not really take into account the operation of national insurance and that some national insurance benefits are not examined at all. The working of national insurance is generally outside the scope of the review. The tax and social security systems will be better aligned as a result of the proposals which the Government are now putting forward, but they remain separate. They are not integrated. The integration of tax and social security will undoubtedly come about before too long, and when it does I fear that it will mean another upheaval of the kind that the Government are now contemplating.
In that context, I think it is important to bear in mind that two of the Government's schemes, which they have been persuading this House were excellent and which were introduced during their current term of office, are strongly criticised in the Government's reviews; namely, the new supplementary benefit regime, and housing benefit. I think that is the point that the noble Lord, Lord Ennals, was making. One of those is to be replaced and the other is to be considerably modified. I think we have to be very careful to avoid a period of continuous upheaval in the social security field.
My complaint is the universal one that there are no figures. I can understand the Government's desire to have the structure carefully considered; but we cannot pass final judgment on the structure without the figures. We need to know how that structure will operate within the resources that the Government are prepared to make available. We need to know who are the gainers and who the losers. We need to know how much the gains and losses entail.
My first question is this: is it correct that the Government are hoping to save £1,000 million as a result of these activities? We on these Benches, the parties of the Alliance, are against cutting resources for social security. We believe that if any genuine and justified savings can be made, they should be re-allocated to improve benefits which are acknowledged to be inadequate, such as the retirement pension; or, for example, the earnings rule could be abolished or a proper disability income introduced—two things to which, as I understand it, the present Government are committed.
The second question is about the review teams. I wonder whether the noble Baroness can say if it is correct that members of the review teams are not in any way committed to the proposals in the Green Paper? Certainly the public comments of the advisers in the pensions field seem to suggest that this is the case. If I may, I should like to make a brief comment on the different elements within the Green Paper. First, there is income support, which is replacing supplementary benefit. Undoubtedly the Government's proposals would lead to some simplification of the present supplementary benefit arrangements. There is, on the one hand, to be a separation of the benefits into income support, and on the other, the social fund, which will deal with single payments and emergencies. We have worries about both of these. For example, premiums are to be paid in addition to the scale rates for certain categories of
280
claimant, and these will replace the additional allowances which people receive at present to meet certain specific needs. What we do not know at the moment is whether these premiums will in fact fully replace what people are now receiving by way of special allowances. Some disabled claimants rely for as much as 30 per cent. of their weekly benefit on extra allowances. Will the premium for the disabled adequately replace that? Much the same is true of pensioners. Again, it is a question of needing the figures.
Then, the social fund is to be cash limited. As I understand it, this means that offices throughout the country will have an allocation from the limited fund. But what happens if an emergency arises after the funds have run out? Can the noble Baroness say what percentage or what proportion of the disbursements under the social fund it is anticipated will be by way of loan? It would seem very unfortunate indeed to increase indebtedness among the poorest people of the country.
Then there will be no appeal. I understand the Government's desire to simplify things; but is it right that the answer that the claimant gets is final and that there is no appeal at all against the decision? One of the most unsatisfactory features of our social security system in recent years has been the fact that so many people have come to rely on supplementary benefit. There is a great increase in the numbers. It would seem that the Government envisage that continuing. There is no attempt, as I understand it, to take people off means-tested benefits, which would of course be one of the objects of a tax credit system.
Turning to housing benefit, we welcome the fact that the rules of the new income support scheme will be used to assess entitlement to housing benefit. We welcome the fact, too, that net income will be used as a basis for the scheme. But we cannot support the proposition that all should make a contribution of 20 per cent. to the rates. Will this not mean a cut in housing benefit for everyone, including the poorest? Pensioners account for over one-half of all householders who are helped by housing benefit. Would it be right to impose an additional burden on pensioners, particularly when it is generally recognised that the basic retirement pension is inadequate? Again, we need the figures here to see precisely what will be the effect of what is proposed.
I now come to family support. We are glad to know that child benefit is to remain. We were worried, because it appeared that it might not be index-linked in the future, and yesterday our fears were justified when we learned that it is not to be index-linked this year. What I want to ask the noble Baroness is this. Is child benefit to go down the same road as the death grant and the maternity grant? Is it to be allowed to decline in value every year, until the Government say that it is now so small it is not worth keeping and that it costs too much to maintain it?
We have to bear in mind that child benefit was introduced to replace family allowances, but also to replace income tax allowances. It is a means of a general readjustment between those with children and those without children—a point that was made clear in Sir John Walley's letter in The Times yesterday. Again, family credit, which replaces family income

281
supplement, is to be based on net income rather than on gross income and that is a move in the right direction. We would support the Government's intention to make sure that people are not better off out of work than in it. It seems that family credit would help mitigate to some extent, but perhaps not by very much, the poverty and employment traps. However, we cannot welcome the fact that family credit paid through the employer will go to the husband in most cases and lead to a transfer from mothers, who get the money at the moment, to fathers. We think that is a retrograde step.
So far as the death grant is concerned, there is to be benefit paid from the fund to those who are unable to meet funeral costs. How will that be assessed? I notice that if benefit is paid out from the estate it is ultimately to be recovered if the estate is above a certain size. Would it not be more sensible to allow everyone to claim and to recover it through this method that is to be used in any case for those who are granted benefit after means testing? That would avoid means testing at the time of bereavement. I cannot really believe that it would be more administratively expensive, because it would eliminate a means test, and we all know that the means testing of benefits makes them expensive to administer.
I should like to say a word about pensions, and here I should again declare an interest again since I am an insurance broker specialising in pensions and life assurance. The Liberal Party has consistently argued for a larger basic pension rather than an earnings-related pension. We have argued, in addition, that there should be a special provision for those not covered by an occupational scheme, in that they should be allowed to invest in a personal pension plan up to 3 per cent. of their income and receive a matching contribution from a central account administered by the Government, but paid for by a levy on all employers without a pension scheme.
I first put that forward in an article in the News Chronicle in 1958 and it became Liberal Party policy in 1960. In 1975, in the Second Reading debate in this House on the introduction of the scheme now in operation for pensions, I made the point about a larger basic pension rather than an earnings-related one and put forward this scheme for special provision. Since then we have been worried about two problems, the first of which is the problem of cost, to which reference is made. Perhaps I may be permitted to say that in that 1975 debate I said that we were committing future generations to pay more than we were prepared to pay for our own pensions today.
The second problem that we have been worried about is the fact that under existing arrangements the oldest would remain the poorest, so far as the state scheme is concerned, until about the third decade of the next century. And of course the earnings-related pension gives more to the better off and does not help those who are already retired to any great extent—most of them not at all and others to a very small extent.
So I put forward a plan to meet those two problems, which secured the support of a series of joint meetings of the taxation and social security committees of the Social Democrat and Liberal parties. The essential feature of it has recently been advocated in another
282
place by both Mr. David Steel and Dr. David Owen. The basic feature of that plan was that the earnings-related pension should be abolished, guaranteeing accrued rights, and that contracting out should be ended. Those are the first two points of it, and the Government are to do those things for men below age 50 and women below age 45.
It then said that everyone should pay contracted-in contributions and that the extra money raised in that way would pay for a 25 per cent. increase in basic pension. This the Government are not doing, except that those formerly contracted out will pay some additional contribution, but there is no increase in the basic and that we very much regret.
Then we advocated the plan, which I mentioned just now, for 3 per cent./3 per cent. into a personal pension for people not covered by an occupational pension scheme. The Government are proposing to make it 2 per cent./2 per cent. and to introduce something very similar, except that we said it was a right that people should have and that they should be free to decide whether to take it up. I notice that Peter Kellner in the New Statesman said that there is a strong libertarian argument in favour of that. However, the Government propose to make that compulsory.
Then we said that people in an occupational scheme should have an option, when they were newly entering the occupational scheme, to go in for the personal pension arrangement instead, on a 3 per cent./3 per cent. basis. The Government are saying that this can be done at any time. We did not go as far as that, because we felt that it would be destabilising for pension schemes. I shall be interested to hear what the noble Baroness thinks about that.
So the Government have followed some of our suggestions, and obviously I welcome that. But the absence of a substantial increase in the basic, which apparently was advocated in the review team by Professor Alan Peacock, is a major obstacle to our supporting the Government's pension package as it now is.
I agree with two sentences in the evidence which Age Concern presented to the review, when it said:
"We advocated an earnings-related contribution but not a pension related to earnings, since we found it impossible to justify the notion of a differential income in retirement supported by the state".
However, it went on:
"Age Concern does not want to see any Government abolish the earnings-related pension only to do little or nothing to raise the basic pension".
That would be my position exactly.
To sum up the Green Paper as a whole, one of the arguments against our present system of social security is its complexities, as the noble Baroness, Lady Trumpington, has reminded us this afternoon. Some of the proposals in this Green Paper should help to reduce that. But another argument has been the confusing variety of separate sources of benefit—national insurance, supplementary benefit, family income supplement, housing benefit, statutory sick pay and child benefit. Under their new names, and amended in the way proposed, they would still continue separately. They would be better aligned and better co-ordinated, but they would still be separate. In addition, of course, the income tax system would still

283
be separate. Its impact on social security would be modified, but it would still be operating separately. Our eventual aim must be to bring them all together in one single system, and any steps we take in the meantime must be such as will not frustrate that aim.
4.10 p.m.
Lord Silkin of Dulwich: My Lord, may I begin by thanking the noble Baroness, Lady Trumpington, for her general welcome to maiden speakers, and, if I am allowed to do so, at the same time express my gratitude to individual Members from all parts of your Lordships' House for their very generous welcome to this particular rather elderly maiden? I do so with the thought in mind that there is of course a tradition of generosity from your Lordships to fellow Members of the House—I hope not to take too great an advantage of that, and certainly not today—and because I believe that that welcome owes something, at least, to the respect which Members of this House felt for my father, who in the last two decades of his life devoted his time to this House, for which he developed a very great affection.
I mention him more particularly because it seems to me that while we can debate this subject perfectly properly in isolation, it forms part of something very much larger in which he played a major role in the years immedately following the war. I refer to the development just before the war and just after the war of a system of community provision, whether it be Butler in education, Bevan in health or Beveridge in the subject we are discussing today, which certainly at one time became the envy of the world: a system which provided or sought to provide, in general with very great success, that the extremes of poverty were mitigated and that the worst features of life, the accidents of life, were guarded against irrespective of the origins or means of the citizen concerned.
As time has gone on that system has been modified, and from time to time it has been improved. It has perhaps worn somewhat thin in places. I believe that we have to look at the Green Paper against the background of how that system stands today. It is certainly very thin indeed in a number of places. What is important is that when we come to look at the basis of the Green Paper and ask ourselves what it seeks to do, we have certainly to accept that after 40 years of a system in which, as it were, a suit of clothes has become worn and we have become used to it—it has been patched up here and there—it is necessary to examine it to see whether something better and something new is required. That is how the Government suggest they are looking at it.
I am certainly not going to cast any aspersions on their approach, though I am bound to look at what they have done in the context of what is happening in the rest of the social welfare system. Therefore, it is perfectly reasonable that there should be the bringing before Parliament of this new suit. What is perhaps a little surprising is that, contrary to the traditional position, what we seem to have here is the new suit visible but no sign of the emperor. The emperor is, after all, the flesh and bones by which one can test the measure of the new suit itself. Without that, it is difficult to know where it pinches, where it is too tight,
284
where it is too loose, where it is too short and where it is too long. It is unfortunate, whatever the reason may be, that in debating the subject we do not have that benefit, particularly, and perhaps surprisingly so, because it is not as though the Green Paper provides us with no figures at all. On the contrary, there is the £1,000 benefit for widows, to which reference has been made. But why we could not be provided with all the figures is something one should like to understand.
I want to deal as quickly as I can with two specific matters in relation to the Green Paper. The first relates to income-related benefits, referred to by the noble Lord, Lord Banks. I certainly welcome the provision which is to be made, apparently, that the basis for computing those benefits should be net income rather than gross income. Having said that, it leads me, as I believe it led the noble Lord, Lord Banks, to ask why we cannot have a system in which you receive your benefits and, having received them, you are then taxed upon the gross income which you have received after any necessary disregard has been made. The Green Paper does not go into argument on that; it refers to the difficulties of what is apparently called "churning". I do not know, but in my experience as good things have come out of churns as have gone into them, and I for one should like to know why it is that that solution has been rejected in favour of the one in the Green Paper.
The second and final matter with which I want to deal specifically is the question of the earnings-related pension. The Green Paper justifies what is proposed on the basis that, because of demographic changes which will be likely heavily to increase the proportion of non-earners, particularly pensioners, to those who provide the resources of the community, we cannot afford to pay them what would result from the present scheme. It is said that we cannot afford to compel the workers in 20 years', 30 years', or however many years' time it may be, to provide for those who have done their work for the community. The first point I find difficult about that argument, in relation to what is proposed, is that it is hard to follow what difference is made, so far as the Government's proposals are concerned, by such an approach.
What is provided for the pensioner or the non-worker at any one time is a part of the resources of the community which are being earned at that time. Nothing else can be used for that purpose. How will the problem be helped by pushing that particular duty off the backs of the taxpayer and the working population and onto private insurance schemes which will have to make use of precisely the same resources, though no doubt achieved in a slightly different way? Perhaps it will not be all that different, if one has regard to the kind of investments which have to be made, whatever the source may be.
Secondly, and perhaps even more importantly, when we say that the working population cannot afford to give such benefits to those who retire, are we really accepting that because of changes in the balance between the workers and those who have done their duty to society a lesser standard of living should therefore be provided for those who have done their duty? Are we saying that in that sense we cannot afford to make the correct provisions? In fact, one can afford what one wants to afford. If we want to afford a decent

285
standard of living for those who have retired, we will do so. I do not understand how it can be used as a justification for this change—that we cannot afford it.
I have already outstayed my leave by a minute or two. I have done my best to be non-controversial, while asking the odd question or two. I have always regarded myself as a singularly non-controversial person, until one day I woke up to find myself described as "the controversial Attorney-General". I promise your Lordships that in future I shall be less controversial.
4.23 p.m.
Baroness Lane-Fox: My Lords, it is my pleasure that it falls to me to congratulate most warmly the noble and learned Lord, Lord Silkin of Dulwich, on his maiden speech. Being aware of his distinguished career in another place, we can hardly say that we were surprised by his excellent speech this afternoon. It is however heartening when still further funds of knowledge arrive in your Lordships' House, such as that which has been so ably exhibited by the noble Lord.
Some of us who have grown up with the social security system have a great deal for which to be thankful. Perhaps most of all it has helped to bridge the gap when inflation and the high cost of living so escalated the cost of simply existing that outside help became vital. Indeed, so conscious are some of the system's beneficiaries of the value of its assistance—means-tested or otherwise—that it is not the normal course to complain and try to pull the system to pieces. Nevertheless, anyone who has watched and lived with the passing scene over the past 40 years must be aware that this whole area has grown to skyscraper proportions, not always following a logical design.
Who could have visualised, when the social security system began, that it would eventually be costing £40 billion a year? I believe that even the noble Baroness, Lady Jeger, if she were here, would agree that this is the first real full review of social security since Churchill's wartime coalition commissioned a review from Lord Beveridge. So it would be mad to suggest that a review is not due; in fact, one is overdue. The Government deserve to be warmly commended for facing up to that fact and for not burking the issue. It is to be hoped that the Government get the credit they deserve.
An important factor is the change in public expectations. It is hardly surprising that post-war generations are more sophisticated in their demands for provision. This influence has helped the system to grow so piecemeal that it is often difficult to understand, as we have heard, and complex to administer. It has been like a conveyor belt, with more and more items piled on as it keeps moving. This review marks a profound, constructive and courageous step to see where the loan requires to be rearranged to suit the need.
For reasons best known to those who say or write it, I have heard it suggested that the intention is to dismantle the welfare state. I consider that to be a mischievous, alarmist suggestion. It is a suggestion which, if there were any truth in it—and I know that there is not—I could never support. Those of us who
286
are privileged to work closely with the more unfortunate members of the public always are privileged to have their needs in mind. There is no doubt that a better-targeted system is the only way to ensure that the long sought-for maxim of the most help for the most in need can come true. Even so, thinking recipients have been worrying about where the money is coming from to finance the continuing pension commitment. Those who have got down to making a few calculations realise that to have allowed the conveyor belt to run on would be to have dug a pit for the endeavours of younger generations in the new century that is so fast approaching us.
Enough is enough, and of course it is right to plan a coherent, merciful and workable scheme that will retrieve those worst hit by life and better match the lifestyle of the rest. I realise that on such a delicate matter it is hard for some sections of the Opposition to resist suggesting that there are evil ulterior motives. But noble Lords opposite would, I believe, truthfully accept that it is owed to everyone to get best possible value for the money spent, since that money comes from the public themselves. I am sure that we in this House all recognise that it is far too easy to make mind blowing provisions and that in order to be conscientiously constructive it is necessary to be cost-conscious and realistic.
That is the answer I gave to one of the many people from whom I receive letters. This particular lady had written to say that she understood that the Labour Party planned to continue to pay invalidity pension on top of retirement pension. I am not suggesting that any noble Lord ever suggested that to her, but that is what she wrote. This lady thought that it was just to be a lovely handout from a private fund of the Labour Party. She was obviously quite wrong.
Lord Ennals: Quite wrong, my Lords.
Baroness Lane-Fox: The difficulty she faces, my Lords, of rising expense is a very genuine difficulty encountered by ageing disabled people, as we all know. The sad fact is that successive Governments have punished this group through the mobility allowance. It is extraordinary that new claimants are ineligible after the age of 65 and the allowance is cut off, immediately, for recipients at the age of 75. That is pretty draconian treatment and my hope is that my noble friend the Minister will recognise this as an area of need that calls for attention.
Once it is made clear that there is no special magic reservoir of money people will depend entirely on careful management of their affairs. Nobody could say that it is good management to leave a financial scheme unreviewed for more than 40 years. Obviously, those among whom I work are cheered to see that a new incomes support scheme will give them a guaranteed weekly income, although apprehension is felt that there is need for careful explanation, which I trust will be provided to all disablement groups. What is more, some of us believe that the major national survey at present in hand will, for the very first time, reveal the numbers, the circumstances and needs of disabled people. These revelations may well prove to be inconvenient. The fact that, despite this, the Government are pressing on regardless in search of the truth in this area shows the wisdom and compassion of

287
the Secretary of State and the Prime Minister. This is not the work of any cynical Government wishing only to find cosmetic answers. This survey is a caring survey, geared to find the true situations in which people find themselves, however sad those may be.
As your Lordships know, when your difficulties are pretty unbearable it is salubrious and heartening to make them known, and the results of the survey will be of great importance to individuals as well as to the Government. Certainly the advance in medical science has allowed many more elderly and disabled people to survive and over the past six years £1 billion more has been paid out to the extra numbers claiming long-term sickness and disability allowance alone. These numbers cry out for the current survey, all the more so since the Government are committed to working towards a more coherent system of cash benefits for disabled people.
This is, of course, just one facet of the comprehensive social security review, and I realise that. My noble friend the Minister has assured us that the way is still open for influence and suggestion in this area. It is my hope and belief that the outcome will improve the lot of those we long to help.
4.33 p.m.
Baroness Warnock: My Lords, perhaps I may first join with the noble and learned Lord, Lord Silkin, in expressing my gratitude to the House for its generosity and its welcome and then go on to crave still further indulgence if I make a few maiden observations on the Green Papers under discussion.
I think it would be difficult to disagree with the avowed purpose of the Green Papers, which is to provide social security primarily and mainly for those who most rely on it and then to simplify the means of access to this security. The extent to which these two admirable aims can be connected with saving any money is, I think, a matter that is far more dubious; but I do not want to say anything, even speculatively, about the finances involved. However, there are three general points I should like to raise.
The first concerns supplementary benefit and the abolition of this in favour of the new system. Supplementary benefit is at present paid to all those whose resources fall below an agreed level, and a level which can be readily ascertained by anyone. It is to be replaced by a system of payments for specific needs. I am bound to say that I share the doubts of the noble Baroness, Lady Jeger, on this particular issue. These payments are to be made at the discretion of the department from the new social fund. The point of this change is to direct help exactly to where it is most needed and that, of course, is a very good aim. However, I am anxious about the consequences if payments are to be made by the local DHSS office according to its assessment of the claimant's need, and, of course, depending on how much money there might be left in the fund, either nationally or locally, when the claim is made. I am very much afraid that the claimant may not fully understand why the claim is either turned down or, indeed, allowed. Yet if there is openness, which I strongly believe there should be, this may result in what will, in effect, become a strict
288
set of criteria according to which a claim can be made and the flexibility of the system, which is supposed to be its merit, will, of course, then be lost.
I am not in the very least bit comforted by the assurance that the funds will be distributed by experts who will counsel the claimants. I have fairly recently come across a doctor of medicine who assured me that he, personally, always counselled his patients when they came seeking treatment for their infertility. I asked him whether or not the counselling proved useful. He replied that it did, that it was extremely useful, and he generally managed to counsel his patients until they went away. I fear that the counselling of claimants for discretionary grants might come to have the same sort of success and I fear, too, that the most helpless and the most bewildered claimants will be the first to succumb to this kind of counselling.
My second point is rather different. Throughout the Green Papers there is visibly the intention that the provision of pensions and grants for certain contingencies, such as funerals, should be to an increasing extent partly the responsibility of the beneficiaries. They say that people ought to begin forthwith to save for a rainy day—the day their spouse dies or the day they die themselves. That is to say, we should insure against old age and death. The picture of the thrifty household with its modest savings in a stocking or put away in a crock is doubtless attractive, and I am certainly not suggesting that people should not save. I believe, too, that once upon a time people saved rather more than they do now. The fact is that most people have completely got out of the way of saving, and in order to induce people to save for the future they must feel a certain level of security in the present.
It is very difficult to look to the future unless you are confident that the present can look after itself. Those who are interested in, for example, preventative medicine complain of difficulty in making people believe in their own future; but I have heard it said that the future is a middle-class concept. That is doubtless somewhat exaggerated, but I think it is true that we cannot, overnight, turn non-savers into savers. We must recognise that there is an enormous educational task to be performed first. Those most in need of provision, whether for their own widowhood or for their own funeral, are, as a matter of fact, the least likely to be ready to contribute, to understand the need for contributing, unless they can come to think differently about their own future.
My final point will be very briefly made. Though it is true that in specific ways the Green Papers progress beyond Beveridge, in some respects these papers may almost have been written in the 1950s. The assumption throughout the papers is that the typical family is one where the husband has been working for the same employer virtually all of his working life, where the mother does not work but is at home with the children, and thus it makes sense to describe a family support payment which is to be made to the father through his weekly pay packet.
Despite some modest concessions to the unemployed in the papers, throughout I think there is hardly any recognition that the pattern of people's lives may in the future be totally different. Long-term

289
unemployment is just one of the matters which may make people's lives different. Besides long-term unemployment, I believe we have to consider part-time employment, sporadic employment, shared jobs, and attempts at self-employment which may sometimes come to fruition and flourish but quite often may quite suddenly collapse. All these are phenomena of which I think we shall see a very great deal more and which among both men and women may in future be taken as normal.
I hope that in future discussion of the Green Papers, which I sincerely hope there will be, a bold and imaginative way can be devised for matching social security and pensions to these new and various needs. This is the direction in which I believe we should be progressing.
4.42 p.m.
Lord Grimond: My Lords, it is an honour to be called upon to congratulate, on your Lordships' behalf and on my own, the noble Baroness upon her notable maiden speech. High things were expected of her. She comes to us with a long history of achievement in different fields. I am sure your Lordships will agree that we have not been disappointed. Of course, she has at least two great advantages in dealing with this subject. First of all, I understand she has mastered existentialism, which is the only subject of equal complication to the welfare services. Secondly, she has an elegance of expression which conceals any possible scintilla of controversy which might enter into her speech; I am not suggesting that it did: but the great art of being controversial is to appear not to be controversial. I know we look forward with great expectations to many further speeches from the noble Baroness.
Perhaps I may say two things which are not perhaps strictly relevant. One is that I and the noble Lord, Lord Blake, once commissioned and published a book by the noble Baroness called Education: a Way Forward. I recommend it to all your Lordships and take this advantage to give it a plug. The other point which perhaps I may mention is that I was for many years a friend of her brother Duncan, whose death we all much regret.
May I also congratulate the noble and learned Lord, Lord Silkin, from these Benches? He is an old friend, not only from the Commons but, indeed, from before the Commons—from the apple trees of Normandy! I enjoyed his speech very much, again with its great care to avoid any touch of controversy.
I agree with those noble Lords who have pointed out that the present system of welfare is complicated and expensive to administer, and has lost sight of its main aim. I think it is worth restating what is its main aim, which to my mind is very simple. The aim is that no-one in this country should be forced to live below a certain level through poverty. That may seem very obvious, but in point of fact it has somehow been lost sight of in the development of the general system of welfare. The main aim is to help the poor. In some ways, it is the rich who have gained.
Here I follow the noble Baroness who has just addressed us. It seems to me that one cannot separate the welfare services from the general state of the
290
country and its industrial organisation. As she pointed out, unemployment and other changes certainly affect these services. Nor can the welfare services be separated from other transfer payments which are not usually regarded as part of the social services.
Therefore, I would suggest that when the Government are engaged in discussing the matters raised in the Green Papers they should also look at the general running of the economy. They may consider how far the spread of ownership and how far, for instance, Mr. Weitzman's book The Share Economy are relevant to this question. I believe, as I hope the Government do, that as this country grows richer the need for social services should decrease. The need for medical services may well increase because we have learned to keep people alive longer and learned to deal with new diseases. However, as we grow richer the number of people who are in or near poverty should surely decrease because they should be given a share in the general prosperity of the country.
It seems to me that what is very relevant to the future of these services is how we shall divide out the profit, so to speak, from the new technologies. At the moment it appears to me that capital is reigning very much at the expense of labour, and that we are in danger of becoming a country in which the comparatively few people who own or who are engaged in the new technology become immensely rich, while the great run of the population benefits from it hardly at all. I think that will have very serious effects upon the welfare services, will be very undesirable and can only be obviated by looking again at ownership and the spread of wealth.
Further, it is clear that some of the subsidies which have been paid benefit principally the comparatively well-to-do middle classes. This is true, on the whole, of the housing subsidies, with advantages to the mortgage holder. It is true of further education. It is true, to a great extent, of passenger services on the railways. Anyone who doubts this should read A Strategy for Equality by Mr. Le Grand, which points out very clearly how it is the middle classes who have gained from these transfer payments. I should also recommend the reading of Change by Mr. Arthur Seldon, which points to the same phenomenon and also to the phenomenon which I understand from reading the Green Paper is called "churning"—a new phrase to me but not, I gather, to the noble and learned Lord, Lord Silkin.
To my mind, there is no doubt that the social services have taken a wrong turning and that we are now wasting an immense amount of money in, on the one hand, taxing people and, on the other, repaying them in subsidies of one form or another. We are also subsidising people who do not need it at all.
That brings me to my main theme, which has already been mentioned by my noble friend Lord Banks. Have the Government abandoned altogether the tax-related approach to the social services? Personally, I believe that what this country needs is a minimum income, payable to everybody. I do not think that we can now say to people that if they become poverty-stricken or disabled through one cause they will get more or less than they will if it is through another cause. I believe that we should aim

291
for a minimum income. As a step towards this, I think we should advance on a tax-credit system or reverse income tax. I should very much like to know whether the Government have virtually abandoned this approach. It may be said that it is casually mentioned on page 19 and in connection with the family credit scheme. However, on the whole they seem to have been moving away from this. Not only was it put forward many years ago by a notable Liberal, Lady Rhys-Williams, but it has in the ranks of the Conservative Party that great ornament Sir Brandon Rhys-Williams. Has he been abandoned by his party, too?—because, personally, I think this is the way forward. It is very noticeable that under the present system the most appalling anomalies take place. It was pointed out in another place only yesterday by Dr. Owen that in certain circumstances a family earning £26,000 a year pay a lower proportion in tax and contributions than a family earning £8,000 a year. This is really intolerable. It could be overcome by moving in the direction of a national minimum income through the tax credit system.
I am afraid that, much as I respect the Government for their apparent desire to look at the fundamental needs of social welfare, they have not done so. Once again, their words do not seem to be carried through in their actions. I do not believe that this Paper is revolutionary. I do not believe that it will make much difference to the complications of the social services. For instance, the social fund will be immensely complicated. It has already been criticised by several speakers. The idea that local officials can deal with special cases without setting up a great feeling of injustice and also fresh demands for newer systems seems unrealistic. The present scheme has endless complications, largely through taking note of exceptional circumstances and trying to deal with them in ad hoc ways. That will happen again.
Like previous speakers, I wish to know about the limit of the fund. Is it to be limited for a certain period? If so, will those who first come to the fund be better off than those who come later? If the fund is exhausted presumably those people who come at the end of the period will get nothing at all. This is not the way to make social welfare services either simpler or more acceptable. I also have doubts (although, here, I fear that I may not carry my noble friend Lord Banks with me) about the funding of pensions, particularly in the public sector. It seems to me, as already mentioned, that pensions are paid for out of current production, whether you like it or not. The resources come out of current production.
For many years I served upon the House of Commons pension fund. We paid a great deal of money to eminent stockbrokers and the public trustee. One day they came along and said, "I think you ought to know that we have lost half your fund. The stock exchange has fallen and it is worth exactly half what it was". I thought that this would be distressing to my fellow trustees. I expect that the noble Lord, Lord Barnett, will know about this. But not at all! If the fund falls, the Treasury pays. It makes not the slightest difference to House of Commons pensions whether the fund is a success or a total failure. I wonder how many more funds are in that position. We should face up to
292
the fact that pensions are a charge upon current production. They have to be paid out of current production, however it is done—whether through Government, through private firms or in any other way. Society has to face up to the fact that it has to look after its old folk, of whom, I may say, I am one. I am afraid, therefore, that I do not regard this as a revolutionary or wholly satisfactory start to a controversy or discussion. I hope, however, that discussion will take place.
I should like to conclude by recommending two old saws to the Government. The first is that they should have the courage of their convictions, which they have been losing to a great extent lately. Secondly, as they are going to be hanged anyway—you cannot deal with the welfare services without stirring up a hornets' nest—they may just as well be hanged for a sheep as a lamb. I therefore recommend them to go a great deal further in the directions that I have indicated, and not to stop at what I regard as a rather muddled point in their discussions.
4.54 p.m.
Lord Williams of Elvel: My Lords, it gives me great pleasure to associate myself with my noble and learned friend Lord Silkin of Dulwich and the noble Baroness, Lady Warnock, in thanking your Lordships for the courtesy that you have extended to me and my fellow maidens—if I may use that expression—today and indeed on our arrival in your House. Many noble Lords have been kind enough to tell us about what we should be doing and should not be doing. I retain with special affection the advice of a noble Lord who told me that it would take me at least five years to find my way around this House. In the context of today's debate where a number of noble Lords have complained about the absence of figures, I regard the presence of this particular figure as being of fundamental importance. However, it seems to me at the present stage to be a serious under-estimate of the time it will take me to get established here.
With your Lordships' leave, I should like to make some observations on the proposals put forward by the Government to modify the state earnings-related pension scheme. I shall try as far as possible to avoid the rather distasteful acronym of SERPS, but I fear that I may be obliged to use it. I hope very much that your Lordships will agree, whatever the views of individual Lords about the substance of such proposals, that it is of great importance that these matters be fully understood by informed public opinion. If they are not, there will at best be only partial acceptance. And if there is only partial acceptance, there will inevitably be renewed controversy. There may well be controversy in any event, but I should like to leave that aside for today, and offer, in a constructive spirit, some comments on four points relating to the proposals which I believe the Government will wish to look at carefully when they come to present their White Paper in the autumn.
The comments that I offer in this spirit I make because I believe that we are dealing with a proposal, or a series of proposals, of very great social importance. It is in the tradition of your Lordships' House, I understand, to attempt to maintain, even across party boundaries, the principle of national

293
cohesion. We should make no mistake about it. National cohesion is here at stake as a central part of the fabric of the social security system is modified. My first point concerns the question of funded pension schemes as opposed to unfunded pension schemes. As I understand it, the Government, in their proposals, intend to change from a wholly unfunded scheme to a partially funded scheme. The basic pension will continue to be provided on an unfunded basis through the national insurance system, but the top-up will be provided on a funded basis.
Funded schemes are of course common in the United Kingdom, in North America, Canada and elsewhere where trust law prevails. Unfunded schemes are common where Roman law prevails. Indeed, if your Lordships look at companies in France, the Federal Republic of Germany, Italy or Spain, you will find their schemes are entirely unfunded. There appears to be no intrinsic moral virtue in a funded scheme as opposed to an unfunded scheme. I think all of us would welcome an explanation from the Government, when the White Paper comes forward, on the merits that they see in changing from one particular method to another particular method of providing for pensions.
The second point is that the Government propose not only to fund partially the pension scheme but to fund it through the private sector rather than the public sector. The estimates of the total annual contributions for the 10 million or so people who are at present covered by the state earnings-related pension scheme—the estimates of the contributions required to maintain the top-up—are of the order of £4 billion a year to provide benefits broadly equivalent to the benefits provided by occupational schemes existing in the private sector. There seems, again, no clear expression in the Green Paper of why this £4 billion should be directed towards the private sector rather than the public sector. For instance, in Sweden, there is a funded pension plan which is run by the public sector rather than the private sector. I understand that the Green Paper talks about partnership. I would welcome some further extention of these explanations when the Government come to publish their White Paper.
Thirdly—and I mean no disrespect to the noble Lord. Lord Banks—I wonder whether the private sector will be able to cope with the new influx of customers who will come to the privately-funded part of the pension scheme. Generally, to date, those who belong to pension schemes do so in the context of their employment. They are part of a company scheme or of a local authority scheme. It seems to me that what is proposed (and I hope that I do not misunderstand the provisions of the Green Paper) is that individuals should be taking out their own pension schemes for the top-up rather than be part of a general scheme administered centrally or by a competent body.
Generally speaking, private pension plans as opposed to occupational schemes provided by companies are for higher income earners, and those who will come onto this particular market as a result of the changes proposed by the Government in the Green Paper will have earnings of approximately £80, £90 and £100 a week. As I see it, it will be extremely difficult in administrative terms—although again I ask
294
for clarification—for the industry to absorb this influx into this relatively limited market at present. I hope that your Lordships will agree that nothing could be worse than a failure in administration of a new scheme when it is put into practice. Before we can be completely persuaded, I should very much like to see some more reassuring noises coming from the industry itself, indicating that it is properly geared to accept this new influx of clients.
Finally, there is stress in the Green Paper on partnership between the public and the private sectors. The Green Paper says that,
"employees will be required to contribute to an occupational or personal pension".
I imagine—and again I look for clarification—that this requirement will be in the form of some statutory obligation.
Quite apart from the libertarian points, which I do not want to raise, I believe that your Lordships would welcome some view from the Government, when they come forward with their White Paper, on exactly how all this will operate and, if there is to be a statutory obligation, how this will be policed, what will be the sanctions, and who will knock on whose door and say, "You have not paid for your pension plan".
I should like to conclude where I started. In order to ensure a proper level of public acceptance of proposals of such importance, a full understanding of what is intended is necessary. I am sure that this will come with the White Paper and with the explanations that will accompany it.
I hope that I have not abused the courtesy that your Lordships have extended to me as a maiden speaker by exciting controversy. My purpose has been to help in this process of understanding and I feel sure that the Government will be thinking carefully—indeed, have been thinking carefully—about the matters that I have raised. I hope that your Lordships will excuse me if I say, finally, that I may well adopt a firmer position on certain matters in future debates.
5.4 p.m.
Lord Swann: My Lords, in the light of his distinguished career in finance and industry I am sure that it comes as no surprise to any of us that the noble Lord, Lord Williams should have given us a maiden speech of such exemplary clarity and wisdom. I am sure that I speak for all of us when I say that we hope to hear him many times in the future. May I also echo the words of former speakers about our two other maiden speakers, the noble and learned Lord, Lord Silkin, and in particular an erstwhile fellow academic and old friend of mine, the noble Baroness, Lady Warnock.
The Green Paper ranges far and wide over a very large number of issues and I want to concentrate on just one of them—namely, the implications of the proposal in the Green Paper that, above a certain quite low income level, an employer shall provide either a company pension or contribute to the employee's personal pension. Moreover, the employee in a firm which provides company pensions shall be free to decide which sort of pension he wants.
I want to concentrate on this aspect of the Green Paper for a reason that I ought to declare. I have

295
recently taken on a position which was filled with much distinction by a former Member of this House—namely, the late Lord Byers, who for many years, until he died, was the chairman of the Company Pensions Information Centre. As some of your Lordships will know, this is a small organisation, supported by a number of leading life insurance companies, whose function is to run courses and provide information for employers, trade unions—increasingly for trade unions—and others involved in the complexities of company pensions. Some of your Lordships will be familiar with the excellent range of explanatory booklets which are published by the centre. It is clear to us that, if and when the proposals of the Green Paper become law, the centre will certainly have to work overtime.
The present proposal was foreshadowed in the Secretary of State's consultative document published last year, which was much concerned with what is known as the early leaver problem—namely, the fact that someone who changes jobs, by choice or otherwise, while in an occupational pension scheme based on final salary finds that his pension at the end of the day is less, and sometimes decidedly less, than the pension of a man on the same final salary who has stayed with one employer all his working life.
I should explain that this is not due to malice on the part of the company or the pension managers in question; it is an inherent result of the structure of the final salary schemes. As your Lordships will know, these schemes are now standard in the public sector and widespread in the private sector, where in most cases they provide X/60ths—X being the number of years that the man has worked with one firm—of a man's final salary in any given firm. Without going into detail, it will be apparent that, say, 20/60ths, a third, earned early in a career, when his salary on leaving a firm will be relatively low, and a further 20/60ths earned later in a man's career when his final salary in another firm is considerably higher, will not add up to as much as the 40/60ths of an identical final salary received by a man who has spent all his time in the same firm.
The consultative document saw this as inequitable as well as being a disincentive to job mobility. Hence the proposal in the Green Paper that any employee should be free to opt out of such final salary schemes, being obliged instead to contribute, along with the employer, to what is variously called a money purchase scheme, a personal pension or a portable pension. Such schemes involve in general a steady rate of funding to build up a pot of gold belonging not to the company but to the individual, with which, when he retires, he buys an annuity as his pension. There is, in consequence, no penalty involved in changing jobs. Moreover, as the Green Paper points out, it has the merit of giving the individual ownership of and control over his own money, much like the owner-occupier of a house. For these reasons I welcome, as does the centre, this widening of possible choice. Is this then the perfect solution?
Alas, personal pensions also have their snags, and quite serious ones. They too can, and often do, give rise to inequities. Someone who started on a low salary, but slowly worked up to a high final salary, is
296
likely to find himself with a poorer pension than someone who started at a reasonably good salary as a young man but only progressed slowly to a distinctly moderate final salary. It was indeed this very factor that started the shift away from such pension arrangements and towards final salary schemes some 30 or more years ago.
There are other snags. With a portable pension there can be no certainty as to how one's ultimate pension will compare with one's final salary. Most serious of all, those people whose policies fall in at a time of high inflation, when the underlying investments have not yet caught up, can be much disadvantaged. It was in fact precisely this which led to the universities pension scheme—as I know all too well to my own cost—the FSSU, a type of portable pension, being abandoned a few years ago in favour of a final salary scheme, the USS. The arrival of index-linked gilts may go some way to overcoming this snag, but only if—and it is a big if, and subject inevitably to much future political uncertainty—index-linked gilts continue to be issued and in sufficient quantity.
Final salary schemes do not share these uncertainties but they have suffered, as I have mentioned already and as is well known, from the snag of disadvantaging, in varying degrees, those who change jobs, especially in mid-career, unless they are lucky enough to be in a position where they can negotiate, demand, or command distinctly higher salaries in the job they move to. Whether final salary schemes are as much of a disincentive to job mobility as is often supposed is harder to tell. They are probably not a disincentive early in a career, which is in fact when most people change jobs, and when in any event job changing does not make much difference to one's ultimate pension. On the other hand, in mid-career it may well be different.
There are a number of other points that need to be made. In the first place although those who stay for 40 years with one employer get a two thirds of final salary pension, is this actually the right criterion or yardstick of the adequacy or success of a pension? It is not generally realised, for instance, that a married man on average earnings will, counting his basic state pension, be actually slightly better off in net terms when he retires even though he only has a half final salary pension. A married man with two thirds of a final salary pension—that is the maximum—will be better off, and in some cases much better off, again in net terms, when he is retired unless his final salary is more than £15,500 a year.
It should also be said that important steps were taken in the 1975 Act, and are proposed in the present Social Security Bill, to overcome the job changing problem: namely, the revaluing of what are called preserved pensions when a person moves jobs. They are welcome steps and will gradually mitigate the problem. Now, my Lords, which type of pension is best? The truth must be that there is no simple and straightforward answer. To assume, as the Green Paper seems to do, that portable pensions are much to be preferred is simply not true. It has to be said that there is a considerable element of chance. Either type of pension can end up giving the best answer, depending especially on an individual's pattern of job

297
changing, but also the incidence of inflation and much else as well.
Perhaps the only useful advice one can give to those people who, if and when the Green Paper's proposals become law, will have to decide whether to go for a final salary scheme or a portable pension, is for them to try to weigh up whether or not they are likely to move around, voluntarily or otherwise, either because that is the type of person they are or because that is the nature of their chosen walk of life. Journalists, for instance, are given to changing jobs with great frequency—which may have something to do with the bad press that final salary schemes have been having of late. They would be well advised certainly to consider portable pensions at any rate when they are young, although possibly final salary schemes as they get older. Employees in many walks of life, by contrast, move around much less. They would very probably be better in a final salary scheme.
In short, a lot of people are likely before long to be faced with a difficult decision, and for some of them there can be no certain, right answer. Dare I say that it will be interesting—revealing, perhaps—to see how our colleagues in another place react in due course. Some of them must foresee a safe future in one job until retirement; others, depending on where they are, may face repeated job changes. Not all the decisions in the other place, or in the wider world, will prove to be right, and inequitable results will turn up in the future just as they do now. There is—alas!—no certainty in this world.
To sum up, I believe that the Government are right to open up the possibility of portable pensions to anyone presently with a final salary scheme. And given, rightly or wrongly, that they wish to abolish the state earnings-related pension—and we have heard much on both sides of that argument this afternoon—I believe they are right to require that everyone above a rather low income level must be in one or other type of scheme. I think also that the Government have made valuable progress in ironing out some of the difficulties and inequities. But some of the details are horrendously complicated, and many people, employers and employees alike, are going to find it very hard indeed to understand everything, and even more difficult to know what to do for the best.
I foresee that the Company Pensions Information Centre, and a lot of advisers and consultants, are going to have a formidable job on their hands explaining the ins and outs. I can only hope that the relevant Government pronouncements and literature will, for once, be written in clear and cystalline prose. Let me in conclusion give an example why. A lot of important topics in the Green Paper are going to require clarification during the consultation period. I know that the pensions world finds the Green Paper unclear on one small but important point, and no doubt many others as well. At the moment the national insurance contribution rebate in respect of those who are contracted out is a total of 6.25 per cent. for employee and employer combined, a figure which is generally agreed to be fair. For people who remain in the state earnings-related pension scheme the Green Paper envisages that the new national insurance contribution rate will be a combined figure of 20.45 per cent.
298
However, what will be the combined national insurance rate in respect of those men over 50 and women over 45 who continue to be contracted out of SERPS? There seem to be three possibilities. The first is the new contracted-in figure of 20.45 per cent. less the existing rebate of 6.25 per cent. A second possibility is the new contracted-in rate of 20.45 per cent. less a rebate larger than 6.25 per cent. A larger rebate would be justified since only the oldest age groups will continue to be contracted out. At those ages pension provision is particularly expensive and the existing rebate of 6.25 per cent. would he too small. A third possibility is the new combined contribution rate, which will apply to those too young to remain in SERPS, of 16.5 per cent., though I do not see how that could be justified. Your Lordships will see why I plead for an answer of crystalline clarity.
5.19 p.m.
Baroness Turner of Camden: My Lords, I, too, should like to express appreciation of the opportunity to say a few maiden words on this important topic. In the trade union movement—and I speak as one who has spent the best part of a working life as a trade union official—social security has always been one of our most basic concerns. Removal of deprivation, degradation, and the misery which were the lot of many working people decades ago has historically been a prime motivation for us. In their place we wanted to put dignity and self respect, decent living standards, security against everyday risks such as ill health and unemployment, and proper provision for mothers, families and pensioners.
The system of social security we have today has been achieved only after many years of long and hard efforts by Governments and other organisations. The welfare state is a noble part of the heritage of the United Kingdom. There is no doubt that raw poverty, of the kind that existed before the coming of the welfare state, has largely been eradicated. Some gaps remain; for example, among the down-and-outs who can be found in the stations and subways of our cities, and recent measures on board and lodging allowances may, unfortunately, create a much larger problem in this area. But achieving the end of absolute deprivation is not enough. Like all civilised societies, we need a social security system which seeks to maintain and improve standards more generally and to provide a safety net.
The review Green Paper is much obsessed with fears about the future, but we need to have a historical perspective. Factors which cause despair and degradation are still with us. Ill health is still very much with us, as are crippling disease and accidents, poverty in old age, and low wages, especially among women and ethnic minority groups; and unemployment is with us still on a horrendous scale. Ideally we all want to eradicate unemployment, have less illness, fewer accidents and less low pay. Many of the circumstances that threaten people's wellbeing are becoming more prevalent. We have more people over retirement age and a growing number of one-parent families. The problems are not new, but the more difficult the times, the greater is the need to protect people against risk. The fundamental merit of our

299
system is its universality; the fact that it affords protection to everyone.
Of course, the capacity to pay benefits rests ultimately on the health of the economy. I believe that there is no substantial evidence that social security payments impede economic growth. Many other developed countries have made more economic progress than we have and they are paying better benefits and directing more of their resources to social security. Indeed, there are very well-respected economic arguments that benefits help the economy in times of recession by maintaining spending power and demand.
There are those, including academics perhaps more experienced in theory than in real life, who say that times have changed. Yes, people must be protected, but the state need no longer take responsibility for that. Today, they say, private arrangements can be made. It is true that in certain sectors of social provision fruitful co-operation can and has taken place between the public and the private sectors. One such sector is pensions. In the mid-1970s all parties agreed on the introduction of pensions legislation which it was felt could finally produce a solution to pensions problems. It was the second or third attempt by Governments to introduce new pensions legislation, and this time everyone was in agreement. Hence we had the establishment of SERPS, the state earnings-related pension scheme, and the opportunity for better private schemes to contract out—a genuine and I believe fruitful partnership between the public and private provision.
Trade unions were often criticised in the late 1960s for not being interested in pension provision. We were told that all we were thinking about was the next wage round. It is true that in those days it was difficult to persuade the younger members to take any care regarding their future and to concern themselves with retirement benefits that they would not be enjoying until perhaps 20 or 30 years hence. However, we conducted a campaign among our members. We raised the level of understanding, and the result of all that is that 11½ million people are now in occupational pension schemes, many of them contracted out of the state scheme. We ran courses to tell our members about pensions and many of our leading members became trustees of main pension schemes. Of course, nobody is claiming, and nobody has claimed in the debate, that the pensions legislation introduced in the mid-1970s was perfect. We have the problem of the early leaver and discrimination against women, because although the legislation guaranteed equal access, it did not guarantee equal benefits. I was glad to hear from the noble Baroness this afternoon that it is intended to do something about discrimination against women and that we have already had some legislation to benefit early leavers.
But the cornerstone of these occupational schemes which are contracted out is SERPS. If the SERPS scheme goes, with it goes a whole system of earnings-related private schemes, because they will be undermined if SERPS is no longer in existence. Nor is it possible to maintain that the provision of personal private pensions will cope with the need that will remain. In fact, I argue that to emphasise private
300
pension provision can be done only by people who have no conception of what it is really like to be poorly paid. By that I do not mean destitute; I refer to the mass of our people who live on tight budgets, who live not from day to day, but certainly from week to week or from month to month, and are not in a position to think about retirement provision in 20 or 30 years' time. They are concerned with day-to-day existence. This is true of many women, particularly the growing number of those who head single-parent families. They stand to lose by the abolition of SERPS.
Moreover, they are the very people who are likely to be easy prey for unscrupulous speculators who will begin to sell private pensions. Even the Government's blue paper on private personal pension provision acknowledges that there will need to be a strengthening of consumer protection in this area if people are to be protected against speculation. Frankly, it will be difficult to do that.
It is an illusion in my view—and certain other speakers this afternoon have said a similar thing—to pretend that the issue of extra demands on resources can be avoided by talking about private as opposed to public provision. The essential issue cannot be avoided—that to meet our social objectives of preventing poverty and protecting living standards and helping families we have to allocate resources for these purposes. We have to find the money from the income of the nation. The alternative is that we have to abandon these objectives. I do not think that is anybody's desire and I do not believe it is the desire of the Government, because everybody is committed —this has been said from both sides of the House—to a system that does not lead to degradation and poverty.
As noble Lords have said, no one believes that the present system is perfect. It has grown up in a piecemeal fashion in response to needs as they have been perceived. It is extremely complicated; so complicated that many people do not claim benefits to which they are entitled, and there are overlapping benefits. But a review should not herald the beginnings of a departure from the concept of a universal safety net for our people. The threat to decent pensions for all should be removed. Child benefit, one of the least complicated benefits, should be preserved and its value should be preserved. We should seek to maintain the broad agreement we have in this area which is of the utmost importance and we should not let ideology overrule common sense.
5.28 p.m.
Lord Beaumont of Whitley: My Lords, it is my very pleasant duty to congratulate the noble Baroness, Lady Turner of Camden, on her maiden speech, and, indeed, I can do so with great sincerity, because we have heard a speech of extreme competence in the field and extreme compassion. Those two things are very much respected and welcomed by your Lordships' House. We hope that she will make many more speeches in this House in the years to come.
We have seen a multiplicity of "maidens" today and we can merely hope that they will not be daunted by some of the things that they have seen and heard. Anyone might be baffled by this Green Paper; anyone

301
might be slightly worried about the traditions of your Lordships' House. We have seen the noble Lord, Lord Sandford, taking over the whole of the Bishops' Bench, and we have seen the noble Baroness, Lady David, taking over the Conservative Front Bench at one moment. It has certainly been an unsettling occasion.
I put down my name to speak on this occasion not because I think that I have any special expertise of my own to offer on this subject, but because I wish to place on record the serious concern on this subject felt by Church Action on Poverty, of the executive of which, as some of your Lordships know, I am a member.
It is an ecumenical body founded by a number of Christians, mainly Anglicans at the beginning, later working with boards of social responsibility and similar organisations in other Churches. It is concerned with what it regards as the sheer weight of misery found in many parts of this country. It regards its task, first of all, as to speak to the Church about the existence of that misery—because, as the right reverend Prelate the Bishop of Liverpool has reminded us in the past, comfortable England does not always understand what is going on in deprived England—and to urge the Church to exercise the influence which it undoubtedly has, through your Lordships' House, among other instruments of Government, to see that changes are made.
It is often said that the Church has the right to speak out on matters of principle but no particular authority to prescribe remedies. It is, I think, clear that here there is a general principle involved in the matters we are discussing today. Although Church Action on Poverty has a considerable expertise in the details of poverty and what should be done, particularly since one of the advantages it has is that more and more these days it is only the clergy who live among the really poor. There are plenty of other people from the middle classes who have done so, too, but if you take any given profession or any given walk of life then, on the whole, the doctors, the social workers and the policemen live outside such situations and go in for their daily work. It is the clergy, undoubtedly rather more comfortable than a number of their parishioners, who are still living alongside them, in some of the real slums and in some of the real areas of poverty that we have.
The theological basis of Church Action on Poverty is, I think, secure. The bishops have obviously considered that the Green Paper is not only unspeakable, but even past praying for; but no doubt the noble Lord, Lord Sandford, has done his best on their behalf. The Christian religion abhors the presence of riches in the midst of poverty. That, I think, is one statement which is incontrovertible. It is what the parable of Dives and Lazarus is about.
We in Britain today see a growing under-class of the population, certainly over 10 per cent., and some would put it much higher, who are excluded from the society in which the other 80 per cent. to 90 per cent. live, excluded from the society which they see every evening on their television sets—because they have television sets. They are people who have to choose from time to time whether to clothe their children properly and smartly and on a par with the other children in the school or whether to feed them
302
properly; and old people who have to choose between food and warmth from time to time.
Many people in this country, I think, doubt that this happens. The people on whose behalf I am speaking, the clergy of the poor areas of this country from all Churches, know that it is so. If any of your Lordships doubt what I am saying, I can find many of them who would be—I will not say delighted—already to take your Lordships and show you that what I am saying is, unfortunately, so. The degree of distress that I am talking about of course if not foreseen and of course is not intended. In almost every case, a middle class, well educated person with proper training could get by without much hardship on what the state provides until problems strike. Other people, less well trained and educated—and that is our fault, my Lords, and not theirs—cannot cope at all. And even those who can cope run into trouble when the least little thing goes wrong because there are no reserves of any kind and once things go wrong, they continue to go wrong. The money for a wreath, for a funeral of a loved relative has to be borrowed and somehow the debt gets deeper and deeper and the problems pile up.
The social fund which the Green Paper suggests is an interesting proposal and it is undoubted, I think, that we need something along those lines. But it is equally quite clear from the criticisms that have been voiced in all parts of your Lordships' House today that that is not by any means a completely well thought out or satisfactory answer.
What is most worrying, I think, about the whole Green Paper is an implication that poverty is not to be relieved, that the poverty line is not to be raised up and, indeed, that it may even sink. That poverty is not to be relieved is obvious from the fact that this is a nil-cost review of an already inadequate system, and the appalling result is an overall net cut in social security expenditure. If we cannot move the poverty line up—and if we tax the hidden welfare state of the rich, then, of course, we can, but there is no sign of that whatsoever—we must not let it move down. If we lived in the kind of society where there was a danger that there was not enough to eat for everybody such a moveable poverty line would be unavoidable. On a desert island when the food runs out everybody sinks below the poverty line. That is not the position we are in today.
We live in a country which, comparatively speaking, is getting poorer, but actual riches are still here. Sections of British society are swimming in it. The Government keep on telling us that the national income is going up every year. If that is so, why are the poor not getting less poor?—because, whatever the figures say, they certainly are not. You may go to Liverpool, or Newcastle or Tower Hamlets and ask them if they are getting richer year by year. They are not; because what gains there are nationally—and I am a little sceptical about gains at all these days, if properly accounted—are certainly not shared out. Instead, we are like the figures in the old cartoon climbing the ladder out of the swamp. When hard times come the top man says, "We must all take a step down," and the man on the lowest rung disappears below the surface. But in fact it is even worse than that. The man on the top rung passes the word down for

303
everybody to step down and he himself, steps smartly up. The rich are getting richer all the time.
As we see it, the attitudes behind this Green Paper are based on myth—the myth that if the poor receive fewer benefits, they will work harder, the myth that there are plenty of jobs if only employers could pay little enough. There is no real recognition that there really are no jobs for 4 million people and that there will not be any without a reappraisal not only of the economic policy which has led us into this particular state at this particular time but of the whole perspective in which we view modern economics.
No one, wherever they live in this country, can doubt that there are thousands of jobs which need doing. One has only to move half a mile outside one's house, wherever one lives, to see that. These are all real jobs in the sense that they would raise the wealth of the community. The average repairs, for instance, which need to be done to houses in this country are £4,000-worth per house. That is a measure of the decay in our housing stock which can be halted. What we do not yet have is the economic system to cope with this kind of situation.
It is true that no one has yet come up with the answers. We do not yet have our new Keynes, but many people are trying to find it and a few of them are edging towards solutions. A number of them are in the party opposite as well as in the parties on this side of the House. But very few of them appear to be represented in the Government. This Green Paper shows no signs at all of grasping the problem, let alone of suggesting any answers. Nor does it betray any of the moral outrage that one would hope for from those who have the dreadful responsibility of dealing with the situation which daily gets worse.
Lord Sandford: My Lords, perhaps the noble Lord, Lord Wallace, would excuse me if I were to intervene for a moment, as I was mentioned twice by the noble Lord, Lord Beaumont; and so were the Bishops. There are a number of explanations as to why they are not here. One is that they are in conference in Manchester, as it were, rewriting the Creed; or, if the House would prefer to believe it, some of them may be at Ascot. But in any case I shall take it on my own shoulders to make sure that they read carefully what your Lordships have been saying in this debate.
Lord Beaumont of Whitley: My Lords, I was casting no aspersions on the Bishops themselves. I know how very seriously they take this problem; and indeed a number of them are fully associated with the body on whose behalf I was trying to speak.
5.43 p.m.
Lord Wallace of Coslany: My Lords, I am very relieved that this ecclesiastical exchange has finished. It rather added to the strain of my speech.
One of the main reasons for my taking part in this debate is that I am one of the few left who took part in the Second Reading debate on the National Insurance Bill in another place in February 1946. That debate was the start of the implementation in great proportion of the Beveridge Report and certainly marked the founding of the welfare state, a welfare
304
state founded, as Prime Minister Attlee said, on faith in the British people and—do not forget this, my Lords—founded after a long and devastating war from which we came successfully to peace. That was an act of faith. I hope that that act of faith will continue.
In my maiden speech on 7th February 1946 I concluded with these words, as reported at col. 1959 of the Official Report:
"This scheme, above all other schemes, will strike deep to the heart of humanity in every home in this country. I make a plea for the humane administration of the scheme. I ask the Minister to reduce the number of forms, and to make the necessary forms as simple as possible … We must aim at reducing, and not adding to, anxiety".
I repeat, we must aim at reducing, not adding to, anxiety. With the greatest of respect, I would humbly submit that that is the very theme of this debate.
A fleeting glance at the Green Paper gives the impression that what I said in 1946 is the objective of the Government: simplification, easing of anxiety, helping and persuading people to make their own provision for the future. This is but a thin veneer over proposals aimed at reducing expenditure at the expense of worse-off members of society and the reduction of taxation benefiting the better-off sections of the community. Even with the remarkable absence of detailed costing in the Green Paper, that is the impression that is bound to arise in the minds of the majority of people in this country.
As a former spokesman on the Opposition Benches, together with my noble friend Lord Wells-Pestell—we all regret the reasons for his absence and wish him well—I can say that we were faced, since the present Government came into power, with a record number of social security Bills, the majority of which were economy measures—concealed cuts, if you like—and littered with orders to be submitted to Parliament by the Minister—orders which this House can discuss but not amend or reject. In such orders people's rights were, and still are, obscured in a mass of legal gobbledegook. Any noble Lord who has served on the Statutory Instruments Joint Committee will know what I mean. Every weekend by post, and upon arrival at this House on Tuesdays, one receives masses of such documents couched in incomprehensible terms. These frequently had to be translated for us by expert officials.
Too much of this sort of thing is going on these days. Organisations such as Citizens' Advice Bureaux and others helping people to obtain their rights, particularly under social security and health legislation, are hard pressed to keep abreast of and to clarify the orders that keep flooding out from Government departments. My fear is that when—I nearly said, hopefully, "if"—legislation is introduced to implement the Green Paper proposals the situation will not improve but get worse. We have to ease off this growing tendency to operate legislation by statutory instrument.
Financial security in old age has always been a key factor in social security legislation. Pensioners are to be among the losers as a result of this review. Some are fortunate to receive an occupational pension as well as the state pension, such as former MPs who receive such pensions geared to the cost of living index. I plead a personal interest there. However, about 5·9 million

305
have incomes within 40 per cent. of supplementary benefit level and have to rely on a group of meanstested benefits to survive. If such weekly additions are to be replaced by proposed income support premiums many elderly people will lose out on income.
The proposed abolition of the state earnings-related pension scheme will hit 11 million people. What I cannot understand is the Government's proposal to abandon the scheme altogether. I cannot understand their approach to the problem. I should like to ask the noble Baroness this question: is the statement by Mr. Stewart Lyon, past president of the Institute of Actuaries, correct—that phasing out of the scheme had never been discussed or even recommended by members of the inquiry?
Private insurance for adequate pension cover, as we know, is not easy to secure and is expensive. Occupational pension schemes in the private sphere vary in type and payment of pension. Small firms do not and cannot run them. What happens when a firm goes "bust"? The more privatisation we have the more likelihood there is of bankruptcy in the private sector. It is not unusual these days: there are more bankruptcies today than we have had for many years. The transfer of pension rights from job to job is a good, sound principle. What will happen in the case of redundancy or unemployment—will they be covered? These questions are not fully answered. The state earnings-related pension scheme was established by all-party agreement. Modification may or may not be necessary, but would submit that it is better to keep the scheme and to negotiate changes on the basis of all-party agreement rather than scrap it, as the Government propose to do.
Of course, the problem that we face in this debate is failure on the part of the Government to give detailed figures of gains or losses, or indeed figures of the amount of public expenditure which is involved. The Government must have these figures in their possession: otherwise, they have been talking in airy-fairy terms on suppositions without any basis. It seems that the Prime Minister, who has been pressed by the Leader of the Opposition, has now given way and said that the figures will be produced in the autumn after the Brecon and Radnor by-election.
Some estimates of losses produce by outside experts are alarming. According to one expert, the changes for widows would mean a loss for some of £17,000 in benefit; but the DHSS will save £112 million by 1997. The £17,000 loss of benefits refers to widows aged 44 with grown-up children, or those who are childless, before reaching retirement age.
The death grant has always been a problem. With funeral costs averaging between £300 and £400, the grant of course is almost negligible; but some people are very thankful even to receive that. To replace the present grant of £30 by a discretionary grant subject to a means test is a retrograde step. I was a Member of Parliament for a number of years and frequently had a hard job to convince elderly people that supplementary benefit was a right to be applied for. Frequently I have rung up social security offices, in Norwich in particular, and said to the head: "Get one of your charming ladies to go along and have a cup of tea with old Mrs. So-and-So and chat with her and
306
persuade her to apply for a benefit: she is too proud at the moment to apply." Elderly people are sensitive and fiercely independent so far as means tests are concerned. Today, several thousands of people are too proud to apply for supplementary benefit; and it is certain that the same position will apply in connection with help with funeral costs.
In conclusion, I should like to say that reading this Green Paper gives me the feeling that there is a touch of arsenic and old lace about it—a smell of Victorian values, about which we have heard a lot lately from a certain lady in another place. We have heard a lot lately about the need to return to Victorian values. Self-help is stressed frequently in the Green Paper. I am the first to admit that today in Britain we could do with more of the Victorian values in so far as family life and respect for marriage are concerned. But with a return to Victorian values we also have the poor law and the threat of the workhouse, with the separation of husband and wife. I am old enough to remember that. These things happen.
That was the fear of old age—that you would be reduced to the workhouse, the biggest social indignity that mankind could suffer. We replaced it with the welfare state, which has been maligned by the press, by Conservative Members in another place and in the country. There have been sneers about free weeks for foreigners, and so on—I have the press cuttings at home. I think that the Members on these Benches have known about this and about how, under the veneer of support for the welfare state, there is opposition to it. There is the belief that people should help themselves and that God helps those who help themselves. But we have to remember that today we live in a different world. Above all, we have to remember that it is our responsibility and our duty not to add to anxiety but to reduce it.
5.56 p.m.
Lord Houghton of Sowerby: My Lords, I should like to add my words of appreciation and congratulation to our four maiden speakers this afternoon. In the week before Wimbledon, one might describe this afternoon as a unique and absorbing display of mixed doubles. I am not sure whose side they were all on; but the noble Baroness, Lady Warnock, had limited political choice of a partner although she would have been able to choose between a lawyer and a banker. However, we have heard four new voices in your Lordships' House. We hope to hear all of them again, well informed and experienced as they are.
I am not able to go as far back in my Parliamentary work on social security as my noble friend Lord Wallace. When he was speaking on that Second Reading, I was broadcasting on it. Out of 300 broadcasts I did on one radio programme, one-third concerned social security. That was right from the publication of the Beveridge Report to the completion of the five-pronged social security scheme of 1948. Then I went into the House of Commons to see what was to be done about it there.
I think this review is timely, and in all honesty I believe that we ought to congratulate the Government on the production of such comprehensive and informative documentation in the time that has been

307
available to do it. We have rarely had anything so comprehensive and complete to enable us to study the future of our social security arrangements. The present scheme which we are discussing in its fundamentals today was accepted in 1975 as being generally agreeable. That was 10 years ago and I think we ought to observe that the last decade has been the most stable of the past 30 years as regards social security. I sincerely hope that the Government will not repeat the futilities and frustrations that were suffered in the early years of the formulation of social security policy, which led to 10 years of stagnation and 14 years in which to accomplish an agreed scheme in 1975.
I believe that the lesson which the Government must keep in mind is that any government must find the consensus to carry through any major reforms which will survive a change of government because experience shows that, whatever is done, if it is not generally acceptable it will not last. We have already had two notable examples of that.
I did the first two years of work on the scheme which, in its general structure and principles, eventually became the scheme of today, but it never reached the statute book in the period of the Labour Government. Crossman came to grief with the general election of 1970. Sir Keith Joseph, who succeeded him, produced an entirely new and different scheme and placed it on the statute book with an operative date, but that came to grief with the general election in 1974. The four years between 1974 and 1978 were taken up with the adoption of the scheme that we have today and its administrative preparation. There is surely a lesson to be learnt from that in political terms about the wisdom of trying to find a consensus.
In Barbara Castle's day, when she was busy trying to find the consensus, she had a very able Minister of State, the late Brian O'Malley, and there is a recent letter to The Times, dated 4th June, from the former leader of the CBI team negotiating with the Government at the time, who writes:
"The late Brian O'Malley said that he would go on negotiating and making concessions until he found a formula that we would all accept and undertake to stay with."
That was his accomplishment and that is his memorial. It seems to me that it is something which the Government must emulate in the review that they are now undertaking. It is better for a pension policy to be enduring rather than to be absolutely fair. I think we have to see what we can agree on, if we are to have firm foundations for the future for at least the main structure of our pensions scheme.
I am sure we can agree on one thing, and that is that the present arrangements regarding the flat-rate pension are fundamental to the Beveridge Plan and are not to be questioned as part of our future scheme. For most pensioners today, and for those who will retire during the next 10 years, the flat-rate pension will continue to be of most importance, and the first aim and condition of any review must be to maintain the real value of the flat-rate pension and improve upon it if we possibly can.
When we look at the earnings-related addition to the flat-rate pension, we are at the centre of whatever controversy there may now be on pensions policy.
308
This has been the trouble for the last 25 years: what shall it be and how shall it be paid for? So here we are again. Let me say at once that I do not regard this part of the present scheme as being fundamental to social provision. I never have. When I was working on this scheme, we were seeking a superstructure to the flat-rate benefit which would give the bulk of the working population the sort of pensions which were enjoyed by white-collar and supervisory staffs, in the public sector and elsewhere, who had long been in occupational schemes.
Beveridge thought that it should all be undertaken by voluntary action, but we thought—and I still think for all sorts of reasons that I need not dwell upon—that it cannot be left to voluntary action. Probably we should not have begun our consideration of the earnings-related pension scheme but for the breakthrough of the flat-rate contribution principle made in 1961 by the noble Lord, Lord Boyd-Carpenter. He broke down the barrier erected so firmly in the Beveridge scheme: flat-rate pensions for flat-rate contributions, and there began a modest form of graduated pension and graduated contributions.
I am sorry that the noble Lord is not present, but I may say that that was not pensions policy but financial policy. The graduated contributions were intended to be used to support the uprating of the flat-rate scheme. As I said at the time, it was hardly the best insurance practice to take current premiums to finance current claims and set aside the contingent liabilities of the increased pension eventually to be paid. But the Labour Party at that time had published a book called New Frontiers of Social Security. Our sights were set very high then. Our emotions in the 1950s were not perhaps quite as strong as those of my noble friend Lord Wallace in 1946. We were beginning to gain experience. In 1966 the principle of earnings-related benefits was extended to sickness and unemployment, so we were really on the path of graduation and earnings-related contributions.
What is in question is whether we can fairly or properly stick to the existing method of financing future pensions. Can we go on demanding that the emerging generation of young people shall pick up the bill? That is what it amounts to. The future generation, as part of the so-called "generation contract", will have to foot the bill for all the stored-up pensions that the present generation of active workers are accumulating. I think that, so far as the flat-rate pension is concerned, we can firmly and fairly place the future responsibility for financing it, whatever its level, on the future generation, because we are now financing it ourselves. We finance our flat-rate scheme in return for the next generation supporting the scheme from which we shall draw benefit.
As regards social security, I think each generation should take its responsibilities, but for the extra part—the top-up, as my noble friend Lord Williams said—of the scheme, which is really national superannuation and for which there is already extensive occupational provision alongside the national scheme, I believe that the Government are right in thinking that we should take a very close look at the implications of the principle, its practicality and prospects for the future. If there is any reasonable doubt, I think it has to be looked at with considerable

309
caution. The noble Lord, Lord Grimond, said that all pensions are paid out of current production; but not all pensions need be paid out of current production, at least not in this country.
There is scope in superannuation investment for investment overseas. The world is getting smaller. Investment is spreading more widely and investment from this country in other countries is being reciprocated here by investments from elsewhere. But I do not think it is for the Government alone to have a view on the question of whether we should depart from the pay-as-you-go system; that is, the unfunded pension scheme.
This is where the consensus of 1975 should be replaced by another one and there should be full consultation with all concerned in deciding whether to make the change which is forecast in the Government's discussion paper. We are entitled to have a separate and authoritative examination of the situation, apart from the Government but based on all the information the Government have and other information which may be required. This is an investigation that could be undertaken in time to reach conclusions on the future. I see nothing wrong in reviewing the prospects of the scheme for the future. All enormous schemes of this kind require periodical stocktaking.
I am not put off in my approach to this by the fact that the Government's thinking goes along similar lines. I am merely saying that this is one of the options, and the option which the Government themselves seem to prefer, and it is worthy of very close and unbiased examination. But I differ from the way in which the Government propose to do it. I am not in favour of privatising the graduated scheme—and this was referred to by my noble friend Lord Williams. The state scheme already lives side by side with the occupational schemes. What we need now, if we agree, is a different way of financing the state scheme in that range of superannuation provision; and we have to look at the two together.
It might be prudent, in any case, to begin partial funding of the scheme—and my noble friend Lord Williams referred to this. That alone would be a very big and complicated exercise. But it seems to me that the advantage of funding is that the existing generation of contributors set aside from their disposable incomes money which can be used for investment in future prosperity and enlargement of the economy, so laying firmer foundations for the ability to pay the pensions in due course. That seems to me to be a perfectly sound economic and political proposition.
Moreover, many people like contributing for themselves, for something that they recognise as belonging to them, rather more than paying money into a fund with which they appear to have no identity. As far as possible, if anything in this direction is to be done it should be accompanied by some identifiable stake in the superannuation side of the scheme for individual contributors.
But there is one snag that has to be overcome. It seems to me that with such a conversion of the state superannuation element into some kind of institutional form, whether in the private sector or by the creation of a state-owned corporation, the tax position
310
of pension funds generally would have to be changed. The present tax concessions to occupational schemes and funds have created a tax haven without parallel in our savings economy. It is quite unjustified. The Chancellor is reported to have fought and lost on stopping some of the huge loss of £3½ billion net of tax revenue, with £2¼ billion of that in tax relief on pension funds' investment income. The sum of £650 million a year of tax revenue is lost by paying lump sums tax-free out of tax-free contributions out of tax-free investment income. You cannot be more tax-free than that. From a fiscal point of view, there is no argument in support of it. If it is anything at all, it is social policy and political policy, but it is not fiscal policy. So if we are to have a premium-based funded state scheme, the tax position of pension funds will need to be tidied up.
While I am at it, I am going to throw another brick into the debate. Why has tax relief on mortgage interest been exluded from the review of housing benefits? They are two sides of the same coin. Here is another slice of social housing-cum-political policy embedded in our tax system, with another £3¼ billion of tax revenue handed out to our property-owning democracy. There are 1¼ million mortgagees who have loans averaging between £15,000 and £30,000, and they get between £10 and £20 a week housing benefit from the taxman, yet we are now going to chip away at housing benefits lest some people in need get too much.
The difference between those who get housing benefit and those who get tax relief is the difference between those in need and those who have the means to qualify, and the total cost to the Exchequer of each of these two groups if not very far apart. If we are looking for a legitimate source of additional finance for any section of the social security scheme today, let the Chancellor loose on this. But, of course, I know that the official spokesmen of the two principal parties will rise and say, "Mortgage interest tax relief is safe with us "When I raised this matter in a recent building society debate, my noble friend Lord Stoddart could not refrain from reaffirming the commitment of the Labour Party to maintaining mortgage interest tax relief.
This, again, has no fiscal relationship to the assumed ability to pay. It has no relationship to the value of or income deriving from, the property upon which the mortgage itself is charged. It is part of the history of taxation that assessments on the notional value of the occupation of property included mortgage interest, land tax, ground rent and other burdens on the property. But when Schedule A tax was abolished on owner-occupation by the then Chancellor, Mr. Selwyn Lloyd, the last vestiges of justification for allowing tax relief on mortgages, against property income which had been removed from taxation, disappeared. But there it is.
All right; I shall not attempt to remove it in your Lordships' House, because the Parliament Act 1911 stops us. But I shall say that, while economies are being sought in social security expenditure and while people are feeling, as they will feel, that their needs are being depreciated and written down, let us bear in mind, if we do nothing else, where the Chancellor could get the money from people who have no real justification for the concessions that are given to them.

311
I finish by saying that I have heard some rather snide remarks about Britain being an entitlement state. So far as the taxation side is concerned, it is becoming a concessionary state as well.
6.19 p.m.
Lord Stallard: My Lords, it is always extremely difficult to follow my noble friend Lord Houghton of Sowerby, whose expertise is renowned. His knowledge of pensions, and of occupational pensions in particular, is something that I have admired over a long period of years. I am glad that none of his bricks was aimed at me, but I am certain that some of them have found their target.
The Secretary of State heralded his review of social security benefits as the most substantial review of the social security system since Beveridge. The resulting Green Paper has been roundly criticised by many of the voluntary organisations concerned, and by local authorities and their associations, which are alarmed at the implications for housing and administrative finance. I was amazed to hear that the noble Baroness, Lady Trumpington, was almost unaware that there was any criticism of the Green Paper. She seemed to infer that it had been met with applause all round. I can assure her that that is not the case in the quarters I frequent.
No one denies the need for reform. This was something else the noble Baroness seemed to misunderstand in regard to our side. We are not denying that there is need for reform. I certainly never have denied that. There is certainly a need, and there is also a great deal of dissatisfaction with the present state of affairs. That is not denied either. Indeed, most of us gave a guarded welcome to the announcement of the reviews, although we were concerned mainly about the Treasury input or lack of it, and we still are.
Some commentators have seen the reviews as a piecemeal approach. I do not; I tend to share the views expressed in a major report in the Sunday Times on 8th April 1984 by two reporters, Michael Jones and Martin Kettle, that the reviews were designed to look piecemeal. That is nearer the truth. They were really a continuation of the Think Tank's report that had been leaked to the Economist in September 1982. The report was aimed at achieving cuts in public expenditure by,
"dismantling huge chunks of the welfare state".
Noble Lords will realise that that leak occurred only one month before the Conservative Party conference which was to celebrate the outcome of the war in the Falklands Islands. It was obvious to any commentator at the time, it was obvious to everyone, that this leaked report from the Think Tank had to be shelved immediately, and pushed to one side, if possible, and a new approach adopted at a more convenient time. That was the tenor of many statements and reports at that time. While I give the Secretary of State full marks for his ingenuity and for his presentation of the present Green Papers, I never had any doubts that the proposals contained in the Think Tank's report would reappear and that any suggestions or proposals would be on the same nil-cost basis that has been the hallmark and the declared policy of Conservative Administrations since 1979.
312
If I had time, I should like to have listed the 20 or so major changes since 1979 which have resulted in savings for the Government of many hundreds of millions of pounds at the expense of pensioners, the unemployed and other beneficiaries. The Prime Minister, herself, in an interview with the New York Times in January 1984 said that,
"Britain was sitting on a social security time bomb",
with,
"the prospect that, towards the end of the century, a large lump of new pension payments will come due. Employer contributions towards pensions have thus far been used to meet general governmental expenses … and unless some changes are made … there will not be enough money to foot the bill".
That is the thinking and the philosophy behind the Government's approach.
The Minister of Social Security in February of the same year said in reply to a number of queries in another place:
"However, some changes have got to be made in order to contain the rising cost of social security within overall public expenditure targets. The Government believe that the housing benefit scheme is the fairest place to make them".
He said that the fairest place to make those cuts was in the housing benefit scheme. I could use numerous quotes to illustrate the Government's approach to the solutions, as they see them, to deprivation and poverty, and their long standing and consistent determination to cut back social security expenditure. I believe that the present dissatisfaction with the various complex schemes, in particular the housing benefit scheme, is being used as a screen behind which to impose further cuts, as leaked in that Think Tank report nearly three years ago.
Other noble Lords have mentioned various aspects of the Green Paper. I want to deal with some of the implications for the housing benefit scheme. This is one area of the Green Paper's suggestions for reform where, from our own knowledge and from accurate estimates, it is possible to work out some of the effects on claimants. The Green Paper endorses the objectives set out by the independent review team which saw the need for a fundamental reform, and in doing so therefore it tacitly accepts the failure of the 1982-83 scheme—something I have said on a number of occasions in this House and elsewhere. Most of the problems inherent in that previous attempt to "simplify" housing assistance can be traced back to the "no extra cost" constraint. With the DHSS now again talking of "simplifying" the scheme but also seeking to make savings estimated at about £750 million out of housing benefits alone, the parallels with the 1982-83 experience are only too depressingly clear.
One of the key problems with the current housing benefit scheme was the failure to unify the two separate benefit systems—the supplementary benefit scheme and the rent rebate, rent allowance and rate rebate schemes. To overcome this it is proposed that there should be a single income assessment test in future. This is fine in principle—I can agree with that in principle; it was the objective to unify the schemes entirely, and the principle is good—but previous studies have shown that it is not possible to implement equality of treatment equitably without spending more overall. That is an accepted fact among all

313
researchers. Bringing the two schemes together as proposed will just mean that lots of people will lose benefits.
The independent review team recommended unequivocally the 100 per cent. help with housing costs for those on lowest incomes as the only fair way of meeting the needs within the present vagaries of the housing market. However, the Government have accepted the argument for rent but they have not accepted if for rates. The noble Baroness mentioned quite proudly the acceptance on the question of rents but she very conveniently forgot to mention the position on rates, which is different. Claimants should meet, according to Government, 20 per cent. of their rates. I have had discussions with SHAG and other involved organisations, including local authority representatives, and I have established that the consequences for claimants on income support who are having to meet 20 per cent. of their rates could be considerable, to say the least. Perhaps I may ask the Minister this question. Would that be compensated for by an equivalent increase in income support schemes? The 2·5 million claimants who are now getting rate rebates will have to resume rate payments. The obvious result of this proposal must be an increase in rate arrears, with all the attendant problems with which we are all only too familiar, and a colossal rates and rents collection task for local authorities.
Whereas the Green Paper does not give any figures of the amount of saving which would be made if the 20 per cent. was not compensated for, SHAG and others have estimated that savings in that field alone would likely be of the order of £250 million. It is worth noting here that one of the key arguments used by the DHSS to persuade local authorities to agree to the introduction of the housing benefit scheme in 1982–83 was that, by rebating claimants' rent and rates at source, local authorities would greatly reduce their rates and rent collection tasks and also their arrears problems. That was the carrot held out to local authorities on the introduction of the original scheme. But the administrative costs of the new proposals with the new changes will be quite staggering for local authorities.
Both the independent review team and the Green Paper accept the logic of a single taper scheme, which, again, was put forward mainly by SHAC during the pre-consultative process, in order to allow the simplification of the taper system, which was also mentioned by the noble Baroness as probably being one of the most complicated parts of the social security system as it presently exists. I do not think that I have the time to explain to the noble Baroness or to anybody else the existing taper system, even if I understood it. I can, however, comment on the changes. The proposals will involve several changes. Everyone will have the same tapers. But at the moment pensioners, for instance, have more generous tapers applied to their eligible income than do non-pensioners. I ask the noble Baroness this question: will that treatment continue?
Secondly, the same taper will apply to rent and rates. At the moment, existing tapers mean that claimants lose 29 pence in every £1 on rent and 9 pence in every £1 in rates as income rises. The proposed new combined taper, on the basis of the
314
model 70 per cent. of net income, will mean a rate of withdrawal of 42·7 pence in every £1.
In practice, the new taper will mean that anyone with income above supplementary level will probably lose some housing benefit because of the effect of the new sharper tapers. This will particularly affect occupational pensioners, families with average earnings, and owner-occupiers—all of whom may lose housing benefit altogether. A number of examples could be given. SHAG estimates that there will be 2·2 million home owners, 4 million pensioners and 1·5 million people on low income who will lose benefit. I should have thought that two single tapers—one for rates and one for rent—would be a fairer proposition and should still be considered.
I conclude with a few words about the implications of the proposed scheme for local authorities, as this aspect must be foremost in the minds of many of us at this moment. One of the reasons for the total chaos surrounding the implementation of the 1983 housing benefit scheme was that local authorities did not have enough time to get their administration sorted out before they had to try to work the scheme. It was quite impossible for them. Here we are, two-and-a-half years later, proposing fundamental changes which will need new computer programs and new staff training if the scheme is to be implemented in time.
On the last occasion, local authorities had 25 months in which to make their arrangements, and they could not do so. We have discussed this point in previous debates. There are now only 21 months to April 1987 and we do not know yet what the new scheme will look like. I forecast that local authorities will again be in difficulties and that some of them just will not be able to cope.
I asked my local authority for a view on the administrative problems that might accrue if the new scheme is implemented. That part of its reply states:
"When the present Housing Benefit system was introduced local authorities were charged with the administration of the system. The task was imposed upon them, it was not sought. One of the principles agreed at the time was that any additional administrative costs incurred by local authorities, net of any savings generated by the system, would be reimbursed in full. The level of direct exchequer subsidy on total administration costs was fixed at 60 per cent. to reflect this principle.
"The Green Paper proposes dispensing with this directly attributable subsidy on administration, and incorporating the administration costs into the Rate Support Grant like most other local authority administrative spending".
For local authorities such as Camden and other inner city authorities which receive no block grant, this would be nearly a joke if it were not so tragic. Camden receives no block grant at all. The new scheme will mean a new loss of subsidy of £1.3 million and no possible gain via the block grant. That is a tremendous problem in the present circumstances.
My own local authority's response continues:
"Even for those authorities in receipt of grant many would still suffer serious financial loss because of the iniquitous system of targets and penalties used in the grant system",
which we have discussed when debating local authority Bills and rates Bills in this House The response concludes:
"Therefore the principle that local authorities would not incur additional costs in administering a Housng Benefit system imposed upon them by Central Government has been scrapped".

315
So another promise has gone.
I predict that unless some of the constructive criticisms levelled by SHAC, Age Concern, Citizens' Advice Bureaux, local authorities and others directly involved are acted upon before the final scheme emerges, then the result could be almost as chaotic as that which accompanied the previous scheme. I hope that the Government are listening.
6.34 p.m.
Lord Hunt of Tanworth: My Lords, I want to speak about that section of the Green Paper which concerns provision for retirement. I must begin by declaring an interest, in that I have recently become the chairman of the Prudential Corporation, which is one of the bodies that could expect to benefit from a policy of greater reliance on the private sector for pension provision. However, I can give only a qualified welcome to the Green Paper, and I shall explain why in a moment.
Like other noble Lords, I should like to begin by welcoming the fact that a review of the way that we provide for retirement has taken place. It is a complicated subject, as is apparent from this debate, and it is one where we ought not to rush into conclusions without very careful reflection and consideration of the Government's proposals.
It seems to me that three things are self-evident. First, it would be unthinkable to abandon SERPS and to return to the pre-SERPS position whereby vast numbers of people depended on supplementary means-tested benefits to supplement their basic retirement pension. Secondly, things have however changed since SERPS came into force, and not all those changes could have been foreseen at the time. There may be arguments about precisely what those changes are, what was foreseen at the time, and what assumptions were made at the time. But the prospective number of people in work in the future that is now foreseen as a proportion of the population raises serious questions about a pay-as-you-go scheme, if calls on future contributors and future taxpayers are to be kept within reasonable bounds.
Thirdly—and I hope that this point is also self-evident—the worst course of all would be to do nothing until the situation gets out of hand or leads to a trail of broken promises. So whatever view your Lordships may take of the Government's proposals, I believe that the Government were right to consider corrective action now. To those who say that the Government are playing politics, I would say only that if I wanted to play politics, I would not pick up this particular subject—particularly since there is no saving to the Government on retirement outlay in the short term. Even if politics are not being played, there are political choices. One of the problems is that the Government are to some extent in a box, because no modification of the present scheme can achieve savings without reducing benefits.
The Government's solution to this conundrum has, on the face of it, apparent attractions. First, it keeps the state's costs in check. And behind all this—as behind every decision taken by this Government and previous governments—lies the whole problem of
316
public expenditure borrowing limits. Secondly, by funding through the private sector, one should produce additions to savings which at least partly add to capital formation and therefore higher production. Thirdly, it is consistent with facilitating job mobility through portable pensions.
I have, however, three reservations. The first is the reservation which most people have, which concerns the absence of illustrative figures. I can see the Government's difficulty over the timing of this Green Paper in relation to the public expenditure review and the autumn upratings. But figures are needed if people are to be convinced of both the viability and the fairness of the proposals.
Secondly, I echo very much what has been said about the need to avoid pensions once again becoming a political football. When I say that, I am not arguing for what might be called consensus politics in the middle-of-the-road or the Butskill sense.
There are, however, certain things which ought to survive a change of government if possible, and pensions is one of them. This is not just because it is a long-term planning process into which much effort and money would have to be invested in devising, marketing and administering the new schemes which might then have to be unscrambled, but also in terms of confusion and inconvenience to individual employers, particularly small employers, and above all to individual contributors. Pensions concern their future at a time when they are no longer able to provide for themselves and need to know where they stand.
My third reservation applies to the apparent complexity of the situation with which we would be left if the Green Paper proposals are adopted unchanged. By definition most of those affected by the proposals are those who are now in SERPS, or would be in SERPS and without an occupational scheme. Therefore, they are likely to be in small groups, with many earning below the national average. Many noble Lords have referred to the complexity of the problem, but I should like to illustrate this by giving some remarkable figures which can be found in the sixth survey of occupational pensions by the Government actuary. In 1979 there were 1,260 employers each employing over 1,000 people and no fewer than 1,250 of them had an occupational pension scheme; in other words, well up at around 90 per cent. However, if you go to the opposite extreme and look at the number of firms employing fewer than 10 people, there were no fewer than 430,000 firms and of those only 30,000 had a pension scheme; 400,000 did not. Therefore, one has to look at a situation where perhaps about 400,000 very small employers are introducing the new scheme. The responsibility for deductions would rest with the employer but each employee in a firm of perhaps eight, nine or ten people would be able to choose his own fund. There would be small and variable deductions, some weekly and some monthly. At the same time, the private sector would also have to cope with the review and likely modification of many—probably all—existing occupational schemes as SERPS is phased out. It would also be necessary, as some noble Lords have pointed out, to have effective monitoring of what went on, some sanctions and some assurance of consumer protection.

317
Having expanded on the difficulties I do not want to say that it is impossible, but it would be a very strange paradox if the intention to give more personal freedom of choice in fact led to greater complexity and a higher cost structure. Therefore, there is a case for simplifying the Government's proposals. There are a number of ways in which this could be done. To give just one example, it would be possible to give employers, at any rate initially, the ability to meet the net requirements through a group scheme without necessarily providing all individuals in small firms with a facility to direct their contributions to a variety of institutional funds.
I have touched on only some aspects of the problem and my comments are not intended to be destructive because I think there is much to commend in the objective of that part of the Green Paper which deals with pensions. The noble Lord, Lord Williams, in his excellent maiden speech—and we have been very fortunate today in hearing four excellent maiden speeches—raised the question of whether the private sector could cope. I suspect that if you ask different people concerned with pensions in the private sector you would get different answers. I believe that if Parliament were to approve proposals on these lines the private sector could cope, provided there is some simplification; but I believe that some simplification is necessary. However, whether or not the private sector can cope, I think that the proposal is so significant that before embarking on it we should all be able to see clearly, first, that the proposals are workable for those who will have to implement them (particularly small employers) and, secondly, that the proposals will command continuing broad political support, even if not enthusiasm. This means that the Government will have to persuade people, not only in the Division Lobbies but more generally.
I repeat that I welcome the review because I believe that some change in SERPS is inevitable. I remain to be convinced that this particular solution is right. Therefore, I am glad that the Government's proposals take the form of a consultative document. I hope that that consultation will be genuine and that the Government will listen to the views put to them. I also hope—and I understand the Government's problems over the timetable—that rather more time for consultation will be allowed than seems to be suggested because some people are going to suspend judgment until they see the illustrative figures and until they understand rather more clearly what is involved in these very far-reaching proposals.
6.46 p.m.
Lord Molloy: My Lords, I too congratulate the four maiden speakers on the speeches that we have listened to this afternoon and I congratulate them particularly on the high standard which has been set. I also thank the noble Lord, Lord Hunt of Tanworth, for his most interesting speech. I was totally staggered that he found there was not much to blame this Government for, and also at his amazing knowledge. Therefore, I give him one or two points on which he might like to concentrate.
In 1979 the level of unemployment in Great Britain was going down; bankruptcies were going down; and suicides in small businesses were going down. Within a year of the present Administration taking over they
318
started to rise, rise and rise. I have listened for four years to the Benches opposite telling us that in a few weeks' time there will be an onslaught on unemployment—which is at the level of about 4 million—that there will be an increase in productivity and that small businesses will at last get on their feet. Having listened to that, month in and month out, year in and year out, I am bound to say that I would be deeply suspicious of the ability of any businessman in the private enterprise sector who thought that the record of this Government was anything to be applauded in any way because—and this is the whole point of my submission—the reason we have these interesting 13 chapters on the reform of social security is the result of a big row between the Chancellor and the Secretary of State, to which I shall refer later. The real reason for the argument and discussion is this: "How much can we destroy our social security; how much of the welfare state, without causing us too much harm electorally, can we really eradicate?" That is the reason we have this Green Paper. It is the total inability of a businessman's Government to run our nation anything like their predecessors did between 1974 and 1979.
We then had the winter of discontent; and I admit it and the trouble that it caused. Ever since then, under the Tories, we have had winters of discontent, autumns of discontent, springs of discontent, and summers of discontent, year in and year out. It is about time that big businessmen, and small businessmen, acknowledged that because I am sure that the 4 million-odd on the dole are people they should like to employ.
Therefore I also think it necessary that we should look at our own progress, not only of yesterday but also in terms of the question of why welfare was created. One realises that the first old-age pension was known to some people, who are still alive today, as "the Lloyd George". What a row that caused when it was introduced! However, Lloyd George succeeded. It was because of the fact that our history in the first industrial revolution was absolutely appalling but at the same time brilliant, with the wonderful inventions, the complete disregard for human suffering, in those "dark satanic mills", as the hymn says. They did exist, you know; they really were dark and they really were satanic.
After that came the wars, when many more paid the full penalty; and mostly—overwhelmingly—those who died were of the working-class stock; there is no argument whatsoever about that. Then there were those, who were in work in those early days, who literally went from bed to work. Cheap labour and appalling conditions at work and at home were natural. When the aged were worn out, they had one place to go: to rot in the workhouses.
We have managed to change some of that, but we had to fight against the viciousness and avarice of employers with their starvation wages. There was a little easing of the burden, the cruelties of the '20s and '30s. The hunger, the homelessness, the humiliation was then attacked by Beveridge, just as it followed on from the commencement of what Lloyd George had tried to do. One realises that when Beveridge, with whom really we are concerned tonight, was drafting these proposals the Secretary of State was not even

319
born. Some of us were wondering what kind of land we were going to return to and whether we were going to be double-crossed, as we were last time, about a land fit for heroes to live in. The kind of land that we wanted was then created by that brilliant Administration from 1945 to 1951. With it, we saw the birth of what is I think the wonderful welfare state.
However, now, as then, we have also to understand what was the purpose of the welfare state and why the money was given, as it is being given to people on the dole today. For what reason was social security given to people? Was it given to them to buy shares somewhere, or to invest in some big organisation? It was to buy food from the grocer, to pay the rent and to pay the rates. In short, people simply collected the money to give away to the landlord, the grocer, the baker, the candlestick-maker and so on. That is what has to be appreciated.
I will tell your Lordships this. Modern youth appreciates this argument very much indeed, even if they have not yet quite grasped it in the upper hierarchies of the City of London. We are now back to that awful situation of the '20s and '30s, which is to see millions on the dole and the disgrace of our jobless teenagers. Just listen to this. In the north of England, unemployment is above its highest point in the late '20s and '30s. One of the reasons for this is that money has to be saved; something has to be done. Therefore we have a situation of seeing, to our credit, that the viciousness that existed in the '30s is now being eased tremendously by the welfare state, particularly in social services, housing development and the great National Health Service. It is all allied to this argument in this Green Paper. If we do not see that full picture, we will quite naturally be myopic. It is very necessary that we do.
I understand there have been arguments going on within the Cabinet, where they have been trying to formulate a financial policy. All that has happened with all the financial policies over the last five years has been the creation of unemployment. No one can argue against that. I would be willing to sit down immediately if anyone could tell me that unemployment has decreased. It has not, and it will become worse.
We have the Chancellor of the Exchequer complaining of a system which encourages idleness and irresponsibility and discourages initiative and enterprise. His party has created more unemployment than there has been in the last 10 to 30 years. The idleness of our youth is a disgrace and the initiative of entrepreneurs has been blunted by the particular policies of this Administration.
In 1982 the Government "Think Tank", which was the Central Policy Review Staff, called for drastic changes in the welfare state. I am sure they all went to work on their bikes; I am quite sure of that. I am also very sure that they were not very well heeled and that they were quite prepared to take it on the chin themselves while they were dishing out cuts for everyone else—the old, the aged, the pensioners and the unemployed. They wanted to end the link between inflation and social security benefits. I find this appalling in this day and age. However, to her everlasing credit our Prime Minister later described it
320
as politically inept. But worse was to come. That was the Green Paper which we have been reading over the last few days. The phasing out of SERPS is probably also an appalling disgrace.
From time to time people outside this House say, "Why can't you all get together? Why can't all the parties, all the MPs, all the Members of the House of Lords (it doesn't matter what party they belong to) get together on one issue at least: the social security of the individuals who comprise this nation?" Well, they did it, and the result was SERPS. Indeed among the signatories in full support of that was none other than Mr. Fowler himself. Thus one can see what a load of rubbish we are discussing. It does not matter what intellectual interpretations are being given to it: it has to be understood and is being understood by the ordinary man in the street.
The other argument submitted recently, which I have heard before and which I also find appalling, is that the poor are having too many children. It was a good job that the poor of the early '20s had their children because they were the people who frustrated the Fascists in 1940, right through to 1944. We have sometimes to appreciate that, because they do. Then there has been the argument that child benefit is threatened. Here again I want to pay full credit to the ladies of the Conservative Party and their national advisory committee, because they went to see the Prime Minister and persuaded the Iron Lady to change her mind. I think that must be acknowledged.
Then there comes the row between the Chancellor and the Secretary of State over too much tax relief if SERPS was replaced by private pensions. That was the argument. I am sure the noble Lord, Lord Hunt, knows that if you leave this to private enterprise, there will be so much tax relief on people's pensions that it will cause a headache for the Chancellor. Thus, what was decided was that abolition would give way to the term that we now all recognise as "phasing out".
The proposals involve official prying into individual circumstances. Just listen to what I have to say, my Lords. Officials will be allowed to pry into private circumstances and there will be no appeal against their decisions. In what kind of society are we going to move which seems to think that the overwhelming mass of the British people are cheats, liars and crooks? It must stop. What I feel is disgraceful is that the mandarins of the social security service will be served by their prying, petty commissars—and in this Great Britain of ours! These are some of the matters that need to be looked at very closely.
Beveridge declared war on want, disease, squalor, ignorance and unemployment. With it, he gave birth to the welfare state. I do not understand why big businessmen, people in the City, as well as the trades union leaders do not understand why this was done—unless it is a more terrible thing to have five years of a Tory Government than have five years of war. When Europe was in ruins, after the greatest war in the history of mankind, when almost everything was destitute, this nation picked up not only itself but other nations as well. Its very example was an example to all mankind.
Then, out of this, within a year or two after that appalling war, Aneurin Bevan had created the

321
National Health Service and James Griffiths the social security scheme. We want to be proud of these matters, not try to dismantle them now that we have a bit of panic on.
Let us acknowledge that the benevolence of the welfare state not only reduces poverty but could actually strengthen the market economy. There are many people in some parts of the north of England, in Liverpool and in South Wales—butchers, bakers, shoemakers, those running the small draper's shop on the corner—who say, "Thank God for social security, or we would be out of business". It is not money that they keep for themselves. It is to pay the rent and rates, to pay for clothes and to buy food. That is what we have to understand. It is hardly mentioned in any of the 13 chapters of this highly intellectual document which I suppose has been drawn up by people who do not know the real meaning of being on the dole or going hungry. We have provided a civilised alternative, with the welfare state, to the whips of starvation and destitution. All parties in the past 30 years have endeavoured to replace contempt for the poor with compassion and understanding.
We should appreciate the finer aspects of philosophy in life. It is not all economics. It is not all privatisation and nationalisation. We have to have a feeling within us. I thought that SERPS was a wonderful example of Parliament at its best when it designed to abolish poverty almost totally by the year 2033. That has gone, or at least is under threat of being abandoned and destroyed. That in my judgment is a criminal act. It runs contrary to a philosophy that all of us can share irrespective of our politics in this country. The capacity for emotional concern of individual life, unmarred by removable or preventable worry, poverty or ill health, is the most significant quality of a civilised human being. I believe that those qualities are available in all parties represented in this Chamber and in the other place. They are the qualities that we need to garner together, to build our nation so that once again we, in these islands, can pick ourselves up and in so doing prove an inspiration and give an example to others in similar difficult cirumstances.
7.2 p.m.
Baroness Ewart-Biggs: My Lords, to be a mere run-of-the-mill speaker today among such an eminent group of maidens is a great honour. Although the term "galaxy of talent" is rather over-used, it is nevertheless a relevant term to describe the maiden speakers we have heard today.
In my view, the importance of this debate must rest upon the fact that it is mainly concerned with those who, at the present time, are in the greatest need. That this is a fast-growing group is borne out by the fact that in the last decade, with 2.7 million fewer jobs in manufacturing industry, the proportion of people with incomes in the bottom 20 per cent. bracket of working age has grown from 65.1 per cent. to 80.8 per cent—a rise of over 15 per cent., which is, indeed, a staggering change. So one purpose of this Green Paper is largely a response to the ever-growing cost of keeping an increasing number of people on the poverty line.
I have only a few comments to make and a few questions to put to the Minister. First, may I say one
322
word about how I interpret the philosophy that has motivated the Government in proposing these changes. It seems to me that this Green Paper is, indeed, a further confirmation of the Government's overall strategy to create a dual society in Britain. One aim would appear to be to divide off the sector that depends on state support from that which does not, and to apply two entirely different standards to the two sectors. For the state sector, it will develop public assistance schemes that minimise cost. For the market sector, it will encourage new initiatives in the private and occupational spheres. As a result, two entirely different social structures will develop.
So, although throughout the review lip service is paid to Beveridge, in fact the Government are clearly shifting in the opposite direction. For would it not be true to say that, properly understood, social security is not just about the relief of poverty; it is also about preventing poverty, both by the transfer of resources to those at the lean stages of the life cycle and by collective insurance against risk? One can only deduce that if the Government were really concerned about the equitable redistribution of public moneys then the review should have been concerned with the wider distribution of income and wealth, especially the hidden system of welfare to be found in tax reliefs, and not just about those sums already allocated to benefit.
Furthermore, the Green Paper would seem to border on the alarmist about the costs of our social security system. My noble friend Lady Turner has said this in a remarkable maiden speech. There has been stress on the burden that it has become to the taxpayer, on the need to bring it under control and on how it is constituting a threat to our economy. Yet OECD figures show that social security expenditure in Britain is well below the European average. One has only to look across the Channel to see an entirely different philosophy at work. On the Continent, there is an increasing recognition that new economic conditions could be turned to the advantage of all citizens by a new approach to income support. There, it is believed that a basic income scheme guaranteeing each person the unconditional right to an independent income sufficient to meet basic living costs would give true income security and incentives to work and save, even in a fragmented labour market. Clearly, this view implies a totally different conception of the state as a unifying force in society which aims to give all an equal basis for citizenship. As the Government here most certainly do not encompass this view, then any income support scheme that is conjured up is likely to be partial and divisive.
I should like to give briefly a few examples of how some of these changes, if carried out, will affect some of the least well off in the country—those who are always on benefit. The single parent—the lone parent—about whom I have often spoken before in the House, is certainly in that category. It must now be agreed that to some extent one-parent families are no longer a minority interest group. Although we should like to see their number diminish, I believe that the demographic signs are that marriage breakdown is likely to go on increasingly. Even were it to stay relatively stable, we are clearly aware that one-parent families pose major problems for social policy and that women alone with children will form a major factor in this country's poor.

323
The Government stress that the changes in welfare and social security are designed to help families with children. Yet these changes have raised many anxieties for single parents, who, after all, represent 48.5 per cent. of all the families with children on supplementary benefit. Again, it must be remembered that it is those who have to live on supplementary benefit for long periods who really suffer. Many of us might be able to jog along on a very low income for a short while. But it is when unexpected expenses arise—two children needing new shoes at the same time, or the cooker breaking down—that the crisis occurs. This makes it essential that the new basic income support level and the premiums are set high enough to cover the loss of single payments, additional requirements, water rates and the proposed percentage contribution to general rates.
For if the level is not set high enough, thus requiring lone parents to seek assistance from the proposed social fund, then their prospects do not look very good—for the following reasons. Decisions as to payments are at the discretion of each DHSS office, without any right of appeal. Each office will have a fixed annual budget. So what happens when that runs out just when a single mother needs some vital piece of equipment for her child? The repayment scheme will not help her, either, as it is evident that if an inadequacy of her income level makes her appeal to the fund in the first place, then the same inadequacy will prevent her from repaying the loan.
Therefore, although lone parents are among those who are meant to have been "targeted" as being among those most in need, there are many questions about how the new arrangements will in fact benefit them. Perhaps I may give one or two examples. Is it proposed to ignore child-care costs and other work expenses when calculating the earnings disregard for the means support for them? Secondly, will one-parent families receive the same rate of family credit as two-parent families, as they do under the FIS? While welcoming the proposed alignment of income support and housing benefit, can we be assured that lone parents will be treated as a couple for housing benefit purposes?
Lastly, while welcoming the proposals for improved treatment of widows—and I believe it is a very great improvement that widows should receive that help at the moment they are left alone and in the greatest need—would it not be logical that some additional measures be extended to lone parents, who after all have precisely the same problems in bringing up their children? These and many other questions will have to be thought of and answered before lone parents will feel anything but alarm about the proposed changes.
Before concluding, I want to mention just one useful activity which will be adversely affected by the abolition of single payments. This relates to an organisation called Neighbourhood Energy Action, with which I have recently become involved and which works in the field of fuel poverty. It operates a nationwide scheme to improve energy efficiency through home insulation projects. Its principal clients are the elderly and poor families with children who receive supplementary benefit. Indeed, around 80 per cent. of its draught-proofing work is funded by single
324
payments. Therefore, the abolition of these payments will put all this highly beneficial and practical work at risk. One can assume that very few of such households would be willing or able to pay for the draught-proofing material which at present is paid for out of the single payments. So not only would about 240,000 pensioners and many other low-income families be worse off, and probably accrue fuel debts, but also, from the employment point of view, all those young people taken from the MSC schemes to do the work will go back on the dole.
I cannot believe that the Government, which profess to encourage and approve such energy-saving and job-creative schemes, could have meant to bring on their demise. It is rather like throwing the baby out with the bath water, and perhaps the Minister can say a few words about whether this really will be affected by the abolition of single payments.
I should like to have commented on many other aspects of this Green Paper, but I am very far down on the list of speakers and I think that on the whole those many different aspects have already been mentioned. However, I find a cut in the value of child benefit a really extraordinary way of implementing the Government's claim that resources are being targeted to.those most in need. I am also anxious that mothers are to be deprived of the small independent income which they have hitherto received from the FIS and which I gather is to be channelled through the family credit scheme into the father's pay packet. Everyone who is interested in child welfare has been quite certain that the independent income which goes straight to the mother has most advantaged the child.
Therefore, I end where I began by repeating my belief that the net effect of these measures will be that the state sector—or the claiming class, for want of a better term—will be poorer and more restricted, that being the price to be paid for the greater freedom and incentives enjoyed by the rest. Without any disrespect to the noble Baroness, Lady Trumpington, I do not think that these proposals are exactly dripping with the compassion that she attributes to them.
7.15 p.m.
Lord Rea: My Lords, at this stage in the debate I think that some of your Lordships might welcome a little light relief. With regard to social security, the Government remind me of the traveller on Bodmin Moor—or was it Dartmoor?—who lost his way. He asked a local farmer how he could get back on the road to Exeter. After a pause for thought the farmer said, "Well, first of all, sir, I would not start from here". I apologise to those who may already have heard the Irish version of this joke, but I think that Irish people should tell Irish jokes about themselves, and as an Englishman I shall talk about my own country. I believe that that tale sums up the Government's problem, faced as they are with a huge and embarrassing bill with which they would much rather not have to deal.
In a different sense the tale is apt in that I think the Green Paper does not look at the problem with a wide enough view. Surely the Government should have stood further back from the problem and asked how they can reduce the number of those who are dependent on social security. There is no hint in the

325
Green Paper about how to do this—no hopeful prospect for the future—which surprises me, as we have heard that it is a middle-class concept. Rather, there is a prospect of a continuous millstone around the neck of this country's economic future.
As many noble Lords have pointed out, the main reason for the recent rise in the social security bill is the need to keep 3 or 4 million unemployed people and their families going at such a level that they do not become destitute or start any ugly demonstrations or riots. Interestingly, it is often members of the party opposite who have persuaded the Government not to adopt policies which are too hard or regressive when seeking economies. I am not only talking about Back-Benchers and the lady members of the Conservative Party, but also about members of the Cabinet who have thought out the full implications of social security cuts.
Despite impressive rhetoric in the Green Paper—which I think scarcely deserves the name "Green Paper" because it seems to offer very little opportunity for discussion, and it offers only three-and-a-half holiday months in which to discuss the proposals anyhow—I do not think it will make any major impact on the situation. It is simply switching resources from one group of poor people to another. The problem of eliminating poverty is not even tackled.
I speak as a National Health Service general practitioner in a not particularly deprived area, who comes into daily contact with people who have real problems concerned with the lack of a job and poverty. These are people who are dependent on social security, whose lives are impoverished and who cannot develop in the way that one would hope they would in a country which is as prosperous as this one. I am often asked to provide medical reports giving evidence as regards claims for additional allowances for clothing, heating, special diets, etc. I dread to think how many more of these there will be and how much more desperate the cases will be when we have in operation the proposed social fund with its limited budget.
Other noble Lords have mentioned and discussed the difficulties that might well arise in that area. It is now not at all uncommon when their husbands are unemployed for wives to go out to work in order to make ends meet. Sometimes the husband does a good job as a house spouse, looking after the children; but sometimes that role is not accepted, and this is unhelpful for family life. I have seen, as have many other doctors throughout the country, an increasing number of people with alcohol and drug problems which are an indicator of the general despair and lack of hope which many people in this country feel at the moment.
Of course, life on the dole is not so bad now as it was in the 1930s, as the noble Baroness, Lady Turner, pointed out. But there is still plenty of evidence that poverty and ill health are linked. This was pointed out and clearly documented with many examples in the Black Report on Inequalities in Health, which I am afraid to say the Government have never yet addressed fully and given a serious and constructive reply to.
This country was among the world's leaders in health statistics—that is, expectation of life, infant and
326
perinatal mortality—in the 1950s and 1960s, but now we are well down the list, having been overtaken by many countries, and in particular by Japan which started to develop industrially only about a century ago. Japan is now the world leader in every kind of health statistic. I recently visited Japan which, though very overcrowded with rather smaller houses and more people per room than is usual in Europe, was full of healthy and contented looking people. Everywhere was neat and clean. There was a great air of prosperity. In fact, I was reminded of Switzerland.
However, recently I had some return visitors from Japan and I was ashamed of the evidence of poverty and poor maintenance in some London streets, and particularly in some of the National Health Service institutions that I showed them round, compared with Japan. In Japan they still have only 2 to 3 per cent. unemployment. They are worried about their rapidly increasing numbers of pensioners due to their good health, but their social security budget is a tiny proportion of ours.
That may be thought to be a totally different case not applicable to Britain but, as the noble Baroness and others pointed out, other countries in Europe have a higher proportion of their budgets devoted to social security. If you walk around Europe now, you do not see evidence of those pockets of poverty which you can see so easily in any British city.
The particular example I should like to point out is Sweden, which now, practically alone in Europe this side of the Iron Curtain countries—and that is a totally different picture—has only 2.9 per cent. unemployment, despite having to face the same world economic forces. I want to suggest one or two reasons why they have been successful. The main reason is that their Government are not afraid to step in with appropriate help to stimulate the economy, borrowing if necessary to do so in what must surely be the modern equivalent of Keynesian economics. He was not a Marxist; far from it. If anything, he probably saved capitalism from going under to either Marxism or Hitler in the 1930s and 1940s.
In the Green Paper there are plenty of references to Beveridge. He based his proposals, as other speakers have said, on an economy with near full employment. The supplementary benefit segment, or National Assistance Board segment, of the cake was never expected to be as large as it is today. I consider that no real progress can be made until the Government set us on the road to economic expansion and a reduction in unemployment. The social security bill will then decline in real terms while the income of the country increases.
There are many steps which can be taken to bring this about, but they will initially involve additional Government expenditure. The pump will have to be primed. This may initially involve some increase in the public sector borrowing requirement and perhaps for quite a few years, and this is anathema to the Government. Meanwhile our economy remains in the doldrums, the rich get richer, the poor get more numerous, and the social security bill climbs. No amount of tinkering about with it will help to solve the basic problem. There is an urgent need for much more investment in our manufacturing industry and in our infrastructure and, in particular, support for our most

327
unique asset, our scientific establishment. I submit that this is the way in which we can eliminate poverty and thus get the social security bill under control.
7.26 p.m.
Lord Kilmarnock: My Lords, I regard this as a rather special occasion. We have been able in one afternoon to enjoy no less than four notable maiden speeches which have blown a real breath of fresh air into the usually hermetic atmosphere of the social security fraternity in your Lordships' House. It is rather strange that the Government Front Bench should not have more supporters behind it. You would have thought that they would have seen this as an important occasion.
There can be no doubt that the social security system was overripe for review and reform, if only because of its complexity and administrative cost. So the Government can claim some credit for having attempted to grasp the nettle. But with two or three exceptions, which I shall later acknowledge, their credit begins to run out rather fast. There was no consultation with other parties on the all-important question of pensions. There is no explicit commitment to the integration of tax and benefits systems which all informed commentators agree is the only way ahead. There is a dearth of figures, to which practically all noble Lords have referred, which makes the outcome in specific cases unpredictable and makes it difficult to conduct this debate. I find it frustrating to proceed from volume I to volume 2, which is simply a rather modest expansion of volume 1 with very little built in. I found that a rather frustrating exercise.
The Government have excused the lack of figures by emphasising their intention to concentrate on the structure of social security for the future. But what they have given us in fact is a series of minor structural reforms coupled with a cost-cutting exercise which is to be achieved in the short term through housing benefit reform and largely at the expense of the elderly. As my noble friend Lord Grimond said, there is no fundamental review here. There is nothing revolutionary.
The Government's aim to cut the total social security bill is justified by "shock horror" references to a 70 per cent. increase in social security expenditure over the past decade. But 35 per cent. of that increase is due to a rise in unemployment, 17 per cent. to the rise in the number of pensioners, and another 17 per cent. to child benefit, much of which is only a bookkeeping cost caused by the change of the old child tax allowances into a benefit. And though our social security bill accounts for one-third of Government expenditure and approximately one-seventh of the gross domestic product, it remains modest compared with that of some of our more successful European neighbours. This was a point made by the noble Baroness, Lady Turner, in her excellent maiden speech. If the Government want to make deep cuts in the social security bill, the quickest and best way would be by a substantial reduction in unemployment.
I said that there were one or two areas in which I thought that the Government have made a modest advance. One is family credit. This is to be based on the net earnings of low income families in work and is
328
therefore an improvement on family income supplement, which is based on the gross earnings and suffers from low take-up. It will be related to the age of children, like unemployment benefit, providing more resources for the older children. It bears a remarkable resemblance to the basic benefit proposed by the SDP, and we are delighted that the Government read our policy documents with such close attention.
As regards free school meals, we support in principle higher cash benefits for those on low incomes rather than a plethora of stigma-laden payments in kind. But the Government's abolition of free school meals is partial, as those on the new income support—that is to say, the successor to supplementary benefit—will continue to be eligible for them while those in work will get extra cash. We believe that this status distinction is wrong and that the same treatment should be accorded to all low income families, whether employed or unemployed. The Government are in no position to make moralistic distinctions between the deserving and undeserving poor at a time of historically high unemployment, to which their policies have contributed so much.
On the income support scheme, again in principle we prefer larger single cash benefits to a patchwork of separate benefits, so that people can choose how to meet their own needs. But many people rely on special additions for up to 30 per cent. of their income, which I believe my noble friend Lord Banks has said, and so we shall have to see how this works out in practice. Everything depends on the amount of money that the Government will devote to this, and that is still a secret.
On disregards we agree that a more generous savings disregard was necessary. It was disgraceful that people who had saved hard should have to run their savings down to £3,000 before qualifying for any assistance and it was a total denial of the principle of thrift to which the Government are wedded. The sliding scale from £3,000 to £6,000 is an improvement and perhaps it should be continued further up the scale.
The increase in the earnings disregard to £15 per week is another tiny step in the right direction but it is far too restrictive. It is to be confined to single parents, disabled people and couples unemployed for two years, who would be able to earn only £7.50 each if both worked. For couples unemployed for under two years, the single unemployed and the pensioners the disregard is £5 a week, which is almost meaningless, as work expenses can no longer be deducted. The SDP's basic benefit scheme is a much better way to help people combine income from work with income from benefits, with its single withdrawal rate of 45 per cent. which helps people to take up part-time work.
I am running out of remarks of approval or qualified approval. The good news was not very plentiful and here comes the bad news. There is quite a lot of it. The social fund involves wide discretion by officials, which was something we were moving away from and which caused the noble Baroness, Lady Warnock, such concern. As it will be cash limited, those who apply late in the financial year are likely to come away empty handed. There is to be no system of appeal and most of the payments will be loans, but loans for people with very low incomes are likely to leave them permanently in debt. This is a retrogressive step for a modern social security system.

329
The ending of payments by the DHSS of mortgage interest for the unemployed and those on state benefits is another retrograde step which comes very oddly from a Government dedicated to the concept of home ownership. It discriminates against those made redundant through no fault of their own and is shortsighted in that it could leave the Government footing an even higher bill for board and lodging and an even greater problem of homelessness in the end. Can the noble Baroness say in what way building societies might be encouraged to help people in this situation?
I now come to the sins of omission. A number of important opportunities have been missed. One of the greatest injustices of the current system is that people unemployed for over a year come off unemployment benefit and go on to the short-term supplementary benefit rate, and nothing is done for them. Between one and two years there is not even a higher disregard for earnings. This is a lamentable lacuna in the Government's proposals. Nothing is done for carers, mainly women, pinned down, caring for elderly relatives and keeping them out of expensive geriatric beds, often at the expense of being able to go out to work themselves. No relief is offered there.
But the treatment of death is particularly inept. The death grant was, of course, totally inadequate, frozen as it was at £30 over many years. But now anyone unable to meet funeral costs will have to apply to the social fund. When people die suddenly, unexpectedly, over a bank holiday, Easter or Christmas, as they frequently do, the relatives presumably have to wait for the next opening of the social fund office. They must then go cap in hand, wait in a queue and be subject to investigation, before they can agree any details with an undertaker for a funeral. This is disgraceful. The simple, equitable and dignified solution is the one that we have proposed on these Benches; namely, that the figure be raised to £250, recoverable from the estate of the deceased on the grant of probate or letters of administration. For God's sake, let us at least ensure that people can bury their dead with decency and dispatch.
On the vexed question of SERPS—I am sorry to use the acronym, but we all seem to have adopted it today—whichever solution one prefers, I think it can be unequivocally said that it is a profound mistake to reform pensions without all-party consultation, because any change imposed unilaterally will not have the effect of binding subsequent Governments. Indeed, the Labour Party have said this evening that if they form another Government, they will reverse the Government's proposals. The whole pensions field is simply opened up again to damaging uncertainty affecting many millions of people.
At one time I thought that the only solution to this heavy and growing commitment of a pay-as-you-go scheme lay in the extension of funded schemes to which the noble Lord, Lord Williams, referred. But even the Financial Times—I refer to an article on 18th May—did not see this proposition as self-evident. On 4th June it again pointed out that shifting the burden from the public to the private sector did not mean any less cost to society. It stated:
"If the Green Paper believes that the economy cannot afford open-ended pension liabilities through SERPS, it takes imagination to contend that even additional investment through the market will see the pension system over the demographic hump".
330
I believe that point was made by the noble and learned Lord, Lord Silkin.
Furthermore, the administrative costs of SERPS are only 1½ per cent. of benefit costs, while those of occupational schemes are running at about 8 per cent. and those of some private schemes can be up to 18 per cent. of contribution income. Also SERPS has the great advantage of being fully portable; a valuable quality in an age of flux. Of course there are alarming actuarial forcasts which we cannot deny; so where do we go?
It was interesting to learn that even the Government's expert advisers did not agree. Professor Peacock wanted to abolish SERPS, but at the same time to raise the basic pension, as has long been advocated by my noble friend Lord Banks and the Liberal Party. Mr. Marshall Field thought that providing large numbers of small private pensions for highly mobile employees, such as those in the building trade as proposed by the Government, could be quite expensive. He said:
"It is the thing that the state scheme does rather better".
Severe reservations have been expressed in this field extremely knowledgeably by the noble Lord. Lord Hunt of Tanworth, and by the noble Lord. Lord Williams.
Mr. Stewart Lyon favoured modification of SERPS, but not abolition. He said that SERPS,
"reaches those employees that the private sector cannot reach".
Those are the employees that we want to reach as well. Incidentally, the current Social Security Bill includes a proposal for a register of occupational pension schemes. Can the noble Baroness tell us whether this will include the compulsory private pension schemes envisaged by the Government? Consumer protection, as the noble Baroness, Lady Turner, pointed out, will become of increasing importance.
When good men and true—the experts I have been quoting and some of your Lordships who have spoken this evening—and knowledgeable to boot disagree, it cannot be right to plunge ahead in the way the Government propose. Fools rush in where angels fear to tread.
The Government should consult genuinely between the Green Paper and White Paper stages and not just make token genuflections towards consultation that we have become so accustomed to from this Administration. They should do this with all the political parties on a matter that will span the lifetime of many Governments, no doubt of different complexions. Only all-party agreement can guarantee stability on pension provisions and structure into the next century at a price the country can afford, along with a fairer and more distributive system. To achieve this we shall all have to compromise on our most favoured solution. That was what my right honourable friend Dr. David Owen proposed in the other place yesterday, and I heartily endorse it. It was interesting that he was supported by some honourable Members on the Government Benches. The honourable Member for Brighton, Kemptown, said that if the Secretary of State wanted his scheme to remain in place for many years, he must look for broad, all-party support. If he did not get that, his scheme would be scrapped and replaced by another, and that would not

331
be in the best interests of future pensioners. Consensus may be a dirty word with the Government on many issues, but if they abandon it over pensions, they will do the country grave disservice.
7.39 p.m.
Lord Ennals: My Lords, what a very fortunate man I am to be winding up for the Opposition on a day such as this when we have had not only four maiden speeches, but four remarkable maiden speeches from newcomers to your Lordships' House, all of whom have brought a tremendous variety of skill and experience. They have made their speeches with elegance, in a constructive way. I think that all of them will add to the debates when the proposals eventually become a Bill. I say to the Minister, who for the moment is looking a little lonely—
Baroness Trumpington: My Lords, I am not lonely.
Lord Ennals: My Lords, I would suggest to the noble Baroness that if she merely turns round, she will see how lonely she is. It has been noticeable to all of us throughout the debate that only one Conservative Member, the noble Baroness, Lady Lane-Fox, has chosen to support the Minister.
I want warmly to welcome the speeches which were delivered by the maiden speakers. I think that my noble and learned friend Lord Silkin, a very worthy son of a noble father, he himself greatly distinguished as a former Attorney-General, brought much wisdom and cogency to the House. We also heard the noble Baroness, Lady Warnock, whose name has made its own contribution to many debates in your Lordships' House and who is a person of such piercing intellect. I hope that she is going to take her role here very seriously because she has an enormous contribution to make; not that we are not mostly, of course, highly intellectual, but there are moments when her presence will be needed. There was, too, the noble Lord, Lord Williams of Elvel, with his experience as chairman of the Price Commission. He made some very relevant comments and raised questions on SERPS, showing his clarity of mind on complicated issues. Finally, there was the noble Baroness, Lady Turner of Camden; and I shall have to watch what I say, for she is the general secretary of my trade union. She is a very distinguished trade unionist. She delivered today a very compassionate speech which made also good, sound, economic and social sense. I think that her role is going to be very important.
Since yesterday's Statement in another place was simply referred to and not discussed in this House, perhaps one should make two or three brief comments. I should like to say to the Government how much I welcomed the decision which was announced yesterday in relation to invalidity benefit and to congratulate them if I may—and I hope that the noble Baroness will repeat this to her noble friend the Leader of the House—on the decision to increase vaccine damage payments for which so many of us in your Lordships' House had so strongly pressed.
Baroness Trumpington: My Lords, I shall do so gladly.
Lord Ennals: My Lords, the very fact that he took away the feeling of the House and took action is a tribute to him personally.
But the increase of 15 per cent. in child benefit is, I should have thought, derisory, to say the least. It does not even pay for a first-class postage stamp, and I am not even quite certain about a second-class postage stamp, particularly since the cost of postage stamps is to go up.
I want to turn to the main subject of the debate, what I call the "Fowler review". The years 1984 and 1985 have been dominated in this House and in another place by the Local Government Bill, which has been supported mainly by those with a sort of dog loyalty to the Government's unwise election manifesto commitment. I think that the nature of the White Paper which we are discussing here today, the Reform of Social Security, has ensured that it will dominate political life in this country for the next two years until the end of this Parliament. I must say to the noble Baroness and to her right honourable friend that to suggest that this is the greatest review of the social security divisions since Beveridge is sheer and utter nonsense.
I remember when the Beveridge Report was published in 1942, when my noble friend Lord Houghton of Sowerby was giving us wise advice on the radio and I was an education officer in my unit. I saw this as being what Hermione Parker said in The Times on 14th June. She said that it was strategic thinking on a grand scale. She said that there was a magic about it which captured the mood of the moment. Well, who can think of this White Paper as somehow or other strategic thinking on a grand scale capturing the mood of the moment? It is nothing like it at all. In fact, the Beveridge Report was so revolutionary that I can remember, when it was published as an ABCA pamphlet, that because it was so revolutionary it was actually withdrawn and I as education officer was unable to proceed with my lectures on the new society that was going to be created. There we were, soldiers, sailors and airmen, fighting against a monstrous, cruel and unprincipled enemy and, suddenly, we were all given a second chance, the opportunity of creating a fairer society in Britain. The post-war Labour Government's bold implementation of this created the welfare state which was, as my noble friend Lord Wallace has said, the envy of the world.
It did not meet the whole of society's needs. Successive Labour Governments added vital improvements to Beveridge's multi-faceted plan. I say "Labour Governments" because I cannot recall—although perhaps somebody else may be able to remind me—of steps forward taken by Conservative Governments. Child benefit replaced family allowance; supplementary benefit replaced national assistance; pensions were linked to rises in living standards, until the Government removed that right. We had new benefits for disabled people and we achieved a national consensus in 1975, as has been said from many sides of the House, with the new earnings-related pension scheme.
That was done after long years of argument. We can look back—and I certainly was involved in what we called then the Boyd-Carpenter scandal; and I am sorry that I used the term in his absence. We had the

333
Crosland national superannuation scheme and I was involved in taking that through the House of Commons. It was confusing, it was complicated and it was not a national consensus. We had Keith Joseph's earnings-related scheme, which never saw the light of day. And in 1975, due to the success of the late Brian O'Malley we tried to ensure that never again would this nation be divided about the nature of pensions for people 30 or 40 years from now. That was a tremendous achievement, and I must record the horror with which I see this Government coming forward, destroying this national consensus.
I am not disagreeing with the noble Lord who said, "All right. It is right that we should have a look at it". I shall say in a moment why I think it is right, but I am certainly not going to say that we should not look seriously at some modification and some suggestions that are made. But I believe that it was wicked to have put before us a proposal to phase out and therefore to throw the public back again into national confusion and to throw back the political parties into national antagonism. I say it constantly: it was a wicked thing to have done.
To hear Ministers speak, one might imagine that the provisions implemented in the 1940s have not changed to meet changing needs. They have changed; and we want perhaps to make further changes. In my view this is an ill-thought-out package which we have before us, apparently designed more to be a cost-cutting exercise than a new visionary set of proposals for the nation for the next generation and more. My noble friend Lady Jeger said (and others have repeated it) that we were not even given the figures. With the short time available how can one have effective consultation without knowing the figures? We know that the figures exist. The very fact that the Prime Minister said that they will be published in October or November in a White Paper means that the figures are known now. If they are known now why are they not made available in order that organisations can properly and effectively consult about what the Government believe to be an important set of proposals?
I entirely agree with the noble Baroness, Lady Lane-Fox, that this is not an attempt to dismantle the welfare state. That is an exaggeration which, I guess, will be repeated by some in the course of arguments. But it certainly is not something which is going to make us more proud of our welfare state, as I shall show in one or two of the things I want to say. We heard the noble Lord, Lord Stallard, and the noble Baroness, Lady Ewart-Biggs. They made it perfectly clear that the proposals do not match up to the social challenges of today. We do not know how many people will suffer; we do not know how many people might gain; we do not know how much will be saved, although we have now, as I say, been promised the arithmetic which already exists.
The Government say that the present system is too complicated as well as too costly. I am sorry to repeat myself, but I intervened earlier, in case there might be fewer Members of your Lordships' House present at the time I made my speech, with reference to the Government's proposals to reform and simplify the supplementary benefits scheme. That, after all, is a scheme they introduced themselves in legislation
334
which was hotly fought from the Opposition Benches in both Chambers and which they forced through Parliament four years ago following a review of supplementary benefits which had been carried out. Certainly they have used words that I can well understand: "confusion", "bureaucracy", and "large numbers of needy" being lost. I think it was the noble Baroness who referred in her opening speech to the language of supplementary benefits as being "a jungle".
Some years ago, when the new measures were introduced by Mr. Patrick Jenkin, he said that
"the present discretionary scheme has become unmanageable for claimants who do not understand it, for the staff of my department who cannot operate it, for the public who suspect it of abuse"
They therefore introduced a scheme which is now being written off and criticised just as the previous one was. They made a "cock-up" of it. I do not want them to make a "cock-up" of the present Bill, which will be the eventual result of the Green Paper.
I shall use the description "SERFS": we cannot go on talking about "state earnings-related schemes", because we shall have long months and years of debating this issue. The present scheme was passed into legislation in 1975, not just with the wholehearted support of the political parties but with the support of the CBI, the TUC, the National Association of Pension Funds, the Life Offices' Association, the British Insurance Association, the actuaries and the Conservative Party. They all accepted that this was the best we could do in order to put an end to poverty in old age, and particularly for those who were coming to retirement at the turn of the century.
I was reading the debate in which a certain gentleman named Mr. Norman Fowler, and another named Mr. Kenneth Clarke, were speaking in 1975 on behalf of the Conservatives in opposition. They paid warm tribute to Brian O'Malley, and they congratulated the Labour Government on the way in which we had accepted so many of their proposals. We did so in order to achieve precisely the consensus which we achieved, and to see that the future of pensioners—an increasing number of people, as we knew—was not going to be used as a political football in the years that lay ahead. In trying to sustain that all-party approach, when the scheme was actually launched in 1978, when I was Secretary of State, I invited Mr. Patrick Jenkin (my "shadow") to speak at the launching. I did not include the Liberal Party because they had certain reservations about it, as has been pointed out by the noble Lord, Lord Banks, although I see that the Leader of the Liberal Party has now come round and it would appear that they thought that they supported the scheme, which actually they did not. But if they are eventually converted, then I am a happy man.
It was the Prime Minister, Mrs. Thatcher, who in the last election, when asked, said that there were no plans to change the earnings-related components of the state pension. That was in fact put on to the statute book with the full support of Conservative Members. I put this to the noble Baroness in an exchange that we had. The noble Baroness said that that was absolutely right, there were no actual plans. What does that mean? If, every time someone says, "We haven't any plans to do this," it means, "We have not worked out

335
the details of our plans but we are going to do it", then what is the value of words which are used on occasions like these?
Mr. Norman Fowler, as we know, when he announced the reviews, made it quite clear that the reviews were not going to deal with the state earnings-related pension scheme. To justify his change of heart he said on television a week or so ago that he had suddenly discovered an extra three million pensioners at the beginning of the next century. That is a load of "codswallop". Anyone could predict 10 years ago—and we did—what would be the level of pensioners, not only now but at the turn of the century, 10 years after the turn of the century, or 20 years after the turn of the century. There are no new facts, except that we now have a threefold increase in unemployment. That, of course, is the main new fact which has caused the Government to come forward with their proposals.
Secondly, there is such pessimism about the prospects of the economy as a result of Tory policy over these last six years that they no longer believe that they can guarantee a decent pension for pensioners 15 or 20 years from now. I believe that it is absolutely pathetic. They had confidence that they would be able to do it at the time when the Labour Government were in power. But now that they have their own Government they do not have the confidence that the economic situation will enable them to do this. There may be, as I said, some adjustments at which we can look. We are all reasonable people—some, if not most of us, are reasonable people. We shall look at serious proposals. But I must say that the noble Baroness will have a very difficult time unless the consultations—over very few months and with very few facts—lead to such proposals.
I shall not in fact go through many of the details, as I should like to have done and as some of my noble friends have done, about supplementary benefit and the effect that this will have on widows and the disabled. I think one of the most absurd things is the idea of cash-limiting a local office for people who need money for specific purposes. Let us suppose that nine months after the beginning of the year, because of special needs, the manager has simply run out of money. What does he say? Does he put a little advertisement in the local paper saying, "Anyone in desperate need, do not apply to us. Wait until 1st April next year"? To put forward a scheme like this is absolute nonsense. I think it is shameful that the Government should do so.
When the noble Baroness made her opening speech she seemed to imply that there had been a very warm welcome of the Government's proposals. One or two speakers today have said, "All right; we give the Government credit for having a look at something". But I have not heard much credit today for what they have come up with. And it is not just that they have had little credit here. What has been the response throughout the country? There has been a quotation from Mr. Stewart Lyon. I knew Mr. Stewart Lyon 20 years ago. We met in the course of negotiations. He is a wise fellow, a shrewd guy, who knows something of what he is talking about. He is the immediate past president of the Institute of Actuaries. He was a member of the inquiry team.
336
Mr. Stewart Lyon said that Government plans had never been discussed in the working party, let alone recommended by members of the inquiry. They had not been discussed in the working party because the working party knew that Norman Fowler had said that this was not one of the issues to be discussed. He went on to say:
"I have serious misgivings about dismantling the present structure. I myself argued, as I have consistently done over the past 20 years"—
I can confirm that because I heard him doing so—
"that many of those without occupational pensions could not be properly pensioned through the private sector without excessive difficulty and expense, and that this was the real significance of the present partnership between the state scheme and private scheme."
To anyone who argues that this is a new partnership, that these are great new pillars between the state and private system, I would say that that is what was established in 1975, and that is what is about to be undermined and destroyed now.
What of the attitude of other organisations? The TUC are totally opposed to it, as are the Child Poverty Action Group, and of course one would expect that to be the case. As the noble Lord, Lord Stallard, said, SHAC, the Housing Aid Centre, is totally opposed. The Disability Alliance have come forward with extremely critical comments as to the effect of this. I will read out one paragraph:
"The reform of supplementary benefit, the abolition of SERPS with its particular advantages for disabled people, and the cuts in housing benefit, will all hit disabled people dramatically, and the more severe your disability is, the more expenses your disability entails, the greater will be the loss of income. For disabled people the Green Paper represents virtually unmitigated bad news".
What about some of the others? The Confederation of British Industry say that they are wary of the cost implications for employers. No wonder, my Lords. They say that they intend to make detailed calculations before giving a definite reaction. Mr. Henry James, director-general of the National Association of Pension Funds, feels that the occupational pension scheme movement has been damaged severely by the proposals and that God willing they will not be carried through; that is, by the proposals alone. He says that the task of the association is one of damage control to limit the effects. This is not a left-wing organisation. These are people who operate the pension funds.
I had a meeting yesterday with the Life Offices' Association and a most helpful brief from them today, although I will not go through that. I cannot pretend there is any enthusiasm at all for what is now being introduced. The Social Security Advisory Committee said that there should be,
"adequate time for further consultation and consideration of responses on any proposals for major reform".
They referred to the prohibitive price of the Green Paper, which is £26.20 or nearly one week's supplementary benefit for a single adult. That really puts it out of reach of the people for whom presumably the review was carried out.
The Financial Times—and although it is pink it has never been considered a Labour paper—says:
"The welfare state is so important a subject for so many individuals and groups that the Government ought to allow at least six months, and preferably more like nine, for a full and informed public debate … It is one thing to ask for people's views before

337
Government plans are formulated and quite another to ask for considered reflections on actual policy proposals. The real debate about Britain's Welfare State cannot begin until the Government has made clear its own preferred approach to reform. The case for a lengthy period of genuine consultation is strengthened because the Government can claim no direct election mandate for these far-ranging changes".
Nothing was said about this at the time of the general election except that it was not then an issue that was going to be faced by a new Government.
I have representations from the British Association of Social Workers and the Royal Association of Disability and Rehabilitation as to how these proposals will affect them. I could mention organisation after organisation which sees these proposals as presenting enormous social problems. I would say to the noble Baroness, not just to convey the small words but to convey the very genuine and deeply felt words of appreciation that I gave at the beginning, that I hope she will say to her noble friend Lord Whitelaw that in the debate in this House today there has been no one except herself who has stood up and bodly said, "This is the plan for the nation".
One could compare the response with that accorded to the Beveridge Report, or, for that matter, to the 1975 Act put forward by Labour, which was an example of effective consultation and eventual consensus. I will make a prophecy and then I will sit down. Whatever damage these proposals cause to millions of our fellow citizens if they survive the scrutiny of both Houses of Parliament, I can promise a line-by-line examination of the Bill when it reaches us next year. I believe these proposals will destroy this Government, and that is the best thing I can say for them.
8.5 p.m.
Baroness Trumpington: My Lords, this has been a long—on occasions it has seemed very long—and interesting debate. The contributions of those whom perhaps I could name collectively as "a modesty of maidens" fulfilled all the traditions of this House. They displayed eloquence, brevity and charm. But did I detect the slightest evidence of iron hands in velvet gloves? I should like to join with those who have offered their congratulations and to say that perhaps if the gloves come off I would rather be in a neutral corner.
When your Lordships read Hansard you will see that some of your questions have already been covered in my original remarks this afternoon. I shall do my best to answer as many of the points that have been raised as I can., and I promise to write to those speakers who may feel they have been neglected by me.
I should like to deal with some of the points which were raised by the noble Baronesses, Lady Jeger and Lady Warnock, and the noble Lord, Lord Banks, who raised questions on the social fund. I should like to deal with two points which caused them concern: can the staff run it and how will the fixed budget operate? We do not pretend that the judgments which staff will need to make to reach decisions on applications for help will be straightforward. They entail the consideration of individual circumstances and then deciding on an appropriate response.
However, first I ought to make a number of points.
338
I do not think anyone would deny that the present regulated scheme already requires staff to reach difficult decisions in areas which have an important effect on large numbers of claimants. The difference will be that staff running the social fund will be concentrating on a limited number of cases, given the fund's specific remit. The problem at the moment is that there are so many areas of judgment in handling the potential entitlement of all claimants. I must say I suspect there are times when staff are deciding the precise amount and type of help in the light of the detailed rules of the present scheme when they must wish they could reach a more sensible decision with a greater amount of flexibility. We already have special case officers to handle cases of particular difficulty. Their role already includes giving advice on budgeting difficulties and serving as appointed liasion officers with social service and other welfare interests.
Clearly we shall have to consider how we develop the new arrangements. The staff running the social fund will have to be carefully selected and specially trained, for example, in counselling and interviewing skills and in the availability of help from other sources. However, they will have the existing arrangements to build on. I do not share the pessimistic judgment implicit in some of the comments that we do not have good staff able to perform this role with the necessary training and advice.
The noble Lords, Lord Banks and Lord Grimond, and the noble Baroness, Lady Jeger, raised points regarding the possibility of the social fund running out halfway through the year. I understand the reason for their concern in the sense that we do not now run this part of the social security system on such a basis. However, I have to point out that demand-led expenditure still has to be budgeted for in our public expenditure considerations, and paid for; but the reality is that most organisations, including those in hospitals and the social service fields, have to plan their spending on the basis of a budget. No one runs such a system on the stated assumption that they may have to shut up shop in the last month or so of the financial year. Obviously I recognise that, and that precisely because this is a new system careful consideration will have to be given to how we fix the budget and run the various mechanisms to support it.
The answer is to make as careful an assessment as we can of the numbers and the circumstances with which the fund will be dealing, and to introduce proper monitoring arrangements to ensure that payments in any period are consistent within the annual budget. That is something to which we shall be giving careful consideration as we work up this part of the scheme in the light of consultation.
The noble Lord, Lord Banks, also asked me whether decisions on payments from the social fund would be appealable. My answer to that is that they are not appealable in the way that adjudication decisions currently are, when appeals can be made to appeal tribunals and then to a social security commissioner. We believe that the remit of the social fund means that it will be better for decisions to be reviewable by management, who are well placed to judge whether the outcome is sensible and who can carry out the review quickly. Decisions on the social fund are essentially ones of judgment. The further away that reviews get

339
from the original decision, and in some senses the more formal they become, the more difficult it is to judge whether the initial decision was a reasonable one.
The noble Baroness, Lady Jeger, also criticised the more flexible decision-making process of the social fund. She praised the independent adjudicating process. I agree that adjudication is worthwhile with reference to weekly income, but it is slow, cumbersome and completely wrong for decisions relating to matters such as household needs. I referred earlier to a decision on a hot water bottle. This particular case went through three tiers of adjudication and the claimant still had not received a hot water bottle or a final refusal.
My noble friend Lady Lane-Fox, who is never wanting in courage, made an eloquent and sensible speech. She asked me a question about mobility allowance. I fear that I cannot encourage her to hope for more help at the present time. Removing or extending the upper age limits for mobility allowance would be very expensive. The latest estimate is that the total abolition of the limits would cost around £340 million a year. Resources on this scale are simply not available. Even to retain the age 65 limit for claiming, but then to pay the benefit for life, as opposed to the age 75 as at present, would cost some £120 million a year in the long term.
The noble Lord, Lord Ennals, and the noble Lord, Lord Banks, claimed that our proposals on income support and housing benefit complicated legislation introduced by a Conservative Government. The 1980 changes to the supplementary benefit scheme were the culmination of a review set up by the Government of which the noble Lord, Lord Ennals, was a member, and followed major changes under the 1966 Labour Government. The key point is that the changes made since 1980 largely carried forward the existing structure of supplementary benefit, and the same is true of the introduction of housing benefit. These structures existed while the noble Lord was Secretary of State. It is we who have had the good sense and courage to undertake a fundamental review. The noble Lord, Lord Stallard—
Lord Ennals: My Lords—
Baroness Trumpington: No, my Lords, I will not give way. Time is much too pressing. The noble Lord, Lord Stallard, raised a number of detailed points concerning housing benefit. He will forgive me if I write to him and do not go into them now. The noble Lord, Lord Hunt of Tanworth, was concerned that new pension arrangements will be too complex for small employers. The new norm for occupational schemes is much simpler than the present contracting-out arrangements. Making personal pensions easy to handle is a priority in our discussions with employers and the pension industry representatives.
The noble Lord, Lord Kilmarnock, spoke about the death grant. Any replacement scheme for the Government death grant will be paid from social security offices and no payment will be possible over public holidays, any more than single payments for funerals are now. The concern is surely over the
340
administration of the social fund. I have already explained how our staff were specially trained. I can assure your Lordships that when developing arrangements for the social fund we shall pay particular attention to the need for this aspect to be dealt with promptly and sensitively.
On pensions, several noble Lords, among them the noble and learned Lord, Lord Silkin, and the noble Lord, Lord Grimond, questioned whether there was any difference between affording SERPS and affording private pensions. The noble Lord, Lord Williams of Elvel, also touched on this when he asked why funded pension provision should be superior to unfunded provision. There is a difference. The national insurance fund from which the costs of SERPS are met is a fund in name only. In practice, it is no more than the contributions of the working population paid in, and then paid out at once to meet that year's pensions for the retired population. Our proposals will mean people building up their own pension funds with some say in how they are disposed. They will have more choice also about how much to save for their retirement and when. Contrary, perhaps, to what was implied by the noble Lord, Lord Swann, even with a money purchase scheme people can aim at a pension which represents a percentage of their earnings.
Of course there is not the same fixed sum as under a final salary scheme. It may be more, or it may be less, but it is precisely because final salary schemes represent an open-ended commitment that they are an unrealistic option for small employers. Our proposals will open the way to almost everyone in work having a personal or occupational pension. The noble Baroness, Lady Turner, spoke eloquently of SERPS, but she conveniently ignored the wishes of those people who are not now in schemes and for whom SERPS is the only option for having an occupational pension of their own.
Perhaps I may say a final word on the supposed pensions consensus. The noble Baroness, Lady Jeger, made some play with this. The Labour Party trumpet the virtues of national investment bank and pension fund direction; the Liberals want to replace SERPS with a grossly extravagant basic pension; and with reference to the remarks of the noble Lord, Lord Kilmarnock, the SDP, so far as one can judge, simply want to fiddle with SERPS, reducing benefits and putting nothing in its place. Some consensus, my Lords!
Noble Lords on the Benches opposite have been quick to carp but have been notably coy about what they want to see. That is not surprising. The Labour Party have a lot to be coy about. Do they rely on the far-fetched proposals of their social services spokesman in the other place, proposals that were ditched by their leader with the speed of light, or do they look for inspiration to that leader who yesterday betrayed, in a grotesque blunder, that he had not the first idea of how the national insurance fund works? In the entire debate, there has been nothing positive from the Benches opposite. Noble Lords sit there bankrupt of ideas and bereft of a lead.
Many of the ideas put forward today have been positive and offered in a constructive spirit. We shall reflect upon them accordingly. Others have been less constructive or more critical. We are absolutely

341
committed to change in the direction which I have outlined to your Lordships today. We shall shape a system which provides a better service of a kind which we believe the vast majority of people want, one which directs help accurately and positively where help is genuinely needed, a service which will provide for our future and that of our children and grandchildren.
I think it was the noble Lord, Lord Grimond, who said, in effect that the Government have nothing if not guts. Being the noble Lord he is, he phrased it rather more eloquently and elegantly. The Government do indeed have guts. We have determination, and we have vision as well. Those qualities are abundantly clear in all our major Green Paper proposals. They will be no less clear in our carrying them through. I commend our proposals to your Lordships.
8.18 p.m.
Baroness Jeger: My Lords, perhaps I may say to the noble Baroness that if there is one thing I congratulate her on, it is her stamina. She has been a very lonely lady today. I think the emptiness of the Government Benches and the paucity of Government speakers indicate that the Tory Party do not care about social security and do not understand it. They do not care much about these proposals. It is a pity that nobody spoke up in favour of the Government's proposals in the whole of this long debate. The noble Baroness Lad): Lane-Fox, who is very loyal and very courageous, had her criticisms to make, and we know she often speaks up for people in need. The noble Baroness, Lady Trumpington, tried to make some joke out of the absence of proposals from this side of the House—
Baroness Trumpington: It was not a joke.
Baroness Jeger: It was not a joke? Bad luck! My Lords, in my generosity, I thought it must have been a joke, because if the noble Baroness had looked at the Order Paper for today, she would have seen that the business for today is a discussion on the Government's Green Paper, and I think we would have been very much out of order if any of my noble friends or I had dared to talk about the Labour Party's proposals for social security. That is not on the agenda and we are very interested in keeping in order.
I asked the noble Baroness some questions and I admit that she has had a difficult and rotten day, so I shall not repeat them again. She has promised to write some letters. She reminds me of a previous Minister who had her job and who after some of our debates wrote more letters than St. Paul. The most important question that I put to the noble Baroness—and I hope that I shall get an answer some time—was when I asked whether this whole exercise is based on a nil cost, and how much the Government will save by these proposed changes. The second important point which she did not answer, was when I said that I hoped she would tell us how irrevocable are the announcements that have been made in the Green Paper, if the Green Paper is really to stay green. I wrote down that the noble Baroness said that the Government are absolutely committed to these proposals. So, my Lords, where is the consultation? Where is the compassion? How will we enable the people who are
342
most affected by these proposals to join in the discussion if the noble Baroness gets up in the House and says, as she did—if she wants to contradict me she can, but I wrote it down and I am not a bad reporter in my old age—that the Government are absolutely committed to these proposals? She has not told us what is to happen to the cash limits on the social fund and what is to happen to people who have become casualties at the wrong end of the financial year.
I asked her also whether the funds were to be organised locally so that some improverished areas would have a larger budget than other areas. None of these important questions has been answered. But as I said at the beginning of my speech, if I were to persist in moving for Papers we would be here for a long time and the Papers would amount to a very heavy load. Therefore, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Local Government (Access to Information) Bill
8.23 p.m.
Baroness Carnegy of Lour: 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.—(Baroness Carnegy of Lour.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD HAYTER in the Chair.]
Clause 1 [Access to meetings and documents of certain authorities, committees and sub-committees]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 1:
Page 9, leave out lines 5 to 15 and insert—

("(a) specifying those powers of the council which, for the time being, are exercisable from time to time by officers of the council in pursuance of arrangements made under this Act or any other enactment for their discharge by those officers; and

(b) stating the title of the officer by whom each of the powers so specified is for the time being so exercisable;

but this subsection does not require a power to be specified in the list if the arrangements for its discharge by the officer are made for a specified period not exceeding six months.").
The noble Baroness said: In moving Amendment No. 1, I should like for convenience to speak also to Amendment No. 5.
Amendment No. 5: Clause 2, page 20, line 39, leave out from beginning to end of line 6 on page 21 and insert—

("(a) specifying those powers of the authority which, for the time being, are exercisable from time to time by officers of the authority in pursuance of arrangements made under this Act or any other enactment for their discharge by those officers; and

(b) stating the title of the officer by whom each of the powers so specified is for the time being so exercisable;

but this subsection does not require a power to be specified in the list if the arrangements for its discharge by the officer are made for a specified period not exceeding six months.").
Amendment No. 1 applies to England and Wales, while Amendment No. 5 applies to Scotland. They both perform the same purpose. They substitute

343
revised wording in the provision requiring authorities to maintain a register of powers delegated on a continuing basis to officers. The amendments simply bring the provision into line with the wording already used in the Local Government Act 1972 and the Local Government (Scotland) Act 1973. Neither of these Acts refer to the term "delegated", as in the Bill, but instead state that a local authority may,
"arrange for the discharge of any of its functions by an officer of the authority".
That is the change brought about by these two amendments. They do not alter at all the substance of the provision. I beg to move.
Baroness Nicol: It may be helpful to the noble Baroness, and perhaps a comfort to those who are yet to speak, to know that we do not oppose any of these amendments. We accept that they are necessary, either as drafting amendments or to cover a point which was not properly covered in the Bill, and none of them will be opposed. I should just like to say that I find it a little disconcerting that a Bill which has been heavily amended at every stage—a very small Bill to begin with—should still be being heavily amended when it reaches this House. I understand that the Government supported the Bill from the beginning and I find it a little strange that better help was not given in the drafting at an earlier stage.
There is also the point that we felt that some expansion of the Bill was necessary, and I should explain to your Lordships that the reason we have not put forward these amendments is that we were given to understand that to do so might delay the passage of the Bill. Therefore, this is all that the Committee will hear from me this evening.
Lord Skelmersdale: I should like to congratulate my noble friend on her perspicacity in observing that the Bill does not, as drafted, properly bring itself into line with the Local Government Act 1972 for England and Wales and the Local Government (Scotland) Act 1973, and that these two amendments do exactly that. I am sorry that the noble Baroness, Lady Nicol, should feel disconcerted. This is of course a Private Member's Bill and the Government have given approval to it, as she well knows, both in this House and in another place. The objective of the Bill, surely, should be that it is drafted in a right and proper form for the statute book, so that in the unlikely event that litigation is ever sought there is a properly formed Act of Parliament on the statute book on which such litigation can be based. I do not see that it matters whether it is in this House or in another place that the ultimate drafting perfection takes place.
On Question, amendment agreed to.
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 2:
Page 12, line 10, at end insert—
("(f) a combined fire authority").
The noble Baroness said: In speaking to Amendment No. 2, perhaps I may also speak to Amendments Nos. 3, 4 and 7.
Amendment No. 3: Page 12, line 22, leave out ("or (e)") and insert ("(e) or (f").
344
Amendment No. 4: Page 12, leave out line 37 and insert (" "and the ward" onwards;
and
(c) in relation to a combined fire authority, with the substitution for the words "ward or division" of the words "constituent area".
(5) In this section "combined fire authority" means a fire authority constituted by a combination scheme under the Fire Services Act 1947.").
Amendment No. 7: Schedule 2, page 33, line 15, at end insert—
("Fire Services Act 1947 (c.41)
In section 8 of the Fire Services Act 1947 (constitution and powers of fire authorities constituted by combination schemes) after subsection (3) there shall be inserted the following subsection—
"(3A) Meetings of a fire authority which is (as well as one which is not) constituted by a combination scheme are open to the public, and documents relating to such meetings are open to inspection by the public, in accordance with the provisions of Part VA of the Local Government Act 1972." ").
This group of amendments incorporates within the Bill combined fire authorities. The Bill already applies in Scotland and in England and Wales, where a single council is the fire authority, or where new joint authorities are to be set up in Greater London and the English metropolitan areas. Amendment No. 2 extends the Bill to cover the possibility of combined fire authorities being set up in England and Wales. No such authorities exist at present, but they could be created under the Fire Services Act 1947 to cover two or more counties. It therefore seems sensible for the Bill to cover this contingency.
Extensions in Amendment No. 2 mean that the Bill will then cover all fire authorities and will be consistent with the Bill's application to police authorities. However, it is worth noting that Amendment No. 4 also corrects a small drafting error. At Report stage in another place, the words "and the" were inadvertently left hanging in mid-air in the provision requiring a register to be maintained of members of joint boards or joint committees. Amendment No. 4 removes these two superfluous words. I beg to move.
On Question, amendment agreed to.
8.30 p.m.
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendments Nos. 3 and 4:
[Printed above.]
On Question, amendments agreed to.
On Question, Whether Clause 1, as amended, shall stand part of the Bill?
Baroness Carnegy of Lour: Before the Committee leaves Clause 1 perhaps I may mention the fact that three matters may require tidying up at the Report stage. I apologise to the noble Baroness for the rather dilatory nature of this process. The Bill has changed very much during its progress in another place and I think it is extremely important to local authorities that we should get this Bill right because it is going to be a very important Bill for them.
The first matter is the relationship of the Bill to the Data Protection Act as provided for in Section 100A(3)(b) and Section 100H(4) and in equivalent sections in Clause 2 relating to Scotland. I think that we may need to look at that aspect at the Report stage,

345
and the description of exempt information relating to the proposed service of notice under any enactment, as provided for in Schedule 12A Part I paragraph 13 and Schedule 7A Part I paragraph 13, may need looking at again.
I have had some discussion with organisations representing the disabled and the blind. It seems to me that it is extremely important that local authorities should do their very best to ensure access under this Bill for everyone who wants access, despite any disability they may have. There is real difficulty in legislation of this kind in attempting to cover the varied needs. One tends to end up with inflexible and somewhat inadequate requirements. What is really important is to stimulate awareness and sensitivity and make sure that the access does in fact happen. I have not brought forward amendments on this matter but wonder whether a better approach would be guidance given in a Government circular letter to local authorities after enactment of the Bill. It would be immensely helpful if my noble friend on the Front Bench could tell us whether the Government will endorse this approach.
Lord Skelmersdale: If any proof were needed of my remarks to the noble Baroness, Lady Nicol, opposite, it has just come from my noble friend in that it is totally a Private Member's Bill.
With regard to the question which my noble friend addressed to me, I think it would be appropriate to remind the Committee that when this Bill was under discussion in another place, my honourable friend the Parliamentary Under-Secretary of State stated (this is recorded in their Official Report at col. 639 of 17th May) that he felt that general guidance might well be helpful in the event of this Bill being enacted. I understand that the local authority associations would welcome such guidance in this particular instance. It is perfectly true, if the noble Baroness wants to come back at me, that they do not always welcome guidance; but in this particular case my understanding is that they would.
It is only right therefore that I should respond positively to my noble friend's suggestion that the Government should draw specific attention to the particular needs of disabled and blind people seeking access to local government information. I hope that it will be possible to include appropriate references of that kind. Clearly we would want to consult on any proposed wording, notably with bodies such as the Royal Association for Disability and Rehabilitation (which is more generally known as RADAR), the Royal National Institute for the Blind and the local authority associations themselves. I should like to think that this assurance will meet the concerns that have been expressed outside this Chamber and will show that we have taken on board the points that my noble friend has drawn to your attention.
Baroness Carnegy of Lour: I appreciate very much that reply and I am sure that those consultations will bear good fruit.
Clause 1, as amended, agreed to.
346
Clause 2 [Access to meetings and documents of local authorities and certain committees and subcommittees in Scotland]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 5:
[Printed earlier: col. 342.]
The noble Baroness said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 2, as amended, agreed to.
Remaining clauses agreed to.
Schedule 1 [Exempt information]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 6:
Page 31, line 29, leave out ("or the subject matter of the collective agreement").
The noble Baroness said: Amendment No. 6 corrects a small mistake made at Report stage in another place. The words "or the subject matter of the collective agreement" were left stranded at the end of a paragraph which no longer deals with labour relations matters—they are now elsewhere in the Bill. The amendment merely seeks to remove them. I beg to move.
On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
Schedule 2 [Consequential amendments]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 7:
[Printed earlier: col. 344.]
The noble Baroness said: I have already spoken to Amendment No. 7. I beg to move.
On Question, amendment agreed to.
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 8:
Page 35, line 35, at end insert—
("(2) In section 228 of that Act (inspection of documents)—

(a)in subsection (1), for the words "local authority" there shall be substituted the words "parish or community council" and for the words "the authority" there shall be substituted the words "the council"; and

(b) in subsection (8) (application to parish meetings) for the words "local authority" there shall be substituted the words "parish council".").

The noble Baroness said: For the convenience of the Committee, I shall speak to Amendments Nos. 8 and 9 together.
Amendment No. 9: Schedule 3, page 36, line 21, at end insert in column 3—
("In section 197, subsection (1).").
These two amendments apply to England and Wales and to Scotland respectively. They are minor tidying up amendments and both have the same effect. There is at present a potential anomaly between Section 228(1) of the Local Government Act 1972 and the provision in the Bill enabling the minutes of local authorities to be available for public inspection. A similar potential anomaly arises in the relevant section of the Local Government (Scotland) Act 1973 and the provision in the Bill. The anomalies can be avoided,

347
however, through excising where necessary Section 228(1) and Section 197(1) of the 1972 and 1973 Acts respectively. For England and Wales this is achieved by restricting the application of section 228(1) to parish and community councils which are not covered by the Bill; for Scotland it is achieved through removing Section 197(1) entirely. I beg to move.
On Question, amendment agreed to.
Schedule 2, as amended, agreed to.
Schedule 3 [Repeals]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 9:
[Printed above.]
The noble Baroness said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Schedule 3, as amended, agreed to.
House resumed: Bill reported with amendments.

Pharmaceutical Services: Policy
8.40 p.m.
Lord Harris of High Cross Lord Harris of High Cross rose to ask Her Majesty's Government how they justify the proposed agreement with the Pharmaceutical Services Negotiating Committee, which includes the limitation of entry by dispensing chemists into the retail market.
The noble Lord said: My Lords, I beg leave to ask the Unstarred Question standing in my name on the Order Paper. I wish to raise an apparently small but fundamental issue of threatened public policy which has only recently been revealed and which I believe calls for urgent consideration if the Government are to avoid the risk of bringing themselves into some degree of ridicule.
Since the National Health Service was established in 1948, and even before, successive Governments have offered a contract for dispensing prescriptions to all chemists' shops staffed by a qualified pharmacist. The standard contract specifies the terms and conditions on which pharmacists dispense and are reimbursed on a cost-plus basis. Because of the popularity of free drugs, the average independent pharmacist now relies on National Health Service dispensing for 70 per cent. of his income.
A well-equipped pharmacy obviously incurs high fixed costs, which are not a commercial proposition for a typical chemist's shop handling less than around 16,000 prescriptions a year. To attract pharmacists into less populous areas, the Department of Health offers all smaller contractors a higher rate of reimbursement per item and, for some, a further supplement as what is called, "an essential pharmacy practice fee".
On the other hand, in more populous areas competition for prescription business often attracts additional chemists, especially where they can find premises nearer to a doctor's surgery than the incumbents. This is a process condemned in the trade as "leap-frogging". The result may be to fragment business between two or more shops, thereby
348
threatening their commercial viability. To discourage this development the Department of Health and Social Security awards one incumbent in each such area what is called a "basic practice allowance".
In May last year the latest round of discussions for a new contract opened between the department and the Pharmaceutical Services Negotiating Committee. This committee comprises 25 chemist contractors in England and Wales, of which 15 are elected from local pharmaceutical committees in each National Health Service region and 10 are nominated to represent the Company Chemists' Association, the National Pharmaceutical Association and the Co-operative Wholesale Society.
It was widely understood that the negotiations would this time include ways of encouraging a more rational location of pharmacies to serve the public, not only in dispensing but also with home medicines and advice on lesser ailments, thereby relieving pressure on doctors' surgeries. Accordingly, all six of the leading pharmaceutical associations signed a joint statement unanimously agreeing ways of achieving a more rational location of pharmaceutical services by means of what were called "financial incentives and disincentives".
This key document offered six suggestions. First among them was an increase in the basic practice allowance; second, separate payment for the time spent on advisory services; third, payment for relinquishing a National Health Service contract where a small pharmacy was not cost-effective; fourth, payment of an initial practice allowance for a pharmacist opening more than two kilometres from another where what was called "a pharmaceutical need" existed; fifth, the essential small pharmacy scheme, to be supplemented by a relocation allowance, where a pharmacy would move to what was called "a more appropriate and cost-effective position"; and, finally, what was called "an additional pharmacist allowance" to be paid when a specified number of prescriptions—say, 24,000 a year—made it necessary to employ a second pharmacist.
As an economist, I strongly approve of the central assertion of this joint statement, which reads as follows:
"If financial incentives were implemented, a better distribution of pharmacies would result, with an improved advisory service in adequately-staffed premises. It would also avoid an increase in unit costs, except in those areas where there is an overriding need for a service and for a subsidy to be paid".
My fundamental complaint is that this promising approach to a voluntary accommodation was thrown overboard by the Minister in favour of a nakedly coercive policy repugnant to free citizens in an open society.
It appears that in January the agents of the Minister went into secret session with the Pharmaceutical Services Negotiating Committee, whose 25 members were forbidden to refer back to the people they were supposed to represent. The outcome was revealed on 14th May in the form of a package deal on a take-it-or-leave-it basis that included the totally unprecedented proposal for controlling entry to the National Health Service pharmaceutical list.
In future, any pharmacist wishing to set up in business would have to satisfy a sub-committee of the

349
local family practitioner committee that his shop satisfied the condition that it was "necessary or desirable". This hanging committee of seven persons would include three local pharmacists, three non-pharmacist members of the family practitioner committee and an independent chairman. There would be an appeal to a neighbouring FPC but not to the Secretary of State.
The best debating reply from the Government side might be that they are not stopping people from opening chemists' shops but are simply withholding National Health Service dispensing contracts from new entrants. Yet, as I have pointed out, the average retail chemist relies for 70 per cent. of his income on his NHS dispensing. To take a somewhat far-fetched example, if the Government monopolised the supply of meat as they have come to monopolise the supply of prescription medicines, it would not be persuasive for them to argue that anyone may set up as a butcher but could not rely on getting any supplies of Government meat.
This major mischief in the draft agreement was in no way redeemed by the addition of more sensible financial inducements, including the abandonment of the higher rate of payment to smaller chemists and a redundancy scheme to encourage smaller pharmacies to shut up shop unless they were judged "essential", in which case they would be guaranteed an income on the basis that they were dispensing 16,000 prescriptions a year.
The piffling prize won by the Minister's proposal for combining maximum coercion with minimum incentives is a paltry £4 million, half of which he has already promised to pharmacists as a sweetener for selling the pass of open entry. All this for a doubtful net saving of perhaps £2 million on a bill for dispensing alone now running at around £500 million!
This wretched agreement is to be put to a conference of 300 delegates of the local pharmaceutical committees this coming Sunday. Since a restriction on newcomers would confer a monopoly value on existing pharmacists, it would not be wholly surprising if it secured a majority vote, despite the declared opposition of the Company Chemists' Association.
This agreement would, over time, fossilise the existing pattern of pharmacies and freeze out young pharmacists wishing to set up shop, thereby encouraging the concentration of ownership by large multiples. General economic analysis is confirmed by the example of France that the effective licensing of chemists shops will operate against the consumer interest by raising the prices of a wide range of goods sold by chemists. My central objection to this proposed deal is that the Minister is blatantly offering to rig the market and deny qualified pharmacists the right to pursue their chosen career, all to achieve a better distribution of pharmacies which the DHSS acknowledged in a private paper last January,
"could, in theory and in practice, be effected through the mechanism of the remuneration structure alone".
I believe that there is all the difference in the world between offering smaller pharmacies less favourable terms and slamming the door in their faces, as the Government propose. On my reckoning the draft agreement represents a shabby breach of faith by the
350
department, which raised the new issue of control over entry, and insisted that those with whom it negotiated should not consult the organisations they were supposed to represent. Here is Her Majesty's Government encouraging the worse kind of trade union malpractice in pursuit of a closed shop, by secret discussions with so-called "representatives" who have no mandate to commit their principals. Even if this proposed contract is supported by a majority of the 300 pharmacists at their conference on Sunday, they are not entitled to sign away the birthright of thousands of qualified and trainee pharmacists to open a business at any time in the future, in the light of their own judgment of the prevailing financial incentives and risks.
What is proposed is certainly a violation of common equity and a restraint of trade, and it may yet be challenged in the courts as ultra vires, or on procedural irregularities, or on more serious grounds. Equally plainly, the creation of a chemists' cartel is in the sharpest possible contradiction to the Government's expressed support for competition, as evidenced by their attack on the opticians' monopoly and currently by the deregulation of buses.
In conclusion, I must with some misgivings ask the noble Baroness, how can a Government who have won widespread public support for ending control over the opening hours of shops possibly contemplate this revolutionary innovation which would empower local committees, on a subjective assessment of what is "necessary" or "desirable", to prevent a pharmacist setting up in his chosen business and simply seeking to cater for the changing needs and every day convenience of his neighbours?
8.53 p.m.
The Countess of Mar: My Lords, the noble Baroness, Lady Trumpington, may be highly amused to find that I am entirely in accord with her tonight. I can think of no other form of business in this country which is subsidised to the tune of 70 per cent. by Her Majesty's Government. The pharmacy business is about the only example that I can think of.
In areas of low population, rural areas, there are already dispensing doctors—and here I must declare an interest in that I am a patron of the Dispensing Doctors Association, though I receive no financial remuneration, and it is purely a titular honour—who dispense prescriptions at a far lower rate than do pharmacists, and there is no need to increase the number of small pharmacies. I agree with Her Majesty's Government in their proposals to reduce the number of small, so-called essential pharmacies.
8.54 p.m.
Lord Ennals: My Lords, I am sorry to trouble the noble Baroness again. She has had a hard day and she will have another hard few minutes. I am most grateful to the noble Lord, Lord Harris of High Cross, for raising this issue. It was virtually unknown. The Minister involved in the negotiations with the Pharmaceutical Services Negotiating Committee had a year of consultations which he described as necessarily confidential. We do not understand why they should have been necessarily confidential at all, except that there would have been an outburst of anger if it had been known what he was up to.

351
The Minister has now cobbled together a wretched agreement to control the entry of new pharmacies to the National Health dispensing list. Here I disagree, first, with what was said by the noble Countess and, secondly, with the noble Lord, Lord Harris, concerning the method of payment. We have a narrow professional interest which has, unhappily, coincided with a ministerial interest—the saving of £4 million, though I think it eventually comes down to £2 million and perhaps the noble Baroness will advise me on that. It will result in a proposal which will instantly serve significantly to inhibit the setting up of a new pharmacy business and to stop in their professional tracks those medium sized companies which are dynamic, expanding and entrepreneurial. I use those words because they appear to relate to the philosophy that the present Government preach, though in this case they are not practising it at all.
It is proposed that the family practitioner sub-committees should meet to consider whether any new dispensing contract is necessary, or desirable, in a locality. If not, any pharmacist will be virtually precluded from practising his chosen profession, private dispensing being so very small—unless the whole purpose of this is to try to make private dispensing much larger than it is and make it more difficult for people to obtain their prescriptions because of the distance they may have to travel. I find that not only an absolute contradiction of what I understood to be Government policy, but extraordinary in every way.
I wish to ask the Minister a number of questions. Why has the DHSS now decided to cut back on the number of pharmacies? I believe it will cause a great deal of hardship to people in small towns and large villages who have a considerable distance to travel to obtain the prescriptions which their doctors believe they need. I well remember that my experience in 1976 was exactly the opposite. The Pharmaceutical Society and the PSNC were concerned, as I was, that there were too many closures and the number of pharmacies was steadily declining. This was causing problems in the smaller towns and villages. I was particularly anxious to put no obstacle in the way of patients being able to get to a pharmacy as conveniently as they could. Therefore, the first action I took was to change the system of payments to help the small pharmacies. This meant that those small pharmacies which dealt with only a few thousand prescriptions would get more per prescription than those very large pharmacies which were able to survive and did a very much larger business with toiletries and all the rest. This immediately had an effect on the rundown on the number of pharmacies. It saved a number of small pharmacies which would otherwise had gone bankrupt.
I had a letter from my own dispensing chemist just two days ago. Mr. Michael Franks, of 3A Swains Lane, Highgate, wrote to me:
"I feel I must bring to your attention the plight of the smaller dispensing chemist. When you were in power you devised a 'Robin Hood' scheme for the benefit of the smaller contractor. The Government and the PSNC have now proposed a new method of payment, whereby the smaller contractor will be penalised for the benefit of the larger contractors, plus a saving of £2 million for the Government.
352
"The problem for the smaller contractor is that one doesn't have time to get involved in 'Pharmacy Politics' "—
I do not blame them—
"and so we have no members on the PSNC".
In his view, therefore, the PSNC very largely represents those who are larger than the small pharmacists about whom we are talking. He goes on to say:
"very few of the LPC delegates who will be voting on the new contract on June 23rd are small contractors".
I ask the Minister why the DHSS has now decided to cut back on the number of pharmacists. Why has the DHSS decided that it will penalise small pharmacists by changing the method of payment to their disadvantage? The next question is: how much will be saved by this dirty little deal? What is the reason for this new scheme? Why have they dreamed it up? If they were dreaming it up, why did they dream it up so quietly? Why did they not at that stage enable people to know what was taking place?
Further, is it true that £2 million of the £4 million saved will be handed back? Who will get the £2 million? Will it go to the richer boys or will it go to the small people with whom I am most concerned? The next question is: is it not likely that this will lead to an increase in costs and therefore to the disadvantage of the patients, with whom we are all concerned? I ask the question as to how many jobs will be lost. Quite clearly, it will be a significant number. I think it is estimated that as a result of this new agreement about 1,000 pharmacies will be abolished. How many jobs will be lost? It will not only be the pharmacists, it will also be those who are operating the pharmacy stores, selling other goods there. I want to know roughly how many.
The public will have fewer sources of effective home medicine and of informed advice on health matters in areas away from doctors' surgeries. There is a greater, not a lesser, need for these services. I feel very strongly that the pharmacist has a very important role in the National Health Service in being able to give advice, especially now that the limited list iniquity has been introduced.
The owners of the assistants in any independent or multiple pharmacy close to a doctor's surgery are less likely to worry too much about service, let alone service with a smile, when there is no fear of competition, which this proposal will ensure. I can quite understand that large pharmacies will be very happy to get rid of any competition. However, not only do I personally think this is wrong but, as the noble Lord, Lord Harris, says, it seems absolutely to fly in the face of the philosophy of this Government. If one must have permission to open a pharmacy, why not insist that permission is needed to open a bakery, a greengrocery or a butcher's shop, and then we might as well be living in Eastern Europe, not in the supposedly democratic West. I just find it so extraordinary.
The DHSS says that it wants, quite rightly, to encourage the role of the retail pharmacist as a health care profession, assisting the consumer to select particular medicines and to reduce the burden of the NHS to the taxpayer. I am all for that. This proposal will lead to a diminution in the number of locations

353
and therefore less encouragement to self-medication. It will negate the DHSS's intent and result in additional cost to the Government for primary health care.
My final question is a long one. I want to know who has been consulted in the hatching up of this deal, which will be put to the vote on 23rd June. As soon as I saw that the noble Lord was raising this Unstarred Question I started to make inquiries. I should like the noble Baroness to say whether the Pharmaceutical Society has been consulted. One should have thought that the society most closely involved, except for the PSNC, would have been consulted. I believe that I can give the answer to that one, and so the noble Baroness need not even trouble to reply; it was not consulted.
What about other organisations? What about the British Medical Association? What about the ABPI? When talking to a number of pharmaceutical manufacturers I told them something they did not know; namely, that they were to have fewer outlets for their products. Damn it all! The Government have done enough damage to the pharmaceutical industry with their limited list. I do not see why they should now pick on the industry again.
What kind of consumer interests were involved in the discussions? Was the Patients Association brought in? After all, it is patients about whom we are mainly concerned. What about the National Association of Health Authorities? Was it involved? What about the family practitioner committees? They must have been involved in some way, because they are to be given a very special role of deciding whether or not a pharmacist should be allowed to practise in a certain place.
What about bodies such as Age Concern, or MIND, the National Association for Mental Health? What about the National Association of Community Health Councils? Even if the noble Baroness does not touch on every single one of these, I hope she will say what has been the process of consultation and what has been the effect. If she or her noble friend insists on going ahead with this proposal, they should then put it out to consultation.
We have already had one debate this evening about the Government's failure to give adequate time for consultation. Unless the noble Baroness is able to reassure me, I shall be left with the feeling that there has not been any consultation at all. Of course, I always recognise the possibility of my being wrong and it being so proven by the noble Baroness. What I have suggested is that if there has not been consultation there should now be a period of several months for consultation. If there has been consultation, then a document should be published giving the views of the organisations that have been consulted.
9.6 p.m.
Baroness Trumpington: My Lords, I see on my brief that I am meant to thank the noble Lord, Lord Harris of High Cross, for bringing this debate before your Lordships. Of course, I do so unreservedly. Let me make the position quite plain. Some noble Lords detect an inconsistency between our proposals for the pharmacists' contracts and our policy elsewhere on deregulation.
354
I welcome the words of the noble Countess, Lady Mar. However, I must point out, as I do to both the other noble Lords, that in fact we are not proposing to prevent any member of any retail trade from developing that retail trade as he or she sees fit. We all know that a pharmacy transacts much other retail business, as well as dispensing prescriptions. In considering whether to establish a pharmacy in any particular location the owner will of course consider all the opportunities available and will exercise his commercial judgment. That is how it should be and that is how it will remain. The Government know—
Lord Ennals: My Lords, I am most grateful to the noble Baroness. Does she mean therefore that a pharmacist cannot practise his profession as a pharmacist and deal with NHS prescriptions but that he can sell lotions, make-up and such? Have the Government decided that only a certain number of places will be allowed to prescribe NHS prescriptions? Many of them depend on this.
Baroness Trumpington: My Lords. I would ask the noble Lord to wait for me to make my speech.
Lord Ennals: So sorry, my Lords.
Baroness Trumpington: My Lords, the Government do not intend to play big brother with regard to private enterprises. Contributors to this debate have suggested that the market could safely be left to take care of such matters as the number of NHS pharmacies, and no regulation of any kind was necessary. The noble Lord, Lord Harris, knows that I am sympathetic to that point of view myself. But a free market in the true sense is not operating here, and so the comparison is not valid.
The patient, as consumer of NHS pharmaceutical services, does not purchase those services at the market price. He pays either nothing at all or the standard prescription charge. Ordinary market forces are conspicuous by their absence, and price does not therefore operate to produce the volume of provision the market can bear. The public as taxpayers are left to underwrite whatever cost is incurred by however many pharmacies choose to set up in business.
As noble Lords will know, this Government are committed to ensuring that the money the taxpayer provides for NHS services is used to best advantage. This is a consideration we cannot ignore. What cannot be right is that a commercial judgment should provide free, unfettered access to public funds. We cannot agree that every pharmacy should automatically be given a National Health Service contract quite regardless of any service need. What we are proposing is that the decision to admit a new pharmacy to the National Health Service contract should have regard to whether the local population, the patients, need the additional service which would be provided.
When the occasion of this debate provided me with the opportunity to learn more about the provision of pharmaceutical services, I was astonished to discover that, except in rural areas, any owner of a pharmacy could obtain a National Health Service contract on demand provided only that the premises were registered by the Pharamaceutical Society and that a

355
registered pharmacist was in charge. This has clearly produced some situations where the need is over-supplied. In one part of London there are 21 pharmacies within one square mile. In another London FPC area there is, on average, one pharmacy every 200 yards.
Because we have a cost-plus contract with pharmacies, each additional pharmacy adds to the burden the taxpayer must bear. Under the present arrangements, that burden is £370 million in payments to pharmacies. In circumstances where there is already a sufficient, or even excessive, number of pharmacies, awarding additional contracts to yet more pharmacies would add nothing to the NHS service provided. This is a wasteful use of public money. A remedy for this situation was one of our objectives in renegotiating the contract with the PSNC. Noble Lords, especially the noble Lord, Lord Ennals, will know well the composition of the PSNC. It has been long established and long recognised as the body representative of all pharmacies in contract with the NHS. Its constitution provides for all pharmacy groups to be represented—big contractors and small contractors.
The plan agreed with the PSNC—and we were informed the PSNC had approved it unanimously—is that any application to be admitted to the NHS list should be considered in the light of the needs of the local people. That decision should be a local one. Family Practitioner Committees, who are aware of local needs, are charged with the responsibility of planning local primary care services, and decisions on the numbers of pharmacies supplying NHS needs would fall squarely within that remit. We shall ensure that they exercise those judgments flexibly.
Local judgments will be made in the light of national guidelines and local plans for the development of services. Those guidelines have not yet been drafted. When we do draft them we shall of course take into account the observations made in tonight's debate. We have already undertaken to consult fully with the PSNC, the PSGB and FPC representatives. I can, however, give an assurance to this House that the guidelines will make it plain that we expect FPCs to respond flexibly to local circumstances. The guidelines will be consumer based and the pattern of pharmaceutical services must reflect changing patterns of patient need. Matters such as relocation of premises must be seen in this context. We are not at all interested in producing a rigid pattern of service.
The odd situations I have already described demonstrate well that the totally free access to the NHS contract as it stands is not producing a match between supply and demand. We are proposing that a better match between supply and demand should be achieved by other means. The position of small pharmacies has attracted much comment. We are interested in small pharmacies for a number of reasons. As in any other line of business, small pharmacies have high unit costs. It is therefore eminently sensible to discourage their excessive participation in the NHS contract.
356
The present remuneration structure positively encourages their establishment. For the future we shall not cover the high costs of pharmacies with low NHS turnover. In consequence, some owners may decide that they wish to relinquish the NHS contract. Note that I say, "relinquish the NHS contract"; I do not say, "close down the business". That decision is entirely the contractor's own. It must be remembered that some businesses which are small in terms of NHS pharmacy business may be big, diverse and profitable operations, and they may choose to continue. We are taking no steps to prevent them. On the other hand, we understand that there are some contractors "locked in" to unprofitable businesses which are difficult to sell and who will welcome an opportunity to leave. We think the proposal to make payments to anyone who wishes to relinquish the contract is only reasonable and would be particularly advantageous to people in this position. There is no compulsion. Contractors will find themselves in many different commercial and personal circumstances and they will make their own decisions accordingly.
There are only about 1,400 small pharmacies anyway. This turns recent reports of thousands of pharmacies disappearing into a gross exaggeration. Of that 1,400, some are essential small pharmacies already; others may well qualify as essential small pharmacies; others may amalgamate. That is their business. I cannot possibly accept figures of 2,000 or 3,000 closures.
We recognise the need to support essential small pharmacies in, for example, rural areas to ensure the continuity of service to patients there. Our proposals on this score are attracting much less attention. An essential small pharmacy will be much better off. It will receive a guaranteed minimum income to ensure its continuing viability. I do not notice many complaints about interference in the free market in this instance.
Although contributions to this debate have concentrated on control of entry, that is only one element of a large package. I should like briefly to touch on one or two other points. I have already mentioned the improved support for essential small pharmacies. The Government remain committed to ensuring that the best use is made of pharmacists' skills to the greater benefit of the public. The Nuffield inquiry into pharmacy will report at the end of this year and that will offer advice on how the community pharmacy's role might be enhanced or extended. We shall enter into immediate discussions with the profession when that report is received. This new contract will provide some funds to help implement any such extension or enhancement of the pharmacist's role, and provides a solid foundation for that future role.
The noble Lord, Lord Ennals, asked me how much would be saved. The answer is £4 million per annum, half of which will be returned to the profession to finance any extension of the pharmacist's role, agreed after discussion of the Nuffield report. With regard to the fact that 70 per cent. of an average pharmacist's income comes from the NHS, I accept that that is the average position. Although these figures disguise wide variations, for some the percentage is close to 100 per cent., but for others it can be as low as 3 per cent.

357
Nevertheless, I cannot accept that the available National Health Service work should be spread across an unnecessarily large number of pharmacies to the detriment of the public purse.
The noble Lord, Lord Harris of High Cross, was worried about the secrecy of negotiations and the lack of consultation. In fact, both noble Lords raised these questions. I think that it is usual for negotiations of this kind to be kept confidential to the negotiating parties until firm proposals have been reached. Community pharmacists have been represented in the negotiations by the PSNC, which includes among its membership representatives of the major pharmaceutical organisations. The representatives of these organisations therefore had the opportunity to comment during the course of the negotiations when the proposals, which now form part of the Government's final offer, were being discussed. The decision to discuss the final offer and to seek acceptance of it at the LPC conference on 23rd June was made by the PSNC. The Government do not wish to steamroller the profession into accepting the proposals and have set no deadline for receiving a response.
I find the analogy of the noble Lord, Lord Harris of High Cross, with the butcher quite extraordinary. There is no similarity between NHS contracts and butchers buying meat. The noble Lord, Lord Harris, asked whether the same effects could have been achieved with financial incentives and disincentives. In the course of long negotiations a wide range of possibilities have been discussed, including relying on financial incentives alone. The final package which has emerged represents the combination of measures which the parties agree represent the best and most feasible way forward. I can assure the noble Lord that
358
the ferocious final penalties needed to prevent unnecessary contracts would produce a great many closures.
Another question asked by the noble Lord concerned proposals to remove or restrict opportunities for pharmacists to pursue their profession. It would be illogical to argue that just because someone has an appropriate qualification he is entitled to be supported in that profession at public expense. Nor is community pharmacy the only branch of the profession. There is also hospital pharmacy, industry, the private sector and education.
How many pharmacies, asked the noble Lord, Lord Ennals, will be closed as a result of the new contract? No pharmacies will be forced to relinquish the NHS contract, and there are no target figures for closures. I could go on, but I think it would be counter-productive.
I contend that these proposals are eminently sensible. As always, the needs of the patients will be paramount. Small pharmacies will be supported where they are essential. New pharmacies will have an NHS contract where there is a need for them. We expect any reduction in pharmacy numbers to contribute to a reduction in the present oversupply from an NHS point of view. Patient services will be maintained. The taxpayer will secure a more cost-effective provision of those services. What this all amounts to is that any prospective owner of a business may open wherever he chooses. If he wishes to have an NHS contract he must consider a little more carefully the NHS needs.
House adjourned at twenty-one minutes past nine o'clock.

  CYPRUS: CONSTITUTIONAL DEVELOPMENTS
  CYPRUS: CONSTITUTIONAL DEVELOPMENTS
  DISCRIMINATION AGAINST WOMEN: UN CONVENTION
  DISCRIMINATION AGAINST WOMEN: UN CONVENTION