Sitting of 25 June 1985

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

PRIVATE BUSINESS
ASSOCIATED BRITISH PORTS (No. 2) BILL
Lords amendments agreed to.
NOTTINGHAMSHIRE COUNTY COUNCIL (SUPERANNUATION) BILL [Lords]
Read the Third time, and passed, without amendment.
LINCOLN CITY COUNCIL BILL
ROYAL HOLLOWAY AND BEDFORD NEW COLLEGE BILL [Lords]
Considered; to be read the Third time.

Oral Answers to Questions
  EDUCATION AND SCIENCE

    Teachers (Dispute)
    Sir John Farrasked the Secretary of State for Education and Science if he will make a statement on the current teachers' pay dispute.
    Sir William van Straubenzeeasked the Secretary of State for Education and Science whether he will make a statement on the current teachers' pay dispute.
    Mr. Adleyasked the Secretary of State for Education and Science if he will make a statement on the current position over the teachers' strike.
    Mr. Barnettasked the Secretary of State for Education and Science if he will make a statement about the current teachers' pay dispute.
    Mr. Proctorasked the Secretary of State for Education and Science if he will make a statement on the current situation with regard to the teachers' dispute.
    The Secretary of State for Education and Science (Sir Keith Joseph)On 23 May the management panel of the Burnham committee increased its 1985 pay offer to 5 per cent. The teachers' panel rejected this, refused to go to arbitration and declined to address my 21 May initiative. That had carried forward my offer of July last year to consider carefully any restructuring package on which the employers and the teachers might agree. On 21 May I made plain the Government's readiness to make additional resources available for teachers' pay next year
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    if agreement in principle could be reached by October on a reform of the current pay system designed to meet the Government's educational objectives and to provide improved promotion opportunities for good teachers. The Government are also seeking a clarification of teachers' duties and are prepared to consider alternative arrangements and funding for the midday supervision of pupils. This initiative requires a quick and constructive response if the prospect of a realistic and lasting settlement is not to be lost for yet another year.
    Sir John Farr: I congratulate my right hon. Friend on his efforts to raise standards in the teaching profession, parts of which seem determined to be dragged screaming and reluctantly into the next century. Does he believe that there are any prospects of the new talks in Burnham scheduled for 3 July taking place with any value al all? Does he feel that there is a risk of the NUT once again withdrawing from the discussions?
    Sir Keith Joseph: I am grateful to my hon. Friend for his comments. I acknowledge that most teachers are effective and hard working in dealing with an intensely difficult task. I cannot predict what will happen when Burnham meets again, but I hope that the interests of the children and teachers will prevail so that attention can be given to the bargain that I have invited the teachers and their employers to negotiate with a view, if the outcome is affordable and good for the children's education, to extra funding next year through the Government.
    Sir William van Straubenzee: Following my right hon. Friend's helpful comment about the work of the vast majority of teachers—and observing that that, in my case, with all-party colleagues, is refreshed by recent evidence in primary schools throughout the country — does he agree that for the cause that they represent to be successfully prosecuted, it must have public support? Does he further agree that the recent industrial action has, sadly, much eroded that support among the people whom they must convince and who, in the end, will have to foot the bill?
    Sir Keith Joseph: I agree that the action chosen by the teachers to damage the education of children must be damaging to their own claim to professionalism in the eyes of the majority of the public.
    Mr. Adley: Will my right hon. Friend confirm that a long-term settlement is the only sensible basis for a solution to the teachers' problem, and that the war of attrition being carried out by the teachers against the children in our schools is deplorable and no more than blackboard blackmail?
    Sir Keith Joseph: I think that I am entitled to recognise that most, if not all, of the initiatives taken by the Government outside pay have been such as to be welcomed by most teachers in the interests of good and better schooling in this country. Therefore, I agree that a long-term approach—coupled with appraisal, better promotion prospects and better career development, all of which are undertakings by the Government—is in the interests of the teachers and of the whole country.
    Mr. Barnett: Has the right hon. Gentleman's attention been drawn to a letter in The Times last Friday from a Peterborough headmaster illustrating the appalling damage that the right hon. Gentleman's policy is causing to education and to the teaching profession generally? Did

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    the right hon. Gentleman note particularly the last paragraph of that letter, in which the headmaster made it clear:
    "Our leaders are rich enough to be detached about money and too foolish to see where their daily slander leads"?
    Sir Keith Joseph: Without impugning the sincerity of the writer of that letter, I think we can all agree that the bargain, which sooner or later will be struck, must be concerned with the interests of the children and of schooling in this country. I am sure that virtually every teacher would accept that.
    Mr. Proctor: Did my right hon. Friend read the report in the News of the World magazine at the weekend describing the practice adopted by our hon. Friend the Minister of State, Northern Ireland Office, when he was a distinguished headmaster, of providing space in school reports for parents to comment on teachers? Does my right hon. Friend think that that practice should be spread throughout education? Will he also say something about the mechanism to be adopted for appraisal so that good teachers can be paid more?
    Sir Keith Joseph: I normally take very seriously the views of my hon. Friend the Minister of State, Northern Ireland Office, but I have in mind that the method of appraisal should be broadly worked out by the teachers themselves and their employers. Informal appraisal is already carried out on a wide scale. I merely seek to make it formal, and I have put aside some taxpayers' money for pilot schemes to try out different methods in the next few years as soon as the teachers' unions allow them to take place.
    Mr. Fisher: Will the Secretary of State give an assurance to the House and to teachers throughout the country that he will not use his veto if members of the Burnham committee wish to recommend an improved offer, as I have no doubt they would like to do, and that they should and will do so if standards of education in this country are to be improved?
    Sir Keith Joseph: No Minister should inhibit himself from using the power of veto if it seems to him and to the Government to be in the interests of the public. The hon. Gentleman will be aware that it stems from the time of a Labour Government.
    Mr. Campbell-Savours: How is it possible for a police constable in Workington to be earning £9,234 a year, which is more than a head of department in many comprehensive schools in Cumbria? How is it possible for a 26-year-old constable on the beat in London to be earning more money than a deputy head in many comprehensive schools in Cumbria? How is it possible for the lowest grade of policeman to be earning more money annually than highly educated and professional people in the teaching profession? Is there not something wrong with the Government's system of priorities?
    Sir Keith Joseph: The Government are offering the teaching profession the prospect of a changed salary structure in return for improvements in effectiveness, the use of an expanded in-service training network and increased promotion prospects — [HON. MEMBERS: "Why?"] Because at the time when the police pay structure was sharply altered, and as a result of the behaviour of the Labour Government, there was a great shortage of policemen. Pay arrangements must respond to recruiting,
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    retention, motivation and quality factors, as policemen's pay then did. Secondly, the conditions and performance of policemen—for example, their lack of the right to strike—must be taken into account. I doubt whether most teachers would welcome the conditions of work of policemen.
    Mr. Freud: Will the right hon. Gentleman define what he means by "affordable," and will his definition take into consideration the cost to the nation of not creating a decently-paid and highly motivated teacher force?
    Sir Keith Joseph: I also take into account the cost to the children and to the nation of present standards, which, as I have explained time and again, are not entirely the responsibility of teachers. The salary scale for teachers must take account of their willingness to improve their average effectiveness, their acceptance of improved promotion prospects and their use of an expanded network of in-service training—all of which is either on offer or has already been announced by the Government.
    Mr. Flannery: Will the right hon. Gentleman admit that children's education has been disrupted because of the Government's intransigence in paying such miserable wages to the teachers? Does he accept that the Burnham committee, due to the recent elections, has changed in character and that at its next meeting the authorities panel will be supporting the teachers? Does the right hon. Gentleman realise that he must put some new money on the table, because tying it to all the other things in the package is holding things up? Is he further aware that at packed meetings throughout the country—I attended one last night — the teachers are planning to carry this dispute right up to the end of the year?
    Sir Keith Joseph: But it was the teachers, led by the NUT, who decided to disrupt the children's education.
    Mr. Greenway: Does my right hon. Friend agree that the present strikes are so rotting the behaviour and atmosphere in schools that they will make the lives of teachers much more difficult when normality is resumed?
    Sir Keith Joseph: I fear that the teachers are setting a very bad example to pupils.
    Mr. Radice: Why has the Secretary of State neither replied to nor aknowledged my letter to him of 19 June, in which I asked him for a meeting to discuss the teachers' dispute? Why has he not more enthusiastically welcomed the recall of the Burnham negotiating committee? I remind the right hon. Gentleman that he is still Secretary of State for Education and Science and not yet the Minister without Portfolio, which he is tipped to become. Why will he not for once take some positive, constructive action to end this highly damaging dispute?
    Sir Keith Joseph: I am sorry if I have not answered the hon. Gentleman's letter. I shall do so immediately. I am glad to welcome the recall of the Burnham committee. The hon. Gentleman would have been more his honest self if he had phrased the latter part of his question by asking me why I was not producing more taxpayers' money. That is what he has in mind. The Government are willing to produce more taxpayers' money in return for an affordable bargain from the teachers.

    Mowden Hall
    Mr. Fallonasked the Secretary of State for Education and Science whether he will transfer more of his Department's work to Mowden Hall.
    Sir Keith Joseph: The Department is committed to transferring areas of its work to Darlington where this is justified in terms of operational efficiency and cost, taking account also of the interests of London staff.
    Mr. Fallon: Will my right hon. Friend join me in paying tribute to the Darlington staff, whose work may not be glamorous but is important to the fulfilment of his Department's functions? Can he reassure me that he will continue to transfer work to Mowden Hall as and when necessary?
    Sir Keith Joseph: Yes, gladly, and with genuine warmth, I pay tribute to the staff at Darlington, which I and my two colleagues have visited with pleasure.

    Teacher Training
    Mr. Freemanasked the Secretary of State for Education and Science if he will make a statement on the current number of students entering training for teaching.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Bob Dunn): The number of entrants to initial teacher training in the academic year 1984–85 was 16,707. Target intakes for the academic year 1985–86 are 17,652.
    Mr. Freeman: Does my hon. Friend agree that one consequence of this damaging and prolonged dispute is the reduction in the number and quality of mathematics and science teachers coming into and remaining in the profession, since many have taken early retirement to take up jobs in industry?
    Mr. Dunn: We are actively considering whether other intitiatives might be pursued by the Department, in concert with others, to improve the recruitment of teachers in shortage areas. We have recently received advice on this subject from the Advisory Committee on the Supply and Education of Teachers, and the Secretary of State's comments will be made known in due course.
    Mr. Freud: Does the Minister accept that there is considerable unease and anxiety among those involved in initial teacher training about the roles of the institutions and the funding available? Is it not time that he made a clear policy statement on this matter?
    Mr. Dunn: As the hon. Gentleman knows, the national and Wales advisory bodies have been invited to advise on the allocation of teacher training intakes to institutions in the public sector. The University Grants Committee is considering the distribution of intakes among universities. Its comments, and the response to them, will be made known in due course.

    Teachers (Pay and Performance)
    Mr. Macleanasked the Secretary of State for Education and Science what discussions he has had with teachers' unions other than the National Union of Teachers on a package of proposals for restructuring pay and performance.
    Sir Keith Joseph: Since last October I have had discussions touching upon these matters with the National
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    Association of Head Teachers, the National Association of Schoolmasters/Union of Women Teachers, the Professional Association of Teachers and the Secondary Heads Association.
    Mr. Maclean: Is my right hon. Friend aware that his reply will be greatly welcomed by the hundreds of dedicated teachers in my constituency who are not members of the NUT and who abhor that union's wrecking tactics? Does he agree—he would have the support of the House if he did—that we should push forward with negotiations with unions other than the NUT on appraisals and restructuring, and not allow the unrepresentative majority of the NUT on the Burnham committee to block all sensible negotiations?
    Sir Keith Joseph: The statutory framework limits negotiations to Burnham. I am under pressure from many to seek legislative authority to change Burnham, and I remain ready to be convinced that that would be a useful step. However, that is the subject of a later question.
    Mr. Ashley: Is the right hon. Gentleman aware that any Minister who has to rely upon his veto or the veto of his officials to overcome the Burnham committee's recommendations will fight a losing battle? It is like trying to stop the tide. The role of King Canute does not become the right hon. Gentleman. He should accept the majority wish of the Burnham committee, if and when that recommendation is made.
    Sir Keith Joseph: It was King Canute's courtiers, not the wise King Canute, with whom I think the hon. Gentleman is comparing me. How can the taxpayer be protected when the Burnham committee makes decisions about the spending of taxpayers' and ratepayers' money, unless someone has some power to set a limit, if necessary by veto, on what is agreed by those who do not pay for the consequences?
    Mr. Key: Is my right hon. Friend absolutely determined to stick to the October deadline for agreement if there are to be additional resources next year? Many people think that, even with the best will in the world, that is not an attainable target. Furthermore, they believe that it plays into the hands of the NUT, which, by its unrepresentative and militant stand, is undermining the good work done by other teaching unions, such as the Assistant Masters and Mistresses Association.
    Sir Keith Joseph: The Government's choice of October is not an arbitrary one. It is the date before which decisions must be made if extra money is to be injected into rate support grant.
    Mr. Skinner: Why does the Secretary of State not do something a little ingenious for a change? Why does he not go to the Treasury, when the Chancellor has gone missing, call at the Bank of England, when the Governor is on the golf course or on a foreign trip, get £100 million of the money that is needed to resolve the teachers' dispute, and say, "I am just doing a Johnson Matthey"?
    Sir Keith Joseph: The hon. Gentleman is showing the degree of his ignorance if he thinks that there is £100 million lying about in either of those places.
    Dame Jill Knight: What does my right hon. Friend think is the objective of calling out on strike teachers in constituencies which dare to return Conservative Members? Is the idea that we should go to my right hon.

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    Friend to make a special pleading? If so, how do we avoid giving the lesson to children that bad behaviour, threatening and bullying win through?
    Sir Keith Joseph: I agree with my hon. Friend that the example that is being set is deplorable. To that must be added the ignoble and thoroughly deplorable practice of taking it out on children and their future, merely because, by chance, a particular person has been elected to represent the constituency.
    Mr. Radice: How much money is the right hon. Gentleman prepared to put behind the package? I hope that it is more than the 2 per cent. which is rumoured in the press.
    Sir Keith Joseph: I am glad to say to the House and to those outside who are concerned about this matter that it would be wise not to take too much account of what they read in the press.
    Mr. Wrigglesworth: Is the Secretary of State aware that, if he had been able to pursue a more consistent package in the earlier stage of the negotiations, the response that he received from the organisations to which he referred when replying to this question might have provided him with an opportunity to resolve this damaging industrial dispute? Will he pursue a package, along the lines of that discussed with those associations, which will not only include a no strike deal but will put more money on the table and provide a long-term programme?
    Sir Keith Joseph: The essence of the proposal, which was confirmed in my letter of 21 May, has been on offer since July last year—11 months.
    Mr. Patrick Thompson: Will my right hon. Friend bear in mind that the majority of teachers in my constituency and throughout Britain generally do not support the disgraceful industrial action that is doing so much damage and marring the education of our children? Will he therefore urgently examine ways of getting the talks on performance and pay under way, even if that means upsetting the politically motivated leaders of the NUT?
    Sir Keith Joseph: I am sure that my hon. Friend is correct in saying that many teachers and some leaders of teachers' unions welcome the main features of the bargain proposed by the Government.

    University Lecturers
    Mr. Wareingasked the Secretary of State for Education and Science what recent representations he has received about salary scales for university lecturers.
    Sir Keith Joseph: The Department has received about 1,800 letters in the past two months on the pay of university academic and related staff.
    Mr. Wareing: How does the Secretary of State justify the 20 per cent. cut in real terms in the pay of university lecturers since the Government came into office in 1979? Is that a sign of the Government's feelings about the true worth of those who are responsible for helping our young people to be properly trained? Is he aware of the burden that that places upon university lecturers at a time when the Government are cutting university finance by 2 per cent. per year? When will the Government see sense?
    sir Keith Joseph: The figures and judgment produced by the hon. Gentleman are the result of a selective choice of dates. I understand that university teachers' pay has kept pace with the cost of living.
    Mr. Colvin: Has my right hon. Friend seen last week's Audit Commission report, which calculated that at least 75,000 extra students could be taught, in view of the present small classes? As well as agreeing new salary scales for college lecturers, should he not also find better ways to employ them more fully?
    Sir Keith Joseph: My hon. Friend focuses upon something slightly different—the non-advanced level of further education upon which the Audit Commission has produced a significant report. With regard to universities, polytechnics and colleges, I am pleased to tell my hon. Friend and the House that the student-staff ratio in polytechnics has improved a great deal. It is nearer to what the Government judge to be the proper level for a student-staff ratio.
    Mr. Pavitt: What representations has the Secretary of State received about the glaring injustice in the remuneration of university lecturers in medical schools when compared with similar employees in the NHS? Is it not about time that some comparability was achieved?
    Sir Keith Joseph: Yes, Mr. Speaker. I am aware of the problem and am, of course, waiting to see what the relevant authorities will recommend. Universities must live within their budget, which comes mainly from the public sector, and decide on their own priorities.
    Mr. Rhodes James: Is my right hon. Friend aware that the Audit Commission gave praise as well as blame? Would it not be nice if occasionally some praise were given to those who work in higher education?
    Sir Keith Joseph: Yes, Mr. Speaker. I do that most gladly. I seem to be constantly praising — the latest occasion was in front of the Select Committee this morning — the outstanding reputation that our higher education system has across the world.
    Mr. Beith: Is the Secretary of State convinced that the present salary levels, other than those in the clinical sector, are sufficient to attract people of the highest ability into university teaching in those subjects about which he is most worried?
    Sir Keith Joseph: I hope that I am worried about all subjects. The Green Paper on higher education recognises that the essentially national system of pay is not necessarily the ideal way to attract the highest talents, and has invited comments upon possible alternatives.
    Mr. Nicholas Winterton: Does my right hon. Friend accept the gist of what I have put in early-day motion 805, relating to academics in higher education in the medical sector? Does he accept that the statement by the hon. Member for Brent, South (Mr. Pavitt) is correct, and that a proper comparison should be made between those in the Health Service who administer health care and those who teach in the universities, and that their salaries should be comparable? It is no good awaiting reports. My right hon. Friend should act now to ensure that that is the case.
    Sir Keith Joseph: I understand the essence of what my hon. Friend says, but there is a body called the clinical academic staff salaries committee which is considering

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    how to reflect the salary arrangements made for doctors and dentists in the NHS in those made for clinical academic staff. I must await its advice and the reaction of the universities.
    Mr. Andrew F. Bennett: Instead of giving praise, will the Secretary of State find a little extra money for those who work in universities? Does he accept that there is not just a problem with the clinical staff and those who work in the NHS, but that there is also an increasing problem in science and technology, where there appears to be a growing brain drain from this country to the United States and Canada?
    Sir Keith Joseph: On the last part of the hon. Gentleman's question, I accept that if evidence accumulates of a net brain drain, as opposed to an exchange of brains, the position is worrying. That is why I spoke only a week ago of the importance that I attach to the ABRC's recommendations for science. However, I warn the hon. Gentleman that, because he is always getting up and undertaking to spend more public money, the cumulative total will completely discredit his party.

    Universities (Freedom of Speech)
    Mr. Sternasked the Secretary of State for Education and Science what discussions he has had with the Committee of Vice Chancellors and Principals about his proposals concerning freedom of speech in universities.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Peter Brooke): My right hon. Friend has discussed this issue with the committee and will be doing so again next month. Recent events continue to give concern.
    Mr. Stern: Will my hon. Friend press ahead with those discussions as soon as possible? Does he agree that recent events in some of our universities, involving militant action against free speech by tiny groups of student—stiny both in number and in mental stature—give rise to doubts, particularly in the case of the recent incident at Bristol university, about the fitness of such people to be in universities in the first place?
    Mr. Brooke: I readily concur that the correspondence columns of the Bristol university periodical are a rich quarry on the subject of freedom of speech in an academic environment — indeed, with a vigorous freedom of speech of their own that is worthy of Burke.
    Mr. Fatchett: Does the Under-Secretary of State recognise that tenured appointment for university staff has been an important element in safeguarding freedom of speech and thought in universities? Does he not realise that the Government's intention to threaten that tenure is causing great concern about the future of freedom of speech in universities?
    Mr. Brooke: My right hon. Friend the Secretary of State for Education and Science has made it absolutely clear in what he has said about tenure that freedom of speech and of thought—academic freedom in total—will not be threatened.

    Local Authority Expenditure
    Mr. Easthamasked the Secretary of State for Education and Science if he will make a statement about
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    Her Majesty's Inspectorate's report on "Local Authority Expenditure Policies on Education Provision in England—1984".
    Sir Keith Joseph: I authorised the report's publication and commend its measured analysis as essential reading to all concerned with the provision of education. I look forward to discussing its findings with the local authority associations.
    Mr. Eastham: This report is highly critical of the Government. It points out that the Government's demands for new technology to be introduced into the curriculum leads to many problems for local authorities. Their school buildings need to be refurbished. Many of them were built in the 1950s and 1960s and considerable sums of money need to be spent upon them. If I may give a constituency example, the city of Manchester needs £10 million to carry out this work. That does not take into account the normal maintenance that has to be carried out by local authorities.
    Sir Keith Joseph: I accept that there are shortcomings over the maintenance of school buildings that reach back over several Governments and very many years. However, the same report to which the hon. Gentleman has drawn attention criticises the management of resources by many local education authorities. They are spending money where it needs not to be spent, with the result that money is stinted where it ought to be spent.
    Mr. Boyes: This report is a gross indictment of the Government's disgraceful, disgusting and unacceptable treatment of the education system. Highly qualified and trained teachers are being denied the buildings and the resources that are needed to provide our children with the basic education that they require.
    Sir Keith Joseph: The hon. Gentleman is guilty of selective quotation. The maintenance of buildings is criticised in the report, but it criticises as more significant still the combined effects of bad management by many local education authorities of public resources and ineffective teaching by a considerable minority of teachers.
    Mr. Jim Callaghan: As a result of Her Majesty's Inspectorate's report on expenditure on schools, does the Secretary of State agree that crisis point has been reached in terms of school repairs? One shire county alone has a backlog of repairs amounting to £35 million. Is the Secretary of State aware that in my constituency, during the last year four schools have had to close because of lack of repairs and that one of them, Elm street, requires repairs amounting to £600,000? Will the Secretary of State help local authorities like mine to foot the bill for these repairs?
    Sir Keith Joseph: Without condoning the position on repairs, I ask the House to realise that the same report said that there was scope for redeployment of public money in many local education authorities. The report, which Opposition Members are using as a quarry to criticise the Government, was not published by them in their time.
    Mr. Radice: Is the right hon. Gentleman aware that in paragraph 14 of the report Her Majesty's Inspectorate—his own advisers — makes it clear that there is a link between resources and quality? Is he further aware that paragraph 89 points out that if we are to increase the level of achievement in our schools there must be more

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    resources? So why is he cutting back central Government money to local education authorities by 9 per cent. in real terms over the next three years?
    Sir Keith Joseph: The hon. Gentleman continually quotes that figure, without adding that that figure was specifically described as provisional. As the report says, adequate resourcing is not a sufficient condition for sound education, but, that said, I accept that there is an association between satisfactory levels of resourcing and the quality of the educational process. There is no conflict between that finding and other evidence that there is only a slight correlation between levels of attainment, as measured by public examinations, and levels of spending on education.

    Children (Lunchtime Supervision)
    Mr. Greenwayasked the Secretary of State for Education and Science if he will make a statement on the lunchtime supervision of children at schools.
    Sir Keith Joseph: I deeply regret the fact that members of the three largest teacher unions have, in pursuit of their pay claim, chosen to withhold their support from the head teacher in exercising his overall responsibility for the conduct of the school during the midday break. This has placed a great strain on the head teachers and I should like to express my respect for them and for their sense of duty towards the pupils—and to those who have helped them—in maintaining supervision over the past months. [HON. MEMBERS: "Humbug."] I am surprised that Opposition Members do not share that sense of respect. I have made public the Government's readiness to consider alternative arrangements and some additional funding for midday supervision in 1986–87 in return for a clearer definition of teachers' duties.
    Mr. Greenway: Is my right hon. Friend aware that I once supervised 1,500 school dinners every day? Therefore, I can well understand the agony recently expressed by head teachers over their problems with supervising school dinners, supervising schools, meeting parents during the lunch hour, supervising the neighbourhood of the school and so on. Is it not a terrible irony that after years of fighting for payment for lunchtime duty there has so far been no discussion by teaching unions of my right hon. Friend's offer of 21 May for payment for lunchtime duties?
    Sir Keith Joseph: I very much hope that discussions on that matter will start fairly soon.
    Mr. Madden: How many children will there be to supervise if the proposal in the Fowler review to scrap free school meals is implemented?
    Sir Keith Joseph: The Fowler review is in Green Paper form. There will still be a need for midday meal supervision, whatever happens on that account.

    Pupil Profile Pilot Schemes
    Mr. Evennettasked the Secretary of State for Education and Science if he will make a statement on the pupil profile pilot schemes.
    Mr. Dunn: Eight pilot schemes have been established in England and one in Wales. The schemes began in April this year and are expected to run for three years.
    Mr. Evennett: I am grateful to my hon. Friend for that answer and I am sure that on the Conservative side of the House we applaud the introduction of those schemes. Does he agree that such schemes will prove invaluable to employers, in that when an individual comes before an employer for a job he will have something concrete, not just an academic paper qualification, which will tell the employer something about the individual? This is a great step forward in getting more jobs for our young people.
    Mr. Dunn: There are many children who do not achieve academically but have other qualities that are of interest to a prospective employer and to the community at large. We believe that in time records of achievement will be of great use to all children, irrespective of their academic commitment and purpose.

    Degrees and Qualifications (Sale)
    Mr. Tom Coxasked the Secretary of State for Education and Science what action his Department is to seek to take to stop the sale of degrees and academic qualifications.
    Mr. Brooke: The Government believe that no solution is possible without legislation, but further proposals are being put to us, to which we are committed to giving serious consideration.
    Mr. Cox: That reply is most warmly welcomed. Is the hon. Gentleman aware of the widespread abuse in this country over the selling of bogus degrees and of the great harm that it does to the well-established colleges of education? Can he give an assurance that that legislation will come through in the next Session of Parliament?
    Mr. Brooke: I join the hon. Member in deploring the practice of selling degrees or other academic qualifications. At their request, I recently met representatives of the Association of Business Executives, who have undertaken to set out a proposal which they think might avoid some of the difficulties described. This will be examined and considered on its merits.

  PRIME MINISTER

    Engagements
    Q1.Mr. Forthasked the Prime Minister if she will list her official engagements for Tuesday 25 June.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.
    Mr. Forth: My right hon. Friend undoubtedly shares the horror and frustration felt throughout the country at the recent spate of bombings at airports and on aircraft. When she goes to Milan this week, will she add another British initiative in this matter by raising with other Heads of Governments and perhaps with Governments and flag carriers the possibility of a co-ordinated effort to counter such acts of terrorism and horror, particularly at airports?
    The Prime Minister: I agree with my hon. Friend. We all share the same horror at those desperate acts. I certainly will raise this at the European Council and I hope to discuss it with Vice-President Bush when he comes next week.
    Mr. Kinnock: Is the Prime Minister aware that I and my right hon. and hon. Friends wish warmly to congratulate the police on the remarkable detective work and the success that they have achieved against the Provisional IRA? We believe that the whole nation has cause to be grateful. Can the Prime Minister give us an assurance that all necessary resources will be provided in order to ensure that the police can fully and quickly undertake the painstaking search that they now have to undertake of hotels and boarding houses in all the resorts mentiond by Commander Crawshaw?
    The Prime Minister: I am grateful to the right hon. Gentleman. As he knows, my right hon. and learned Friend will be making a statement on this matter shortly. We all warmly congratulate the police on preventing a disaster which was calculated to maim and kill many innocent people. All possible resources will be devoted to the task of the necessary search.
    Q2.Mr. Greenwayasked the Prime Minister if she will list her official engagements for Tuesday 25 June.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Greenway: Does my right hon. Friend not agree that in a bad week, when terrorists have terrified the world, it is high time that everyone united in congratulating the police on their brilliant anti-terrorist operations? Is it not time that the GLC anti-police Bill was withdrawn and that the sour and obstructive attitude towards the police by many Members in the Labour party was brought to an end?
    The Prime Minister: I agree with my hon. Friend, and indeed I have already indicated that we warmly congratulate the police on their success. I agree with him about the GLC anti-police Bill.
    Mr. Winnick: Can the Prime Minister give any explanation at all why the Tory candidate in the current by-election goes about as if he has never heard of her? What possible explanation can there be for that?
    The Prime Minister: I am sure that we have a candidate who is concentrating on putting across positive, constructive policies—[Interruption.] Those policies are the policies of our party. The Labour party attempts to personalise politics because it has no constructive policies to put across.
    Q2.Mr. Dobsonasked the Prime Minister if she will list her official engagements for Tuesday 25 June.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Dobson: Does the Prime Minister recall her speech to the Welsh Conservative party conference in Swansea in 1980, when she said that Welsh people who wanted work would have to move to find it? Is that still her advice to the people who live in Brecon and Radnor? If it is, where does she suggest they go? Surely she cannot be suggesting her constituency of Finchley, where 3,000 people are on the dole.
    The Prime Minister: In that speech I said that movement was a part of finding a job—[Interruption.] That is also mentioned in the employment White Paper published many years ago.
    Dr. Blackburn: Does my right hon. Friend agree that the greatest blessing that a Government can give to the
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    sick, the unemployed, the disabled and those on fixed incomes is — [HON. MEMBERS: "To resign".] — lower inflation? Will my right hon. Friend confirm to the House and to the nation from the Dispatch Box that that remains the paramount policy of Her Majesty's Government?
    The Prime Minister: It is our policy to reduce inflation. Although at the moment it is higher than we would wish, it is lower than any level achieved by the Labour Government.
    Mr. Beith: Why is the Government's representative in the European Court of Human Rights at Strasbourg arguing so adamantly in favour of the power of a Labour Government to nationalise industries without adequate compensation? Does the Prime Minister really believe that the shares that she has sold to large numbers of the British public should be open to renationalisation at a knock-down price?
    The Prime Minister: The European Commission on Human Rights has pronounced on the case and the matter has now gone before the Court. As the hon. Gentleman is aware, we accept the Court's decisions, whatever they may be.
    Q2.Mr. Douglasasked the Prime Minister if she will list her official engagements for Tuesday 25 June
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Douglas: May I make an appeal to the Prime Minister's scientific mind? The expectation of an event occurring which is one divided by 10 to the power of 53 is small. Is that not exactly the position of the Scottish miners, because 413 men have been re-employed, but not one of the 203 men from Scotland has been re-employed? Are we therefore correct in assuming that human intervention is involved? Will the Prime Minister now instruct the National Coal Board to pay the same attention and give the same justice to Scottish miners as to miners in other areas, so that some at least of the 203 men who have been dismissed will be re-employed?
    The Prime Minister: I told the House what the Coal Board said when I replied last time. The hon. Gentleman is the first to know that the correct procedure for miners who were dismissed during the dispute is to appeal to an industrial tribunal. If that tribunal finds that any miner was unfairly dismissed it can order compensation and recommend reinstatement. That is the correct procedure.
    Mr. David Atkinson: Will my right hon. Friend use the opportunity of the forthcoming European summit to strike a blow on behalf of millions of small businesses throughout the Community by trying to amend the sixth directive on value added tax to increase the threshold to above £50,000 a year so that small businesses can get on with the job of making a profit and creating new jobs rather than being weighed down by the enormous bureaucracy in the EEC?
    The Prime Minister: I raised the subject of that directive at the previous meeting of the European Council. My right hon. Friend the Minister without Portfolio has also raised the matter. We shall continue to raise it. We believe that the level for VAT set in that directive is far too low and should be raised substantially.
    Mr. Freeson: Referring back to earlier barbarism and terrorism, will the Prime Minister tell us why British

    769
    intelligence services, for which she is responsible, have blocked the release of information on Klaus Barbie held by American State Departments and being sought by special investigators trying to combat Nazi cells in America, and failed to provide information in connection with the Klaus Barbie trial, which is still to take place in France?
    The Prime Minister: I have answered a question on that matter before. The answer has not changed. We try to release as many documents as we possibly can and to be as helpful as we possibly can, but there are sometimes reasons why documents cannot be released.
    Mr. Wigley: Is the Prime Minister aware that one of the issues that is emerging in Brecon and Radnor is the utter inability of the rate support grant formula to maintain an adequate level of services in areas of great sparsity of population? In view of the £50 million of help that she has given Scottish ratepayers and her promises to reform the rating system—[Interruption.]—when can the people of Brecon and Radnor expect some relief from their problems?
    The Prime Minister: As my hon. Friends are saying, it is unlikely to come from the hon. Gentleman. The Government have done as much as they can to persuade local authorities to constrain expenditure and, if need be, to cap the rates. In many cases, that has been highly successful. I look forward to receiving the hon. Gentleman's support when we bring forward proposals fundamentally to change the rating system.

    Billericay
    Q5.Mr Proctorasked the Prime Minister if she will pay an official visit to Billericay.
    The Prime Minister: I have at present no plans to do so.
    Mr. Proctor: My constituents will naturally be disappointed by that response. Is my right hon. Friend aware that my constituents wish to see control of the level of inflation, control of the level of public expenditure and a reduction in taxation? Can my right hon. Friend give pledges on those matters as well?
    The Prime Minister: As my hon. Friend is aware, it is the Government's policy to keep strict control of public expenditure. I agree with the Leader of the previous Labour Government, who said:
    "If you talk to people in the factories and in the clubs, they all want to pay less tax. They are more interested in that than the Government giving away money in other directions."

    Engagements
    Q6.Mrs. Peacockasked the Prime Minister if she will list her official engagements for Tuesday 25 June.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mrs. Peacock: Is my right hon. Friend aware that the recently published report of the Select Committee on Employment is the report of the Opposition Chairman, supported by Labour Members, and not supported by Conservative Members, as at no time during the giving of evidence did Mr. Scargill condemn the nature—
    Mr. Speaker: Order. This is a bad habit, because that matter is not the Prime Minister's responsibility.
    Q7.Mr. Wareingasked the Prime Minister if she will list her official engagements for Tuesday 25 June.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Wareing: As the Transport Bill is now in another place, would the Prime Minister care to inform this House of the name of just one country in the developed world where the deregulation of transport and the sort of regime that the Bill envisages exists?
    The Prime Minister: I do not know of any country that has had the system that we are trying to get rid of, under which subsidies have increased and passengers decreased.
    Mr. Colvin: Further to the earlier question from the hon. Member for Berwick-upon-Tweed (Mr. Beith), will my right hon. Friend take time today to remind the House that if it had not been for the Lib-Lab pact in 1977 the aircraft and shipbuilding industries would never have been nationalised in the first place?
    The Prime Minister: I thank my hon. Friend for putting his point so cogently.
    Q8.Mr. Chris Smithasked the Prime Minister if she will list her official engagements for Tuesday 25 June.
    The Prime Minister: I refer the hon Gentleman to the reply that I gave some moments ago.
    Mr. Smith: Will the Prime Minister tell the House whether her Government have now made up their mind whether the best recipe for the British economy lies in greater public spending or more cuts and tax cuts? Which side of the Cabinet is winning?
    The Prime Minister: The hon. Gentleman should be aware that the Government believe in the control of public expenditure, as do almost every Government in power, because they have to. Perhaps the hon. Gentleman will never have the experience of being in power, so e will never know that fundamental fact. Only if we control public expenditure and have the type of growth that we have had during the past few years can we cut tax. Had we kept the present amount of tax and the structure of income tax that existed under the Labour Government, the average family would be paying £260 more in tax than it is now.

Questions to Ministers
3.31 pm
Mr. Speaker: I wish to make a statement.
I have reflected on the point of order put to me after Prime Minister's questions last Thursday. The difficult task imposed on Mr. Speaker is to balance the diverse and urgent claims of hon. Members, both Back Bench and Front Bench, and of nearly a dozen parties in the House. In its wisdom, not for years but for centuries, the House has advised its Speaker not to give reasons for the exercise of his discretion. When Speakers have departed from that apparently cold discipline in answer to points of order, as I did on Thursday, they often find themselves on the spur of the moment stating what are not, and cannot be, rules, but must necessarily be instantaneous judgments. It has been and is the fervent hope of successive Speakers that the sum total of their decisions will be accepted as fair and reasonable by the House which elected them to the Office of Speaker.
Mr. Neil Kinnock: On a point of order, Mr. Speaker. May I thank you for offering us a characteristically wise reflection on the nature of your task, which we fully understand is not always easy?
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): Further to that point of order, Mr. Speaker. I am sure that the House will be grateful to you for your statement and will wish you well in the exercise of your very difficult task.

Terrorism
3.33 pm
The Secretary of State for the Home Department (Mr. Leon Brittan): With permission, Mr. Speaker, I should like to make a statement.
As the House will know from the statement issued by the police yesterday, on 22 June five people were arrested in Glasgow by Strathclyde police and detained under the Prevention of Terrorism (Temporary Provisions) Act 1984. My right hon. Friend the Secretary of State for Scotland has approved the extension of their detention for five days for further questioning. Since then the police have arrested and detained under the Act a further 16 people. Those detained are being questioned in connection with a number of offences, including the bombing of the Grand hotel at Brighton.
As a result of information obtained following the arrests made on 22 June, the police were able to discover and disarm a bomb set for detonation on long-term timer in a room at the Rubens hotel, Buckingham Palace road. The investigation, the discovery of the bomb and its disarming are outstandingly successful demonstrations of the professionalism, courage and determination of the police in the battle against terrorism, which they are fighting on behalf of us all. I congratulate warmly all the forces concerned.
The House will also be aware, however, that the bomb discovered at the Rubens hotel was intended to form part of a wider operation involving the planting of bombs in a number of towns: Blackpool, Bournemouth, Brighton, Dover, Eastbourne, Folkestone, Great Yarmouth, Margate, Ramsgate, Southampton, Southend and Torquay. The bombs were to be timed to explode at intervals from mid-July, at the height of the holiday season, and the attacks would have been quite indiscriminate in their victims. But, as last night's statement showed, the police have reason to believe that the only device so far placed was the one discovered in the Rubens hotel, and that the preparations of the IRA have been interrupted at an early stage.
None the less, the police must take account of what they regard as the slight possibility that it was not only in the Rubens hotel that a bomb had been placed. Accordingly, they are urgently pursuing co-ordinated inquiries and searches on a basis agreed between all the chief officers of police concerned. That will involve conducting searches in the places identified as intended targets just as vigorously as if there were positive reasons for believing that bombs had been put in place there.
The police service therefore now faces one of the largest preventive operations that it has ever mounted. I have asked the Commissioner of Police of the Metropolis, Sir Kenneth Newman, to undertake personally the co-ordination of the operation. The Commissioner's task is not to take over the local operational responsibilities of chief officers, but to provide a co-ordination centre and clearing house, in which individual forces may be represented, for the conduct of the operation. For that purpose, the forces principally involved will be invited to second appropriate officers temporarily to assist the commissioner in that task. He will in that way be able to ensure that information derived from related inquiries in any police force area is made available to others who may need to act upon it or refer to it. Those arrangements will

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also enable the public and the press to be kept properly informed, particularly in relation to any ways in which they can help.
But the local Members of Parliament may also have an important role to play. For that reason, the commissioner, in consultation with the chief constables for the relevant areas, will be arranging briefing tomorrow for Members of Parliament for the constituencies identified as possible targets. The purpose will be to explain the background and the police assessment as fully as practicable and to discuss ways in which the Members and the public can best help the police.
The House will appreciate the limitations on what can be said at this stage in the inquiries about the considerable amount of information that has so far been discovered. That has already resulted in a major terrorist outrage being thwarted. Every possible effort is now being made to prevent any further risk to the public and to bring to justice those who have been planning the cold-blooded and indiscriminate murder and maiming of totally innocent human beings.
Mr. Gerald Kaufman: On behalf of Her Majesty's Opposition, I congratulate the police on this skilful and successful operation. By their tenacity and ingenuity, they have almost certainly saved the lives of innocent people-possibly very many thousands of innocent people. If that plot had succeeded, it is appalling to imagine the havoc and carnage that would afflicted countless carefree holidaymakers.
I hope that the Home Secretary will report to the House on any further significant developments as the public, including those in the holiday and tourist industries, will naturally continue to be concerned at any possible hazards. I am confident that all involved, whether those planning their holidays or those who work hard to earn their living at seaside resorts, will join the House—representing, as we do, the whole country — in in sending a message to those evil people who, for their bleak and inhuman purposes, are ready to destroy and maim men, women and children. That message is clear and unmistakable: "Your methods will not win. Bombs never have and never will change the principles and purpose of the people and Parliament of the United Kingdom."
Mr. Brittan: I am most grateful to the right hon. Gentleman for what he has said. I shall certainly report to the House on any significant developments. I hope the House will feel that the course that has been followed in this case, of being as open as possible with the public about what has happened, is the right one.
Sir Peter Blaker: Is my right hon. and learned Friend aware that the whole House will endorse his congratulations to the police? Other hon. Members may agree that, in view of the briefing that he is arranging for hon. Members who represent the towns affected, it would be inappropriate to press him today on detailed points. However, will he confirm that, where people have made, or might be considering making, plans to spend their holidays in the towns he mentioned, as of now he sees no reason why they should change those plans?
Mr. Brittan: I certainly confirm what my right hon. Friend invites me to confirm. People should not change
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their plans. One reason for the briefing is that, apart from enlisting the support of hon. Members in the weeks that lie ahead for the tasks that fall to the police, the circumstances in each place will differ, so it is more convenient to deal with them by way of a briefing.
Mr. David Steel: My hon. Friends and I wish to be associated with the expressions of admiration for the police and the intelligence services and join in the congratulations to them on the remarkable success of this operation. It has been reported that the nature of the hotel in Buckingham Palace road is such that, if the bomb had gone off, numbers of American tourists might have been killed. If that is so, does the Home Secretary agree that this is a timely moment for Her Majesty's Government to underline yet again to the American public the folly of donating money to organisations that support campaigns of this kind? Does he agree that there is some ray of optimism, in view of the information about IRA plans that has been forthcoming, and that that underlines yet again the growing revulsion of British and Irish citizens at this campaign of persistent murder and terror? Does he agree, therefore, that this would be a good time for the Government to underline yet again their intention to continue the constructive dialogue with the Government of Ireland?
Mr. Brittan: I am grateful to the right hon. Gentleman for those remarks, and I agree with everything he said. The common purpose that we share with America in fighting and defeating terrorism is well reflected in the supplemental treaty on extradition which is being signed today and which, when completed and ratified, will prevent those who commit terrorist acts from seeking a haven in the United States, while hypocritically claiming a political justification for their murderous acts.
Sir Frederic Bennett: I endorse what my right hon. Friend the Member for Blackpool, South (Sir P. Blaker) said about this not being the time to press the Home Secretary on matters of detail, particularly as those concerned will be briefed tomorrow. However, as my right hon. and learned Friend said that there was a slight chance that bombs may have been placed, will he give an assurance, irrespective of tomorrow's briefing, that as soon as it becomes clear that has not happened, a further statement will be made to that effect? Otherwise, as my right hon. Friend pointed out, there will be an adverse effect on tourism, a trade which is of vital importance to parts of the country?
Mr. Brittan: I assure my right hon. Friend that if it is felt possible to eliminate, more conclusively than I have been able to do today, any further possibilities, I shall be delighted and happy to do so.
Mr. Merlyn Rees: I applaud the success of the police against the Provisional IRA. They have done well; may their efforts continue that way. However, is the right hon. and learned Gentleman aware that I have been surprised at the detailed information that has appeared in the newspapers today, not only because that may help any remnants of a cell that is in this country but also because I hope that it will not weaken any case that may come before the courts?
Mr. Brittan: The right hon. Gentleman, with his experience of these matters, is giving a salutary warning to all concerned in the handling of these issues.
Mr. Teddy Taylor: Is the Home Secretary aware that, while in Southend this morning, I detected among the public a sense of outrage that the IRA planned to kill and maim innocent holidaymakers? Is he further aware that the public are immensely grateful to the police for showing professional skills and bravery in thwarting the IRAs appalling plan? Does the co-ordination arrangement mean that the extremely professional skills of the Met will be available, if required, to county forces?
Mr. Brittan: I am grateful to my hon. Friend. The answer is that it does.
Mr. J. Enoch Powell: Have the Government taken note that once again the operations of the Provisional IRA have been pointedly used to bring pressure to bear on Her Majesty's Government in the context of the conclusion of certain arrangements with the Irish Government?
Mr. Brittan: I am not sure that I accept what the right hon. Gentleman has said.
Mr. Andrew Bowden: Is my right hon. and learned Friend aware that the people of Brighton will greatly welcome his statement showing yet again the competence and effectiveness of the Sussex police force and the other forces involved? Will he emphasise the importance of the public giving full support to the police in their activities and ignoring the anti-police activities of small groups of extreme Left-wing activists in my town and in other parts of the country?
Mr. Brittan: I am grateful for my hon. Friend's observations and I welcome the opportunity that they give me to say that members of the public should be on the alert for suspicious objects, individuals and incidents, but that neither they nor hoteliers should institute searches of establishments without advice from the police.
Mr. Robert Maclennan: Will the Home Secretary convey the congratulations of my right hon. and hon. Friends and myself to all those police forces throughout the country which have played such a notable part in forestalling appalling outrages and in particular to the force in the Strathclyde region? In that context, does he agree that it is to the regional and local police forces that the country must turn for protection and that we must guard against responding by any step towards the creation of a national police force? Is the right hon. and learned Gentleman aware that in that regard I view with some disquiet the appointment of Sir Kenneth Newman in a co-ordinating role?
Mr. Brittan: The hon. Gentleman is entirely right to draw attention to the contributions of a number of police forces and to single out Strathclyde in this instance, but I am afraid that I do not agree with his comments about the appointment of Sir Kenneth Newman. If the hon. Gentleman had followed carefully the terms of my statement he would have realised that it was designed to avoid precisely that which he fears. There is no question of a step towards the creation of a national police force. I happen to believe that such a force would not be more efficient, quite apart from any political disadvantages. In an event of this kind, however, the necessity for co-ordination is real and imperative and I believe that the machinery that we have set up is appropriate.
Mr. Robert Hicks: Is my right hon. and learned Friend aware that all concerned with the
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tourist industry, especially hoteliers, are most perturbed by these developments? Will he confirm that additional surveillance will be given in areas which, although not mentioned, are equally vulnerable?
Mr. Brittan: Certainly, wherever in the judgment of the police there is an enhanced risk, enhanced protection will be provided.
Mr. J. D. Concannon: Having witnessed too many times for comfort the professionalism of the police and the Army in situations of this kind I can only congratulate them yet again on their success, as I have done many times before. Bearing in mind what my right hon. Friend the Member for Morley and Leeds, South (Mr. Rees) has said, is the Home Secretary in a position to say in a few words whether the Prevention of Terrorism Act has helped him in circumstances of this kind?
Mr. Brittan: The answer to that is—undoubtedly.
Sir Edward Gardner: Does my right hon. and learned Friend agree that the superb work of the intelligence services, which deserves the gratitude of the whole country, bears out the truth of what my right hon. and learned friend told the Select Committee on Home Affairs some months ago—that but for the work of the security forces hundreds of people now alive would be dead?
Mr. Brittan: My hon. and learned Friend is quite right. I did not and could not anticipate that what I said to the Select Committee would be borne out so vividly and in such a horrifying way so soon afterwards.
Mr. David Atkinson: Further to the point raised by the leader of the Liberal party, in view of the record number of American visitors staying at British hotels this year, would it not be sensible to draw attention to the fact that the IRA is no respecter of whom it maims and murders, and should not such visitors be given an information pack on the IRA to take home?
Mr. Brittan: That process of education was sadly and tragically enhanced by the Harrods bombing in which there were American victims. The fact that IRA terrorism respects no persons can and should be abundantly clear to citizens of the United States, whether visiting here or at home. I also wish to say to them that they are most welcome here, and we will do everything we can to make them safe.
Mr. Michael Howard: I thank my right hon. and learned Friend for the arrangements he has made to brief tomorrow the representatives of the resorts identified. Further to the point raised by the right hon. Member for Mansfield (Mr. Concannon), does not my right hon. and learned Friend agree that the investigations which he has reported to the House yet again underline the importance of the provisions of the Prevention of Terrorism Act? Will he join me in expressing the hope that those who have opposed this legislation in the past will reconsider their attitude in the light of these developments?
Mr. Brittan: I entirely agree with my hon. and learned Friend. I do not wish to enter a partisan note, but I was always baffled at the thought that those who introduced the legislation should have felt that it was no longer necessary. Present circumstances and events, alas, underline its enduring necessity.
Rev. Martin Smyth: Will the Home Secretary accept that, with others in the community, we share in the joy at the success of the security forces and agree with the necessity to co-ordinate those forces to deal with such an attack upon the nation? Does he also accept that a recently elected Derry councillor, who five years ago carried a bomb into Londonderry guildhall, has gone on record as saying that that was a political statement? Perhaps the time has now come for the Government to reconsider the position of Sinn Fein, the political representative of the IRA, and to proscribe it as a political party.
Mr. Brittan: I shall not comment on that suggestion, but there can be no question of any political justification for acts of violence. We do not recognise violence as a means of furthering political ends.
Mr. Patrick McNair-Wilson: On behalf of my many constituents who work and shop in Southampton throughout the year, I congratulate my right hon. and learned Friend on the magnificent success of the security services. As he has pointed out, the danger has not gone away. Will he therefore seriously consider using the Central Office of Information to mount a vigorous advertising campaign to warn holidaymakers and others of the ever-present danger?
Mr. Brittan: I am grateful to my hon. Friend for that suggestion, which I should like to consider.
Mr. James Hill: Does not my right hon. and learned Friend agree that the Members of Parliament of all the cities named will look forward to the meeting but that we must go through an educative process? We must become more vigilant to the obvious things that should be observed. I think in particular of hotel managements, hotel employees, hotel guests and everyone who frequents a restaurant. Wherever people reside, they must look for the unattended parcel and the easy hiding place.
Mr. Brittan: My hon. Friend is entirely right.
Mr. Roger Gale: Will my right hon. and learned Friend convey to the Kent police force my thanks and those of my constituents for the part they played in producing this result? Does he agree that at least part of the IRA campaign was aimed at economic rather than personal targets? Does he further agree that it would be a tremendous and sad irony if, in the light of the success of the police campaign, the British public were to do the IRA's job for it by boycotting English seaside resorts?
Mr. Brittan: My hon. Friend is entirely right in his assessment of one objective of the IRA, and I share his determination that that objective should not be achieved.
Mr. Henry Bellingham: Is my hon. right hon. and learned Friend aware that many hoteliers in my seaside constituency will be relieved by today's news? Does he agree that this is an appropriate moment to spare no effort in tightening the control and handling of baggage and cargo at airports?
Mr. Brittan: Certainly, and my right hon. Friend the Secretary of State for Transport has taken the matter well on board.
Mr. Andrew Faulds: Since these perverted people have been thwarted in this campaign, is
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there not a danger that remaining members of that cell or other cells may still be active? Should there not be a campaign by the Government to warn the public about the risks in any public place, such as restaurants, stations or big stores?
Mr. Brittan: Naturally, I have no knowledge or information beyond what I have told the House about this campaign. The risks that the hon. Gentleman identified are real, but I do not believe that they should be exaggerated.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I will call the five hon. Members who are standing, but I ask them to address their questions in a somewhat different fashion. I know they are speaking for their constituents, but this is a narrow statement.
Sir John Biggs-Davison: Noting the gratifying unity in the House today, may I ask my right hon. and learned Friend whether it is true that those who will an end must will the means? Is not an indispensable means to the end that we all seek the Prevention of Terrorism Act?
Mr. Brittan: Yes, Sir.
Mr. Geoffrey Dickens: Since terrorism is the most barbaric form of protest, does my right hon. and learned Friend believe that, aided and abetted by the Secretary of State for Trade and Industry plus a very sympathetic Chief Whip, the time has come for the Cabinet, as a matter of policy, to put the Whips in and reintroduce capital punishment for terrorism?
Mr. Brittan: My hon. Friend will have observed how I voted when this matter came before the House, but I have not changed my view that this matter should not be determined on the basis of a party vote.
Mr. Ivor Stanbrook: Will my right hon. and learned Friend be more specific about the new arrangement with the United States, which is a remarkable change in American practice on extradition? Is he sure that it will obtain the approval of Congress and the co-operation of all American judges?
Mr. Brittan: As my hon. Friend says, it will require the approval of the United States Senate, and that approval has still to be achieved. Events such as the ones that we are discussing will underline, in the United States as elsewhere, the importance of ensuring that there are no safe havens for those about whom there is suspicion of committing such acts. I hope that the ratification of this important agreement will proceed smoothly.
Mr. Peter Bruinvels: In congratulating my right hon. and learned Friend on the superb work done by police forces throughout the country, may I add a word of caution? I would imagine that it is important that other members of the IRA, no matter where they are in the country, should have no more details of what we have done to date. Therefore, will my right hon. and learned Friend consider supporting what the right hon. Member for Morley and Leeds, South (Mr. Rees) said, and introduce a security clampdown? I know that the House is fully behind the police force, under Sir Kenneth Newman, and we must cut out the cancer of IRA terrorists as a matter of great urgency.
Mr. Brittan: My hon. Friend has made an important point. The information that we have been given is only a

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small part of the information that is already in the hands of the police. We must all be sensitive to the primary needs of security, although the wide availability of information can assist in tracking down people on occasions such as this.
Sir Eldon Griffiths: I congratulate my right hon. and learned Friend the Home Secretary and my right hon. Friend the Prime Minister on the American treaty. Can my right hon. and learned Friend confirm that, if the treaty is ratified, it will be retrospective? On the appointment of Sir Kenneth Newman, will my right hon. and learned Friend brush aside all the nonsense of the suggestions that this is a move towards a national police force? It is no such thing. Will he recognise also that the best thing that the House could do for Sir Kenneth Newman and for the police as a whole is to ensure that the Special Branch and the anti-terrorist squad have the necessary men and resources to provide bipartisan support for the Prevention of Terrorism Act and put an end to rate-financed denigration of the police?
Mr. Brittan: I agree with what my hon. Friend said about the denigration of the police and the need for them to be adequately supported. I agree also with my hon. Friend's point about the role of co-ordination that is necessary in this case. I am grateful to my hon. Friend for what he said about the extradition arrangements. My hon. Friend asked whether the supplemental treaty would be restrospective. It will apply to any offence that is committed before or after it comes into effect.

Board and Lodging Payments
4 pm
The Minister for Social Security (Mr. Tony Newton): With permission, Mr. Speaker, I should like to make a statement on the arrangements for supplementary benefit payments towards board and lodging charges.
The House will recall that consultative proposals on board and lodging payments were referred to the Social Security Advisory Committee in November 1984 and that in March this year the Government laid regulations which came into operation on 29 April.
The regulations were designed to achieve two main purposes. One was to contain the rapid growth in expenditure and to stop the abuses that had been taking place. The number of ordinary board and lodging cases had risen from 49,000 in 1979 to an estimated 139,000 in 1984, while annual expenditure in this area had risen from £52 million to an estimated £380 million over the same period. There was widespread public criticism that young people were too easily able to settle in such accommodation at the public expense, often at levels of charges well above what could be afforded by people in work.
Our second purpose—at least as important as the first—was to ensure continued help at an appropriate level for young people who really do need board and lodging for more than a short time. We therefore took steps to exempt from time limits people such as those who were recently in care, those who have children, those who are disabled or mentally handicapped, those who are or have been mentally ill, and those who are in board and lodging as part of a programme of rehabilitation arranged by, for example, the probation service. We also exempted people living in homes qualified as hostels.
We made it clear that we would be monitoring the new regulations with great care and would be ready to make changes quickly if the need were shown. That monitoring is of course continuing, but the initial indications suggest that, generally, young people with a real need to be in board and lodging for more than a short time should be covered by the various categories of exemption from the time limits for which the regulations already provide. It is therefore important—I want to emphasise this to every hon. Member—that claimants, or anyone else who is concerned about a particular case, should ensure that any special circumstances are fully explained to the local DHSS office, which will give them careful consideration before any final decision on benefit entitlement is reached.
We have, however, decided that an additional exemption category is needed to cover young people under the age of 26 who are living with their parents or step-parents in board and lodging accommodation. Regulations to achieve this will be laid before the House shortly, and until they come into effect we shall make special arrangements to help those people to whom they would apply.
The regulations will also enable us to extend the exemption categories to cover other types of case if a need can be shown. As I have said, we believe that the present exemptions generally cover those to whom the time limits ought not to apply, but we think it right to ensure that we can act quickly and flexibly if it should become clear that there are other groups who should also be covered.

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The Government's objective is to strike a proper balance between curbing undoubted abuse and ensuring that genuine social security needs are effectively met. The additional proposals that I have made today will help us to maintain that balance.
Mr. Michael Meacher: Is the Minister aware that we welcome this extension of the exempt categories, while insisting that this is an insufficient answer to the method of operating the rules, which has been shown to be exceedingly harsh and unjust? Is the hon. Gentleman aware that the restrictions which he introduced two months ago have caused hardship to innocent claimants out of all proportion to the limited abuse which they were designed to remedy? Is he aware that because, as the Government's own Social Security Advisory Committee has advised, adequate alternative powers exist for the DHSS to deal with this abuse, these rules should be suspended pending a wider and more thorough review?
Is the hon. Gentleman further aware that even after today's limited relaxation of the rules they still remain unfair, because a period of two, four or even eight weeks is inadequate in which to obtain accommodation from a local authority waiting list or housing association, to register with a GP or a dentist for medical treatment, to obtain legal rights—since bail is not granted if there is no fixed address—or even to register as a voter? Is the hon. Gentleman aware also that extending the exempt categories will not prevent reported suicides, like that of Brian Brown last year in Glasgow, or attempted suicides, like that of David Leitch in Telford, since they were already in exempt categories but did not know it?
Is the hon. Gentleman aware that where a young couple have separated and one partner has custody of the children the other partner will still not be allowed to stay for any length of time in the area where his partner lives, so that in many cases children will be deprived of access to their father? Is he further aware that the right of appeal against a decision that is tantamount to an eviction notice is still effectively abolished, since it takes longer than the two, four or eight weeks available to get an appeal heard?
Is the Minister aware that the Government continue to deal with the symptoms rather than the causes of the problems of homelessness? Is he aware that expenditure on board and lodging payments has increased so much in recent years only because of the growth in the numbers of homeless people who have been forced to live in this type of accommodation because they have nowhere else to go, due to the huge cut in public spending on house building which Government policies have brought about?
If the Government believe that the problem is caused by young people taking holidays by the seaside, why do the regulations cover the whole country and not just the seaside? Why do the Government not simply rely upon powers which they already possess under requirements regulation 9(14)(b), which has always provided that a person who is on holiday and staying in board and lodging accommodation cannot have his board and lodging charges met? Is the hon. Gentleman aware that in many cases the real abuse is committed, not by claimants, but by some landlords unscrupulously exploiting guaranteed payments by the DHSS and installing cookers and switching to self-contained tenancies to avoid these regulations?
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Is the Minister aware that minor tinkering, like today's package, will not deal with the problems caused by these regulations and that they should be repealed and replaced by a comprehensive programme to deal with the real causes of homelessness, including greater investment in public housing and measures to bring board and lodging within the Rent Acts so that residents are protected from arbitrary eviction? Is the hon. Gentleman aware that if he does not do that — the Social Security Advisory Committee warned him about this — the Government will be creating an army of young people forced to move around the country like nomads, unable to put down roots, to find a job or to get on a housing list, and that his concession today will do nothing to stop that?
Mr. Newton: The hon. Gentleman cannot seriously contend that there was only limited abuse, in view of some of the evidence that has been adduced and the huge increase in numbers. It was not confined, as he implies, to seaside resorts. We have evidence, for example, in one leading inland town of a 37 per cent. increase in the number of claimants in board and lodging accommodation during a period of only five months over the turn of the year, and the opening of about 100 new board and lodging establishments in a period of not much more than a year.
Mr. D. N. Campbell-Savours: Where was that?
Mr. Newton: Reading.
Of course, I accept that there was abuse and exploitation by landlords. We introduced the regulations because we were determined to curb that abuse and exploitation.
The hon. Gentleman suggests that the regulations will cause large numbers of young people to move about the country. He has only to study the number of young people who have claimed board and lodging in recent years, the huge 50 per cent. or more increase in their numbers, and the reports that have come from many parts of the country about the influx of young people to know that the previous regulations were creating that rootlessness.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. It might be fair to hon. Members to say that, as we have an important debate in which no fewer than 30 right hon. and hon. Members wish to take part, as well as a ten-minute Bill, I cannot allow questions on the statement to run after 4.30 pm. I hope that all hon. Members will ask brief questions; then they will all get in.
Mr. Albert McQuarrie: My hon. Friend made an interesting comment about hostel accommodation. In my constituency there is the New Bible college with 60 residents. The owners of that college have applied for registration as a hostel. If the cut-off date —8 July—comes before authorisation for registration is granted, will my hon. Friend ensure that the cut-off does not take place, thus throwing those 60 young people on to the streets?
Mr. Newton: May I look into the case that my hon. Friend has mentioned? We have two or three hostel applications currently under consideration. The best thing would be for me to have a decision made quickly.
Mr. Frank Field: As the whole House agrees that many landlords are ripping off the welfare state

783
through the regulations, when will the Minister make a statement to the House that deals directly with that matter, rather than aiming at those landlords through claimants?
Mr. Newton: I hope that the hon. Gentleman will be fair-minded enough to accept that the restraints that we have imposed in the regulations through the time limits, and, in respect of landlords, through the financial limits, have been directed at curbing abuse and exploitation by landlords. I should not want to leave the impression that the abuse is caused solely by young people. It is important that we prevent young people from being exploited by others.
Mr. Robert McCrindle: I welcome the relaxation announced by my hon. Friend. Is he satisfied that sufficient steps have been taken to ensure that claimants understand the wide categories of exemptions? There is evidence that that is one of the causes of some of the hardship. Secondly, will he take on board the fact that probation officers have been expressing anxiety because of the lack of accommodation likely to be available to young people coming out of institutions?
Mr. Newton: My hon. Friend will be aware that probation hostels would normally be exempt under the hostel provisions, and that anyone in board and lodging under a programme arranged by a probation officer would likely to be exempt.
Mr. Michael Meadowcroft: The Minister is to be congratulated on easing these unworkable regulations, which were always a triumph of bureaucracy over humane and political judgments. If he will not withdraw all the regulations, will he consider two immediate exemptions: first, an exemption for those who are offered council accommodation which will be available after the end of their allowed stay; and, secondly, an exemption for those who are offered jobs which will begin after the period of allowed stay? Will he also give instructions that people be allowed to stay where they are pending an appeal? Thirdly, will he commend those authorities which have set up a system of prevention similar to that in Leeds, where the DHSS notifies people when they must move on and also notifies the social services and gives individuals a list of telephone numbers of the citizens advice bureaux and social services, which is a help when people would be allowed to stay but are unaware of their rights?
Mr. Newton: I shall consider the hon. Gentleman's first two suggestions within the terms of the power to make the extensions which I propose in the amending regulations. We are anxious that people should be pointed towards proper advice. The letter which currently goes to them tells them of the exemption categories and asks them to talk to the local office if they have problems. I am arranging for that advice to be strengthened, in the hope that we shall he able to move in the direction that the hon. Gentleman would like.
Mr. Warren Hawksley: I thank my hon. Friend for his statement. Can he confirm that the BBC, in trying to exploit the case of Mr. Leach, who is a constituent of mine, was misleading the public by saying that he was still in hospital when the programme was put out and that he had tried to commit suicide because of a threatened cut in the lodging allowance that he was to receive? Will my hon. Friend confirm that in that case my
784
efficient DHSS manager, Mr. Eade, had, before the programme went out, advised Mr. Leach that he was covered by one of the exemptions in the original proposal and arrangements and that he was exempt from the cut that was threatened?
Mr. Newton: I am grateful to my hon. Friend for his comments. I shall take the opportunity to say that I am grateful also to the "That's Life" programme for the trouble that it took to put me fully in the picture with the details of the cases that had come to its attention. I am happy to confirm that Mr. Leach, who was interviewed by the local office last Friday, will be in an exempt category when he is once again available for employment, and he has had a letter confirming that fact.
Mr. Donald Anderson: Is not the Minister, who is normally so compassionate, thoroughly ashamed of his nasty little regulations? Was he not warned by the organisations working in this sphere—Shelter and the Campaign for the Homeless and Rootless—of what would inevitably happen? He went ahead notwithstanding, and the results flowed from that. Will he and his officials listen in future and disabuse themselves of the illusion that under-26-year-olds, born and brought up in their own towns and cities, have families to which they can return?
Mr. Newton: I do not see, and have never seen, anything compassionate in permitting the continuation of a system which was allowing the kind of exploitation which rightly worried the hon. Member for Birkenhead (Mr. Field). It has led to many tens of thousands of young people being trapped in inappropriate accommodation in circumstances where they probably could not even afford to take work if it were offered.
Mr. Gerrard Neale: It is impossible to suggest ways in which my hon. Friend could have been more compassionate or sensitive in his consideration of this matter. There was immediate anxiety in my constituency because of speculation that he was intending to relax the scheme. There are examples of connivance by youngsters with landlords, and that must not be forgotten. The one thing that is clear, which I hope my hon. Friend will bear in mind in all his considerations, is that there is no genuine incentive to link the search for board and lodging with finding work. In fact, at the moment there is every incentive to seek accommodation where no work exists, in order to perpetuate unemployment and the receipt of benefit.
Mr. Newton: I understand the point that my hon. Friend makes. I am grateful for his earlier remarks. The time limit and the structure, with the longest limits in the large travel-to-work areas, such as the metropolitar areas, are designed to take some account of that point.
Mr. Frank Cook: Would the Minister care to put aside for one second the cynical disregard and callous unconcern that the Government have so far displayed when considering these issues and examine for a minute the decline in the availability of public housing stock for rent? Does he accept that if he measures one against the other he will see that the decline in public housing stock for rent reflects the dramatic increase in claimants which he has identified today? His hon. Friend the Parliamentary Under-Secretary of State for Health and Social Security said that

785
"The Department have established a very carefully worked out catalogue of exemptions for those who would be affected by the new regulations"—
Mr. Speaker: Order. I hope that the hon. Gentleman will ask a brief question, because he made an application on this subject yesterday under Standing Order No. 10.
Mr. Cook: He said—[HON. MEMBERS: "Reading."] I am reading because it is a quotation. He said:
"Nobody in need can slip through that net of exemptions."
Who is to be believed? Were the exemptions that were announced last Thursday afternoon adequate? If they were adequate then, why do they need to be extended now? Furthermore, how does moral and physical danger stop at the age of 19?
Mr. Newton: I confirm that my hon. Friend the Parliamentary Under-Secretary of State said that there was an extensive list of exemptions in the existing regulations, covering many of the difficult cases which have caused controversy in recent days. However, it was necessary to extend the exemptions in the way that I have announced this afternoon, and it is wise for the Government to have the power to act quickly should other needs be made known to us.
Mr. W. Benyon: One welcomes the changes, but there is a large number of cases of real hardship. Would it not be right to have some form of appeals procedure whereby one case could be judged adequately against another?
Mr. Newton: My hon. Friend will know that there is an appeals procedure in respect of the category into which a claimant is placed. If he is denied exemption, he can appeal against the decision on that basis. That is a wide-ranging and important right, and it is the appropriate course to adopt, as with other parts of the benefit system when benefit is refused.
Mr. Joseph Ashton: What advice would the Minister give to the two 16-year-old girls in my constituency who live in a hostel at Watson road, Worksop, who deliberately got themselves pregnant last month so that they could stay in the hostel and not be evicted? Was it the subsequent publicity on breakfast television, on Radio 4, in the Worksop Guardian and in other organs of the media that persuaded him to change his mind?
Mr. Newton: Since, on the facts suggested by the hon. Gentleman, the two young ladies in question would be exempt, that does not affect anything that I have said this afternoon about additional exemptions. The suggestion that young women deliberately become pregnant has often been made in respect of local authority housing allocation policies. To the extent that that can be seen to be a problem, it is not unique to these regulations. Unless we are not to take account of such circumstances, it is always possible that people will contrive such circumstances to achieve a particular advantage.
Mrs. Edwina Currie: Does my hon. Friend agree that much of the blame for the current anguish lies with certain voluntary and political organisations which, for a variety of motives, have not read the exemptions and have not therefore attempted to apply them? Does he further agree that if we accepted the
786
suggestion of the hon. Member for Oldham, West (Mr. Meacher) that the board and lodging system should be brought under the Rent Acts it would solve the problem because it would wipe out board and lodging altogether?
Mr. Newton: I think that there is some truth in my hon. Friend's suggestion. Nevertheless, that does not absolve the Government, nor would I wish it to absolve them, from making sure that these exemption categories are as effective as they can possibly be made. That is what I am seeking to do.
Mr. Robin Cook: Is it not apparent, from the host of cases of intolerable hardship that have been created in the last two months, that thousands of vulnerable young people who ought to have been exempt have been hit by the regulations, including my constituent, Brian Brown, who killed himself two days after being made homeless under these regulations? Is it not unrealistic and unjust to pass the buck to these vulnerable young people and say that mentally ill people, who may be barely semi-literate, should first work their way through a four-page leaflet to find out whether they are exempt; that, secondly, they should claim exemption; and that, thirdly, they should successfully pursue an appeal through the DHSS bureaucracy? Cannot the Minister grasp the fact that it is up to him to protect such people and that they should not be forced to have to protect themselves against him?
Mr. Newton: The letter that would have gone to Mr. Brown would have contained, not a four-page list, but a simple list of exemptions. No question of an appeal would have been involved. It would simply have been a matter of bringing the facts to the attention of the local office. It is important that not only claimants but those who have information which may be helpful to the local DHSS office should make sure that it has it. I emphasised that point in my statement. I would not wish to finish my response to the hon. Gentleman without saying that, whatever the circumstances, the whole House would wish to express its regret for what happened to Mr. Brown's family.
Mr. Roger Gale: While one welcomes the flexibility that has been built into the regulations which will enable my hon. Friend and his Department to deal with the very few real cases of hardship that have been caused by the regulations, now that he has taken positive steps to control abuses of the social services system, will he discuss with the Home Office ways of preventing foreign nationals from coming to this country and creating further abuse of the system at the invitation of some of the landlords to whom members of the Opposition have referred?
Mr. Newton: My hon. Friend will be aware that we already have powers to prevent a measure of abuse. My colleagues in the Department of Employment, together with the Home Office, took additional steps early this year or late last year.
Mr. Kevin Barron: Will the Minister accept that his statement that exemption categories will be extended to cover other types of case if need can be shown is no more than an admission that the regulations have been an abysmal failure and that it is terrible to inflict them upon tens of thousands of young people? Are her Majesty's Government, who cherish Victorian values, saying that young people should be like Joe in Charles

787
Dickens' "Bleak House", who every time he was asked by the authorities to move on said, "Where?" to which they replied, "Just move on, Joe, move on"?
Mr. Newton: If I thought that the regulations had failed in the way that the hon. Gentleman suggests, I should have proposed an extensive further list of exemptions this afternoon. I have proposed that the Government should ensure that they have the necessary flexibility to respond. I believe that the whole House will consider that that is sensible.
Mr. Tony Marlow: In view of the quite reasonable concern of the hon. Member for Oldham, West (Mr. Meacher) about homelessness, will the Government put forward, with my hon. Friend's agreement, a package to strengthen private sector rented accommodation, thereby overcoming the problem at its roots?
Mr. Newton: My hon. Friend the Minister for Housing and Construction is present, and I am sure that he will have noted my hon. Friend's question.
Mr. Ian Wrigglesworth: Is the Minister aware that it is no use coming to the House and suggesting that there should be flexibility, when so much hardship has been caused to so many young people, particularly in areas of high unemployment like my own? Will he explain exactly what hope this statement contains for young people? He has suggested that young people should explain their circumstances to the local DHSS manager. If he is unable to help young people because of the rules and regulations of his Department, what help will that be to young people who are suffering so much hardship?
Mr. Newton: There are two points on the hon. Gentleman's question. First, if young people make sure that their circumstances are made known to us, we can more effectively ensure that all those who are in the exemption categories are covered. Secondly, I am very anxious to ensure that if any special circumstances emerge which should make us consider using the flexibility to which I have referred, we are fully informed about them. We shall then be able to act quickly to meet those circumstances.
Mr. Jonathan Aitken: Will my hon. Friend decisively reject the typically exaggerated call from the hon. Member for Oldham, West (Mr. Meacher) for the complete suspension of these rules, for the very good reason that their original purpose — the curbing of undoubtedly widespread abuse — is still completely valid?
At the same time, will my hon. Friend accept that the flexibility and extra discretion that is to be given to DHSS managers is widely welcomed? Should not discretion be applied to genuinely local young people who have been alienated from their homes and families, so that they may have a longer period than two weeks within which to find a job and make other arrangements?
Mr. Newton: I should make it clear that the greater flexibility that I am proposing is not a discretion for local office managers in the sense that my hon. Friend implied, but greater flexibility for the Government to define exemption categories to cover further types of cases if such a need should be shown. I shall reflect further on the last
788
point made by my hon. Friend. On his first point, I think that everything that I said implicitly rejects the call made by the hon. Member for Oldham, West (Mr. Meacher).
Mr. Peter Viggers: Does my hon. Friend agree that the scale of benefits makes it advantageous in some cases for people to leave the stability of their homes? Is he aware that parents in my constituency have expressed great concern about that? Despite all the stories that we have heard—which we accept—the maxim that hard cases make had law is valid and the regulations can, in some cases, be socially disruptive and divisive.
Mr. Newton: I would, indeed, accept the general proposition, which is one reason why we felt that we should take action in this area. Nevertheless, I am anxious—and I hope that the House is clear about this — to ensure that we cover genuine hard cases.
Mr. Chris Smith: Why is the Minister so intent on imposing hardship and homelessness on several hundred of my constituents who this week face the end of the eight-week period? If he is concerned about abuse and irregularity, why does he not extend the fair rent system to board-and-lodging accommodation, instead of clobbering the claimants?
Mr. Newton: If I understand correctly the call for the extension of rent control, the House should perhaps realise that that would mean bringing virtually every hotel in the country within the ambit of rent control, which might create more problems than could be picked up from the hon. Gentleman's question.
I hope that it is clear from what I have said that I am not in the least intent on imposing hardship on anybody. On the contrary, I am concerned to ensure that the balance of the regulations is right.
Mr. Harry Ewing: Why is the Minister so reluctant to deal with rogue landlords, and so determined to hound young people? Does he not realise that, uncharacteristically, he is giving a good performance this afternoon of having these minor concessions dragged from him? Does he expect to come forward with any further exemptions? If so, does that not prove our case that the regulations should be withdrawn?
Mr. Newton: At the moment, it is a case not of expecting to come forward with further exemptions, but of recognising that we need to respond quickly and flexibly—which is part of what I have proposed.
On the first part of the hon. Gentleman's question, I hope that I have already made it very clear that one of our purposes is to curb abuse by landlords.
Mr. K. Harvey Proctor: Will my hon. Friend investigate the extent to which those claimants not covered by the exemptions—and this should be widely publicized — have, under the incentive of these new regulations, taken on work since their introduction?
Mr. Newton: If I understand my hon. Friend correctly, I confirm that that would be a significant factor to which I would wish to draw attention.
Mr. Campbell-Savours: Is the Minister aware that to apply a time limit of two weeks to Workington is to treat Workington as some sort of holiday resort—a seaside town? Is he aware that that town has an unemployment rate of 20 per cent. and that it is an industrial town which does not have a tourist industry? Will he review that decision?
Mr. Newton: If the hon. Gentleman cares to make specific representations to me—and I shall take this as the start—I shall certainly consider that point.
Mr. Robert Litherland: Will the Minister stop crying crocodile tears, come clean and accept that this is a folly of gigantic proportions, which has already led to tragedy in one case? Is not this policy, which is designed to catch a few who might abuse the system, in fact discriminating against the majority? It is ill-thought out, unwarranted and should be scrapped.
Mr. Newton: If there was a problem, to use the hon. Gentleman's phrase, of gigantic proportions, it was the escalation in board and lodging, which was creating social problems and, quite frankly, diverting resources within the social security system from the real cases of genuine need on which they should be spent.
Mr. Clive Soley: Is the Minister aware that in my constituency it is not uncommon to pay between £50 and £70 a week for bed and breakfast and often to be expected to share with two, three or four other people for that money? Why has he turned these people into the scapegoats of a couple of editors of the Daily Express and the Daily Mail, who feel that it is more important to pursue them than to pursue people for such things as avoiding tax or fiddling expense accounts? Does he not listen to the voluntary groups, which tell him that these wicked regulations will force more people into crime, drug abuse, alcoholism and vagrancy?
Mr. Newton: I do not, of course, accept the hon. Gentleman's charges. The limits that have been imposed in the hon. Gentleman's area, as in others, are designed to strike a fair balance and, as I have now said on a number of occasions, to prevent the sort of exploitation about which he is rightly concerned.
Mr. Harry Cohen: Are not these regulations the new poor law, with harsh penalties for being young, single, homeless and unemployed? As well as causing considerable hardship and endangering lives and livelihoods, do not the regulations deny voting rights to several hundred thousand youngsters who will lose their votes because they are forced to move around the country? Why have the Government not come forward with special arrangements to deal with that?
Mr. Newton: The arrangements are designed to allow people a reasonable opportunity to look for work if they wish to go to another part of the country to do so. That is part of the underlying rationale, and something to which we shall stick.
Mr. Austin Mitchell: Does the Minister accept that the minimal changes made to these iniquitous regulations to save his face do nothing to make them acceptable or fair? The net result will be to create a dispossessed tribe of young people hounded from place to place, or to drive them into the arms of even more racketeering landlords in flats which will be overcrowded and overpriced?
If the Minister wants to cure abuses in seaside resorts, why has he classified the industrial town of Grimsby as a seaside resort, with only two weeks' grace—similar to Workington—before people are hounded on? Will he reconsider that case?
Mr. Newton: As I said to the hon. Member for Workington (Mr. Campbell-Savours), taking that as a specific representation about a specific local limit, I shall, of course, reconsider the matter.
As to the remainder of the hon. Gentleman's question, if there is an army or a tribe—whichever phrase he used—it was those 20,000 or 30,000 young people who represented a virtual doubling of the numbers in that age group in board and lodging in only two years. That is the problem which we were creating, and that is the problem which we are now seeking to check in a fair and balanced way.
4.37 pm
Mr. Roland Boyes: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the need for the withdrawal of the Government's board and lodging regulations affecting homeless under-26-year-olds—the Supplementary Benefits (Requirements and Resources) Miscellaneous Provisions Regulations 1985."
I ask for the Adjournment of the House to discuss a specific matter—the regulations to which I have just referred. The matter is urgent because the Minister's statement today was unsatisfactory and inadequate, as were his answers to the varied questions raised by my right hon. and hon. Friends.
The Minister has made a minor change to a piece of legislation that I shall describe in three words — unnecessary, vindictive and wicked. It is unnecessary because it has not dealt with the problem that the Government were trying to tackle. The editorial of the Newcastle newspaper The Journal today emphasised that point when it said:
"It may be that the Government reacted too quickly and without proper research to deal with a situation which happened to fit their own particular set of prejudices."
The Journal is certainly not a Left-wing paper.
The Government have not dealt with the problems of landlords who exploit youngsters, nor have they dealt with the unsatisfactory nature of the property into which many youngsters will be driven.
The legislation is vindictive because it attacks the most vulnerable group of youngsters—those under 26 who are both homeless and jobless. It is especially vindictive, as the Minister should know, because of the many and varied reasons why youngsters are forced to leave home in the current difficult social climate, such as high unemployment and the consequent strain on families.
The legislation is wicked because it will lead to anti-social problems. My hon. Friends have already mentioned suicide and pregnancies, and there will be many more during the next few months.
I request the Adjournment of the House because the regulations must be withdrawn. Nothing else will satisfy Opposition Members. The alternative will be piecemeal changes to the regulations and, as television and newspaper commentators continually tell us, social problems and hardship for youngsters.
I must get this into the Official Report. I wrote to the Minister on 15 April and enumerated 10 to 12 points.—
Mr. Speaker: Order. The hon. Member must not make a speech. He must make a case to me showing why this is urgent and important.
Mr. Boyes: This is part of my case for urgent consideration, Mr. Speaker, because I wrote to the Minister on 15 April and have not yet received a reply. In that letter I enumerated a number of points. If they had been taken into consideration, there would not have been the death of one youngster, attempted suicide by other youngsters and the other social problems that have arisen. I am sure that I speak for every Opposition Member when I say that we wish you to grant the application so that we may express as strongly as possible the need for these regulations to be withdrawn immediately.
Mr. Speaker: The hon. Member asked leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the need for the withdrawal of the Government's board and lodging regulations affecting homeless under—26-year-olds—the Supplementary Benefits (Requirements and Resources) Miscellaneous Provisions Regulations 1985."
I have listened carefully to what the hon. Member has said, but I regret that I do not consider that the matter which he has raised is appropriate for discussion under Standing Order No.10 and I cannot, therefore, submit his application to the House.

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: By leave of the House, I shall put together the Questions on the eight motions relating to statutory instruments.
Ordered,
That the draft Merchant Shipping (Fire Protection) (Ships Built Before 25th May 1980) Regulations 1985, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Merchant Shipping (Fire Appliances) (Amendment) Regulations 1985, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Merchant Shipping (Fire Protection) (Amendment) Regulations 1985, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Merchant Shipping (Grain) Regulations 1985, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Merchant Shipping (Radio Installations) (Amendment) Regulations 1985, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Industrial Training Levy (Engineering Board) Order 1985, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Job Release Act 1977 (Continuation) Order 1985, be referred to a Standing Committee on Statutory Instruments, &c.
That the Export of Goods (Control) Order 1985 (S.I. 1985, No. 802), be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Biffen.]

EUROPEAN COMMUNITY DOCUMENTS
Ordered,
That European Community Documents Nos. 12451/80 and 9826/84 concerning observation of markets for freight transport by road, rail and inland waterway be referred to a Standing Committee on European Community Documents. — [Mr. Biffen.]

Co-ownership of Flats
4.43 pm
Sir Brandon Rhys Williams: I beg to move,
That leave be given to bring in a Bill to permit the residents of flats in mansion blocks and substantial conversions in private ownership to form companies with powers to acquire and manage the properties under stated rules of common ownership; to empower such a company in certain circumstances to apply to the courts for the appointment of a managing trustee; to require local authorities to keep lists of persons qualified to act as managing trustees or as secretaries of such companies and for related purposes.
The problem at which my Bill is aimed to provide some solution is well known to hon. Members on both sides of the House and was very well aired by my hon. Friend the Member for Chichester (Mr. Nelson) in the debate on the Adjournment of the House on 24 May, to which the Parliamentary Under-Secretary of State for the Environment gave some very helpful, but at this stage still non-comittal, replies.
It is important for the House to look forward to the publication of the Nugee report. I hope that hon. Members who, like myself, have this problem in their constituencies will have the forgiveness of the House if they come forward, even at this late stage, with some specific recommendations which they hope will be helpful.
It has often been pointed out that we have a certain unbalance where the acquisition of residential freehold is concerned. The House long ago agreed that in the private sector those living in houses on long leases should have the right of enfranchisement and be able to enjoy the benefit of freehold ownership. In the public sector the Government have made tremendous strides, which we all appreciate and are grateful for, by allowing people in council houses, and also in council flats, to acquire their own property. But people living in flats in private ownership are, as it were, second-rate citizens, because they do not have the right at present to acquire their freehold. I believe that a formula can be found, which is fair to both sides, that will encourage this type of home ownership for people living in flats.
On previous occasions the House has permitted me to introduce a Bill on this subject. I hope that on this occasion the Bill will make progress, in the sense that the Minister will pay serious attention to the problems, of which he is well aware, which are really widespread in inner London and in other parts of the country. I am honoured that he has chosen to be present during the debate this afternoon. Such things are very much appreciated on the Back Benches.
I shall deal with the Bill as briefly as possible. The purpose is to provide a convenient statutory means by which the tenants and the lessees of purpose-built blocks of flats—or buildings converted so as to consist only of self-contained flats—may act jointly to purchase their landlord's interest in the property at a fair valuation. The Bill would not apply to any property in owner-occupation or to any property consisting of fewer than four self-contained flats, and it would not, of course, extend to local authority properties.
The Bill would specify that in order to exercise the right of purchase a company — which I suggest might be known as a condominium company, making use of an expression which is very well understood in the United States—could be formed, in accordance with a model

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constitution, which would include provisions to ensure that a block of flats acquired by the tenants under the Bill's provisions would be properly managed. There is a danger that enthusiastic tenants' associations might overreach themselves by acquiring properties which were in need of serious repair and then find that they could not raise enough money among themselves to look after the block properly. That, of course, would lead to dissension and bad feeling, such as there was in the days when there were two sides and the owners were reluctant to find the necessary capital and the people living in the flats felt that the block was being neglected.
The Bill would grant to a properly constituted condominium company the right of pre-emption, to be exercised within a maximum of six months. That, I think, is not very controversial. When a block has been put on the market, most people feel that a tenants' or residents' association, if it acts quickly and responsibly, should have a right of pre-emption. I hope that that will be one of the recommendations of the Nugee report. However, the Bill would only extend the right to require the owner to enter into negotiations to dispose of his interest in other circumstances where all the flats in the property are held on long lease.
The difficulty is one of valuation. Where there are mixed regimes in 'a block, it is extremely difficult for even the most experienced and fair-minded person to know what is a fair price for the block, because estimates have to be made of the dates on which flats under controlled rents may become available, and vacant possession will enable the owner to make a substantial gain on those particular flats.
The payments to be made by the company to acquire the building would be based on a valuation prepared in accordance with principles laid down in the Bill and provide a reasonable assessment of the current value of the vendor's interest. There should be no question whatever of the right being extended to the residents of purchasing the property on confiscatory terms. The valuation should take into account the different forms of tenure in the property and the market value of any ancillary properties, such as shops, offices or other non-residential premises integral to the block. The valuation should be subject to arbitration.
To encourage continuity of ownership, the Bill provides that if any tenant of a flat belonging to a co-ownership scheme of the type envisaged by the Bill should sell his flat within a short period after the acquisition of the building by the tenants' company, any profit he makes would be shared with the company on a sliding scale designed to give the company the main benefit of any windfall capital gains, particularly in the early years.
Where difficulties arise in the relationships between the residents and the owners or their managing agents, the right will be conferred on the residents to apply to the court
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in certain circumstances for the appointment of a managing trustee. This new suggestion which I am making in this Bill is, I believe, an extremely practical solution to the type of deadlock situations which occur all too often, unfortunately, in mansion blocks where tenants have a deep suspicion of the intentions of the managing agents and nothing can be done about maintenance or even routine upkeep of the block because the tenants' association is not prepared to agree to the normal operation of the service charges.
It would be permissible for a condominium company to issue debentures and also participating preference shares; and it could qualify for grant on the same terms as a housing association. I am very anxious that a residents' association, properly constituted, should have assistance in the early years from building societies and other financial institutions. All too often they are reluctant to lend money on fixed-interest terms, but willing to enter into some sort of participatory arrangement so that they can take their money out after a relatively short time with an element of profit involved. That would encourage outside finance to come to the aid of residents' associations and give them a practical opportunity of meeting the price which they have to meet if they are going to take the chance to buy the block when it is offered to them.
I am hoping to repeat in my Bill the schedule, which is a model memorandum and articles for a condominium company.
Even if my Bill were to make no progress, the fact that it was available in print would, we think, be of use to many people thinking of setting up residents' associations. I hope, therefore, that the House will give me leave to reintroduce my Bill.
Question put and agreed to.
Bill ordered to be brought in by Sir Brandon Rhys Williams, Mr. Hugh Dykes, Sir Geoffrey Finsberg, Mr. John Hunt, Mr. Anthony Nelson, Mr. Michael Shersby, Mr. Martin Stevens and Mr. John Wheeler.
Sir Brandon Rhys Williams: I emphasise that not all of my supporters will necessarily commit themselves to all the measures that I am recommending in the Bill.

Co-ownership of Flats
  CO-OWNERSHIP OF FLATS
  Sir Brandon Rhys Williams accordingly presented a Bill to permit the residents of flats in mansion blocks and substantial conversions in private ownership to form companies with powers to acquire and manage the properties under stated rules of common ownership; to empower such a company in certain circumstances to apply to the courts for the appointment of a managing trustee; to require local authorities to keep lists of persons qualified to act as managing trustees or as secretaries of such companies; and for related purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 5 July and to be printed. [Bill 171.]
Orders of the Day

  European Communities (Finance) Bill
  Order for Second Reading read.
  4.50 pm
  Mr. Tony Marlow: On a point of order, Mr. Speaker. We have passed a business motion to allow the Representation of the People Bill to go on until a late hour. The 10 o'clock rule has been dispensed with. This is an important constitutional Bill—
  Mr. Speaker: Order. The hon. Member has misread the Order Paper. That motion will be considered at 10 o'clock.
  Mr. Teddy Taylor: On another point of order, Mr. Speaker. Back Benchers have three hours in which to make their speeches on the European Communities (Finance) Bill. Would it be in order to suggest that we have another two hours to debate this vital Bill? Can anyone but a Minister propose such a step?
  Mr. Speaker: That cannot be done. The Money Resolution will provide a little additional time for debate.
  Many right hon. and hon. Members wish to take part in the debate, so I hope that speeches will be brief. I shall apply the ten-minutes limit on speeches between 7 o'clock and 9 o'clock and I hope that those hon. Members who speak before then will bear that in mind.
  I have not selected the amendment in the name of the hon. Member for Thanet, South (Mr. Aitken).
  Mr. Marlow: Further to the point of order, Mr. Speaker. Is it or is it not possible for the Leader of the House or anyone else to move that the time for the debate be extended beyond 10 o'clock?
  Mr. Speaker: No such notice has been given and notice must be given for such a motion to be moved.
  4.52 pm
  The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): I beg to move, That the Bill be now read a Second time.
  The House will realise that this is the most significant piece of primary legislation affecting our position in the Community since the European Communities Bill 1972. I therefore propose to begin by putting the present Bill into a wider perspective, by making plain to the House the important part which Community membership plays across the whole range of our foreign and economic policies.
  Our role as a leading member of the Community is increasingly central to our position in the North Atlantic Alliance, to the quality and weight of our contribution to the dialogue between East and West and, indeed, to our ability to maintain a worldwide foreign policy. It is the effectiveness of our presence in the Community which is the key to our influence on the future of Europe, and so to our capacity to promote Britain's interests in the wider world.
  With or without our membership, the European Community would be a major factor in Britain's economic life. If we were outside, we would have free access neither to a single large market for our goods and services, nor to
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  a group of countries which can serve as partners in the battle to compete in the new technologies. If we were outside, the problems created by agricultural subsidies in the Community itself, the United States and elsewhere would be much more serious for us than they are. If we were outside, we would experience the impact of Community policies without being able to shape or influence them.
  Those are only some of the reasons why our future so plainly lies within the European Community. That is why the great majority of the House is now rightly concerned that we should succeed in that setting. I want in this debate to show how we have already brought our influence to bear in the Community, and to describe the opportunities that have opened following the agreement reached at Fontainebleau last year.
  The wider debate is, of course, already well under way about the development of the Community's policies and institutions over the next decade. There is a new and growing determination to achieve a genuine common market in goods and services; to ensure that Europe can make the most effective use of its economic strength, compete successfully in world markets, and so offer long-term job opportunities for its peoples.
  The Community of ten will soon become the Community of twelve. Spanish and Portuguese membership of the Community will reinforce democracy in those two countries. The wider Europe will be able increasingly to work together in external affairs.
  All this has been made possible by the agreement reached at Fontainebleau. At the core of that agreement was the solution of what became known as "the British budget problem". That is the question which this Government placed firmly at the top of the Community agenda when we came to power in 1979. The problem was not just that Britain was paying too much. It was a problem that itself lay at the heart of the whole structure of the Community. It was a problem that our predecessors had completely failed to solve, a problem which was tackled in earnest for the first time only by the present Government.
  The urgency of the problem was sharpened by the mounting cost of the common agricultural policy and by the imminence of Spanish and Portuguese accession, but it was brought to a head and brought to a conclusion only by the tenacity of this Government: by our determination to secure a fairer system and to light hard for our interests within a strong and vigorous Community.
  As the House is well aware, long and hard negotiations were necessary, in the first place, to persuade our partners to accept the basic validity of our argument; and then to persuade them — no less difficult — to accept the consequences for themselves of putting our financial contribution to the Community on to a fair basis.
  The agreement reached at Fontainebleau, the effect and consequences of which are embodied in the Bill that is before the House today, was then the culmination of a long process. It has been a process in which my two predecessors as Foreign Secretary, and my successor as Chancellor of the Exchequer, have all battled tenaciously, under the leadership throughout of my right hon. Friend the Prime Minister. The house should pay tribute to them all.
  Mr. George Foulkes: Tell us what you have done.
  Sir Geoffrey Howe: I am much too modest to say but, as the Prime Minister told the House last year, the outcome of those negotiations was good for Britain and good for the Community. It is better than anything else previously on offer. It is far better, of course, than the reforms proclaimed by the Opposition when they were in office. We have achieved the fundamental change in the operation of the Community which eluded them completely.
  It is difficult to overstate the significance of what was won at Fontainebleau. We secured the repayment of our 1983 refund of £434 million. We secured agreement to our abatement for 1984 of £600 million. Most important of all, we secured agreement to the establishment of a durable system for the abatement of our contribution. That system is embodied in a legally binding form in the own resources decision which the House is, in the first subsection of this short Bill today, being asked to approve for inclusion in the list of Community treaties in the European Communities Act 1972.
  The agreed arrangement features an automatic system for the abatement of our VAT contribution. In 1986 alone, this will be worth around £830 million to this country. Over the next three years, it will be worth £2·5 billion. Henceforth we shall be contributing only half what we would have had to pay under the present 1 per cent. ceiling. That is the effect of the agreement which I am today commending to the House.
  Mr. Marlow: Is my right hon. and learned Friend about to say that, although we are about to agree to Community own resources of 1·4 per cent., we shall be paying less than 1 per cent. —that is, of course, after rebate? My right hon. and learned Friend will know that the average cost after rebate over the last four years of United Kingdom Community membership in VAT terms has been 0·5 per cent. What are the additional benefits for us from doubling our percentage VAT payment over future years?
  Sir Geoffrey Howe: If my hon. Friend will be kind enough to listen to me, I shall deal with precisely that question.
  It is important to recognise that the rebates that we were receiving in the years before Fontainebleau were themselves on a declining trend. It is important to recognise that figures such as those offered by my hon. Friend the Member for Northampton, North (Mr. Marlow), averaged over a four-year period, and those averaged over the period to 1972, are wholly fictitious and misleading. They take account of the low figures payable during the long transitional period. I want to focus on the figures that were payable during the last year before Fontainebleau and the figures that would have been after Fontainebleau, if it had not been achieved.
  Mr. Marlow Mr. Marlow rose—
  Sir Geoffrey Howe: My hon. Friend will have his opportunity to speak.
  As a result of the agreement made at Fontainebleau, France will contribute to new Community policies through the allocated budget at a rate of 26 per cent., Germany will contribute at 31 per cent. and the United Kingdom will contribute at only 7 per cent. France is now becoming a significant net contributor to the Community budget for the first time. Within two or three years, France is likely to be a larger net contributor than the United Kingdom.
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  The system is worth more to us than the previous refund arrangements, and it has many other advantages. We shall no longer have to negotiate about the amount, argue about the timing or justify how the money is used. Instead of ad hoc and arbitrary refunds, our VAT contribution will be reduced automatically and without procedural argument each year. The system is built into Community law. It will last as long as the 1·4 per cent. ceiling remains in place — [Laughter.] The hon. Member for Hamilton (Mr. Robertson) should listen to the facts and face them. That can be changed only by the unanimous decision of the member states and with the agreement of all their Parliaments, including our own. There can be no change in the system and no further increase in own resources without the consent of this House.
  Mr. Eric Deakins: I am grateful to the right hon. and learned Gentleman for giving way. Does this mean that we shall have another bargaining session in a couple of years' time in which we shall be blackmailed into giving way on the 1·6 per cent. to maintain our rebate? What sort of deal is that for this country?
  Sir Geoffrey Howe: In the absence of unanimous agreement by every member state and endorsement by every member state's Parliament, the status quo continues.
  Several Hon. Members Several Hon. Members rose—
  Sir Geoffrey Howe: I realise, of course, that hon. Members wish to be satisfied that it was right to secure our abatement mechanism in the context of the increase in own resources.
  I am convinced that the approach which we adopted was right. Unless we had been willing to consider the increase, there is no doubt that our partners would not have been ready to agree to any further refunds for the United Kingdom—
  Mr. Teddy Taylor Mr. Teddy Taylor rose—
  Mr. Nicholas Budgen rose—
  Sir Geoffrey Howe: —let alone to accept the lasting system of abatements that we have now secured. I remind hon. Members that, whatever the justice of our case, we had no automatic right to a rebate. The automatic right to rebates is something that we have secured, and could only have secured, by success in these negotiations.
  Mr. Budgen Mr. Budgen rose—
  Mr. Ron Leighton rose—
  Sir Geoffrey Howe: Let me seek to quell the interested crowd of inquiries by taking the interventions of two or three of the prime candidates.
  Mr. Teddy Taylor: Has my right hon. and learned Friend seen the public expenditure White Paper which states that, in 1987, our contribution after Fontainebleau will be £973 million net, after all repayments? Is not this argument about rebates rather like my wife saying that she can get a bigger discount at Harrod's if she buys a mink coat rather than a fox fur?
  Sir Geoffrey Howe: I appreciate that my hon. Friend has developed that joke on previous occasions, but it has nothing to do with the case. As a result of Fontainebleau, we shall pay half what we would have paid. We shall pay a VAT rate of less than 1 per cent.
  Mr. Nicholas Winterton: But it is not less money.
  Sir Geoffrey Howe: I shall allow my hon. Friends to make their own points in their own speeches.
  If the 1 per cent. ceiling had remained in place, we should have had to make a net contribution of £1·5 billion to the Community in this financial year. As a result of the Fontainebleau agreement, and despite the accompanying increase in own resources, our annual net contribution will be half that size.
  Mr. Budgen: Will my right hon. and learned Friend give way?
  Sir Geoffrey Howe: No.
  Mr. Leighton Mr. Leighton rose—
  Mr. Deputy Speaker (Sir Paul Dean): Order. We cannot have several hon. Members on their feet at the same time. It seems quite clear that the Foreign Secretary is not giving way.
  Sir Geoffrey Howe: In the year immediately before Fontainebleau, we were contributing at £2·5 million a day. Those arrangements ran out last year. Without the Fontainebleau agreement, and relying on the 1 per cent. ceiling, we should have had to contribute at £4 million a day. After Fontainebleau, even with increased own resources, we shall be contributing at £2 million a day.
  Mr. Leighton Mr. Leighton rose—
  Sir Geoffrey Howe: That is the reality — a formidable reduction of that which would otherwise have been available. The only effect of failing to pass this Bill would be a continuing and substantial increase in the amount payable.
  Mr. Leighton Mr. Leighton rose—
  Sir Geoffrey Howe: What is more, as part of the Fontainebleau agreement, we have secured a system of budget discipline—
  Mr. Budgen Mr. Budgen rose—
  Sir Geoffrey Howe: —which has been one of the key objectives on both sides of the House.
  Mr. Leighton Mr. Leighton rose—
  Sir Geoffrey Howe: The essence of that discipline is the establishment—
  Mr. Leighton Mr. Leighton rose—
  Sir Geoffrey Howe: No, I shall not give way for the moment. The hon. Gentleman must be patient.
  The essence of that discipline is the establishment of a financial guideline designed to ensure that agricultural spending grows at a lower rate than that of the own resources base as a whole.
  Mr. Marlow: You do not believe that!
  Sir Geoffrey Howe: The system was described by my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) in the debate in the House on 11 December last year.
  My hon. Friend the Member for Northampton, North said "You do not believe that." I invite him to address himself to the reality. The system of budget discipline which my hon. Friend the Member for Pentlands described
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  is now plainly coming into effect. The Community showed its determination to start the process of reform in last year's price fixing.
  Mr. Leighton Mr. Leighton rose—
  Sir Geoffrey Howe: This year, the discipline has been seen in full operation. The effectiveness of the discipline has to start with the Commission, which is responsible for the price proposals. That is exactly what happened. The Commission's proposals this year were, and still are, within the 1986 guidelines. The Commission has undertaken to ensure that the final costs of the price fixing are within the agricultural figures already agreed by budget Ministers.
  Mr. Budgen Mr. Budgen rose—
  Sir Geoffrey Howe: My hon. Friend will have his opportunity to speak later.
  Perhaps I might give an insight into the figures. The percentage increase in guaranteed spending in 1983 was 28·3 per cent. It was 15·6 per cent. in 1984, it is 8·4 per cent. for 1985, and the increase in the provisional draft budget for 1986 is 2·5 per cent. We could not have achieved a more dramatic deceleration than that. As a result of that decrease, the real price cuts imposed on the CAP last year were 4 per cent., as a result of which the real price cuts imposed on the CAP this year are 3·5 per cent. If that does not amount to the effective imposition of budget discipline, I do not know what does.
  Mr. Budgen: Bearing in mind my right hon. and learned Friend's assurances that all will be well in the future, will the Government give a clear undertaking that they will not ask again for an increase in own resources to 1·6 per cent. before 1 January 1988?
  Sir Geoffrey Howe: The position remains as I have stated it. Budget discipline is now in force and effective. There can be no question of this Government or any other, or of the Council, considering the prospect of an increase in own resources without taking into account the need for unanimity in the Council and endorsement by the House. Then, as now, we shall have to take account of the fluent and persuasive advocacy of my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) and others.
  Mr. Nigel Spearing: Will the right hon. and learned Gentleman give way?
  Sir Geoffrey Howe: Perhaps the hon. Gentleman will allow me to continue for a moment.
  For next year, the pattern is the same. The Commission's preliminary draft budget for 1986 proposes a figure for agricultural spending which, at 64 per cent. of the Community total, is also well within the guideline.
  That is also so in the Council this year. Price cuts have been agreed for tobacco and most fruit and vegetables. Prices for wine, beef and sheepmeat have been frozen. Milk quotas have been reinforced and a further 1 per cent. cut in quota implemented. Even on cereals, the argument has not been, as so often in the past, about a price increase but about the size of the price cut. Once again, in the Agriculture Council we saw a 9:1 situation. But this time it was not Britain alone arguing with the rest of the Community against price increases, but Britain and eight other member states all arguing for a price cut, and achieving it.
  Mr. Spearing: Does the Foreign Secretary recall that at Stuttgart he said that his conditions for increasing VAT to 1·4 per cent. would be effective budgetary discipline and a rebate mechanism? He has achieved the second. Does he agree that budgetary discipline is not enshrined in the Bill? Regulation 4972/1/82 is but a conclusion, which, according to the European Scrutiny Committee, does not have legislative force. As a former Chancellor of the Exchequer, how can he ask the House for legislation to pay more without legislation constantly to control what is being paid?
  Sir Geoffrey Howe: I appreciate the hon. Gentleman's point, to which he has previously directed attention. The agency and institutions of the Community have committed themselves in the decision to which the hon. Gentleman refers to be bound by budget guidelines and discipline along those lines. If one looks at the way in which those matters are being applied, one sees that the institutions of the Community are applying precisely that budget discipline.
  The hon. Gentleman refers to my past as Chancellor of the Exchequer, and I know only too well that the battle to sustain budgetary discipline, whether nationally or internationally, must be fought year after year. In maintaining the pressure for reform of agricultural policy, as the House would wish and as we shall, none of us should delude ourselves that there are easy options open to us, either within the Community or outside it. It is a matter of sustained application of political will. No automatic device can achieve that.
  The Community has not been alone in devising a system which has paid for the real benefits of security of supply, and decent living standards for those who work on the land by subsidies, which have imposed a heavy burden on taxpayers, and strains on relations with trading partners and on Third world producers. The United States, for example, is in a similar position. The problem cannot be solved by denunciation, but only by determined reform from within. That is precisely the programme to which the Government and the Community are now committed. We shall sustain that programme.
  Dr. Oonagh McDonald: The Foreign Secretary has just said that the budgetary battle must be engaged in each year, both nationally and in the EC, yet the Economic Secretary to the Treasury in his article in The Times today said that the reason for voting for the Bill should be because it will prevent a return to the guerrilla warfare that has characterised EC budget discussions for many years. Perhaps the right hon. and learned Gentleman would care to get together with the Treasury so that they can put forward one reason for the Bill, and not more than one.
  Sir Geoffrey Howe: I am delighted that the hon. Lady has read my hon. Friend's article, but sorry that she has not seen as much wisdom in it as she should have done. The sentence she mentioned precisely reinforces the point that I made earlier, but which she may not have noticed. I have said that from now on there will be no guerrilla warfare from year to year between Community states about the British budget contribution. All that is resolved, and a durable system has been put in place. The hon. Lady must understand that, not surprisingly, my hon. Friends and I are making precisely the same case—and an extremely good case.
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  We have achieved the conditions that we set before we should be ready to agree to any increase in own resources. The increase proposed for the Community as a whole is to 1·4 per cent. That represents an increase of up to 20 per cent. in the own resources available to the Community. For Britain it is justified by the plain fact that we shall be better off after the increase than we were beforehand. But there are much broader arguments than that for the change.
  The change is required to finance the costs of enlargement, which will grow to between 0·1 per cent. and 0·2 per cent. of Community VAT by the end of the transitional period. It has always been accepted that Spain and Portugal, which will be among the poorest members of the Community, should not find themselves net contributors. The Community as a whole has decided that it is worth making some financial contribution in return for the wider benefits of enlargement: an enlarged area of stability and democracy and a larger common market.
  The increase is justified to finance the development of new policies, especially in the new technologies where we can operate more effectively as a Community than we can alone.
  Mr. Marlow Mr. Marlow rose—
  Mr. Eric Forth Mr. Eric Forth (Mid-Worcestershire) rose—
  Sir Geoffrey Howe: I shall give way in one second to my hon. Friend, who has not yet had a bite of the cherry.
  The increase is justified to meet existing commitments, which, in the past two years, have required supplementary finance. From now on, those commitments will be met within the framework of budget discipline that I have described.
  Mr. Forth: As the House has never yet had an opportunity to give its opinion on the policy of enlargement, does my right hon. and learned Friend agree that for those of us for whom enlargement is not a wise policy his reason for the measure is invalid, and puts us in great difficulty? Does he agree, therefore, that it would have been easier for us if we had discussed and considered enlargement separately, instead of it being brought in under the carpet today?
  Sir Geoffrey Howe: My hon. Friend will have to address himself to that question. If he finds that that argument is not persuasive, I hope that he will be persuaded by the other arguments that I have put forward. He will have an opportunity specifically to discuss enlargement when the accession treaty comes before the House. I have been giving the House a range of arguments why the Bill and agreement should be endorsed, four or five of which are in the interests of the Community, and one of which is overwhelmingly in the interest of the United Kingdom.
  The increase is required because the VAT ceiling applies to the highest rate for any single member state. The mathematical consequence of abating the United Kingdom VAT rate is that the VAT rate of every other country increases. While other member states will be contributing to the budget at more than 1 per cent. VAT, we shall be contributing at less than that figure. Compared to the 1 per cent. that we would have paid, if we had stuck with the present ceiling—
  Mr. Marlow: In the past, the figure for rebate has been only 0·5 per cent.
  Sir Geoffrey Howe: It may have been 0·5 per cent. in the past but it will be a full 1 per cent. in future, which is a great deal more than we hoped to gain under the agreement.
  Compared with that, our effective rate in 1986 will come down to about 0·8 per cent. That is the reduction which we have sought to achieve.
  Mr. John Townend Mr. John Townend (Bridlington)rose—
  Sir Geoffrey Howe: Forgive me, but I shall not give way. I must now proceed some distance.
  I should like now to turn to the other part of the Bill before the House today: the second subsection, which provides for the intergovernmental agreement on the 1985 Budget.
  The 1984 intergovernmental agreement was dealt with by a special Supplementary Estimate and a Consolidated Fund Bill. That was an exceptional procedure justified at the time by the urgency of making our intergovernmental agreement payment. This time round, we have chosen to use primary legislation, not because we consider inappropriate any other procedure, including use of section 1(3) of the European Communities Act 1972, but because there is a substantive link between the own resources decision and the intergovernmental agreement, and we wanted to give the House the fullest opportunity to debate both together. The House can hardly complain about that.
  The intergovernmental agreement is essentially a transitional measure to cover the period until new own resources come in on 1 January 1986. It is a legacy from the period before the budget discipline agreement came into force.
  About half our gross contribution under the present intergovernmental agreement of £250 million is likely to come back to the United Kingdom as receipts. Moreover, in contrast to the 1984 agreement, the expenditure covered by this intergovernmental agreement enjoys the full abatement agreed at Fontainebleau. Our net contribution will therefore be much smaller than the figure of £250 million that has caught attention. It will be only one sixth of that.
  We accepted this year's intergovernmental agreement only when we were satisfied that three conditions had been fulfilled. They were that the position of this House on the authorisation of the funds had been fully protected; that the amount involved was the irreducible minimum required to meet obligations; and that the United Kingdom's 1984 abatement of £600 million was fully assured.
  The reforms of the Community budget that we have achieved were necessary for their own sake, but they were more important than that. They provide the basis for the wider reforms we are now pursuing, to make the Community work better for the benefit of its citizens.
  Let me close by telling the House something about our objectives. It is important that hon. Members should have these in mind as they consider the present proposals for financing the Community in the years ahead.
  With the Fontainebleau agreement behind us, Britain has been able to make completion of the common market by 1992 the top priority of Commission and member states alike. The effective establishment of a single large market will not only give us an opportunity to exploit our strengths and skills; it is crucial to the creation of wealth and jobs and to the generation of profits that can stimulate research and the successful exploitation of our inventive skills.
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  Completion of the common market is the biggest single contribution that we can make to enable European companies, British companies, to exploit and market their research on a European scale and so compete in world markets efficiently and successfully. That is the way to cut the dole queues throughout Europe.
  In the run-up to this week's meeting of the European Council in Milan, we have put forward a number of ideas based on the guiding principle that we must decide as a Community what it is that we want to do, and can do better together, and then ensure that we have the means available to achieve those ends.
  That is why we have put forward proposals for a timetable for completion of the common market, and for improvements in decision-taking through greater use of majority voting and through a safeguard procedure to ensure that member states do not abuse their capacity to block decisions. The ability to uphold a vital national interest by insisting on unanimity is maintained. We also propose formalisation of political co-operation, including the establishment for the first time of a very small secretariat to ensure continuity and co-ordination.
  The opportunities are now open to us to make the most of our membership of the Community. It was for that purpose that the Government set out to achieve, and have achieved, a significant change in the basis of our membership. We have been strengthened in that task by the support of the House and by the detailed work of the Select Committee on the Treasury and Civil Service and the Scrutiny Committee, to the Chairmen and members of which I pay tribute.
  Today, the House has to make a judgment, just as at Fontainebleau my right hon. Friend the Prime Minister and I had to make a judgment, on what was then and is now in the interests of the country as a whole. I am in no doubt that the agreement achieved at Fontainebleau represents a very good deal for Britain and a significant step forward for the whole Community.
  Mr. Anthony Beaumont-Dark Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)rose—
  Mr. Townend: Will my right hon. and learned Friend give way?
  Sir Geoffrey Howe: No, I am afraid not. I am now drawing to a close, because hon. Members would like me to do so.
  My judgment is that, if we had taken the negotiations at Fontainebleau up to and beyond the point of breakdown, we should have not only lost the chance of a financial deal very favourable to Britain but destroyed the chances of starting the whole process of reform that is now under way. If we had sought to hold out and rely on the 1 per cent. ceiling, we should now be facing a net contribution to the Community budget that would be costing us not £2 million but £4 million a day. Instead of being able to mobilise the majority that is now taking in hand the reform of the CAP, we should have been in a minority of one trying in vain to challenge a budget that was still devoted to increasing expenditure on the CAP.
  I do not believe that we would have been acting in the interests of the country to pass up that opportunity. Nor do I believe that the House would have wished us to embark on the only alternative means of securing a reduced British

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  contribution—by unilateral action that would have been a breach of our treaty obligations and would have dealt a severe blow to our relations with our major allies.
  Mr. Beaumont-Dark Mr. Beaumont-Dark rose—
  Sir Geoffrey Howe: I am sorry, but I shall not give way.
  We have shown by the agreement at Fontainebleau that we can achieve our purpose by determined negotiation. [Interruption.] We achieved our purpose in that agreement by negotiation of precisely that kind. It is the outcome of that resolute campaign, pursued by the Government for the past six years, which is embodied in the Bill. On that basis, I commend it to the House.
  5.24 pm
  Mr. George Robertson: I dare say that some people will be wondering why the Foreign Secretary is moving the Second Reading of the Bill, because, after all, it is presented in the name of the Chancellor of the Exchequer. However, for an explanation perhaps the House need look no further than the coverage of the European Community in Sunday's newspapers. All over both the quality and tabloid newspapers was spread the new hero of European politics—the British Foreign Secretary, now to be the saviour of the Milan summit. With amazing, not to say suspicious, unanimity, the papers suddenly see British initiatives, British leads and British solutions to the demise of the much-vaunted European union summit. Even yesterday's edition of The Times reached the stage of referring to
  "Britain's quiet takeover of the Community this year"
  in good humoured and well-orchestrated style.
  Presumably the Government's business managers, who have been under siege recently, believe that if the Foreign Office could pull off such a well-organised publicity stunt, transforming what will be a collective lack of any new ideas about revitalising Europe in Milan this weekend into a triumph for British statesmanship, the same architects of the same public relations agency might just be able to pull off the same trick today with the Bill. Certainly they did not imagine that the Chancellor could do the same trick. Instead, the great conjuror himself has managed the three-card trick this afternoon and come up with each faceless card in turn.
  The Bill represents a confession of failure, not success—a failure by the Government's own explicit standards which they laid down at the Fontainebleau summit last year, and a failure—indeed, a national humbling—which will now be enshrined in British law. The Bill is designed to increase the resources of the European Community by between 20 and 40 per cent., and endorse yet another free gift, or donation, as it was so well described in a previous debate, of another £250 million, but in return for what?
  Mr. Robert Jackson: While the hon. Gentleman is talking about free gifts and donations, will he remind the House of the precise total sum of money yielded by the budget rebate mechanism negotiated by the Labour Government in 1974?
  Mr. Robertson: The Foreign Secretary has already explained, in answer to criticism from Conservative
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  Members, the difficulty of comparing earlier years, when transitional arrangements applied, with the present fiasco. It cannot easily be done.
  The Bill is in return for what? It is in return for worthless promises on budget discipline, in return for a rebate which we shall eventually help to pay for ourselves, and in return for cashing in the only effective bargaining lever that this nation had for European Community reform. The deal which we are being asked to rubber-stamp today is little less than a sell-out, which will cost the country money, because, despite the much-trumpeted rebate and abatement, we shall still end up paying more cash to the European Community within the next two years. The deal is not permanent, because the new increase in the Community's own resources is already almost totally committed for 1986, as figures from the European Commission itself show. We shall be back at the negotiating table late next year when the cash finally runs out.
  The deal has done nothing to control farm spending—that monster which piles up mountains of immovable, undisposable rotting food—while Europe's jobless millions continue to be ignored. Yet again only lip-service was paid to them in the speech of the Foreign Secretary, in a way that was paralleled only by his hon. Friend the Minister of State, Foreign and Commonwealth Office, when he opened the debate last Thursday. The veto two weeks ago by West Germany on the already feeble cereal price cut says it all. The Government have had five years of conflict and souring argument with our European partners, and have finally been sold an expensive pup. They have achieved nothing of substance, and have set the scene only for the next round of the fight.
  Ministers may find it convenient to portray all opposition to that deal as arising from instinctive hostility to the European Community. That is of course convenient, but it is not true. For some people that has an element of truth, but the sordid way in which the sell-out is being oversold as a success will only feed the prejudices of those who, in any event, hate the Common Market and all that it stands for. The accusation will not stick.
  Many others, both inside and outside the House, who criticise this foolish and injudicious package—those who, like myself, have always supported British membership of the Community—see see in this deal the objectives of the European Community betrayed, the genuine motivations of the Community undermined and its raison d'etre and potential subverted by a shoddy compromise which continues the present shambolic financial arrangements and leaves Europe still unable, unwilling and almost incapable of meeting the major challenges of unemployment, of a continent-wide recession, and of the need for growth of investment to permit competition with the rest of the world.
  The Economic Secretary to the Treasury has, with a rare high profile for him, put his case—a case which has been transferred tonight lock, stock and barrel from the Treasury to the Foreign Office—in print in The Times today. In an article which reads rather like an election leaflet, he says:
  "we achieved a system of budgetary discipline designed to bring the growth of Community expenditure under much tighter control … we see that the new budgetary disciplines are now beginning to bite … Fontainebleau has changed the rules for good."

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  How different from the cautious, defensive responses from the hon. Gentleman in the pounding which he now regularly takes from the Treasury Select Committee. How colourful the language of that article compared with the meandering, conditional, reserved statements that he used in the House in January of this year, when the last topping-up exercise was made to EEC coffers. Yet what a fiction it is that is being peddled by the Government, a fiction which recent experience has already shown up in graphic style.
  Last year the Prime Minister made the position clear when she told the House that only after a satisfactory agreement on expenditure control had been settled would she wish to put proposals to the House to implement the whole package. The Foreign Secretary used virtually the same words on 10 July, when he said:
  "only"—
  note that the word "only" was used once again—
  "when Finance Ministers have adopted the necessary measures on budget discipline will the Government be prepared to recommend to the House that the own resources ceiling should be increased." — [Official Report, 10 July 1984; Vol. 63, c. 897.]
  The great trick employed by the Foreign Secretary today is to pretend that everything that he said would happen has happened. Against all the evidence to the contrary, the right hon. and learned Gentleman simply says, "We asked for budget discipline. They agreed to that, and what we have — whatever the outside world may say and whatever all the evidence suggests — is budget discipline."
  The facts are totally different from that. Has such control been settled? Only enough to justify today's package. There is no sign that that control has been given. The key to budget discipline is in the common agricultural policy, and that is up as a proportion from 68 per cent. of the budget last year to 74 per cent. this year. It is consuming most of the assets of the Community, mainly in piling up food mountains.
  Mr. Forth: Does the hon. Gentleman agree that the likelihood is that the entry of Spain and Portugal into the Community will increase the political pressure on the EEC for higher spending, as both those countries have a direct vested interest in the maximum expenditure by the Community, as they are likely to be beneficiaries? That is another factor which throws increasing doubt on the effectiveness of budget discipline in the political sense.
  Mr. Robertson: The hon. Gentleman is right. The pretence is that the additional resources being voted today will go to commendable and worthy projects, such as the new technology community, which, among his other fine initiatives, the Foreign Secretary has been proposing—none of which has been notified to the House.
  The documents containing the Foreign Secretary's suggestions for the reform of the Community that will be before the Milan summit have not even been placed in the Library of the House of Commons. They appear to be available to the European press and, it seems, they are available in Brussels, but they are not available in this House. Yet they will be discussed as a British initiative at Milan next weekend. The way in which the House of Commons is being treated is an indication of how little value the initiatives will prove to be.
  Three weeks ago, Mr. Frans Andriessen, the Commissioner for Agriculture, outlined the Commission's
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  latest thinking on long-term developments in the common agricultural policy. As The Guardian put it, Mr. Andriessen
  "insisted that the starting point for reform must be the control Of prices. 'Let us have no illusions on this point. If the Community cannot succeed in controlling the markets through a restrictive price policy, sooner or later we shall find ourselves extending the empire of quotas.
  That is to be the target of those operating the guidelines for the common agricultural policy's internal budgetary discipline. That is to be the financial constraint and the real budget mechanism.
  However, certain statements have already been made about that by some Ministers. For example, the Economic Secretary to the Treasury said in evidence before the Select Committee:
  "I think the first demonstration of the effects of the budget discipline is that the agricultural price-fixing proposals for this year were put forward by the Commission within the guidelines."
  Thus, the proposals put forward by the Commission within the guidelines were to be the criteria by which we would judge the effectiveness of the financial discipline. Indeed, the Economic Secretary went on to say that the Agricultural Council had demonstrated that the guidelines imposed a tight restraint on agricultural expenditure.
  How peculiar, in the light of that, to consider the history of the price proposals. The Commission first asked for a 5 per cent. cut in key cereal prices. That was thought to be demanded by the guidelines on budget discipline. It then allowed itself to be negotiated down to an unnegotiable 3·6 per cent. cut in cereal prices, and it was on the basis of 3·6 per cent. that the intergovernmental agreement which we are being asked to endorse was calculated. However, within days of the 3·6 per cent. figure being debated the Commission moved down to an almost ludicrous 1·8 per cent. proposed cut in cereal prices.
  There followed the veto by West Germany. How could budget discipline be guaranteed by the self-restraint of the Germans if, on the first occasion when budget discipline was tested, they used the veto and reduced the effectiveness of the Commission?
  In January, the Minister of State, Foreign and Commonwealth Office even dared, when replying to the debate on the European Communities budget, to quote the German Finance Minister, Herr Stoltenberg. Our Minister, justifying German self-interest as a reason for maintaining budget discipline, said that Herr Stoltenberg had said:
  "We now have for the first time an effective instrument to bring about a sensible control of expenditure."
  The Minister went on:
  "It is therefore easy to see why Herr Stoltenberg … and the French Finance Minister, will have an enormous vested interest in ensuring proper control of expenditure".—[Official Report, 22 January 1985; Vol. 71, c. 948.]
  Why should we bother to speculate about budget discipline when the one guarantee which the Minister offered the House in January of this year was vetoed six months later by the German Government? It is far easier to see why the pious words of January and the silly words in The Times today are to die along with budget discipline on the altar of the Bavarian farmers' vote.
  Agricultural spending will still be demand-led. It will still rage on with loopholes and ineffectual paper guidelines pushing up expenditure. The only effective controls will be on the worthwhile side of Community spending — on the regional and social funds, energy, technology, pollution control and research. With the

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  common agricultural policy, we shall simply continue to pay the Bills. It is truly bizarre to see the Government so obsessed with controlling and savagely cutting expenditure in this country but maintaining such a profligate attitude to expenditure in the European Community.
  Mr. Marlow: I am grateful to the hon. Gentleman for giving way, particularly as he has just made the point that the Government are about to double our VAT take from 0·5 to 1 per cent. Will the hon. Gentleman address himself to another part of the Government's justification that the entrance of Spain and Portugal is like motherhood and apple pie, that it is a good thing and that we should all want it? The Foreign Secretary said that the cost of that will be equivalent to 0·2 per cent. of the VAT take, but that does not start until next year, and it will be up to 10 years before it is effective, so how is that a justification for increasing VAT today?
  Mr. Robertson: Unlike the hon. Gentleman, the Opposition welcome the accession of Spain and Portugal to the European Community. We believe that it will have major benefits for them and for the wider Community. However, it is absurd for the Government to pretend that the increase in own resources is necessary solely to finance the accession of Spain and Portugal which, as the hon. Gentleman has said, has now been specifically identified as a negligible part of the funding. There is a great suspicion that the bulk of the additional resources will go in exactly the same way as they have always gone in the past—to finance the uncontrolled farm spending of the Community.
  Mr. Budgen: As the Opposition favour the accession of Spain, Portugal and also, I believe, Greece, will the hon. Gentleman tell the House what calculations the Labour party has made of the cost of accession of those countries? Do the Opposition believe that it will inevitably combine with increasing costs of supporting farm surpluses and lead to the Government's coming to the House again before 1 January 1988 to ask for an increase in own resources to 1·6 per cent., as seems to be half promised in the Fontainebleau agreement?
  Mr. Robertson: One does not have to be a statistical genius—I assure the House that I am not—to see that if the common agricultural policy remains in its unreformed state there is no question but that the money will run out. That is a point which the Foreign Secretary has signally failed to grasp. However, that does not alter the fact that the accession of Spain, Portugal and Greece can still be desirable and be contained within the budget of the European Community if the common agricultural policy excesses are controlled.
  The Economic Secretary to the Treasury said in an article in The Times today:
  "Fontainebleau has changed the rules for good."
  That is a prophecy and a half, especially from a Minister who has crawled back to the House time and time again with demands for refundable advances and supplementary payments and who is here today asking for another £250 million. He has now even dropped the word "repayable" from his description. The Foreign Secretary—a former Chancellor of the Exchequer—should today have spoken about the repayable advances that we have already made and precisely when and how those repayments will come
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  back to the United Kingdom Treasury. There was not a whisper about that, because they will not be refundable, and even the pretence has now been dropped from the specification.
  The Minister has publicly conceded, as well he might, that this may not be the end. In his evidence to the Select Committee on the Treasury and the Civil Service last week he said:
  "there was considerable pressure from a number of Member States to leave the amount open on the grounds that, if the price fixing was not completed, it might actually require more money."
  In The Times today the Minister said that the present requirement was
  "a direct result of the lack of budgetary discipline in the past, and takes no account of the new arrangements."
  Yet he has said that there is still pressure from member states to leave the door open because the price fixing is still not complete, whatever the Commission says about pushing through the 1·8 per cent.
  The Economic Secretary to the Treasury (Mr. Ian Stewart): If the hon. Gentleman had bothered to read the rest of my evidence he would know—I also made this clear to the House—that I rejected any possibility that the amount of the intergovernmental agreement should be increased. The Council accepted that and the Commission has also agreed, so there is no question of that being reopened.
  Mr. Robertson: The Economic Secretary might be well advised to keep to his hobby of archaeology and to dig more carefully over the old bones of his past statements. In January this year he said:
  "I should like to think that supplementary budgets for the European Community would not be a thing of the future, but that would be too optimistic".—[Official Report, 22 January 1985; Vol. 71, c. 884.]
  Either he has dropped that caveat or he is becoming unduly optimistic. Certainly his statements do not carry much conviction. He may have been able to persuade the Commission, but some member states believe that there will still be a demand for more money until a price settlement is reached. That is what many people in this country also believe and what the Minister's evidence to the Select Committee drives us to believe. Given the Minister's record, I do not think that the House will have much confidence in his statement that the Community begging bowl will not be coming round again in the coming year.
  The Economic Secretary says that Fontainebleau has changed the rules for good, but the European Commission apparently thinks otherwise. In a statement two weeks ago it said:
  "For its pan the Commission does not feel itself to be bound by 'budgetary discipline' considerations (this is an internal matter for the Council) with the exception of the farm prices aspect, on which the Commission has given certain undertakings."
  Mr. J. B. Unwin, deputy secretary in the overseas finance section of the Treasury, in evidence to the notorious Select Committee inquiry on 17 June, said frankly and openly:
  "the budget discipline agreement is not absolutely watertight".
  Clearly, there is a division in the Treasury ranks on this. Mr. J. B. Unwin was obviously not a co-author of the Economic Secretary's article in The Times, or perhaps he was told to write something else—"Yes Minister" lives again.
  Mr. Marlow: The hon. Gentleman seems to be saying that the 1·4 per cent. VAT limit will not work or even exist and that further supplementary advances will be required. Perhaps he will be kind enough to give way to the Treasury Bench, as I am sure that the Government are anxious to make it clear that the hon. Gentleman is wrong, and to do so as clearly and quickly as possible.
  Mr. Robertson: If the House will allow me a couple of minutes longer, I shall drive the nail further into the coffin. I shall then be delighted to give way to the Foreign Secretary if he wishes to answer the point.
  A press release issued by the European Commission last week refers to the VAT call-up rate for the preliminary draft budget for 1986, which the Foreign Secretary had the audacity to boast about as an example of budgetary discipline. It says on page 3 that the VAT call-up rate will be 1·35 per cent., even under the strict assumptions on which the draft budget is based. This leaves only a slight margin of about 900 million ecu up to the new ceiling of 1·4 per cent. VAT. Therefore, from the words of the Commission itself we see that the budget margin at present, even making assumptions such as zero price increases, will be only 900 million ecu. That is for the 1986 budget. Therefore, hon. Members who have said that there will be an increase in own resources up to 1·6 per cent. in 1988 had better revise backwards the date at which we can contemplate Ministers scurrying back to the Dispatch Box.
  Mr. Deakins: Is that Commission press statement and announcement based on the assumption that the Commission's draft budget, with its proposal for a 1·8 percent. cut in cereal prices for the 1985–86 marketing year, will go through? If it does not go through, would that not reduce the margin still further?
  Mr. Robertson: My hon. Friend is absolutely right. Not only that, but the budget for this year was written on the basis of a 3·6 per cent. cut in cereal prices, not 1·8 per cent. We do not know whether the 1–8 per cent. will go through, but we do know that the 3·6 per cent. will not. Therefore, there is already an imbalance in the budget, and that circle must be squared.
  We must never forget how the last negotiation was conducted, given this evening's events. The much vaunted rebate that has been negotiated was to have been unconditional. Indeed, in our debate in January the new writer for The Times said:
  "whatever decisions were taken about the mechanism for dealing with the Community's financial decisions in 1985, they would commit themselves to implementing in 1985 the Fontainebleau … abatement for 1984 to the United Kingdom."—[Official Report, 22 January 1985; Vol. 71, c. 886.]
  Yet only six months later our rebate is strictly conditional and absolutely tied hand and foot to three conditions: first, the Bill must go through this House and every other Parliament in the European Community; secondly, this Parliament must now agree to the supplementary budget; thirdly, there must be ratification by the 10 member Parliaments of the accession of Spain and Portugal to the Community.
  That is some bargain! We lost our unconditional rebate, and we will soon be back at the negotiating table. We lost our veto on overspending. We have achieved no reform of the CAP. We have a shown-to-be-worthless guarantee on budget discipline. We have no guarantee that additional own resources will not just feed the agricultural black
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  hole. We are forking out an additional £250 million in yet another supplementary bale-out payment, and probably more will be demanded. We have gone along with a colossal aid package, through the integrated Mediterranean programmes to Greece and other countries, which is bound to squeeze aid to our own hard-hit areas.
  In his article in The Times the Economic Secretary to the Treasury said:
  "Fontainebleau was a major achievement for the United Kingdom."
  If that was an achievement, we wait with dread to discover what failure is.
  We are told by the Economic Secretary:
  "there is no doubt that refusal to ratify the Fontainebleau agreement would cost us dear."
  We in this House must live with the fact that the passing of the Bill will also cost the country very dear. We will continue to spend more on the EEC, whatever the juggling with statistics shows, to the point where in net terms we will be spending £973 million in 1987–88.
  For that we get a bloated and growing agricultural spending spree which piles up obscene surpluses, a total failure of political will to tackle the jobs crisis, which affects every nation in the Community and condemns more than 14 million of our citizens to unemployment, and a chronic inability to face the challenge of technology, pollution, energy and competition from Japan and the United States.
  Mr. Nicholas Winterton Mr. Nicholas Winterton rose—
  Mr. Robertson: The Bill is all about endorsing a deal that solves nothing that is wrong with the Community, yet it concedes our one lever to make changes. It is a capitulation to the financial indiscipline that is at the root of the Community's inability to deal with Europe's problems. Far from being a permanent arrangement, it simply promises a return to the tangle when the new money eventually runs out. It has achieved only a temporary breathing pause at an enormous open-ended price. I urge the entire House to vote against it this evening.
  5.55 pm
  Mr. Edward Heath: Because of earlier events, the time for this debate is undoubtedly all too short — [HON. MEMBERS: "Hear, hear."] I thought that my hon. Friends would agree. It is the only thing on which I agree with them. I hope that I may be allowed to make a short intervention about the Bill.
  The hon. Member for Hamilton (Mr. Robertson) said that he has always been a supporter of British membership of the European Community, but it was very difficult to discern anything in his speech to indicate anything of the kind. There was not a constructive proposal in the whole of that speech.
  When the hon. Gentleman complained that my right hon. and learned Friend the Foreign Secretary had made a deal, the first reason he cited was that this Bill had to come to the House of Commons. What ground for complaint is that? He then complained that ratification of Spanish and Portuguese membership had to come before the House of Commons. Why must the hon. Gentleman complain about that? Thirdly, he said that the amount of own resources also had to come to the House of Commons. Why did he complain about that? This is the democratic procedure of the Community. The hon. Gentleman has

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  absolutely no grounds for accusing my right hon. and learned Friend of having made a discreditable deal by insisting and agreeing that those three things happen.
  Mr. George Robertson: If the right hon. Gentleman were accurate in what he says I said, there might be an element of truth in his accusation. The point I made was that the House was originally told that the United Kingdom rebate was unconditional. I was making the point—I am sure that many hon. Members on either side of the argument would agree—that the abatement is no longer unconditional, and that it is subject to three major conditions which must be satisfied before we get the money.
  Mr. Heath: Those three conditions are laid down under the treaty in any case. They are not conceded by my right hon. and learned Friend. No country can join the Community unless every Parliament in the Community ratifies accession. That was not a concession made by this Government, and the hon. Gentleman does not know the treaty or what he is talking about if he accuses my right hon. and learned Friend of a discreditable deal.
  The hon. Gentleman made no constructive suggestion of any kind. He talked about agricultural reform. What does he mean? The Foreign Secretary has already given the figures for the increasing limitation on agricultural expenditure. When the hon. Gentleman and some of my hon. Friends are contemptuous about that, they should look at the impact on this country's farmers of even one move to control milk.
  The last agricultural price review was vetoed by the Germans because the Bavarian farmers are CDU supporters, and the German Conservative Government were supporting their farmers. That is the problem. At last the fact has come out into the open that the French are not always the problem behind agricultural policy. From the beginning the problem has been the German Government, and it would be useful if this House made some attempt to understand the political problems of other people when dealing with agricultural surpluses and the price review.
  Mr. Budgen: Will my right hon. Friend give way?
  Mr. Heath: I am not prepared to give way. [HON. MEMBERS: "Oh."]
  What does the hon. Gentleman propose to do about the agricultural system? Will he return to the system which his Government instituted in the late 1940s? Will he put that burden on the British exchequer? That amount is far beyond anything that has been mentioned tonight about our contribution to the European Community. The amounts needed to subsidise farmers or consumers are enormous. The Conservative party has always supported the farming interest and will continue to do so for as long as I have anything to do with it. We are supporting the farmers.
  Mr. Nicholas Winterton: We are not. My right hon. Friend should ask my dairy farmers.
  Mr. Heath: My hon. Friend has given me the case. Try to make one change in the agricultural price system and there is a revolt, especially from my hon. Friend. It is said that turning Britain from 63 per cent. self-sufficiency to 78 per cent. self-sufficiency has done us no good, but it has done the country an enormous amount of good. What
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  reform does the hon. Member for Hamilton wish to bring about? The hon. Member has no idea other than to go back to the old subsidy system which the Labour Government inaugurated in the late 1940s.
  Mr. George Robertson: In a brief intervention it is impossible to go over the numerous ideas available. Does the right hon. Member defend the obscene surpluses that have piled up in the past few years in the European Community, which are going to waste and which cannot be transferred to the southern part of the world, whose interests the right hon. Member holds dear to his heart?
  Mr. Heath: What about the obscene surpluses which the Labour Government created when they operated a subsidy policy? It would be much more constructive if the hon. Member told us how to deal with the pricing of agricultural products in the Community and how to deal with the surpluses which arise.
  The hon. Gentleman criticised Mediterranean agriculture. The only answer is to reorganise Mediterranean agriculture. [HON. MEMBERS: "Ah!"] It is no use hon. Members saying, "Ah!" To reorganise Mediterranean agriculture, the Community must have funds. There has been criticism of the cost of Spain and Portugal. Spain controls its wine and olive production. It is not a problem for Spain to control wine and olive production, because it has done so for a long time. Portugal is a poor country which we should be prepared to help. We have heard the economic point of view, but from a political point of view it is vital that we hold Spain and Portugal as democracies within the European family.
  Some of us lived through the Spanish civil war—I was in Spain during the civil war—and some of us lived through the time of the dictatorship after the civil war. We do not wish that to arise again. That is why I am surprised that some Opposition Members do not wholeheartedly support the accession to the Community of Spain and Portugal—[HON. MEMBERS: "We do".] I am very glad. If the Opposition support the accession of Spain and Portugal, they must be prepared to support the cost.
  Mr. Nicholas Winterton: And unemployment?
  Mr. Heath: There will be unemployment if the Community does not move ahead in technology.
  We will contribute 7 per cent. to the Community's budget, France will contribute 27 per cent. and Germany will contribute 32 per cent. I take no pride in the fact that two other major countries in Europe can contribute far more than we can because, over the past 10 years, our economy has become so weak. That has not happened because of membership of the Community. Had we not been in the Community, our economic position would have been far worse than it is today. It was because people realised that at the general election, when the Labour party lost so overwhelmingly, that the Labour leadership changed its tune and said, "We will stay in the Community." Why has the Labour party decided that? Because it knows that it is of benefit to be in the Community, and that we would lose jobs if we left it.
  The second part of the Foreign Secretary's speech related to the future. I am glad that the Government have taken the initiative for the Milan summit. The problem with summits is that the Heads of Government do not have the time to reach decisions on the major issues of the Community. I would strongly urge that, instead of a day

  815
  and a half or two days, the Heads of Government—even if it means meeting every six months instead of every three months — should give themselves more time to deal with those major issues. At present, they do not even have time to give effective instructions to officials to produce or carry out the policies that they agree.
  Therefore, it will be necessary at the summit to concentrate on some matters, and the Foreign Secretary is right to say that we must concentrate on turning the Community not only into a Community with a common tariff, but into a completely free Community. Of course, that will mean bargaining, and the best way to get bargaining is to observe the treaty's provisions on majority voting. That is a basic principle. The so-called Luxembourg agreement was blown sky-high by the British Government when they tried to insist that the price review was conditional on the budget. They could not prove that the price review was of vital national interest, since they had agreed it; but they tried to prove that the budget was of vital national interest and they would not sign the price agreement. What happened? The rest of the Community went ahead without us. It is a great thing that that is now out of the way. Now we can deal on the basis of majority decisions—
  Mr. Austin Mitchell: What about the Germans?
  Mr. Heath: I strongly disapprove of the German action, which the Commission has overruled. The Commission has said that it does not accept the German veto on the price of cereals.
  We must bargain on making the Community completely free internally, and it would be very much to Britain's advantage if we did so. Let us not try to disguise that fact, because our service firms and manufacturers would have much greater opportunities in the Community. The second matter on which we must concentrate is technology. We all realise now that Britain cannot manage modern technology on its own. We are having to import technology and combine with it, for example in the car and electronics industries. Since we cannot do it on our own, Europe must do it together. That will involve budgetary expenditure to bring about the change and developments required—[HON. MEMBERS: "Oh, yes?"] Yes, and let us accept the consequences of that. It will mean some Community expenditure. Of course we must control it and ensure that the money is spent properly, but let us not try to avoid the fact that it will involve expenditure.
  I know that the Foreign Secretary will disagree with me, but I believe that Britain should become a full member of the European monetary system. Unless we accept full membership, we shall not persuade the other members to accept developments inside the Community for removing the objections and barriers to trade, and we shall not get them to accept the technological developments that we want. They will say, "Why should we do this when Britain is not prepared to become a full member of the European monetary system? The arguments have varied during the past five years, and they are becoming fewer and fewer. The Governor of the Bank of England has said publicly that he sees no economic objection to our joining. We are driven back to the last remaining argument, which is that if Britain joins it will harm the Community. Not even the rest of the Community believes that. It is simply an
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  obvious excuse being put forward. Let us abandon that and say, "Yes, we will become full members and accept all our obligations."
  Those are the three matters on which the Milan summit should concentrate. We must recognise that the Community, despite what has been done, or because of the loss of momentum during the past 10 years, has fallen behind the United States and Japan.
  The other day, I read in a rather disgusting article by my hon. Friend the Member for Southend, East (Mr. Taylor) that we are suffering because we are on the rim of the Community. Other countries are on the rim. How has California suffered by being on the rim of the United States? How has Japan suffered by being on the rim of Asia? That is a completely fallacious argument. Where we have suffered, it is because of our lack of productiveness and lack of technological development.
  Mr. Nicholas Winterton: What do you know about industry?
  Mr. Heath: I have had much more experience than my hon. Friend.
  Mr. Winterton: Nonsense. Rubbish. You have worked for a bank.
  Mr. Heath: There was a tradition in the House—
  Mr. Teddy Taylor: Will my right hon. Friend give way?
  Mr. Budgen: Give way to the disgusting man.
  Mr. Heath: I did not refer to my hon. Friend the Member for Southend, East as disgusting; I referred to his article as disgusting.
  Mr. Teddy Taylor: Thank you.
  Mr. Heath: My hon. Friend intends writing another article, so he can go on from disgusting.
  Europe has fallen far behind the United States and Japan in modern technology, and it is falling further behind. Britain has fallen behind a large part of Europe. The only way to remedy this is for European countries to determine and to have the will power to carry through their aim to move jointly into modern technology. Unless we do that, unemployment will increase.
  Mr. Austin Mitchell: We have seen it.
  Mr. Heath: But not because of membership of the Community.
  Mr. Teddy Taylor: Will my right hon. Friend give way?
  Mr. Heath: Unless we have the technological development—
  Mr. Taylor: Will my right hon. Friend give way?
  Mr. Heath: I shall not give way.
  Mr. Taylor: Why not?
  Mr. Heath: If my hon. Friend is prepared to say that this reform movement is hypocritical nonsense and that he wants to break up the Community, I shall give way to him. That is what he wants.
  Mr. Taylor: I think that all hon. Members appreciate my right hon. Friend's grand visions for Europe, which he is perfectly entitled to have. How can he say that matters

  817
  will be improved by giving more public money to an organisation that is spending 54 per cent. of its budget on dumping, destroying or storing food surpluses? How will that make things any better for his grand designs or those of anyone else?
  Mr. Heath: If my hon. Friend were still a Member for Scotland, he would get all the weight of the Scottish farmers, especially the hill farmers, on him about dealing blows to agriculture. At Southend, it does not matter.
  We all want to deal with surpluses. I particularly want the surpluses to go to developing countries which are suffering from famine. The Community has done a great deal, and we can urge it to do more. That is constructive. It is not constructive to don the guise of wanting to reform and then proceeding to condemn and damn and prevent the Community from developing or doing anything. That is what this debate is about.
  Are we going to support the development of the Community and our own development, or are we just going to allow Europe and ourselves to slide further and further down the scale? I know what the answer should be, and I wish that this debate were on that theme, instead of tiny meticulous arguments such as those put up by the hon. Member for Hamilton.
  The Labour Government had 17 Budgets in five years; yet the hon. Member for Hamilton is telling the Community that it should be able to foresee exactly its budgetary requirements 10 years ahead. What absolute nonsense. No Conservative Member can say what the Chancellor will put in his Budget in six months' time.
  Mr. Nicholas Winterton: We are already in debt.
  Mr. Heath: Yet we are saying to the Community that it has to prove the miraculous. There is another myth. There are many myths about this great bureaucracy in Brussels. Let me tell my hon. Friend, formerly a Member for Scotland, that the size of the staff in Brussels is lower than the size of the Scottish Office in Edinburgh.
  Mr. Teddy Taylor: No.
  Mr. Heath: It is; I checked the figures yesterday. Brussels is responsible for 320 million people; Edinburgh is responsible for 5½ million people. Which has the bureaucracy? Let us stop that spurious argument as well. Let us raise the level of this debate, as I have been trying to do, when we consider the great issues of state and, above all, the future of our country and of the European Community.
  6.14 pm
  Mr. Richard Wainwright: The right hon. Member for Old Bexley and Sidcup (Mr. Heath) expressed the very proper vision of the future at which the Community should aim. I hope that his intention with respect to lifting the level of debate will materialise. However, I have my doubts, judging by the number of sedentary interruptions to which he was subjected, but one must always hope.
  The Foreign Secretary, after his confident opening remarks, seemed to lapse into the manner of an irritated and rattled infant teacher when he wagged his finger for a considerable period at dissident members of his party and in suitably simple words — mostly of one syllable — seemed to go over the top in claiming that the new
  818
  budgetary guidelines for the Community, which are to be applied to the 1986 budget and onwards, are wholly satisfactory instruments. I wish that were the case, but I do not believe it is. The budgetary guideline is
  "that net expenditure relating to agricultural markets will increase by less than the rate of growth of the own resources base."
  That is unlikely to happen, but, even if it did, it would be nowhere near enough. It does not satisfy the hopes which some of us have about what will emerge from the negotiations.
  Not for the first time in a House that is dominated by the two major parties, alliance Members are baffled because the Prime Minister, speaking on 5 December 1984, said that the text on budgetary discipline could not be put into a treaty because
  "one simply cannot get agreement from all 10 countries. All of them have, however, agreed that the Council, which is the deciding unit in the whole Community, shall be bound by the clause on financial budgetary discipline." —[Official Report, 5 December 1984; Vol. 69, c. 354.]
  Apparently, we have 10 member states that cannot get agreement; yet they have agreed. I make that point because the case for this budgetary discipline is based on the fact that they have agreed. The requirement of a synthetic triumph calls for the sacrifice even of the English language and of the possibility of matters being properly understood by the House.
  Mr. Spearing: Did the hon. Gentleman not understand when I intervened on this very point during the speech by the Foreign Secretary that, while there has been a conclusion, it is not a decision with a capital "D" and therefore it is not enshrined in legislation? If we are talking about discipline, surely even that is necessary for the Liberal party.
  Mr. Wainwright: I should have thought that, too, but it is difficult to be clear about what has gone on.
  I am sure that all hon. Members sympathise with the Economic Secretary's burden, for which he is cast in the role of Atlas. When he came before the Select Committee earlier to explain the new system of budgetary discipline — he did so very lucidly — he emphasised that it was underpinned by this splendid agreement with West Germany. He invited us to consider that that was the big strength of the new deal and that it illustrated the new climate in the Community. However, when he came before the Select Committee more recently, he had to admit that West Germany was "hoist with its own petard" and that he felt very sorry for the West Germans.
  All this gives no pleasure to the Liberal or Social Democratic parties, because we want the Community to get ready to move into this future about which the right hon. Member for Old Bexley and Sidcup spoke so convincingly. It is not convincing to have a system of budgetary discipline which the Commission says, I am assured, will only reduce the total claimed by the CAP from 66 per cent. to 64 per cent. in the next EEC budget.
  Mr. Budgen: Will the hon. Gentleman confirm that alliance policy is that own resources should be increased to 2 per cent. as quickly as possible?
  Mr. Wainwright: The hon. Gentleman, with whom I have some acquaintance, would expect me to cover that point, as, indeed, I shall. I am not in the habit of trying to conceal the alliance's intentions, as I spend my whole

  819
  time trying to bring them to the notice of the public. I have just returned from Brecon and Radnor where I have had a satisfactory 24 hours doing just that.
  Those doubts and worries about budgetary discipline must not cause us to descend into absurdly juvenile Community bashing. The motto that served the Conservative party only too effectively in the years when the mass electorate was less well informed about public and international affairs has been, "When the party is worried and nervous about unpopularity and its misconduct of public affairs at home, let it step up the bashing of frogs and wogs across the sea. That will divert the attention of the electorate." That is what the Conservative party is doing at the moment, but I do not believe that today's electorate will be deceived.
  As the right hon. Member for Old Bexley and Sidcup reminded us, the House is not Simon Pure and it cannot lecture the Commission about budgetary discipline. The Labour and Conservative parties have seen to it, richly over recent years, that we have had our Concordes, Humber bridge, public sector pay bribes and many other pork barrels. The one thing true about a pork barrel is that it is always a leaky vessel. There is no way to keep a pork barrel full. Once we resort to mass bribery, the cry is always, "Give us more; give us more." That has been the cry of the leech down the ages.
  We do not have much to crow about in this country over the detailed application of budgetary discipline. There is still a deplorable lack of accountancy skill in the Treasury, public purchasing departments and in the Departments which monitor the EEC. We have a long record, which will probably be broken this year, of gigantic public expenditure overruns. The party which was so set on ruthless and inhumane cuts in public expenditure has not been able to deliver them because it does not have the mechanism of proper financial control.
  The Government must be thoroughly and more wholeheartedly willing than hitherto to agree to majority voting on the CAP. We should like to see West Germany voted down on that matter. I never thought that I should ever observe a more crass Minister of Agriculture in West Germany than the former Minister, Mr. Ertl. But West Germany now seems to have a Minister of Agriculture who out-Ertls Ertl. I thought that that was impossible.
  The Community should be enabled to vote down West Germany and make it accept the medicine of majority voting which means accepting it ourselves in the future.
  Mr. William Cash: Will the hon. Gentleman explain how he squares what he has just been saying with the statement made recently by the right hon. Member for Plymouth, Devonport (Dr. Owen), when he asked my right hon. and learned Friend the Foreign Secretary to assure the House that we would continue to use the veto in all circumstances?
  Mr. Wainwright: The right hon. Member for Plymouth, Devonport (Dr. Owen) is well able to and must speak for himself — [AN HON. MEMBER: "He was speaking for the alliance."' There is no evidence that the right hon. Member for Plymouth Devonport was speaking forr j 6–3 the alliance. I was not present, and I am not prepared to be diverted by a red herring.
  While stressing the need for greater budgetary discipline and a great improvement in the scheme, which
  820
  apparently has so far been agreed to by the Council, it is of the utmost importance that the Community presses ahead in other expenditure regimes.
  Research and development in most industries, compared with our Japanese competitors and the marvellously recovered United States, is in a pathetic state throughout Western Europe. It is no good kidding ourselves, and it is no good Labour Members kidding themselves, that little Britain can mount the volume of research and development required if we are to compete with Japan and the United States.
  There is an urgent need to move to greater financial and currency unity within the Community. I was disappointed that the Foreign Secretary made no observations about the relative success of the ecu. I believe that it is now fourth in the list of Eurocurrencies. That is a remarkable achievement when the Community has been struggling in other respects. Will the Economic Secretary be able to tell us tonight that the British Government are urging full convertibility between official ecus and those held by the private sector? Are there other developments towards making the ecu, to some extent, a common currency in Europe, which is, of course, the objective of Liberals and Social Democrats?
  Our message on unemployment at the last election was, has been since and will be that, although we have plans that we believe would substantially reduce unemployment in this country, they would be many times more successful if we were part of a European scheme aimed at reducing unemployment. That means a much more wholehearted commitment to the Community than the Government have shown. What is today's touchstone for the Government's commitment to the proper development of the Community? The Government should wholeheartedly welcome Lord Cockfield's plan to turn the Community into a genuine common market.
  I was distressed to hear — I hope that I have been wrongly informed — that the Government are shilly-shallying about that. Although Lord Cockfield was one of the jewels in the Government's crown, apparently his proposals for turning the Common Market into what it was always intended to be are looked upon with some doubt by the Government. I shall be delighted if the Economic Secretary can assure me that I am wrong about that.
  The claims for the Bill have been overstated. There is more to be done than the Government allow, but, because the Bill's aim is sensible and could lead, with greater Government commitment, to a quicker development of the Community along the lines that we have always cherished, we shall support the Second Reading in the Lobby tonight.
  6.28 pm
  Mr. Terence Higgins: No one can doubt that the Bill raises strong passions. It also raises issues some of which are simple and some of which are of greater complexity. It raises major conceptual problems and the arithmetic involved is not easy to understand. That being so, it is important that the House should be well informed on those matters. The Treasury and Civil Service Select Committee has fulfilled a useful function in that respect. Without its reports on the Fontainebleau agreement, we would know little about the agreement because the so-called communiqué was a scrappy piece of paper, published apparently by the President, drawing conclusions some of which turned out not to be agreed to by the British Government.

  821
  More recently, we have been grateful for the further evidence provided by the Economic Secretary. By chance we were able to take evidence from him only two days after the Bill had been published. I regret that we have been unable, in the short time available, to produce a report on that evidence for today's debate, so we have no collective view to offer. Nevertheless, the evidence quoted by a number of hon. Members, not least by the hon. Member for Hamilton (Mr. Robertson), is very useful.
  I believe profoundly in the importance of British membership of the European Economic Community. We should appraise the Bill from the point of view not only of the United Kingdom but of the Community as a whole. The Bill cannot be regarded as a success in terms of our responsibility to keep the Community on the right tracks. Many of the steps that it ought to be taking, particularly in relation to making it a proper common market, do not require further expenditure. They require more sensible decisions by the Community rather than additional resources.
  The complexity of the issues raised by the Bill stems from the fact that the Government failed to keep separate: two negotiations which ought to have been kept separate first, the need to ensure that the United Kingdom pays its fair share of costs and, secondly, the question whether the Community's own resources should be increased.
  The Government and the Prime Minister asserted that we were not paying our fair share—that we were paying too much and that our contribution should be reduced. There was no question of a quid pro quo, because an imbalance of this kind needs to be rectified in its own right. As the negotiations proceeded, the Government fell into the trap of accepting that there ought to be some quid pro quo. That raises very difficult issues for this country.
  Our bargaining position is extremely strong. For the first time since we joined the Community, we had the opportunity to reform the common agricultural policy. We have thrown away that opportunity. To those like myself who believe that the Community's future depends radically upon getting the common agricultural policy right, that is a matter of great regret.
  Sir Anthony Meyer: Will my hon. Friend give way.
  Mr. Higgins: No. Many hon. Members wish to speak, and there is a great deal that I wish to say in a comparatively short time. I hope my hon. Friend will forgive me for not giving way.
  Instead of standing firm, Her Majesty's Government went along with a number of dubious devices for keeping the Community going. We were told that under the treaty the Community is required to balance the books. The Prime Minister made it clear that there was no question of loans being made to keep it going. At one stage she said that it was not right to raise loans for budgetary purposes within the European Community because it was contrary to the treaty of Rome. However, within a short period, under the intergovernmental agreement, there was the charade that resulted in the invention of the interesting concept of reimbursable advances. In the view of the Select Committee, this concept was difficult to distinguish from a loan. It is rather like a semantic joke in rather bad taste.
  822
  Secondly, there were continual requests for more money. Some of those requests were, procedurally, very odd. For example, the Government decide to proceed one way, a case is fought through the courts, the unfortunate Mr. Smedley is left with the costs and the Government then proceed by a different route so that more funds can be provided. Another device is to make advance payments by resorting to the contingency fund and reimbursing it later out of the Consolidated Fund, on the basis of an estimate. Further payments are also made under the intergovernmental agreement for 1985 which is to be incorporated in the Bill. They are not reimbursable loans but straightforward advances.
  This increase in expenditure has to be considered against the background of the House being asked to make severe cuts in a number of other areas, ranging from student grants to council housing. The additional expenditure has not been properly appraised against other priorities which require money to be spent upon them.
  I concede what the Foreign Secretary said about the abatement. The amount we shall pay will be roughly half the amount that we should have paid without the agreement. Although the limit on own resources is to be raised to 1·4 per cent., it is expected, in the words of the explanatory memorandum, that we shall not pay more than 1 per cent. One is bound to point out that the explanatory memorandum does not form part of the Bill, a point to which we ought to return in Committee. Nevertheless, the public expenditure White Paper shows that the absolute amount that we shall pay as a result of all the negotiations will not be significantly different, in terms of cash, in the next three years from what it was in the last three years. Therefore, we have not achieved a significant reduction in the amount of money that we shall be asked to spend. In its own right that might be regarded as a tolerable outcome, but it has been achieved only by making substantial concessions and introducing the concept of a package.
  I believe profoundly that we ought not to have agreed to a package. That was not our original bargaining position. The package is said to be subject to three conditions: first, that our arrangements for abatement should be confirmed; secondly, that there should be effective budgetary discipline; and thirdly, that the agreement of the House should be obtained. According to the mechanism that has now been devised, we may reasonably hope to receive the abatement.
  However, the position on budgetary discipline is far more dangerous. The Prime Minister relied very much on the idea that others were now contributing more when she said:
  "More EC member countries are becoming net contributors. Frankly, that is the best discipline that we can possibly have."
  After the use of the German veto to prevent even a modest reduction in cereal prices, that does not seem to be working very well in practice. The Select Committee reported that such broad political pressures are no substitute for effective budgetary control mechanisms.
  Secondly, the two sides of the equation are clearly asymmetrical. If the Commission or the Council wants to reduce expenditure, an individual member state who objects has a veto. However, only a qualified majority is required for decisions about the budgetary mechanism and its framework. There is therefore a clear asymmetry, which biases the arrangement against the idea that this kind of control would be effective. We have not managed

  823
  to achieve a balance. One notes that the financial document that is to be incorporated in the Bill takes the opposite view to the Chancellor of the Exchequer, who constantly tells us that finance should determine expenditure. We ought to be concerned about that.
  In addition, we were told in evidence that there is a different spirit in the Community and that everybody is now very much in favour of budgetary discipline. We ought therefore to note what happened at a meeting of the Council only a few days ago:
  "The Council noted that the Commission had not submitted to it the necessary figures for the establishment of the reference framework for the 1986 budget. Following a brief discussion the Council agreed to include this item yet again on the agenda for its meeting on 8 July."
  It does not look as though the Commission was rushing forward to provide the necessary information to ensure budgetary discipline. It is scarcely a happy picture. Budgetary discipline has not been achieved.
  One ought also to draw attention to what the Prime Minister said on 27 June:
  "We should like the principles to be embodied formally and legally in the budgetary procedure, but it must be done in such a way as to guarantee them."— [Official Report, 27 June 1984; Vol. 62, c. 1001.]
  That has not happened. The Foreign Secretary, I think by a slip of the tongue, referred to what is actually a conclusion of the Council as a decision.
  "The text on financial budgetary discipline"
  as was stated by the Prime Minister subsequently,
  "is binding on the Council itself, but it is not being embodied into a treaty or technically—legally—into the budgetary process. [HON. MEMBERS: 'Why not?'] Because one simply cannot get agreement from all 10 countries." — [Official Report, 5 December 1984: Vol. 69, c. 354.]
  This is a very strange guarantee. If one went into a shop and asked to see the text of the guarantee on something that one was considering purchasing and was told that it had not been put in writing, one would be a little worried about it. If we had had genuine agreement on it, there would have been no problem with putting it in writing.
  Are we actually aiming at the right target in budgetary discipline? The agreement is no more than to stop agricultural expenditure rising as fast as the own resources base. But agricultural expenditure, which is now two thirds of expenditure, will be almost two thirds after these arrangements have changed, so there is a vast increase in agricultural subsidy even under what the Government regard as effective budgetary discipline.
  Against the background of vast agricultural surpluses, there is no case for spending more on agriculture. The fact that expenditure is not rising as fast as the total of own resources is neither here nor there. Effective budgetary restraint — a change in the system that we had the opportunity to achieve because of financial pressures—has not been achieved.
  There are tremendous dangers for our trade with the remainder of the world, especially the United States. That country has massive agricultural support programmes, but under President Reagan it is taking action to get that under control. That is not happening in the EC. I fear that we shall run into major problems — not just on spaghetti, but on the whole range of agricultural products. For all those reasons, I do not think that we have effective budgetary discipline.
  A great opportunity has been thrown away. If we did not take a stand on I per cent. of VAT, it is difficult to know whether we would take it at 1·4 per cent. Indeed,
  824
  the explanatory memorandum makes no mention of one of the items in the documents that we are incorporating in the Bill—that the figure may be increased to 1·6 per cent. It is strange to use the expression "it may be" because it can scarcely have been included for no purpose. However, we shall at least have had the enlargement issue if not the cost enlargement out of the way by the time we get the next limit. As my right hon. and learned Friend the Foreign Secretary said, the position of the United Kingdom will have been written in. Perhaps at the next stage—and it seems to be the general view that that will not be very long coming — we will do better than at present and make more progress.
  I am left with a real dilemma this afternoon. I have always taken the view that when voting in this House one should vote as one would wish the House to decide. That is a problem, because we have been presented with a package. I have to face the fact that if the Bill falls, despite its massive imperfections and failures, the effect is likely to be a significant increase in public expenditure rather than a reduction.
  I do not really have the options that I should have liked to have, and would have had had the issues been presented separately. There are still ways in which we can make further progress, but we have missed a major opportunity. Many of the points made in support of the view that we should increase own resources — in particular, the question whether we have actually achieved budgetary discipline—do not bear out the Government's case. For that reason, I shall most certainly not support the Government this evening.
  6.43 pm
  Mr. Ron Leighton: I congratulate the right hon. Member for Worthing (Mr. Higgins) on his speech. I hope that it does not embarrass him if I say that I concur with virtually every word that he uttered. I also congratulate the Treasury and Civil Service Select Committee on its report to the House. The House would be well advised to take account of all reports from Select Committees.
  From what the right hon. Member for Worthing said, there appears to be no case for the Bill. The case against it is fairly simple, and it comes under two headings. First, if we pass the Bill we are throwing good money after bad, compounding past mistakes and making matters worse. The Foreign Secretary spoke about what we would have paid if this and that had not happened. However, we do know that this year we will pay more in real terms than we paid last year and that next year we will pay more than we are paying this year.
  The second reason why we should oppose the Bill is that it encourages and finances further lunacies in the crazy farm policy of the Common Market. It is rather like treating an alcoholic by giving him a standing banker's charge on the nearest distillery. What is the money for? It is overwhelmingly for agriculture. We have not had a breakdown, but we all know that it is for the CAP. In 1986 we will pay 2·5 per cent. more for agriculture.
  That is the opposite of what we should be doing. We should be turning off the tap and cutting off the money supply to the CAP. We should be doing all the thing; that the Government say we should do at home, where there are cash limits. The trouble with the CAP is that it is limitless. By its very nature it is a bottomless pit into which we are pouring our money. All the chatter about

  825
  reform is idle. Surely the lesson of our experience is that there will be no substantial reform of the CAP, because it is not rational, not sound economics, not sound husbandry and not good farming. Instead, we are dealing with something that is political, with vested interests and with those who benefit from this policy — for example, the Bavarian smallholders with their Mercedes who want to be kept in the style to which they have become accustomed, and by whose votes the governing party in Germany rules. What other explanation was there for the German veto on cereals? There is no logic for its use of the veto. It was based not on reason or sound economics, but on crude domestic politics.
  What happened to the British veto in 1982 cast by the now Secretary of State for Energy? I do not know whether hon. Members remember that, but he exercised the veto and nobody took any notice. It was ignored. But when the Germans exercise the veto, apparently that is different and the Community takes notice. The brutal truth is that the CAP cannot be reformed. That could happen only if the whole structure were altered, if the principles on which it is based were reversed, and if it was changed into its opposite. In other words, the CAP would have to be destroyed. The vested interests will not allow that, so it will continue, ever more expensively and irrationally.
  For those areas with intervention, whatever is produced will be bought — whether or not it is needed — at the taxpayers' expense. It is open-ended and demand-led, with no cash limits. Nobody knows what the cost will be. Nobody knows how much will be produced. If we drench the countryside with chemicals, pesticides and herbicides, we might produce very much more. If we have a bumper harvest it will cost more money. If world prices fall because we have a year of international abundance, whereas hitherto mankind would have rejoiced at the low prices, it now means that the CAP will be even more expensive. There will be higher levels and higher subsidies to dump EEC produce abroad which, as was mentioned by the right hon. Member for Worthing, will damage the interests of third parties.
  Yesterday I was asked by the COI to a lunch with politicians from Uruguay, and I was interested to meet them. They explained that their main export was beef, that they were efficient, economic producers, but that the EEC had a beef mountain and Uruguayan beef was being kept out by the variable levy, although they did get a very small quota. Their main complaint was not that their beef was being prevented from coming into the EEC; it was their treatment in Third-world markets. They want to service and repay their debts, but they cannot compete against the EEC because of the export subsidies that the EEC pays on the dumping of EEC beef in Third-world markets.
  The lunch was hosted by Baroness Young, to whom I pay tribute for her hard work in gaining friends for Britain around the world. She must have thought that this was a familiar argument, because I met her some months ago in New Zealand, where she had a press conference. She thought that she was going to be discussing a whole variety of matters, but found that the only issue mentioned was butter. That was because the EEC had dumped large quantities of butter on the world market and the New Zealanders could not compete.
  The CAP is meretricious. It damages us and our friends around the world and it distorts our agriculture. I have
  826
  mentioned the way in which we are drenching our countryside in chemicals and draining the wetlands to add to the food surplus. That has led to crazy land speculation and high land prices in this country, with the farms being mortgaged to the banks — and all to no good purpose, because the only result is dearer food for our consumers.
  Therefore, we should not support or underpin such a system. To use an argument which I hope will appeal to Conservative Members, we should not throw money at such a system. We should wring its neck. That is the only sensible thing to do. We should do the opposite of what the Bill is asking us to do.
  Mr. Gerald Bermingham: Does my hon. Friend agree that another side effect of the CAP is that it has not only forced up land values but made it almost impossible for young people to buy land and enter the farming profession?
  Mr. Leighton: That is absolutely true. Ordinary young people cannot enter farming. It is now run by City firms and bankers. I fear that those young people who do enter farming and mortgage themselves to the hilt will find themselves in great economic difficulties when some sense and sanity are brought back to prices. We are making great problems for our farming industry. The farmers are not benefiting from these high prices, nor are the consumers. The whole policy is basically anti-British. It is anti the interests of British taxpayers, agriculture and consumers and of our friends in the world, whether from Uruguay or New Zealand.
  I am quite clear about what we should do. We should come out of the CAP and have nothing further to do with it. We should extricate, liberate, free ourselves from the common agricultural policy and bring agriculture back under the control of the British Parliament. We should have a policy which is in the interests of this country. Why should we not do that? Does anyone suggest that somehow world peace or international friendship depends on having a common price for turnips from the Shetlands to Sardinia, where there are differences of climate and culture and different ways of life? Is it not absurd to try to force all these people into a rigid mould? It is unnatural and only causes problems instead of resolving them.
  Nobody in this House suggests that we should have a common policy for coal — that throughout the whole Community we should produce as much coal as possible and have it bought in through intervention. Nobody is so absurd as to say that we should have a common policy for motor cars and that, however many motor cars are produced, they will be bought in through intervention at the taxpayers' expense. So why do we have such a policy for beef or cereals? There is absolutely no need for it. This country is being conned. This has got nothing to do with the good of Europe or anything of that sort. It is for the benefit of the vested interests of continental agriculture and of the parties who want the votes of the people engaged in agriculture by paying them bribes. If the other countries of Western Europe want to do that, I do not object; that is their business. But we should not let them use our money to bribe those in their peasant agriculture to vote for the ruling parties on the continent.
  I hope that later this evening we shall hear from the Government Benches some arguments calling for a healthy dose of market forces. Why do we not have a healthy dose of market forces, the law of supply and demand, in

  827
  agriculture? If there is a surplus, why do we not cut prices? I hope to learn later this evening why, if there is a large surplus of agricultural products, we do not hear a demand for a cut in prices and financial support. Why do we not cut off the money supply? We are cutting off the money supply everywhere else. Why is it only in this area that the sky is the limit?
  Elsewhere we are told that if there is an allocation of extra money, that means there has to be a cut somewhere else. The right hon. Member for Worthing talked about science. I agree with him entirely. When student grants were restored, the Secretary of State for Education and Science said that that money had to come from somewhere else, and he took it from science. We cannot afford money for science to keep this country going, yet we can pour endless millions down the black hole of this lunatic farm policy.
  Only masochists, only besotted Euro-fanatics, only those who have given up rational thought, could support this misguided, misconceived Bill, which is soaking British taxpayers more than ever. We should throw it out with contempt.
  6.57 pm
  Mr. W. Benyon: I appreciate that this Bill and the whole subject arouse passions, but I find it somewhat depressing that so much of the argument that we have heard today has been totally devoid of idealism. I greatly welcomed the speech by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), who was the first Member speaking in this debate to look further ahead.
  On Thursday, the Under-Secretary of State said:
  "Our hands are at last off the brake and on to the steering wheel." —[Official Report, 20 June 1985; Vol. 81, c. 529.]
  He did not mention the accelerator. In my view, this Bill is the first stage—late, but none the less welcome—of using the accelerator.
  Mr. Marlow: I agree with my hon. Friend that we are on the accelerator — we are accelerating public expenditure. It is already 50 per cent. more than it was in terms of our gross contribution four years ago and it is going to accelerate even further now.
  Mr. Benyon: I thought that my right hon. and learned Friend the Foreign Secretary dealt with that aspect very well. All that I can say to my hon. Friend is that, even ignoring the concessions made to the United Kingdom, the new level of contributions represents a minute proportion of GDP. It is a very small price to pay for the benefits which will accrue in the future. It is a minute proportion of the £2 billion referred to last week in relation to welfare benefits. There is no more barren exercise than speculating about what might have happened if history were rewritten.
  When the Common Market was formed, Britain did not join. If we had joined, many of the changes that we should like now would probably have already been made. Europe would now be stronger and more democratic. We had a painful struggle to join and we were successful at the second attempt. That is when things went wrong. Many of us who were inspired by the European ideal relaxed gratefully. We believed, mistakenly, that the battle was won. We forgot the barrier formed by the Channel, which is so useful in war and so detrimental in peace. We left the scene to the nationalists and the Communists—one of the more bizarre political alliances of our time.
  828
  What we need now is a new vision of Europe — a new inspiration for the future. That is urgently needed for the United Kingdom itself. [HON. MEMBERS: "Hear, hear."' The two most malign influences on Government expenditure are the cost of keeping millions who have no gainful employment, and the burden of high interest rates. Those are the two major pressures on Government expenditure.
  The first pressure can be eased by increased economic activity within the Community, by removing the remaining barriers to trade and competition, by encouraging European industry and by ensuring that European inventiveness is given full rein. That can he translated into an industrial success which should enable us to compete effectively with America and Japan.
  Mr. Nicholas Winterton: My hon. Friend has in recent months demonstrated a considerable commitment to reducing unemployment and considerable care and compassion for the unemployed. Is he aware that large sectors of British industry such as the paper and board and the textile and clothing industries are substantial employers? The textile industry is the fourth largest employer in the country. Those industries have expressed grave concern about the accession of Spain and Portugal to the Economic Community and about the effect that that will have on industry and employment in Britain. Does my hon. Friend disregard that anxiety or does he think that it is justified?
  Mr. Benyon Mr. Benyon rose—.
  Mr. Deputy Speaker (Mr. Harold Walker): Order. Before the hon. Member for Milton Keynes (Mr. Benyon) responds, I remind him of the ten-minute limit on speeches. I hope that hon. Members will bear that in mind when making and giving way to interventions.
  Mr. Benyon: I am grateful to you, Mr. Deputy Speaker, and I shall deal later with the question asked by my hon. Friend the Member for Macclesfield (Mr. Winterton).
  Let us consider what we have achieved within the Community in terms of inventiveness. Two out of three of the Nobel prizes for information technology were won by Europeans, yet Europe supplies only 10 per cent. of world production. Eight out of ten personal computers sold in Europe are American and nine out of ten video recorders are Japanese. If that dominance continues, millions of jobs will be put at risk. That answers my hon. Friend's question.
  As my right hon. Friend the Member for Guildford (Mr. Howell) said so eloquently on Thursday, the problem of high interest rates cries out for this country joining the European monetary system and for the strengthening of the European capital market so that we can look the dollar in the face.
  Europe, with 270 million people, has a GNP 30 per cent. less than that of the United States, with 236 million people. We lag behind America and Japan in the development of the new technologies. That is the real challenge.
  As we stagger under the burden of providing adequate defence forces, why has the integration of weapon procurement and research progressed so slowly? That activity could be developed further. Why do we allow Japanese penetration of the EEC to pick off our modern industries one by one?

  829
  Much has been said about the common agricultural policy. Of course it needs reform; of course surpluses must be contained; but we want a strong agriculture. It is better to have surpluses than shortages. In the Third world, surpluses would be called buffer stocks. The basis of the CAP is worthy. It is to bring the standard of living of the agricultural community up to the level of its urban counterpart. Reform has started. I pay warm tribute to the Minister of Agriculture for what he has achieved. The process of reform must be gradual. Agriculture is not an industry capable of radical or drastic change. We cannot turn off the tap just like that.
  I support the Bill, because I want Britain to lead Europe into a dynamic and prosperous future. That means making concessions to achieve a unity of purpose. That is where the future lies. That is in our interests as well as in Europe's. We need the Community, and the Community needs us.
  7.6 pm
  Mr. Eric Deakins: I have a question to ask the Minister about the Bill and the status of the intergovernmental agreement. We were told that this is an undertaking by representatives of the Government meeting "within the Council." I stress those words. What do they mean and why are they considered necessary? Is the intergovernmental agreement in the form of a treaty? Is the undertaking or intergovernmental agreement automatically a Community treaty by virtue of the piece of paper on which it is written or by virtue of its embodiment in the 1972 Act?
  My hon. Friend the Member for Newham, North-East(Mr. Leighton) dealt with the CAP. Increased expenditure under the CAP budget is taking place this year. Even with the 1·8 per cent. decrease in cereal prices, the proportion of the Community budget taken up by the CAP is to increase to 74 per cent. No progress whatsoever is being made. As the Minister himself admitted to the House only last week:
  "the Council has thus failed to take decisions on sensible price arrangements for cereals and rapeseed for the next season. This represents a serious setback so the progress which has been made in putting the common agricultural policy on to a more realistic basis."—[Official Report, 13 June 1985; Vol. 80, c. 1033.]
  That is the Minister of Agriculture's comment on what has happened in the CAP so far this year.
  Perhaps we shall achieve some fixed price package for cereals, but we do not know tonight when a decision is to be taken on the impact of that package on the total cost of the Community budget for the 1985–86 agricultural marketing year. I urge the House to recognise that we do not yet have the full information from the Government, because it is not available to them. We do not know whether the financial discipline agreement is biting on that part of CAP expenditure which will occur in 1986.
  I agree about the dangers of the CAP to consumers in Britain and to world trade, but I shall concentrate my brief remarks on the budgetary discipline agreement—or non-agreement, as the right hon. Member for Worthing (Mr. Higgins) has described it.
  The Government must admit that the Council decision or agreement is not legally binding. The right hon. Member for Worthing asked why the other member states did not agree that it should be legally binding when they could easily have agreed that it should be. The reason must
  830
  be that they do not take it as seriously as we do. That agreement should be a Community treaty. It should be one of the documents which we incorporate into the 1972 Act. We have to vote tonight on a one-sided Bill.
  Secondly, we know that the budgetary discipline agreement is full of escape phrases which will be taken advantage of. We know that the agreement does not apply to the 1985 budget, but that it will apply to spending on the CAP in 1986, decisions on which are being taken in the settlement for 1985. The United Kingdom, alone of the 10 member states, has taken the budgetary discipline agreement seriously. I shall quote again from the Minister of Agriculture, Fisheries and Food who, on 13 June, in reply to the hon. Member for Wolverhampton, South-West (Mr. Budgen), said:
  "I have been alone in asking the Commissioner, at almost every point of the negotiations, whether he remains satisfied that the cost of the package is within the financial discipline that has been agreed for the agricultural budget."—[Official Report, 13 June 1985; Vol. 80, c. 1039.]
  Why was our Minister the only Minister concerned to ensure that the financial discipline and budget discipline arrangements apply to this year's CAP settlement? Because — this bears out the point made by the right hon. Member for Worthing — we take this financial discipline agreement seriously and hence are in the minority. I urge the House to bear this in mind when voting tonight.
  The Bill contains the 1·4 per cent. limit, but we have an undertaking that it can go to 1·6 per cent. The 1·6 per cent. is mentioned in the Council decision which we are embodying as a Community treaty in the 1972 Act. Why is the 1·6 per cent. mentioned in such a way that it becomes a Community treaty should this Bill become law? Surely that will compromise and undermine a future Government's case when these matters are debated in the Community with a view to an increase in own resources from 1·4 to 1–6 per cent. Shall we not be told that we have already conceded the principle in having the 1·6 per cent. written into this Bill? If we pass the Bill in its present form, it is more likely that the figure will go up to 1–6 per cent. in a couple of years.
  There is another danger relating to the 1·4 and 1·6 per cent. The intergovernmental agreement, which we are also embodying tonight, for the extra money is a non-repayable advance to the Community. It is a gift from the taxpayers of this and other countries to help the Community out of its present financial difficulties. This IGA is setting a dangerous precedent because it gives the Community extra money which is not part of own resources, or part of a treaty, although we are now embodying it as a Community treaty.
  There is nothing to stop any Government negotiating a further IGA, regardless of the 1·6 per cent., the 1·8 per cent., or anything else, to pay money over to the Community and to embody it as a Community treaty without going through the normal processes in the Community and this country.
  We are introducing a mechanism which supplements the own resources increase we are giving to the Community — new principle in the financing of the Community. If the own resources, even though they are increased and will continue to increase, run out, we will not have to put things right by considering the expenditure. We shall simply increase the finance, not by increasing

  831
  own resources, but by a further simple IGA. This is a very dangerous precedent and on that ground alone I hope that the House will reject the Bill.
  7.14 pm
  Mr. Michael Knowles: Unlike the hon. Member for Walthamstow (Mr. Deakins), I support the Bill. As my right hon. Friend the Member for Worthing (Mr. Higgins) said, we have a straight deal—an increase in VAT own resources and an arrangement for Britain's contribution to be reduced.
  In an ideal world it would be necessary to do political deals, but we do not live in an ideal world. Without the Bill there will be no correction to our contribution and we should end up paying about double what we shall pay when, as I trust, the Bill is enacted. It would be insane to turn down such an offer.
  The 1985 price-fixing package and the 1·8 per cent. price cut for rapeseed and cereals come within the budget limit for 1985. The Germans imposed their veto, but it has been overridden by the Commission, using its executive powers. I am quite happy about that, but I suspect that many right hon. and hon. Members are not. I think that even the Government will have difficulty with that development. I am dubious about the veto. It is not used because of overriding national considerations as much as it is used by politicians looking for blocks of votes and at the latest by-election results. That is not what the Luxembourg compromise was supposed to be about. The veto has been abused, and it is time that it went.
  Mr. Teddy Taylor: Will my hon. Friend give way?
  Mr. Knowles: No, I have only 10 minutes.
  Germany might now be looking more to her own interests. Perhaps she has stopped being willing to be the paymaster and the whipping boy of western Europe. German nationals will now use German and not English in the Community. If the Community fails because of a rise of nationalism — it has happened before—hon. Members will be hard put to criticise Germany or any other country in view of the stand that we have taken.
  The Government will be in a strong position at Milan. I should like to thank the Foreign Office team for what they have done in the past few months. As has been said, we have our hands on the steering wheel for the first time. What use will we make of that position? We must make clrarthe Government's view about the future of Europe. Our partners suspect that we do not have a view. Indeed, they suspect that, at best, we want a super European Free Trade Association and that our imagination can go no further. They also think that we will be tied to the United States for ever. The suspicion that lurks in the back of their minds is that General de Gaulle was correct.
  If Europe does not unite, it has no future. Squeezed between Soviet military power and the technological power of the United States and Japan, Europe will become a small collection of colonies for somebody or other. Three major problems must be resolved at Milan. The first is the completion of the market. Lord Cockfield's report spells that out. The Council of Ministers asked Lord Cockfield what was necessary, but national Governments have already started to say that they like one bit of the report but not others. They must take the report on board if we are to have a completed internal market.
  The second major problem concerns political co-operation. Much fuss is made about it, but I regard it as
  832
  a bit of a farce. A readiness to consider a political and economic dialogue has been declared, but what has been achieved? Nothing. That is not good enough. To achieve anything, we must go further towards union. I have no difficulty with that, but I suspect that the same is not true for many other right hon. and hon. Members. It is surprising that any decision is reached in the Community, considering the way in which we set it up—with the Council, the European Parliament and everyone who wants to get in on the action taking part in the proceedings. We must clarify the mechanism. One cannot will the end without willing the means.
  National Parliaments, including the British Parliament, have no real say in the early formulation of policy decisions. I am a member of the Select Committee on European Legislation. We see that legislation at the end of the line, and recommend to the House or to another Select Committee that it should look into it. We do not get a say at the beginning of the process, as we should. The House should ensure that its Select Committees get that sort of say.
  One of the problems with our partners is that continental politicians deal with politics differently from the way in which we deal with them. Last Thursday, in an excellent speech, one of my hon. Friends pointed out the different methods of approach. We in the United Kingdom are not good at looking far ahead and seeing what the future will be. We have lost opportunities before. Indeed, on the Floors of both Houses we lost our first empire—the North American colonies. We had neither the wit nor the ability to construct a solution to the problems of representative government. We acquired a second empire, but did not know what its purpose was.
  Joe Chamberlain was the one man who came forward with the idea of imperial federation, but the idea faded away. In the 19th century it was known that only the empire made us a power. There were plenty of books about that, including Seeley's "Expansion of England". We were not particularly important without our empire, yet we let it slip. We also let slip our chance of leading Europe in the immediate post-war years. We joined the EC later on terms which we did not like. If we miss the opportunity again, history will pass a harsh verdict on us, and it will be right.
  The responsibility on hon. Members who oppose European union is to show how else the United Kingdom will play a role on the world stage. The drawback to any form of union is that one is only one of many—in this case one of 12—and one does not have total national sovereignty. However, at least we have a say in our fate. Without union, would we be truly independent and sovereign? We might be in theory, but in practice we would certainly be tied to the United States and Japan. We would become a cheap assembly plant on the edge of that technological empire. We might be prosperous, but we would certainly not be a sovereign independent state. In the end, European unification is about economic, technological and military power. Power matters in the real world. Countries and civilisations which forget that do so at their peril.
  7.23 pm
  Mr. John David Taylor: Last week we debated the institutions of the European Community, and today we are debating its finances and financial control mechanisms. It is of interest that between the two debates

  833
  the Government met at the weekend to consider means of controlling public expenditure £1 million in the United Kingdom—paring off £1 million here and there. Yet, strangely, a few days later in this EC debate we are willy-nilly talking about spending hundreds of millions of pounds of taxpayers' money on extra public expenditure.
  That is proved by the preliminary draft budget for 1986. It shows increased expenditure of £2,500 million next year. On agriculture alone there will be an increase of more than £500 million next year over and above what was spent this year. The draft budget also shows that the United Kingdom will continue to contribute net to the EEC as much as it has been doing in recent years. According to the Commissioner for the budgets in Brussels, our VAT rate will be 0·82 per cent.
  A year ago, when the Foreign Secretary introduced the Fontainebleau agreement to the House, he said that it was
  "on a lasting and fair settlement of the budget problem … This is a good deal for Britain and for the Community."
  Today he repeated that final phrase. The word "lasting" was important. Therefore, when I got the opportunity, in a supplementary question, I asked him how long he expected "lasting" to last. He replied:
  "As long as it takes to convince the Government of this country and the House of Commons that a case for change has been made out."—[Official Report, 27 June 1984; Vol. 62, c. 986–92.]
  That was not a particularly enlightening reply. We now have more evidence about how long "lasting" will last, because the Commission has seized the opportunity of the advance knowledge that VAT on own resources will be increased to 1·4 per cent. to produce a draft preliminary budget, which will spend almost all that money because VAT is set at 1·35 per cent. That may not be the limit, unless the Council, as one of the budgetary authorities within the Community, reduces the draft budget.
  The budget is based on various factors, such as what the dollar exchange rate will be in 1986. The Commission has made it clear that the preliminary draft budget is based on the assumption that the dollar will have greater value over the ecu next year, and that $1 will be equivalent to 1·2 ecu, whereas at present the exchange rate is $1 to 1·35 ecu. As a Conservative Member of the European Parliament, former Chairman of the Agriculture Committee, and rapporteur for the EC budget, Mr. David Curry, in a recent article, said,
  "if the dollar slips one point against the Common Market ecu it costs the budget close to £60 million."
  Yet the budget is based on the assumption that the dollar will be higher in value against the ecu, and not the same value as today.
  A second factor could increase the Community budget is grain. Because Russia will produce more grain this year than last year, there will not be the same opportunities for export by the Americans as there have been. America will, therefore, compete with the EC in the world market, and the chance of grain prices falling will increase. Mr. David Curry further states that
  "if the world cereal price comes down by 1 per cent. the cost to the EEC budget is about £45 million."
  Clearly, next year's budget will be close to 1·35 per cent., and the limit according to the Fontainebleau agreement is only 1·4 per cent. The Government are right that that cannot be changed without unanimity, but, as has been said, we can avoid unanimity and still get more money for
  834
  the EEC by having yet another intergovernmental agreement. The agreement that we are discussing today is No. 2, and in a few years' time a third agreement could certainly be introduced.
  The Government's case would have been strong if the Fontainebleau agreement were lasting, but it is not. Already there is evidence that we are reaching the limit. Last week, when Commissioner Christophersen introduced the budget in Brussels, he said that
  "the Commission considers that the new own resources will suffice for 1986 and 1987."
  That is all. The agreement will last two years. He went on to add that
  "the question of increasing them"—
  to a 1·6 per cent. VAT rate—
  "should start to be considered now."
  Those are the words of the commissioner in charge of the EEC budget. It will be two years at most before an increase in own resources is required. That is why the Government Front Bench has not felt comfortable throughout today's debate.
  The budget is not good for the European Community nor for the United Kingdom, and it is certainly not good for agriculture. Another £500 million is being used to continue to produce surpluses that are not wanted by the people of Europe and that United Kingdom taxpayers do not wish to continue to finance.
  Her Majesty's Government lost a golden opportunity when they reached the 1 per cent. limit. That was the time to have a radical reform of the common agricultural policy. The weaknesses of that policy are fundamental to the entire problem. I believe that the Government kicked for touch. They have two years' grace. The next election will take place before we again face the problem of the British contribution to the EEC. That will be in about three years' time. When the problem does arise, it will be much greater than it would have been last year or this year, and it will be even more difficult to resolve. For that reason, it will be worse for the EEC, for the United Kingdom and for the farmers of this country.
  Several hon. Members Several hon. Members rose—
  Mr. Taylor: As I have one minute left, let me conclude by saying that my right hon. and hon. Friends in the Ulster Unionist party, the fourth largest party in the House, will be opposing the Government tonight.
  7.31 pm
  Mr. Richard Body: I am afraid that my speech may be rather a faint echo of what the right hon. Member for Strangford (Mr. Taylor) has just said. I agree wholeheartedly with every syllable uttered by the right hon. Gentleman. I also think that my right hon. and learned Friend the Foreign Secretary was right when he refused to give an undertaking to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen).
  There are two reasons why my right hon. and learned Friend was right not to give that undertaking. However, first I shall reply to the criticisms by my hon. Friends the Members for Milton Keynes (Mr. Benyon) and for Nottingham, East (Mr. Knowles), who alleged that those of us who are critical of the Government today lack any European idealism. I believe, and I always have believed, in the European Community, but I want a Community founded upon a partnership of nation states. It seems obvious that, in this comparatively small continent of ours,

  835
  it is urgent that we should try to work together in what I would call an open Europe, where each country can join others in pursuit of international co-operation to formulate common policies, and to advance their own interest and the interests of their neighbours.
  I am sure that my hon. Friend the Member for Milton Keynes and I could prepare a list of at least 17 subjects upon which we could work usefully with other countries to forge a common policy in our mutual interest. Trade and defence would obviously be on that list. Less obvious would be pollution and company law. Agriculture, however, is one certain subject upon which it will not be possible to formulate a satisfactory common policy.
  It should also be obvious that, as more countries have come into the Community, so it has become more difficult to find the necessary degree of common interest to formulate common policies to serve with justice the people in each of those 12 countries. That will be made difficult so long as we are tied to a common agricultural policy. That is why I believe that the Bill is totally and essentially misconceived.
  If we are to pursue the goal of international co-operation in Europe, much more progress will be made if individual nation states become free to take part in a new policy or quietly to stand to one side. That is the meaning of a partnership of nation states, each state having the right to take part in the talks that may lead up to that common policy, but equally having the right to pull out if it feels that its own interests may be put at risk.
  Instead, the Bill is part of a scheme to transfer massive wealth from northern to southern Europe. It is born of a fear that in Greece, Italy, southern France, Spain and Portugal there are millions of Communists and others who may become Communists. Most are called, scoffingly, peasants or are in industries serving the peasantry. Therefore, people think that lots of money should be poured into their pockets through the CAP to subdue their undesirable political instincts. [Laughter.] My hon. Friend the Member for Harrow, East (Mr. Dykes) may laugh, but he knows perfectly well that that thought is at the back of people's minds. That view is misconceived.
  This country, along with other countries in western Europe and north America, is in the midst of a massive programme of agricultural research costing hundreds of millions in our own country alone, and many more millions throughout the world. The results of that research will be coming through in the 1990s. Let me give one example. On land on which we were producing wheat at 1 tonne to the acre 25 years ago, we are now producing 4 tonnes to the acre. When the results of that research come through in the 1990s, we shall be producing 6 tonnes of wheat to the acre. That is a 50 per cent. expansion of output in the next few years, yet now, on the eve of this year's harvest, we have in our stores over 3 million tonnes of wheat that we cannot sell. We cannot even dump it on the world market.
  Last March the House voted more than £300 million for the cost of those surpluses. I see in this week's edition of Private Eye, which usually gets it right on farming matters, that the House will be invited to vote another £128 million before we rise for the recess, because the cost of looking after those surpluses in the intervening months has been miscalculated. That is a measure of how we cannot calculate the rising costs of a common agricultural policy. We can, though, be certain that by the time we approach
  836
  the 1990s, the cost to the CAP of the commodities produced in northern Europe will be rising by about 50 per cent. The problem in southern Europe will be worse.
  The CAP does not enable the peasants, as they have been rather dismissively called, to survive. Before the CAP, 20 million people were able to earn a living from the land in the Common Market. Now that number has fallen to 8 million and declines every year. This is where the trouble will come. In Portugal, 28 per cent. of the people can earn a livelihood on the land, and 88 per cent. can earn a livelihood on 5 hectares or less. That system of farming is not unlike that of southern France before CAP.
  Those people survive because they can receive £250 a tonne for wheat, and all the other farm gate prices are in proportion. Yet the price in the Community is only £100 a tonne. That 88 per cent. of the people in Portugal will not survive on the basis of the CAP as it is. They will be driven from the land, and nobody can be certain of there being jobs for them in that periphery of the Community once they have lost their jobs on the land. The strain on the social and regional policies of the Common Market would then be intolerable and the cost to the Community would be appalling.
  The Foreign Office is woefully ignorant of the effect that the common agricultural policy will have on southern Europe. If it were a little wiser, we should not halve this Bill.
  7.41 pm
  Mr. Austin Mitchell: This is more than a tawdry little Bill. We are debating a betrayal of British interests because this little Bill is the key which turns the lock on the Prime Minister's Eurocage. The right hon. Lady has rattled the bars of the cage a great deal, and from time to time she has been allowed out to shout and growl on the bigger issues. But she has always shouted and growled like the lion in "The Wizard of Oz", which chickened out at the first sign of difficulty. We have had difficulties with these matters and the Government have chickened out on them.
  Now the wise men in the Foreign Office — the exponents of the quiet British takeover of Europe and of the Prime Minister—are, by this Bill, putting the right hon. Lady back in the cage and saying to her, "Enough is enough. You have done your bit on Europe. It is time now for you to turn your attention to football hooliganism, the drug problem, the rates and any other issues that will keep things quiet for a couple of years."
  By this Bill, we are thowing away the one weapon we had to secure reform in the CAP. We had the ability, through refusing to increase the own resources contribution over 1 per cent., to block everything, to hold a pistol to the head of an EEC which would go bankrupt without the ability to increase its budget.
  We had the ability flatly to refuse to increase the own resources contribution until the CAP was brought into order. We had to be cruel to be kind and we needed to be tough to secure reform in this sphere. We had an impregnable bargaining card in that flat refusal. We could have imposed the policy of Thatcherism cash limits on the CAP. While we should have had to force a crisis, out of it good would have come because controls could have been imposed on the CAP.
  That weapon, the only one we had, is being thrown away with this measure for a mess of Euro-pottage, for promises that we know will not be fulfilled. If the same

  837
  basis is retained, with the automatic escalation of subsidies as production increases, there will be no possibility of restraining output and bringing the CAP under control. We shall have the same cycle of subsidies producing surpluses, producing dumping, producing increased costs, producing increasing destruction.
  When a mild attempt was made to restrain cereal prices, as soon as it came to a policy of imposing restraint, the Germans vetoed it. That is how effective so-called restraints and controls will be. We have seen, too, the way in which farming is politically impregnable in the EEC. Farming cannot be subjugated in the way we need, unless we are prepared to use the impregnable bargaining position that we are throwing away. We have agreed to give more money to an alcoholic who, grinning with the bottle in his hand and raising it to his lips, assures us that he will reform. That is about the validity of the promises of reform that we have been given.
  The nub of our difficulties is that membership does not suit us. So long as it does not suit us, we shall always be negotiating from a position of weakness in attempting to secure change in the Community. It does not suit us in agriculture specifically because we are, and always will be, net agricultural importers. It is not in our interests, therefore, to pay high EEC prices for foodstuffs that we can buy more cheaply elsewhere and trade our manufactured goods in return.
  It is certainly not in the interests of Britain to assume all the odium of a system of agricultural protection that is generating increasing hostility in the rest of the world, particularly in the American market, where it will be used as an excuse for their protectionism against our imports, generated by the rising dollar, simply because we are taking on the odium of a system of agricultural protection which we do not need or want and which does not suit us.
  Why should we incur that odium? Why should we support the folly, which is an obscenity in today's world, of the CAP? We are spending £800,000 a day to store food mountains when every minute of every day 30 people in the world die of hunger.
  What was the fate of commodities taken into intervention in the EEC in 1983–84? About 85 per cent. of lemons were destroyed. In other words, 5,246 lemons were destroyed every minute in that period; 1,579 peaches; 41 cauliflowers; 19 lb. of tomatoes; 2,019 lb. of apricots; 5,266 oranges; 587 lb. of mandarins; and 134 lb. of apples. The obscenity that we are supporting is that that amount of produce was destroyed every minute in a world in which 30 people are dying of hunger every minute. That obscenity does not, cannot and never will suit Britain.
  It does not suit us either because we have been hit disastrously by the impact of free manufacturing trade. That has turned what was a surplus in manufactured trade in 1970 of £2 billion, at 1983 prices, into a deficit last year of £9 billion, a turnround of £11 billion in manufacturing trade. That has been responsible for the loss of about 1 million jobs in this country.
  In that situation, we are always arguing from disadvantage, because we are trying to deal with what is an agricultural protection society—the NFU turned into a system of government—as though it were some great adventure in international idealism. We started at a
  838
  disadvantage. We are always forced to make concessions from an inadequate position, and we shall remain in that situation as we try to get concessions.
  We are told that we have in the Bill a marvellous deal and that we must accept it because, thanks to it, we shall get a rebate on our contributions. That rebate, we are told, is automatic and guaranteed. That, too, is wrong. The rebate lasts for as long as the 1·4 per cent. ceiling lasts, and how long will that last? With luck, it might last for two years. The Community is already running out of money and we have written into the White Paper a provision allowing for the ceiling to be raised to 1·6 per cent. on 1 January 1988, and the Commission is already talking of a 2 per cent. ceiling on VAT.
  Not only have we thrown away our negotiating position; we have no guarantee of a rebate. When we reach the 1·6 per cent. ceiling, our rebate will be up for grabs—it will be negotiated again—and we shall be back in a minority of one, the position in which we have always been. We shall be back in the old inadequate negotiating position, on our own, trying to roll the stone back up the hill. Today the Government are trying to convince us that they have got the stone up there and have triumphed.
  We have already seen that our allies in this process cannot be relied on. Therefore, we are seeing the shameful spectacle of our people being squeezed by cuts, some of which are bearing cruelly on many of them—cuts, for example, in child benefit and in lodging allowances, which we discussed earlier—with the proposed collapse of SERPS and with no effective restraint on the money that we are forced to shovel into Europe at Europe's behest.
  The Prime Minister's condition for giving way on the own resources ceiling was not to give way unless there was effective budgetary discipline; but there is no effective budgetary discipline, so the Bill is not just a betrayal but in domestic legal terms a shameful shuffling process. Originally, we were told that we were making reimbursable loans and we accepted the intergovernmental agreement, which was specifically se—t
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman has reached the limit of his time.
  7.51 pm
  Mr. Hugh Dykes: I shall be brief and shall refer to the Bill. Debates on this topic tend to become general discussions about the virtues or otherwise of Community membership. Foreign observers from other member states hearing our debates would be bemused, puzzled and a little disappointed that we still repeat the old, fundamental debate about Community membership. That issue was decided a long time ago.
  A lot of nonsense has been spoken today about the common agricultural policy. We know that if we had maintained our domestic support system for farmers and for farm gate products the costs would by now have been far in excess of our contributions to the common agricultural policy. One need only make a statistical continuation of the figures in the 1950s and 1960s when the old system obtained and make the calculations about the consumption of foodstuffs to realise that these debates are totally nonsensical and based on a lack of knowledge of what goes on in the CAP.
  Mr. Budgen: It is nice of people like my hon. Friend to let us have these debates at all.
  Mr. Dykes: Members talk as though farm gate prices have the most direct and final effect on prices in the shops, but that is not true. There is a big difference between the two, which is a more important determining factor than the price originally fixed and negotiated within the CAP.
  I, too, was amazed to read articles in the newspapers suggesting that there was some kind of sinister Government conspiracy and that instead of producing a respectable order the Government had produced a sinister Bill and published it on a Friday, and how harmful this was. The Bill is the best and most logical way to deal with this matter. It has provided a much bigger debate for dissident Conservatives who do not like the Community or its works than would otherwise have been possible. However, very few people have referred directly to the changes outlined in the Bill.
  I make no apology for saying that, despite this being a one-day debate, this is a small and technical Bill for good, constructive Europeans. I hope that there will be an increasing number of such people as we settle down to the realities of Community membership. This is a technical Bill implementing the intergovernmental agreement, which will need to be ratified by all or most of the national Parliaments according to the procedures applying in each member state.
  The 1·4 per cent. ceiling has taken a long time to be agreed. It has not been slipped through quickly by a sinister conspiracy in the Council of Ministers. The last increase to 1 per cent. took many years to achieve. If inflation receipts on the VAT equivalent base rise again as they did until a few years ago, the figure of 1·4 per cent. will persist and be entirely adequate for some years to come, but if it has to be increased by general agreement—
  Mr. Budgen: Will my hon. Friend comment on the Foreign Secretary's reluctance to give any undertaking not to come back to the House before 1 January 1988 to ask for another increase?
  Mr. Dykes: It is impossible to answer such an unusually reasonable provocative question from my hon. Friend in those terms, because that is not the way in which negotiations are conducted in the Council of Ministers. Finally, these matters are ratified and approved by the Parliament of each member state.
  As a constructive European, I should like the 1·4 per cent. to be increased as soon as possible. The thesis of earnest Europeans is that the Community budget is still far too small in aggregate and that a great deal of money should be spent centrally on the matters referred to by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath).
  Mr. Budgen Mr. Budgen rose
  Mr. Dykes: I cannot give way again, in view of the time limit on my speech.
  My hon. Friend the Member for Nottingham, East (Mr. Knowles) also referred to the need for the Community to work together to create a high technology Europe and to catch up with Japan and the United States. We also have to do a great deal nationally in that context which may have a limited connection or no connection at all with the Community. Britain is a seriously under-investing country. We invest in modern plant and machinery at about half the rate of Japan. The Community budget is
  840
  actually a very cheap mechanism. Those of my hon. Friends who are always rabbiting on about how expensive it is should consider the need to invest far more money, public and private, in this country and to make decisions along the same lines through the European Community machinery.
  While listening to Members fussing about the Community budget being outrageously big, I was musing on the modesty of the Community mechanism. I regret that the proportion spent on agriculture is too great, but that is not the same as saying that if the overall budget were bigger the proportion spent on agriculture would be smaller and the anxiety about it would decrease. Even with the latest increases in the draft 1986 budget, the entire Community budget is about £20 billion—roughly the amount that this country spends on dole money for the unemployed. Why do Conservative anti-Marketeers not put the same pressure on the Government to reduce unemployment, which is surely more important as well as more expensive?
  The European Community is here to stay, not just because all the populations of all the member states strongly support that continuation and development. With the addition of two more member countries at the end of this year, the Community must now be developed in a concerted way—
  Mr. Teddy Taylor: A Socialist way.
  Mr. Dykes: No, the judicious use of public money for investment purposes is quite different from excessive spending on current account.
  There are many respects in which Governments should restrain their spending on current account but continue to spend a large amount of public money on combined projects with private investment to build up the economy. We must build up investable resources in Europe. Unfortunately, the United Kingdom is the most seriously under-investing advanced country in Europe and probably, pro rata, in the world. The more money devoted to that purpose in the European Community, the better. At a time when this House, like other national Parliaments, should be considering these matters constructively and considering the expansion of high technology spending on ESPRIT and related projects, we get only curmudgeonly, pessimistic mumblings — from both Conservative and Labour Members-about the Community being outrageously expensive.
  At least the Community budget, unlike those of all the individual member nations, does not have a built-in deficit. That in itself is a discipline, as is the 1·4 per cent. ceiling. I welcome the fact that at long last the Community is earnestly engaged—with the Council of Agriculture Ministers, despite the German veto, which I deplore as a total disgrace and which should have been denounced by the Government and by the whole House-in the control of agricultural prices. That has taken some years to achieve, but price reductions have been proposed and people continue to leave the agriculture sector. It is not true that ossification has set in. One has only to consider the reduction in the agricultural population in France and elsewhere. The Bavarians, too, need to be shown the realities of life by their political leaders.
  With all those things in mind, as my hon. Friend the Member for Milton Keynes (Mr. Benyon) said, we must at long last begin to take the Community forward in an

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  idealistic way and stop these absurd nitpicking little debates about tiny amounts of money which make the Daily Express feel pleased and happy but which make us look foolish to other European countries.
  7.59 pm
  Mr. Gerald Bermingham: It has been interesting to listen to the preaching of supposed European idealism — even idolism — by Conservative Members. The hon. Member for Milton Keynes (Mr. Benyon) said that increased spending in Europe was an increased investment in public expenditure which was good for the European economy and jobs. Pardon my cynicism, Mr. Deputy Speaker, but if I heard the hon. Gentleman loudly preach that theme to his own Government, who have done nothing but cut public expenditure and investment in jobs, I might give more credence to what he said.
  One cannot have the argument both ways. One must either adopt the market approach and ask what the return on our investment will be, or the much more social approach to public expenditure and investment. I do not know which approach the Government wish to adopt. On this occasion they tell us that we must increase investment in Europe from 1 per cent. to 1·4 per cent., and that that apparently is a good thing. They then wonder why some of us criticise such investment and ask what we shall get in return. In all fairness, we have a right to ask that question.
  I have never made any secret of the fact that I consider the whole European concept, as currently constructed, to be an utter waste of time. It is bureaucratic madness and a waste of money, which, at the end of the day, produces nothing for the European Community. If we were talking about a free trade area that stretched northwards from the Mediterranean, which was enlarged to 12, 14, 16 or 18 countries and which operated a fair system, I would be all for it. But the current system is nothing more than an absolute waste of money, and it has many side effects that are utterly detrimental to the United Kingdom.
  We talk about the CAP. But what does that mean in real terms for British farming? As my hon. Friend the Member for Newham, North-East (Mr. Leighton) said, land values have escalated beyond reasonable levels. A secondary effect is that, unless they are extremely rich, the young cannot afford to enter the farming community except as tenants, but the number of tenancies available has decreased, and the Government have not helped by encouraging county councils to get rid of smallholdings. As a result, the first rungs of the farming career structure have been removed.
  What would happen if the CAP collapsed tomorrow or if subsidy levels were reduced by force of economic circumstances? Many young farmers who are now buying their land on very large mortgages would find themselves in the bankruptcy court. Carey street alone would benefit, and the lawyers and accountants with it. The real farming industry would suffer. One cannot justify a policy which has that as a potential end result, any more than one can justify an industrial policy that talks about fairness and competition when that does not exist throughout the Community.
  842
  The British fishing industry has two thirds of the potential, but it gets only one third of the catch. Our trawlers are laid up, our men are out of work and our industry is dying on its feet. Is that an investment?
  The heart of the glass industry is in my constituency, and it has some of the finest technology in the world. It is said that there will be common agreement on production rates and everything else, yet the Belgians, French and Italians break every agreement, not officially—one asks the Government to intervene, but nobody takes any notice—but by way of energy support prices.
  Mr. Forth: Why is the Labour party encouraging Spain and Portugal to come into the Community, given the fishing implications to which the hon. Gentleman has referred as well as the implications for horticulture, farming and industry generally?
  Mr. Bermingham: That is a fair intervention. I make no secret of the fact that I do not speak for my party from the Opposition Front Bench.
  Mr. J. Enoch Powell: The Americans do not speak to the hon. Gentleman; they speak to his Front Bench.
  Mr. Bermingham: I am much obliged to the right hon. Gentleman.
  I have no objection to Spain and Portugal coming in, provided that the ground rules are changed and there is fair play. I shall come back to that point, particularly in the context of the clothing industry and textiles.
  If the rules on energy support prices, and so on, are not adhered to, in Belgium glass sheeting for double glazing, for example, can be produced and shifted at a price that is cheaper than the price we pay for the materials. That is the sort of club to which we are now expected to pay this extra money. There are serious questions about why we should pay such extra money, because it seems to be grossly unfair.
  The United Kingdom textile industry has suffered grossly over the past 10 or 15 years, and only now is it beginning to struggle back on to its feet. Textile firms in the north and in my constituency will be seriously at risk if pricing agreements throughout Europe are not arrived at on a basis that will allow the British textile industry a fair share of the market. No one is asking for preferential treatment, only for fair competition within the Community.
  In international terms that must be coupled with a multi-fibre arrangement that is fair to European, English and world trading interests. But unless the rules are played fairly across the system, the system is not worth having. The truth is that different rules seem to apply to different parts of the Common Market. At the end of the day, the United Kingdom always seems to get the worst of the deal.
  I have lived for many years in south Yorkshire, which used to have many steel industries. From 1954 onwards one has seen how the rules have been bent in the European Iron and Steel Community, as a result of which the English steel manufacturers, who produced some of the best special steel in the world, found themselves on the losing side time and again.
  It is against that background that we are now asked to increase our membership fee from 1 per cent. to 1·4 per cent., but in no way have the Government sought to justify it. It is said that the money is needed, but the level of

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  expenditure is already up to just over 1 per cent. I have estimated that there was roughly a 7 per cent. leeway. Even in our inflationary times, 7 per cent. is nothing, and I do not believe that the 1·4 per cent. ceiling on own resources VAT—unless policies are drastically altered—will prove to be adequate.
  There comes a time when some of us have the right to ask—I hope that the House has such a right—where we are going with current European policies. Are we seeking to produce the European free trading entity that was first conceived in the original idea and that will expand and benefit the whole of Europe? Alternatively, are we seeking to create a cosy little club, some sections of which will be cosseted at the expense of others?
  At the end of the day we must decide whether, in what we do, we are seeking to benefit our constituents. We must seek to produce a fair trading policy across Europe. In my view, and I hope in the view of many other hon. Members, that situation has not been reached. The Government's attempt to force this tawdry little Bill through will, in effect, mean that some sections of Europe might be cosseted but that many more will ultimately be damaged.
  I can think of many ways in which £1 billion would be far better invested in the United Kingdom than in the current concept that has come from Brussels. The original dream of the European entity was good. The reality is that it has become an absolute nightmare for which the United Kingdom is paying a very dear price. I hope that the Bill will be rejected.
  8.9 pm
  Mr. Richard Shepherd: Over the weekend the press has prepared us for the debate. One remembers Belloc:
  "The stocks were sold; the Press was squared; The Middle Class was quite prepared."
  Monday's exposition in The Times was followed by today's contribution, neither of which did the greatest credit to their authors. The unease which fed the articles was expressed well today by my right hon. and learned Friend the Foreign Secretary. He stayed in the Chamber to hear the speech of my right hon. Friend the Member for Worthing (Mr. Higgins). Had that speech come from the Secretary of State, there would have been a cheer from the House and from the country. Instead, my right hon. and learned Friend the Foreign Secretary prefaced his speech with an apologia for the future of Britain in Europe and identified factors which he claimed add to our strength in the world.
  The fact that our membership of the Community has diminished our influence in the world causes anxiety to people who are neutral to the intent and purpose of the Community. The Foreign Office has turned the arguments upside clown. Part of the strength of our influence lay in the fact that we were a major purchaser of agricultural commodities from nations which had a natural advantage in their production. The influence which we exercised as a significant purchaser of the goods of Australia, New Zealand, North America and even Argentina was far out of proportion to that which we exercise as a rather junior member of the European Community.
  For many years we have heard that our trade with the Community is significant. It amounts to 40 per cent. Conversely, 60 per cent. of our trade is still with the rest of the world, although we have embraced the European Community's common agricultural policy.
  844
  I cannot support the measure, because what causes most distress to the country and what is central to the Community is the constant burden of the common agricultural policy. The net contribution to the Community is borne by the ordinary consumers of this country. It is difficult to make the Government identify the cost to the consumer. In the United States of America it is a requirement of law for the International Trade Commission to assess what a tariff means to the consumer. This applies to shoes, corn imports or any commodity which carries a tariff. We no longer deal in those economics. We eschew the quantitative evaluation of the merits of an argument. I suggest that the common agricultural policy amounts to £10 billion of taxes on consumers. The Government seek to cut public expenditure so as to effect taxation cuts. The most effective way to raise the standard of living for people in Britain and diminish the tax burden would be to reduce the price of food.
  The purpose of Parliament is to scrutinise and inquire into the purpose of raising taxes and finance, and this we do inadequately and woefully. The Government were elected to defend the common man, to represent his interests and to control wasteful taxation. We are gradually abandoning that policy. We shall return to this fundamental constitutional issue in Committee. We should not suffer taxation over which we have no call, nor direction, nor ability to abate. We must identify the cost to the consumer.
  The Treasury must insist and the Government must demand that the Ministry of Agriculture, Fisheries and Food gathers itself up and informs us about what a 10 per cent. reduction in the cost of food would represent. It could be £3 off the average family's cost of living. That would reduce the retail prices index, improve our standard of living and direct our resources to where they are most needed. My hon. Friend the Member for Holland with Boston (Mr. Body) has written an excellent book entitled, "Agriculture: The Triumph and the Shame". It is not true that we do not wish to support our agricultural interests. However, many hon. Members and many British people believe that we can better support and defend the interests of our farmers and represent the interests of our consumers without that especially pernicious instrument, the CAP.
  It is not true to say that we have resolved the European problem. Most hon. Members recognise the reneging on undertakings which were solemnly given by the most senior members of our Government by their coming here today and saying that things which they promised would not happen will happen. One appreciates their difficulties. If we reject this measure, our immediate contribution will increase considerably. One feels that the Government started to run the race, were running strongly and then gave up. There was a sudden realisation that the forces were too great and the other issues too big.
  The measure for which we shall fight across the Floor of the House during the next three years is tax cuts, and the Government have the power to reduce them, in a properly targeted way that reaches to the poorest and most needy in the community, by cutting their food bills. That is why I want the Government to take up the sword again and to fight back. The points made by my right hon. Friend the Member for Worthing should be adopted by the Government, and they should return to Europe and say, "The House of Commons will no longer support such a measure."
  8.16 pm
  Mr. Peter Hardy: I apologise for the fact that I have had to spend some time away from the debate. This subject commands much of my concern and has for a long time commanded my interest. I congratulate the hon. Member for Aldridge-Brownhills (Mr. Shepherd) on a speech that deserves our attention.
  Yesterday, I attended the first meeting of the Political Affairs Committee of the Council of Europe, at which we had our first glimpse of the document produced by the Colombo commission. That document, which was written by a committee of the worthy and good, considers the future of Europe. It identifies areas of real need where European co-operation would be possible. It calls for much more intense co-operation to deal with terrorism, drug-taking and unemployment among the young, and talks of the need to co-operate in enhancing Europe's environment. Those are all good causes, but the Minister and many hon. Members will know that the Community cannot offer a positive response to those or to any other good causes, because the Community will not reduce the proportion of its expenditure that it devotes to agriculture.
  If the proportion of expenditure falls below 72 per cent. during this decade, I shall be astonished. But until the Community accepts that the proportion must be dramatically reduced, and until agriculture expenditure is borne by national funds instead of by Community funds, the Community will lack all capacity to move even remotely towards the ideals which persuaded many Conservative Members and a few Labour Members that entry of the Common Market was a commendable development.
  I said at the Political Affairs Committee meeting in Paris yesterday that almost every Member of both British Houses of Parliament would subscribe to the ideals which have driven the members of the Colombo commission to their recommendations. All of us realise that we need substantial co-operation in Europe, but, unfortunately, the experience in the United Kingdom since we entered the Common Market has brought bitterness and suspicion, which did not exist before the right hon. Member for Old Bexley and Sidcup (Mr. Heath) dragged Britain, unmandated, into the Community.
  Mr. James Molyneaux: And without the full-hearted support of the British people.
  Mr. Hardy: As the right hon. Gentleman says, he did not have their full-hearted consent. If the Government sought to obtain the full-hearted consent of the British people today, they would not get it. They will not get it until the Community recognises the need for substantial reform. The Government have an obligation to say that they will give no more money to support what is little more than insanity. For a while, I acted as Chairman of the Agriculture Committee of the Council of Europe and was therefore in a position to study European food policy. Indeed, I acted as rapporteur. The more I looked at the insanity, the more curious I became.
  I remember raising in the House the fact that the Soviet Union had doubled its wine purchases for five successive years and was paying the princely sum of 4·5p a litre. The House was amused when I suggested that this was a gesture to achieve disarmament and detente through alcoholic euphoria, but it was not a laughing matter. Nor is it a laughing matter when my colleagues in the Council
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  of Europe who live in wine-producing areas can boast that wine production has increased by a factor of five in a decade and we know that there is an enormous and growing surplus of wine. We know that the problem of wine storage will loom ever larger than the problem of the butter mountain. In a frivolous moment I have suggested that eventually we shall have to put a cork south of Gibraltar to make the Mediterranean sea a repository for surplus wine and Italian sewage.
  British Governments have an obligation to speak out with sanity. There was certainly a need for sanity two or three years ago when our steel industry was being contracted. My hon. Friend the Member for Rotherham (Mr. Crowther), who is a member of the Select Committee on Trade and Industry, met Count Davignon and asked him why Britain was required to contract its steel industry to fulfil Community policy while the Italians were busily engaged in expanding their industry in defiance of that policy. His response was, "We cannot do anything about Italy." Britain's economic position is as parlous as Italy's. It may be that this is due to the improvement that the Italian Administration has secured through sheer defiance of Community regulations.
  Those of us who live in constituencies and represent areas where there are 10 times as many people unemployed as there are vacancies in a year and where the unemployment prospects are dreadful and will soon be devastating, no matter how much Ministers trumpet about recovery—we have not seen much sign of recovery in many parts of England's industrial heartlands—find it impossible to endorse the Government's policy. The Government are prepared to spend vast sums in supporting wasteful excess and inadequate controls in the Community while the needs in our areas are bewildering.
  I trust that the Minister will respond to the arguments that have been advanced by some of his colleagues, because it is right that Britain should speak out in Europe and ensure that its interests, in the areas with the highest unemployment in Europe, are properly recognised.
  As the hon. Member for Aldridge-Brownhills has pointed out, experience has shown that we have turned from the deep-water diplomacy which dominated our foreign policy until recently and that entry into the Common Market has brought to our policies a layer of introspection which has changed the character and approach of British political life. It may be that we cannot easily extricate ourselves from Europe, and I would not dissent from the argument that it would be difficult for us to secure this disentanglement. If we are not going to disentangle ourselves, we have no alternative but to ensure that we do all that we can to ensure that the European Community puts its house in order. It is a disorderly house if there is the extravagance of an agricultural policy that imposes no limit on the waste but demands that industries such as those that have served Britain well, providing the economic base for areas such as mine, should be driven into desolation.
  Wine, corn and butter are still produced in profusion, but one of the most successful steel works in Europe, at Tinsley Park in Sheffield not far from my constituency, has to be closed to comply with the demands of economic planning imposed by people who have taken leave of their senses. If we have waste in Europe, we must insist that there is productivity and employment in the United Kingdom. Unless the Government are prepared to set that

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  point firmly in their mind, they will fail. In that case, I hope that, they will attract the sincere and genuine opposition of Conservative as well as Labour Members.
  8.24 pm
  Mr. William Powell: One point that is fundamental to consideration of the Bill was the statement by my right hon. and learned Friend the Foreign Secretary that the Bill represents the most significant piece of primary legislation since the original legislation that took us into the Common Market 12 years ago. I wish to examine on that basis the arguments about what the House should do.
  Some hon. Members oppose our membership of the European Community. They have spoken most eloquently and been heard with respect. It is not surprising, therefore, that, when they are asked to take the next step down the road to the development of the Community, they should stand out against it.
  Mr. Marlow Mr. Marlow rose—
  Mr. Powell: I shall not give way. My hon. Friend knows that we are all limited by time.
  It is not surprising that those who oppose our membership refuse to take the next step, just as they refused 12 years ago to take the next step.
  There are those who favour membership but believe that the position advanced by the Bill cannot be supported. My right hon. Friend the Member for Worthing (Mr. Higgins) eloquently advanced that point, which has found substantial echoes of support in the House. I believe that that is a profoundly mistaken view, because it is not for any of us as Members of the House of Commons to second-guess the negotiations that have been carried out by the Government. I do not doubt that we would all have liked to achieve something slightly different, but those Members on the Treasury Bench who participated in the negotiations are the only people who had to judge whether a bargain could be struck. Ultimately, the House must decide whether it is prepared to entrust confidence in the Government. That is our power and responsibility.
  My right hon. and learned Friend the Foreign Secretary came to the House, as did my right hon. Friend the Prime Minister, and said that this was the best deal that could be struck on behalf of the country. They commended the deal to the House on that basis. We have heard a number of contrary arguments. Some hon. Members say that they could have made a better deal, but the fact is that they are second-guessing the people who have the responsibility for conducting our foreign and international policy.
  When the Foreign Secretary says that this is the best deal, it becomes a question of confidence. Are we prepared to entrust confidence in him? Although I do not support many aspects of the Community—indeed, I wish to change them, as, I am sure, does my hon. Friend the Member for Harrow, East (Mr. Dykes)—the fact is that this is where we are.
  Where would we be if we were to reject what the Bill offers and to refuse the next step towards the development of the Common Market? We should be in the worst possible position. We should remain in the Community—as, of course, a number of hon. Members wish, although they reject the conclusions reached by Her Majesty's Government—but what influence should we have? We should have virtually none, because the best that
  848
  could have been obtained would have been rejected by the House. The European Community would be developed by our partners and we should have virtually no part in it. We should stand on the sidelines. We should be ignored and despised.
  My hon. Friend the Member for Holland with Boston (Mr. Body) said that we need a common market for company law, international trade, and so on. If we reject the Bill, and the further development of the Community that is implicit in it, that will never come about. We shall have no chance of securing the objectives that he so eloquently advanced and which I passionately share.
  If we wish to develop Europe and come together as a Community, we have no alternative but to accept the advice that has been given by my right hon. and learned Friend the Foreign Secretary. The House of Commons must fulfil its historic function and have confidence in Her Majesty's Ministers.
  The arguments put forward by my right hon. Friend the Member for Worthing and by my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) are fundamentally flawed. Their objectives and analysis may command wide support, but they have no chance of achieving their objectives if they stand apart and say to the rest of the Community, "We will have no part of it."
  The hon. Members for Hamilton (Mr. Robertson), for Walthamstow (Mr. Deakins) and for Great Grimsby (Mr. Mitchell) said that we had thrown away our best bargaining card. That implies that they would have been prepared to continue the year-on-year struggle to obtain a British rebate. We shall not be able to obtain the 13ritish rebate if we reject the Bill, because we have not been able to obtain it in the past. Little progress would be made. Their argument is fundamentally flawed. We have used our best bargaining card to the point where it gave us the maximum return.
  In those circumstances, my right hon. and learned Friends the Foreign Secretary and the Chief Secretary to the Treasury struck the best bargain at the right moment. We used our cards to the best effect and obtained the best deal that we could. We are now presented with a choice: do we or do we not proceed with the development of the Community? If we wish to develop the Community in all its aspects, the only choice is to support Second Reading of the Bill.
  If we reject the Bill, the message will go loud and clear to our partners in the Community that we are not serious in wanting to be a member of the European Community and that they can go their way and leave us aside. We shall find that our influence in the world is but a small percentage of that imagined by those who have so eloquently argued that we can stand apart, defy the forces of the world and go it alone. That may have been possible at one time. That option is not open to us now.
  8.34 pm
  Sir Anthony Meyer: The debate, which has been dominated by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), contained an exceptionally important speech by my right hon. Friend the Member for Worthing (Mr. Higgins). I do not suppose that any hon. Member is held in higher esteem than he is, or is more justly held in that esteem. It is therefore important to meet head on the argument that he deployed. It is central to the debate. Although hon. Members will stream in at the end of today's proceedings

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  and vote as the Whips direct, this is supposed to be a debating Chamber, and my right hon. Friend's arguments deserve to be taken seriously.
  The centre of his argument was that we had an outstandingly good case and that therefore there was no need for us to give a quid pro quo to achieve a settlement satisfactory to the United Kingdom. It seemed a good case to every hon. Member. To the other members of the Community, the case did not seem so good. The United Kingdom, which has demanded a reduction in its contribution to the Community, is the only member of the Community that is self-sufficient in energy. The United Kingdom's case for special treatment, therefore, did not seem so blindingly clear to other members of the Community as it seemed to every one of us.
  My hon. Friend was a distinguished Treasury Minister. As far as I can recall, his duties in the Treasury were involved mainly with the management of the money market. He was perhaps less involved with international negotiations than some of his other Treasury colleagues. My experience as a lowly member of the diplomatic service taught me that one receives nothing for nothing and that there is always a quid pro quo. One achieves nothing in international negotiations unless one is prepared to make some concession.
  My right hon. Friend said that we had a bargaining weapon so powerful that we should not have been prepared to concede anything in return. It was the same bargaining weapon that Samson used so effectively. It is so powerful that it brings down the roof not just on everyone else but on ourselves. I cannot hope to persuade my right hon. Friend by what I have been saying, but I do not accept his case. I accept the case that the Government put forward—that they obtained for this country the best possible bargain at Fontainebleau and that the Bill enshrines that bargain.
  The Government obtained a good bargain at Fontainebleau because, for the first time for many years, they stopped thumping the table and put forward to the meeting a paper which was by far the most constructive, forward-looking and interesting contribution to the European debate that the British Government had made for a long time.
  The agreement reminds me of a subscription to a Christmas club. Anyone who objects to the Christmas club putting up the subscription when his own subscription will be halved and his divvy will be upped must be stark, staring mad. We must accept the whole of the Fontainbleau agreement or none of it. We cannot swallow the bits that we like and spit out those that we do not like.
  The Bill and the agreement to which it gives effect mark the end of the interminable dispute over Britain's contribution to the European Community which has paralysed the Community for five years. The way is now open to make the Community into what it should be—a unique system which allows member countries, while keeping their national identities, to increase their influence and wealth more than they could possibly do by their own efforts. For the first time there is an opportunity that would have seemed unimaginable two years ago: the opportunity to make progress towards a European Community that works.
  The new Commission is incomparably better than its predecessor. In M. Jacques Delors we have a President
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  who gets things done, who believes in an open and competitive economy and who is fully backed by the French Socialist Government who appointed him. In Lord Cockfield we have, I admit somewhat to my surprise, a commissioner who has come forward with bold and radical ideas for advancing swiftly towards a unified market, which is the primary aim of British policy. Already things are beginning to move.
  At the last meeting, the Foreign Secretary made very sensible suggestions for improving decision-making by making more use of qualified majority voting. I stress "qualified majority voting". People speak as though we had merely one vote among nine. With majority voting, provided that we have the support of one other country, we need never make use of the veto. The proposals stand a very good chance of being accepted, provided that we can get the Italians, who will be in the chair at Milan, to use their considerable expertise in the Presidency. All of us pay homage to the excellent way in which on more than one occasion the Italians have conducted their chairmanship. Provided that we obtain their support for the British Government's proposals, there is a very good chance that they will be accepted.
  If to obtain that support we have to pay a very small price in terms of European symbols—it would be absurd to jib at such symbols as national anthems and flags that cost so little and give so much satisfaction on the Continent—or the very much larger price that I hope we are now ready to pay and that will benefit us as much as anybody else — to complete the European monetary system by this country joining its exchange rate mechanism — I believe that these proposals will be accepted.
  I support the Bill and I challenge any hon. Member who opposes it to say how we can throw it out and still remain an effective member of the Community. I want the Community to get on with its job of enabling this country and other members of the Community to strengthen their influence in the world and provide better living conditions for their people.
  That brings me to the one contentious part of my speech. Even the increased budget of the European Community is far too small. Like my right hon. Friend the Member for Old Bexley and Sidcup, I want a great deal more money to be spent upon technological advance, common procurement and financing the European defence industries. I do not believe that even the most ardent supporter of a free market would say that people can be induced to buy their own tanks and guns.
  Although the budget is far too small, most of it is wasted. We should be far better off without the common agricultural policy, but we have to live with it. Nor is the money spent upon the regional policy a proper activity for the European Community. This work could be done far better by national Governments. All the money should be spent on financing technological achievement. That is the way in which Europe could make a major contribution to raising living standards generally.
  8.43 pm
  Mr. Eric Forth: I begin by giving some credentials to the House. There is no reason why I should, but I do so only for this reason. It is often said that those who criticise the European Community or who are bold enough to criticise a Bill such as this are in some sense anti-European. There is nothing wrong with being anti-European. It is a perfectly respectable political

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  position to adopt. However, it is not a position that I occupy. Throughout the late 1960s and early 1970s I campaigned for the entry of the United Kingdom into the European Community and I spent five years as a member of the European Parliament, so I am marginally qualified to comment on this Bill. I do not do so as one who argues that we should leave the Community, but we must keep in perspective those matters that the Community can do best.
  It can be a very effective trading block and customs union. It can, and rightly should, perform the task of representing the interests of its members in a world trading sense, and from time to time we may be able to identify those matters that the Community can perform better than individual member states. But that does not necessarily lead to the conclusion that we should vote for the Community a budget which sets about identifying more and more things upon which money should be spent. The common agricultural policy is a classic example of a policy that began with very high hopes and splendid ambitions but which has come very badly unstuck.
  The question that has to be asked tonight is: do we have a better chance of reforming the CAP and setting Europe back again on the right rails by retaining the 1 per cent. VAT limit, or should we trust to good luck and good fortune and the majority vote in the future and provide the Community with more money at this stage?
  We have been told over and over again in this debate, including by my right hon. Friend the Foreign Secretary, that the Bill represents a good deal for the United Kingdom. Perhaps it does; perhaps it does not. I am more interested in what is a good deal for the European Community. I am not yet convinced that we shall do the Community any good by removing the one thing that until now has concentrated minds and disciplined the Community: the 1 per cent. VAT ceiling. We have been told that the new ceiling of 1·4 per cent. will be bumped up again as early as next year and that it is already provided for in the 1986 preliminary draft budget. What that means for discipline I do not know.
  Two main reasons are given for the Bill. The first is enlargement of the Community. I do not support enlargement. I am a lone voice on that, although I appreciate any support from my hon. Friends. However, the House has not been given an opportunity to say what it thinks about enlargement, except in my Adjournment debate before Easter in which I discussed the matter at some length with my hon. Friend the Minister of State, Foreign and Commonwealth Office.
  The real reason why I am unable to support the Bill and will vote against it is because the Prime Minister, the Foreign Secretary and the Economic Secretary have said that effective budgetary discipline will be introduced. The budgetary discipline document says:
  "the level of expenditure will be fixed on the basis of available revenue, and that budgetary discipline will apply to all budgetary expenditure."
  That is splendid.
  Article 1 then refers to a reference framework being fixed each year, the maximum level of expenditure being fixed within that framework. That is also splendid. However, it then falls apart because article 2 says:
  "Account shall be taken of exceptional circumstances, in particular in connection with enlargement."
  Therefore, the budgetary discipline document admits of the possibility of unidentified exceptional circumstances
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  that may alter the budget discipline. Article 5 says that, "barring aberrant developments" agricultural expenditure will be brought back within the limits imposed by the guidelines. We do not know what those "aberrant developments" are. However, in the view of the Economic Secretary, what would happen if there were two or three consecutive years of record harvests in the Community, to say nothing of developments in the world market for agricultural products?
  Finally — this blows a hole in the entire claimed budgetary discipline mechanism—article 6 says:
  "the Council, acting by the majority referred to in article 1(2), may amend the reference framework".
  In other words, having started the year by identifying limits, we can at any time vary them or do away with them altogether.
  If this is being offered to me by my Government as a serious attempt at budgetary discipline on a Community that until now has shown no will or ability to discipline its expenditure, I cannot accept it. Until I am convinced that that document and these words mean something—that bringing into the Community two countries that can only benefit from increased expenditure—until I am convinced that the Germans did not really mean what they have recently done and until I am told how it is that by bumping up the 1986 preliminary draft budget we shall not go beyond the 1·4 per cent. that is now proposed in the foreseeable future, I shall have to vote against the Bill.
  8.50 pm
  Mr. Gavin StrangI make no apology for confining my remarks to the CAP. It is because of the colossal expenditure on the CAP that the Bill has been introduced. The Government are cutting public expenditure in areas that hit the poorest people in our society. They are cutting back on important areas for our community. Their whole philosophy is one of reducing public expenditure. Therefore, it is remarkable that they are prepared to continue to sanction the wasteful expenditure of thousands of millions of pounds. To some extent, that money is used to give an open-ended state commitment to farmers to produce as much as they want, regardless of need. Our intervention stores have more food in them now than ever before. Thousands of millions of pounds have been wasted destroying the markets of other countries, especially of the Third world. There is a real and understandable conflict between the United States Administration and the European Commission because of the enormity of the subsidies that the EEC has been prepared to use to win markets to dump surplus produce.
  I was privileged to represent this country during the last Labour Government, sometimes in the company of my right hon. Friend the Member for Lewisham, Deptford (Mr. Silkin). At the time of the referendum it was remarkable that EEC prices were about the same as world prices. That, of course, was a freak position. Subsequently, world prices returned to a more realistic level, but EEC prices continued to be set well above them.
  I acknowledge that the Labour Government were repeatedly bought off by such bribes as butter subsidies. They did not take a sufficiently determined stand to hold down prices. It was only at the last price-fixing—we lost power in the middle of it — that the Labour Government had a mandate to dig in their heels and hold down prices.

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  That has happened with this Conservative Government. Instead of embarking upon a policy to reform the CAP and hold down expenditure, they have concentrated on trying to obtain unilateral independent action in the Community to help reduce our net budgetary contribution. Indeed, during the past six years, the Government have made no real attempt to obtain real changes in the CAP. An example of that is the development of the sheepmeat regime. I remember debating that on a Friday afternoon two or three years ago. The then Minister presented it as a great achievement, but the majority of speakers from both sides of the House were highly critical of it.
  Instead of creating a common market for sheepmeat — which would have been in the interests of Scottish producers—the regime was drawn up in a complicated manner precisely to keep Scottish lamb out of the French markets. It was a grotesque regime which cost a great deal of money. This country may be a net beneficiary, but there is guaranteed intervention on the Continent, headage payments for some countries and a deficiency payments scheme operating in this country.
  That grotesque regime makes no sense to anyone looking at the development of sheep production in the Community. Instead of tackling the real problem, each country is prepared to accept a bribe. There is an unlimited amount of money and it is used to keep countries quiet. We seem to be continuing along that road.
  The next major development was the implementation of milk quotas. That was an admission of failure. Every producer is given a rigid quota. It is an admission that we are not prepared to use the price mechanism to discipline the level of production. We will be stuck with a surplus in milk production. We must ensure that we are not destroying British jobs and making disproportionate cuts in our production while the Community as a whole increases production or maintains it at present levels.
  I hope that the Government will decisively kill the nonsensical suggestion of quotas for cereals. I accept that, having imposed milk quotas, we should try to make them work and reduce milk production throughout the Community, but cereal quotas would be diabolical. Cereals are a fundamental cost in the agriculture industry. They determine the price of livestock production—especially of pigs and poultry—where 70 per cent. of costs are accounted for by the price of cereals. It would be disastrous if the Community adopted cereal quotas.
  I shall not take the time of the House to put forward other practical arguments against cereal quotas. I hope that the Minister will make it clear that the Government will stand by their policy—I accept that they are doing so at the moment—so that, even if we cannot achieve the full 5 per cent. reduction in cereal prices that we should have had this year, at least the price will be held down. It is incredible that the German Government, who have traditionally supported the idea of the European Community, should have been prepared to stand apart on this issue. There is no case for keeping prices above the level of world prices.
  When I was first elected to the House and began to study these matters, people in Brussels described the CAP as the vehicle of integration. It was the great common policy. They thought that it was sacrosanct because it would bring the Community together. In fact, it has done the opposite. Far from being a vehicle of integration, it is
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  the main source of disunity, of waste and of lack of progress. It is one area in which we should not try to develop a common policy. If we consider the different types of agriculture and Government intervention, we must recognise that there is no case for going down that road.
  We must think of the investment that we could make in science and technology—areas where there is a case for saying that Britain is not large enough to act unilaterally and that there should be collaboration within the framework of the Community. Small countries such as ourselves, Germany and France cannot act alone against such large countries as Japan and the United States.
  I regret that Britain is in this position. Surely there must be common ground at least on the view that the Government must take a tough line, although I do not dispute that during the present round of price fixing they have taken a tough line. They must not be prepared to concede further increases in prices for products in surplus.
  8.59 pm
  Mr. Roger Freeman: I rise to support this Bill as one who supported entry into the Common Market originally and believes that we should stay in and play a very active role in its further development. I want to make four points very briefly.
  The hon. Member for Hamilton (Mr. Robertson), opening the debate for the Opposition, was perhaps attacking from the financial standpoint figures for 1984 and 1985 before us in this Bill which are already set. We are currently running at a rate of approximately 1·2 per cent. VAT own resources contributions within the Community. We were about 1·1 per cent. in 1984 and already the draft budget for 1986 is 1·3 per cent. or 1·35 per cent. The figure for 1985 of 1·2 per cent. equivalent reflects the price-fixing largely in 1984, and the draft budget decision for 1986 reflects not only the accession of Spain and Portugal but also to some extent the price fixing which has already largely occurred.
  I suggest to the hon. Gentleman that, instead of attacking this Bill, which should be addressed on its merits, it would be more constructive to address the draft budget for 1986 and, more important, the draft budget for 1987. There I can agree with him that a ceiling of 1·4 per cent. must be maintained and economies must be achieved, particularly in the discretionary spending of the Community. To criticise the intergovernmental payment for 1985 is to miss the point, because that was already predetermined by decisions in 1984. [Interruption.] My hon. Friend the Member for Southend, East (Mr. Taylor) indicates part of the reasons for the 1985 IGA and I will come to that in just a moment.
  My second point—here I agree with my hon. Friend the Member for Corby (Mr. Powell)—is that we have to look at the deal as a package. [Interruption.] The hon. Member for Thurrock (Dr. McDonald) expresses some disagreement with what I am saying; it will be interesting to hear what she has to say in a minute. The plain fact is that the net contribution of this country from 1982–83 as a result of this Bill will remain broadly speaking the same. Speaking for the farmers in my constituency, as well as the industrialists and consumers, I say that that is a good deal. That is a contribution in absolute terms that it is well worth this country paying, not only for participating in the

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  common agricultural policy but also to enable the business men in my constituency to participate in the tariff-free European Economic Community.
  Mr. Marlow: The gross contribution is also important, and that has gone up by 50 per cent. That is public expenditure. It may be that some of that public expenditure is within the United Kingdom, but if we are concerned to control public expenditure, gross European expenditure is also very important.
  Mr. Freeman: I disagree with my hon. Friend. I am concerned about the net expenditure that affects public spending. When we talk about the 1985 IGA payment, I think that my hon. Friend is right. I know that he argues that we must look at that net of only the abatement that will operate in 1986 for that IGA payment and not necessarily net of the receipts to the agricultural community. That is right, but I look at the net contribution that appears in our public accounts and affects the PSBR, and that net contribution has not increased since 1982–83 and will not increase.
  My third point is that I have heard no evidence, even from my hon. Friend the Member for Mid-Worcestershire (Mr. Forth)—who has left the Chamber, unfortunately, but will no doubt be returning shortly—to suggest that budgetary discipline is not working. The hon. Member for Walthamstow (Mr. Deakins) may shrug his shoulders, but no evidence has been added to the debate tonight to suggest that budgetary discipline is not working. The cereal year begins on 1 August and the Commission has not yet finished wrapping up its proposals to ensure that CAP expenditure rises in line with the restraints agreed at Fontainebleau. We are somewhat begging the question if we suggest that somehow agricultural expenditure is going to run away in the next year. I am not persuaded of that argument on the evidence presented.
  I refer hon. Members to the Select Committee evidence, when my hon. Friend the Economic Secretary, in answer to a question on page 12 of the Minutes of Evidence, made it quite clear that there is no evidence yet to suggest that, simply because the regime for cereals and oilseed rape has not yet been firmly fixed, total agricultural spending will overstep the guidelines.
  In conclusion, I should like to address a question to my hon. Friend the Economic Secretary concerning the carry-over not only of the revenue shortfall but also of agricultural spending. As far as the revenue shortfall is concerned—my hon. Friend the Member for Southend, East raised a question earlier which I shall now address—there was a revenue shortfall in 1984 of 400 million ecu, which has been carried into this year. The intergovernmental agreement for 1985 makes no provision for recovering that shortfall. It will be offset against a revenue surplus which might be 250 million ecu or 300 million ecu. It is right not to include in the intergovernmental agreement for 1985 any cover for that revenue shortfall, because it is a discipline against further expenditure within the Community this year.
  Mr. Teddy Taylor indicated dissent.
  Mr. Freeman: My hon. Friend the Member for Southend, East shakes his head. I shall be happy to give way to him if he wants to pursue that argument.
  It is important to ensure that agricultural expenditure is not deferred. Cash limits to expenditure must come shortly
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  so that sums agreed to be spent in one year are not squeezed into the next year to fulfil obligations incurred in a full calendar year. I should appreciate the Economic Secretary's comments on that, because if budgetary discipline is to mean anything, it must mean that obligations incurred are properly accounted for in the course of the year.
  9.6 pm
  Mr. Roger Moate: My hon. Friend the Member for Kettering (Mr. Freeman) is a doubtful ally of the Government Front Bench, because his case seems to be that we have already overspent the 1·4 per cent. and so we should be worrying about the future and the next tranche. The Front Bench has tried to establish that 1·4 per cent. will hold good for some years. If he thinks that the solution lies in cash limits, it is strange to propose taking away the only effective cash limit which imposes some form of discipline on the CAP.
  Several hon. Members referred to the Commission analysis, which states that in 1986 the VAT figure will be 1·35 per cent., leaving a gap of only a few hundred million ecu before the 1·4 per cent. is reached. Is that figure accepted by the Treasury? If it is, how does the Economic Secretary justify the 1·6 per cent. VAT figure in the treaty documents? Is that not a give-away for the next stage of the operation?
  What will the new arrangements do to the net contribution by Britain in relation to other countries? The Foreign Secretary said that it was likely that in a few years' time France would become a net contributor. Other suggestions are that France will be a significant net contributor almost immediately. One of the many promises made by the Government Front Bench in recent years has been that the injustice whereby we are the second largest contributor would be put right in the negotiations. Even allowing for certain elements of speculation, we are entitled to know what forecasts the Treasury and the Foreign Office can make about who will and who will not be the largest contributors in the league table of net contributors to the European Community.
  Many promises have been made by leading Ministers. We were led to expect much more than is being delivered by the Government tonight. The Government have themselves to blame for any disappointment. Our expectations were raised. We were promised fundamental reform of the CAP.
  Some hon. Members who have spoken today do not believe in the need for that fundamental reform. They might argue that there should be some marginal improvement, but they are in a minority. The Opposition, the majority on the Government Benches and certainly the Government have argued for a long time for fundamental changes in the CAP.
  Let me make my position clear. Arguments about idealism, reform and anti-Marketeering have been thrown about. I am one of those who resisted entry into the Community, but, ever since the clear mandate in the referendum, I have argued for reform of the Community. That is what we are after. We are in the Community and will stay in it, but if we are staying in, we are entitled to fight for reform in the interests of Britain and of Europe. The Government, the Prime Minister and the Foreign Secretary built up our expectations that the 1 per cent.

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  ceiling would be used as a technique to secure fundamental and durable change. They have failed to deliver what they promised us.
  If we remove the discipline of the 1 per cent. and have a considerably higher figure in two or three years' time, where is the discipline? The Government have thrown away an opportunity for reform. That will be regretted by the people of Britain and Europe. It is a tragedy that many of the follies of the CAP will continue. My constituents and others will continue to witness hillsides and estuarial lands being ploughed in pursuit of a foolish cereal policy, or taxpayers being called upon to compensate farmers for not following that policy. We shall have a continuation of nonsensical cheap exports to Russia, and we shall continue to pour out money on the destruction of oranges or lemons rather than on the things that right hon. and hon. Members want the Community to be doing. This is a missed opportunity, and I shall vote against the Bill.
  9.11 pm
  Mr. Eric Cockeram: My right hon. and hon. Friends will know that I have always been a supporter of the Common Market. Nevertheless, I have been critical of the inadequacy of the safeguards to control expenditure from the outset. Not enough was written into the original constitution on that subject. History has proved my criticism to be right.
  I differ from several of my right hon. and hon. Friends who support the Common Market and who believe that they can show their sympathy with the cause of co-operation in Europe by throwing ever more money at the Brussels bureaucracy, as if it were some sort of virility symbol. Co-operation in Europe is not achieved merely by throwing still more money in that direction.
  I accept that the United Kingdom has got a good deal in this transaction because we have an inbuilt refund mechanism. That does not satisfy me, however, because the increase in own resources from 1 to 1·4 per cent. is pretty substantial on any analysis. This was the moment when the Government should have ensured that there were sufficient safeguards to control expenditure. The opportunity will not recur.
  The Common Market more than once has demonstrated its inability to control expenditure. It was literally running out of money in the autumn of 1983. The House should imagine what would happen if the Treasury ran our affairs on that basis. We should imagine what would happen if, one autumn, we could not pay pensions, unemployment benefit or the National Health Service. What a way to run a railway! What a way to run a Government or a European institution!
  Something must be done. The problem is that the European Assembly—or Parliament as it likes to call itself—is a spending body. It is a pressure group that constantly requires more resources. Its virility symbol is its ever increasing expenditure. It constantly puts pressure on member Governments for more money, but it does not control expenditure.
  The 1 per cent. income on VAT under the present constitution is index-linked twice. It is index-linked because, as expenditure rises in line with inflation in each country year by year, so the 1 per cent. yield rises. On top of that, there is the increased GNP of each member state, and as output and wealth rises in each country, so GNP
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  expands. The 1 per cent. increase in VAT resources is also written into that. At present the EC is protected with an ever increasing income, without having to come back and ask for an increase from 1 per cent. to 1·4 per cent.
  Substantial savings could be made in the Community by not duplicating expenditure. An argument in favour of the CAP is that that policy is administered from Brussels and not duplicated in each nation state, unlike expenditure on roads, by-passes and the many new constructions that one sees when one drives about the country, which are advertised as being assisted by, for example, a 10 per cent. grant from the Common Market funds. Assisted, be blowed. It is our money that is being expended on those projects. That money has been laundered not by one bureaucracy in Westminster, but by a second in Brussels. Overseas aid is another example of that. It is not necessary in developments of that nature, although the projects are worthy.
  Why do we employ a Civil Service in this country to oversee a 90 per cent. expenditure and another Civil Service in Brussels to oversee Community expenditure? The same applies to overseas aid, which is duplicated by national Governments and in Brussels. It is time for the Government to devote more thought to that expenditure and, therefore, I oppose the measure. In my view, the Government should have ensured that greater powers and ability to control expenditure were written into the EC constitution before they conceded the principle of an increase from 1 per cent. to 1·4 per cent. in own resources.
  9.17 pm
  Mr. Teddy Taylor: As I have only a few minutes, it will not be possible to comment on the remarkable speech of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). However, I should at least correct the record. My right hon. Friend said that the staff of the Commission was smaller than that of the Scottish Office and that he had checked the figures yesterday. There has not been a remarkable change over the past 24 hours, and the Commission staff today number 12,747, whereas the Scottish Office staff, including the staff at all Scottish prisons and the mental health hospital at Carstairs, number fewer than 10,000.
  It would be tragic to pass the Bill. It provides for a massive increase in the public expenditure of the Common Market, which is spending more than half its income on the dumping, destruction and disposal of food surpluses. Conservative Members in particular, who are supporting spending cuts and the cutting out of waste, should realise that if they vote for the Bill they are voting for a massive increase in the expenditure of an organisation which spends more than half its cash on food dumping, with east Europe being the main beneficiary. How can we justify that if we believe in controlling public expenditure?
  It might be worth doing that if we were receiving something in return. The tragedy is that we are committing ourselves to a consistently high contribution to the EC, which, according to the Treasury, in 1987 will be £973 million net. That is about £1 billion net a year compared with about £400 million on average during the past 12 years. We will not control agricultural spending. The Government have said that there are guidelines, but they know that the guideline agreement says that the figures can be exceeded if the majority of European states agree that the year has been exceptional or if there have been aberrant circumstances. Prices will certainly not control the

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  spending of the CAP. My hon. Friend the Economic Secretary is aware that it is not prices, but dumping costs, that cause the expenditure, and nothing in the package will restrain the increase in agricultural spending.
  This will not be a good Bill for the British taxpayer, because it seems that we are committed for all time to a net expenditure of about £1 billion. It is not a good Bill for the British farmer, because, when the crunch eventually comes the effects on British agriculture will be disastrous. It is an appalling Bill for the Third world, because the people who are suffering most from the EEC's scandalous dumping policies are those in the Third world, who, because of Common Market policies, are denied a reasonable return for their produce. When we see countries getting £80 or £90 a tonne for their sugar, which is a low price established because of Common Market dumping, we should be ashamed of ourselves.
  The one group of people who will be happy with the measure are those in eastern Europe, who will continue to get a massive amount of dumped food at knock-down prices, such as top quality beef at 35p a pound and wine at 4·5p a litre. It seems crazy that we are voting more spending to increase surpluses and subsidise eastern Europe.
  People such as myself who originally opposed our membership of the EEC, and those who supported it, all accept that we are in the EEC, and there is no lawful way of withdrawing. For the past 12 years we have been told that the only chance of reforming the EEC would come when the money ran out. Now the money has run out. The Government said that there were two specific things on which they would not accept an increase unless they had been achieved. One was budgetary limits, which were legally binding. We do not have them. The second was a reform of the CAP. We do not have that.
  As an hon. Member who supports the Government's policy of restraining public spending and cutting out waste, I believe that it is utterly shameful that we are voting for a Bill to provide for huge additional spending by the EEC when it is wasting more than half the money on food dumping. We should say to the EEC, "You save some money and cut out waste." In those circumstances, it would be a better deal for Britain, and, more important, a better deal for the Common Market as a whole.
  9.22 pm
  Dr. Oonagh McDonald: From press, television and radio reports over the past few days, it is clear that the Government have been carrying out a strong propaganda exercise to try to convince the people of Britain that the deal obtained at Fontainebleau last year is a good deal for Britain. There are many examples, including the Economic Secretary to the Treasury's article in The Times this morning, in which he presented the Bill as a change in the rules for good. Yet it is clear from the debate that most hon. Members have not been deceived by that propaganda exercise. Some hon. Members have declared themselves to be on the Government's side, in support of the Bill, such as the hon. Member for Ludlow (Mr. Cockeram), but it is clear from the content of their remarks that they are most critical of what the Government are doing tonight. If the hon. Member for Ludlow had not said that he supported the Government, one would not have guessed it from his speech.
  It is clear that in the efforts to present the European Communities (Finance) Bill as a good thing for Britain,
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  some of its implications have been played down. It increases own resources from 1 per cent. to 1·4 per cent. It also provides for an immediate gift from the United Kingdom to the EC of about £250 million to cover the EC's 1985 budget deficit. The Bill also provides for the £595 million rebate, which was unconditional only a year ago. Now it is conditional on the United Kingdom Parliament and all other national Parliaments agreeing to the increase in our own resources. The Economic Secretary referred to the extra £240 million that is to be paid to the EC. Even that figure instead of £252 million implies a more favourable exchange rate for 1985–86 than the explanatory memorandum in the public expenditure White Paper.
  The increase in own resources from 1 per cent. to 1·4 per cent. tends to conceal the amount that we are paying into the EC. As the Select Committee on European Legislation once pointed out, 1 per cent. means an 11 per cent. contribution from our VAT take. Increasing the ceiling for own resources to 1·4 per cent. means that our contribution to the EC from our VAT take is probably nearer 14 per cent. We are therefore paying more into the Community despite the Bill and the so-called abatement mechanism that forms part of it.
  The figures in the public expenditure White Paper show that, while for 1985–86 the net payments, including overseas aid, are £898 million, by 1987–88 they will rise to £973 million. The hon. Member for Southend, East (Mr. Taylor) was right, therefore, to talk about the Bill leading in future to payments of almost £1 billion a year to the Community without any firm agreement on budget discipline.
  It is noteworthy that the Bill allows for extra payments to the Community, although there is no reference in it to budgetary discipline, which was supposedly agreed at Fontainebleau as being binding on each member state. Hon. Members have referred to gaps in relation to so-called budgetary discipline, and I shall return to that later. The fact that there is no reference in the Bill to budgetary discipline is a glaring omission. A provision dealing with that issue should be in the measure if it is to ensure that future spending by the EC is controlled.
  As hon. Members have said, the new ceiling of 1·4 per cent. may last for only a further two years. The preamble to the decision recalls the Fontainebleau conclusion that the maximum rate may be increased to 1·6 per cent. on 1 January 1988. The ceiling of 1·4 per cent. is likely almost to be reached in the 1986 budget. Indeed, that budget suggests that the ceiling will be 1·35 per cent., only 900 million ecu below the 1·4 per cent. ceiling. Thus, the 1986 budget is already reaching the limits laid down in the agreement which the Prime Minister described as a triumph following her return from Fontainebleau.
  Agricultural spending will account for two thirds of the 1986 budget. We do not yet know what the outturn will be, but it is likely that agricultural spending will form a greater proportion of the 1986 budget than the two thirds suggested in the draft budget provided by the Commission.
  The preliminary draft budgets for 1983 and 1984 forecast that agricultural spending would account for about two thirds of the total. The outturn in each case resulted in agricultural spending taking a higher proportion, and the same is likely to happen in 1986.
  The actions already taken by the Commission show how those price rises are likely to occur. The Economic Secretary, in evidence to the Select Committee on the

  861
  Treasury and Civil Service, and other hon. Members who support the Bill have referred to "firm" action by the Commission in laying down a 1·8 per cent. cut in cereal prices, but the original proposal was for a 5 per cent. cut. It was then knocked back to 3·6 per cent. and Agro Europe describes the present 1·8 per cent. proposal as "meaningless" because the price of cereals is already more than 20 per cent. too high. Cereal prices form an important part of the agricultural budget, so that meaningless cut gives us no confidence that agricultural spending in 1986 will be any more under control than it was in 1985 or in any previous year.
  The hon. Member for Mid-Worcestershire (Mr. Forth) and the right hon. Member for Worthing (Mr. Higgins) have shown that the so-called budgetary discipline is utterly ineffective. It allows member countries to plead for price rises in exceptional circumstances, including changes in exchange rates affecting world food prices. Moreover, the budgetary discipline proposals put forward at Fontainebleau are not legally binding on the whole Community. The Prime Minster said on her return from Fontainebleau that she wanted those proposals to be legally binding, but she did not succeed in achieving that at Fontainebleau and she has not succeeded since. Neither Select Committee of this House believed that the proposals were legally binding and the House of Lords second report describes them as merely "a legal enigma". Budgetary discipline cannot be enforced. It is not included in the Bill and the Government have cheerfully ignored it in presenting legislation which allows increased spending in the Community. They have merely talked about the possibility of obtaining discipline over agricultural and other spending. They have abandoned any attempt to control the common agricultural policy which alone would ensure that spending on agriculture could be brought under control.
  The Government have entirely abandoned all those objectives and have instead tried to present a con job, suggesting that the Bill is good for Britain and will ensure an abatement for us in the future and an end to the squabbling about farm prices and about spending in the Community as a whole. Not only have the Government failed to achieve that purpose. They do not even agree that it is a purpose. The Economic Secretary spoke in those terms in The Times. The Foreign Secretary, however, expects to be engaged in budgetary wrangles within the Government and in Brussels this year, next year and in years to come because he is perhaps more realistic about the Government's failure in Brussels, Fontainebleau and Stuttgart, even though he is not prepared to spell that out to the House of Commons. Both this year and in the future, agricultural spending will continue to rise as a proportion of the budget.
  Mr. Anthony Beaumont-Dark: Bearing in mind the case that the hon. Lady is making, in the terrible eventuality that at some distant time there is another Labour Government, what would she do in negotiations that is different from what this Government are now doing? What would she do that this Government are not doing?
  Dr. McDonald: The hon. Gentleman's criticism of the Government's policy towards Europe is well known. The more important question that he should face is what he will
  862
  do in tonight's vote. The hon. Gentleman has frequently opened his mouth on the European Community and farm spending. Let us now see whether he has the courage to put his money where his mouth is. We want to know whether he will respond to the requests of many of his hon. Friends, who would very much like to see him voting in the Lobby against the Bill. We want to see whether the hon. Gentleman's position is entirely consistent. Let us see whether he can summon up the courage to vote against the Bill, given what he has said in the past.
  On this and many previous occasions, the Opposition have simply said that the Government threw away a golden opportunity when the Community was running out of money and pressure could have been exerted to ensure that agricultural spending was brought under control through a reform of the CAP. That would have overcome the obscenities about which the hon. Member for Southend, East (Mr. Taylor) spoke — [HON. MEMBERS: "Obscenities?"] Yes, the obscenities of food mountains, of food going to waste in storage that is desperately needed in the Third world, and of food which the Community cannot even deliver to Ethiopia in time. Those are the obscenities of the CAP, yet when given the opportunity presented to them, the Government let it slip by.
  They have given the game away by agreeing to pay more into the European Community. In 1988 at the latest, but probably much earlier, they will have to agree to raising the ceiling to 1·6 per cent. To find the money for such contributions they will perhaps agree to the proposal to be considered in Milan to widen the VAT base as part of VAT harmonisation. In order to achieve that, they may have to tax food, transport, or heating, in order to find the necessary resources, not only to pay more into the EEC but also to fritter away on tax cuts. The Government failed to take that opportunity, and instead agreed to pay more. They accepted budgetary discipline proposals which they know to be ineffective, and which have not been included in the Bill.
  At the same time, the Community has 14·5 million people unemployed, 38 per cent. of them aged under 25. This year and next year, the regional and social funds will each represent only 5 per cent. of total spending. The Bill does nothing to deal with unemployment, which is the crucial problem in the Community. Instead, the Government have meekly given in to pressure from the farming members of the Community to give them the money that they want, and now they are trying to whitewash it in their presentation of the Bill. They also tried to whitewash it in the press briefings that they gave about the Bill, and too many members of the press swallowed the story that the Bill would be good for Britain. It will be a disaster for Britain. The EC will continue to waste money on unnecessary agricultural spending.
  The House should reject the Bill, and I call on those Conservative Members who have been so critical of the Bill inside and outside the Chamber to have the courage to vote against it tonight.
  9.41 pm
  The Economic Secretary to the Treasury (Mr. Ian Stewart): The idea that the Government should take lessons in budgetary discipline from the Labour party is so absurd that it does not deserve comment. My right hon. and learned Friend the Foreign Secretary raised several of the wider issues of our membership of the EC, and those

  863
  themes were repeated in the debate by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) and by many hon. Members on both sides of the House.
  Time does not permit me to consider all the contents of the Bill this evening, so I shall concentrate on its European budget aspects. I should explain that part of the Fontainebleau agreement—this is the anniversary of the meeting at Fontainebleau when those decisions were taken—has been brought forward in several specific measures designed to carry out what was agreed by the leaders of the Community countries. The own resources decision provides for the increase in VAT to 1·4 per cent. and for the United Kingdom abatement. The Bill also contains the inter-governmental agreement which provided for transitional finance for 1985. At last, we have a budget for 1985, although it was rejected in the latter part of last year, and towards the end of this year the House will be asked to decide upon the accession of Spain and Portugal. In answer to my hon. Friend the Member for Mid-Worcestershire (Mr. Forth), who asked about this matter earlier, I should say that the provision for the increased contribution under the own resources decision is contingent on the ratification of the accession treaty.
  The debate has, not surprisingly, concentrated on previous agricultural and other expenditure by the Community. Most hon. Members who are against the Bill have said that, because in the past the Community has spent too much money on agriculture, we should not vote for a Bill which is part of a package that includes measures to contain future expenditure. That is an absurd proposition. Of course, it is highly unsatisfactory that surpluses have grown in recent years and that they now cost so much to store and to dispose of. That excess production has imposed a great burden upon the European Community's budget. As my hon. Friend the Member for Mid-Worcestershire said, this is now a declining problem.
  Mr. Marlow Mr. Marlow rose—
  Mr. Stewart: Three years ago, the increase in agricultural expenditure was 27 per cent., two years ago it was 16 per cent., last year it was 9 per cent. and next year it will be less than 3 per cent.
  Mr. Marlow: Is my hon. Friend saying that agricultural surpluses will decline? Will there be fewer surpluses next year compared with this year and fewer surpluses the year after that? If so, how does he know?
  Mr. Stewart: If my hon. Friend will allow me to continue with my speech, I shall talk about the future for agricultural expenditure.
  The hon. Member for Thurrock (Dr. McDonald) referred to the contribution to the European budget this year of £240 million as if that were money thrown down the drain. She forgets that part of that money will come back to this country in agricultural and other payments and that the balance will be subject to the Fontainebleau mechanism, so we shall probably pay only about 40 million. This is a measure of the importance of the abatement mechanism.
  Many hon. Members have concentrated upon the guideline. The matters that are agreed between the Council members—they are in the form of conclusions which are binding on the Council — relate to agricultural expenditure and to non-obligatory other expenditure. The reference framework covers both. The guideline has not
  864
  yet been brought forward merely because the whole budgetary process this year is late because last year the European Parliament threw out the 1985 budget. The budgetary discipline with respect to the agricultural guideline is fully endorsed by the European Commission. It has said that it will not permit the agricultural proposals to exceed the guideline as already established. For 1986 that is 20·6 billion ecu, which is an increase of only 3·5 per cent. over the current year's budget—a decline in real terms. The Commission's proposals are within that guideline; they are only 2·5 per cent. Last year, we had a zero price increase in the agricultural price fixing. This year, we are having a similar zero price increase. That meant a reduction in real terms last year of about 3·5 per cent. We expect a further reduction this year of the same order. That is a great change of direction for the Community and represents a significant impact on the budgetary discipline arrangements on the very first occasion on which the Community has been called upon to comply with them.
  Mr. Forth: Why does the 1986 preliminary draft budget already represent a 1·35 per cent. VAT rate? How can my hon. Friend explain that in the context of what he is claiming for budgetary discipline?
  Mr. Stewart: I shall explain the VAT rate in a moment. I said that the percentage increase proposed in the 1986 budget is only 2·5 per cent. — the lowest increase for a very long time. It represents a tight and tough target for the Community. [HON. MEMBERS: "Answer the question."] I shall come to the question of the 1·4 per cent. and 1·35 per cent. rates. Let me finish on the point about budgetary discipline.
  Some hon. Members have said that this was a missed opportunity. They are complaining not about the fact that we do not have budgetary discipline but about the fact that we have not had budgetary discipline in the past. The problems with the budgets during the past year or two have been caused by the lack of budgetary discipline in the past. As part of the agreement at Fontainebleau, we have come to an agreement with other member states that budgetary discipline will be rigorously applied.
  Mr. Teddy Taylor Mr. Teddy Taylor rose—
  Mr. Budgen Mr. Budgen rose—
  Mr. Stewart: My hon. Friends have drawn attention to exceptional circumstances and other technical provisions in the text, but how on earth can there be an absolutely rigid guideline for agriculture when one cannot even predict the weather at the beginning of the year? Of course we cannot. Any hon. Members who pretend otherwise are merely demonstrating how unrealistic is their approach to the Community budget.
  The fact that the guideline is not rigid does not mean that it is not fast and tight. [Interruption.] The budgetary disciplinary measures are proving effective. I was asked whether France would be a net contributer. [Interruption.] France will be a net contributor in the coming year. That may be why French Ministers have shown themselves so much more interested and tougher in their approach to expenditure in the European Community.
  The West Germans are in a contradictory position. They voted to support budget discipline and for guaranteed thresholds. They now find it difficult to accept the cereal price proposals.

  865
  The long and difficult negotiations that have taken place in the Agriculture Council over the past four months are not a demonstration that budget discipline is not working. They are a demonstration that budget discipline is exercising a tight constraint on the decisions of Ministers of Agriculture.
  If the budget discipline were not in place, I have no doubt that, as in previous years, if one country such as West Germany said that it was essential that it should put forward extra expenditure on cereals that would have been accommodated. That would probably have been the case in most past years. On this occasion, because budget discipline has been agreed by the Council and all member states and because the Commission is sticking by that, the Commission will not accept measures that will increase the budgetary cost of the Community's agricultural policy. The Commission has said that it will take the necessary measures in managing the markets to avoid any recourse to a supplementary or rectifying budget in 1985. It also said that the final outturn of the agriculture budget for 1986 and in the new price-fixing year will be budget neutral as a result of the proposals that it originally put forward.
  Hon. Members may not like the fact that budget discipline is biting so hard. They may complain and say that it will impose too sharp a constraint on agriculture. Some may say that, because budget discipline applies to next year and the decisions which are now being taken, we should study what happened in the past and judge the future from that. That would be out of keeping with the arrangements agreed at Fontainebleau. The purpose of that agreement was to come to a new arrangement which would provide a lasting settlement of the British budget problem and deal with the problem of future agricultural overspending. The tight guidelines which have been agreed will ensure that that occurs.
  Mr. Teddy Taylor: Does my hon. Friend agree that the strict budgetary guidelines which he has explained can be exceeded if the weather is unexpected and can be ignored by any amount, in any year, if the majority of member states decides that there have been exceptional or aberrant circumstances during that year? How can the guideline be strict?
  Mr. Stewart: For good reasons. In the case of enlargement, comparable discipline must be applied to the new member states on accession. The Council of Ministers must be entitled to make its own decisions in the light of circumstances, but price fixing and the arrangements for clawback have been implemented to the letter by the Council and the Commission. That is the greatest assurance that the reforms for which we have worked for so long are now being put into practice.
  I come to the 1·4 per cent. VAT ceiling. In 1983 and 1984, Community expenditure exceeded the 1 per cent. VAT rate. If the proposals put forward for the 1986 budget were accepted in full—that assumption cannot be taken for granted because the Budget Council has not yet studied them and the details have not been published — the illustrative figures given by the Commission suggest that even if the Community budget went to a rate of 1·35 per cent. it would still leave the United Kingdom contribution at 0·82 per cent.
  I have been asked why the United Kingdom contribution will stay below 1 per cent. That question has
  866
  been at the heart of the debate. Opposition Members and some of my hon. Friends complain that this would impose an extra burden upon the British taxpayer. The precise opposite is the case. Because of abatement, Britain will receive an automatic refund. It is called an abatement because we shall be able to deduct it from our contributions. Refunds will not have to be negotiated. Our contribution will remain below 1 per cent. Only in absolutely exceptional and unforeseeable circumstances would our contribution exceed 1 per cent. within the limit of 1·4 per cent.
  For our receipts from the European budget to increase sufficiently, for our contribution to exceed 1 per cent., either FEOGA expenditure would have to rise in our favour from 11 per cent. of the Community budget to 14 per cent., which is far higher than it has ever been in the past and is unlikely to happen in the future, or our share of the regional and social fund, from which we receive about 25 per cent. of Community expendiure, would have to rise to about 45 per cent. That is clearly inconceivable. It is therefore a remote possibility that we should reach the 1 per cent. ceiling within the 1·4 per cent. limit.
  Mr. John Townend: Some hon. Members who have reservations about the Bill might be persuaded not to oppose the Government if they were to give an undertaking that if proposals were introduced in this Parliament that own resources would be further increased by increasing VAT to 1·6 per cent. the Government would veto it.
  Mr. Stewart: The 1·6 per cent. that is mentioned in the Fontainebleau text is not a commitment by anybody. This Government are not committed to increasing the ceiling. For the time being 1·4 per cent. is right, although what may happen in future years is not for me to predict. However, the unanimous agreement of all member states would be required and it would have to be approved by the Parliaments of all member states. Therefore, the possibility that that could happen without the full agreement of the Government of the day and of Parliament does not arise.
  It has been suggested that we should be better off if the 1 per cent. ceiling were to be left in place. Nothing could be further from the truth. In domestic terms, our contribution would be about double what we shall be paying under the Fontainebleau abatement. If we kept our contributions at the 1 per cent. ceiling without abatement — and surely we should never get any abatement — [Interruption.] How could we negotiate an abatement or a refund if we were unwilling to ratify the agreement to which we have contributed so much? Our contribution would then be about £1·5 billion, which in today's values is what it was under the Labour Government. Are my hon. Friends asking the Government to return to the position in 1978 and 1979 when our net contribution, in today's prices, was about 01·5 billion? I cannot believe that they are.
  We have not abandoned our bargaining power. We have used it to obtain a satisfactory and lasting settlement. It would be ridiculous to punish the European Community for its past excesses by voting against the Bill just at the time when the Community has accepted reforms that we have worked so hard to achieve. On that basis, I urge my right hon. and hon. Friends to support the Bill.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 352, Noes 184.

  Division No. 246]

  [10 pm

  AYES

  Adley, Robert

  Edwards, Rt Hon N. (P'broke)

  Alexander, Richard

  Eggar, Tim

  Alison, Rt Hon Michael

  Emery, Sir Peter

  Alton, David

  Evennett, David

  Amery, Rt Hon Julian

  Eyre, Sir Reginald

  Amess, David

  Fairbairn, Nicholas

  Ancram. Michael

  Fallon, Michael

  Arnold, Tom

  Favell, Anthony

  Ashby, David

  Fenner, Mrs Peggy

  Ashdown, Paddy

  Finsberg, Sir Geoffrey

  Aspinwall, Jack

  Fletcher, Alexander

  Atkins, Rt Hon Sir H.

  Fookes, Miss Janet

  Atkins, Robert (South Ribble)

  Forman, Nigel

  Atkinson, David (B'm'th E)

  Forsyth, Michael (Stirling)

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

  Fowler, Rt Hon Norman

  Baker, Nicholas (N Dorset)

  Fox, Marcus

  Baldry, Tony

  Franks, Cecil

  Banks, Robert (Harrogate)

  Fraser, Peter (Angus East)

  Batiste, Spencer

  Freeman, Roger

  Beith, A. J.

  Freud, Clement

  Bellingham, Henry

  Gale, Roger

  Bendall, Vivian

  Galley, Roy

  Bennett. Rt Hon Sir Frederic

  Gardiner, George (Reigate)

  Benyon, William

  Gardner, Sir Edward (Fylde)

  Best, Keith

  Garel-Jones, Tristan

  Biffen, Rt Hon John

  Gilmour, Rt Hon Sir lan

  Biggs-Davison, Sir John

  Glyn, Dr Alan

  Blackburn, John

  Goodhart, Sir Philip

  Blaker, Rt Hon Sir Peter

  Goodlad, Alastair

  Bonsor, Sir Nicholas

  Gorst, John

  Bottomley, Peter

  Gow, Ian

  Bottomley, Mrs Virginia

  Gower, Sir Raymond

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

  Grant, Sir Anthony

  Bowden, Gerald (Dulwich)

  Greenway, Harry

  Boyson, Dr Rhodes

  Gregory, Conal

  Braine, Rt Hon Sir Bernard

  Griffiths, Sir Eldon

  Brandon-Bravo, Martin

  Grist, Ian

  Bright, Graham

  Ground, Patrick

  Brittan, Rt Hon Leon

  Gummer, John Selwyn

  Brooke, Hon Peter

  Hamilton, Hon A. (Epsom)

  Bruce, Malcolm

  Hampson, Dr Keith

  Bryan, Sir Paul

  Hancock, Mr. Michael

  Buchanan-Smith, Rt Hon A.

  Hanley, Jeremy

  Buck, Sir Antony

  Hannam, John

  Burt, Alistair

  Hargreaves, Kenneth

  Butcher, John

  Harris, David

  Butler, Hon Adam

  Harvey, Robert

  Butterfill, John

  Haselhurst, Alan

  Carlile, Alexander (Montg'y)

  Havers, Rt Hon Sir Michael

  Carlisle, Kenneth (Lincoln)

  Hawkins, Sir Paul (SW N'folk)

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

  Hayes, J.

  Carttiss, Michael

  Hayhoe, Rt Hon Barney

  Cash. William

  Hayward, Robert

  Chalker, Mrs Lynda

  Heath, Rt Hon Edward

  Chapman, Sydney

  Heathcoat-Amory, David

  Chope, Christopher

  Heddle, John

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

  Henderson, Barry

  Clark, Dr Michael (Rochford)

  Heseltine, Rt Hon Michael

  Clark, Sir W. (Croydon S)

  Hickmet, Richard

  Clarke, Rt Hon K. (Rushcliffe)

  Hicks, Robert

  Clegg, Sir Walter

  Hill, James

  Colvin, Michael

  Hind, Kenneth

  Coombs, Simon

  Hirst, Michael

  Cope, John

  Hogg, Hon Douglas (Gr'th'm)

  Cormack, Patrick

  Holland, Sir Philip (Gedling)

  Corrie, John

  Holt, Richard

  Couchman, James

  Hordern, Sir Peter

  Cranborne, Viscount

  Howard, Michael

  Critchley, Julian

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

  Crouch, David

  Howe, Rt Hon Sir Geoffrey

  Currie, Mrs Edwina

  Howell, Rt Hon D. (G'ldford)

  Dickens, Geoffrey

  Howell, Ralph (N Norfolk)

  Dorrell, Stephen

  Hubbard-Miles, Peter

  Douglas-Hamilton, Lord J.

  Hughes, Simon (Southwark)

  du Cann, Rt Hon Sir Edward

  Hunt, David (Wirral)

  Dunn, Robert

  Hunt, John (Ravensbourne)

  Durant, Tony

  Hunter, Andrew

  Dykes, Hugh

  Irving, Charles

  868

  Jackson, Robert

  Oppenheim, Phillip

  Jenkin, Rt Hon Patrick

  Oppenheim, Rt Hon Mrs S.

  Jenkins, Rt Hon Roy (Hillh'd)

  Osborn, Sir John

  Johnson Smith, Sir Geoffrey

  Ottaway, Richard

  Johnston, Sir Russell

  Page, Sir John (Harrow W)

  Jones, Gwilym (Cardiff N)

  Page, Richard (Herts SW)

  Jones, Robert (W Herts)

  Parkinson, Rt Hon Cecil

  Jopling, Rt Hon Michael

  Patten, Christopher (Bath)

  Joseph, Rt Hon Sir Keith

  Patten, J. (Oxf W & Abdgn)

  Kellett-Bowman, Mrs Elaine

  Pawsey, James

  Kennedy, Charles

  Peacock, Mrs Elizabeth

  Kershaw, Sir Anthony

  Percival, Rt Hon Sir Ian

  Key, Robert

  Pollock, Alexander

  King, Rt Hon Tom

  Porter, Barry

  Knight, Greg (Derby N)

  Portillo, Michael

  Knight, Dame Jill (Edgbaston)

  Powell, William (Corby)

  Knowles, Michael

  Powley, John

  Knox, David

  Prentice, Rt Hon Reg

  Lang, Ian

  Price, Sir David

  Lawler, Geoffrey

  Prior, Rt Hon James

  Lawrence, Ivan

  Raison, Rt Hon Timothy

  Lawson, Rt Hon Nigel

  Rathbone, Tim

  Lee, John (Pendle)

  Rees, Rt Hon Peter (Dover)

  Leigh, Edward (Gainsbor'gh)

  Renton, Tim

  Lennox-Boyd, Hon Mark

  Rhodes James, Robert

  Lester, Jim

  Rhys Williams, Sir Brandon

  Lewis, Sir Kenneth (Stamf'd)

  Ridley, Rt Hon Nicholas

  Lightbown, David

  Ridsdale, Sir Julian

  Lilley, Peter

  Rifkind, Malcolm

  Lloyd, Ian (Havant)

  Rippon, Rt Hon Geoffrey

  Lloyd, Peter, (Fareham)

  Roberts, Wyn (Conwy)

  Lord, Michael

  Robinson, Mark (N'port W)

  Luce, Richard

  Roe, Mrs Marion

  Lyell, Nicholas

  Rossi, Sir Hugh

  McCrindle, Robert

  Rost, Peter

  McCurley, Mrs Anna

  Rowe, Andrew

  Macfarlane, Neil

  Rumbold, Mrs Angela

  MacGregor, John

  Ryder, Richard

  MacKay, Andrew (Berkshire)

  Sackville, Hon Thomas

  MacKay, John (Argyll & Bute)

  Sainsbury, Hon Timothy

  Maclean, David John

  Sayeed, Jonathan

  Maclennan, Rober

  Scott, Nicholas

  McNair-Wilson, P. (New F'st

  Shaw, Giles (Pudsey)

  McQuarrie, Albert

  Shaw, Sir Michael (Scarb')

  Madel, David

  Shelton, William (Streatham)

  Major, John

  Shepherd. Colin (Hereford)

  Malins, Humfrey

  Shersby, Michael

  Malone, Gerald

  Silvester, Fred

  Maples, John

  Sims, Roger

  Marland, Paul

  Skeet, T. H. H.

  Marshall, Michael (Arundel)

  Smith, Sir Dudley (Warwick)

  Mates, Michael

  Smith, Tim (Beaconsfield)

  Maude, Hon Francis

  Soames, Hon Nicholas

  Mawhinney, Dr Brian

  Speed, Keith

  Maxwell-Hyslop, Robin

  Spence, John

  Mayhew, Sir Patrick

  Spencer, Derek

  Meadowcroft, Michael

  Spicer, Jim (W Dorset)

  Mellor, David

  Spicer, Michael (S Worcs)

  Merchant, Piers

  Squire, Robin

  Meyer, Sir Anthony

  Stanbrook, Ivor

  Miller, Hal (B'grove)

  Sranley, John

  Mills, Lain (Meriden)

  Steel, Rt Hon David

  Miscampbell, Norman

  Steen, Anthony

  Mitchell, David (NW Hants)

  Stern, Michael

  Monro, Sir Hector

  Stevens, Lewis (Nuneaton)

  Montgomery, Sir Fergus

  Stevens, Martin (Fulham)

  Moore, John

  Stewart, Allan (Eastwood)

  Morris, M. (N'hampton, S)

  Stewart, Andrew (Sherwood)

  Morrison, Hon C. (Devizes)

  Stewart, lan (N Hertf'dshire)

  Morrison, Hon P. (Chester)

  Stradling Thomas, J.

  Moynihan, Hon C.

  Sumberg, David

  Neale, Gerrard

  Taylor, John (Solihull)

  Needham, Richard

  Tebbit, Rt Hon Norman

  Nelson, Anthony

  Temple-Morris, Peter

  Neubert, Michael

  Terlezki, Stefan

  Newton, Tony

  Thatcher, Rt Hon Mrs M.

  Nicholls, Patrick

  Thomas, Rt Hon Peter

  Normanton, Tom

  Thompson, Donald (Calder V)

  Norris, Steven

  Thompson, Patrick (N'ich N)

  Onslow, Cranley

  Thorne, Neil (Ilford S)

  869

  Thornton, Malcolm

  Warren, Kenneth

  Townsend, Cyril D. (B'heath)

  Watts, John

  Tracey, Richard

  Wells, Bowen (Hertford)

  Trippier, David

  Wells, Sir John (Maidstone)

  Twinn, Dr Ian

  Wheeler, John

  van Straubenzee, Sir W.

  Whitney, Raymbnd

  Vaughan, Sir Gerard

  Wiggin, Jerry

  Viggers, Peter

  Wigley, Dafydd

  Waddington, David

  Wilkinson, John

  Wainwright, R.

  Wolfson, Mark

  Wakeham, Rt Hon John

  Wood, Timothy

  Waldegrave, Hon William

  Woodcock, Michael

  Walden, George

  Wrigglesworth, Ian

  Walker, Rt Hon P. (W'cester)

  Yeo, Tim

  Wall, Sir Patrick

  Young, Sir George (Acton)

  Wallace, James

  Younger, Rt Hon George

  Waller, Gary

  Walters, Dennis

  Tellers for the Ayes:

  Ward, John

  Mr. Carol Mather and

  Wardle, C. (Bexhill)

  Mr. Robert Boscawen.

  NOES

  Abse, Leo

  Craigen, J. M.

  Aitken, Jonathan

  Cunliffe, Lawrence

  Anderson, Donald

  Davies, Rt Hon Denzil (L'lli)

  Archer, Rt Hon Peter

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

  Ashley, Rt Hon Jack

  Deakins, Eric

  Ashton, Joe

  Dewar, Donald

  Atkinson, N. (Tottenham)

  Dicks, Terry

  Barnett, Guy

  Dixon, Donald

  Barron, Kevin

  Dobson, Frank

  Beckett, Mrs Margaret

  Douglas, Dick

  Beggs, Roy

  Dubs, Alfred

  Bell, Stuart

  Dunwoody, Hon Mrs G.

  Benn, Tony

  Eadie, Alex

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

  Eastham, Ken

  Bermingham, Gerald

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

  Blair, Anthony

  Evans, John (St. Helens N)

  Body, Richard

  Ewing, Harry

  Boothroyd, Miss Betty

  Fatchett, Derek

  Boyes, Roland

  Faulds, Andrew

  Bray, Dr Jeremy

  Field, Frank (Birkenhead)

  Brown, M. (Brigg & Cl'thpes)

  Fisher, Mark

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

  Flannery, Martin

  Brown, Ron (E'burgh, Leith)

  Foot, Rt Hon Michael

  Buchan, Norman

  Forrester, John

  Budgen, Nick

  Forsythe, Clifford (S Antrim)

  Caborn, Richard

  Forth, Eric

  Callaghan, Jim (Heyw'd & M)

  Foster, Derek

  Campbell, Ian

  Foulkes, George

  Campbell-Savours, Dale

  Fraser, J. (Norwood)

  Carlisle, John (N Luton)

  Freeson, Rt Hon Reginald

  Carter-Jones, Lewis

  George, Bruce

  Clark, Dr David (S Shields)

  Godman, Dr Norman

  Clarke, Thomas

  Golding, John

  Clay, Robert

  Gould, Bryan

  Cocks, Rt Hon M. (Bristol S.)

  Gourlay, Harry

  Cohen, Harry

  Hamilton, James (M'well N)

  Concannon, Rt Hon J. D.

  Hamilton, Neil (Tatton)

  Conlan, Bernard

  Hamilton, W. W. (Central Fife)

  Conway, Derek

  Hardy, Peter

  Cook, Frank (Stockton North)

  Harrison, Rt Hon Walter

  Cook, Robin F. (Livingston)

  Hart, Rt Hon Dame Judith

  Corbett, Robin

  Hawksley, Warren

  Cowans, Harry

  Healey, Rt Hon Denis

  Cox, Thomas (Tooting)

  Heffer, Eric S.

  870

  Hogg, N. (C'nauld & Kilsyth)

  Pendry, Tom

  Holland, Stuart (Vauxhall)

  Pike, Peter

  Howarth, Gerald (Cannock)

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

  Hoyle, Douglas

  Proctor, K. Harvey

  Hughes, Robert (Aberdeen N)

  Radice, Giles

  Hughes, Sean (Knowsley S)

  Randall, Stuart

  Janner, Hon Greville

  Redmond, M.

  John, Brynmor

  Rees, Rt Hon M. (Leeds S)

  Kaufman, Rt Hon Gerald

  Richardson, Ms Jo

  Kinnock, Rt Hon Neil

  Roberts, Ernest (Hackney N)

  Lambie, David

  Robertson, George

  Lamond, James

  Robinson, G. (Coventry NW)

  Leadbitter, Ted

  Ross, Wm. (Londonderry)

  Leighton, Ronald

  Rowlands, Ted

  Lewis, Ron (Carlisle)

  Ryman, John

  Lewis, Terence (Worsley)

  Sedgemore, Brian

  Litherland, Robert

  Sheldon, Rt Hon R.

  Lloyd, Tony (Stretford)

  Shepherd, Richard (Aldridge)

  Lofthouse, Geoffrey

  Shore, Rt Hon Peter

  Loyden, Edward

  Short, Ms Clare (Ladywood)

  McCartney, Hugh

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

  McCusker, Harold

  Skinner, Dennis

  McDonald, Dr Oonagh

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

  McGuire, Michael

  Smyth, Rev W. M. (Belfast S)

  McKay, Allen (Penistone)

  Snape, Peter

  McKelvey, William

  Soley, Clive

  MacKenzie, Rt Hon Gregor

  Spearing, Nigel

  McTaggart, Robert

  Stewart, Rt Hon D. (W Isles)

  McWilliam, John

  Stott, Roger

  Madden, Max

  Strang, Gavin

  Maginnis, Ken

  Straw, Jack

  Marlow, Antony

  Taylor, Rt Hon John David

  Martin, Michael

  Taylor, Teddy (S'end E)

  Mason, Rt Hon Roy

  Thompson, J. (Wansbeck)

  Maxton, John

  Thorne, Stan (Preston)

  Maynard, Miss Joan

  Torney, Tom

  Milian, Rt Hon Bruce

  Walker, Cecil (Belfast N)

  Miller, Dr M. S. (E Kilbride)

  Weetch, Ken

  Mitchell, Austin (G't Grimsby)

  Whitfield, John

  Moate, Roger

  Williams, Rt Hon A.

  Molyneaux, Rt Hon James

  Wilson, Gordon

  Morris, Rt Hon A. (W'shawe)

  Winnick, David

  Nicholson, J.

  Winterton, Mrs Ann

  Oakes, Rt Hon Gordon

  Winterton, Nicholas

  O'Brien, William

  Woodall, Alec

  O'Neill, Martin

  Young, David (Bolton SE)

  Park, George

  Parry, Robert

  Tellers for the Noes:

  Patchett, Terry

  Mr. Frank Haynes and

  Pavitt, Laurie

  Mr. Ray Powell.

  Question accordingly agreed to.
  Bill read a Second time.
  Bill committed to a Committee of the whole House. —[Mr. Lennox-Boyd.]
  Committee tomorrow.

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the consideration of Lords Amendments to the Representation of the People Bill may be proceeded with, though opposed, until any hour. — [Mr. Lennox-Boyd.]

  European Communities (Finance) Bill [Money]
  Queen's recommendation having been signified. Motion made, and Question proposed,
  That, for the purposes of any Act resulting from the European Communities (Finance) Bill, it is expedient to authorise—

  (1) any increase attributable to that Act in the sums to be charged on and paid out of the Consolidated Fund or the National Loans Fund, or payable out of money provided by Parliament, under the European Conununities Act 1972; and

  (2) the payment of any sums into the Consolidated Fund or the National Loans Fund.—[Mr. Lennox-Boyd.]

  10.15 pm
  Mr. Nicholas Budgen: In such moments of tension, a large gathering often finds it useful to sing a song. If it were within my power to suggest a song to the House, it would be the song which I believe was fashionable in your generation, Mr. Speaker, during the war—"We'll meet again". There is no doubt that, after the decision of the House tonight, we shall meet again, and pretty soon. One thing is obvious-we have collectively thrown away the one serious obstacle that we had to overspending in the EC. It is obvious that the proposals for the 1986 budget are already taking a serious chance.
  There has been no answer from the Government on whether the proposed budget is contemplating expenditure at the level of 1·35 per cent. There has been no answer from the Government about their assumptions about the level of the dollar. There has been no answer from the Government about whether they will com back again for another cut of public expenditure.—[Interruption.]
  Mr. Speaker: Order. I ask the House to give the hon. Member a fair hearing.
  Mr. Budgen: I ask no special favour. We shall be back, and the Treasury will tell us once again that it has control of this expenditure. We shall have yet another reiteration of lame promises.
  I hope that some of my hon. Friends who were among the 131 hon. Members who signed an early-day motion last year, all of whom said that there was no place for an increase in expenditure on own resources, have a happy time this week explaining their change of stance to their constituents. I hope that they have a very happy time when we come back again in about one year—perhaps just before the next general election—and the Government present another lot of lame excuses and false promises about their having got control of expenditure in the EC.
  In the words of Vera Lynn, "We'll meet again".
  10.19 pm
  Mr. Tony Marlow: As I understand my history, this once fine and robust institution was established to control the people's money and to ensure that grasping potentates did not put their hands in people's pockets and spend their money without control. The prime duty of the House is to control expenditure and to ensure that the money is properly guarded and prudently spent.
  When we joined the Eurpean Economic Community we agreed to certain terms and conditions, which set out the amount of money that we would be able to make available to the Community and in what circumstances, the 1 per cent. VAT limit, levies and customs duties. We have signified today that we are prepared to allow a foreign
  872
  institution of which we are a member—other people and other countries—to control the money of the British people to a greater extent. Not ony that, but the way in which we have made the agreement today will show other member states that in future they have but to ask and it shall be yielded up unto them.
  Not only in the past has the 1 per cent. ceiling been overcome by reimbursable loans, non-reimbursable advances and intergovernmental agreements, but today we are agreeing to increase the ceiling to 1·4 per cent. My hon. Friend the Economic Secretary to the Treasury was asked to give the House the guarantees that if during the life of this Parliament, our European partners asked us to increase the VAT limit to 1·6 per cent. he would veto it, but he was silent. That silence speaks words and, indeed, volumes. It tells those in the EC that if they want more British taxpayers' money, they can have it.
  Today we have been concerned about the control of Community expenditure, especially the CAP. We have discovered from the speech of my hon. Friend that it is impossible to control agricultural expenditure.
  Mr. Neil Hamilton: On a point of order, Mr. Speaker. It is traditional for the speeches of the chief Government and Opposition spokesmen to be drowned in hubbub, because they are only doing a job and their speeches are usually boring, but, when a Back-Bench Member tries to make some serious points, he should be heard. Some hon. Members are preventing us from hearing what my hon. Friend the Member for Northampton, North (Mr. Marlow) is saying. I am sure that we would all be grateful if you could ensure that those hon. Members who are interrupting our proceedings are quiet or leave the Chamber.
  Mr. Speaker: Order. Every hon. Member should be heard in the House, and there is a good deal of discussion going on. I think that the hon. Gentleman is coming to the end of his speech.
  Mr. Marlow: You may be right, Mr. Speaker, but I do not know. I may run out of steam in about 30 seconds, but I may talk for some time. I am sure that many hon. Members present do not want to hear what I have to say, and I would not be the slightest bit insulted if they left the Chamber now.
  I take this matter seriously, as I am sure my hon. Friends do. On behalf of the people whom we represent, we want to, and must, control Community expenditure, especially on the CAP. If we kept the 1 per cent. on VAT, the CAP would have to be controlled, because there would be no money to pay for increases. This year's budget is about 85 per cent. above the budget of four years ago. All hon. Members know that budgets are always overrun, and that we must make loans and intergovernmental agreements and bail out the Community. The probability is that this year we shall spend twice as much on the EC and the CAP as we did four years ago.
  My hon. Friend the Economic Secretary bravely said, "Do not worry. It is all right. We have a financial mechanism. We have the matter under control. Spending cannot run away in future." However, there is a regular annual increase in production of European agriculture of about 2 per cent., whereas the increase in consumption of European agricultural products within the EC is zero. Therefore, each year our surpluses will increase, and surpluses will be piled on surpluses. Obviously, if there

  873
  is a disaster in the Third world, a famine and starvation, only a small part of the surplus is needed and can be moved in that direction. We would all support that, if it can be arranged. However, much of our surplus goes to the Eastern bloc, as my hon. Friend the Member for Southend, East (Mr. Taylor) so eloquently said.
  You and I know, Mr. Speaker, and I believe that the House knows, that the time will come when the Soviet Union and its allies in the Warsaw pact sort out their agricultural problems. They will become self-sufficient. So the Eastern bloc will be self-sufficient. China is becoming increasingly self-sufficient. India is becoming self-sufficient. Where shall we offload the growing surpluses that we shall have in the European Community? Instead of a deficit there will be a surplus, and a growing surplus, on the world market. The price that we get for our supluses, which will be even greater than in the past, will be even less than in the past. Therefore, if one multiplies the volume, which is increased, by the price difference, which is greater, one sees that the costs of the common agricultural policy will not be under control. They will increase. They will get further out of control.
  Mr. Eric Forth: Up to now, my hon. Friend has discussed only the surplus problem in the existing Community. Does he share my concern that, should the enlargement of the Community go ahead to include Spain and Portugal, which the House will be asked to approve some time later this year, the surplus problems which he has identified will be made much worse, if only because those countries are looking to the Community to invest in them to increase their productivity and production, and there will be greater surpluses in a new range of products?
  Mr. Marlow: I take my hon. Friend's point. I am not against Spain and Portugal coming into the Community, but I appreciate that that will increase the burden. There is, there was, and there should be, another way, and that is to put a ceiling on EC expenditure—to put a cap on the CAP expenditure. If that happens, it may well be that there will be problems to be dealt with. It may well be that there will be increased surpluses. It may well be that those surpluses will be greater in some European countries than in others. Why do we have to maintain the same rigours of the CAP throughout each and every Community country in the same way? If in future some countries produce more surpluses, why should not the taxpayers in those countries pay directly for the increased surpluses that they are creating? Under the present circumstances, no one is directly responsible. The Agriculture Ministers all meet, and they agree, given the political imperatives in their own countries, that their own farmers have to be satisfied. They do not have to find the money. They just agree what prices they can get away with politically. Somebody else has to find the money.
  If one spread the increased costs to the countries which were increasing those costs, those Agriculture Ministers, as members of their own Governments in their own countries, who have to be concerned about the taxpayers and consumers in their own countries, would sing a different tune. The buck would stop in the country where the surplus was being built up. That is a far more sensible way of dealing with the CAP. It is a way that would work and we could cut expenditure on the CAP.
  874
  People say that I am anti-European. I am not anti-European — [HON. MEMBERS: "No."] I thank hon. Members. I am not anti-European.
  Sir Bernard Braine: My hon. Friend is a European whether he likes it or not.
  Mr. Marlow: Indeed, I am a European whether I like it or not.
  We want a large, unified market where 280 million people can trade. We want to cut down on non-tariff barriers, which we have done. But we do not need a colossal bureaucracy in Brussels across the Channel with a colossal budget to spend on European policies. If one is to allow insurance to cross frontiers in the European Community, if one is to allow goods to cross frontiers, if one is to allow companies to come together and have joint investment programmes, and if one is to increase the size of the market, why does one need money for that? We have dispensed with theproblem of the CAP. We should nationalise all or parts of it. That will save us some money. We do not need to vote for the money resolution on that basis.
  Why else does the Community need money? Does the Community need money for social or regional policies? As my hon. Friend the Member for Ludlow (Mr. Cockeram) said, do we need to send our cash across to Brussels so that the people there can launder it and send it back to us? They put great signs up outside towns and on roads saying that it is Community largesse, that people should be grateful for it, that the Community works, and that it is Community money. It is our money that we send there. They take some of it for administration and bureaucracy, dilute it in other ways, and return it to us. It would be more sensible for us to make our own decisions with our own money.
  The Government have advanced their case tonight on the basis that if we did not agree to the change in the VAT limits, we would not have had the system of rebates that will exist in future. The Government have claimed many times that it is a good deal because we shall be spending less money. That may be so, but under this deal our annual net contribution to the Community will be greater than it has been, and my hon. Friend the Member for Southend, East and others have said that within two or three years our net contribution will be about £1 billion a year.
  What special benefit will we in the United Kingdom get that is not available to other Community countries? Why should we pay this extra money? Hon. Members have talked about a membership club, golf club and Christmas club fee and so on. Why is our fee so much greater than any other country's? There is no justice in that. Not only are we concerned to prevent others putting their hands in the pockets of our people and taking their money. We are concerned to see that our people get justice, and this £1 billion that we shall be spending is unjust expenditure.
  The Minister said that this was the best we could get away with. I do not even believe that. We have massively underestimated our bargaining power. Consider the strength that we bring to Europe. We have oil in the North sea. There is almost a glut of energy at present, but circumstances can change rapidly. We have coal and oil, and the fact that we are energy-rich is a great strength to the other nations of Europe.
  We have a massive deficit—of about £7 billion—in trade in manufactured goods with the rest of the European Community. That represents hundreds of thousands of

  875
  jobs. If we drove a hard bargain with the Community and said, "Why should we spend £1 billion a year for something that you are getting for nothing?" would we be told, "Get out of the Common Market. We do not want you any longer."?
  Sir Kenneth LewisOn a point of order, Mr. Speaker. I am wondering whether the ten-minutes rule has applied to speeches tonight. At any rate, it seems that the duration of speeches has been about ten minutes. Should it not apply now?
  Mr. Speaker: Most certainly not.
  Mr. Marlow: I am grateful to my hon. Friend for allowing me time, by raising that point of order, to get my second wind.
  In view of our massive deficit in trade with the rest of the Community, what would happen if we insisted on a membership fee of, say, £300 million a year? That is a lot of money. Why we should pay £300 million when the French are paying nothing I am not sure. However, if, in negotiations, we insisted on that figure, would we be told to get out of the Common Market. Would the other countries say, "We will do without your market, your energy, your £300 million a year and your political expertise"? Not on your nelly, Mr. Speaker. They want us in.
  The Government's mistake has been severely to underestimate our bargaining power. Having done that, and having brought the measure before the House today, the Government have told us—hooray, hooray—that, despite the 1·4 per cent. ceiling, we have actually got a really great deal because after the rebate it will cost us only 1 per cent. But why is that a good deal? Figures given to me yesterday by my hon. Friend the Economic Secretary show that our average net VAT payment to the Community in the past four years amounted to 0·5 per cent. after rebate, so this great deal today will double our commitment.
  Ministers have said that our net contribution will be under control — we know that it will be about £600 million and then about £1,000 million and so on up. They tell us that the extra £240 million membership fee will actually cost us only £40 million because the rest will eventually come hack. But it is all public expenditure. The Opposition will be trying to crucify us later in the year because of our cuts in housing benefit, especially for elderly people, many of whom have voted Conservative for a long time and have got used to that extra spending money. There is a danger that that benefit will be attacked as a result of the Fowler review. That will be a small amount compared with the £240 million but it is all public expenditure.
  Our gross contribution to the Community has risen by 50 per cent. in the past four years. What other Government programme has risen by that amount? Community expenditure is out of control and passing the Bill today means that we shall have no hope of controlling it in the future. In response to interventions, the Government have said that the present ceiling will be 1·4 per cent., but they have not said that they will not agree to 1·6 per cent. or that they will not agree to further loans, doles, hand-outs, reimbursable this's and take-away thats. They have not said that there will be any further control. What if it rains? If it rains there will be a bigger crop and it will cost us more
  876
  money, so even the 1·4 per cent. is not sacrosanct. The 1 per cent. that we had in the past was topped up by loans, too.
  The message is clear. The signal is on go. Take no account, just spend the money. Increase agricultural expenditure, increase expenditure on bureaucracy. Dream up nice little European policies and make nice federal Europeans of us all. The message from the Commission is that everyone should go off and devise strategies and policies. Then there will be great bartering and negotiating sessions. Some policies will be thrown out and some will be accepted. Then, because the British Government want some policies to be accepted, they will have to agree to others that they do not want. Last week we listened to a lot of nonsense about the temperature in the centre of a frozen pea. Our retailers and shopkeepers will have to buy expensive equipment that they do not need to meet standards that are not required because European regulations say they must.
  We have lost control over our own country. We have lost our sovereignty. We have lost control over our awn people's money, especially in what we have done today. If we had kept the 1 per cent. limit on own resources there would have been a chance that sanity would prevail and that sensible policy would break out. Sadly, we have sold the pass. We have given in. The message is clear and I regret it very much.
  10.39 pm
  The Economic Secretary to the Treasury (Mr. Ian Stewart): I sense that the House might not wish me to return to the broad subject that we have been discussing all evening. I therefore confine myself to answering a question put by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) about the 1986 budget. This has not yet been published, so I cannot respond to his question.
  Question put:—
  The House divided: Ayes 317, Noes 158.

  Division No. 247]

  [10.40 pm

  AYES

  Alexander, Richard

  Brandon-Bravo, Martin

  Alison, Rt Hon Michael

  Bright, Graham

  Amess, David

  Brittan, Rt Hon Leon

  Ancram, Michael

  Brooke, Hon Peter

  Arnold, Tom

  Bryan, Sir Paul

  Ashby, David

  Buchanan-Smith, Rt Hon A.

  Aspinwall, Jack

  Buck, Sir Antony

  Atkins, Robert (South Ribble)

  Burt, Alistair

  Atkinson, David (B'm'th E)

  Butcher, John

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

  Butler, Hon Adam

  Baker, Nicholas (N Dorset)

  Butterfill, John

  Baldry, Tony

  Carlisle, Kenneth (Lincoln)

  Banks, Robert (Harrogate)

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

  Batiste, Spencer

  Carttiss, Michael

  Beaumont-Dark, Anthony

  Cash, William

  Beith, A. J.

  Chalker, Mrs Lynda

  Bellingham, Henry

  Chapman, Sydney

  Bendall, Vivian

  Chope, Christopher

  Benyon, William

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

  Biffen, Rt Hon John

  Clark, Dr Michael (Rochford)

  Biggs-Davison, Sir John

  Clark, Sir W. (Croydon S)

  Blackburn, John

  Clarke, Rt Hon K. (Rushcliffe)

  Blaker, Rt Hon Sir Peter

  Clegg, Sir Walter

  Bottomley, Peter

  Colvin, Michael

  Bottomley, Mrs Virginia

  Coombs, Simon

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

  Cope, John

  Bowden, Gerald (Dulwich)

  Corrie, John

  Boyson, Dr Rhodes

  Couchman, James

  Braine, Rt Hon Sir Bernard

  Cranborne Viscount

  877

  Critchley, Julian

  Johnston, Sir Russell

  Crouch, David

  Jones, Gwilym (Cardiff N)

  Currie, Mrs Edwina

  Jones, Robert (W Herts)

  Dickens, Geoffrey

  Jopling, Rt Hon Michael

  Douglas-Hamilton, Lord J.

  Kellett-Bowman, Mrs Elaine

  Dunn, Robert

  Kennedy, Charles

  Durant, Tony

  Kershaw, Sir Anthony

  Dykes, Hugh

  Key, Robert

  Eggar, Tim

  King. Rt Hon Tom

  Emery, Sir Peter

  Knight, Greg (Derby N)

  Evennett, David

  Knight, Dame Jill (Edgbaston)

  Eyre, Sir Reginald

  Knowles, Michael

  Fairbairn, Nicholas

  Knox, David

  Fallon, Michael

  Lang, Ian

  Favell, Anthony

  Lawler, Geoffrey

  Fenner, Mrs Peggy

  Lawrence, Ivan

  Finsberg, Sir Geoffrey

  Lawson, Rt Hon Nigel

  Fletcher, Alexander

  Lee, John (Pendle)

  Fookes, Miss Janet

  Leigh, Edward (Gainsbor'gh)

  Forman, Nigel

  Lennox-Boyd, Hon Mark

  Forsyth, Michael (Stirling)

  Lester, Jim

  Fowler, Rt Hon Norman

  Lewis, Sir Kenneth (Stamf'd)

  Fox, Marcus

  Lightbown, David

  Franks, Cecil

  Lilley, Peter

  Fraser, Peter (Angus East)

  Lloyd, Ian (Havant)

  Freeman, Roger

  Lloyd. Peter. (Fareham)

  Freud, Clement

  Lord, Michael

  Galley, Roy

  Luce. Richard

  Gardiner, George (Reigate)

  Lyell, Nicholas

  Gardner, Sir Edward (Fylde)

  McCrindle, Robert

  Garel-Jones, Tristan

  McCurley, Mrs Anna

  Gilmour, Rt Hon Sir Ian

  Macfarlane, Neil

  Goodhart, Sir Philip

  MacGregor, John

  Gorst, John

  MacKay, Andrew (Berkshire)

  Gow, Ian

  MacKay, John (Argyll & Bute)

  Gower, Sir Raymond

  Maclennan, Robert

  Grant, Sir Anthony

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

  Greenway, Harry

  McQuarrie, Albert

  Gregory, Conal

  Madel, David

  Griffiths, Sir Eldon

  Major, John

  Grist, Ian

  Malins, Humfrey

  Ground, Patrick

  Malone, Gerald

  Gummer, John Selwyn

  Maples, John

  Hamilton, Hon A. (Epsom)

  Marland, Paul

  Hampson, Dr Keith

  Marshall, Michael (Arundel)

  Hannam, John

  Mates, Michael

  Hargreaves, Kenneth

  Maude, Hon Francis

  Harris, David

  Mawhinney, Dr Brian

  Harvey, Robert

  Maxwell-Hyslop, Robin

  Haselhurst, Alan

  Mayhew, Sir Patrick

  Hawkins, Sir Paul (SW N'folk)

  Mellor, David

  Hayes, J.

  Merchant, Piers

  Hayhoe, Rt Hon Barney

  Meyer, Sir Anthony

  Hayward, Robert

  Miller, Hal (B'grove)

  Heath, Rt Hon Edward

  Mills, lain (Meriden)

  Heathcoat-Amory, David

  Miscampbell, Norman

  Heddle, John

  Mitchell, David (NW Hants)

  Henderson, Barry

  Monro, Sir Hector

  Heseltine, Rt Hon Michael

  Montgomery, Sir Fergus

  Hickmet, Richard

  Moore, John

  Hill, James

  Morrison, Hon C. (Devizes)

  Hind, Kenneth

  Morrison, Hon P. (Chester)

  Hirst, Michael

  Moynihan, Hon C.

  Hogg, Hon Douglas (Gr'th'm)

  Neale, Gerrard

  Holland, Sir Philip (Gedling)

  Needham, Richard

  Holt, Richard

  Nelson, Anthony

  Hordern, Sir Peter

  Neubert, Michael

  Howard, Michael

  Newton, Tony

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

  Nicholls, Patrick

  Howe, Rt Hon Sir Geoffrey

  Normanton, Tom

  Howell, Rt Hon D. (G'ldford)

  Norris, Steven

  Howell, Ralph (N Norfolk)

  Onslow, Cranley

  Hubbard-Miles, Peter

  Oppenheim, Phillip

  Hunt, David (Wirral)

  Oppenheim, Rt Hon Mrs S.

  Hunt, John (Ravensbourne)

  Osborn, Sir John

  Hunter, Andrew

  Ottaway, Richard

  Irving, Charles

  Page, Sir John (Harrow W)

  Jackson, Robert

  Page, Richard (Herts SW)

  Jenkin, Rt Hon Patrick

  Parkinson, Rt Hon Cecil

  Johnson Smith, Sir Geoffrey

  Patten, Christopher (Bath)

  878

  Patten, J. (Oxf W & Abdgn)

  Stevens, Martin (Fulham)

  Pawsey, James

  Stewart, Allan (Eastwood)

  Peacock, Mrs Elizabeth

  Stewart, Andrew (Sherwood)

  Percival, Rt Hon Sir Ian

  Stewart, Ian (N Hertf'dshire)

  Pollock, Alexander

  Stradling Thomas, J.

  Porter, Barry

  Sumbreg, David

  Portillo, Michael

  Taylor, John (Solihull)

  Powell, William (Corby)

  Tebbit, Rt Hon Norman

  Powley, John

  Temple-Morris, Peter

  Prentice, Rt Hon Reg

  Terlezki, Stefan

  Price, Sir David

  Thatcher, Rt Hon Mrs M.

  Prior, Rt Hon James

  Thomas, Rt Hon Peter

  Raison, Rt Hon Timothy

  Thompson, Donald (Calder V)

  Rathbone, Tim

  Thompson, Patrick (N'ich N)

  Rees, Rt Hon Peter (Dover)

  Thorne, Neil (Ilford S)

  Renton, Tim

  Townsend, Cyril D. (B'heath)

  Rhodes James, Robert

  Tracey, Richard

  Rhys Williams, Sir Brandon

  Trippier, David

  Ridley, Rt Hon Nicholas

  Twinn, Dr Ian

  Ridsdale, Sir Julian

  Van Straubenzee, Sir W.

  Rifkind, Malcolm

  Viggers, Peter

  Roberts, Wyn (Conwy)

  Waddington, David

  Robinson, Mark (N'port W)

  Wainwright, R.

  Roe, Mrs Marion

  Wakeham, Rt Hon John

  Rossi, Sir Hugh

  Waldegrave, Hon William

  Rowe, Andrew

  Walden, George

  Rumbold, Mrs Angela

  Wall, Sir Patrick

  Ryder, Richard

  Waller, Gary

  Sackville, Hon Thomas

  Walters, Dennis

  Sainsbury, Hon Timothy

  Ward, John

  Sayeed, Jonathan

  Wardle, C. (Bexhill)

  Scott, Nicholas

  Warren, Kenneth

  Shaw, Giles (Pudsey)

  Watts, John

  Shaw, Sir Michael (Scarb')

  Wells, Bowen (Hertford)

  Shelton, William (Streatham)

  Wells, Sir John (Maidstone)

  Shersby, Michael

  Wheeler, John

  Silvester, Fred

  Whitney, Raymond

  Sims, Roger

  Wiggin, Jerry

  Skeet, T. H. H.

  Wigley, Dafydd

  Smith, Sir Dudley (Warwick)

  Wilkinson, John

  Smith, Tim (Beaconsfield)

  Wolfson, Mark

  Soames, Hon Nicholas

  Wood, Timothy

  Speed, Keith

  Woodcock, Michael

  Spence, John

  Wrigglesworth, lan

  Spencer, Derek

  Yeo, Tim

  Spicer, Michael (S Worcs)

  Young, Sir George (Acton)

  Squire, Robin

  Younger, Rt Hon George

  Stanbrook, Ivor

  Steen, Anthony

  Tellers for the Ayes:

  Stern, Michael

  Mr. Carol Mather and

  Stevens, Lewis (Nuneaton)

  Mr. Robert Boscawen.

  NOES

  Aitken, Jonathan

  Clay, Robert

  Anderson, Donald

  Cocks, Rt Hon M. (Bristol S.)

  Archer Rt Hon Peter

  Cohen, Harry

  Ashley, Rt Hon Jack

  Conlan, Bernard

  Ashton, Joe

  Cook, Frank (Stockton North)

  Atkinson, N. (Tottenham)

  Cook, Robin F. (Livingston)

  Barnett, Guy

  Corbett, Robins

  Barron, Kevin

  Cowans, Harry

  Beckett, Mrs Margaret

  Cox, Thomas (Tooting)

  Beggs, Roy

  Craigen, J. M.

  Bell, Stuart

  Cunliffe, Lawrence

  Benn, Tony

  Davies, Rt Hon Denzil (L'Ili)

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

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

  Bermingham, Gerald

  Deakins, Eric

  Blair, Anthony

  Dewar, Donald

  Body, Richard

  Dicks, Terry

  Boyes, Roland

  Dixon, Donald

  Brown, M.(Brigg & Cl'thpes)

  Dobson, Frank

  Brown, (N'c'tle-u-Type E)

  Douglas, Dick

  Brown, Ron (E'burgh, Leith)

  Dubs, Alfred

  Budgen, Nick

  Dunwoody, Hon Mrs G.

  Caborn, Richard

  Eadie, Alex

  Callaghan, Jim (Heyw'd & M)

  Eastham, Ken

  Campbell-Savours, Dale

  Evans, John (St. Helens N)

  Carlisle, John (N Luton)

  Ewing, Harry

  Clark, Dr David (S Shields)

  Fatchett, Derek

  Clarle, Thomas

  Faulds, Andrew

  879

  Field, Frank (Birkenhead)

  Lloyd, Tony (Stretford)

  Fisher, Mark

  Lofthouse, Geoffrey

  Flannery, Martin

  Loyden, Edward

  Foot, Rt Hon Michael

  McCartney, Hugh

  Forrester, John

  McCusker, Harold

  Forsythe, Clifford (S Antrim)

  McDonald, Dr Oonagh

  Forth, Eric

  McGuire, Michael

  Foster, Derek

  McKay, Allen (Penistone)

  Foulkes, George

  McKelvey, William

  Freeson, Rt Hon Reginald

  MacKenzie, Rt Hon Gregor

  George, Bruce

  McTaggart, Robert

  Godman, Dr Norman

  McWilliam, John

  Gourlay, Harry

  Madden, Max

  Hamilton, James (M'well N)

  Maginnis, Ken

  Hamilton, Neil (Tatton)

  Martin, Michael

  Hardy, Peter

  Maxton, John

  Harrison, Rt Hon Walter

  Millan, Rt Hon Bruce

  Hawksley, Warren

  Mitchell, Austin (G't Grimsby)

  Haynes, Frank

  Moate, Roger

  Healey, Rt Hon Denis

  Molyneaux, Rt Hon James

  Hogg, N. (C'nauld & Kilsyth)

  Morris, Rt Hon A. (W'shawe)

  Holland, Stuart (Vauxhall)

  Nicholson, J.

  Howarth, Gerald (Cannock)

  Oakes, Rt Hon Gordon

  Hoyle, Douglas

  O'Brien, William

  Hughes, Robert (Aberdeen N)

  O'Neill, Martin

  Hughes, Sean (Knowsley S)

  Park, George

  Janner, Hon Greville

  Parry, Robert

  John, Brynmor

  Patchett, Terry

  Kaufman, Rt Hon Gerald

  Pavitt, Laurie

  Lambie, David

  Pendry, Tom

  Leadbitter, Ted

  Pike, Peter

  Leighton, Ronald

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

  Lewis, Terence (Worsley)

  Powell, Raymond (Ogmore)

  Litherland, Robert

  Radice, Giles

  880

  Randall, Stuart

  Strang, Gavin

  Redmond, M.

  Straw, Jack

  Richardson, Ms Jo

  Taylor, Rt Hon John David

  Roberts, Ernest (Hackney N)

  Taylor, Teddy (S'end E)

  Robertson, George

  Thompson, J.(Wansbeck)

  Robinson, G. (Coventry NW)

  Thorne, Stan (Preston)

  Ross, Wm. (Londonderry)

  Torney, Tom

  Rowlands, Ted

  Walker, Cecil (Belfast N)

  Sedgemore, Brian

  Whitfield, John

  Sheldon, Rt Hon R.

  Williams, Rt Hon A.

  Shepherd, Richard (Aldridge)

  Wilson, Gordon

  Shore, Rt Hon Peter

  Winnick, David

  Short, Ms Clare (Ladywood)

  Winterton, Mrs Ann

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

  Winterton, Nicholas

  Silkin, Rt Hon J.

  Woodall, Alec

  Skinner, Dennis

  Young, David (Bolton SE)

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

  Smyth, Rev W. M. (Belfast S)

  Tellers for the Noes:

  Soley, Clive

  Mr. Tony Marlow and

  Spearing, Nigel

  Mr K. Harvey Proctor.

  Question accordingly agreed to.
  Resolved,
  That, for the purposes of any Act resulting from the European Communities (Finance) Bill, it is expedient to authorise—

  (1) any increase attributable to that Act in the sums to be charged on and paid out of the Consolidated Fund or the National Loans Fund, or payable out of money provided by Parliament, under the European Communities Act 1972; and

  (2) the payment of any sums into the Consolidated Fund or the National Loans Fund.

  Representation of the People Bill
  Lords amendments considered.
  Representation of the People Bill
    Clause 1

      EXTENSION OF PARLIAMENTARY FRANCHISE
      Lords amendment: No. 1, in page 2, line 3, after "date" insert
      "subject to subsection (3A) below".
      10.52 pm
      The Parliamentary Under-Secretary of State for the Home Department (Mr. David Mellor): I beg to move, That this House doth disagree with the Lords in the said amendment.
      Mr. Speaker: With this it will be convenient to take Lords amendments Nos. 3 to 6, 11, 13, 15 to 18 and the amendments, in the name of the hon. Member for Berwick-upon-Tweed (Mr. Beith), to Lords amendments Nos. 6, 11 and 18.
      Mr. Mellor: Considerable debate took place in the House and outside it to find an acceptable basis on which to make progress on the Bill. This led to the gratifying conclusion that the legislation had an unopposed Third Reading.
      It is common knowledge that some Conservative Members wanted a more generous extension of the franchise to British citizens overseas than the five years contained in the Bill. It is equally clear that some Opposition Members would have preferred more modest proposals to succeed than those agreed by the House. In the proper spirit which I think should guide us when discussing issues relating to the electoral rules, a compromise was reached, and the five-year provision was agreed.
      The other place proceeded to discuss the question of officials working for the European Community and concluded that European Community officials should be enfranchised as if they were diplomats and serving soldiers who, by long tradition, have had the right to vote while serving overseas. There are problems with that proposition. I can identify two of them. The first has been perceptively observed by the hon. Member for Berwick-upon-Tweed (Mr. Beith), who has noted that, if the decision is taken to extend the franchise to officials of the European Community, there is no logic in not extending it to the officials of NATO, the Council of Europe or the Western European Union. There is an irresistible logic in that proposal, as is the case occasionally with proposals advanced by the hon. Gentleman.
      Secondly, there is the question whether it is appropriate for the House to make further distinctions between officials and people working overseas privately. We honour what has been dignified by a historical position in our electoral arrangements — the privilege of voting accorded to members of the armed servies and of the diplomatic corps. I should be hard put to it to say that someone who works for the European Community and undoubtedly does valuable service, as do about 1,500 of our fellow citizens, is necessarily any more worthy of being permitted to vote in a British election than someone who represents in Brussels the interests of ICI, ICL or any of our other great companies.
      882
      In logic, it is impossible to defend the Lords amendment. If we are prepared to drive that wedge into the five-year proposal, we should accept the hon. Gentleman's proposition. While I hope that, in the not-too-distant future, the House will return to this subject and determine that everyone who works overseas for a period longer than five years should have the vote, that day has not dawned. I wish to honour the arrangement into which we entered earlier. I do not think that it is right to perpetuate distinctions between officials and others and on that basis I advise the House to negative the Lords amendment.
      Mr. Gerald Kaufman: I should like to thank the Minister for what he has said. It is highly generous of the Government to come to the House and confirm the arrangement that was reached here when the Bill was going through.
      It is proper for all the reasons that the Minister has given that we maintain the Bill as it was sent to the House of Lords and that we do not start being selective in terms of allocating extended franchises to one group rather than to another.
      I pay tribute to the Government for the way in which they are conducting the Bill. The Opposition will be voting to delete the amendment from the Bill.
      Mr. A. J. Beith: The Government and the Opposition find themselves in a strange pickle tonight. The right hon. Member for Manchester, Gorton (Mr. Kaufman) did not refer to the fact that his noble Friends in another place voted to include the amendment in the Bill. They did so on an official Labour party vote. The amendment would not be before us tonight if they had not done so. If we studied the arithmetic, we would find that the amendment probably would not have been accepted without their support.
      A noble succession of Labour peers such as Lord Cledwyn of Penrhos joined Lord Mishcon in the Division Lobby to bring that about. The right hon. Gentleman has done us a disservice by not giving the customary summary of the arguments that his noble Friends found so persuasive in another place. Lord Mishcon said that he would put those people who worked for the European Community in the same line as members of the armed forces an the diplomatic corps. He said that he had met many of the people involved and thought that they were definitely representing British interests abroad. He said that while many of his noble Friends were in favour of continuing membership of the Community many were not. None the less, he thought it right officially to commit the Labour party to supporting the extension of the franchise to British citizens who were servants of the European Community.
      I do not know what subsequently passed between Lord Mishcon and the right hon. Member for Gorton. Now that we are contemplating the televising of Parliament, provision should perhaps be made for the televising of such discussions as took place subsequently between Lord Mishcon and the right hon. Member for Gorton. It ought to be brought to our screens so that we could hear the full flow of invective from the right hon. Member for Gorton and the full range of adjectives that he deployed when the news was brought to him.
      But the right hon. Member is not the only one to have reneged upon his commitments. The amendment that the Government are asking the House to overturn was not the

      883
      amendment that was originally moved by Lady Elles when she proposed that British citizens working for the European Community should have the right to vote. That amendment was passed by another place, but the Government said that the amendment, although not defective, could be improved upon. They later brought before another place a Government amendment setting out in what they thought were better terms the basis upon which British citizens working for the European Community should be given the right to vote. That amendment was carried without a Division. It is the Government's own choice of words they are now asking the House to overturn in the forthcoming Division.
      11 pm
      Mr. David Winnick: Is the hon. Gentleman suggesting that the vote should be extended, regardless of whether the person living abroad has a secure family background?
      Mr. Beith: The hon. Gentleman's intervention is completely irrelevant. I do not speak, as did his right hon. Friend the Member for Gorton, as if those to whom we say the franchise should be extended are a wholy army of tax dodgers, criminals and fugitives from justice.
      Mr. Dennis Skinner: Will the hon. Gentleman give way?
      Mr. Beith: No, I shall not give way to the hon. Gentleman. My right hon. and hon. Friends and I reject the notion put about by the Labour party that British citizens living abroad are in some sense disloyal to this country because they want to vote in British elections while they are serving British interests abroad. To suggest that those who are working for the European Community, the Council of Europe or the Western European Union are disloyal to this country because of their residence abroad and have forfeited their right to take part in elections in this country is the sort of monstrous absurdity which only the modern Labour party could promote.
      Mr. Roger Moate: Is the hon. Gentleman suggesting that somebody who works for Imperial Chemical Industries or any other commercial organisation is disloyal to this country? He has left them out of his amendment.
      Mr. Beith: The hon. Gentleman tempts me to repeat the speeches that I made in earlier debates. I argued that the franchise should be extended to precisely those people. Who are denying the franchise to them? It is being denied to them by the hon. Gentleman's Government and the Ministers on his Front Bench. They are unwilling to extend the franchise because of the agreement that they have reached with the Labour party.
      I understand why the Under-Secretary of State feels that he is bound by the agreement that has been entered into with the Labour party, but how could that agreement have remained in force once the Labour party gave such a clear signal to the Government as it gave by its vote in another place? The shackles and bonds were broken. Consensus politics were working. Members of every party in another place agreed that there should be a modest extension of the franchise, which the Under-Secretary of State claims he favours, to British citizens serving British interests abroad. However, the Government have reneged on the amendment that they moved in another place on Third
      884
      Reading and have failed to seize the opportunity that was presented to them, based on consensus, to have a modest extension overseas of the franchise.
      However, the Minister raised the fair question whether it was reasonable to make a partial extension. Of course, we could raise the same question about the decision for the five-year limit which is so restrictive that it will give few opportunities to British citizens living overseas.
      I have stated the case and tabled an amendment. I stand by my case that there is a good reason to extend the franchise to those serving British interests in their work for the WEU, the Council of Europe or NATO. I tabled the amendment in that form knowing that, at this stage in the proceedings, there was no chance of getting back to what I originally argued for—and for which I would have been grateful for the support of the hon. Member for Faversham (Mr. Moate)—which is that there should be much wider provisions for British citizens overseas to vote. It places a very low value on British citizenship if we do not assume that it confers voting rights. I wish to place a high value on British citizenship.
      There is one distinction in logic that we can make between the European Community and the other institutions that I have mentioned—one which the hon. Member for Faversham would certainly make. It is that the European Community has law-making powers in this country which are not possessed by any of the other bodies. That places it in what I am sure he and others who occupied the time of the House tonight would argue as a rather different category. However, put at its lowest, half a loaf is better than no bread. I am sufficiently committed to an extension of the franchise to British citizens working overseas to believe that the step forward taken by another place in making that extension to those working in the European Community was important enough to justify this House retaining it. That makes me both a little surprised and not a little annoyed that the Government should seek to overturn a very sensible amendment.
      I am fascinated by the gyrations of the Labour party, which one day of the week argues that this amendment should be passed and votes for it through its representatives in another place, but in this House take the opposite view. Things have reached a strange state, but we shall be consistent and vote against the Government.
      Mr. Douglas Hogg: The speech of the hon. Member for Berwick-upon-Tweed (Mr. Beith), which I assume was the official response of the Liberal party, was both bizarre and unacceptable. It was unacceptable for two reasons. First, the Liberal party is now committing itself to the bizarre view that an important distinction should be made between officials on the one part and wealth creators on the other. The Liberal party is clearly disclosing itself as the party of the bureaucrat. I have never doubted that, but I am awfully glad that the Chief Whip of the Liberal party has come to this place to make that clear.
      The other reason why what the hon. Gentleman said is unacceptable is that the Liberal party and its funny little friends in the SDP have been wandering around trying to suggest that we should govern this country by some form of consensus. On a very important matter we have a consensus — it has been possible, on a major constitutional matter, to reach agreement between the two Front Benches. I find that highly desirable. But when that happens, what do we find? The funny little men in the

      885
      Liberal party and the even funnier little men in the SDP come to grumble. The bizarre speech of the hon. Gentleman is not merely strange: it is utterly unacceptable.
      Sir Russell Johnston: I had not intended to make a speech, but the wholly mischievous, ill-informed and totally unprincipled speech of the hon. Member for Grantham (Mr. Hogg) so aroused me that I felt that I must at least make a short contribution.
      I remind the hon. Gentleman that his Minister made a lot of the fact that some compromise had been reached. I think that he used the expression "a proper spirit of compromise". He said that some Conservatives wanted a more generous allocation, that there some Labour Members wanted a more miserly allocation, so they split the difference.
      As my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), the Liberal Chief Whip, said, the Liberal party and the SDP also want a more generous allocation. We are on his side, and in terms of trying to weigh a compromise that is of some significance.
      The hon. Gentleman absurdly—he knows it himself, by the smile on his face—suggested that we wanted to make some distinction between officials and these great wealth-makers. The hon. Gentleman has many speeches on record that show that this is quite simply not true. We would have liked to see a proper opportunity for people working for the United Kingdom abroad to vote in British elections. It is the sort of thing that is commonplace in other countries. It happens in the case of the Italians, for example, and in the case of others, who are able to vote in this country in their own elections without any difficulty. It is regarded as normal and reasonable. Why the hon. Member for Grantham should think it is unreasonable, if he is as democratic as I dare say he considers himself to be, I fail to understand.
      Mr. Tim Rathbone: Following the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) somehow winds the clock back about 10 years to the debates that we had late into the night on Scottish assemblies, and so forth. I can remember a speech that he made that was a source of great enjoyment for the whole House at a late hour one evening. But I do not follow his line of argument this evening.
      This debate is peculiar on one or two scores. First, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) pointed out, it is peculiar that there is such disagreement between the Labour party's stand here and its stand in the other House.
      Secondly, it is peculiar that both Liberal Members who have spoken so far seemed to deride any disagreement between the other place and this House. Disagreement between them and us seems to be to be a perfectly healthy form of constitutional behaviour. It has gone on in the past and will, I am sure, go on in the future. The parliamentary democracy in which we operate is the better for it.
      Thirdly, it is peculiar, as my hon. Friend the Member for Grantham (Mr. Hogg) pointed out, because, as the amendments standing in the name of the Liberal party identify, it seems to put the Liberal party firmly in the peculiar position of asking for special rights for bureaucrats. It is absurd—
      Mr. Beith: Rubbish.
      Mr. Rathbone: The hon. Gentleman says "Rubbish", but the amendment is only and solely on behalf of bureaucrats in Europe. It is no good his saying that at this late stage of the evolution of this Bill he could do no more, because I believe that that is the argument of the non-trier. He is showing the Liberal party in this marvellous new guise of being overly in favour of those people who travel round the world doing bureaucratic jobs but against those people—they are not included in this amendment—who are helping this country and earning their living abroad.
      I am one of those who have been frustrated by the Government's lack of extension of the right to vote on a far more liberal basis than the Bill at present deploys. I am delighted that my hon. Friend the Minister made reference to those on these Benches who are so inclined and reiterated what the Home Secretary said during the debate in the House—that this was a step forward and that we would be returning to this at some moment in future to see what further steps forward could be contemplated.
      It is remarkable that a major and constitutional advance has been made across the House by agreement between the two major parties. I fear that, judging by its amendments, the alliance eschews being a major party.
      There is agreement across the House about this major constitutional improvement. I hope that the Government will stand fast in denying the Lords their amendment. In the same breath, I say that the Government will have to return to the subject with energy and enthusiasm and take it a step forward.
      11.15 pm
      Mr. Robert Maclennan: The offensiveness of the attack by Government Members on public servants operating in communities to which this country belongs by treaty will be noted widely and will do no credit to those who have committed such remarks to the Official Report.
      The spectacle of the Government going through the gyrations which they have thought appropriate in relation to the Bill are not edifying. They have not sought to explain why it is right to reject the principles embodied in the amendments, to accept and redraft them, and then to recommend to the House that it should throw them out, having commended them to the other place.
      Mr. Mellor: The hon. Gentleman is wrong. The Government spokesman in another place did not commit the Government to accepting this proposition. It seemed fair that he should ensure that the other place having made its views clear in a Division should ensure that the Bill was set in a form approved by parliamentary draftsmen. It was made clear at every stage that the Government reserved their position for when it came back to this House.
      Mr. Maclennan: The Minister is adding to his earlier statement. To use the language of the "silly little man", the hon. Member for Grantham (Mr. Hogg), it is bizarre. To improve the language of the Bill, it is extraordinary for the Government to commend these measures to the other place and not to produce a single argument of substance. That will not be noted.
      Mr. Skinner: Not in Brecon.
      Mr. Maclennan: The Minister talked about the distinction between officials and others and suggested that—
      Mr. Skinner: He could be an encyclopaedia seller.
      Mr. Maclennan: The hon. Gentleman will wish to make his own contribution.
      Mr. Skinner: Yes, I will.
      Mr. Maclennan: The hon. Gentleman will, in his own time, make his speech without interruption from me.
      There should be no doubt that my right hon. and hon. Friends believe that the right to vote should be enjoyed by British citizens regardless of the territory in which they live. It is of great importance that citizens should enjoy that fundamental right of citizenship and not be deprived of it by some temporary arrangement between certain spokesmen—apparently there is not unanimity on this subject in the Labour party—of the Labour party and the junior Minister who happens to be responsible for the conduct of the Bill tonight.
      One has only to read the record of earlier debates on these matters to draw a stark contrast between what the Minister said tonight and what was said by his colleague in another place. It is patent nonsense to suggest that there is anything other than a squalid political deal which deprives citizens of rights which they ought properly to enjoy. The two Front Benches have collaborated to stop the clock and to prevent people from enjoying their proper constitutional rights. That is no credit to Ministers, or would-be Ministers, and they will learn to regret it.
      These amendments represent matters of great substance to many thousands of citizens, who will dislike being drawn into this debate. It has become clear that their services to the country are little appreciated by those who continue to deprive them of the right to influence the country's future. The idea that servants of the country in NATO are not worthy of a vote is not a concept that can commend itself to anybody who cares to speak about defence in the West, as the Government do.
      It does not do the country any credit to deprive our officials in the Western European Union of a vote. The Government tell us that that organisation must be the centre of European defence in future. They appear to believe that increasing diplomatic weight should be put on it, and yet they wish to continue to deprive our citizens who work for it of any right to participate in our general elections. What kind of logic is that? It is all to appease right hon. and hon. Members on the other side of the Gangway. It is being done for a simple political purpose—to elevate the political importance of people, such as the right hon. Member for Manchester, Gorton (Mr. Kaufman), who posture as members of an alternative Government. The more they posture, the less it will be believed that they are worthy of support.
      The people who serve the country in commerce, banking and industry around the world are equally deserving of the vote. We shall return to this matter when we are in a position to amend our constitution. As long as our constitutional law is arranged by squalid little fixes, we live in the 19th century.
      Mr. William Powell: I must tell the hon. Members for Berwick-upon-Tweed (Mr. Beith), for Inverness, Nairn and Lochaber (Sir R. Johnston) and for Caithness and Sutherland (Mr. Maclennan) that their argument is profoundly wrong. They will recall that I originally proposed the amendment that the right to vote for British subjects resident abroad should be open and large, and not restricted by a time limit. I was delighted
      888
      that the hon. Gentlemen were prepared to support my hon. Friend the Member for Lewes (Mr. Rathbone) and me in the Division Lobbies.
      A reason why the Liberal amendment is wrong is that, having taken the five year cut off point, they propose that a limited class of persons should be enabled to vote beyond that period. The franchise should either be universal, subject to the limited exceptions that we make of convicted criminals, lunatics and members of the House of Lords, and rest in everybody or nobody. The hon. Gentlemen propose to extend that right to a small number of people, which will create anomalies. That is why they are profoundly wrong to advance the case that they have. If we want to extend the right to vote beyond the five year period, as I do, we must extend it for more than five years, not create little classes of people here and there who are given that right beyond the five year period, regardless of the rights of our people as a whole.
      I shall make a further point, which is of wider constitutional importance. We live in an age when the other place imagines that it has a duty beyond that of being a revising chamber. More and more, it is taking major and substantive political initiatives, which it knows have been rejected in the House. In this area, which determines the right of people to vote for members of this House, above all other when the House has reached a deliberate, settled political conclusion, we are entitled to expect that that decision receives respect in the other place. The other place has tried to take a political initiative, which it is neither right nor proper for it to take.
      In those circumstances, I commend my hon. Friend the Parliamentary Under-Secretary and the right hon. Member for Manchester, Gorton (Mr. Kaufman) for the way in which they have handled the matter. I shall certainly support them tonight.
      Mr. Skinner: Tonight the House would do our electors a great service by rejecting the amendment from the Liberal offshore alliance. On Thursday I pointed out to the voters in Brecon and Radnor, including many Liberals, that this Tuesday we would have a debate about giving £252 million to the Common Market because it was bankrupt and that later there would be a debate about giving votes to the claret drinking tax dodgers in the Common Market.
      I have always argued that SDP and Liberal Members are Common Market fanatics, and that has been proved tonight. We would do the electors of Brecon and Radnor a service by ensuring that tonight's voting list is sent there to show how many of those hon. Gentlemen are prepared to serve the interest of those in the Common Market before that of those in Brecon and Radnor, and Wales.
      I thought that the Liberals would have more sense. They will soon want to give a vote to Ronnie Biggs, all the tax dodgers on the Costa del Sol, and Tony Jacklin with his golf clubs in Spain. It is high time we paid more attention to those who pay taxes in Britain, rather than to those who have swanned off on the gravy trains to evade paying tax. No representation without taxation.
      Question put, That this House doth disagree with the Lords in the said amendment:—
      The House divided: Ayes 327, Noes 13.

      Division No. 248

      11.30 pm

      AYES

      Aitken, Jonathan

      Amess, David

      Alexander, Richard

      Ancram, Michael

      889

      Anderson, Donald

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

      Archer, Rt Hon Peter

      Deakins, Eric

      Ashby, David

      Dewar, Donald

      Ashley, Rt Hon Jack

      Dickens, Geoffrey

      Ashton, Joe

      Dicks, Terry

      Aspinwall, Jack

      Dobson, Frank

      Atkins, Robert (South Ribble)

      Dorrell, Stephen

      Atkinson, David (B'm'th E)

      Douglas, Dick

      Atkinson, N. (Tottenham)

      Douglas-Hamilton, Lord J.

      Baker, Nicholas (N Dorset)

      Dubs, Alfred

      Baldry, Tony

      Dunn, Robert

      Banks, Robert (Harrogate)

      Dunwoody, Hon Mrs G.

      Barnett, Guy

      Durant, Tony

      Barron, Kevin

      Dykes, Hugh

      Batiste, Spencer

      Eadie, Alex

      Beaumont-Dark, Anthony

      Eastham, Ken

      Beckett, Mrs Margaret

      Eggar, Tim

      Beggs, Roy

      Evans, John (St. Helens N)

      Bell, Stuart

      Ewing, Harry

      Bellingham, Henry

      Fairbairn, Nicholas

      Bendall, Vivian

      Fallon, Michael

      Benn, Tony

      Fatchett, Derek

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

      Favell, Anthony

      Benyon, William

      Fenner, Mrs Peggy

      Bermingham, Gerald

      Field, Frank (Birkenhead)

      Biffen, Rt Hon John

      Fisher, Mark

      Blackburn, John

      Flannery, Martin

      Blair, Anthony

      Fookes, Miss Janet

      Blaker, Rt Hon Sir Peter

      Foot, Rt Hon Michael

      Boscawen, Hon Robert

      Forman, Nigel

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

      Forrester, John

      Bowden, Gerald (Dulwich)

      Forsyth, Michael (Stirling)

      Boyes, Roland

      Forsythe, Clifford (S Antrim)

      Boyson, Dr Rhodes

      Forth, Eric

      Brandon-Bravo, Martin

      Foster, Derek

      Bray, Dr Jeremy

      Foulkes, George

      Bright, Graham

      Franks, Cecil

      Brinton, Tim

      Fraser, Peter (Angus East)

      Brittan, Rt Hon Leon

      Freeman, Roger

      Brooke, Hon Peter

      Freeson, Rt Hon Reginald

      Brown, M. (Brigg & Cl'thpes)

      Galley, Roy

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

      George, Bruce

      Brown, Ron (E'burgh, Leith)

      Godman, Dr Norman

      Bruinvels, Peter

      Gould, Bryan

      Buck, Sir Antony

      Gow, Ian

      Burt, Alistair

      Gower, Sir Raymond

      Butcher, John

      Gregory, Conal

      Butterfill, John

      Griffiths, Peter (Portsm'th N)

      Caborn, Richard

      Ground, Patrick

      Callaghan, Jim (Heyw'd & M)

      Hamilton, Hon A. (Epsom)

      Campbell-Savours, Dale

      Hamilton, James (M'well N)

      Carlisle, Kenneth (Lincoln)

      Hamilton, Neil (Tatton)

      Carttiss, Michael

      Hardy, Peter

      Cash, William

      Hargreaves, Kenneth

      Chalker, Mrs Lynda

      Harris, David

      Chapman, Sydney

      Harrison, Rt Hon Walter

      Chope, Christopher

      Haselhurst, Alan

      Clark, Dr David (S Shields)

      Hawkins, Sir Paul (SW N'folk)

      Clark, Dr Michael (Rochford)

      Hawksley, Warren

      Clark, Sir W. (Croydon S)

      Hayes, J.

      Clarke, Rt Hon K. (Rushcliffe)

      Haynes, Frank

      Clarke, Thomas

      Hayward, Robert

      Clay, Robert

      Healey, Rt Hon Denis

      Clegg, Sir Walter

      Heathcoat-Amory, David

      Clwyd, Mrs Ann

      Hickmet, Richard

      Cockeram, Eric

      Higgins, Rt Hon Terence L.

      Cocks, Rt Hon M. (Bristol S.)

      Hind, Kenneth

      Cohen, Harry

      Hirst, Michael

      Conway, Derek

      Hogg, Hon Douglas (Gr'th'm)

      Cook, Robin F. (Livingston)

      Hogg, N. (C'nauld & Kilsyth)

      Coombs, Simon

      Holland, Sir Philip (Gedling)

      Cope, John

      Holland, Stuart (Vauxhall)

      Corbett, Robin

      Holt, Richard

      Cowans, Harry

      Howard, Michael

      Craigen, J. M.

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

      Cranborne, Viscount

      Howarth, Gerald (Cannock)

      Crouch, David

      Howell, Rt Hon D. (G'ldford)

      Cunliffe, Lawrence

      Hoyle, Douglas

      Currie, Mrs Edwina

      Hubbard-Miles, Peter

      Davies, Rt Hon Denzil (L'lli)

      Hughes, Robert (Aberdeen N)

      890

      Hughes, Sean (Knowsley S)

      Neubert, Michael

      Hunt, David (Wirral)

      Newton, Tony

      Hunter, Andrew

      Nicholls, Patrick

      Jackson, Robert

      Nicholson, J.

      John, Brynmor

      Norris, Steven

      Johnson Smith, Sir Geoffrey

      Oakes, Rt Hon Gordon

      Jones, Gwilym (Cardiff N)

      O'Brien, William

      Jones, Robert (W Herts)

      O'Neill, Martin

      Kaufman, Rt Hon Gerald

      Oppenheim, Phillip

      Kershaw, Sir Anthony

      Osborn, Sir John

      Key, Robert

      Ottaway, Richard

      Knight, Greg (Derby N)

      Page, Sir John (Harrow W)

      Knight, Dame Jill (Edgbaston)

      Page, Richard (Herts SW)

      Knowles, Michael

      Park, George

      Knox, David

      Parry, Robert

      Lang, Ian

      Patchett, Terry

      Leadbitter, Ted

      Patten, Christopher (Bath)

      Lee, John (Pendle)

      Patten, J. (Oxf W & Abdgn)

      Leigh, Edward (Gainsbor'gh)

      Pavitt, Laurie

      Leighton, Ronald

      Pawsey, James

      Lennox-Boyd, Hon Mark

      Peacock, Mrs Elizabeth

      Lester, Jim

      Pendry, Tom

      Lewis, Sir Kenneth (Stamf'd)

      Percival, Rt Hon Sir Ian

      Lewis, Terence (Worsley)

      Pike, Peter

      Lightbown, David

      Pollock, Alexander

      Lilley, Peter

      Portillo, Michael

      Litherland, Robert

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

      Lloyd, Ian (Havant)

      Powell, Raymond (Ogmore)

      Lloyd, Peter, (Fareham)

      Powell, William (Corby)

      Lloyd, Tony (Stretford)

      Powley, John

      Lofthouse, Geoffrey

      Radice, Giles

      Lord, Michael

      Randall, Stuart

      Loyden, Edward

      Rathbone, Tim

      Luce, Richard

      Renton, Tim

      McCartney, Hugh

      Rhodes James, Robert

      McCurley, Mrs Anna

      Rhys Williams, Sir Brandon

      McDonald, Dr Oonagh

      Richardson, Ms Jo

      MacGregor, John

      Roberts, Ernest (Hackney N)

      McKay, Allen (Penistone)

      Roberts, Wyn (Conwy)

      MacKay, John (Argyll & Bute)

      Robertson, George

      McKelvey, William

      Robinson, G. (Coventry NW)

      MacKenzie, Rt Hon Gregor

      Roe, Mrs Marion

      McQuarrie, Albert

      Ross, Wm. (Londonderry)

      McTaggart, Robert

      Rowe, Andrew

      McWilliam, John

      Rowlands, Ted

      Madden, Max

      Sedgemore, Brian

      Madel, David

      Shaw, Giles (Pudsey)

      Maginnis, Ken

      Sheldon, Rt Hon R.

      Major, John

      Shersby, Michael

      Malins, Humfrey

      Shore, Rt Hon Peter

      Malone, Gerald

      Short, Ms Clare (Ladywood)

      Maples, John

      Silkin, Rt Hon J.

      Marland, Paul

      Silvester, Fred

      Marshall, Michael (Arundel)

      Skeet, T. H. H.

      Martin, Michael

      Skinner, Dennis

      Mather, Carol

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

      Maude, Hon Francis

      Soley, Clive

      Mawhinney, Dr Brian

      Spearing, Nigel

      Maxton, John

      Stokes, John

      Maxwell-Hyslop, Robin

      Stradling Thomas, J.

      Mayhew, Sir Patrick

      Strang, Gavin

      Meacher, Michael

      Straw, Jack

      Mellor, David

      Taylor, Rt Hon John David

      Merchant, Piers

      Thompson, Donald (Calder V)

      Millan, Rt Hon Bruce

      Thompson, J. (Wansbeck)

      Miller, Hal (B'grove)

      Thorne, Stan (Preston)

      Miller, Dr M. S. (E Kilbride)

      Thurnham, Peter

      Mills, Lain (Meriden)

      Trippier, David

      Miscampbell, Norman

      van Straubenzee, Sir W.

      Mitchell, Austin (G't Grimsby)

      Waddington, David

      Mitchell, David (NW Hants)

      Wakeham, Rt Hon John

      Moate, Roger

      Walker, Bill (T'side N)

      Molyneaux, Rt Hon James

      Wall, Sir Patrick

      Montgomery, Sir Fergus

      Waller, Gary

      Moore, John

      Wiggin, Jerry

      Morris, Rt Hon A. (W'shawe)

      Wilkinson, John

      Morrison, Hon P. (Chester)

      Williams, Rt Hon A.

      Moynihan, Hon C.

      Winnick, David

      Neale, Gerrard

      Winterton, Mrs Ann

      Nelson, Anthony

      Winterton, Nicholas

      891

      Wood, Timothy

      Tellers for the Ayes:

      Woodall, Alec

      Mr. Tristan Garel-Jones and

      Young, David (Bolton SE)

      Mr. Tim Sainsbury.

      NOES

      Alton, David

      Steel, Rt Hon David

      Ashdown, Paddy

      Wallace, James

      Bruce, Malcolm

      Wigley, Dafydd

      Carlile, Alexander (Montg'y)

      Wrigglesworth, Ian

      Freud, Clement

      Kennedy, Charles

      Tellers for the Noes:

      Maclennan, Robert

      Sir Russell Johnston and

      Meadowcroft, Michael

      Mr. A. J. Beith.

      Meyer, Sir Anthony

      Question accordingly agreed to.
      Lords amendment disagreed to.
      Lords amendment: No. 2, in page 2, line 4, leave out "resident outside" and insert "not resident in".
      Mr. Mellor: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker (Mr. Harold Walker): With this it will be convenient to take amendments Nos. 8, 9, 10, 12 and 14.
      Mr. Mellor: Tempting though it is, after my eloquence caused such a huge majority in that Division, to expand at length on this series of amendments, I shall content myself by confining my remarks to urging hon. Members to agree to the said amendment.
      Question put and agreed to.
      Lords amendments Nos. 3 to 6 disagreed to.
      Lords amendment: No. 7, in page 2, line 21, at end insert—
      "( ) The reference in subsection (1) above to a person being subject to a legal incapacity to vote on the qualifying date does not include a reference to his being below the age of 18 on that date."
      Mr. Mellor: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this it will be convenient to take Lords amendment No. 19.
      Question put and agreed to.
      Lords amendments Nos. 8 to 10 agreed to.
      Lords amendment No. 11 disagreed to.
      Lords amendment No. 12 agreed to.
      Lords amendment No. 13 disagreed to.
      Lords amendment No. 14 agreed to.
      Lords amendments Nos. 15 to 18 disagreed to.
      Lords amendments Nos. 19 to 43 agreed to.
      Ordered,
      That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to certain of their amendmerits.—[Mr. Mellor.]
      Motion made, and Question proposed, That Mr. Secretary Brittan, Mr. Robin Corbett, Mr. Gerald Kaufman, Mr. David Mellor and Mr. Tristan Garel-Jones, be Members of the Committee.—[Mr. Mellor.]
      Mr. Beith: On a point of order, Mr. Deputy Speaker. Perhaps you will give me an opportunity to move an amendment to the motion. Lest it be thought that this is a two-party carve-up, I beg to move, as an amendment to the proposed motion, to leave out "Mr. Robin Corbett" and to insert "Mr. A. J. Beith".
      Mr. Deputy Speaker: I am prepared to accept that motion.
      Question, That the amendment be made, put and negatived.
      Main Question put and agreed to.
      Ordered,
      That Mr. Secretary Brittan, Mr. Robin Corbett, Mr. Gerald Kaufman, Mr. David Mellor and Mr. Tristan Garel-Jones, be Members of the Committee.—[Mr. Mellor.]
      Ordered,
      That Three be the Quorum of the Committee. —[Mr. Mellor.]
      Ordered,
      That the Committee do withdraw immediately. — [Mr. Mellor.]
      Reasons for disagreeing to certain of the Lords amendments reported, and agreed to; to be communicated to the Lords.

  Brixworth School, Northamptonshire
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]
  11.51 pm
  Mr. Roger Freeman: After that most exhausting series of Questions which the Chair has put to the House, perhaps the remaining minutes of today's proceedings will be allowed some respite. I thank the Under-Secretary and my hon. Friend the Member for Wantage (Mr. Jackson) for attending the debate. I know that the hour is late, and the Minister's courtesy and interest in Brixworth school and the whole subject of capital expenditure allocations is much appreciated by myself and all my hon. Friends who represent constituencies in Northamptonshire. It is also appreciated by the local education authority.
  This is a debate about capital expenditure, but I should like to refer to the comments of my right hon. Friend the Secretary of State today at Question Time about the teaching profession. To the best of my recollection, my right hon. Friend said that most teachers are effective and hard working and do an enormously difficult task. He also said that most teachers welcomed the new initiatives introduced in education. I associate myself with those remarks, which are most appropriate to the county of Northamptonshire and the teaching profession in my own constituency. Those teachers are doing a difficult job very well, and I commend the teaching profession for its dedication and hard work in all the schools in my constituency.
  In Northamptonshire there are falling school rolls, especially in the secondary schools. It is also a county which has recently grown because of the new towns, the enterprise zones and the new estates in my own constituency such as Brixworth, Rothwell and Desborough. These dormitory towns serve the growing and expanding markets and industrial centres of the east midlands. Therefore, within a county that has falling school rolls, specific towns and villages are rapidly expanding. That is the problem to which I wish to allude, with specific reference to Brixworth.
  If the A1-M1 link is built, as I hope it will be, that will only add to the growth of some towns and villages in central Northamptonshire, including some of the towns that I have mentioned. There is an inevitable strain on resources, which I accept are limited. Capital expenditure allocations are not infinite, and I support the Government's policy on the control of public expenditure.
  In a county with falling school rolls, it is difficult to close part of a school, sell the assets and move them to the towns and villages where the population is growing and where the number of children entering infant and junior schools is increasing. We cannot move schools like building blocks. Therefore, scarce resources must be devoted to the most important cases of new school building or additions to existing schools. Havelock school in Desborough is in the same position as is Brixworth school, but for different reasons. I shall not develop arguments about Havelock school tonight, because I do not have enough time. There are many examples not only in my constituency but in all constituencies where scarce resources must be carefully devoted to the most pressing needs.
  894
  Brixworth has a population of about 3,400. It has an active parent-teacher association, and I pay tribute to Mr. Wilson, the current secretary of the PTA, to Mr. Leeming, the former PTA chairman, and to Mr. Woodcock, who is one of the governors. They have been most helpful to me, and I admire the spirit in the PTA and its attitude towards the school and the local education authority. It has always been most supportive and constructive, and I pledge its members and the PTAs in all the schools in my constituency that I shall work with them to the benefit of their schools and the benefit of their children.
  Brixworth school, which caters for four to 11-year-olds, was built about 14 years ago to accommodate six classes and about 180 pupils. That number has grown to 390 pupils. Part of the increase is accounted for by the policy of the county council—I agree with the policy—to take into education the rising five-year-olds. Clearly, that has meant some pressure on resources that was not expected 14 years ago. A new block for five infant classes was built about three years ago. The school population is expected to increase to 400 in September, and the result of the rapid expansion has been three mobile classrooms. The important point that I wish to draw to my hon. Friend's attention is that, during the next four years, we expect the school population to increase to about 600. The rapid increase has been caused by the rapid development of the housing estate.
  There are three solutions to the problem. The first is to have more mobile classrooms—something which I and the Minister would not wish to be a permanent solution to the problem, with all the shortcomings that mobile classrooms have. Secondly, we could build a new school in a different part of the village. Thirdly, we could add to the existing buildings, as was done three or four years ago. I cannot say what is the correct solution, because that is the job of the local education authority. I recognise its problems in controlling the allocation of scarce resources. Indeed, I pay tribute to Mr. Michael Hemley, the chief education officer of the local education authority in Northamptonshire, for doing a difficult job extremely well. It is not my job tonight to comment on whether there should be a new school, if resources are available, or an extension of the existing one.
  I make three suggestions to my hon. Friend the Under-Secretary of State which I offer in a helpful and constructive way. They are based upon discussions with the parent-teacher association in Brixworth and the local education authority. The first concerns long-term planning. At present, central Government say to the local education authority, "We will give you a certain capital expenditure allocation only 12 months ahead." That is not a cash grant but permission to borrow. I should like the LEA to be given a three-year plan, perhaps with allocations in the second and third years as a declining proportion of the allocation in the first year. Incidentally, this system applies to the HIP allocation for district councils. To the best of my knowledge, this three-year planning horizon does not apply to the county council for school capital expenditure.
  It would be a great advantage if the Treasury accepted this proposal. Admittedly, the suggestion would cramp its style a little, because it means that, looking out to year two and year three, there is less room for manoeuvre in controlling the level of capital expenditure in the counties. Nevertheless, the proposal would have two great advantages. It would enable the LEA to plan more sensibly

  895
  in terms of design and the order in which problems could be tackled. It would also enable the LEA to announce publicly to parents when their school was likely to be extended or a new school was likely to be built. That would give parents a great deal of comfort and would alleviate much concern—for example, at Brixworth.
  My second suggestion concerns percentage limits. Under the present rules, district councils can spend in the current year only 20 per cent. of the proceeds from the sale of council houses, but county councils, being responsible for education, can spend 30 per cent. Obviously, the county councils can spend the other 70 per cent. in succeeding years. In Northamptonshire, the necessary capital expenditure plan is met from not only the approved allocation from central Government but what is called "virement" from the other departments—for example, if the transport department has spare capital allocation money that it does not need in the current year, it can give it or lend it to another department within the county council. That is one way in which Northamptonshire has been spending above the capital expenditure allocation to meet its plan.
  I suggest that a threshold for each county council should be set and that we should say, "This is the target that we would like you to achieve in the sale of surplus land and assets. If you reach that threshold, you can spend only 30 per cent. in the current year but, if you do better than the absolute figure that we have given you, you can spend 100 per cent." I submit to my hon. Friend the Under-Secretary of State, although this is a matter not for him but for the Treasury, that such an arrangement would not increase the PSBR but would provide an incentive to the LEAs to sell more surplus land and assets. The LEAs would know that they could spend 100 per cent. of their surplus sales in the current year.
  My third suggestion concerns the problem that Brixworth has encountered during the past few years. Perhaps this suggestion comes too late to benefit Brixworth, but it may benefit other towns and villages. I believe that we have to improve liaison between the housebuilders and planners and the LEA. How is it that in Brixworth the housebuilders built within two years an estate that was planned to be developed over 10 years? The local authority could have provided adequate buildings within that time, and avoided the present school places crisis.
  If there were a requirement that the county structure plan should include a reference to education needs and a requirement for housebuilders and developers fully to consult the local education authority, we might avoid circumstances similar to those in Brixworth.
  I again thank my hon. Friend for his kindness in attending the debate and I invite him, on behalf of my colleagues who represent Northamptonshire, to visit us again. We have much appreciated his past visits. When he comes again, I hope that he will visit Brixworth.
  12.5 am
  The Parliamentary Under-Secretary of State for Education and Science (Mr. Bob Dunn): I congratulate my hon. Friend the Member for Kettering (Mr. Freeman) on obtaining this Adjournment debate on the expansion of Brixworth school. I am pleased to be able to reply to him. I note his interesting suggestions, some of which, as he said, are not for decision by the Department of Education and Science.
  896
  My hon. Friend has spoken tonight about a matter which is of immediate interest in his constituency—the important matter of school provision when there is a growth of new housing in the area and the school population is likely to rise. This raises issues of national as well as local interest, since it relates to the Government's policies in relation to capital expenditure. In raising these issues my hon. Friend has demonstrated the active and diligent way in which he represents his constituents' interests.
  My hon. Friend spoke about the position at Brixworth school. I shall come to that in a moment, but before I do so there are a number of relevant issues of national policy that need to be set out because they form the background to a full understanding of the local position.
  Each year, local education authorities are invited to send to the Department details of their plans for capital expenditure in the following year. In aggregate, these plans inevitably exceed what the country can afford. We are therefore faced with having to decide between conflicting priorities when distributing the limited resources available for capital works. In doing so our priority has been to meet expenditure required for commitments on on-going projects which previous allocations have allowed for. This accounts for a large part of the resources available. We also take account of local education authorities' legal obligations to make sufficient provision for the children in their area. Where the area is one of population growth which leads to a demand for new places in an authority's schools, a high priority is given for a capital allocation to meet this demand, whether by building new schools or extensions to existing schools. In recent years we have always been able to meet local education authorities' bids for such projects. In addition, where authorities have published statutory proposals to remove surplus places, which have been approved by my right hon. Friend, and where these include a capital building project, which is related to the proposals, we have generally been able to provide a capital allocation so that the work can go ahead. This is to enable the authority to implement the proposals, which it has a legal duty to do.
  Before the introduction in April 1981 of the present system for controlling local authority capital expenditure by means of annual prescribed expenditure allocations for each of the five service blocks — housing, transport, education, personal social services and other Government services—the Department operated a system of annual building programmes under which each local education authority received an allocation of the total value of building work that it could start in a given year. This allocation carried with it a borrowing approval, and local authority borrowing was controlled by this means rather than as now by control of expenditure.
  Up to and including 1974–75, the allocation of building programme resources was by individual named projects based on DES consideration of annual LEA bids related to priority. A sum for minor works was added by the Department. This was an unnecessarily burdensome system, leaving LEAs with virtually no room for manoeuvre. With effect from 1975–76, in line with the then Government's desire to leave more decisions about the use of educational building programmes to LEAs, a three-stage rolling programme was reintroduced to promote the systematic processing of work, and authorities were given firm lump sum authorisations of starts based on their own priorities, leaving them free to start projects

  897
  which they thought essential. As I have said, this system, wherein a rolling programme gave a useful facility to authorities for forward planning, came to an end in 1981.
  Since that time, under the arrangements introduced by the Local Government. Planning and Land Act 1980, LEAs have each year indicated to the Department the level of capital expenditure which they would wish to undertake. Priority in making the prescribed expenditure allocations within the resources available for schools is given, on the basis of the expected deficiency of places assessed by LEAs, to the need to provide additional school places in areas of population growth—that is, roofs over heads without which pupils would be out of school, and then to work for the removal of surplus places and other improvement and replacement projects. Once allocations are made, authorities are free to use them how they wish and can transfer between the service blocks at will if they decide to do so.
  Clearly, under a system of expenditure control, it is for an authority to determine its own priorities and to formulate its capital programmes, and in doing so it could well quite reasonably adopt a system of rolling programmes if it wished to do so. Indeed, we are aware that many authorities already have such a system, which enables them to plan ahead in a sensible and logical way, with sufficient flexibility to cope with unexpected eventualities. Given that the Department no longer manages a building programme, we must rely on local authorities, which are, after all, better placed, to assess their needs and priorities and, within the resources available to them, to establish the best and most efficient way of managing their capital programmes.
  As regards the disposal of surplus assets, it is our policy to encourage local authorities to identify these and, where no alternative educational or community use can be found for them, to sell them wherever possible. Authorities are well aware of the benefits, both educational and financial, to be obtained from seeking to rationalise their educational provision and the removal of surplus places and realising assets found to be surplus. Since 1982–83 we have positively helped in this direction by providing in the prescribed expenditure allocations the capital resources for building work necessary to release surplus schools for closure and disposal.
  There is no doubt that the sale of education assets has been increasing over recent years. In 1980–81 receipts from such sales were £23 million. They rose to around £46 million in each of the years 1981–82 to 1983–84, and, on the basis of local authority returns to the Department of the Environment, are expected to be around £80 million in 1984–85. This increase is in line with the higher number of schools approved for closure by my right hon. Friend in each of the years since 1980.
  898
  The system of capital expenditure control allows authorities to increase the limit of their capital spending in any given year by a proportion of their actual capital receipts. This proportion, prescribed by regulation, is currently 30 per cent. for non-housing receipts, including those realised from the sale of surplus school and other educational buildings and land. It is very much in the interests of authorities to rationalise their school provision at a time of falling school rolls. Such rationalisation schemes result in better deployment of teachers and improved educational provision for the pupils concerned. At the same time, where whole schools or parts of them can be closed, there are valuable savings on recurrent expenditure to be achieved in addition to the capital receipt from the sale of redundant buildings and land.
  The prescribed proportions of capital receipts were reduced for 1985–86 in order to restrict authorities' access to their accumulated receipts. These are estimated to be about £5 billion in total and unrestricted access to them posed a serious threat to the national cash limit for local authority capital expenditure set by the Government. Nevertheless, the more capital receipts an authority can generate in a particular year, the further it can increase its spending power in that year. Furthermore, an authority is under no restriction on the use of its capital receipts for non-prescribed expenditure and for redeeming outstanding loans with benefits in terms of reduced debt charges, which will be a further saving in recurrent expenditure. These are very real advantages which provide a worthwhile incentive to the realisation of surplus assets.
  Turning at last to the question of Brixworth school, I understand that Northamptonshire LEA has indicated that there may be a deficiency of 200 primary school places in the area by 1988–89. I have to tell my hon. Friend that very shortly the Department will be asking LEAs for details of their plans for capital expenditure in the next few years. Provided that Northamptonshire can satisfy us that a capital project is necessary to cater for that additional demand, and that it meets the parameters that I mentioned earlier, I can assure my hon. Friend that it will receive careful consideration. He will realise, and I know that he will appreciate, that I cannot give him any assurances at this stage. What we are able to allocate to individual LEAs will depend upon the amount which is available to us nationally, and this in turn, will depend on what the country can afford.
  I conclude as I began, by congratulating my hon. Friend on firmly placing before the House the interests and needs of his constituents.
  Question put and agreed to.
  Adjourned accordingly at eighteen minutes past Twelve o' clock.

PRIME MINISTER
  Israeli Prime Minister (Visit)
  Israeli Prime Minister (Visit)
  General Belgrano
  General Belgrano
  European Union
  European Union
  Engagements
  Engagements
OVERSEAS DEVELOPMENT
  Ethiopia and Sudan
  Ethiopia and Sudan
HOME DEPARTMENT
  Evidential Breath Testing
  Evidential Breath Testing
  Prisoners (Injuries)
  Prisoners (Injuries)
  Thorp Arch Remand Centre
  Thorp Arch Remand Centre
  Car Tracking Devices
  Car Tracking Devices
  Police National Computer (Vehicle Checks)
  Police National Computer (Vehicle Checks)
  Dog Fights (Leicestershire)
  Dog Fights (Leicestershire)
  Savernake Forest (Police Activity)
  Savernake Forest (Police Activity)
  Immigration
  Immigration
  Scrap Metal Dealers
  Scrap Metal Dealers
  Closed Circuit Television Cameras
  Closed Circuit Television Cameras
TRADE AND INDUSTRY
  Mr. C. Roberts (Speech)
  Mr. C. Roberts (Speech)
  Amaro Ltd.
  Amaro Ltd.
  Limited Companies
  Limited Companies
  Scrap Metal
  Scrap Metal
  Silver Plate (Exports)
  Silver Plate (Exports)
EDUCATION AND SCIENCE
  School Buildings
  School Buildings
  Remuneration of Teachers Act
  Remuneration of Teachers Act
  School Meals
  School Meals
  St. Aidan's School, Bamber Bridge
  St. Aidan's School, Bamber Bridge
  Hay Fever
  Hay Fever
  Higher Education
  Higher Education
  Local Authority Expenditure
  Local Authority Expenditure
  Teachers (Dispute)
  Teachers (Dispute)
  Mathematics
  Mathematics
  National Union of Teachers
  National Union of Teachers
  Science and Mathematics Teachers
  Science and Mathematics Teachers
  Teacher Training (Plymouth)
  Teacher Training (Plymouth)
  School Leaving Age
  School Leaving Age
  Drugs
  Drugs
  Student Grants
  Student Grants
  Open University
  Open University
  Student Maintenance Grant
  Student Maintenance Grant
  Textile Industry
  Textile Industry
  Agricultural and Food Research Council
  Agricultural and Food Research Council
  University Grants Committee
  University Grants Committee
  Special Education Needs
  Special Education Needs
  Education Act 1981
  Education Act 1981
  Foreign Students
  Foreign Students
  Local Authority Education Departments
  Local Authority Education Departments
  Nursery Education
  Nursery Education
  Teachers (Assessment)
  Teachers (Assessment)
  Grammar Schools
  Grammar Schools
  Mandatory Awards Regulations
  Mandatory Awards Regulations
  Teachers (Morale)
  Teachers (Morale)
  Religious Education
  Religious Education
  Pupil Expenditure
  Pupil Expenditure
  Primary School Education
  Primary School Education
  Sixth Forms
  Sixth Forms
  Pupil-teacher Ratios
  Pupil-teacher Ratios
  Casterton Community College
  Casterton Community College
  St. Francis Roman Catholic Primary School, Melton Mowbray
  St. Francis Roman Catholic Primary School, Melton Mowbray
  School Organisation
  School Organisation
  Universities and Polytechnics (Commercial Activities)
  Universities and Polytechnics (Commercial Activities)
  Medical Students
  Medical Students
  Handicapped Children
  Handicapped Children
SCOTLAND
  River Tay
  River Tay
  Forestry Grants
  Forestry Grants
  Mentally Handicapped People (Support)
  Mentally Handicapped People (Support)
  Occupational Therapists
  Occupational Therapists
  Industrial Production
  Industrial Production
HOUSE OF COMMONS
  Stationery
  Stationery
WALES
  Health Advisory Service Report
  Health Advisory Service Report
  Sheep Annual Premium
  Sheep Annual Premium
  Psychiatric Provision
  Psychiatric Provision
ENERGY
  Onshore Licensing
  Onshore Licensing
TRANSPORT
  London Underground (Investment)
  London Underground (Investment)
  Heathrow Airport (Rail Link)
  Heathrow Airport (Rail Link)
  Air Services
  Air Services
  Motorways (Noise Levels)
  Motorways (Noise Levels)
  Vehicle Excise Duty
  Vehicle Excise Duty
  Liverpool Airport
  Liverpool Airport
  Singapore Airlines
  Singapore Airlines
  Trinity House Vessel
  Trinity House Vessel
  Accidents (A17)
  Accidents (A17)
  "Cycles on Trains"
  "Cycles on Trains"
  Local Government Reform
  Local Government Reform
AGRICULTURE, FISHERIES AND FOOD
  Agricultural Prices
  Agricultural Prices
NORTHERN IRELAND
  Dog Licences and Sheep Worrying
  Dog Licences and Sheep Worrying
  Local Enterprise Development Unit
  Local Enterprise Development Unit
  Terrorism (Anglo-Irish Co-operation)
  Terrorism (Anglo-Irish Co-operation)
FOREIGN AND COMMONWEALTH AFFAIRS
  Uganda
  Uganda
  Recognition and Diplomatic Relations
  Recognition and Diplomatic Relations
  Lebanon
  Lebanon
  Mr. George Habash (Press Conference)
  Mr. George Habash (Press Conference)
  Libya
  Libya
NATIONAL FINANCE
  Argentina (International Debts)
  Argentina (International Debts)
  Falkland Islands
  Falkland Islands
  Economic Policy
  Economic Policy
  Drug Detection Staff
  Drug Detection Staff
  Inflation
  Inflation
  EC (Finance)
  EC (Finance)
EMPLOYMENT
  Careers Service
  Careers Service
  Political Fund Ballots
  Political Fund Ballots
  Labour Statistics
  Labour Statistics
  Labour and Social Affairs Council
  Labour and Social Affairs Council
  Enterprise Allowance Scheme
  Enterprise Allowance Scheme
  Training
  Training
ENVIRONMENT
  Anti-fouling Paints
  Anti-fouling Paints
  Swan Deaths
  Swan Deaths
  Lighting (London)
  Lighting (London)
  Urban Aid
  Urban Aid
  Housing Defects
  Housing Defects
  Urban Development Grant
  Urban Development Grant
  Ely Cathedral (Planning Application)
  Ely Cathedral (Planning Application)
  Land (Public Bodies)
  Land (Public Bodies)
  Yorkshire Water Authority
  Yorkshire Water Authority
SOCIAL SERVICES
  Hospital Health Standards (Prosecutions)
  Hospital Health Standards (Prosecutions)
  Community Care
  Community Care
  Kidney Patients
  Kidney Patients
  Pensions (Uprating)
  Pensions (Uprating)
  Cleft Palates
  Cleft Palates
  Housing Benefit
  Housing Benefit
  Water Charges
  Water Charges
  Drug Rehabilitation Centres
  Drug Rehabilitation Centres
  Tranquillisers
  Tranquillisers
  Family Income Supplement
  Family Income Supplement
  Maternity Grant
  Maternity Grant
  Supplementary Benefit
  Supplementary Benefit
  Pensions (Reciprocal Arrangements)
  Pensions (Reciprocal Arrangements)
  One-parent Families
  One-parent Families
  Limited List Prescribing
  Limited List Prescribing
  District Health Authorities
  District Health Authorities
  Patient Treatment (Rugby)
  Patient Treatment (Rugby)
  Social Security Review
  Social Security Review
DEFENCE
  Trident Submarines (Communications)
  Trident Submarines (Communications)
  Policing
  Policing
  Royal Ordnance plc
  Royal Ordnance plc

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

Namibia: Government Policy
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 action they propose to take over the attitude to United Nations Resolution 435 adopted by the South African Government in setting up an interim government in Namibia.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, the new administrative arrangements in Namibia do not alter South Africa's responsibility to bring about internationally recognised independence in accordance with the terms of Security Council Resolution 435. We shall continue to take every opportunity to impress upon the South African Government the need for the early implementation of that resolution.
Lord Hatch of Lusby: My Lords, does the noble Baroness not realise, after the recent raids into Botswana and the raid on Cabinda, that the words of Her Majesty's Government have no effect whatever on South African policy? That is why I am asking what action the Government intend to take. Can she tell us why last week at the Security Council the British Government abstained from voting on the resolution which warned South Africa of the movement towards economic sanctions? Can she tell the House why only yesterday at the special Commonwealth Committee meeting the British Government stood alone against the whole of the rest of the Commonwealth in action, not words, being taken against these invasions by South Africa of international morality?
Baroness Young: The noble Lord, Lord Hatch, has managed to include about seven questions in his one supplementary question. I shall answer his point about the vote in the Security Council on Security Council Resolution 566, from which we abstained because of our reservation on certain elements of the resolution and because we regretted the failure of the Security Council to agree a consensus text. Her Majesty's Government continue to believe that economic sanctions are not the most effective way of securing a Namibian settlement.
Lord Cledwyn of Penrhos: My Lords, I hope the House will allow me, before I ask a supplementary question, to say how delighted we are to see my noble friend Lord Underhill back looking so well after his illness.
Noble Lords: Hear, hear£
Lord Cledwyn of Penrhos: My Lords, we appreciate that the Government rightly condemn the action of the South African Government, and also that the Government support Resolution 435. Can the noble Baroness say whether there have been any direct representations from Her Majesty's Government to the Government of South Africa on their action, which can do nothing but create a more difficult situation in Southern Africa and also create an invidious political situation for other members of the Commonwealth, such as Zambia and Zimbabwe, in that part of the world?
Baroness Young: My Lords, we, too, are very pleased to see the noble Lord, Lord Underhill, back in his place. On the particular point that the noble Lord, Lord Cledwyn, has raised on the South African raid into Gaberones, we acted swiftly. My right honourable and learned friend summoned the South African ambassador immediately on 14th June and made clear the very serious view we took on this indefensible attack. We strongly condemned this blatant violation of Botswana's sovereignty, and we joined our Community partners in the statement by the Ten on 17th June strongly condemning the South African action.
Lord Avebury: My Lords, is the noble Baroness not continuing to confuse action with words? Do not all her answers show that nothing is being done to combat the behaviour of the South Africans except mere remonstrations? Is it not time we moved on from that, as the United Nations Congress is thinking of doing? If the noble Baroness is not prepared to do anything positive whatsoever, will she not at least advise the leaders of business and industry in this country that, whatever the morality of the situation, they are taking tremendous risks with their shareholders' money in continuing to invest funds in the racist regime of South Africa and in Namibia?
Baroness Young: My Lords, I have made plain in your Lordships' House on many occasions what is Her Majesty's Government's view on the effectiveness of economic sanctions. We do not believe that they would be effective in this case, and we continue to think that we can best make our views known and best influence the South African Government by leaving open the channels of diplomatic communication and other lines of communication.
Lord Molloy: My Lords, will the noble Baroness briefly adumbrate the premise upon which the decision has been taken that economic sanctions are not worth bothering with?
Baroness Young: My Lords, we believe that economic sanctions would be counter-productive and would be likely to hurt the blacks in South Africa most and harm the economics of the neighbouring black African states.
Lord Brockway: My Lords, in the Government's view, how long is the present deadlock to go on? Is it not the case that the illegal Government of South

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Africa has now operated for over a decade? If Her Majesty's Government are not prepared to endorse the policy of sanctions, what do they propose to do to bring effective pressure upon the South African Government? Could they not at least limit investments into South Africa, which are maintaining the apartheid system?
Baroness Young: My Lords, I have made plain Her Majesty's Government's view over sanctions. Perhaps I may add that we do not believe that they would be effective in securing the implementation of Security Council Resolution 435, which is the subject of this Question. Indeed, it is much more likely to bring to an end the possibility of negotiating a peaceful and internationally accepted settlement in Namibia.
The Earl of Lauderdale: My Lords, would not my noble friend agree that it may not be altogether helpful if Members of this House dub particular Governments as illegal? Is it not the case that our own constitution goes back to the revolution of 1688?
Baroness Young: My Lords, I note the point that my noble friend makes on this matter. In fact, so far as the interim administration in Namibia is concerned, we do not recognise it and it has no standing under the United Nations plan.
Lord Hatch of Lusby: My Lords, is it not the case that the South African administration in Namibia before the new interim administration was formed was also illegal internationally and has been declared so? The noble Baroness, in answering my first supplementary question, said that the reason that the British Government had abstained at the United Nations was that they did not believe in economic sanctions. Is it not the case that the British Government are now placing themselves in isolation from the rest of the Commonwealth and in isolation from the rest of the Security Council apart from the United States of America? If the British Government do not believe in economic sanctions, what action do they believe in, bearing in mind the fact that words have been used for the past 70 years with results that we can all see today?
Baroness Young: My Lords, we are quite clear what it is that we wish to achieve in Namibia; that is, the implementation of Security Council Resolution 435. The question is, how to achieve it. We do not believe that imposing sanctions will achieve it.

Nuclear Weapons and US Servicemen
2.45 p.m.
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Quesions was as follows:
To ask Her Majesty's Government whether having regard to reports that alcoholism, drug abuse, and mental illness are rife among United States servicemen with access to nuclear weapons, any examination has been made of the incidence of
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such hazards among United States personnel manning nuclear weapons in the United Kingdom
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, our information does not support the allegations to which the noble Lord refers.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that a Congressional report reports it and that that is more important than the opinion of the noble Lord, if I may say so? Is he also aware that the Congressional report was published by the United States of America, who are rather more open in these matters than we are? Will the noble Lord ask the Americans to publish the next report on this subject, as they have previous reports, and in future t break down the figures geographically so that the people of this country can assess the additional risk here?
Lord Trefgarne: No, my Lords, I shall do no such thing. The fact of the matter is that the incidence of abuse to which the noble Lord refers has significantly declined in recent years and there is, of course, no question of anyone in these circumstances having any access to nuclear weapons or any other weapons.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that common observation suggests that there is more alcoholism, drug addiction and mental illness in the ranks of the CND than there is in the armed forces of our loyal American allies?
Lord Trefgarne: My Lords, that is an interesting observation which I cannot verify or otherwise deal with.
Lord Renton: My Lords, is my noble friend aware that Mr. Gorbachev has expressed his deep concern about alcoholism among the Russian people and that there are reports which indicate that this extends, alas, also to members of the Russian forces?
Lord Trefgarne: So I have heard, my Lords.
Lord Grimond: My Lords, will the Minister assure us that, even if the allegations were true, the chances of setting off nuclear weapons by mistake, so to speak, are extremely remote?
Lord Trefgarne: My Lords, the noble Lord is entirely correct in that assumption. The safeguards are very stringent indeed.
Lord Molloy: My Lords, if there is a possibility and that possibility is remote, can the noble Lord tell the House when the remote possibility—which he agrees exists—of a nuclear weapon being fired could arise?
Lord Trefgarne: My Lords, the noble Lord is, of course, asking for information which he is not authorised to receive.
Lord Balfour of Inchyre: My Lords, is it not an abuse of the House that a Question should appear on the Order Paper based entirely on unsupported and substantially unjustified accusations? Is it not an insult

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to our allies upon whom we rely greatly that this kind of Question should appear?
Lord Trefgarne: My Lords, that is a very proper point of view, if I may say so, but I imagine that the questions of the noble Lord, Lord Jenkins of Putney, are well known to our brave allies.
Lord Cledwyn of Penrhos: My Lords, whatever may be one's views about the merits or otherwise of the CND, is it not also an abuse of the House to make the kind of charge that the noble Lord, Lord Boyd-Carpenter, made against a movement which includes members of all political parties and which is viewed with respect for the courage of the views of those people who are represented?
Lord Trefgarne: My Lords, your Lordships probably will not wish me to extend Question Time by responding to that supplementary question.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that, if allegations of the grossest character are made by someone associated with an outside organisation against the gallant forces of our American allies, they must be prepared to take it as well as to give it?
Lord Jenkins of Putney: My Lords, is the Minister aware that the allegations are based on a United States Congressional report? Does he not agree that the indignation expressed by his noble friends is unworthy of them and that they would be better engaged in concerning themselves with the reality of this issue rather than pretending to a false indignation on facts which they do not care to know about?
Lord Trefgarne: My Lords, if the noble Lord will forgive me for saying so, he is quite good at quoting things out of context. The fact of the matter is, as I said earlier, that abuse of this kind has sharply declined in recent years, and I am sure that the noble Lord will be very glad to hear that.
A noble Lord: Next Question!
Lord Leatherland: My Lords, since this question deals with alcohol, will the Minister bear in mind that those of us who stood up to our waists in water on the Somme in 1915 were very thankful indeed when the rum ration came round at 6 a.m.?
Lord Jenkins of Putney: My Lords—
Noble Lords: No!
The Lord President of the Council (Viscount Whitelaw): My Lords, judging from the noises I hear I think it may be that the House will feel that enough has been given and taken on this particular Question to enable us to pass on to the next one.
Lord Jenkins of Putney: My Lords—
Noble Lords: Order, order!
Lord Jenkins of Putney: My Lords, will the Leader of the House be good enough to bear in mind that it would become him to call his noble friends to order?
Viscount Whitelaw: My Lords, I will of course bear everything in mind; it is my duty to do so. But the noises that I heard coming from around the House, and not all from one side, led me to the conclusion that on the whole the House would wish to pass to the next Question.

Lloyd's: Regulation of Activities
2.51 p.m.
Lord Bruce of Donington: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will state their attitude towards the recent disclaimer by Lloyd's of any responsibility for the fraudulent trading practices already reported to the Director of Public Prosecutions and whether they will publish a detailed report on the effectiveness of Sections 83 to 86 of the Insurance Companies Act of 1982 in the years following its introduction.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, responsibility for the regulation of the Lloyd's market is primarily for the Council of Lloyd's by virtue of the Lloyd's Acts 1871–1982. It is thus not for the Government to comment on matters between Lloyd's members and their agents or the Council. The Government have, however, appointed inspectors under Section 165 of the Companies Act 1948 into activities of two groups. My department has also been in touch with the Director of Public Prosecutions in respect of the inspections, and police investigations are in progress. I do not consider that there is any need for a report on Sections 83 to 86 of the Insurance Companies Act.
Lord Bruce of Donington: My Lords, I thank the noble Lord for his most informative reply. Is he not aware that the unresolved scandals of 1932 have still to be attended to? Is it not also clear that the provisions of Sections 83 to 85, the breach of which occasions no offence which enables the noble Lord's department to proceed, are now due for very considerable revision? Also, in order to satisfy very wide sections of members of Lloyd's in London, will the noble Lord please see to it that the relevant documents, and in particular the Price Waterhouse report and the report by Sir Peter Green, are made public? Therefore, instead of being able to judge matters on leaked reports, people will know exactly what is happening in what appears to be a highly privileged institution.
Lord Lucas of Chilworth: My Lords, in response to the noble Lord's first supplementary question, I am afraid that I do not recall, nor do I have a note of, what the noble Lord described as a 1932 scandal.
Lord Bruce of Donington: My Lords, 1982.
Lord Lucas of Chilworth: My Lords, the noble Lord said 1932; but if it is a 1982 scandal then events which are now under investigation will prove whether or not that is in fact a scandal. To turn to the review of Sections 83 to 86, again, until the investigations by my department's inspectors and investigations by the police are completed and have been reviewed, it would be premature for me to suggest or even agree that those sections should be reviewed. In regard to the Price Waterhouse report, it is not yet available although I confirm that my department are in touch with Price Waterhouse and have knowledge of what they have been investigating. However, until all those investigations have been completed by the various agencies, I feel it would be premature of me to give any further judgment.
Lord Bruce of Donington: My Lords, is not the noble Lord aware that the underwriting syndicates concerned for a number of years have been in breach of Section 83 of the 1982 Act? Is he also aware that the auditors of the syndicate were drawn from a list specifically approved by Lloyd's as a precondition for their appointment? Will the noble Lord at least consider the appointment of auditors who are subject not to the authority of Lloyd's but to the authority of his own department?
Lord Lucas of Chilworth: My Lords, no, I could not agree with the latter suggestion of the noble Lord. These matters are for Lloyd's and Lloyd's members and their agents to resolve. It was for exactly that reason that Lloyd's came to Parliament in 1981, asking for additional powers. Parliament gave those powers to them and they became effective at the beginning of 1983. That of course is the consequence of self-regulation. It is for Lloyd's, and I know that Lloyd's are seized of both their responsibilities and their obligations under the powers which were given to them by Parliament in the 1982 Act.
Lord Mowbray and Stourton: My Lords, may I ask my noble friend—and I declare an interest here, as a name at Lloyd's—whether he is fully aware that the chairman, the chief executive and the committee of Lloyd's are going through the most agonising time at this particular juncture? Is he aware that they are doing absolutely everything possible to clear their names and Lloyd's name, because it is the most important underwriting position in this Kingdom? Can the noble Lord confirm that the Government agree that Lloyd's are doing absolutely everything they can, even if they have not gone so far as the noble Lord, Lord Bruce of Donington, would wish?
Lord Lucas of Chilworth: My Lords, I gladly confirm what my noble friend Lord Mowbray and Stourton has said. Lloyd's have implemented a great number of the powers for which they asked in a Private Member's Bill in 1983. They are pursuing even further those remaining powers. It is in the interests of Lloyd's, of the members and of others connected with them to ensure that the conduct of the market is satisfactory in all respects.

Building Society Legislation
2.57 p.m.
Lord Taylor of Blackburn: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they intend to introduce legislation following their Green Paper Building Societies: A New Framework (Cmnd. 9316.).
Lord Brabazon of Tara: My Lords, the economic Secretary to the Treasury announced detailed proposals for new building society legislation in a speech earlier this month to the annual conference of the Building Societies Association. He said he hoped that the legislation would be introduced in Parliament this autumn. Copies of his speech have been placed in the Library of your Lordships' House.
Lord Taylor of Blackburn: My Lords, I thank the noble Lord for his reply to my Question. I am not privileged to attend the annual conference of the Building Societies Association and I look forward to reading the report which is placed in the Library. Perhaps I may ask whether this includes conveyancing and whether the Government intend allowing building societies to introduce conveyancing for their members.
Lord Brabazon of Tara: My Lords, my noble and learned friend the Lord Chancellor has recently reaffirmed the Government's commitment to allow solicitors employed by banks, building societies and other organisations to offer a conveyancing service. The Government are still considering how best to give effect to this.
Lord Stoddart of Swindon: My Lords, I wonder whether the noble Lord can say that in the legislation to be brought forward there will be protection, especially in the matter of unsecured loans, for people who actually want to borrow money. Can the noble Lord also say whether there will be protection for small societies against takeover by large societies? Will he also say whether there will be provisions in the Bill to provide for better democracy within the building society movement?
Lord Brabazon of Tara: My Lords, on the point of the smaller societies, my honourable friend said that he believed that it would be a pity if the existing variety of building societies was lost, and he hoped that the present variety would continue and indeed develop because a diverse movement is a healthy one. On the question of democracy in the building societies, he has outlined more or less as in the Green Paper his proposals for election to the board, etc.
Lord Mishcon: My Lords, in answer to a question directed to him by my noble friend, the noble Lord the Minister talked in terms of Government policy in regard to solicitors and building societies. Would he say quite firmly that the Government will protect the public to see that there is no conflict of interest in that connection?
Lord Brabazon of Tara: My Lords, it is indeed the Government's intention to provide arrangements which avoid subjecting solicitors to a conflict between the interests of their clients and those of their employer.

Business
The Earl of Swinton: My Lords, at a convenient moment after 3.30 this afternoon, my noble friend Lord Glenarthur will, with the leave of the House, repeat a Statement on terrorism which is to be made in another place. He will be followed by my noble friend Lady Trumpington who, again with the leave of the House, will repeat a Statement on Supplementary Benefits Board and Lodging Allowance.
It may also be convenient to the House if I announce that the Committee stage of the Social Security Bill will be adjourned at approximately 7.30 p.m. for a short period and during this adjournment the Third Reading of the Hill Farming Bill, the Report stage of the Local Government (Access to Information) Bill and the Third Reading of the Rating (Revaluation Rebates) (Scotland) Bill will be taken.

Wildlife and Countryside (Amendment) Bill
3.3 p.m.
Read a third time.
Lord Melchett: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass. (Lord Melchett.)
Baroness Nicol: My Lords, I know that the House will forgive me if I rise and keep your Lordships for a very short time simply to say how very glad we are to see this Bill finally on its way. If I may be forgiven for introducing a slightly sour note, I should like to say how much better it would have been if the clauses which were approved at Second Reading in the other place had been allowed to remain in the Bill, especially those on marine reserves, forestry and the duties of agricultural Ministers. The last one, in particular, received wide support from all sides of the House and from outside bodies which are concerned with farming interests. It is very difficult to understand why the Government insisted on removing this particular clause. Public opinion demands it and sooner or later it must come.
During the passage of the Bill there have been many weaknesses exposed in the 1981 Act, and we look to further amendments from the Government in the next Session as part of their programme, instead of having to rely on Private Members' Bills. Finally, perhaps I may congratulate my noble friend Lord Melchett, and my honourable friend Dr. David Clark in another place, on what is a very useful Bill.
Lord Hunt: My Lords, is it acceptable if I rise from these Benches to echo very briefly the words of the noble Baroness, Lady Nicol, in congratulating the author of this Bill, Dr. David Clark, in thanking the noble Lord, Lord Melchett, for introducing it in this
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House and in saying how glad we are that it may shortly reach the statute book. I cannot do better than reinforce what the noble Baroness, Lady Nicol, has said about other most important elements in the matter of protecting the landscape and wildlife which remain outside the Bill. There is an over-riding need of providing very early protection for badgers and of ensuring that the loophole which existed in the protracted process of designation of intended SSSIs should be closed and that they should be protected by law. I would only say that there are other important matters, such as the marine nature reserves. It may be of interest to your Lordships if I say very briefly that I have just come back from spending four days on Scoma. There is no doubting the deep concern of people directly informed about the damage being done on the seabed in that intended nature reserve through dredging for scallops.
It follows that any delay in further tightening the measures to protect the environment, whether it is submarine or on the land surface, can only mean further damage, and therefore there remains important unfinished business. We on these Benches hope very much that there will be support from all sides of your Lordships' House in this strictly nonpolitical area beneath the sea and in the landscape and habitats of wildlife, for pursuing and pressing for further amendments and improvements of the principal Act.
Lord Houghton of Sowerby: My Lords, I wish to detain the House for only a moment or two on this Motion. This is a Private Member's Bill which arrived here on a very choppy sea. I hope that anyone who is now making a study of the Private Member's Bill procedure will have a look at how this Bill came here and at the drawbacks and hazards that it overcame. It is fortuitous that Clause 1 is in this Bill. At an earlier stage I expressed an appreciation of this provision being here and I am grateful to all those who used their endeavours to insert it and keep it in the Bill. However, I want to underline the appeal that I made at that earlier stage of the Bill to the hunting fraternity and to the British Field Sports Society.
The badger is under very heavy pressure all over the country. Not only is there this tragic destruction of badgers which are found to be infected with bovine tuberculosis—and the area of trapping and killing is widening the whole time—but in addition there has been a growing menace to the badger from those who are unaware of the popularity of this animal and the desire of the people to cherish it after many centuries of persecution. People go badger digging and sometimes they take dogs with them to assist. Clause 1 is an attempt to strengthen the existing law against this and it is to be hoped that Clause 1 will bring about the conviction of persons accused of badger digging where, at the present time, the courts are unable to convict through lack of sufficient evidence.
Be that as it may, only experience will show how the clause will produce the results that we want. I want to make this appeal. We are all now trying to safeguard the badger, not only against the extreme danger of the disease of bovine tuberculosis, but also from badger diggers and others who harass the badger. It is the duty of those who go fox-hunting and those in charge of

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foxhounds and hunts to play their part, too. There is a practice in some hunts of stopping up badger setts before the hunt begins in order to prevent foxes taking refuge in them, which I am advised they frequently do. That is called stopping up. Another practice is that if a fox is seen to take refuge in a badger sett, the fox is dug out in order to set it again in the chase, and that is called digging out. If I am misrepresenting what fox-hunters do, I hope that noble Lords who are more familiar with this sport will correct me.
But since it is called a sport, why not be sporting enough to give the fox a reasonable and natural chance of escape? Certainly badgers have suffered through having their setts stopped up, and very often badgers have suffered through being the victims of the digging-out of a fox which has taken refuge there. I do not think it is unreasonable to ask fox-hunters to desist from both of these practices. If a fox can get away, let it get away. I thought this was the idea: that you hunt animals with the chance of escape, and if there is not the chance of escape it is not called hunting and it is not called sport.
In those circumstances I think, since others are being asked to refrain from activities which are harassing the badger in present circumstances, that those who are in the field probably more than anybody, those who claim to be sportsmen in the field more than anybody, should also play their part. I am not myself a fox-hunting man, although I come from fox-hunting country. I have witnessed some parts of foxhunting, but I have never ranted about foxhunting, and that is something about which to commend a Member of your Lordships' House on this subject, because emotions run very high on it. There it is, my Lords, in good temper, in the hope that there will be a response from those who have responsibilities for the conduct of foxhounds, and hunting men and women in the field. Give the badger a chance.
Lord Skelmersdale: My Lords, for the second time in 24 hours I have to say quite genuinely that six months ago I never thought that this day would ever come. That it has is due to the combined efforts of many people—too many for me to mention by name. Through the difficult medium of a Private Member's Bill we will have on the statute book an Act of Parliament that strengthens the Wildlife and Countryside Act. I would say to the noble Baroness, Lady Nicol, that, had it been a Government Bill, it is my own personal view that it would inevitably have ended up as a very different animal.
This strengthening is done in two very important ways. The first, and originally the only, gap that this Bill plugs is the so-called three months' loophole. As from Royal Assent, even though there will still be a three-months' period for objection after a site has been notified as a SSSI, the protection for the site will run from the date of notification and not the end of the three-months' period allowed for objections to be made and considered.
The second important thing that this Bill does is to shift the burden of proof on to a person accused of molesting badgers to show that he was not, as opposed to the situation in the Badgers Act where the onus of proof is on the prosecutor. The Bill does two other
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things which in their own way are equally important: namely it extends the range of topographical features which have to be mapped in national parks, and gives the Forestry Commission a duty to try to achieve a reasonable balance between the interests of forestry and conservation.
The House will know that this Bill could have covered more subjects by this last stage in its parliamentary timetable—perhaps even would have. Many of them were discussed in Committee and I shall not go into them now. Moreover, due to the traumas inherent in the Private Bill procedure in another place, your Lordships were asked to do something completely unheard of in countryside matters in recent years; namely, to have a self-denying ordinance and to appreciate that in this unusual case the best really was the enemy of the good.
Nonetheless, the Government are most grateful to the House for the very thorough way in which it has examined the whole Bill and the reasons underlying it. Getting this Bill on to the statute book brings great credit not only to the promoters of the Bill but also to all the interests in the countryside and their continuing diplomacy. It therefore only remains for me, on behalf of the Government, to wish this Bill all blessings and beatitudes.
Lord Melchett: My Lords, first may I thank those noble Lords who mentioned by honourable friend, Dr. David Clarke, who promoted the Bill in another place, and on whom almost the entire burden of work—and it has been an enormous amount of work—has fallen as a result of the Bill going through Parliament. He certainly deserves the thanks that have been given to him. I should also like to thank the interests which came together to provide the initial suggestions for the contents of the Bill and some of the drafting help, particularly the voluntary wildlife, animal welfare and landscape conservation bodies, the National Farmers' Union and the Country Landowners' Association, all of whom played a big part in helping my honourable friend to introduce the Bill and to get it now to this stage and on the statute book.
I should also like to thank the Government for the drafting help that they gave for the clauses that are still in the Bill, but to echo my noble friends comments of deep regret that two of the most important clauses were deleted by the Government as part of that redrafting exercise. I am sure, as other noble Lords have said, that those two clauses raise issues to which we shall inevitably return in the very near future, and quite rightly so.
Finally, perhaps I may issue my own plea to the Government—and I am delighted to see the noble Lord, Lord Belstead, sitting on the Front Bench listening, because I think it is to his department that this plea is mainly directed—that in two months' time when the Bill will come into force, assuming that it gets Royal Assent in the near future (as I hope it will), the Government will make every possible effort to give maximum publicity in particular to the new laws contained in Clauses 1 and 2, which will have a major impact on farmers and landowners. I think it is only right that they should be given as much information as possible about the change in the law. Having said that,

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I hope that the Bill can now proceed to be an Act as quickly as possible.
On Question, Bill passed.

Social Security Bill
3.18 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): 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 Trumpington.).
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Short service benefit for members whose employment is terminated before age of 26]:
On Question, Whether Clause 1 shall stand part of the Bill?
Baroness Jeger: I rise only briefly to point out some difficulties. I understand from the Explanatory and Financial Memorandum that Clause 1 amends Schedule 16 to the Social Security Act 1973 so as to remove the age limit of 26 under which an occupational pension scheme need not preserve a member's accrued rights. This is something that we welcome, but it seems to us to mean that any early leaver with five years' qualifying service will be entitled to preserved benefits, while any young person with less than five years' accrued benefits will not be entitled.
I want to ask the Minister why the age of 26 has been chosen. Why should persons under the age of 26 not have any option of preserved benefits? Should people with less than five years' qualifying service not be entitled to some sort of benefit? Why not make it three years? It is a truth of the present situation that people may, sadly, be made redundant after only a few years; certainly, after less than five years. There cannot be many young people in this country who have a continuous employment record of five years. We want to encourage job mobility, we want to encourage promotion and we want to see people moving from job to job and from area to area. I can see one Minister nodding, but I am wondering whether in changing jobs these people will endanger their rights under Clause 1 of this Bill.
This is particularly important, because the Government's objective is to move the maximum number of people into private schemes. Are they going to recommend to private pension funds that these young people should not sustain rights if they have been employed under one fund for less than five years? This could be a trap for people changing jobs and it could be a very important element in the decision of young people whether to change their jobs and try to improve themselves by getting more interesting and more useful work. They may be just finding their feet.
It applies particularly to young women who may contribute for a year or two and then be away, perhaps
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having a baby. I feel that the five-year rule might be a disadvantage for them. In fact, the contributions which workers make are really a part of deferred income. It is their money which goes into these funds. On Clause 1 I must ask the noble Baroness whether there is any chance of the five-year qualifying period being looked at again, because five years in the life of a young worker is quite a long time.
Baroness Trumpington: Following comments made in another place we consulted the main pensions interests about the effect of reducing the five-year qualifying period, but we decided that we should not make any change in the Bill. Any change would increase the administrative costs of schemes which would have to provide a greater number of comparatively small pensions. What it means is that when the provision comes into force schemes will have to preserve benefits for anyone with five years' service, irrespective of their age. This is a small but I believe a worthwhile change. If the qualifying period was reduced to three years the number of preserved pensions would increase by something like a quarter. Removing the qualifying period altogether could double the number of preserved pensions.
Clause 1 agreed to.
Clause 2 agreed to.
Clause 3 [Information about schemes]:
On Question, Whether Clause 3 shall stand part of the Bill?
Lord Mottistone: At Second Reading my noble friend the Minister declared both in her opening and in her closing speech that the Government were open-minded about the need for a register such as would be set up under Schedule 2, for which this is the paving clause. I am questioning whether, having heard what was said on Second Reading and any other points that may have been brought to their notice, the Government have considered whether there really is a need for this register and registrar. Having read the Social Security Pensions Act 1975, it seems to me that if there is a need for some sort of supervisory body of the nature of the registrar, the Occupational Pensions Board may have its activities slightly increased. But to go into the whole business of setting up what Schedule 2 proposes seems to me to be a rather cumbersome and unnecessary job. If the Government do not respond to this point I have tabled amendments which I hope we shall discuss separately later when we come to them, but not now. My real point is that we should get rid of this altogether and I hope that the Government, when they say they are open-minded, are open-minded enough to do just that.
Lord Kilmarnock: I recall the reference of the noble Lord, Lord Mottistone, to this clause on Second Reading—
Baroness Trumpington: Perhaps I may ask the noble Lord to speak up, because it is terribly hard to hear him.
Lord Kilmarnock: I am sorry. There are not many microphones around here in this gap.

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I recall the speech of the noble Lord, Lord Mottistone, at Second Reading in which he opposed this clause and said that he would raise the matter again in Committee. I disagreed with him at that time. He has now put forward the suggestion that responsibilities of this kind might be undertaken by the Occupational Pensions Board. Whoever is responsible, it seems to me that it is desirable to have a register of this kind. The reasons are quite simple. The Government's acknowledged aim is to shift the balance of provision of income in retirement towards the private sector. If this comes about a great deal of personal wealth will be tied up in these schemes.
In fact, in Chapter 1.47 of the Green Paper the Government say themselves:
"For many people this will become the biggest single asset that they own—worth more even than their own home".
It is therefore surely right that there should be some method of policing or overseeing these schemes, as indeed there is for the Stock Exchange, for banking, for insurance and for many other activities of this type. The Green Paper also says—we cannot debate this Bill without also looking at the Green Paper because they overlap at several points—at Chapter 1.45 that:
"Under the new arrangements, employers and employees will be required to contribute to an occupational or personal pension".
There is also to be an option to prefer the personal pension to the employers' scheme. It therefore seems likely that many new schemes will flourish.
My belief is that the register should be brought into existence, though I agree we could discuss under whose control it should be. If the scheme is brought into existence, will it also become responsible for the registering of the personal pension schemes which the Government are advocating in the Green Paper? Will they have to declare themselves also in the register which is proposed under the Bill? It is also worth pointing out that in the Green Paper the Government suggest that a wide range of institutions should be allowed to offer pension savings schemes and so we shall have all kinds of new schemes coming into the arena. In Chapter 1.58 of the Green Paper the Government refer to the necessity for safeguards. On all those grounds, in principle it seems to me that there should be a register. I should like to hear from the noble Baroness what schemes the Government think should appear in it.
Lord Boyd-Carpenter: I should like briefly to support my noble friend Lord Mottistone in his suggestion that the idea of a register of private pension schemes should be dropped. I do so for two reasons. First, as I said on Second Reading, there is a danger from this Bill generally that the increased intervention by the state in connection with the operation of the private schemes may well have the effect of discouraging either their introduction or their expansion. All the machinery of a register, though it may not weigh very heavily in the decisions that have to be made, may add a little to that discouragement. If your Lordships look at Schedule 2, you will see the length and complexity of the provisions required for this register. I think your Lordships will feel that if we can avoid it, we ought to, because a system as complex as
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this will need quite a substantial staff and will add to the expenses of my noble friend's department.
With my noble friend Lord Mottistone I hope that open-mindedness which my noble friend the Minister displayed on Second Reading will now blossom out into an acceptance of the idea of dropping this register altogether.
Lord Davies of Leek: Perhaps I may ask the noble Lord, whose opinions I respect because of a position he held previously in this department, where he was noted for the work he did, what protection there is in this "bucket shop approach", if I may use that loose phrase, if we do not have some kind of control of information.
Lord Boyd-Carpenter: Perhaps I may respond to the noble Lord's perfectly proper question. If he will study the clause and still more the schedule, he will see that there is no protection there against a "bucket shop" pension scheme. I share the noble Lord's apprehension about such schemes. They have been known to exist, and they do a lot of harm and cause much social misery. But I do not believe that there would he any protection in the registry such as would justify its coming into being to prevent such schemes.
3.30 p.m.
Lord Swann: Unlike the noble Lord, Lord Mottistone, I do not want to oppose the Question that Clause 3 stand part, but I have one reservation about the clause. First, I welcome very much indeed the proposal that scheme members and their dependants can now find out all about their company schemes. Regrettably, there are still some companies loath to provide such information. As chairman of the Company Pensions Information Centre, again I warmly welcome the raising of the level of awareness about how pension schemes work, the benefits they provide, and their cost.
Although I welcome the aim of the register, I have two worries about it. One is its cost, and the other is the likely demand for it. We have been told that the cost will be that of up to 100 staff; I suppose this must mean more than £1 million a year. By the time there is added the cost of premises and all the rest of it, I suppose the figure will be nearer £2 million a year. That is to be shared between search fees and the trustees and managers.
What is likely to be the demand? Do the Government know, or have they tried to find out? Individuals will of course now be able to find out all they want to know about their own scheme from their own employer. A few individuals may want to know about other schemes if they are thinking of changing jobs, or for other reasons, and no doubt a few professionals will want to browse through the data. Also, a few keen-nosed journalists may want to study the information from time to time. But I wonder how many inquiries the registry will receive.
I should have thought that the number is unlikely to reach 100 per day, which would be 25,000 inquiries a year. A fee of £ 10 a search would represent income of about 10 per cent. of the total cost. If the number of inquiries is more like 10 per day, which is the figure I guess it will be, one will be talking about meeting 1 per

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cent. of the cost. So the bulk of the financial burden will undoubtedly fall on the trustees and managers.
I may be wrong, but I have to say, as an ex-chairman of the BBC, that it does rather sound to me as though Jim Hacker and Sir Humphrey Appleby of "Yes, Minister" fame have been transferred to the DHSS and had a hand in drafting the schedule. So unless the Government have real reasons for supposing that the demand will be far greater than I expect, would they not be well advised to consider cheaper and simpler solutions, if they can be found? Let me say once again, however, that I am in full agreement with the aim of the registry.
Lord Banks: I should like to enter a plea that the registry should be a tracing registry and not a registry of documents, or that, if there is to be a registry of documents, it should be at the joint office of the Inland Revenue Superannuation Fund and the Occupational Pensions Board. I suggest that they should become the registrar, if a registry of documents is felt to be essential.
A pensions consultant of my acquaintance, in order to obtain approval of a United Kingdom scheme in the Republic of Ireland, had to send 24 copy documents to Dublin. The same consultant recently acquired a new client with an existing scheme established in 1971. When the consultant received the documents involved, he found that there were 32 of them. There are many schemes established in the 1950s and before the war which have even more documents. Even when the deed and the rules are completely replaced, all the earlier documents must be kept in order to ascertain whether the power was there to make the alterations contained in the replacement document.
Collating, copying and posting documents to the registrar, to establish the registry, would be an administrative burden, particularly on smaller employers. But the joint office of the Inland Revenue Superannuation Fund and the Occupational Pensions Board already has copies of all approved pension scheme trust documents. That is why I suggest that if a registry is considered necessary, the joint office can accommodate such a registry. That body is of course carrying out the supervisory work which my noble friend Lord Kilmarnock very rightly says is essential now and will be even more essential in the future.
A simple tracing registry would be very useful. It would help a person who left a company pension scheme 30 years ago, and who is now approaching retirement, to trace his scheme despite changes in company names, company takeovers and mergers, changes in scheme names, and amalgamations.
Baroness Trumpington: I believe that the noble Lord, Lord Swann, is just old enough to know what I mean when I say that I feel, in his "Yes, Minister" syndrome, just like Mrs. Mopp: can I do you now? As my noble friend Lord Mottistone said, Clause 3 introduces Schedule 2. It deals with disclosure of information and the pension scheme registry. Scheme members will be given basic rights to receive information about their scheme and the Secretary of State will have the power to set up a registry of occupational pension schemes. This is the second area covered by our occupational pension scheme reforms.
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I hope that there is no argument between us about the desirability of giving members access to information about their schemes. After all, a pension can be the biggest single asset they will ever have. We believe it is essential that people should have sufficient information available to be able to safeguard their assets.
To dispense with the clause would, if I may say so, be to throw out the baby with the bath water. The principles of greater disclosure of information to pension scheme members have, as the noble Lord, Lord Swann, indicated, received widespread support in both this House and another place. For some time there has existed broad agreement that members of pension schemes should have the right to basic information about the schemes to which they belong. Indeed, our proposals go no further than formalising what is already good practice in many well-run schemes. In general, any reservations expressed have been about the need for and purpose of a public registry of information. As I have already indicated the Government have undertaken to look further at this issue.
It would indeed be unfortunate if concern about a registry were to undermine the general principle of disclosure of information which has been so widely accepted. The provisions as set out would permit the Occupational Pensions Board to run any registry in whatever form, if the Secretary of State so decides.
Returning to the question of cost, and in answer to the noble Lord, Lord Swann, we are evaluating costs at this moment. The noble Lord, Lord Kilmarnock, will remember that the proposals in the Green Paper are for consultation only at this time. I hope that I have answered the fears expressed by my noble friends Lord Mottistone and Lord Boyd-Carpenter.
Lord Mottistone: I am not sure that my noble friend has fully satisfied me; I do not know about my noble friend Lord Boyd-Carpenter. I hope that when my noble friend considers this little debate she will pay particular care to what was said by my noble friend Lord Boyd-Carpenter when he warned the Government, particularly this Government, not to have yet another bureaucratic system which, basically, they are against having, not to set up an expensive new outfit which is not perhaps wholly necessary.
My noble friend the Minister made it clear, I believe, that there is no need for a separate registry and a separate registrar, and that this function could be given as a duty to, for example, the Occupational Pensions Board. If that were so, it may be that we do not need Schedule 2 with, as my noble friend Lord Boyd-Carpenter observed, all its highly complicated bureaucratic nonsense, but we could have instead some simple instructions to the Occupational Pensions Board to meet the need to ensure that the right people have access to the right pension funds. That is all that is necessary. Nobody would quarrel with the fact that the people who are subject to pensions should have full access to any pensions funds which are going to affect them; but Schedule 2 is not needed to make that happen.
Perhaps the Government could be more true to their last in their basic principles if they were to have a big movement towards sweeping away Schedule 2 and

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putting in a few phrases to give an extra job to the Occupational Pensions Board. However, I shall not pursue this matter any further now.
Clause 3 agreed to.
The Earl of Caithness: My Lords, I think this is an opportune moment to take the Statement. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Terrorism
3.41 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, with the leave of the House, I shall now repeat a Statement on terrorism which is now being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"As the House will know from the statement issued by the police yesterday, on 22nd June five people were arrested in Glasgow by the Strathclyde Police and detained under the Prevention of Terrorism Act. My right honourable friend the Secretary of State for Scotland has approved the extension of their detention for five days for further questioning. Since then the police have arrested and detained under the Act a further 16 people. Those detained are being questioned in connection with a number of offences, including the bombing of the Grand Hotel at Brighton.
"As a result of information obtained following the arrests made on 22nd June, the police were able to discover and disarm a bomb set for detonation on a long-term timer in a room at the Rubens Hotel, Buckingham Palace Road. The investigation, the discovery of the bomb and its disarming are outstandingly successful demonstrations of the professionalism, courage and determination of the police in the battle against terrorism which they are fighting on behalf of us all. I congratulate warmly all the forces concerned.
"The House will also be aware, however, that the bomb discovered at the Rubens Hotel was intended to form part of a wider operation involving the planting of bombs in a number of towns: Blackpool, Bournemouth, Brighton, Dover, Eastbourne, Folkestone, Great Yarmouth, Margate, Ramsgate, Southampton, Southend and Torquay. The bombs were to be timed to explode at intervals from mid-July, at the height of the holiday season, and the attacks would have been quite indiscriminate in their victims. But as last night's statement indicated, the police have reason to believe that the only device so far placed was the one discovered in the Rubens Hotel, and that the preparations of the IRA have been interrupted at an early stage.
"Nonetheless, the police must take account of what they regard as the slight possibility that it was not only in the Rubens Hotel that a bomb had been placed. Accordingly they are urgently pursuing co-
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ordinated inquiries and searches on a basis agreed between all the chief officers of police concerned. This will involve conducting searches in the places identified as intended targets just as vigorously as if there were positive reasons for believing that bombs had been put in place there.
"The police service therefore now faces one of the largest preventive operations it has ever mounted. I have decided to ask the Commissioner of Police of the Metropolis, Sir Kenneth Newman, to undertake personally the co-ordination of this operation. The commissioner's task is not to take over the local operational responsibilities of chief officers, but to provide a co-ordination centre and clearing house, in which individual forces may be represented, for the conduct of this operation. For this purpose, the forces principally involved will be invited to second appropriate officers temporarily to assist the commissioner in this task. He will in this way be able to ensure that information derived from related inquiries in any police force area is made available to others who may need to act upon it or refer to it. And these arrangements will enable the public and the press to be kept properly informed, particularly in relation to any ways in which they can help.
"But the local Members of Parliament may also have an important role to play. For this reason the commissioner, in consultations with the chief constables for the relevant areas, will be arranging a briefing tomorrow for Members of Parliament for the constituencies identified as possible targets. The purpose will be to explain the background and the police assessment as fully as practicable and to discuss ways in which the Members and the public can best help the police.
"The House will appreciate the limitations on what can be said at this stage in the inquiries about the considerable amount of information which has so far been discovered. This has already resulted in a major terrorist outrage being thwarted. Every possible effort is now being made to prevent any further risk to the public and to bring to justice those who have been planning the cold-blooded and indiscriminate murder and maiming of totally innocent people."
My Lords, that concludes the Statement.
Lord Mishcon: My Lords, I am sure that all parts of the House will be united upon three matters. The first is on the congratulations to the police forces who have been instrumental in making these discoveries and effecting certain arrests. About that there is no doubt and all of us will want to express our gratitude to them. The second point upon which I am sure all the House will be united is a further declaration which goes forth very clearly from these Benches and all Benches in Parliament that terrorism and hijacking are not going to be allowed to pay. The third matter is that, with a full sense of responsibility, one does not ask questions which go beyond reasonable probing and which in any way would interfere with the security of our people.
Having said that, there are some questions which I should like to put to the noble Lord, the Minister, whom I thank for having repeated the Statement in this House. I ask the first question with every respect and only in order to try to help if there are future

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Statements of this kind. Possibly the Minister can tell me, by an answer to my question, that I have no need to complain or express apprehensions. I ask the Minister why so much publicity has been given, including in this Statement, to the 12 resorts which it is discovered were subject to threat. It is the beginning of the holiday season for the people who keep hotels, boarding houses and apartments in these resorts and people have obviously made their arrangements to go there. I noted that in this morning's Daily Telegraph Commander Simon Crawshaw, who is head of the anti-terrorist branch, was asked if he would give these resorts the all-clear. His answer was:
"There is no question of giving the all-clear. I am certain the public need not have any fear in these resorts."
If they have no reason for fear and everybody is to be encouraged to go to the resorts, why have the resorts been named? It does not seem to be doing any good and it can conceivably do some harm.
My next question to the Minister is this. I also noticed in the press that there was an announcement—presumably somewhere, or at least a discovery somewhere—that there is a new liaison arrangement which was set up after that regrettable Brighton bombing, whereby there would be a Royal Ulster Constabulary presence at Scotland Yard to maintain a contact with the anti-terrorist squad. If after and out of that terrible tragedy that liaison has resulted, at least some of us would feel just one little bit of consolation. Is it true, and is there the liaison with the RUC that all of us would want to see?
My last question is this. Is there that association and co-operation with the hotels association and all other bodies, including those which may be associated with small establishments and not large ones, in order to ensure that there is that series of safeguards which all of us would want to see, especially at this time when presumably we are in the midst of these threats?
Lord Wigoder: My Lords, I would not want to ask any questions arising out of this Statement because the questions which I would seek to ask are those which I know perfectly well it would be quite inappropriate for the Government to attempt to answer at this stage. I shall therefore, if I may, make only three brief comments.
First, as to the disclosure of the names of the towns to which the noble Lord, Lord Mishcon, referred, it seems to me that the police were in a quite impossible dilemma. If they disclosed the names of the towns, they were liable to be criticised on the basis on which the noble Lord criticised them. If they did not and there was by any chance, however remote the possibility, an explosion in one of those towns, they would in due course be heavily criticised for not having alerted the public to that remote possibility.
Secondly, I note that the people who have been detained have had their detention extended for a period of five days for further questioning. I think it may be that few Members of your Lordships' House would query that decision by the Secretary of State. Perhaps it adds force to those of us who supported that power of extended detention when the Prevention of Terrorism Act was passed through your Lordships' House not very long ago.
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Finally, may I say this? The planting of bombs with time fuses of this type is an act of the most despicable cowardice. It requires no courage, no skill, no ability and no bravery; it requires nothing except a lust to kill. What has always astonished me over the past few years when such offences have been committed has been the extraordinary success of the police in bringing to justice such a high proportion of the people who commit the offences. It reflects very, very highly on the skill and determination of the police force, and that skill and determination are obviously being repeated at the moment. I know that the whole House will want to join in the congratulations being extended to the police on their actions.
Lord Glenarthur: My Lords, I am most grateful to both noble Lords for their remarks and their kind references to the police. I entirely share, as I know does the whole House, the views which they have expressed, and I shall ensure that they are passed to the police.
The noble Lord, Lord Mishcon, asked why the resorts should be named. The answer really was, I think, given by the noble Lord, Lord Wigoder. I can understand that there are those who would question the wisdom of stating that there was a slight possibility that those towns might have been targeted, but equally there are no doubt those who would accuse the police of irresponsibility if they did not share the information that they had. It is not always easy to judge in these cases. If there was an error, it was an error in favour of disclosure. But I think that the noble Lord, Lord Wigoder, gave the answer for which the noble Lord. Lord Mishcon, was searching.
So far as a RUC presence in New Scotland Yard is concerned, what I can assure the noble Lord about is that there is indeed the closest co-operation between the RUC and New Scotland Yard on these matters, which are of course of such importance.
The noble Lord asked about hoteliers. Like members of the public, they should be on the alert for suspicious objects, individuals and incidents, but they should not institute searches of their establishments without advice from the police. I think that the best way that that can be taken forward is in the light of what I repeated in the Statement about the commissioner's responsibility in now bringing together all these forces to provide the clearing point for all the information that comes forward.
The noble Lord, Lord Wigoder, did not ask me any questions, but I note the points that he made, particularly about the extension of the Prevention of Terrorism Act. I think that that Act is serving us well.
Lord O'Neill of the Maine: My Lords, I thank the noble Lord for the excellent Statement, and I should like to ask him a question. Might this not be a good moment to have a review of security arrangements in the Palace of Westminster? Perhaps because I come from an area where these things are most important I have sometimes noticed a certain lack. It is a very difficult question. I have discussed it with Black Rod. But perhaps the Minister or his right honourable friend could consider the possibility of having a review of security as it exists in the Palace of Westminster today?
Lord Glenarthur: My Lords, the matter of the security of the Palace of Westminster is under continuing review.
Lord Renton: My Lords, I join in the tributes paid to the police. In view of the increasing scale and sophistication of terrorist attacks, may I ask my noble friend whether he will confirm that they are considered to come within the all-hazards approach for dealing with emergencies in peace and war, about which the Government made such a welcome Statement last week?
Lord Glenarthur: My Lords, the matters with which we are concerned here are primarily for the police in their pursuit of terrorists. They are difficult and sensitive matters. I am well aware of my noble friend's interest in the all-hazards approach. Whether it is entirely appropriate in this instance I think is more a matter for the police to judge. I think that in this case it is best left to the police.
Viscount Hanworth: My Lords, does the noble Lord agree that perhaps a very important reason why the places should be named is that if there is to be an investigation into the hotels and boarding houses, as he said there will be, unless people know what is happening and know that other places are involved, and unless there is a free statement of the whole position, absolute panic will be created? To my mind the situation could have been absolutely disastrous had the Statement not been made.
Lord Glenarthur: My Lords, I am grateful to the noble Viscount for his comments.
Lord Fitt: My Lords, can the noble Lord say whether prior to the arrests any approach had been made to the Government or the security forces of the Irish Republic, and whether there had been cooperation from those forces?
Lord Glenarthur: My Lords, what I can tell the noble Lord is that the arrests followed receipt of information. I cannot tell him whether the Government of the republic were involved.

Social Security Bill
3.58 p.m.
House again in Committee.
Clauses 4, 5 and 6 agreed to.
Clause 7 [Calculation of contributions]:
Lord Banks Lord Banks moved Amendment No. 1:
Page 4, line 7, after ("week") insert ("less the first £10.00")
The noble Lord said: In moving Amendment No. 1, with the leave of the Committee, I should like to speak also to Amendments Nos. 2, 3 and 4.
Amendment No. 2: Page 4, line 7, leave out from ("question") to end of line 10.
Amendment No. 3: Page 4, leave out lines 11 to 23.
Amendment No. 4: Page 4, line 29, leave out from beginning to end of line 3 on page 5.
The Bill reduces the national insurance contributions from employer and employed for the lower paid. The reductions are to be paid for, at least in part, by abolishing the ceiling on employers' though not employees' contribututions. There are three steps in the new graded scale as it affects employees. For example, for contracted-in employees, for those earning between £33.50 and £55 the employee's contributions is 5 per cent. at £55 to £90 it is 7 per cent. and at £90 or more it is 9 per cent. The scale for employers is the same, except that for those earning over £130 the rate is 10.45 per cent.
The aim of this is to reduce the burden of the lowest paid and to reduce the cost of employing the lower paid. Both aims are unexceptionable. However, the new system substitutes a number of smaller poverty traps, at £35·50, £55 and £90, instead of the one big poverty trap. It is inevitably more complicated to operate and there is also the danger of employees being trapped in bands just below the limits, in order to avoid higher contributions having to be paid.
These amendments would be simpler. Instead of the graded scales which I have described, they would simply exclude the first £10 of earnings from national insurance contributions. I believe that it would cost about the same as the Government's proposed reforms. It would of course bring some relief to all employees. It would bring rather less to the lowest paid, although, even there, their reductions would be a higher proportion of their earnings than was the case for higher earners. The same would apply to the employers' contributions.
Amendment No. 2 would abolish the upper limit for employees' contributions. In the Bill this has already been abolished for employers' contributions. Now that it is proposed to phase out the earnings-related pension, the argument for retaining the upper limit for employees' contributions is greatly weakened. It seems absurd that national insurance contributions should form an increasingly smaller percentage of proportion of earnings as earnings rise above £265 per week. Removing the upper limits could well allow a reduction in the percentage rate and that would be accomplished at the same time as a fairer system was established so far as employees are concerned. I beg to move.
Baroness Jeger: I shall delay the Committee only long enough to say that we support the amendments which have been spoken to by the noble Lord, Lord Banks.
Lord Mottistone: This is not quite clear to me and perhaps the noble Lord, Lord Banks, can explain it. It seems to me that his Amendment No. 4 will sweep away the employer's contribution altogether. Alternatively, does that mean that it stays as it is now, with no change at all?
Lord Banks: It stays as it is in the Bill with no further change.
Lord Mottistone: But is the noble Lord not taking away from page 4, line 29, new subsections (6D), (6E) and 6F)? Does not that sweep away what the Bill is proposing, or am I being very dull?
Lord Banks: I do not think it does. However, I shall consider what the noble Lord has said and perhaps return to it.
The Minister Without Portfolio (Lord Young of Graffham): It is with a mixture of pleasure and trepidation that I rise to assist my noble friend: pleasure because this is my debut in this Chamber in matters concerning social security and trepidation because I find myself answering such an acknowledged expert in these matters as the noble Lord, Lord Banks. But I am glad to be able to do so because, even though a Minister Without Portfolio, as your Lordships well know, I have a very particular interest in the encouragement of employment. I believe that the changes in the national insurance contributions which my right honourable friend the Chancellor proposed in his Budget, and which this Bill seeks to put into effect, are a bold and imaginative step to encourage employment at the lower end of the wage scale, particularly among that vitally important group: young people looking for their first job. I am too old a hand to hazard predictions of my own, but I notice that among the experts in this field the London Business School has suggested that there will be some 150,000 extra jobs as a result of these changes, and some have made even higher predictions.
Although not an old hand when it comes to national insurance, except perhaps as a contributor, I have already learned that it is a technical and highly complex matter. In such matters bold steps may be amply justified by the helpful changes they introduce for a wide majority, and in this case the assistance given to the lower paid and to their employers has been widely welcomed. However, in a complex field there may be inescapable repercussions for others, and I understand that the noble Lord's amendments are in part addressed to these.
From the noble Lord's remarks at Second Reading, I understand that these amendments also reflect his interest in the integration of income tax and national insurance contributions. The Chancellor has already said that this will be one of those areas explored by the forthcoming Green Paper on personal taxation, and I shall not allow the noble Lord to tempt me into that particular thicket. Instead, I shall consider his amendments on their merits within the existing system. I shall argue that they are unacceptable drawbacks to the action he proposes and that in any case he has exaggerated the problems.
Let us first take the supposed problems. The third amendment in this group of four would remove the structure of graduated rates which we have proposed for employees' contributions, and the fourth amendment would do the same thing in respect of employers' contributions. The noble Lord argues that this is necessary because the transition from one graduated rate to the one above creates a series of earnings traps. It is true that the transition is not a smooth one. However, at each new cliff edge the increase in gross pay needed to overcome the increased contribution liability and thus produce an increase in net pay is far smaller than that which currently exists at the lower earnings limit.
These cliff edges are of course reflected in both the employee's and the employer's liability to pay
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contributions. Taking both together, the present cliff edge at the LEL is formidable. It costs an employer £8.58 to give an employee earning £34.50 a £1 increase in take-home pay. Under the proposed new system, and taking account of income tax, it will cost only £4.70 to give that same employee the £1 net increase. By comparison with the existing cliff edge at the LEL, the new steps at £55 per week and £90 per week are much smoother. It will cost an employer a total of £4.61 to give an employee earning £54 gross a week a £1 increase in take-home pay, and £6.75 a week to give the same increase to an employee on £89 gross a week. At that level a 5 per cent. pay increase is more than enough to leave the employee better off.
Nor should we lose sight of the fact that, whatever the transitional effects between the different earning brackets, all those employees within the scope of those reduced rates will take home more in absolute terms than they do at present, and their employers' costs are reduced. Eight-and-a-half million lower-paid earners will be better off.
What is it that the noble Lord proposes to put in place of these desirable changes? The first of his four amendments exempts £10 of weekly earnings from contributions. I shall not dwell on the drafting technicalities, but I assume that he intends that all employees whose earnings exceed the LEL, £35.50 per week, should pay contributions on £10 less of earnings than they do at present. Because of his third and fourth amendments, employees will, however, pay at the current standard rate of 9 per cent. and employers at the current standard rate of 10.45 per cent. Despite this exemption of £10, for employees only, there will still be a hefty cliff edge at £35.50. It would cost employers £7.49 to give an employee at £34.50 a week a net increase of £1 a week.
The noble Lord's proposals also mean that low-paid employees will be considerably worse off than under the Government's proposals. For example, someone earning £40 a week will pay just £2 under the Government's proposed graduated scales, but, under the noble Lord's proposals, £2.70, over one-third more. This amounts to an attack on the lowest paid of the working population. The reductions in employee liability are not concentrated on the low paid as in the present draft of Clause 7. The noble Lord's proposal provides increases throughout the wage scale and this gives assistance to some who do not need it quite so much.
The noble Lord's amendments also do little for employers. He proposes nothing to compensate them for the loss of the structure of reduced rates for their contributions. At a stroke he would add some £880 million to employers' costs in a full year, which will not help the creation of jobs one whit. The main aim of the Government's proposals for graduated rates of national insurance contributions is to improve the employment prospects of the low paid and particularly of young people seeking their first job.
I turn finally to the second of the noble Lord's amendments. I have to acknowledge that at the upper earnings limit there is a savage end to his largesse. He proposes that the upper earnings limit should be abolished for employees just as we have abolished it for employers' contributions. The effect on employees, however, is very different from that on an employer.

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Whereas many employers will recoup from the reduced liability for their lower-paid employees what they would incur in increased liability for the higher paid—that is, for those above the upper earnings limit—the individual employee has no such offset. Nor is it possible for the Government to mitigate this increase by adjusting the higher rates of income tax. There is a substantial body of employees, about 900,000, whose annual earnings exceed the upper earnings limit of £13,780 but who still fall within the standard rate band for income tax. The onset of higher-rate tax varies, of course, with individual circumstances. But assuming only the basic allowance, it is £18,405 for a single person and £19,665 for a married man.
For these people, above the upper earnings limit but still paying standard rate tax, there would be no way of preventing unacceptably high marginal rates of tax. It would mean an extra £8 a week for someone at the £18,405 level and over £10 a week at £19,665. Those employees who are also owner-directors of their company would be particularly hard hit, if their earnings were high, because they would have to pay both the employees' and the employers' shares of the contributions on all their earnings. My right honourable friend's Green Paper on the reform of social security makes clear that for these reasons we have rejected the abolition of the upper earnings limit for employees.
To sum up, it is true that the assistance we are giving to the lower paid will create small new steps in contribution liability where none exists today. But the steps are all small both in relation to earnings and to the current cliff edge at the lower earnings level. Everyone affected will be better off in absolute terms than at present and jobs will be created. By contrast, the noble Lord's alternative creates grave distributional problems. A more rational relation between tax and national insurance contributions requires very careful consideration. I would urge your Lordships to await the proposed Green Paper on personal taxation and meanwhile to reject all these amendments.
Lord Banks: I should like to thank the noble Lord very much for his comprehensive reply to these amendments. The amendments were designed to make the working more simple by removing the administrative problems created by having these three different tiers by the very simple procedure of excluding the first £10 and extending the payment by employees throughout the range of earnings.
I do not think that the noble Lord replied to the point about the reduction of the rate which could have been done for the employers' contributions as well as for employees if the top earnings limit were to be abolished. It is wrong to assume that the same percentage would be applied and to work out what that would cost. Indeed, somewhere around £800 million has been added to Government revenue by what has already been done with regard to employers. However, it would be wrong for me to try to reply to all the points that the noble Lord was good enough to set out. I would like to consider carefully all that he has said. In the meantime, I seek the leave of the House to withdraw the amendment.
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Amendment, by leave, withdrawn.
[Amendments Nos. 2, 3 and 4 not moved.]
4.15 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 5:
Page 5, line 3, at end insert—
("(6FF) The Secretary of State may by order make provision for the implementation of percentage rates, which are to he paid in the primary earnings brackets set out in subsection (6B) above, to be deferred until the weekly earnings reach a sum which equals the lower earnings limit of a particular bracket plus the percentage rate of that bracket applied to its lower earnings limit.").
The noble Lord said: This amendment springs from remarks that I made at col. 545 on Second Reading, when I pointed out that the cliff edges that my noble friend Lord Young has been talking about, or perhaps, as I might call them, the pay traps, as opposed to the poverty traps, are quite serious and cannot readily be swept away because of the implications that they could have for industrial relations and wage bargaining. I would not take exception to what my noble friend the Minister Without Portfolio was saying about all the benefits of the broad picture of the new scheme that is proposed in the clause. But he did not say, or did not take into account, that the fact that there are these cliff edges could have quite serious implications for wage negotiations.
It could well happen that someone having a 5 per cent. increase negotiated for him will be able to say that if this takes him over the edge from one bracket into another, he will have to pay—if he goes over the bottom one—5 per cent. on national insurance, not having paid anything at all before, and that this will sweep away the benefit of the pay increase. Therefore he, or his trade union for him, will seek to negotiate an even greater pay increase. But the company will neither wish nor need to do this for people who are not going over the cliff edge. I did say that it seemed to me that it would be very difficult to draft an amendment to meet this point. With the aid of a wise industrial relations expert of many years' standing, we have come up with Amendment No. 5.
The principle here is that it eases the movement from the lower bracket to the higher bracket. If, for instance, you take the current lower earnings limit of £35.50 for bracket No. 1, the imposition, if my amendment was accepted, of the 5 per cent. NHI deduction would not be effective unless the new weekly earnings were on or above £37.28—that is, £35.50, which is the current lower earnings limit, plus £1.78, which is 5 per cent. of £35.50 rounded up. This means that if there are increases that hover around the borderline, which is very likely—we know from other statements that these borderlines will move with inflation and are not therefore static—they will be spared having to pay this extra NHI deduction until they reach the new softened limit.
However, it is not really good enough. I take the example that I gave. Let us suppose that the new earnings, after a percentage increase, were £38. The person would suffer some of the pay trap shortcomings but not all of them. In pointing that out to my noble friend Lady Trumpington when trying to indicate the line that I was going to pursue, I invited her to instruct the cleverest of her advisers to get to work to see whether they could not improve these provisions even

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further. At this point I strongly say to my noble friend the Minister Without Portfolio that the industrial relations implications are of such a nature as potentially to cause all types of trouble which will then negate the advantages which, I fully admit, should accrue from the general policy which is within the Government's amendments.
Therefore, I hope that my noble friend will say that he understands the point that I am making and that he will give it consideration and see whether he can come back on Report with an even greater improvement than the suggestion which I am putting forward. I beg to move.
Lord Young of Graffham: Having just successfully climbed the cliff edge put up by the noble Lord, Lord Banks, I hope that I shall not fall promptly into the pay trap put up by my noble friend. I understand my noble friend's concern. However, the fact remains that in absolute terms all employees earning up to £90 a week are better off. There are, indeed, more cliff edges, but the steps will be smaller. To make a comparison, I would say that it is easier, perhaps, to climb a staircase than a cliff face.
I read with interest what my noble friend had to say about the effects where increases in earnings cross the threshold between one contribution rate and another. I read what he had to say in the Second Reading debate and I also listened with interest and care to what he has had to say just now. However, I am afraid that it only goes to underline what he said at Second Reading; namely:
"it will be very difficult to produce suitable amendments … without upsetting the whole principle of what the Government are clearly trying to achieve".—[Official Report, 3/6/85; col. 546.]
I can quite see the thrust of what my noble friend intends by this amendment. By deferring the onset of a higher rate of contribution he hopes to level out that small dip in the graph where, unless gross earnings increase by an amount sufficient to compensate for the higher contribution rate, there is a small decrease in net pay. However, I have to say that this is an inherent feature of a system of progressively higher rates which, once triggered, then apply to all earnings. What is to happen when a higher rate, despite having been deferred according to the formula in this amendment, eventually applies after all? Without some additional mechanism, a cliff edge occurs again, but at a different point.
My noble friend cannily left the details of his scheme to be settled by regulations, and did not specify what the additional mechanism might be. It is true that the abruptness of the cliff edge might be reduced if, within that relatively small band of earnings over which my noble friend proposes to defer the application of a higher rate, there was a more gradual change to that higher rate. Thus between £55 per week (the threshold between the 5 per cent. and 7 per cent. rate) and £58.85 (the point to which he defers the onset of the 7 per cent. rate) it would, I suppose, be possible to provide a succession of rates increasing from 5 per cent. to 7 per cent. by stages. But I have to say that the administrative complexity that this multiplicity of rates would introduce for both employers and DHSS would I suspect far outweigh the benefits which my noble friend hopes to achieve. Indeed, I am engaged at
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the present time on an exercise with the object of finding out where, with safety, we can reduce the amount of regulation. I would hate to be adding unnecessarily to it by this process.
So long as we still have earnings-related benefits—and my right honourable friend's social security Green Paper proposes a phasing out rather than sudden withdrawal of SERPS—it will be necessary to record the contributions paid and to translate these into earnings factors from which benefit rights are calculated. The introduction of the new structure of three different employee rates will make that calculation difficult enough, entailing approximations which err on the side of generosity in order to avoid damage to benefit entitlement on the one hand, or more complex recording by employers on the other. Introducing a series of additional intermediate rates to smooth out the steps would clearly increase these problems.
I have already argued in response to the amendments proposed by the noble Lord, Lord Banks, that the new steps are small, both by comparison with the current cliff edge at the lower earnings level and also in relation to the earnings levels at which they actually occur. I think that we should see how these steps operate in practice before complicating the legislation now before your Lordships. My personal view is that they will not cause the difficulties that my noble friend fears. But he may be right and I may be wrong, in which case we will need to look at this again. In the longer term it is possible—and I put it no higher than that—that when we have seen how the new graduated bands operate we may be able to find if necessary some way of smoothing the steps, particularly in the light of the long-term changes in contributions and their relation to benefits which my right honourable friend has proposed in his recent Green Paper. Meanwhile, I would ask my noble friend to withdraw his amendment.
Lord Mottistone: I thank my noble friend very much for his very full comment on my amendment. Perhaps I should have said earlier that I have worded it in the form of:
"The Secretary of State may by order"
introduce this so as to give him an opportunity not to do it precisely like that. It seems to me that that is what will be necessary when we have gained our experience from these measures. It would be reassuring to know whether there are facilities for doing more than what is provided for in subsection (6F). Indeed, subsection (6F) allows the Secretary of State to alter the number of brackets below the highest bracket.
However, as I see it, there are no powers for the Secretary of State by order to make a modification along the lines of my amendment if it is shown that my fears about industrial relations are very serious ones. It might be helpful to have another order-making power to cover that type of gap. If there is no such power, perhaps I may come back at a later stage in our discussions on the Bill and put foward an amendment providing for such an order-making power without specifying what it does. I do not know whether my noble friend has an answer for me?
Lord Young of Graffham: I can assure my noble friend that I am told that we already have that power.
Lord Mottistone: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
The Earl of Caithness: In order that we may take the second Statement, I beg to move that this House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Supplementary Benefit: Board and Lodging
4.28 p.m.
Baroness Trumpington: My Lords, with the leave of the House I shall now repeat a Statement which is being made in another place by my honourable friend the Minister for Social Security on board and lodging payments under the supplementary benefits scheme. The Statement reads as follows:
"With permission, Mr. Speaker, I should like to make a Statement on the arrangements for supplementary benefit payments towards board and lodging charges.
"The House will recall that consultative proposals on board and lodging payments were referred to the Social Security Advisory Committee in November 1984 and that in March of this year the Government laid regulations which came into operation on 29th April.
"The regulations were designed to achieve two main purposes. One was to contain the rapid growth in expenditure and to stop the abuses that had been taking place. The number of ordinary board and lodging cases had risen from 49,000 in 1979 to an estimated 139,000 in 1984, while annual expenditure in this area had risen from £52 million to an estimated £380 million over the same period. There was widespread public criticism that young people were too easily able to settle in such accommodation at the public expense often at levels of charges well above what could be afforded by people in work.
Our second purpose, at least as important as the first, was to ensure continued help at an appropriate level for young people who really do need board and lodging for more than a short time. We therefore took steps to exempt from time limits people such as those who were recently in care; who have children; who are disabled, mentally handicapped are or have been mentally ill; or who are in board and lodging as part of a programme of rehabilitation arranged by, for example, the probation service. We also exempted people living in homes qualified as hostels.
"We made it clear that we would be monitoring the new regulations with great care and would be ready to make changes quickly if the need were shown. That monitoring is of course continuing; but
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the initial indications suggest that, generally, young people with a real need to be in board and lodging for more than a short time should he covered by the various categories of exemption from the time limits for which the regulations already provide. It is therefore important that claimants or anyone else who is concerned about a particular case should ensure that any special circumstances are fully explained to the local DHSS office, who will give them careful consideration before any final decision on benefit entitlement is reached.
"We have however decided that an additional exemption category is needed to cover young people under the age of 26 who are living with their parents or step-parents in board and lodging accommodation. Regulations to achieve this will be laid before the House shortly; and until they come into effect we shall make special arrangements to help those people to whom they would apply.
"The regulations will also enable us to extend the exemption categories to cover other types of case if a need can be shown. As I have indicated, we believe that the present exemptions generally cover those to whom the time limits ought not to apply. But we think it right to ensure that we can act quickly and flexibly if it should become clear that there are other groups who should also be covered.
Mr. Speaker, the Government's objective is to strike a proper balance between curbing undoubted abuse and ensuring that genuine social security needs are effectively met. The additional proposals I have made today will help us to maintain that balance."
That is the end of the Statement, my Lords.
Baroness Jeger: My Lords, I thank the noble Baroness for repeating the Statement. Any amelioration is very welcome to this side, but I wonder why we have had a Statement today. In my view it is because of the severely critical publicity which has arisen following the cruel impact on some of the most vulnerable young people in our community which has resulted from these new rules. I know that I must not make a debate out of a Statement and so I shall ask the noble Baroness the Minister one or two questions. What happens to young people or older people while they are waiting for appeals to be heard? I understand that there is a long waiting period of total impoverishment if a young person appeals against the withdrawal of benefit. Is no discretionary payment made to tide someone over such a difficult period?
We know that the time limits laid down are far too short for many people to find a job, to put down roots, to get onto housing lists; and so there is inevitable hardship. The noble Baroness said that there are exemptions, but the problem seems to be that not every person entitled to exemption knows about it. In fact, some of the tragic cases we have heard about lately seem to suggest that some of these people would have been exempt from these regulations had anybody told them about it.
The noble Baroness has not referred to refugees. She will know that I have raised this point on previous occasions. She and I have had correspondence because of the anxieties of the British Council for Refugees

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about young people coming here from overseas with all kinds of problems of poverty and language difficulties and not being able to get the help that they need.
The Statement referred to the increase in the number of people claiming board and lodging. I wish the noble Baroness had said today, although I know she is only repeating a Government Statement, what the Government are proposing to do to deal with the causes of this homelessness, unemployment and misery. Instead we are given these increased figures. We know that the figures will rise further, because the Government's own social security advisory commission pointed out that the rules would create an army of young nomads roaming the country, having to move from place to place—
Lord Ross of Marnock: On their bikes, my Lords.
Baroness Jeger: It is as my noble friend says, though I do not think many of them can afford a bike nowadays. I appreciate the sympathy of the noble Baroness, but the exemptions are not widely known and are not working out because many of the disabled and mentally handicapped who are in board and lodging accommodation do not seem to be receiving the help and sustenance that they need.
The Statement says that there is to be an additional exemption category to cover young people under the age of 26 who are living with their parents or stepparents in board and lodging accommodation. But what is to happen to young people who have no parents or step-parents? Many of these children or young people do not even know their parents. They have been adrift for most of their lives and are the casualties very often of broken marriages and miserable family situations.
The noble Baroness may recall—I hope she will not mind if I quote it—a letter she wrote to me on 23rd May, referring to a statement I made on a previous occasion. I appreciate the courtesy of the noble Baroness. She always writes fully and sympathetically. She wrote:
"You felt also that the elderly mentally infirm should receive a separate, more generous rate. We do not consider it would be appropriate to introduce a further category, particularly one that would be difficult to define and administer".
There is nothing in the Statement today about any special help for this category of elderly mentally infirm. There is nothing about refugees or young people who are not with parents or step-parents. Though we are glad that the Government are giving a sidelong look at this problem, we believe that they are far from coping with the cruelty of the present situation.
Lord Kilmarnock: My Lords, we on these Benches should like to thank the noble Baroness for repeating the Statement. It shows the beginnings of an awareness of the problems being created by the new rules. To that extent as far as it goes we welcome it. But one has to say that it seems to have been prompted by some tragic instances which have taken place over the last few weeks and which have been reported in the press.
The Statement refers to the categories of exemption and it seems that there are now a number of categories.
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Are the Government satisfied that this information is freely and easily available and that the DHSS guidelines are clear, clearly displayed and available to those who inquire? As the noble Baroness, Lady Jeger, has said, it seems that the only real concession made in the Statement is not very far reaching, covering young people under the age of 26 who are living with their parents or step-parents in board and lodging accommodation. It would seem to cover the case of Vietnamese refugees living in the Access Hotel, Clapham who have been under threat, as many of them, who have received move-on letters, are living at the hotel with their parents. Can the noble Baroness confirm that those move-on letters will now be withdrawn as a result of the Statement? Even if the situation of the young Vietnamese refugees is covered by the Statement, there does not seem to be any more overall cover for the general category of refugees and asylum-seekers. Can the noble Baroness therefore assure us that refugees and asylum-seekers will now be included in the category of exemption and that this will be made clear?
The noble Baroness, Lady Jeger, mentioned refugees and I make no apologies for mentioning them again because they clearly suffer special difficulties. It is important for them to be able to build up links with members of their community, their doctor, to attend English classes at the same institute and to be within easy reach of any advice agencies that they might need. At the present moment they are hampered in their efforts to settle by being forced into a nomadic existence or they are obliged to depend on a voluntary agency to guide them on their every move. Can we have an assurance from the Government that that problem in particular will be included under the extended category of exemption?
Baroness Trumpington: My Lords, I thank the noble Lord, Lord Kilmarnock, for a kind of half-hearted welcome to these new proposals. I am disappointed that the noble Baroness, Lady Jeger, did not see fit to be gracious about the fact that we had speedily recognised, as we said we would, that there was a need for greater flexibility. The noble Baroness, Lady Jeger, asked what happened to people while appeals were being heard. The situation is exactly the same with any appeal against a benefit decision. There are no provisions for changing an adjudication officer's decision on entitlement until new facts are known or until an appeal tribunal overturns that decision.
With regard to refugees, which both the noble Baroness, Lady Jeger, and the noble Lord, Lord Kilmarnock, mentioned, may I remind them—and this applies to all the other points that they raised—that the Secretary of State can use discretionary powers when faced with any new category of people who appear to be in need. This includes the plight of refugees. If there are any particular cases that either the noble Lord or the noble Baroness know about, I hope that they will get in touch with my right honourable friend.
With regard to the Vietnamese in the Access Hotel (to which I think the noble Lord, Lord Kilmarnock, referred) they are receiving ex gratia payments until the regulations come into effect when they will be exempted. I hope that that is a satisfactory answer on

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that point. With regard to the more general question of refugees, young refugees living with their parents in board-and-lodging accommodation will be covered by the new regulations that we intend to introduce. We are in very close contact with the British Refugee Council about the problems of young refugees. I understand that the chief adjudication officer will be issuing additional guidance shortly to help sort out the problems; but in any case the exemption categories, under the new discretionary power that we shall be introducing, could be extended to cover, as I have said, any category shown to have been missed.
With regard to what happens to young people with no parents, new regulations will allow us to extend the exemption categories to any other groups if a need is shown, and of course we shall be looking at this particular problem. It might be that they are living with grandparents who would form yet another category. It would be very rare. The noble Baroness, Lady Jeger, asked whether the new arrangements would not penalise elderly and disabled people. I would say that the new arrangements are designed to ensure that elderly and disabled people can continue to meet reasonable charges for care. Drug and alcohol users and physically handicapped people are likely to benefit from the new proposals.
The proposals include a change in the treatment of attendance allowances for those in private residential accommodation and the introduction of a new level of personal expenses allowance. Both changes are intended to fit more closely the actual needs of people in residential homes and should not cause hardship. We intend to review the limits within the next 12 months instead of freezing them until November 1986, as originally intended. In doing so, we shall have regard to proprietors' behaviour as well. Moreover, there will be generous protection for people already in homes. It is certainly not the intention that anyone should be deprived of the type of accommodation and care that they need as a result of these changes.
4.45 p.m.
Lord Taylor of Blackburn: My Lords, may I thank the Minister for repeating the Statement? How sad I feel that the Statement does not go far enough! Many of us who are active in the voluntary service have, as I have, wives who work in the citizens' advice bureaux. My wife is constantly coming to me and telling me what is going on there and telling me about case after case of people who are not getting the benefits and asking to be moved on from one place to another. There is only one thing for it. It is for this Act to be completely repealed. It is causing more hardship than anything I have known for many years. Therefore, I sincerely hope that the Minister and the officials will realise how difficult it is for those who are working in the field to explain to people what are their entitlements. I hope that something is done very quickly. I know that the noble Baroness has said that the Minister will look at it again and again. I hope that the Minister will take note of the numerous complaints that are coming from all over the country.
Baroness Trumpington: My Lords, the noble Lord, Lord Taylor, is slightly overlooking the fact of the vast
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increase in sums from £52 million to an estimated £380 million in the year. I must say to him that if he knows about all these complaints, I should be very grateful if he would write to me or to my right honourable friend because unless these complaints are brought to our notice, how can we know about them?
Lord Banks: My Lords, can the noble Baroness say whether former foster children remaining in their former foster parents' home are now to be exempt?
Baroness Trumpington: My Lords, there is this terrible moment of silence! I think they are to be exempted and that foster children would count as being as children with parents. If I am wrong, I apologise to the House in advance and I shall write to the noble Lord.
Baroness Turner of Camden: My Lords, is not the vast increase in sums very largely a reflection of the increasing unemployment that we have seen in recent years among young people in particular? I should like to direct attention to some of the publicity that we have had recently in connection with young people because it seems to me that those are the category most at risk, rather than some of the exempt categories. I welcome the exempt categories, of course; but the people who are at risk it seems to me are young people who have left the areas where they were born because of the high unemployment in those areas in the belief that they can get work by moving to other areas, sometimes to the south coast. But when they get there, they find that unemployment still exists there; and they have to have some form of accommodation. That is where the problem lies, so it seems to me.
Baroness Trumpington: My Lords, I think that the noble Baroness is not entirely correct. Of course, unemployment comes into the picture; but there is also the question of population movements and where these young people are finding it most attractive to go, regardless of work opportunities. It is definitely wrong that young people should be occupying accommodation which they would not be able to afford if they were in work and which other people who are in work cannot afford.
Lord Stallard: My Lords, I, too, welcome the Statement repeated by the noble Baroness. I was slightly surprised that the noble Baroness expressed amazement that my noble friend Lady Jeger did not go into ecstacies of gratitude over the content of this Statement. I do not think the noble Baroness should be surprised at that when one considers that we made all the criticisms, some of which are now being replied to, in the Second Reading debate and also in other debates in this Chamber.
Is the noble Baroness aware that we said then, as I would wish to repeat now, that it is a totally unnecessary measure? It was introduced in a panic in response to a report in a newspaper that some kids were living it up at the seaside at the state's expense, The Government were panicked into introducing these regulations. Is the noble Baroness aware that we said then that it would have been far better to await soberly the outcome of the review into social security generally and then to do something more permanent and more

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acceptable than these panic regulations? It is hardly surprising that we are not over the moon, to use a football cliché about this.
The noble Baroness has repeated the figures that she mentioned on Second Reading. They have gone up from £52 million to £380 million. Can she tell us how much of that is taken care of by the normal inflationary process, which has been quite dramatic? Can she say how much of it was taken by the "one-off" exercise in 1982–83 when there had to be such a dramatic increase in the amounts payable that of course it pushed up the figures quite tremendously? It still did not meet the real costs, but to bring it nearer to the real costs there had to be that dramatic increase. That must be reflected in the huge increase she has mentioned.
The noble Baroness mentioned also the huge increase in the number of claimants. My noble friend has already referred to unemployment. How much of an effect has that had? How much has the lack of alternative rented accommodation had an effect? We know that local authorities have cut back on the provision of rented accommodation and the provision of purpose-built hostels and so on. I would ask the noble Baroness to recall that many of the larger hostels are going through a refurbishment process because of fires and tragedies which have occurred in recent years and which have caused them to spend a great deal of money on necessary repairs, rebuilding and so on. That has meant a reduction by thousands in the number of beds.
The noble Baroness may recall that I said to her in a recent debate that within a month of these regulations being introduced 10,000 youngsters in central London would be on the streets. I was wrong: it is more than that. I think that the 500 submissions the department received all made similar statements: they were absolutely horrified at the kind of regulations being introduced.
Perhaps I may say finally that the Government still seem to be dealing with the symptoms and not the causes. It was the causes that I wanted to be dealt with and to be properly discussed as a result of the social security reviews. I would like to say—
A noble Lord: No!
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, if the noble Lord will forgive me, he really is trying the Standing Orders of your Lordships' House a little hard. There is a Standing Order that we do not turn the repeating of a Statement into a debate. The noble Lord is making skilful points, but he is making an awful lot of them.
Lord Stallard: My Lords, I apologise if I am abusing the Standing Orders. It was certainly never my intention to do any such thing. I was trying to ask a number of questions. I was going to ask another question. Is the noble Baroness aware that this time limit—whether it is two, four, six or eight weeks—is totally unrealistic in order to find work or to get oneself put on to the panel of a medical practitioner? Will the noble Baroness review that time limit? I had better not ask any more questions because of the Standing
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Orders, but there are thousands more questions still unasked because of the nature of these panicky regulations that could have waited for a proper debate.
Baroness Trumpington: My Lords, I am lucky enough to be able now to correct myself in what I said in answer to the question of the noble Lord, Lord Banks, about foster-children. They are not covered under the specific change to the exemptions, but that is one group we may well want to cover by the use of my right honourable friend's discretionary powers. I am sorry if I misled the House earlier.
With regard to what was said by the noble Lord, Lord Stallard, in his Second Reading speech, may I say that he made typically socialist remarks, totally regardless—spend, spend, spend—of the fact that the money has got to come from somebody's pockets, and it is coming from his pockets just as much as from those of other people. We have already dealt with all the points that he raised when the order was first debated. They have nothing to do with the Statement that I repeated to your Lordships today.
Baroness Jeger: My Lords, I must protest for a moment against what the noble Baroness has just said. Of course the money comes from our pockets, and from some of us it comes willingly and gladly. We would pay more if we could do something to remedy the evils we have been discussing. I think it was very ungracious of the noble Baroness to make that remark about my noble friend Lord Stallard, because he pays his taxes, as we all do. I am sure we would all do so without regret if we could feel that they were being used for these kinds of purposes.

Social Security Bill
4.57 p.m.
House again in Committee.
Clause 8 agreed to.
Clause 9 [Abatement of invalidity allowance etc., where beneficiary entitled to additional component in pension or to guaranteed minimum pension]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 6:
Page 11, line 36, leave out ("below") and insert ("of the Social Security Act 1975").
The noble Earl said: With the leave of the Committee, I should like to speak also to Amendment No. 7.
Amendment No. 7: Page 12, line 9, leave out ("below") and insert ("of the Social Security Act 1975").
These are purely drafting amendments to correct mistakes in the present wording of the Bill. It is necessary to relate the references to Sections 124 and 126A in Clause 14 specifically to the Social Security Act 1975. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 7:
[Printed above.]
On Question, amendment agreed to.
On Question, Whether Clause 9, as amended, shall stand part of the Bill?
Lord Kilmarnock: I have given notice of my intention to oppose the Question whether Clause 9 shall stand part of the Bill? Clause 9 covers several pages of the Bill. It concerns the abatement of invalidity allowance and so on, where the beneficiary is entitled to an additional component in the pension or to a guaranteed minimum pension. The Government's proposal in this Bill is that in future invalidity pensioners will not be able to receive both the age addition and the earnings-related component on top of their basic pension. In April 1983, 37 per cent. of all invalidity pensioners were receiving both additions. That implied then that about 300,000 claimants would be affected by the change; and I understand that in fact the number now stands at 375,000. Therefore these claimants will lose the smaller of the two additions that they receive.
From November 1984 the three rates of age addition are: £7·50, £4·80 and £2·40. The maximum current payment for the earinings-related addition is £16·21 and the average payment to those receiving this addition is about £3. Thus, someone who is now receiving £3 earnings-related and a £2·40 age addition will lose the whole of the age addition. On the other hand, someone who is receiving £3 earnings-related and £7·50 age addition will lose £3. In fact, owing to the way in which these deductions are to be administered, the earnings-related component will not disappear in this case and instead the claimant will continue to receive the £3 earnings-related and the age addition will be paid net of the £3 at a rate of £4·50: in other words, £7·50 less £3. In this way, the Government can claim that the earnings-related part of the pension is being protected, as promised in the Green Paper, but this is really just semantics.
I wanted to draw the attention of the noble Baroness to the view of Mr. Stewart Lyon the independent adviser on their review, in opposing the abolition of SERPS. One of the reasons that he gave for this was:
"Nothing is said about how invalidity benefits will fit into a regime of compulsory private pensions. Given the small margin for personal invalidity benefits in the private sector does this silence mean that the difficulties are too great and the disabled are to be sacrificed on the altar of expediency?"
Some of your Lordships might wonder why it is right, or how it can be justified, that both these payments should be received together. The reason I think is simple. The Government's argument is that offsetting the age allowance against the earnings-related additional component is based on the notion that the two overlap. But given that the additional component relates to what the individual earned when able to work, which is one thing, and the age allowance relates to compensation for loss of earning power, which is another thing, then in my submission there can be no overlap, since the two were designed in recognition of two totally different circumstances.
I think it emerges that what is really happening is that the Government are using Clause 9 to pay for Clause 14 to which my noble friend Lord Banks will be speaking in due course. In effect, it is giving with one hand and taking away with the other, and this is confirmed in a letter which the noble Baroness, Lady Trumpington—who, I am glad to see, is back in her seat—was kind enough to write to me on 13th June. She says:
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"The savings from offsetting additional component against invalidity allowance build up more slowly than we had anticipated. Our current estimates break down as follows."
The table she then gives clearly shows that the net cost of the concessions under Clause 14 is more than offset by the net savings under Clause 9, to the tune of £25 million over the period between now and 1987–88. The noble Baroness then goes on to say—because this was a matter I raised at Second Reading—that:
"You are therefore quite right to think that overall these three measures will reduce benefit expenditure below what it would otherwise have been, though the effect is not borne only by the benefits for the long-term sick. We have not pretended otherwise, and I believe that both Clause 9 and Clause 12 will save money and are sensible measures fully justified on their own merits".
Of course in that quotation she is referring also to Clause 12, which is not at issue in my amendment. Her argument is that these are sensible measures—I repeat her words—"fully justified on their own merits".
There may be two opinions on this. It seems to me quite extraordinary, as the noble Lord, Lord Stallard, has already suggested, that these measures should be brought forward in this Bill with the Government's Green Paper coming shortly after it, and in fact overtaking it. In Chapter 1.42 of the Government's Green Paper on page 6 they seem to recognise that there are some considerable difficulties in this area, and they say:
"The Government will be giving further consideration to the implications of the new arrangements for invalidity benefits."
On those grounds, I would seriously suggest to the noble Earl who will reply to this debate that the clause should be withdrawn from the Bill at this stage. It is quite inappropriate, particularly during the process of consultation on this document which is supposed to be taking place. In effect, I suppose we are actually performing some of this consultative process this afternoon. In view of that, I would strongly suggest to the Government that they withdraw the clause, that they consult with all the interested bodies concerned, that they have regard to the very serious effect that this will have on invalidity pensioners, and that they come forward with their final proposals; whatever they may be, in the final legislation which follows the consultation on this Green Paper.
Lord Stallard: I want to support the noble Lord, Lord Kilmarnock, in this amendment, and I hope I remain within the Standing Orders in this instance. May I start by saying that we gave a cautious welcome to the announcement about the restoration of the cuts to the invalidity benefit, among others, that had taken place in the Social Security Act 1980. I suggested then that this clause was unnecessary. In fact I suggested that this part of the Bill was unnecessary, because this restoration could have been done in the normal process, in the same way that had been applied years ago to the unemployment benefit and to the invalidity allowance. So there was another reason behind the necessity to introduce such a clause and such a part of a Bill.
Having said that we gave a cautious welcome to that abatement, we certainly did not welcome Clause 9 and the provisions of Clause 9, because that claws hack most of it from many thousands of people—in fact I think the Secretary of State has admitted that half of

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the people who claim, that is half of 750,000, would lose most of the abatement in clawback. There was therefore no welcome for a clause that would claw back the abatement that was being offered in another two clauses. It is true of course that in order to cover this up Clause 9 is extremely complicated. As the noble Lord, Lord Kilmarnock, has already said, it covers five pages—one clause covering five pages of a Bill that was introduced in a panic. Very few people had the time to consider this Bill in the detail required because of the immediate announcement of the social security reviews and the Green Papers. It was all crowded into that time scale and gave no one a real chance of going into this proposal in depth.
However, we have been able to look at it since. We think it is still complicated, but in essence it offsets the invalidity allowance and the additional component to invalidity pension, retirement pension and widows' pension. It offsets one against the other. The noble Lord has already said that. I do not accept—I do not think anyone I have spoken to accepts, and I have spoken to a number of professional people who understand these things—that the Government have made a case out for the overlap. They claim an overlap, but in fact there is no overlap.
I think I should go back a little to talk about when the invalidity allowance was first introduced by Sir Keith Joseph in 1971, in recognition of the fact that people who became incapable of work early in life have not had the opportunity to build up as many assets as those who fall permanently sick at a later age. The invalidity allowance was £7.50 for people who were permanently incapacitated since before the age of 40, £4.80 for those incapacitated before the age of 50 and £2.40 for those incapacitated before the age of 60–55 for women. The additional components were introduced by the Social Security Pensions Act 1975 as part of the eventual all-party agreement, the consensus on the question of SERPS, the earnings related pension scheme. If it had then been considered—and I recall the tremendous amount of consideration and discussion surrounding that measure in 1975 both inside and outside the Palace of Westminster—that the two benefits were paid for the same reasons, then the Government in my view would have taken steps to ensure that the overlapping benefit regulations applied.
Everybody knows about the overlapping benefit regulations and they should have been applied there and then, as soon as it was recognised. I hope that I shall not be told that it took another 10 years for the Government to recognise that there was a possibility of an overlap in these two benefits, because I do not accept that. I hope that the noble Earl will reply to that point. I do not think that the two benefits are the same, and the noble Lord, Lord Kilmarnock, has said the same thing. The rationale for each benefit is totally different, and therefore it cannot be argued now, nor could it be argued in 1975, that there is this overlap. The Government have used this question of overlap as the sole reason for reducing the amounts of these benefits.
I submit that there is another reason and for that other reason we have to look at the Explanatory and Financial Memorandum. There we see that in the first full year, 1986–87, the net cost of restoring the cut in
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invalidity pension will be £65 million, but that the savings that the Government will get from this clause and from Clause 12 are £70 million through Clause 9 and £20 million through Clause 12. So there is an overall profit of £25 million to the Government as a result of the introduction of these clauses. That is the real reason. The overlap is a convenient excuse which the Government thought would hold up, but it does not hold up. The fact is that not only is Clause 9 a nil-cost clause, it is a saving clause and the Government aim to save £25 million as a result of the introduction of these two clauses.
So in two short contributions we have proved that the clause is necessary and that it has to be reconsidered on the basis of the 1971 and 1975 Acts. I hope that the Government will take this away and review it. Then I hope they will come back later and say that they have taken this clause out of the Bill as it is totally unnecessary and that they have made a mistake in claiming that there was an overlap in these benefits.
Baroness Jeger: Very briefly, if the Government are saving £25 million under Clause 9 in 1985–1986 and £85 million in 1986–87, where are they getting it from? They are saving it only because they are taking it away from people who need it. They are taking this money out of the resources which many of these people need.
I wanted to ask why maternity benefit was not included among the items which would be regarded or disregarded, but as I read the Green Paper I see that it is because the maternity benefit is to be abolished altogether. This is another illustration of how this Bill is a total waste of time, since everything in it will be overtaken if the Fowler review goes through.
I want to refer to something that was said in Committee in another place, but I must first say, in passing, that Parliament must be tired of this Bill. It dragged through the Committee stage in another place from 11th December 1984 until 29th January 1985, yet here we are getting it now in what should be midsummer. It has been the most botched-up piece of legislation that I have had to put up with in my long experience.
But to return to what I was saying, the Minister said in Standing Committee E on 15th January 1985 (which is a long time ago), at col. 195 of the Official Report:
"However, the Government's intention remains to bring invalidity benefit into tax as soon as that is operationally possible. The fact that we have restored the abatement without bringing invalidity benefit into tax does not imply that that intention has been abandoned".
So we get these restrictions, these savings on capital expenditure, and a threat that there is to be taxation on these inadequate benefits. I hope that the noble Earl can answer those two questions: what is the relevance of maternity benefit to this clause, and what point have the Government reached in their decision about the taxation of benefits?
5.15 p.m.
The Earl of Caithness: I have listened very carefully to what the noble Lords, Lord Kilmarnock and Lord Stallard, and the noble Baroness, Lady Jeger, have said

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on what we consider to be a very important clause. As everybody has said, Clause 9 is technically a very complicated clause; but, as my noble friend explained on Second Reading, it is intended to provide that two elements which serve broadly the same purpose are not both paid in full.
Noble Lords opposite have argued that these two elements were introduced for completely different purposes; but that is clearly not so and that is where we have a complete difference of opinion. When invalidity allowance was introduced in 1971, it was not envisaged that those falling long-term sick before pension age would receive an additional component which offers the equivalent of an occupational pension, the absence of which was what invalidity allowance was intended to compensate. Duplication of provision can and does occur, and in our view the fairest solution to deal with this is to ensure that pensioners receive the equivalent of the higher of the two additions and that is what the clause does.
To put the financial consequences into perspective, as at April 1983 there were 737,000 invalidity pensioners, of whom 275,000, or 37 per cent., were getting both invalidity allowance and additional component. It is estimated that by November 1985 there will be 850,000 invalidity pensioners, of whom 375,000, or 44 per cent., will be getting both increases. Thus, 56 per cent. of invalidity pensioners will be completely unaffected by the proposals.
The noble Baroness, Lady Jeger, said that this was the most botched-up piece of legislation that she had come across. It is great fun. She is thinking of wonderful new words. I remember that last year she became equally excited about the Health and Social Security Bill. I think she called that the worst rag-bag. She is doing frightfully well. I hope that Roget's Thesaurus comes to her aid for the next social security Bill because with her vast experience she knows far better than I that social security Bills are complicated and cover a wide range of subjects. We look forward to her next instalment in due course.
The noble Lord, Lord Kilmarnock, rushed to the aid of the Green Paper. He answered his own question right at the end when he said that the Green Paper explains that these matters are being further considered. One of the purposes of a Green Paper is to consider a whole lot of matters, and to say that we should wait until we determine the results of the Green Paper after further consultation seems to be the most ludicrous way of legislating because in his opinion—and this is perhaps the Alliance's way of trying to get votes—we should not do anything as we are always looking to the future, to the next consultation, and dare not do it now.
The noble Lords, Lord Kilmarnock and Lord Stallard, asked for further justification of this clause. Invalidity allowance and the additional component, which were introduced at different times, are broadly intended to cover the same purpose and this has led to duplication of cover. Invalidity allowance was introduced as an addition to invalidity pension in 1971 and it provides additional financial help for those people who became chronic sick early in their working lives and who do not have the opportunity therefore to build up additional pension rights.
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But since 1979, it has been possible for invalidity pensioners also to get an earnings-related additional component added to their invalidity pension if they have been working and have paid earnings-related contributions. This was clearly not envisaged when invalidity allowance was introduced and that is why we are now acting to remove the duplication. In our view, the fairest solution is to ensure that the pensioners will receive the higher of the two additions and that is what, in effect, the proposed legislation will achieve.
The noble Lord, Lord Stallard, asked how much people will lose. I can tell him that more than half of all invalidity pensioners will not be affected as they do not receive both invalidity allowance and the additional component. For the remainder, the loss will vary between a few pence and £8.05; but for the majority it will result in a relatively small loss. The average amount of additional component in payment at April 1983 was £2.63. Does the noble Baroness wish to say something?
Baroness Jeger: I was just having a word with my noble friend.
The Earl of Caithness: The noble Baroness, Lady Jeger, referred to Clause 14. I have a good deal of information for her on Clause 14 but perhaps the noble Baroness can wait, as perhaps can the noble Lord, Lord Stallard, who started off on Clause 14. I have something to say on tax in due course.
The noble Baroness also asked about the maternity allowance and whether we should restore the abatement. I can tell her that we have no plans to do so at present but we shall look at this again when the benefits are taxed in the light of the economic and other circumstances prevailing at the time. The noble Lord, Lord Stallard, pointed out that according to the financial memorandum the savings here are about £25 million. That of course is not denied. It is in the financial memorandum and we stand by that.
However, I hope that he is not discounting the immense amount of good that the Government have done towards the long-term sick and disabled. I can mention such things as the ending of the invalidity trap and the reduction from two years to one year for the waiting period for long-term supplementary benefit. Last year—this is more in my mind than the previous two—there was the introduction of the severe-disabled allowance, which alone represented an increase of £20 million. I do not think that the noble Lord is entirely justified when he criticises us solely on making a saving on this clause, but perhaps we can discuss this again. Does the noble Lord wish to intervene?
Lord Stallard: Anybody can quote statistics to prove a case. I can prove that millions of people have lost as a result of the social security measures introduced since 1979–80. We know that pensioners and invalidity pensioners lost as a result of the two weeks that were added to the year in 1980–81. One week is added this year, which means three weeks' lost payments. It is estimated that the cumulative cost to a single person by November 1985 of the invalidity pension changes alone will be £354; and it will be £569 for a married couple. The Secretary of State has

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already said, and the Minister who is replying has said, that half the people will not be affected. He said it as though half means nothing. I put it another way round. I say that half of them will lose. The half is a half of 750,000 people. That is 375,000. He passed over that as though it was nothing. But 375,000 people will lose. Many of them will lose the whole benefit. If you have been getting £7·50 on one benefit and £7·51 on the other and you deduct £7·50 from £7·51, you are left with one penny. So it is possible to lose the lot on this transaction as a result of Clause 9. The losses have not been fairly estimated or enunciated by the Minister who has answered this debate.
The Earl of Caithness: I am sorry if the noble Lord does not think I have been fair. I have spent quite a long time on the people who would lose and on the amounts some people would lose. But the number of people who will lose the full amount is very small. I must make it absolutely clear that nobody is going to lose money. There is no cash reduction here. They might not gain as much if the upratings had gone on both; but as is clearly set out in the memorandum to which the noble Lord has referred, there is a saving on this clause. Although this clause and Clause 14 stand clearly on their own two feet, there is in our view considerable merit in looking at them to some extent together for the benefits that we can give under Clause 14.
I think I have covered all the points that were raised and I hope that the noble Lord will not press for the deletion of this clause.
Lord Kilmarnock: I am grateful to the noble Earl for answering the debate, though I am disappointed that the Government are not going to withdraw the clause when such very good reasons for doing so have been given from various quarters of the Committee.
I really cannot agree with the noble Earl when he says that these two elements are broadly for the same purpose. I thought that the noble Lord, Lord Stallard, had demolished that argument. The invalidity allowance, or age allowance as it is also called, is given in such a way that it is bigger the earlier you become incapable of work to compensate for loss of earning power and thus the capacity to accumulate pension rights. The additional component is calculated on a SERPS basis in respect of past earnings. These are two entirely different things. It will not wash when the noble Earl tells us that they have broadly the same purpose. When he tells us that 56 per cent. of the category concerned will be unaffected, that does of course mean that 44 per cent. will be affected.
As regards Roget's Thesaurus, I really do not think that the noble Baroness, Lady Jeger, will have any need for it in searching for more words such as "ragbag" or "hotch-potch", because she already has an extremely fertile mind. I am sure that it comes quite naturally from her.
The noble Earl said that my claim was ludicrous, but what seems to me and to many of us to be ludicrous is to legislate in this Bill, which will presumably be passed within the next month or two, and then follow it with another Bill which will be partly covering similar ground and which we understand the Government intend to introduce in the
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Queen's Speech in November. If anything is a ludicrous way of legislating, I submit that that is it.
The noble Earl has been quite frank. He has said that this is a cost-cutting or off-setting exercise. That was also the burden of the letter to me from the noble Baroness. They have been quite open about that. It will certainly have been noted by the 300,000 or more people who will be affected. If that is the way the Government want it, so be it, but it does not allow them to congratulate themselves on restoring the abatement in Clause 14 out of the money which they will have accumulated from the operation under Clause 9. That needs to be clear. If that is the road the Government are going to go down, we want to be quite clear about how it is working, and that is the way it is clearly going to work.
I shall read carefully, as I always do, what the noble Earl has said. I am not proposing to divide the Committee on this Motion this evening, but I can promise the noble Earl that we shall certainly come back to this question at Report stage.
Clause 9, as amended, agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 8:
After Clause 9, insert the following new clause
("Voluntary redundancy entitlement to unemployment benefit.
In section 20 of the Social Security Act 1975 (disqualifications for receipt of benefit), the following subsection shall be inserted after subsection (3)—
"(3A) For the purposes of this section, a person who has been dismissed by his employer by reason of a redundancy within the meaning of section 81(2) of the Employment Protection (Consolidation) Act 1978 after the volunteering or agreeing so to be dismissed shall not be deemed to have left his employment voluntarily ".").
The noble Earl said: With the leave of the Committee, I should like to speak to Amendments Nos. 8 and 19 at the same time.
Amendment No. 19: Clause 29, page 27, line 10, at end insert—
("section (Voluntary redundancy—entitlement to unemployment benefit);").
The amendment to Section 20(1)(a) of the Social Security Act 1975 is put forward to maintain our policy that those who are made redundant should not be regarded as having left employment voluntarily and thereby subject to up to six weeks' disqualification for receiving unemployment benefit even though they may have volunteered or agreed to be dismissed by reason of redundancy. This has been the situation until recently when the chief adjudication officer issued new guidance indicating that those who had volunteered for redundancy should normally be regarded as having left employment voluntarily and were therefore subject to a disqualification under Section 20(1)(a). The proposed amendment will restore the previous interpretation and put the matter beyond doubt. I beg to move.
On Question, amendment agreed to.
Clause 10 [Entitlement of married women to Category A retirement persons]:
On Question, Whether Clause 10 shall stand part of the Bill?
5.30 p.m.
Lord Tranmire: As an ex-Parliamentary Secretary of the ministry, perhaps I may congratulate the Government on their decision to remove the very obscure and unpopular married women's half test. However, I should like the Government to explain in some detail exactly what is involved in this provision. It appears that it is retroactive from only 22nd December 1984. There are very many married women who were serving overseas after the war, who were quite ignorant of the married women's half test and who have been fighting to get a retirement pension for many years. How will they be affected by the decision?
It seems that older retired married women will be at a disadvantage when compared with younger retired married women who retired after December 1984. I am sorry not to have given my noble friend notice of this question, but this battle is one that we have been fighting for many years, and that is why I was delighted to see Clause 10 in this Bill.
Baroness Trumpington: I greatly welcome my noble friend's remarks and am grateful for them. I have pleasure in explaining Clause 10, which will extend pension rights to some 25,000 women by removing the residual effects of the married women's half test from 22nd December 1984.
The half test was abolished in 1979 for women reaching the age of 60 after 6th April 1979, but it continued to apply to women who reached the age of 60 before then. Following careful consideration within the department in the light of the European Community equal treatment directive, this clause proposes abolition for the women still subject to the discriminatory test. I hope that the Committee will regard this as a welcome measure and a further step forward in the direction of equal treatment.. The cost of the change will be under £25 million in 1985–86, gradually reducing to almost nothing by 1990.
Clause 10 agreed to.
Clause 11 agreed to.
Clause 12 [Pension increases in respect of adult dependants—equal treatment for males and females etc.]:
Lord Kilmarnock Lord Kilmarnock moved Amendment No. 9:
Page 12, line 42, at end insert ("of at least £10 in excess of the lower earnings limit specified in section 4(1)(a) above").
The noble Lord said: This amendment affects Clause 12, which applies to Category A or C retirement pensioners or invalidity pensioners. It equalises the treatment of additions to invalidity benefit for spouses. The amendment is designed to ensure that earnings of less than £10 above the lower earnings limit will be ignored.
The present earnings limit for wives of invalidity pensioners is £45, and the present lower earnings limit is £35.50. The amendment would merely make the same arrangements for men as for women, which, after all, is one of the perfectly laudable objects of the clause.
The most usual cases are those of invalid husbands whose wives go out to part-time work. It would surely be wrong to force such wives to keep their earnings
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below the lower earnings limit, which would thus deprive them of National Insurance rights. We on these Benches see that as entirely wrong. We believe it may be due to an oversight on the part of the Government and hope very much to hear from either the noble Earl or the noble Baroness that they agree with us on this amendment. I beg to move.
Baroness Trumpington: I regret that I must disappoint the noble Lord, Lord Kilmarnock. Amendment No. 9 seeks to fix the amount which the wife of a retired pensioner or invalidity pensioner may earn and still keep the dependancy increase at an amount even higher than it is now—this at a time when one of the reasons for changing the provision is that it does not provide a realistic measure of dependancy.
The earnings limit is at present £45, as the noble Lord said, and tapered for higher earnings. The amendment would make this a minimum of £45.50. This really will not do. A pensioner's wife may earn however much she can without in any way affecting her husband's pension, but she ought not to qualify him for further benefit unless she is truly his dependant. If she earns more than he himself is getting by way of personal pension, surely she is not his dependant. In strict social security terms he becomes her dependant.
There is another reason why I take this view. We are trying to introduce a measure of equality in the terms and conditions for dependancy increases. The amendment specifies an earnings limit for the wife of a retirement or invalidity pensioner. Another amendment would give the same limit to the husband of a retirement pensioner but does nothing for the husband of an invalidity pensioner. We want a common earnings rule running across the long-term benefits.
Another consideration is the cost of this proposal. Not only would we forgo £10 million of savings to the National Insurance Fund in 1986–87, but we would have to shoulder the cost of giving equality of treatment to the husbands of pensioners. This would mean an additional cost of £1 million. With expenditure on social security running at £42 billion, we must look for ways of containing a burden which, after all, falls upon contributors to the scheme, many of whom have no dependants at all. Against this background, I hope that the noble Lord, Lord Kilmarnock, will see fit to withdraw his amendment.
Lord Kilmarnock: I thank the noble Baroness for her rather tortuous argument, which I shall of course read with the attention I always pay to her remarks. Just listening to what the noble Baroness was reading out has not immediately convinced me. She spoke about a measure of equality, but it seems to me that the amendment is introducing a greater measure of equality than that which is in the Bill as drafted.
Also, the noble Baroness has not answered the very real objection that if the proposals in the Bill stand, wives in this situation will be virtually forced to work below the lower earnings limit and will not therefore enjoy any national insurance rights. That is a very cogent criticism. I will read carefully what the noble Baroness said and will probably return to this point at

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a later stage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 10 not moved.]
Clause 12 agreed to.
Clause 13 agreed to.
Clause 14 [Invalidity pension]:
Lord Banks Lord Banks moved Amendment No. 11:
Page 16, line 18, at end insert—
("(2) All invalidity pensioners shall be able to claim the total additional benefit which they would have received between 1980 and 1985 but for section 1 of the Social Security (No. 2) Act 1980.").
The noble Lord said: In 1980 the invalidity pension was abated by 5 per cent. In other words, everyone in receipt of invalidity pension received 5 per cent. less than they would otherwise have done. This was regarded by the Government as an interim measure pending the application of income tax to invalidity pension. It meant, however, that the 5 per cent. abatement was suffered by those who would not have been subject to income tax as well by those who would. Attention was drawn at the time to the unfairness of that situation.
Now it appears that invalidity pension is not, after all, to be made subject to income tax, and so it would appear that people who suffered the abatement, and those who would not have been subject to income tax, in particular, did so to no purpose. The Bill restores the abatement. The pension is restored to the level it would have reached had there been no abatement.
However, nothing is done to restore the losses sustained by invalidity pensioners over the years as a result of the abatement. The restoration of abatement will cost £65 million a year, but the Government are saving £70 million a year as a result of the abatement of invalidity allowance where a beneficiary is entitled also to an additional component or guaranteed minimum pension, as referred to by my noble friend Lord Kilmarnock and as introduced in Clause 9. Between November 1980 and November 1985 a single person will have lost a cumulative total of £354 as a result of the 5 per cent. abatement. For a married couple the figure is £569. The amendment would ensure that invalidity pensioners would receive a payment of the sum which they had lost in earlier years. I beg to move.
The Earl of Caithness: I have listened to the noble Lord, Lord Banks, with great care, but I am sure he will not be surprised to learn that I cannot recommend acceptance of the amendment. As the noble Lord pointed out, the Social Security (No. 2) Act 1980 provided for invalidity benefit and the short-term benefits to be uprated by 5 per cent. less than would otherwise have been due. This was part of the Government programme for reducing public expenditure. The fact that the Government have been able to restore the abatement in advance of bringing the benefit into tax does not mean that it would be right to restore the abatement retrospectively and so negative the provisions of the 1980 Act. The fact that the Government are restoring the abatement before
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taxation does not imply that the reasons for introducing it in 1980 have been discredited.
It is common ground with noble Lords opposite that tax on invalidity benefit and similar benefits should be brought in, and this was not denied in another place. This takes me to the point raised by the noble Baroness when we were discussing Clause 9. It is true that because of the way in which the Government have been able to raise tax thresholds over recent years the number of invalidity pensioners who would have been liable for tax would have fallen compared with a few years ago. Indeed, this was one of the factors which the Government took into account in deciding to restore the abatement now. But that does not alter the broad justification for the abatement in the first place.
The Government are pleased to be able to restore the abatement ahead of taxation. We are still considering possible methods of taxation but, as the noble Baroness will be aware, that is a matter for my right honourable friend the Chancellor of the Exchequer. I conclude by saying that there is no justification for going further at this stage.
Lord Banks: It appears from what the noble Earl has said that invalidity benefit is going to be made subject to taxation even though the Government have not yet made it so. That is an important admission on the part of the Government this evening, that that is what they intend to do. If the Government are able to restore the abatement and yet intend to proceed to taxation it destroys the argument that the abatement was introduced in the first place as an interim measure pending the introduction of taxation. It leaves the saving of money as the only argument in favour of it.
I do not intend to press this further this evening, but I am quite certain that we shall come back to this point at Report. I beg leave to withdraw—
The Earl of Caithness: Before the noble Lord withdraws his amendment, he referred to what he said was a major admission by the Government this evening that they still propose to tax invalidity benefit. In fact, it was not a major admission because it has been well known for some time. I reiterate that it is because we have been able to raise the tax thresholds over the years that we have been in office that we have been able speedily to bring in this piece of legislation.
Lord Banks: The impression had certainly got about that as the Government had done nothing as yet to apply taxation they were not now intending to do so. That impression has been dispelled by the noble Earl this evening. There is nothing else that I can add to what I have already said except to repeat that we shall undoubtedly return to this matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
5.45 p.m.
Baroness Trumpington Baroness Trumpington moved Amendment No. 12:
After Clause 14, insert the following new clause:
("Up-rating benefits.
.—(1) The words "in the month of June" shall be omitted from subsection (1) of sections 125 and 126A of the Social

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Security Act 1975 (annual reviews of benefits for purposes of up-rating).
(2) The following subsection shall be substituted for subsection (4A) of section 125—
"(4A) A review under this section or section 126A below shall cover a period of not more than twelve months beginning immediately after the end of the period covered by the last review under the relevant section.".").
The noble Baroness said: As my right honourable friend the Secretary of State has already announced in another place (and which was printed in the Official Report of this House) the Government propose that the 1986 uprating of benefits should take place in July and thereafter, starting in 1987, it should take place in April. This new clause is to enable this change to take place by removing the present requirement to review benefits each June.
The change will mean that pensions and other benefits will be uprated three times between November 1985 and April 1987, and uprating will thereafter take place at the same time as other changes in personal incomes, notably tax and national insurance contributions. It will also coincide with rent and rates changes and thus have an added advantage for local authorities administering housing benefit. I should emphasise that this clause permits the period between reviews to be less than 12 months but it does not allow it to be more.
There will be a consequential amendment to Schedule 6, which appears as Amendment No. 43 on the Marshalled List. I beg to move.
On Question, amendment agreed to.
Clause 15 agreed to.
Clause 16 [Period of entitlement]:
Lord Banks Lord Banks moved Amendment No. 13:
Page 17, line 11, at beginning insert—
("( ) The two lower rates of Statutory Sick Pay are abolished and the highest rate will apply from the coming into effect of this Act to all levels of earnings.").
The noble Lord said: Under the Bill statutory sick pay is to be extended from eight weeks to 28 weeks, replacing the national insurance sickness benefit entirely for most people. Only the self-employed, the unemployed and a small proportion of employees are excluded from statutory sick pay. At the end of 28 weeks, as is the case now for those on sickness benefit, all those still on statutory sick pay will go on to invalidity pension if they qualify. Sickness benefit is a contributory national insurance benefit. Employees have paid into the national insurance scheme with the expectation that they would receive adequate financial support from the state when unable to work through sickness.
Statutory sick pay is paid in three rates, whereas there is only one rate for sickness benefit. The result is that lower-paid married couples suffer under statutory sick pay whereas single people gain. A single man on £60 per week would receive £27.25 sickness benefit but £35.45 statutory sick pay. A married man on £60 per week, on the other hand would receive £35.45 gross (it would net to £32.26) under statutory sick pay as against £44.05 on sickness benefit. That is nearly £12 less. The amendment seeks to rectify the position
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as far as the lower-paid married man is concerned by abolishing the two lower rates and making the top rate apply to all.
It is not satisfactory—and I freely admit this—that a single contributor and a contributor with an adult dependant should be paid the same amount, but that is a defect which is inherent in the statutory sick pay scheme. We cannot, if the scheme maintains its present structure, help the married man who needs help without also helping the single man who is not so much in need of help. I beg to move.
Lord Kilmarnock: It has always seemed incomprehensible to me that people on lower wages should be assumed to have fewer expenses when sick than people on higher wages. Sickness is sickness. I should have thought that the demands on the family are exactly the same. There is another severe defect in statutory sick pay. As it is often lower than sickness benefit, it means that more people are forced to rely on supplementary benefit. That money will still have to be paid but it is coming from the supplementary benefit rather than from the sickness benefit source.
A further consideration which I think that the Government should have in mind is that in extending the period for statutory sick pay from eight to 28 weeks there may well be a danger of employers sacking employees to avoid payment over that prolonged period. I wonder whether the Government have given consideration to that.
Baroness Trumpington: Perhaps I may answer both noble Lords together. As has been explained, the amendment would abolish the middle and lower rates of statutory sick pay with the result that all employees would receive the top rate when sick, no matter what their normal earnings. The middle and lower rates of SSP, which this amendment seeks to abolish, were introduced in order to preserve an incentive to return to work. This is important. It is still open to employers to pay more to their employees if they choose, and many of course do so under their own occupational sick pay schemes. But it would be wrong to compel employers to pay SSP at rates closely approaching or exceeding normal earnings.
The majority of people who qualify for SSP at the lower rates will be young people and married women working part-time who would rarely be able to claim for an adult dependant if receiving sickness benefit; and even the lowest rate of SSP is higher than sickness benefit for a single person. While I am not saying that no one will ever be worse off on SSP than they would have been on sickness benefit, such a situation will not happen often. It is of course open to any claimants to claim supplementary benefit under the normal rules for receipt of that benefit if their situation warrants it.
With regard to the comparison of SSP rates with sickness benefit, the middle and lower SSP rates of £37.20 and £30 compare with a weekly rate of sickness benefit of £27.25. That is the rate payable to a person without an adult dependant. I want to emphasise here that 80 per cent. of people who get sickness benefit are paid at the £27.25 a week rate. Therefore we can say that most people getting the middle and lower rates of SSP are entitled to more now than they would have been from sickness benefit.

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The noble Lord rightly pointed out that unlike sickness benefit SSP is subject to tax and national insurance contributions, but even so the changes in contribution rates for the lower paid from October will ensure that the net SSP received will still be more than the standard sickness benefit rate. That leaves us with those employees who would have been entitled to sickness benefit for a dependent adult and thus would have received in current benefit terms £44.5 sickness benefit compared with gross payments of £37.20 or £30 SSP. I accept that those are the people who concern the noble Lord.
As I said earlier, only about 20 per cent. of people who get sickness benefit are paid that higher rate. We do not have information as to how many employees receive the middle and lower rates of SSP. Employers are not required to keep those statistics. But, as I have explained, common sense points to there being very few people who would be disadvantaged in that way. Most of those people on the lower rates of SSP would not have entitlement to an increase of sickness benefit for an adult dependant.
The noble Lord, Lord Kilmarnock, asked about SSP adversely affecting the job prospects of the chronically sick and disabled; but we have no evidence that that is so and there is no reason to suppose that the scheme should have that effect.
Lord Banks: I am grateful to the noble Baroness for her reply to this amendment. One of the things that she said was that the three rates were introduced in order to give an incentive to people to go back to work; but that does not apply in the case of sickness benefit. It seems to me that it is wrong to have different principles applying to benefits which are used for the same purpose. Certain categories of people get sickness benefit; others get statutory sick pay. It does not seem to me right that we should have a different set of principles for the one than for the other.
I think that the main point to which we wanted to draw attention—and the noble Baroness had accepted that we have a point—is the position of the lower paid person with an adult dependant. As we have shown, those people are worse off on statutory sick pay. It was their plight to which we wanted to draw attention. However, I do not wish to press the amendment and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
On Question, Whether Clause 16 shall stand part of the Bill?
Lord Stallard: I am in just a little bit of difficulty here. I had originally intended to move that Part III and Schedule 4 of the Bill be left out. I have since been given to understand that that means that I oppose the Question that Clauses 16, 17, 18 and 19 shall stand part of the Bill. I seek guidance on whether it is in order for me to speak to the clauses on the Question whether Clause 16 shall stand part of the Bill or whether I have to deal with each one separately.
The Deputy Chairman of Committees (Lord Murton of Lindisfarne): I am advised that the noble Lord can speak to all the Motions together but presumably they will be put separately at the end.
Lord Stallard: I am grateful to the noble Lord. I should have been quite happy to move them separately if it was necessary.
I wish to oppose the Question that Clause 16 shall stand part of the Bill because I do not think that the case for extending the period of statutory sick pay from eight to 28 weeks has been made at all. I do not think that this part of this Bill is necessary. On the contrary, I think that it has aroused a great deal of hostility and anger in all sections of the community, both among those who may receive it and those who will have to administer it. We all recognise that behind all these measures is the cost cutting/nil cost aspect.
I am certainly not arguing that the existing national insurance sickness benefit is adequate or that the scheme is perfect. We have on a number of occasions argued that there is room for improvement. The statutory sick pay arrangements that came into force in April 1983 fell even further short of the inadequate national insurance sickness cover. Right from the beginning the arrangement which placed the responsibility for the payment of the first eight weeks of statutory pay on employers was heavily criticised. I gave a number of examples during the Second Reading of the Bill of the administrative difficulties that small employers in particualr experience. Those difficulties will inevitably be magnified if we increase the commitment from eight to 28 weeks.
I have had a number of letters—I shall not read any of them out at this stage; there will be time later on—to say that small employers are even more concerned than I thought they were. I could not be privy to all their considerations as I had been able to talk to just two or three of them. But it seems that there is widespread opposition among them to extending that statutory sick pay scheme. I can understand why. I should have hoped that noble Lords opposite particularly would have understood why small employers, or indeed any employers, would not welcome the huge administrative burden that is about to be loaded on them by the extension of the scheme to 28 weeks.
Because of their overheads and because no single company can possibly bear the overhead costs in the way that a central organisation can, it must be more efficient and cheaper to operate the sick pay scheme from the centre, as it was with the DHSS operating it through its network of offices, than it is for each separate employer to operate his own. That seems common sense to me, as it does to many small employers. Yet, the Government say that they are simplifying it. I would dispute that and so would the small employers.
Another matter that I mentioned on Second Reading and which I think is worth repeating is that most ordinary illnesses, such as severe colds, 'flu and other viruses, are fairly short lived. It is likely to be the most serious illnesses which last for up to or more than 28 weeks. In consequence, employers more than ever are likely to discriminate against people with records of frequent sickness. That is an inevitable consequence. People who understand industry and commerce and employers, must know that that will happen.
Disability is another one of my particular interests. It is quite often mistakenly equated with poor health

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because of the possibility of absences. The possibility of frequent absences will place those people in an even more invidious position than many of them are in now, given the present circumstances and the present employment situation.
6 p.m.
It has already been noted by employees, small employers and the trade unions that there has been an increase in employers monitoring sickness records. At a recent meeting which I attended in a school, for the first time sickness records of teachers appeared as an item on the agenda. There was already a monitoring of the sickness records of the people in that school. It is happening not only there, but also in industry. It will happen everywhere. It is inevitable that this monitoring process will now take place because of the responsibility, the administrative costs, and everything else that is being loaded on to employers because of this new increased time factor.
I have mentioned the disabled and their difficulties because we know that the rate of unemployment among the disabled is already much higher compared with that among the able-bodied job seekers. An extension to 28 weeks will do nothing to improve their situation. On the contrary; it must worsen their situation. All those who understand their position, and certainly the small businessmen, must accept that.
I repeat the quote that I used on Second Reading. The chairman of the small businessmen's association has said that employers and especially smaller businesses will be viewing disabled applicants with a very unfavourable eye. It must worry all of us that people are even thinking along those lines. Therefore we must begin to query whether this extension is necessary.
I understand, again from recent reports, that some small employers do not even yet realise that they have this kind of responsibility. They have simply said, "Oh, don't bother about it, we will carry on paying", and they have carried on paying a man his full wages while he was absent. That has saved them the necessity of going through all the administrative procedures. They do not realise the implications of continuing with that process into a 28-week period. They have simply glossed over it because it was in relation to a short period of illness and they have not been operating the Act as it ought to have been operated. Thus they now realise that they are going to have a fairly big shock and they are now very strongly objecting to this increase to 28 weeks.
The Minister has said that there was little, if any, difference in the two schemes, the national insurance benefit and the statutory sickness pay. We have proved that for a number of reasons statutory sickness pay is lower, that people when they are sick lose on statutory sickness pay as opposed to national insurance sickness benefit. One of the main reasons for this exercise is to save costs. We understand that. If the Government were as open on this clause as they were on a previous one, they would openly admit that they did this to save money, and therefore they know that people will lose.
We have figures to prove it. For instance, in relation to a married couple, the current rate of national
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insurance sickness benefit is £44.5, whereas the maximum statutory sickness pay would be £42.25. Thus they lose. Single people lose almost the same amount. We know that there are children's allowances, children's benefits and dependents' allowances under the old NISB, which are not given under SSP. We know that SSP is taxed and the other one was not. Thus, there are inevitably bound to be losses to people when they are sick. That is at a time when, in my view, they may be entitled to extra money because of the extra necessity for diets, medicines, special clothing and other costs which they incur as a result of long illnesses. In my view, the attempt to save money is a pretty squalid exercise.
I do not think that the case to extend the SSP scheme has been made out. I never thought that the case had been made to introduce it. Having said that, I recall that when it was introduced in Committee, a Member on the Government side proposed this course of action. He said that it should be extended to 28 weeks. The Government Minister, replying to the debate in Committee, demolished his arguments and pushed the issue to a vote. The Government were opposing any introduction. The Minister said:
"If we were to extend that period"—
that is, eight weeks to 28—
"there would be problems with employees with families. There has already been much criticism of the sick pay scheme on the basis that it provides for flat rate payment, irrespective of family circumstances … That argument would be much reinforced if we were to carry that period beyond 28 weeks".
That did not come from this side of the House at all. It came from the Government Minister replying to a Back-Bencher on the Government side who was trying to do what the Government are now doing in this Bill. I do not know how they will justify these matters, but they will. They have much cleverer research assistants and backers than I have. They can do all kinds of things and no doubt they will. But I suggest that they have not done it correctly.
However, as well as that, the Select Committee favoured a 28-week extension. Those who favoured a 28-week extension favoured it on two conditions. First of all, there would have to be substantial increases in child benefit sufficient to make up for the loss that such families would endure under statutory sickness pay. Now the opposite is true. Child benefit is not being increased. I think it is being cut. It is certainly not being increased to the levels that were envisaged by those who at that time were suggesting that it should be increased to 28 weeks. Secondly, the Select Committee recommended that the low paid should receive normal earnings rather than a substantially reduced figure merely because they were low paid. Both of those conditions would have been acceptable at that time, or would have been partially acceptable, to the people who were suggesting 28 weeks. I therefore submit that the case has not been made out for extension to 28 weeks. It never was made out for the eight weeks and it certainly has not been made out for the 28 weeks. Therefore I oppose Clauses 16, 17, 18 and 19 standing part of the Bill.
Lord Tranmire: In reply to the noble Lord, Lord Stallard, who has just spoken, will the Minister give an explanation of the difference on the taxation side? It is

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perfectly true that the man who is on sick pay and goes on to 28 weeks will have to pay his income tax, his pay-as-you-earn, on it. He will also have to pay his national insurance contributions as an extra on that. It amounts to a great deal.
I think the time is coming when we must have an investigation into the effect of national insurance contributions and pay-as-you-earn on sickness benefit and statutory sick pay. We cannot have one taxed and the other not taxed, and one included in the wage for national insurance contributions. I should have thought the time has come to remit that to a committee to look at and to advise on, so as to get one form of treatment for both.
Baroness Jeger: This may not be the time to have a fundamental debate about the statutory sick pay scheme, though I think that one is very badly needed. We have very little evidence of how it is working out. We have had assurances that matters are going quite smoothly, but I do not know on what evidence that is based. All that I know is that the Explanatory and Financial Memorandum states that as a result of Clause 16 there will be,
"an increase in revenue to the Consolidated Fund from the income tax on statutory sick pay. The overall effect of these changes will be to save about £200 million in public expenditure".
If we are saving £200 million, that means that people on statutory sick pay are getting £200 million less. We are constantly told that any increases have to come out of the taxpayers' pocket. But these increases are going to come out of the pockets of the sick and the disabled, and especially the pockets of those most frequently ill who will be at a financial disadvantage and who will also be at a disadvantage in the employment market because their sickness record causes a nuisance if not an expense to employers. I hope therefore that the Government can say that there is to be some fundamental review of what was a very bad scheme which will be made worse by the extension of time to 28 weeks.
Baroness Trumpington: I shall ask your Lordships to resist all the words of the noble Lord, Lord Stallard. As your Lordships know, Clause 16 extends the duration of statutory sick pay from eight to 28 weeks. As some doubt has been expressed about the advantages of the SSP scheme and the wisdom of extending it, I should perhaps say a few words about this. The move to 28 weeks, liability is not as considerable as it may at first appear. Employers are already dealing with nearly 90 per cent. of short-term sickness spells. The average length of a spell of sickness is about 10 days. Only about 10 per cent. of sickness lasts longer than eight weeks. Of those spells, around half last no longer than 13 weeks. We do not therefore expect the ongoing administration costs of extension to be large. I would, however, stress that we are very conscious of the need to keep procedures as simple and flexible as possible. This is certainly our aim.
We are confident that the extension will be taken successfully on board by employers and will be to the benefit of employers and employees alike. In addition, the employer will be compensated in full for all the SSP that he pays out and for the national insurance contribution payments on that SSP. Although some
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organisations representing small employers objected to the SSP scheme in principle, the majority of comments that we have received on our proposals following the consultation document that we issued have not been against the extension.
With regard to the success of the SSP scheme for both employers and employees, mentioned by the noble Lord, Lord Stallard, SSP was introduced in April 1983 after a long period of consultation with both employers' and employees' representatives, and there can be no doubt about its success. Would the noble Lord, Lord Graham, like me to pause? On the employers' side, the SSP scheme has been successfully incorporated within employers' bankroll systems with little trouble or upheaval, while, for employees, fears expressed about the effect that SSP would have, for example, on job prospects where an employee had periods of sickness, have proved groundless. Indeed, there is evidence—I substantiated this in my speech at Second Reading—that many employees positively prefer the SSP scheme to state sickness benefit. Of course, some mistakes and errors are occurring. It would be very strange if this was not the case. The Government have never sought to deny it. But these are mainly of a very minor nature, and the position will improve with experience.
Also, as I again explained on Second Reading, because we are concentrating our checks on those employers most at risk, the level of mistakes discovered is misleading if applied to all employers. In general, the SSP scheme is working well. With regard to the disabled and SSP adversely affecting the job prospects of the chronically sick and disabled, we have no evidence, as I have said, that this is so. There is no reason to suppose that the scheme would have this effect. It is important not to confuse the terms "disabled" and "chronically sick". Disabled people do not, in general, have bad attendance records. It has been the constant endeavour of Governments of both complexions to increase awareness that a disabled employee is a good employee. His attendance record is likely to be as good as average, if not better.
Before the SSP scheme, employers may have sought to avoid employing people likely to have poor attendance records. I do not believe that SSP has aggravated this. There is no reason to expect this to occur when SSP is extended to 28 weeks. It is interesting to note that in its comments on the proposed extension the TUC confirmed that fears that the introduction of SSP could lead to more dismissals on account of sickness absence did not materialise.
6.15 p.m.
The noble Lord, Lord Stallard, also asked why the extension should be made now when this was opposed by the Government at the start of SSP. As I said during Second Reading, because SSP was a completely new concept for employers, it was thought best to restrict their involvement to the shorter spells of sickness and to look at this again once employers had become used to the scheme. This is sensible. On the question of family benefits, I should emphasise that there is no increase of sickness benefit for children; so there is no difference between SSP and sickness benefit.
My noble friend asked about SSP and tax. The rates of SSP were deliberately set so that, as a whole,

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employees would receive the same net income as they would have done if sickness benefit had been liable for tax and national insurance contributions. As your Lordships know, it remains the Government's intention to bring sickness benefit into tax when it is practical to do so. As for the costings of SSP about which I have been asked, I must make clear at once that there is no question of saving £200 million at the expense of people at the lower end of the scale. I really must ask your Lordships to oppose the amendments of the noble Lord, Lord Stallard.
Baroness Jeger: Before the Minister sits down, can she help me? I quoted the figure of £200 million from page vii of the Bill. I cannot be responsible for any mistake that has been made, although I am not surprised to hear that there are a few more mistakes in the drafting of this legislation.
Lord Stallard: I have listened carefully to the noble Baroness trying to explain this turn-about. I want to read her remarks in detail before making any further comment. I would never agree with some of her figures and statistics. Nor do I accept that small businesses have welcomed this and that there is no problem for them. I shall produce my own statistics, figures and evidence at a later stage. I have reservations about this matter and I shall raise it again at Report stage.
Clause 16 agreed to.
Clauses 17 to 19 agreed to.
Clause 20 [Housing benefits—subsidy]:
Lord Kilmarnock Lord Kilmarnock moved Amendment No. 14:
Page 20, leave out lines 19 to 25.
The noble Lord said: We come now to Part IV of the Bill dealing with housing benefit subsidy. I have raised previously—I was joined on that occasion by the noble Baroness, Lady Faithfull—the worries of the Association of District Councils, of which I have the honour to be a vice-president, concerning the effects of this clause on the undertaking which was given by the Government that there would be no additional costs to local authorities arising from their new responsibilities for the housing benefit scheme.
The association told me that it feared that Clause 20(1)(b) could undermine the 90 per cent. subsidy principle. It saw the power contained there as too wide-ranging, allowing the Secretary of State to make deductions—deductions under almost any heading—at his discretion. The association also pointed out that the exercise of this discretion would not be subject either to affirmative or to negative resolution in either House of Parliament.
The noble Baroness, in reply to me at col. 562 of the Official Report for 3rd June, said that "the amendment"—I think that she meant to say "the clause"—
"will also give the Secretary of State a new power to exclude items which it is clearly not reasonable to meet out of money voted by Parliament for the housing benefit scheme. This power will not be used lightly".
That may be so, but it gives the Secretary of State an unbridled right to exclude any item that he chooses and, of course, that right will continue to his successors.
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I have since heard from the Association of District Councils that its fears about this subsection have been, if anything, strengthened since the publication of the Government's Green Paper Reform on Social Security, which has been mentioned several times this evening. In that review, in Chapter 3, paragraph 70, we learn that the Government consider that the best way in which to subsidise local authorities for their administration expenses under the new housing benefit scheme will be by:
"including administration costs in Rate Support Grant like most other local authority administrative spending. Administration costs will therefore be dealt with in this way from the start of the new housing benefit scheme. The proposal will be discussed with local authority interests".
Frankly, that is rather alarming. When the housing benefit system was introduced the local authority associations were assured that their administrative costs would not be increased.
The consultation document Assistance with Housing Costs of March 1981 stated that the Government accepted the need to reimburse local authorities for any increase in their net administrative costs resulting from the change. However, it rather looks from Chapter 3, paragraph 70, of the review as though the Government may be planning to go back on that and to introduce another system. Of course, the paragraph does conclude with the undertaking that:
"The proposal will be discussed with local authority interests".
Therefore, in view of the (I think) justified alarm of the association and of the fact that there will shortly, presumably, be discussions with local authority interests about how their administrative costs under the housing benefit scheme will be handled in the future, it seems to be quite superfluous to write this power into the Bill—a power which it looks as though will possibly be extremely short-lived. I should like to suggest to the Government that, in view of the fact that the Bill has once again been overtaken by their review, perhaps they will consider withdrawing this subsection pending discussions with the interested parties. I beg to move.
Baroness Jeger: We support the amendment. In view of the housing benefits review which is being undertaken—and we all agree that if anything needs a review it is the housing benefits muddle—it is unfortunate to enshrine in statute and in this particular piece of legislation more confusion about housing benefit. This is not a party issue. I have put forward a view which is widely held among those in the local authorities who have to administer housing benefits and who are experiencing increasing difficulties.
The noble Lord, Lord Kilmarnock, has very clearly set out the arguments. I would only emphasise one aspect which concerns me particularly. The Bill gives so much power to the Secretary of State to decide what is unreasonable when local authorities are working out their housing benefit schemes. If we were to have a Secretary of State with such enormous power that he could go around investigating the housing benefit proposals of every single local authority in the country, then I would suggest, first, that he ought to have something else to do; and, secondly, that it is a deprivation of local democracy which I thought the party opposite were supposed to support.

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There is nothing in the Bill as it stands which could prevent the Secretary of State from deciding that the reduction in subsidy was reasonable or unreasonable. There are no guidelines here; local authorities will not know when the Secretary of State is going to tell them that something which they have decided in good faith to do is reasonable or unreasonable. The noble Baroness the Minister has not been able to help us much today, but surely this is a proposal which the Government, on the basis of good common sense, could take back again. I do not say that there should be no changes in the housing benefit arrangements. However, the Government take this matter on board as part of the total review which is taking place of the housing benefit arrangements.
The Earl of Caithness: I understand the points which the noble Lord and the noble Baroness have made. However, with due respect, I believe that they are based on a misunderstanding of the purpose of this new clause.
The vast majority of local authorities need have nothing to fear from it. Only those authorities which deliberately attempt to abuse the housing benefits subsidy system will be affected. The arrangements for reimbursing local authorities for their benefit expenditure and administration costs will continue to be set out in an annual subsidy order following consultation with the local authority interests. This new clause does nothing to alter that. At Second Reading my noble friend assured the House that the power for the Secretary of State to make deductions from an authority's benefit subsidy will not be used lightly—and it will certainly not be used to make changes in the subsidy arrangements that apply to authorities in general. I can confirm that assurance. The power is there to prevent abuse, and I assure the noble Lord and the noble Baroness that it is needed.
The Secretary of State's existing powers are not adequate to prevent the exploitation of the subsidy arrangements by any authority determined to find a way of doing so. Of course the annual housing benefits subsidy orders can be amended if potential abuses come to light, but it is clearly unsatisfactory for the Government to have to keep reacting in this way and there is always the danger that the more tightly definitions are drawn the more risk there is of unwittingly excluding perfectly proper arrangements made by local authorities.
I must say to the noble Lord, Lord Kilmarnock, that I do not want to go into too much detail because, as the noble Lord knows, there is a case before the courts at the moment. However, to insist to the Committee that we leave out this clause would only facilitate what one local authority is doing to abuse the housing benefits system. I think that that would be a retrograde step and I am sure that the noble Baroness would not want it. We want the housing benefit system to work well; we do not want it to be abused. This clause is included purely to stop the abuse that has happened recently and as regards which there is a court case.
The noble Lord, Lord Kilmarnock, mentioned the Green Paper. I am glad that it has proved to be such fascinating reading to him. The proposals for subsidising local authority benefit and administration costs in the revised housing benefits scheme will be
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fully discussed with the local authority interests. The power in the current Bill is not concerned with these proposals. I repeat, it is there to prevent abuse of the subsidy arrangements in the present scheme. I queried in great detail with the officials whether there should be a narrower power; but, as I have explained, the more tightly it is drawn the more loopholes there are. I knew that this would be raised and I have gone into it in great detail. I am convinced that this power is necessary and I urge your Lordships to accept the Bill as it is.
6.30 p.m.
Baroness Jeger: Is the noble Earl telling the Committee that there is only one case of proposed or expected abuse and it is on the basis of that one single case that we have the clause in this Bill, or is there other evidence?
The Earl of Caithness: No, there is more than one case which, as I said, I do not want to go into in too much detail. Other local authorities are viewing that case with a great deal of interest. If that case succeeds, they are ready to jump on the bandwagon of abuse.
Lord Davies of Leek: I do not want to create a lot of fuss about this. It is mostly phrased anyway; nevertheless I see an ulterior motive. I do not want to make a party point of this; but bit by bit power is going from the people and being centralised under this new system of government—I will invent a word—Thatcherism. It is taking away from the people. Everything is being moved to the centre as though they are gods almighty. Can we not trust the people in local areas? Local councillors are not fools, they are men of all political colours with years of service to the community. When local authorities act daft—if I can use a vulgar phrase—the public come to the rescue of a sane Government. I do not know why the noble Earl is afraid of points of view put from this side of the Committee. I do not want to develop it any further than that because we are all busy and have been speaking long enough about this point.
The Earl of Caithness: I agree with the noble Lord that the great majority of councillors behave sensibly. This is purely a reserve power to be used as a last resort to stop abuse. I am sure the noble Lord, who knows about these matters far better than I do, does not want to see the type of abuse that is being perpetrated in some areas extended and continued. It is for that reason that I discussed this carefully with the officials, and I am now convinced that this power is necessary to stop the limited number of councillors who are abusing the present system.
Lord Kilmarnock: The noble Earl said that he thought that there was a misunderstanding on this point. I doubt that because local authorities are well versed in these matters. He referred to abuse and we agree with him for we do not want abuses. I said at Second Reading:
"While appreciating the Government's wish to prevent exploitation of the scheme by a few authorities (which was mentioned by Lady Faithfull) the association [of district councils] considers that the existing powers of the Secretary of State are adequate for this purpose and that the proposed powers in subsection (1)(b) are unnecessary and undesirable".—[Official Report, 3/6/85; col. 551.]

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That remains their and my position.
When the noble Earl refers to a reserve power it seems to me that he is taking a sledgehammer to crack a nut. He has also referred to a case which is pending and that seems to me to be an additional reason for not rushing into legislation, if it turns out that the powers are already there to prevent the alleged abuse in question.
The noble Earl has said that there will be full discussions with local authority interests which I imagine will take place shortly. That is another reason for not putting this on to the statute book simply for a short or transitional period of time. I was not insisting on leaving out this subsection. I was simply inviting the Government to take the initiative themselves. I was trying to give the noble Earl a chance to make a concession—he has not made any concessions this afternoon—which I am sure his nature inclines him to make from time to time to those of us who speak from these Benches. As he has not offered to do so, I shall not press the matter further. Both I and the association I speak for will want to study carefully what has been said and we are likely to return to this matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 20 agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 15:
After Clause 20, insert the following new clause:
("Vaccine damage payments.
In section 1 of the Vaccine Damage Payments Act 1979—
(a) in subsection (1), for "£10,000" there shall be substituted "the statutory sum";
(b) the following subsection shall be inserted after that subsection—
"(1A) In subsection (1) above "the statutory sum" means £10,000 or such other sum as is specified by the Secretary of State for the purposes of this Act by order made by statutory instrument with the consent of the Treasury."; and
c) the following subsection shall be inserted after subsection
(4)—
"(4A) No order shall be made by virtue of subsection (1A) above unless a draft of the order has been laid before Parliament and been approved by a resolution of each House.".").
The noble Earl said: I have great pleasure in moving this amendment and the associated amendments which are Amendments Nos. 17, 18, 20 and naturally the consequential Amendment No. 44 in the Title.
Amendment No. 17: Clause 28, page 26, line 37, at end insert—
("(3A) Section [Vaccine damage payments] extends to Northern Ireland and the Isle of Man.").
Amendment No. 18: Page 26, line 38, leave out ("(3)") and insert ("(3A)").
Amendment No. 20: Clause 29, page 27, line 15 at end insert—
("section [Vaccine damage payments"];").
Amendment No. 44: In the Title, line 3, after ("to") insert ("amend section 1 of the Vaccine Damage Payments Act 1979 and").
These amendments amend the Vaccine Damage Payments Act of 1979 by enabling my right honourable friend the Secretary of State to specify, by order, the amount of the payment under the Act. As noble Lords will be aware, my right honourable friend announced our intention to increase the payment to £20,000 when he made his statement about the annual up-rating of social security benefits on 18th June. My
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noble friend Lady Trumpington also wished to give the good news to your Lordships' House; but, alas, the Statement was refused by the noble Baroness.
The Vaccine Damage Payments Act 1979 does not contain any power to vary the payments and thus it is unnecessary to bring forward the amendment in primary legislation. We believe that it is also right to take this opportunity to include the power to make alterations if necessary by order in the future. I am sure that the Committee welcomes the Government's initiative more than to restore the value of the payment which has stood at £10,000 since the Act was first introduced. I beg to move.
Baroness Jeger: We are very happy to associate ourselves with this amendment. It is the first hit of good news we have had from the Government today and we welcome it.
On Question, amendment agreed to.
Clause 21 agreed to.
Clause 22 [Pensions and gratuities for members of certain Boards]:
On Question, Whether Clause 22 shall stand part of the Bill?
Baroness Jeger: I rise to ask a few questions about this strange clause. The effect of Clause 22 would enable the Horserace Totalisator Board and the Horserace Betting Levy Board to pay pensions to board members with the cost falling to the hoards concerned and not to the Consolidated Fund. I find this a strange creature in the middle of this very strange Bill. I have to ask, first, why we have to have legislation so that the Horserace Totalisator Board and the Horserace Betting Levy Board can make arrangements for pension schemes. Surely it is the Government's policy that all employers should be making their own occupational pension schemes. It is extraordinary to find in this complex Bill that there has to be statutory consent for this. Why cannot the boards make their own arrangemens? How much are members of these boards paid? Why do there have to be special pension arrangements for them?
I do not want to to be too personal; but I understand that among the members of the board there is Lord Allen, who was former Permanent Secretary at the Home Office, I am sure he is enjoying an index-linked pension, quite rightly; Sir Ian Trethowan may not be totally bereft of earlier pension arrangements; my onetime friend, Sir Woodrow Wyatt, who I hope is receiving a modest pension from the other place. I have to ask this question. Are all the employees, including the most modest employees, of these boards going to get pension rights; or is it only these well-paid gentlemen at the top?
Are we not in danger of setting a very dangerous precedent of members of all boards and all quangos now going to have their pension schemes enshrined in legislation? What would be the consequences of that? I have always thought that when people with a record of public service and of distinction and ability are asked to serve on boards of this kind, it is in some ways an honour; it is an interesting job for them and they are not badly paid. I am in some confusion as to why we have to have their statutory rights for further pensions

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enshrined in legislation. I ask these questions really because I want to know the answers, and not in any envious spirit. That may come later, but not at the moment.
Lord Swann: I must take issue with the noble Baroness. It has been my modest experience that the public sector, on occasions such as this, is extremely cavalier about giving pensions to hard-working members of the public. It took me seven years, despite many promises, to achieve a pension as chairman of the BBC. I am glad to see that my director-general is being brought into the fold. I think it is entirely right and proper.
The Earl of Caithness: The noble Baroness has given us a pretty good canter over this clause. I admire her. I think she is a great stayer in heavy going. My noble friend, who is a true thoroughbred if ever there was one, when faced with heavy going, sent for her whip. Successive Governments have recognised the unfairness of asking people to chair these boards without any provision for pensions and there is a clear commitment to rectify the position—even by the party of the noble Baroness. Over the years, the chairmanship of each of these boards has become close to a full-time occupation. The chairmanship of the Tote requires a full-time commitment and each chairmanship of the other two boards calls for three days a week.
Under the clause, pensions will be determined and paid for in the same way that the salary of the chairman concerned is determined and paid for at present. So, in the case of the Tote and levy boards, the boards themselves will determine the pension for their board chairmen, subject to the approval of the Secretary of State. The boards will pay for the pension from their own resources and not from public funds. In the case of the Gaming Board, the Secretary of State will determine the chairman's pension subject to the consent of the Treasury; and the pension, like the chairman's pay, will be a charge on the Consolidated Fund.
Legislation is necessary in order for the boards to be able to pay these expenses as the enabling legislation, which goes back to the Gaming and Lotteries Act 1963 in the case of the Tote, does not provide for pensions for the chairmen. On the current salaries, I think I shall have to write to the noble Baroness, if she would like the figures.
I hope that the Committee will agree that it is only reasonable to provide pensions for people filling such responsible positions and that this Bill does provide for legislative opportunity to do this—something that both sides have wanted. The noble Baroness's party did not find an opportunity; we have done so. I hope that the Committee will support us.
Baroness Jeger: I thank the noble Earl for his usual courtesy. There was only one question which he did not answer: that is, whether pension arrangements would be made for all employees of these boards and not just the top board members.
The Earl of Caithness: I think that, as they are career employees, they have been treated separately from the other employees of the board.
Clause 22 agreed to.
6.45 p.m.
Lord Stallard Lord Stallard moved Amendment No. 15A:
After Clause 22, insert the following new clause:
("Invalid Care Allowance for Married Women.
The following words shall be deleted from subsection (3) of section 37 of the Social Security Act 1975—
"and a woman shall not be entitled to any such allowance if—

(a) she is married and either—

(i) she is residing with her husband, or

(ii) he is contributing to her maintenance at a weekly rate not less than the weekly rate of such an allowance; or

(b) she and a man to whom she is not married are living together as husband and wife.".").

The noble Lord said: I beg to move Amendment No. 15A. I think that this is something that should be included in the Bill. Even at the risk of incurring further wrath from the noble Baroness, I should still like to spend some more money because I am not one of those who at this moment is advocating massive tax reductions in order to effect savings at the expense of people on social security. Neither can I compare the people who are going to be affected by this amendment with the people who were affected by my noble friend's previous amendment to Clause 22—I think it is a different argument—except that now that the Front Bench have put themselves into a generous mood, following the opposition to the Question that Clause 22 stand part of the Bill, I hope that they can carry that generosity into this amendment.
What I am really saying—and I have said it so many times—is that the invalid care allowance should be extended to married and cohabiting women. That is what my new clause really says. If we are seized, as most of us are, about care in the community, then this is something to which we must turn our minds: the situation that affects married women in respect of this care allowance. It is the only benefit that is available for carers. The vast majority of carers are married women but they are the only group who cannot at this moment receive the allowance. I have spelt out the words and they are written on the Marshalled List.
The wording of the previous Act, the 1975 Act, was based on the assumption that all married women are financially dependent upon their husbands. I do not think that anybody on either side of the Committee would agree that that is the situation now. For whatever reason, it is certainly not the situation now. In fact, statistics prove that 70 per cent. of married women between the ages of 30 and 54 are in the workforce and that a common reason for having to give up work is the ill health of a relative; so that 70 per cent. of them have to give up work, we know, because of the ill health of a relative of one description or another. And one in three women over 35 are restricted because they have to care for a sick or invalid relative.
The invalid care allowance, in my view, would simply give married women the financial protection to which they are entitled. I think that the amount paid to carers at the moment is £21·50 a week. That is not a great deal in itself but it would be a help to the family budget in those circumstances and it would enable the woman's national insurance contribution to be credited—which it is not at the moment—thereby giving her some financial security in her old age.
I daresay that everyone in the Chamber at this moment could think of examples of people who could benefit, and ought to have benefited, because they have given up half their lives (and some have given up more than that) to the care of an elderly or not-so-elderly or sick or dependent relative. They have forfeited their own earning potential, their own rights, their own pension rights, their own careers. All sorts of things have been forfeited and there is no case in justice for continuing on the basis of the assumptions behind the earlier wording in the 1975 Act and previous Acts.
I say that it would be an acknowledgement of the importance that we place on this caring in the community if we were to say that we will recognise the importance of the people who do the caring and that we will now extend this benefit to married women. I do not think that I need say any more at this stage because I know the Government are in this generous mood following the previous amendment. I hope that that will continue and that they will say that they will look at this and come back at Report stage with a scheme that would help at least to ameliorate some of the problems faced by married women in this situation.
Lord Banks: I should like briefly to support the case that has been put by the noble Lord, Lord Stallard. He has put the case extremely well. As he pointed out, the majority of carers are married women and it has always seemed very unfair that they should not get an allowance which, as the noble Lord has said, is not a very large one. I strongly support the aim of this particular amendment.
The Earl of Caithness: Notwithstanding that we have covered this ground before, I am very well aware of the strength of feeling that invalid care allowance arouses. The words which the new clause is designed to omit from the Social Security Act clearly discriminate against married women and cohabiting women and I would not attempt to pretend otherwise.
At this stage I should like slightly to widen the debate from the very good arguments put forward by the noble Lord, Lord Stallard, and refer to the European Commission directive on equal treatment. The directive came into force last December. In early January a test case was put to the independent adjudicating authorities with the ultimate aim of securing a judgment from the European Court on the application or otherwise of the directive to invalid care allowance.
Our legal advice was, and remains, that the directive does not cover invalid care allowance—a view which the commission shares but which ultimately is a matter for the European Court. I understand that the Social Security Commissioner has referred the case to the court and that judgment will be made in due course. If that final judgment is that the directive applies to the invalid care allowance, the directive would override domestic legislation—but only if the European Court decides that the directive applies to invalid care allowance. We would then need to take stock of our own position in the light of the availability of resources and see how the expenditure could be contained.
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Before leaving that issue I should make it clear that any claims we are receiving from married women are being put on ice. They are being acknowledged, but adjudication will await the judgment of the European Court and the subsequent decision of the Social Security Commissioner. Although our advice has been, and is, that the directive does not apply to ICA, we have never used that as a reason for not extending the allowance to married women. Our record on the implementation of the directive is an honourable one. I have made it clear that our principal reason for not extending the allowance is the cost—an estimated extra £85 million a year at current rates. I think it is fair to say that it was undoubtedly cost which prevented the Labour Government in 1975, when they introduced this, including married women at that time. I think it is quite fair for us to take that into account when considering this matter today.
We have to face the fact that resources are finite. I do not wish to detain your Lordships, but even if £85 million a year were available, within the broader context of care within the community it is by no means clear cut that an extension of ICA to married women would be the best use of resources. In other contexts pressure is brought to bear on behalf of other sectors of the disabled community. In this field, therefore, it is by no means certain that ICA would top the list even if the money were available, despite the persuasiveness with which the case has been argued. It is clear that I cannot advise your Lordships to accept this new clause and, given that the whole issue is now before the European Court, I hope the noble Lord will feel able to withdraw his amendment.
Baroness Jeger: Again I thank the Minister and I assure him that this amendment was not moved in any party sense. Many of us were very disappointed when a previous Government did not put into legislation what we have in mind. In fact, my noble friend Lord Stallard, then in another place, moved an amendment to this effect, and tonight he is really repeating a speech he made on that earlier occasion. At least he cannot be accused of inconsistency.
I read very carefully what was said on Second Reading in the other place in November, 1984—a long time ago it seems—and it is very unclear from what the Minister then said whether we would pay this benefit only if the European Court found that we should. The Minister said—and I quote from col. 712 of Hansard of 26th November 1984:
"We think it right to move against that discrimination, although we are not compelled to do so by the EEC directive".
What I am now asking is: if the EEC directive comes out in support of the payment for married women carers, will the Government then have to find the money? I think that is what the noble Earl said—that the money would have to be found if the court made a judgment to that effect. If the court does not do so, are the Government going to give no further consideration to this problem? I do not think it was within the terms of what the Minister said in the other place that the whole thing would be finished on the result of the European Court's findings and that if we find we do not have to pay, we simply will not pay; in other words, we will pay only as the result of a court directive. The Minister said in another place that he

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was considering the whole problem, apart from the European Court.
The Earl of Caithness: It is too early to anticipate the judgment, and much of what the noble Baroness has said depends on how the judgment, when it comes, is phrased. The reference to the court has only just been made by the commissioner and therefore an early response is not expected. When we receive the decision of the Social Security Commissioner in the particular case of Mrs. Drake, we will consider the implications and what the correct course of action should be at that stage.
Lord Stallard: I am grateful to the Minister for his reply and for the mention of the European Court. I deliberately omitted it because I was not sure whether or not I would be in order. I am grateful for his reassurance, or what seems to be a reassurance, that if the court's judgment goes in favour of Mrs. Drake, the Government will be bound to consider the matter favourably. Certainly that puts a respectable light on the amendment and on the reply the Government have given. I beg leave to withdraw my amendment, on that basis.
Amendment, by leave, withdrawn.
Clauses 23 to 27 agreed to.
Clause 28 [Extent]:
Baroness Trumpington Baroness Trumpington moved Amendment No. 16:
Page 26, line 37, leave out ("extends to Northern Ireland only.") and insert—
The noble Baroness said: Clause 28 provides for the extent to which the Bill applies to England, Wales, Scotland and Northern Ireland. This technical amendment provides that Clause 28 (Extent), Clause 29 (Commencement) and Clause 30 (Citation) extend to Northern Ireland. I beg to move.
On Question, Amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 17:
[Printed 25/6/85; col. 701.]
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 18:
[Printed 25/6/85; col. 701.]
On Question, amendment agreed to.
Clause 28, as amended, agreed to.
Clause 29 [Commencement]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 19:
[Printed 25/6/85; col. 701.]
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Alport): I have to point out, in calling Amendment No. 20, that "line 14" as it is printed should read "line 15".
The Earl of Caithness The Earl of Caithness moved Amendment No. 20:
[Printed 25/6/85; col. 701.]
On Question, amendment agreed to.
Clause 29, as amended, agreed to.
Remaining clause agreed to.
Schedule 1 [Transfer and revaluation]:
7 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 21:
Page 31, line 20, leave out ("5") and insert ("3").
The noble Lord said: On Second Reading I raised this point about the proposed 5 per cent. revaluation and suggested that 3 per cent. would be a better figure. The noble Lord, Lord Banks, said that he thought that 5 per cent was about right. So far as I can tell, my noble friend the Minister did not comment upon that particular point when she wound up. It is really quite simple. The point is that there is no really good reason for acquiring a higher escalation of deferred pensions than of pensions in payment, since both are a call upon the same pool of money. There seems to be no reason why deferred pensioners should receive preferential treatment over actual pensioners, or indeed over current employees. I beg to move.
Baroness Trumpington: My noble friend will remember that we looked at this at Second Reading, and I have to tell him that I am not persuaded by his arguments. This whole subject was looked at in depth by the Occupational Pensions Board, and they came up with a 5 per cent. ceiling. We think that is about right. We have been criticised for being too generous to the early leaver and criticised also for not being generous enough. So we find ourselves in the middle. That, as much as anything, leads me to believe that 5 per cent. is a fair and reasonable ceiling.
Lord Mottistone: My noble friend has not taken up my point about comparison between deferred pensions and pensions in payment, nor indeed those of current employees. I honestly think that I have not had an answer to this point, either at Second Reading or now. It is not an adequate explanation to say that the Occupational Pensions Board thinks that this is a good figure, because there is a very valid point here which companies need to have answered. I should have said, when I moved this amendment, but did not because we were rattling along, that in moving Amendment No. 21 I was also speaking to Amendment No. 22.
Amendment No. 22: Schedule 1, page 31, line 26, leave out ("5") and insert ("3").
Lord Banks: Taking up the point made by the noble Lord, Lord Mottistone, I do not know whether he is really comparing like with like. He is saying that because, as he understands it, 3 per cent. is the average of the increases that are made in pensions in payment, we ought therefore to increase preserved pensions by the same amount. But if we are dealing with final salary schemes, then up to retirement those people who now may be receiving only 3 per cent. in retirement have certainly received an increase in their pension which has taken account of inflation, have they not? If inflation has been running at higher than 3 per cent., then they have had a higher increase than 3 per cent. It seems to me that that is the comparison with the preserved pension: what is happening with the preserved pension compared with what is happening with the man who is still in his final salary scheme.
Baroness Turner of Camden: As a member of the Occupational Pensions Board I hope that we do not

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have a different figure from the 5 per cent here. We spent a lot of time talking about it. There were different views on the Occupational Pensions Board at that time, and we came out with 5 per cent. as a majority view. It has to be remembered that this was in the context in which early leavers were regarded as especially disadvantaged. This is trying at least to take away the inequity which early leavers suffer and to make it easier for people to change jobs and not to be tied to their employment. I think this was an issue about which there was agreement on all sides, and there is a lot of public support for this, so I hope that this amendment is not carried.
Baroness Trumpington: May I say that the noble Lord, Lord Banks, is quite right in what he said. I am grateful to the noble Baroness, Lady Turner, who leads me into answering my noble friend when I say that we believe that early leavers are in a different position from stayers. Once somebody has left early there is no one to fight for his interests. That is why we believe that early leavers have been given such a poor deal in the past. They have in effect been subsidising the benefits of stayers, and that is unfair.
Lord Mottistone: I am deeply grateful to both the noble Lord, Lord Banks, and the noble Baroness, Lady Turner, and, at last, to my noble friend the Minister, because I really did not have a satisfactory explanation either at Second Reading or on our first encounter on these amendments, but I now see that there is a very good point to this. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 22 not moved.]
Lord Banks Lord Banks moved Amendment No. 23:
Page 31, line 40, leave out from ("person") to end of line 43.
The noble Lord said: The noble Baroness, Lady Trumpington, will be aware that there is much concern in professional circles about the effect of the new Section 52C as it now stands in the Bill. The object of the section is to secure that trustees and managers of occupational schemes may obtain a discharge by taking out insurance policies or annuity contracts for the benefit of members. Such a procedure is one permitted way of dealing with early leavers. There is, however, a fear that in securing one discharge the Bill will take away another.
Lines 40 to 43 state that trustees or managers are not discharged from their liability unless they comply with Section 52C. But in line 37 the new section refers to the provision of "requisite benefits", and requisite benefits are not relevant to contracted-in schemes. So it would appear that trustees and managers of such schemes who seek to discharge their liabilities by taking out insurance policies or annuity contracts in fact would not have discharged them. Accordingly, the amendment seeks to remove lines 40 to 43, which give rise to this situation. I beg to move.
The Earl of Buckinghamshire: This is a technical amendment. The noble Lord, Lord Banks, has outlined the position very clearly and accurately. The discharge as it is currently drafted is inadequate. Legal
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advice has been taken on this subject and I feel sure that my noble friend on the Front Bench will take note of this amendment.
Baroness Trumpington: In speaking to this amendment I hope I can make some remarks that apply equally to other amendments that have been put down by noble Lords to the new Section 52C. I refer to Amendments Nos. 24, 25 and 26.
Amendment No. 24: Page 32, leave out lines 22 to 31 and insert ("that, except in such cases as may be prescribed, any sums which fall to be paid under the policy or contract can only be paid to the person or persons for whom the policy or contract provided for payment of the amount secured by the policy or contra( t or to trustees for any such person; and").
Amendment No. 25: Page 32, line 23, after ("obligation") insert ("(being enforceable by the earner or a person for whom the policy provides or the trustees or managers of the scheme)").
Amendment No. 26: Page 32, line 25 leave out ("occupational pension scheme") and insert ("the policy or contract").
This new section has given us considerable trouble. It was amended in another place, and it is clear, both from the amendments that we have today and from discussions that my department has had with pensions experts, that we have still not got it right. I had hoped to be able to put down Government amendments to meet those points today, but we are still having problems in drafting them.
I can give an undertaking, though, that I hope will satisfy noble Lords. We shall bring forward at Report amendments to this new section which I think will meet all the misgivings that have given rise to these amendments. I shall not apologise further on behalf of my friends, but we have tried very hard, and I am sure your Lordships will agree that it is best to get this right. I hope that this undertaking will be sufficient to enable both the noble Lords who have put their names to this particular amendment and others not to pursue this amendment now but to await our amendments on Report.
Lord Banks: In view of what the noble Baroness has said, I beg leave to withdraw this amendment, and I shall look forward to seeing the Government amendment dealing with this matter in due course.
Amendment, by leave, withdrawn.
Lord Banks Lord Banks moved Amendment No. 24:
[Printed earlier: col. 710.]
The noble Lord said: Although my remarks are covered by what the noble Baroness has said, I think it would be useful to make the points so that perhaps they can be taken into account in the preparation of the Government amendments. This amendment deals with the new Section 52C(3)(b), which also relates to cases where trustees or managers of occupational schemes discharge their liability by taking out insurance policies or annuity contracts. Where this is done, the transfer value accuring to the member is used to purchase a single premium policy and this policy may be on a with-profits basis. If it is on a with-profits basis, there will be a comparatively small guaranteed amount to which bonuses are added until retirement. The resulting cash value on retirement is used to purchase a pension. The resulting pension will not be the same as the pension which would have been

711
provided had the member remained in the scheme until retirement.
The wording of the lines which this amendment would leave out seem to imply that the benefit provided by the policy must be the same as the benefit which would have been provided by the scheme. The amendment seeks to rectify this. In addition, it is not clear from the current wording whether a policy effected in this way would be enforceable by a member and his executor or by the recipient, who might be the widow or another dependant. The amendment clarifies the position by allowing either. Amendments Nos. 25 and 26, in the name of the noble Earl, Lord Buckinghamshire, are an alternative method of dealing with the same problem, and the noble Earl and I should be happy for either of the two alternatives to be adopted. I beg to move.
The Deputy Chairman of Committees: I have to inform your Lordships that if this amendment is agreed to, I cannot call Amendments Nos. 25 or 26.
Baroness Trumpington: I have nothing further to add. I have already given my reasons for asking the noble Lord whether he would kindly not press these amendments.
Lord Banks: In view of those reasons, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 25 and 26 not moved.]
Baroness Trumpington Baroness Trumpington moved Amendment No. 27:
Page 37, line 8, leave ("his widow") and insert ("to any other person in respect of him").
The noble Baroness said: This is a technical amendment which will put right a defect in the revaluation requirements for flat-rate benefits. The requirements apply, for other benefits, to all dependants' benefits provided by the scheme. That for flat-rate benefits covers only widows' benefits. This is quite simply an error and we now wish to correct it. I beg to move.
On Question, amendment agreed to.
Lord Banks Lord Banks had given notice of his intention to move Amendment No. 28:
Page 37, line 20. after ("to") insert ("payment or").
The noble Lord said: In view of the Government's Amendment No. 29, Amendment No. 28 is not moved.
[Amendment No. 28 not moved.]
Baroness Trumpington Baroness Trumpington moved Amendment No. 29:
Page 37, line 20, leave out ("payments made from time to time") and insert ("a payment or payments made").
The noble Baroness said: This is a technical amendment and I am grateful to the noble Lord, Lord Banks, for not moving his amendment. As he and everybody else will have realised, we are single-minded about this. The definition of a money purchase benefit is defective, because it does not cover the situation where the benefit results from a single payment. This is important, because a transfer value into a scheme
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could well be money purchase based. If the scheme otherwise provides final salary benefits, the money purchase benefit would be the result of a single payment. This amendment will remedy the defect. I beg to move.
On Question, amendment agreed to.
Lord Swann Lord Swann moved Amendment No. 30:
Page 39, line 9, at end insert—
(". Notwithstanding any other provision of this Part, if the scheme is contracted-out then for the purpose of calculating—

(i) the amount of pension which is to be revalued in accordance with this Part; and

(ii) the amount of the revaluation percentage for the period as defined in paragraph 1(2)(a),

the periods to be taken into account shall be the same as the periods taken into account for calculating guaranteed minimum pension and the revaluation of guaranteed minimum pension under that scheme;
except that—

(a) revaluation shall not apply to the pension of any scheme member whose pensionable service ends before 6th April 1986;

(b) pensionable service before 6th April 1985 shall not be taken into account;

(c) the references to the date of the commencement of Part 1 of Schedule 1A shall be construed as references to the 6th April which is or next follows such date of commencement; and

(d) references in the 1975 Act to state pension age shall be construed as references to the normal pension age of the scheme.").

The noble Lord said: I fear that the amendment must look as baffling to your Lordships as some of the schedule itself. In fact, as I shall try to explain, it is intended to "debaffle" your Lordships and a good many other people who deal with pensions, or who are members of schemes, and I think I can explain quite simply how and why that is.
Before the days of inflation it was quite easy to ensure that pension schemes provided reasonable levels of benefit by stipulating the amounts that they should provide from time to time. But with the coming of higher inflation it became necessary to make sure that the pension earned in any one year should maintain its real value right up to the time when it started to be paid. To achieve this, some very complicated requirements for revaluing pensions were built into the Social Security Act 1975. These requirements, however, applied only to occupational pensions used for contracting out. The Bill that we are currently considering introduces equally complicated revaluation requirements into these occupational pension schemes, which are not covered by the 1975 Act because they are not pensions used for contracting out. So far, so good.
7.15 p.m.
But I am surprised to find that the revaluation requirements in the current Bill are significantly different in a number of details from the revaluation requirements of earlier legislation. This means that a scheme member who has contracted out will find complicated differences between the revaluation which applies to the part of his pension used for contracting-out, and the revaluation which applies to the rest of his pension. I believe that we have to try to avoid bringing in yet further complications which are not only unnecessary but which will make it finally

713
impossible for a scheme member, unless he be a genius, to understand how the amount of his pension is worked out.
As I said earlier, the 1975 Act introduced a number of complicated requirements and the pensions world has learned to live with them over the last 10 years. The sole purpose of my amendment is to ensure that we do not bring in further unnecessary complexity. I have to admit that the wording of the schedule that I am seeking to amend is itself terribly complicated. I also have to admit that the wording of my amendment, despite the fact that I have taken expert advice, may be defective. But what it is trying to achieve is that the method of revaluation in the current Bill will follow, wherever possible, the method of revaluation already in use for contracted-out pensions.
I appreciate that some differences may have to survive, such as the link to prices rather than earnings. But I want to make sure that the only differences between the revaluation introduced by the 1975 Act and the further revaluation introduced by this Bill are necessary differences. Why, for example, does the present Bill provide for revaluation to be calculated in calendar years, when contracted out pensions are revalued in fiscal years? That is surely a fertile ground for confusion.
I believe that simplifying these revaluation calculations will not only help all those professionally involved with pensions, but, most important, it will help the ordinary man or woman who belongs to a scheme and wants simply to understand how the pension works. I know that your Lordships value clarity and simplicty and I need say no more. I beg to move.
Baroness Trumpington: I listened with enormous interest to what the noble Lord, Lord Swann, said. He is, I know, chairman of the Company Pensions Information Centre, and therefore brings all their expertise to bear as well as his own. Perhaps I may begin by saying that there is nothing in the Bill to prevent revaluation applying to people who leave on or after 6th April 1986. The starting date for these provisions will depend upon a commencement order. But the Government have said that they intend to bring these provisions into effect on 1st January 1986, and that is still our intention. I agree that there is some attraction in linking increases to tax years, because that is how increases in guaranteed minimum pensions are calculated. But, equally, there is no compelling reason why increases to benefits in excess of GMP should be treated in the same way and using tax years has a positive disadvantage.
It might be helpful if I illustrate this point with an example. Let us assume that our early leaver leaves his scheme on 7th April 1986 and reaches pension age on 8th April 1988. If we use tax years, his increase will be based on one year. But if we use complete years, he will have an increase based on two years. In other words, using tax years would often mean that the leaver would lose out. It is therefore in the best financial interests of the leaver to go for complete years rather than tax years.
I sympathise with anything that will help people to understand occupational pensions. I speak here with some feeling because I, too, find the whole subject extremely complicated; but I really question whether
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one method rather than another will be much easier for the average member to understand. Given the choice I think most of them would rather have more money and that is what in the end this amendment is about. We have considered this whole matter very carefully and sympathetically, but we believe that, on balance, the advantage rests with the provisions in the Bill as drafted and I am therefore unable to support the amendment.
Lord Swann: I am grateful to the noble Baroness. I am aware of the point she raises about the amendment's effect in terms of money. In fact, as the years go by it becomes a trivial difference, but I agree that initially there is a difference. However, I do not wish to pursue the matter, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Banks Lord Banks moved Amendment No. 31:
Page 39, line 35, after ("to") insert ("or in respect or).
The noble Lord said: I wish also to speak to Amendment No. 32.
Amendment No. 32: Page 39, line 37, after ("to") insert I or in respect of").
The Bill gives to members of an occupational scheme the right when their pensionable service terminates at least one year before normal pension age to take a transfer value which may be transferred to another scheme or used to purchase a Section 32 single premium policy. The transfer value is defined as the cash equivalent of the benefits "which have accrued" to the individual. That is the phrase used in line 35 and in line 37 of page 39. On page 43 it is stated that where this process is carried out,
"the trustees or managers shall be discharged from any obligation to provide benefits to which the cash equivalent related".
However, in lines 35 and 37 benefits for widows and dependants are not included. It would therefore appear possible that, even though all the cash accumulated in relation to a particular individual had been transferred, the trustees and managers might still be under an obligation to provide widows' or dependants' benefits. To rectify this the amendment inserts—the next amendment does the same a little further along—the words "or in respect of thus including widows' and dependants' benefits. I beg to move.
Baroness Trumpington: I am so grateful to the noble Lord, Lord Banks, for bringing forward these amendments. We think that the Bill as drafted may well have the desired effect, but I agree that it makes sense to put this beyond doubt. The Government are therefore pleased to be able to accept the amendments.
Lord Banks: Just before we approve the amendments, perhaps I may thank the noble Baroness very much indeed for accepting them and for her cooperative attitude.
On Question, amendment agreed to.
Lord Banks Lord Banks moved amendment No. 32:
[Printed earlier: col. 714]
On Question, amendment agreed to.
Baroness Trumpington Baroness Trumpington moved Amendment No. 33:
Page 40, line 46, leave out ("or friendly societies") and insert ("such as are mentioned in section 52C(3)(a) above").
The noble Baroness said: This is a technical amendment. When someone takes a transfer value and uses it to purchase an annuity the annuity will have to satisfy prescribed conditions. It has always been our intention that those conditions should include restrictions on those with whom the policy or contract can be taken out. It was also our intention that the prescribed conditions should not conflict with new Section 52C, which deals with discharging liability on buy out. We now have doubts whether the power in paragraph 13(2)(b) is sufficient to enable us to put conditions on the company providing the annuity, and we have therefore put this provision on all fours with new Section 52C.
On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
The Earl of Caithness: I think this is an opportune moment for the House to resume, and in begging so to move I think it would be wise to confirm that we shall not return to this Bill before twenty-five past eight.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Hill Farming Bill
7.25 p.m.
Read a third time, and passed.

Local Government (Access to Information) Bill
Report received.
Clause 1 [Access to meetings and documents of certain authorities, committees and sub-committees]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the first amendment:
Page 2, line 14, leave out ("other than the Data Protection Act 1984").
The noble Baroness said: My Lords, in moving my amendment to page 2, line 14, I will for the convenience of the House speak also to the next three amendments on the Marshalled List.
Second amendment: Page 10, leave out lines 13 to 26.
Third amendment: Page 14, line 19, leave out ("other than the Data Protection Act 1984").
Fourth amendment: Page 22, leave out lines 7 to 20.
These four amendments, of which I gave forewarning at Committee stage, in effect alter the relationship of this Bill as it now stands to the Data Protection Act 1984 which is likely to come into force later this year, probably in the autumn. The Data Protection Act is about the protection of information; this Bill is about the disclosure of information. It is important that the provisions of both should operate alongside one another in a way that is as easy as possible for all concerned to understand and operate.
The main relevant effect of the Data Protection Act is to prevent unauthorised disclosure of personal information relating to an identifiable individual and which is either held on computer or is derived from data held on computer. The person or body possessing such information, the data user, is forbidden to disclose it except to a person or persons, the data recipient, whom they have registered with the Registrar of Data Protection. It is an offence to disclose personal information to anybody other than a registered data recipient except in limited exceptional cases which include where the disclosure is required by statute.
At present the Bill forbids local authorities to release information the disclosure of which is prohibited under any other statute. There is, however, one explicit exception to this rule, the Data Protection Act 1984. The purpose of this exception was not to compel local authorities to release personal information held on computer; it was rather to place a decision whether or not to disclose such information in the hands of the local authorities themselves. The schedules to the Bill include among the matters which local authorities may refuse to make public information relating to a particular individual with whom they have dealings whether in their capacity as employer or landlord or in discharging any of their functions. The schedules therefore aim to cover all sensitive information about individuals.
The chief reason for proceeding in this way was that it seemed anomalous to have two classes of personal information in the hands of the local authority; that which is held on computer arising from computer data, which would mandatorily be confidential unless the general public were registered as a data recipient, and that held by more traditional methods on file, where the authority would have discretion of disclosure.
It seemed on balance preferable instead to make the decision to release all personal information, however held, a matter for local authority discretion, as indeed had been the case prior to the Data Protection Act coming into force. On reflection, however, and in the light of discussions with local authority associations, the balance of advantage appears to lie in removing this exception.
This is for three main reasons. First, the Data Protection Act responds to public concern in that it seeks to protect as an intentional act of public policy personal information held on computer or derived from computer data. It quite deliberately stops short of attempting to extend protection to personal information held in other, more traditional forms. It would therefore be difficult to defend mandatory privacy for all personal information held on computer or derived from computer data, excepting information in the hands of local authorities, who would have discretion over disclosure.
Secondly, the law would be clearer and more readily comprehensible to the general public and to local authorities alike if the requirements of the Data Protection Act operated in local government as elsewhere.
Thirdly, in practice a local authority which wishes to exercise discretion over the disclosure of certain

717
personal information on computer or derived from data would still be able to do so. It could register for specified information a data recipient. The recipient could be defined in as narrow or as wide a way as the local authority wished, extending even to registering the general public as data recipient.
These reasons appear to outweigh the case for the exception currently included in the Bill. The local authority associations for their part have made it clear that they, too, would prefer to see the exception removed.
The effect of these four amendments is that Section 100A and Section 50A to be inserted into the Local Government Act 1972 for England and Wales and the Local Government (Scotland) Act 1973 respectively, will now provide in their definition of confidential information, information whose disclosure is prohibited by or under any enactment, no longer specifically excluding the Data Protection Act. They will also have the effect that in supplemental provisions under Section 100H and Section 50H, paragraphs overriding the Data Protection Act are removed. I beg to move.
Baroness Nicol: My Lords, I welcome these amendments and can see the argument for having a consistency of approach as far as the Data Protection Act is concerned. However, I have a slight worry about the application of the amendments, which I should like to put in the form of a question to the noble Baroness, who may be able to answer it.
If an authority, or an official or member of an authority, is in a particular case disinclined to accept the provisions of this Bill, or would find it inconvenient to do so, would not these amendments make it possible for that authority or person to record all documentation on computer and then claim the Data Protection Act in defence? I do not believe that many authorities, or officials or members of authorities, would take such a view, but one can see such a situation arising in the case of, for example, a difficult planning application involving a number of protestors, where the authority might wish to avoid complications and might be tempted to make such a defence. Would it be possible to do that under the provisions of these amendments?
Where a local authority normally, as a matter of course, commits all its information to computer—and this is happening more and more as authorities come up-to-date—it will then be required to take a positive step: that is, to declare either the general public or the people wishing to have the information data recipients, in order to escape the provisions of the Data Protection Act and to supply the information. This seems to me to be placing a barrier in the way of giving information to the general public or to particularly interested members of the general public. With that single reservation, I welcome the amendments and look forward to hearing the comments of the noble Baroness on my remarks, if she has any.
Lord Ardwick: My Lords, my noble friend has raised a difficulty concerning this Bill, but I rise chiefly to give the Bill my full support, which I was prevented from doing earlier. I support this Bill wholeheartedly,
718
not only as a citizen but also as a newspaper man with long and bitter memories of frustrations imposed by local government. In saying this I must declare that I still have a vestigial interest in so doing.
At this time of the year, amendments to a Private Member's Bill are seldom wise for they will have to pass the scrutiny of another place, which is hard-pressed for time. However, I am delighted to learn that the Government will see to it that there is time. Indeed, the newspaper of the Campaign for Freedom of Information (one of the originators of this Bill) which I received today assumes that the Bill has already passed through all its stages in this House and will return to the other place for approval of the final amendments on 5th July. Somebody in high circles has obviously been very free with this information. I trust that he or she is entirely accurate and that very soon this Bill will pass into law.
Baroness Carnegy of Lour: My Lords, I should like to thank the noble Baroness, Lady Nicol, for her continuing encouragement for what I personally regard as a very important Bill. In answer to her question, her main fear that hiding behind the Data Protection Act might preclude the release of information of the kind she mentioned is not justified. The noble Baroness may recall that the Data Protection Act covers only personal information relating to identifiable individuals. A planning application, such as the noble Baroness suggested, would not be affected; nor would computer information about traffic flows or teacher/pupil ratios in schools.
I agree with the noble Baroness that, increasingly, it is likely that local government information will be held on computer and will, if these amendments are passed, be affected by the Data Protection Act. However, one has to ask this question: why should an individual be protected everywhere but not in local government, so far as personal information on a computer is concerned?
I agree that one might be able to think of circumstances in which personal information could be disclosed if it were held on files but could not be disclosed if held on computer. That is true, but there cannot be very much information that local government would wish to disclose which was personal and therefore covered by the Data Protection Act. At the same time, my honourable friend in another place, the Member for Hornchurch, has constantly said that the Bill could be side-stepped by an authority that was determined to do so. A way could be found. The purpose of the Bill is to change the atmosphere in which some councils operate. On balance, I think that this amendment proposes a better way than the existing provision.
On Question, amendment agreed to.
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the second amendment:
[Printed earlier: col. 715.]
The noble Baroness said: My Lords, I have already spoken to this amendment. In doing so I omitted to say how much I welcome the encouragement given to the Bill by the noble Lord, Lord Ardwick. I hope that he is right that the Government are going to find time for the Bill to get on to the statute book, and that the

719
assumption of the broadsheet, which he welcomes, comes true. I beg to move.
On Question, amendment agreed to.
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 the third amendment:
[Printed earlier: col. 715.]
The noble Baroness said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the fourth amendment:
[Printed earlier: col. 715.]
The noble Baroness said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Schedule 1 [Exempt information]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the fifth amendment:
Page 27, line 16, leave out paragraph 13 and insert—
("13. Information which, if disclosed to the public, would reveal that the authority proposes—

(a) to give under any enactment a notice under or by virtue of which requirements are imposed on a person; or

(b) to make an order or direction under any enactment.").

The noble Baroness said: My Lords, in moving the amendment to page 27, line 16, I should like, for the convenience of the House, to speak also to the other amendments to Schedule 1 on the Marshalled List.
Sixth amendment: Page 28, line 10, leave out from ("above") to end of line 14 and insert ("is exempt information if and so long as disclosure to the public might afford an opportunity to a person affected by the notice, order or direction to defeat the purpose or one of the purposes for which the notice, order or direction is to be given or made.").
Seventh amendment: Page 31, line 1, leave out paragraph 13 and insert—
("13. Information which, if disclosed to the public, would reveal that the authority proposes—

(a) to give under any enactment a notice under or by virtue of which requirements are imposed on a person; or

(b) to make an order or direction under any enactment.").

Eighth amendment: Page 31, line 35, leave out from ("above") to end of line 39 and insert ("is exempt information if and so long as disclosure to the public might afford an opportunity to a person affected by the notice, order or direction to defeat the purpose or one of the purposes for which the notice, order or direction is to be given or made.").
May I first point out to the House that there is an error in the last amendment on the Marshalled List. The final lines of the amendment should read:
"or one of the purposes for which the notice, order or direction is to be given or made".
On 17th May, on Report in another place, my honourable friend the Member for Hornchurch moved amendments to deal with certain planning matters. His explanation is at cols. 653 and 654 of Hansard for that day. As a result, Part I of the new Schedules 12A and 7A to be inserted into the Local Government Act 1972 and the Local Government (Scotland) Act 1973, respectively, now each include
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provisions set out in paragraph 13 in each case. In both schedules paragraph 13 of Part I is qualified by paragraph 6 in Part II.
As the Bill now stands local authorities have discretion to meet in private and to withhold reports and background documents where the intention is to require an individual to do something or to stop doing something. On such matters it would, in certain circumstances, clearly be a mistake for a council to signal its proposal in advance: for example, when a building preservation notice is to be served to ensure that a building which the council considers worthy of listing is not demolished or is unsympathetically altered while the Secretary of State is deciding whether or not it should be preserved. In such a case advance warning that the council is considering serving such a notice could defeat its purpose because the building could be demolished or damaged before the notice is served.
On examination, while the purpose of the relevant paragraphs is clear, the wording seems defective in two ways. First, it is too wide. It would make possible the consideration in private of all notices, not just those which place a requirement on an individual. Secondly, it is too narrow. It fails to cover orders and directions which ought to be covered, but which do not come within the definition of the word "notice". An example of this might be an authority which wishes to make a direction through a development order under Section 24 of the Town and Country Planning Act 1971 and to ensure that a general planning permission granted under the order should not apply to development in a particular area or development of a particular site. If advance warning is given of the intention to make such a direction that would enable, as with a preservation notice, the person affected to frustrate the council from exercising its power—perhaps to commence the development at once.
The four amendments to Schedule 1 correct these defects while maintaining the overall intention of the existing provisions. They do not grant local authorities any additional powers to impose burdens or restrictions on the citizen. They merely seek to prevent existing powers being rendered ineffective through premature disclosure as a result of the Bill. I beg to move.
On Question, amendment agreed to.
The Deputy Speaker (Lord Cullen of Ashbourne): My Lords, would the noble Baroness like to move the remaining amendments together?
Baroness Carnegy of Lour Baroness Carnegy of Lour moved the sixth, seventh and eighth amendments:
[Printed earlier: col. 719.]
The noble Baroness said: My Lords, I have spoken to the remaining amendments. I beg to move.
On Question, amendments agreed to.

Rating (Revaluation Rebates) (Scotland) Bill
Read a third time, and passed.
Lord Skelmersdale: My Lords, I beg to move that the House do now adjourn during pleasure until 8.25 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.48 until 8.25 p.m.]

Social Security Bill
House again in Committee.
Schedule 2 [Information about and registration of occupational pension schemes]:
Lord Mottistone Lord Mottistone moved Amendment No. 34:
Page 47, leave out line 48.
The noble Lord said: In moving Amendment No. 34, I should like also to speak to Amendments Nos. 35 to 40 inclusive.
Amendment No 35: Page 48, line 43, leave out from beginning to end of line 18 on page 49 and insert ("of the current name and current address of the occupational pension scheme and the names of any predecessors of the current occupational pension scheme.").
Amendment No 36: Page 49, line 26, leave out from beginning to end of line 24 on page 52.
Amendment No. 37: Page 53, leave out lines 28 and 29.
Amendment No. 38: Page 54, line 19, leave out from ("section") to end of line 20.
Amendment No. 39: Page 55, line 21, leave out ("or 56E(1)(b) or (c)").
Amendment No. 40: Page 55, line 43, leave out ("or 56E(1)(b)").
The operative amendment is Amendment No. 35, and that is the one on which I shall concentrate. At the moment we find at the bottom of page 48 under new Section 56C(1) in paragraphs (a) to (e) a list of a substantial number of documents which the registrar will acquire and which have to be lodged with him. If we then turn to page 52, we see that new Section 56G(1)(b) on line 40 says that if a document:
"is in the custody of the registrar, any person—

(i) may inspect it; and

(ii) may require a copy of or extract from it".

The subject which we are discussing we also discussed when I resisted initially the acceptance of Clause 3. I shall not go into all the detail that we then covered. But a great deal of a company's arrangements for its pension scheme can by the process that I have just described be available to any person to examine in considerable detail. That could be of harm to the company by disclosing to its competitors exactly how it is running its pension scheme. It seems to me that that goes much further than would be either reasonable or desirable.
It seemed to me from the earlier debate that we might escape the registrar but that we shall almost certainly have the register, even though, as I suggested, it might be run by the Occupational Pensions Board, if one likes, for an economy reason. But if we are to have the registrar, it seems to me that we really ought to remove—and this is the purpose of Amendment No. 35—paragraphs (a) to (e) from new Section 56C(1) and replace them with just the current name and address of the occupational pension scheme. That would be quite enough information for anybody who
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wished to know what sort of pension scheme they were concerned with or might potentially be concerned with. They could then find out all the details that they needed. What is important is that the information would be within the control of the company or the insurance company or other body organising the pension scheme. They can make sure that the wrong kind of person does not obtain this information The wrong kind of person is not the bona fide employee of the company or potential employee of the company, but somebody wanting to do something clever with the information they may gain.
Thus, as we said earlier when we were talking about Clause 3, everybody agrees that it should be easy for people to find out what pension schemes affect them, but it is not reasonable for other people who may have other purposes. Somebody mentioned clever journalists. It is not entirely in the interests of a company to have clever journalists writing articles about the details of their pension scheme. Thus, I think if we are to have the register, it needs to be restrained in the way that Amendment No. 35 requires. All the other amendments, Amendment Nos. 34 to 40. are consequential on this one. I beg to move.
Baroness Trumpington: Before I answer my noble friend, I cannot resist a little tit for tat. Last Wednesday I endured the taunts from the noble Baroness about the absence of people from my Benches. I have to say that I outnumber her representation this evening. It may not be great, but it is a damned sight better than on her side‡
It has become apparent over the years, whenever the issue of a pension schemes register is discussed, that there are very different views about the information which such a register should contain and the functions which it might perform. On the one hand, there is considerable support for a deposit register which could contain the deeds, rules and annual reports of schemes and be open to the public inspection. On the other hand, the amendments proposed by my noble friend Lord Mottistone would provide for simply a tracing register containing only enough information to enable early leavers, for example, to contact schemes with which they may have lost touch. Others would advocate no register at all.
Serious concern has been expressed about the costs and administrative burden which a register might place upon schemes, and about the confidentiality of information which might be placed on public record. The Government have listened carefully to the arguments which have been put forward at various times. That is why we have said that we are still open-minded on the issue. An evaluation of the costs and feasibility of the different options for a register is being prepared and I am sure my noble friend will agree that it would be unwise to reach a final decision before we have had an opportunity to consider all the facts.
Of course we are aware of the fears expressed about the disclosure of certain financial information. This will be taken into account in considering the results of the evaluation now being carried out. In the meantime, I can assure my noble friend that we shall certainly have very full regard to the views which have been expressed. I would therefore ask my noble friend Lord Mottistone to withdraw his amendment.
Lord Mottistone: Two points from my noble friend's remarks strike me. One is that she said considerable support was given to many documents as listed currently in the Bill. Can she enlarge on that and say where the considerable support comes from and, if it is not immediately available to her, can she perhaps let me know in a letter? I ask this because it could be that the considerable support comes from the very sources against which protection ought to be provided. It is difficult to know. As my noble friend said, my amendment would enable an individual, who was personally concerned because of a pension or possible pensions if he went to work for a company, to go only to the people who were providing the pension scheme, which is exactly what I want to achieve. That would seem to me to be perfectly all right for my individual friend. I think perhaps the considerable support might come from people who would derive other benefits from being able to get at this information and would not help the person we want to help, who is the potential pensioner. That is the first point.
The other point is this. My noble friend said that she and her department were considering all the facts before they came to a conclusion. However, she did not really give an indication as to when all these facts might have been examined. Is she able to go as far as to say that that would happen so that she would have time to put down an amendment of her own on these lines at Report stage, or, at the worst, Third Reading? I should hate this Bill to leave this Chamber while the Government were still investigating the facts. Can my noble friend help me on that matter? Is the moment right for me to sit down and invite her to reply?
Baroness Trumptington: That is beautifully timed. On the first point I shall write to my noble friend. On the second point, the answer is: in the near future.
Lord Mottistone: Can my noble friend say that it will be before Report stage? I must press her on this because I think that that would be a matter of considerable importance. If at Report stage my noble friend comes up with an amendment which is perhaps on the lines of that which I have, that is fine and we can forget about it. However, if she does not come up with one, we have to do it at Third Reading and by the rules of the House it would not be proper for me to go into battle on Third Reading. Furthermore, if the outcome at Third Reading is that her amendment which she then puts down is not good enough, we will not have time to correct it because we are the Second Chamber taking this Bill. Thus, it is very important that a conclusion is reached before Report stage.
Baroness Trumpington: Yes, I totally take the points made by my noble friend. He must remember that the Bill has flexibility for requiring any kind of register. I cannot really say whether I shall be in a position to put down an amendment at Report stage. However, when I am writing to him on the first point, I shall include the information he has asked for, and if the noble Baroness wishes to see a copy of the letter, it will be in the Library, but I shall see that the noble Baroness and perhaps the noble Lord, Lord Banks, have copies of any such letter containing that information. We shall then have to take the matter from there.
Lord Mottistone: Yes, that is fine. There is just one final point. What I sought to convey to the Committee when I introduced this amendment was that we have many facts here which are open to "any person"—and I turn again to page 52, line 40. Perhaps when my noble friend is considering any amendment she may have she will bear in mind that that term is very wide indeed. One may think that the term "any person" will invite all kinds of trouble. Therefore perhaps my noble friend may care to think about that. Having made that point—
Baroness Trumpington: The point is taken.
Lord Mottistone: I am assured that the point is taken. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 35 to 40 not moved.]
Schedule 2 agreed to.
Schedules 3 and 4 agreed to.
Schedule 5 [Minor and consequential amendments]:
Lord Mottistone Lord Mottistone moved Amendment No. 41:
Page 64, line 34, leave out from ("Act ") to ("at") in line 35 and insert (" (earnings limits) ").
The noble Lord said: this amendment is a paving amendment to Amendment No. 42, which is the operative amendment.
Amendment No. 42: Page 64, line 37, leave out from ("contribution") to end of line 39 and insert ("the contracted-out percentage of so much of those earnings as exceeds the current upper earnings limit.").
I talked at some length on this point at Second Reading. In another place the Government put down an amendment dealing with this part of the Bill which was not good enough to make the proper adjustments financially that would encourage companies to concentrate on employing the lower paid and not the higher paid.
I pointed out at that stage that because of the effect of this part of the Bill, if not amended, there was a risk that the large companies and more especially the small companies that perform what are called "high tech" tasks might say, "We have to have the high-paid people. We cannot afford to lose them. And so, because it will cost us so much to have them, with the Bill unamended, we shall have to make economies at the bottom end". I am sure that my noble friend Lord Young would find this especially distasteful. The whole point is that this should work the other way round. I invite my noble friend, therefore, to examine my remarks at cols. 546 and 547 on Second Reading, which give the main argument showing why this is important.
It is a fact that under the Bill, as at present constituted, some big companies will be seriously affected. IBM estimates that in a full year it will lose £13 million as the Bill is now written; British Petroleum estimates £9 million; Shell £7 million, and ST and C £4.5 million; ICI £4 million, and so on. There are a whole range of smaller companies that would lose at least £400,000 to £500,000. There is really a need to pay regard to Amendment No. 42, which would ensure that the employers' contracted-out rebate should apply above as well as below the

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£265 a week upper earnings limit. Correcting the anomaly, it has been estimated, would cost about £300 million in a full year and about £130 million in the current 1985–86 year. Those figures need to be set against the sorts of figures that the Treasury estimated would be the result of the Bill as it stood. But, as I explained on Second Reading, the figures that the Treasury produced to justify it took in all industry, public industry as well as private industry.
Public industries on the whole probably would gain because of the balance of their employees. It is private industry that will lose. As one company has said:
"This additional burden"—
referring to the Bill unamended—
"goes a long way to offset the benefit that we have derived from abolition of the national insurance surcharge".
As such a tremendous effort was made by the Government to abolish that surcharge—it took them some years to get around to doing it—it seems an awful pity to negate it by not making a compensating correction to what they are trying to achieve here.
My amendment is phrased carefully so that it does not strike at the root of what the Government are trying to do. It tries only to make an offsetting balance. It can, however, make a tremendous difference as to how companies behave as a result. I hope that, even if the Government cannot accept the amendment right now, my noble friend will say that they will have yet another look at this point in order to be quite certain that they are not trying to save a few hundred thousand pounds or perhaps even a few million pounds to satisfy the Treasury, which is all theoretical anyhow, before assessing on a proper balance how it will affect private industry which will be the sector to suffer and which earns the money to keep the rest of us going. I beg to move.
8.45 p.m.
Lord Young of Graffham: As my noble friend has explained—I have read carefully cols. 546 and 547 on Second Reading—his intention in the amendment is to extend the contracting-out rebate to the employers' contributions which, by virtue of Clause 7(1) of the Bill, will become payable from 6th October on earnings above the upper earnings limit; that is, some £265 a week for weekly earnings or £13,780 a year. The director-general of the CBI wrote to my right honourable friend the Secretary of State making the same suggestion. My right honourable friend has replied explaining the technical objections to this proposal. I hope that it will assist your Lordships if I now repeat that explanation.
The contracting-out rebate that operates, as I have explained, over that part of the earnings in the range of £35·50 to £265 a week is actuarially related to the liability to provide graduated minimum pensions which contracted-out employers accept in their occupational pension schemes. This liability is, in turn, related to the earnings-related pension liability of which the state itself is being relieved to the extent that a rate above £265 a week would mean giving a new kind of rebate that was quite unrelated to the contracting-out provision. It would amount to a straightforward concession to contracted-out employers whereas others, not contracted-out but
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equally affected by the abolition of the upper earnings limit for employers' contributions, simply would not benefit.
I accept that the entire structure of the earnings-related pensions and contracting-out are very substantially affected by my right honourable friend's recent Green Paper. Under these proposals this technical objection simply would not arise. But then neither does the contracting-out rebate. It would be wrong to tinker with the present system in a way that prejudices the introduction of important new changes such as my right honourable friend has proposed.
In its letter to my right honourable friend, the CBI costed this proposal—here, I agree with my noble friend—at £300 million in a full year. This is a significant objection. It would significantly reduce the £800 million to be raised from employers by abolishing the upper earnings limit in order to offset the £880 million that they receive by virtue of the reduced liability lower down the earnings scale. I am sure that my noble friend would agree that £880 million or £800 million is not mere tens or hundreds of thousands of pounds. We are dealing with substantial amounts of money, in the view of the Treasury or elsewhere.
As your Lordships will see, therefore, employers are already net gainers from our proposals to the tune of £80 million. I suggest that the understandable concern about the abolition of the upper earnings limit, when applied to particular employers' needs, has to be seen in the wider context. My noble friend was right to remind us that last year we were able finally to abolish the national insurance surcharge which will save employers almost £900 million in a full year. This year, as the Chancellor made clear in his Budget speech, there was less room for manoeuvre. It was not possible to make further substantial reductions in employers' costs. Nevertheless, no one would dispute the need to encourage employment; hence the measures now before your Lordships. As I halve said, employers will gain £80 million overall from these measures despite the abolition of the upper earnings limit on their contributions.
About 1·75 million employees earn more than the upper earnings limit. In most cases the extra employers' contributions will amount, at most, to only about 2 to 3 per cent. of gross salary. There is evidence that earnings for such employees have been rising at about 2 to 3 per cent. in real terms for the last two or three years, suggesting that costs of that order can be absorbed without evidently too much difficulty.
I appreciate that there will be some cases where the costs are harder to absorb. But it is worth keeping in mind that paying 10·45 per cent. on all earnings, as employers will have to do for their higher-paid employees, is no more than the employers of the lower paid have done for some time. Indeed, before we started to phase out the national insurance surcharge such employers paid a total rate of 13·5 per cent. In contrast, under the present system, employers' contributions are just 6 per cent. of gross salary for someone on £25,000 a year and 4 per cent. only at £35,000 a year.
In my view the overwhelming point is that it will now be cheaper for any employer to take on new, lower paid employees. Removing the ceiling on

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employers' contributions may have increased costs in respect of some 1·75 million employees, but it has reduced costs for 8·5 million—almost five times as many. It encourages employers to provide jobs, and potential employees to take them, in that one part of the labour market where the problem of unemployment is most acute.
My noble friend's amendment would significantly weaken the Government's ability to provide the encouragement to employment where it counts most. Seen in this wider economic context, I hope that my noble friend will see fit to withdraw his amendment.
Lord Mottistone: It is difficult to agree with a fair amount of what my noble friend has said. As regards the point about my amendment significantly reducing the Government's opportunities to encourage employment in the lower level, I fear—and I said this also on Second Reading—that without my amendment that could be the outcome in many of the companies which matter; namely, the companies which are earning the money for us. That is something of which the Government really must take account instead of producing arguments against it.
My noble friend said on two occasions—and I also mentioned this in my Second Reading speech—that the net advantage or the forecast advantage was £80 million across the board. The difficulty is that companies are all different. The £80 million will be shared out in different ways. However, the companies which particularly need to benefit from it—private industry—will not be nearly so well off as the heavy old creatures which have been around our necks for years. Therefore, the Government should not look at global situations quite so much; they should try to identify where the bite is going to be felt. I quoted several companies which will be individually over £1 million—indeed, over £3 million—worse off because of this. They are all important companies and companies upon which we depend.
I shall not of course make a fuss about this amendment now. However, I should be very grateful if my noble friend would not rely too much upon what the Chancellor wrote to the Director General of the CBI as though that were the end of the story. I hope that he will take this message away and try to persuade the Treasury, I suppose, to have a serious look at the matter or else one may feel that the Treasury are not really interested in the country prospering in the long run. Indeed, that is what we are talking about; we are talking about the companies which earn the money for us. That is much more important than making minor adjustments to balance some part of their books. We must look at what matters to the companies which are earning our living overseas. That is where they should concentrate their efforts. I hope that my noble friend will be able to convey that message to his noble friends and his right honourable friends so that they will have another look at the matter. In the meantime, I shall have another look and I shall almost certainly come back on Report with something. However, if my noble friend comes back with something else which is acceptable, then that will be better still. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 42 not moved.]
Schedule 5 agreed to.
Schedule 6 [Repeals]:
Baroness Trumpington Baroness Trumpington moved Amendment No. 43:
Page 69, line 26, column 3, at end insert—
("In section 125(1), the words "in the month of June".
In section 126A(1), the words "in the month of June".").
The noble Baroness said: I beg to move Amendment No. 43, which is consequential upon the new clause which follows Clause 14.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to to.
In the Title:
The Earl of Caithness The Earl of Caithness moved Amendment No. 44:
[Printed earlier: col. 701.]
On Question, amendment agreed to.
Title, as amended, agreed to.
House resumed: Bill reported with amendments.
House adjourned at four minutes before nine o'clock.

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