Sitting of 19 March 1985

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

    Secondary Education
    Mr. Campbell-Savoursasked the Secretary of State for Education and Science whether he will review the progress of secondary education reorganisation.
    The Secretary of State for Education and Science (Sir Keith Joseph): Local education authorities are on target to remove 1 million surplus school places by 1986. When I consult their associations to set targets for 1987 and later, I shall stress the need to review progress in reorganising secondary schools where the decline in pupil numbers will be at its sharpest for the rest of the decade.
    Mr. Campbell-Savours: Is the right hon. Gentleman aware that just as a backlog of building repairs and maintenance for hospital buildings can damage health care, so, with needy education expenditure, a backlog of maintenance, repairs and modifications, particularly where reorganisation of secondary education is taking place, can damage educational provision? Is he further aware that people are willing to pay higher taxes to ensure that such modifications take place and that — for example, in my constituency—without them secondary reorganisation will be threatened?
    Sir Keith Joseph: The Government always respect the need for capital to implement approved school reorganisations, as occurred in Cumbria this year. Backlog in maintenance has been going on under one Government after another for many years.
    Mrs. Kellett-Bowman: Will my right hon. Friend accept my thanks and those of many people in Lancaster for preserving the girls' grammar school, for enabling it to work on harmoniously in its present buildings and for preventing chaos and disruption at Greaves and Castle schools?
    Sir Keith Joseph: The Government try to take decisions that are in the best interests of the children. I am grateful to my hon. Friend for those remarks.
    Mr. Freud: Will the Secretary of State give an assurance that no reorganisation will be undertaken if it gives a higher priority to the selected sector than to the benefit of all children?
    Sir Keith Joseph: The record shows that we try to make decisions which are in the interests of all the children
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    concerned. I do not use strong language frequently, but it was absolutely wicked of the Labour party, when in government, to abolish direct grant schools.

    Student Grants
    Mr. David Atkinsonasked the Secretary of State for Education and Science when he expects to complete his review of student grants.
    Mr. Sternasked the Secretary of State for Education and Science when he expects to publish a consultation document on the future funding of higher education by parents and students.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Peter Brooke): As my right hon. Friend announced on 24 January 1985, a consultative paper will be issued as soon as practicable. After an appropriate period of consultation, the Government will decide on any changes which they may wish to introduce and will publish proposals accordingly.
    Mr. Atkinson: Will my hon. Friend, in his review, investigate what savings can be made, perhaps by computerisation, to reduce the current bureaucratic duplication of the administration of student grants that goes on both by the university departments concerned and by education authorities?
    Mr. Brooke: Local education authorities administer the system effectively. We shall have to consider the administrative implications of any changes in the awards system arising out of the review.
    Mr. Fatchett: What steps is the Minister taking to ensure that the widespread anxieties that are felt about the real level of student grants and about the Government's possible intention to move to a student loans system will be taken into account, and that a future system will ensure that children from low income families have a right of access to higher education?
    Mr. Brooke: My right hon. Friend has always made it clear that the review will take into account the interests of both the taxpayer and parents. I am always slightly puzzled by remarks from Opposition Members about low income families, in view of the fact that they bequeathed to us a parental contribution scale that was regressive in its effect.
    Mr. Stern: In his review, will my hon. Friend take into account the strong desire of parents, students and, as expressed this week, the Association of University Teachers for an expansion of higher education? Does he agree that the only way to achieve that is to find a fresh source of funding which does not involve either the taxpayer or a forced levy on parents?
    Mr. Brooke: I am grateful to my hon. Friend for opening up the possibilities of the review. The review will cover all possibilities.
    Mr. Wilson: If it proves impossible for the Under-Secretary of State to complete the review before the next academic session, and bearing in mind that, in real terms, the grant has fallen over five successive years, will he undertake to give a top-up to the proposed grant for 1985–86 so that students are not placed in a position of virtual poverty?
    Mr. Brooke: My right hon. Friend the Secretary of State has already announced the grant levels for 1985–86. We shall have to see how we get along in terms of the timing of the consultation.
    Mr. Rhodes James: Will my hon. Friend, who has many friends on both sides of the House, look especially in his review at the problem of discretionary grants and the inequities between one county and another?
    Mr. Brooke: I cannot give my hon. Friend a commitment that the review will be that wide. I understand his interest in the matter.
    Mr. Andrew F. Bennett: Does the hon. Gentleman accept that this review is a sham because all the money will be pre-empted today in the Budget? Does he accept that what is really needed is more money for student grants in order to give students a decent basic income? If the hon. Gentleman cannot find that much money, will he at least return student grants to their 1979 real value?
    Mr. Brooke: The hon. Gentleman knows that £600 million is spent on student support at the present time. That is the most generous level of support in any Western country.
    Mr. Heathcoat-Amory: Will my hon. Friend affirm the general principle that, where possible, students should be funded by their parents and not by other people's parents in the form of the general taxpayer?
    Mr. Brooke: The consultative paper will not prejudge any particular method of student support. Parental contributions may well continue to have a role to play in student support in the future.

    Teachers (Pay)
    Mr. Meadowcroftasked the Secretary of State for Education and Science what representations he has received as to comparability of teachers' pay with other groups.
    Sir Keith Joseph: Comparability with the pay of other groups is a recurring theme in representations to me by teachers about their pay. The prime factors in settling pay are the employers' capacity to pay and their need to recruit and retain teachers of appropriate quality.
    Mr. Meadowcroft: Is the Secretary of State aware that the report of the Burnham committee's pay data working group shows that, over 10 years, the pay of teachers compares unfavourably with that of many other groups in the public sector? Surely comparability is important, because it gives some idea of the Government's perception of the importance of the teaching profession.
    Sir Keith Joseph: I disagree with the hon. Gentleman. Chasing past relativities means a return to a self-defeating inflationary spiral, which would price even more people into unemployment.
    Mr. Madel: As the unions involved in the current dispute are due at ACAS tomorrow, should not classroom disruption end at once to give ACAS a reasonable chance of solving the dispute?
    Sir Keith Joseph: I cannot believe that classroom disruption is in the interests of teachers themselves, let alone of children. I hope that they will give up disruption.
    Mr. Flannery: Is it not a fact that teachers' pay—[HON. MEMBERS: "No."] Perhaps hon. Members will listen.
    Is it not a fact that teachers' pay has fallen a long way behind the pay of other people? Is it not disgraceful that a teacher, who has taken A-levels and undertaken four years of training, should earn less when he or she begins to teach than an ill-qualified young policeman with only three months training? Has that not driven teachers to industrial action which, without the type of provocation in which the Secretary of State has engaged, would never have needed to be taken?
    Sir Keith Joseph: I do not for a moment denigrate the hard work, the difficult job and the devotion to duty of most of the teachers, but they should bear in mind that they have one of the most secure jobs in the country, that they are important and that they have been offered, and have refused, a 4 per cent. pay increase and all arbitration measures. They have refused even to discuss proposals for appraisal. I cannot believe that that is in their interests.
    Mr. Key: Does my right hon. Friend agree that the National Union of Teachers is seeking to prove that might is right because it is the biggest teaching union, that it has divided the teaching unions, and that the other teaching unions disagree with it fundamentally and are prepared to conciliate, arbitrate and negotiate to solve the problem? [Interruption.]
    Sir Keith Joseph: It is no good Opposition Members jeering at my hon. Friend. The teaching unions seem to be split.
    Mr. Boyes: Is it not a fact that local government officers have had a much greater pay rise than teachers during the 10 years between 1974 and 1984? I welcome the rise in pay for officers in local authorities, but is it not a fact that those delivering the service and teaching in the classrooms should have had at least as big a rise as administrators in the service? Is that not a reason why teaching morale is as low as it has ever been? Is it not also a fact that teachers' resources have been continuously cut and that our most precious asset, children's education, is suffering as a consequence?
    Sir Keith Joseph: I do not think that that justifies the return to a particular year, which the teachers' union leaders advocate, as every other group would seek the same argument of comparability, which would start another inflationary spiral, with even more unemployment.
    Mr. Colvin: Will my right hon. Friend acknowledge that there are not enough policemen, yet there are too many teachers?
    Sir Keith Joseph: My hon. Friend is surely right that the pay rise for the police was necessary to staunch an extremely sharp outflow of policemen at the time. I do not accept that there are inherently too many teachers, although the House knows that, because of the fall in the number of school children, a small decrease is being brought about in the teaching force.
    Mr. Radice: Will the Secretary of State tell the House and parents what he is doing to help solve the dispute?
    Sir Keith Joseph: The function of the holder of my office is to play a certain part in the negotiations, which are primarily between the employers and the teachers.
    Mr. Tracey: Can my right hon. Friend say how many representations in favour of the teachers' pay claim he has received from parents and taxpayers because, if my constituency is anything to go by, it will be few?
    Sir Keith Joseph: A significant minority of the representations reaching us from parents are in favour of the teachers; but I suspect that the purpose of the teachers in disrupting children's education is not calculated to win the esteem of most parents.

    Education Meals Service
    Mr. Easthamasked the Secretary of State for Education and Science if he will make a statement on the education meals service.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Bob Dunn): The school meals service is the responsibility of the local education authorities. A number of individual authorities have made substantial net savings in expenditure in this area since 1979–80, and the Government expect others to do the same.
    Mr. Eastham: Is the Parliamentary Under-Secretary of State aware that when the Government issue circulars, especially about the privatisation of school meals, there is no reference to the supervision of school meals, which forms a considerable part of the school meals' costings? In the city of Manchester, for example, the supervision of school meals costs £750,000. Will the Minister ensure that if authorities privatise school meals the cost of supervision is included?
    Mr. Dunn: I understand the hon. Gentleman's point, but I believe that, far too few local education authorities are embarking on the privatisation of the school meals service. If they did, a great deal of money could be saved and spent in other areas of the education service.
    Sir Geoffrey Finsberg: Does my hon. Friend agree that, apart from the possibility of privatisation, authorities, such as the Inner London education authority, could raise a substantial sum merely by keeping their school meals' prices in line with the cost of living?
    Mr. Dunn: My hon. Friend is entirely right. He knows, and the House must know, that ILEA has not increased school meals charges since 1979. In that sense, a great deal of Londoners' money is being spent unnecessarily on the school meals service, instead of being a saving for ratepayers.

    Teachers (Pay)
    Mr. Heddleasked the Secretary of State for Education and Science when he next plans to meet representatives of the Professional Association of Teachers to discuss the current pay claim.
    Sir Keith Joseph: I have no current plans to do so, but I meet representatives of the Professional Association of Teachers fairly frequently and I know their position.
    Mr. Heddle: Does my right hon. Friend applaud members of the Professional Association of Teachers and others who, through moderation, conscience and conviction, are continuing to set a standard of dedication to our schoolchildren? Is not the answer to settling the
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    teachers' pay dispute for them to adopt the new assessment procedures already adopted and approved by the local education authorities?
    Sir Keith Joseph: I agree with my hon. Friend in applauding those teachers, whether members of the PAT or not, who stick to serving the children, as is their professional duty.
    Mr. Spearing: Does the Secretary of State agree that on Sunday, in a public statement on the pay dispute, he made it clear that in his opinion only a minority of teachers were unsatisfactory? Would it not be more appropriate, in the second half of the 20th century, to provide all teachers with the support to make them better teachers, without arbitrary and impossible forms of assessment? Would not that approach get the agreement not only of the PAT but of all teachers in the profession?
    Sir Keith Joseph: An appraisal system for all teachers is very much in their interests. It will permit the career development of every teacher. After all, appraisal is now going on informally. All that I am seeking is that it should be done formally for the benefit of all teachers.
    Mr. Greenway: Is it not sad that some teachers, who are not members of the PAT, have got themselves into a cycle of striking and refusing to teach examination pupils, mark books, and so on, thereby increasing classroom difficulties, which makes them suffer from extra stress when they return to the job?
    Sir Keith Joseph: I agree with my hon. Friend.
    Mr. Radice: May I remind the Secretary of State that he is actually responsible for running education in this country? [Interruption.] Hon. Members should read the Education Act 1944. The right hon. Gentleman therefore has a duty to answer the question that I asked earlier: what is he doing to help solve the teachers' dispute?
    Sir Keith Joseph: The hon. Gentleman knows that we have a decentralised system of education in this country and that I have certain statutory duties, but he also knows that both the employers and the teachers' representatives are today, and I believe tomorrow, having a meeting with the Advisory, Conciliation and Arbitration Service.

    Student Grants
    Mr. Canavanasked the Secretary of State for Education and Science what is the purchasing power of (a) the minimum and (b) the maximum student grant expressed as a percentage of the value in May 1979.
    Mr. Brooke: The purchasing power of the minimum and the maximum student grant for 1984–85, expressed as a percentage of the value in September 1978, is 58 per cent. and 91 per cent., respectively. Grants are paid from September, and it is appropriate to apply the corresponding price indices.
    Mr. Canavan: Is the Minister aware that the Government's last reported climbdown on the student grants issue was of benefit to only a minority of better-off parents, and that students in general have suffered a vicious attack on their living standards since the Tory Government came to power in 1979? Is it not about time that the purchasing power of the student grant was restored and parental contributions phased out completely so that students can study in peace instead of having to worry about poverty and financial hardship?
    Mr. Brooke: It is because the issue of student grants attracted the attention that it did in November and December that my right hon. Friend the Secretary of State announced the review that is taking place this year.
    Mr. Robert B. Jones: Why should an apprentice bricklayer in my constituency pay tax to support grants for people who are better off than he is?
    Mr. Brooke: There are many who share my hon. Friend's view. It also underlies the review.

    School Meals (Nutritional Standards)
    Mr. Fatchettasked the Secretary of State for Education and Science if he will introduce legislation to lay down minimum nutritional standards for the provision of school meals.
    Mr. Dunn: No, Sir.
    Mr. Fatchett: I am grateful to the Minister for that detailed reply. Does he not recognise that in many parts of the country, particularly those areas under Conservative control, there has been a fall in nutritional standards? Does he not also recognise the impact of that, particularly on low-income families? Should not a Government who claim to be a caring Government do something about it and make sure that children from low-income families have a proper and decent meal as part of their daily diet?
    Mr. Dunn: I challenge the hon. Gentleman to prove the first part of the allegation contained in his question. The law makes it quite clear that children from families which are in receipt of supplementary benefit or family income supplement should receive free meals at school. I remind him and the House that the responsibility for a balanced diet for children rests with parents. It is parents, not the state, who bear children.
    Mrs. Rumbold: Does my hon. Friend agree that it is more important to encourage local authorities to undertake the private sector provision of meals in schools, as my authority in Merton has done, than to hound local authorities by asking them to do things that are rightly the responsibility of parents?
    Mr. Dunn: My hon. Friend makes a fair and correct distinction between those essential elements of the education service which are concerned with education and those which are not. Making savings on school meals does not bring about the provision of junk food. It can mean savings on expenditure, which can go elsewhere in the education service to bring about better results and standards in the schools.
    Mr. Tony Lloyd: Is it not staggering that the Minister should ask my hon. Friend the Member for Leeds, Central (Mr. Fatchett) to prove whether school meals are good or bad? Should not the Minister be able to say to the House that he knows? That is his responsibility as a Minister charged with responsibility for the schools system.
    Mr. Dunn: I challenged the hon. Member for Leeds, Central (Mr. Fatchett) to prove the allegation that he made. If he can do so, I am prepared to sit down and talk to him. If he cannot, it is up to him to apologise to me and to the House.
    Mr. Adley: Is not nutrition related to content? Can my hon. Friend explain why we spend so much time and
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    trouble warning people about the dangers of cigarettes, but seemingly spend no time at all warning them about the dangers of either alcohol or foods which can induce heart disease? Will he consider the problem seriously, in consultation with his ministerial colleagues, and ensure that the branding of foods is undertaken?
    Mr. Dunn: I understand the point my hon. Friend is making. I am aware of the concern felt by many about the link between diet and disease. The Department of Health and Social Security has commissioned a survey of the diet of schoolchildren. It is hoped that the results will be published in the very near future. I shall take on board the points made by my hon. Friend.
    Mrs. Clwyd: Why do the Government continue to provide a subsidy for full fat milk, but no subsidy for skimmed milk, which nutritionists say is better for all of us?
    Mr. Dunn: The hon. Lady may be right; she may be wrong. I do not know.

    Open University
    Mr. Andrew F. Bennettasked the Secretary of State for Education and Science if he will make a statement about the future of the Open University.
    Sir Keith Joseph: The Open University will continue to play an important part in the Government's programme for higher education by providing degree level education for those who missed the opportunity earlier in life and through continuing education relevant to the updating needs of industry, commerce, the professions and public services.
    Mr. Bennett: Does the Secretary of State accept that the visiting committee totally repudiated his view of the Open University and that it set out clearly that the Open University is doing an excellent job? Would it not be fair for the Secretary of State to say to the House that he has got over his prejudice against the Open University and will give it money so that it may continue to do a first-class job?
    Sir Keith Joseph: No, Sir. The Government value the Open University and the work that it does, but they believe that, like other institutions, it has to seek to cover its costs by economies, where possible.
    Mr. Alexander: Bearing in mind the value of the new technology courses of the Open University in broadening the skills of our work force, what reassurance can my right hon. Friend give that those courses will be continued, despite the drop in income?
    Sir Keith Joseph: The Government have used taxpayers' funds to meet some of the needs of the Open University in the light of the visiting committee's report. But the visiting committee thought that there was scope for the Open University to make some economies, and it was disappointed that the Open University did not have the management figures to enable it to consider the economies that it might make.
    Mr. Donald Stewart: The cut in funds to other universities, though deplorable, is understandable in view of the policy of the Government, but why do students of the Open University, who appear to meet the criterion of

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    Conservative philosophy because they are doing their own independent study without the use of buildings, and so on, not receive assistance from his Department?
    Sir Keith Joseph: They do. Open University students, whose initiative and enterprise the Government admire, meet only 14 per cent. of the costs of their studies, or 19 per cent. if one includes summer school fees. The taxpayer bears 86 and 81 per cent. respectively.
    Mr. Sumberg: Is my right hon. Friend aware that the Open University is one of the most cost-effective centres of higher education? Is that not a reason why we should give it more rather than less support?
    Sir Keith Joseph: I grant that it is cost-effective on one form of reckoning. On another form of reckoning it has about the same public cost significance as other such institutions.
    Mr. Fisher: Does the Secretary of State recognise the importance of the Open University to unemployed students? Will he undertake to protect the unemployed students' fund in the Open University, to ensure that that part of its work is increased rather than decreased?
    Sir Keith Joseph: Yes, Mr. Speaker. That is why the fund for the unemployed in the Open University budget has been protected.
    Mr. Hannam: Is my right hon. Friend aware that the Open University offers special opportunities to disabled people, who cannot gain access to other university campuses? Will he therefore ensure that the number of disabled places is maintained in any future reorganisation?
    Sir Keith Joseph: Yes. The visiting committee took special care about that.
    Mr. Freud: Will the Secretary of State reconsider the visiting committee's report and try to meet its demands a little more closely?
    Sir Keith Joseph: The Government have met £4 million of the visiting committee's proposed suggestions and are considering a number of others.

    Student Unions (Expenditure)
    Mr. Lathamasked the Secretary of State for Education and Science what progress has been made with his discussions about the controls which are available over expenditure of public money by student unions.
    Mr. Brooke: Discussions are proceeding between officials of the Department and representatives of higher education interests. These are preliminary discussions intended to inform the Government as a basis for decision upon appropriate next action. The Government will make a statement in due course.
    Mr. Latham: Is it not deplorable that Jewish students at Sunderland polytechnic have been denied the right to a Jewish society of their choice? Surely Jewish taxpayers should not have to pay for a union which operates such blatant discrimination.
    Mr. Brooke: I share my hon. Friend's vivid anxiety that the principles of freedom of speech and association should be maintained, especially in places of higher education. I understand that the authorities at Sunderland polytechnic are actively examining the issues raised by the
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    student union's refusal to ratify the constitution of the proposed Jewish society, and that the matter will be considered by the polytechnic governors at their next meeting. My right hon. Friend is minded to make inquiries of the authority and the director if second thoughts do not prevail.
    Mr. Janner: May I thank the Minister for that reply? Has he considered whether the Sunderland students' action is in breach of the Race Relations Act 1976 and whether it should be referred to the Commission for Racial Equality by the Government, as it has been by the Jewish community in this country?
    Mr. Brooke: I have noted what the hon. and learned Gentleman said. He will also be aware that the National Union of Students has taken up with the student union at the polytechnic the inappropriateness of what it is doing.
    Mr. Peter Bruinvels: Does my hon. Friend agree that student unions are abusing their role and spending far too much money subsidising trips for students to miners' picket lines—when they existed—to anti-Government meetings in London and all that sort of thing? Is it not time to calm them down once and for all?
    Mr. Brooke: Limitations on the use of student union funds are set by charity law. That was made clear by my right hon. and learned Friend the Attorney-General in the guidance issued to institutions in 1983. Expenditure must further the interests of students as students.
    Mr. Sheerman: While the Minister is being urged by his colleagues to introduce a final solution to this matter will he try to remember that this is the International, Year of Youth, whose aims are peace, participation and development? Participation—growing up and learning about democracy—is an important part of a student's development. Would it not be more sensible for the Government, when they are investigating and discussing, to discuss matters with the National Union of Students, which represents the students of this country, and which has not been approached by the Minister? Could he not talk to it and get that democracy moving?
    Mr. Brooke: I applaud International Youth Year, of which the hon. Gentleman reminds me each month. I hestitate to say to him that it is arguable that voluntary participation is sometimes preferable to participation in which there is a greater degree of coercion.
    Mr. Leigh: Have the Government given consideration to making universities, rather than student unions, responsible for the funding of recreational activity by students, thus enabling us to have voluntary rather than compulsory membership of student unions and achieving a considerable saving of public money?
    Mr. Brooke: The matter is obviously one for the universities. In some universities that provision is rendered by the universities.

    Mature Students
    Mr. Wallaceasked the Secretary of State for Education and Science how many mature students entered further and higher education in 1982, 1983 and 1984, respectively.
    Mr. Brooke: In 1982 and 1983, 37,400 and 39,000 home students aged 21 and over entered a course of full-time higher education in Great Britain for the first time. Figures for 1984 and directly comparable figures for non-advanced further education are not available.
    Mr. Wallace: Does the Minister accept that if economic revival is to become a reality in the country it is necessary to have as much retraining and as many opportunities for developing the skill resources of the population as possible? What part does he envisage further and higher education playing in this, and what steps is he taking to encourage mature entrants?
    Mr. Brooke: The Department of Education and Science is participating in the adult training strategy, which was launched in collaboration with the Department of Employment. The projections for mature students in higher education show a continuing increase on the projections which we published last year.
    Mr. Sheerman: Will the Minister take on board the recommendations in the report of the Association of University Teachers published this week entitled "Expansion, Expansion, Expansion"? In terms of the House of Lords Select Committee report on the shortage of high tech qualified people, whom we need, and in terms of reports from Government Ministers about the appalling lack of high tech graduates, would not adult students be attracted into this kind of course, and is this not where it is vital to have the expansion about which the AUT speaks?
    Mr. Brooke: The AUT has been good enough to send me a copy of its booklet, so I have had an opportunity to read it. The hon. Gentleman will know that in the booklet the AUT is arguing for an expansion in all subjects, and not simply in high tech.

    Secondary Schools (Reorganisation)
    Mr. Loydenasked the Secretary of State for Education and Science what representations have been made about secondary schools reorganisation by parents organisations.
    Mr. Dunn: Such representations are received, in the form of statutory objections and deputations to the Department, in respect of most proposals to reorganise secondary education. The views so expressed are one of the factors that my right hon. Friend takes into account when deciding these proposals.
    Mr. Loyden: Now that the Secretary of State has exercised his power to keep open Bluecoat school, will he also exercise his power to ensure that the necessary finance, assessed at some £3 million, is available to the local education authority to enable it to carry out the wishes of the Secretary of State?
    Mr. Dunn: A letter along those lines has been sent to the Department of Education and Science by the chairman of the education committee. That letter is being considered.
    Mr. Mark Carlisle: Does my hon. Friend agree that his right hon. Friend's welcome decision about Bluecoat school as a school of high excellence shows that the Government listen to parental views on these matters?
    Mr. Dunn: My right hon. and learned Friend is right. When my right hon. Friend considers proposals on their
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    individual merits, he must take into account not only the views of the parents but the proposers' case for the proposals and all other relevant circumstances, including his own policies.
    Mr. Alton: While I welcome the decision to keep open Bluecoat school in my constituency, will the Minister now reconsider the decision to close state schools which are scheduled for closure this year in Liverpool? Will he accept that, when decisions of this kind are being made, it would be an improvement if the Ministers concerned could visit the schools affected by closure proposals?
    Mr. Dunn: To take the latter point first, if I were to visit all the schools under consideration for closure by the Department I would spend no time in the House of Commons or at home in my constituency. Additionally, it is not possible for the Secretary of State to change an earlier decision. Those decisions are now legally binding on the local education authority unless fresh proposals are made by the local education authority itself.
    Mr. Batiste: Can my hon. Friend assure parents in Leeds that he will give full weight to their representations opposing the closure of sixth forms in that city on grounds of viable numbers and proven worth?
    Mr. Dunn: On behalf of my right hon. Friend, I shall be happy to consider all the views and points put to us on any proposals in any part of the land.

    Polytechnics (Degree Courses)
    Mr. Madelasked the Secretary of State for Education and Science whether he expects the proposed new centralised student admissions scheme for degree courses in polytechnics to be in operation for the academic year 1986–87; and if he will make a statement.
    Mr. Brooke: I understand that the new polytechnic central admissions system is already in operation in respect of the admission of students to full-time and sandwich courses at degree level for the academic year 1986–87.
    Mr. Madel: The new system will help both polytechnics and students. Can my hon. Friend confirm that the Government welcome the increase in numbers attending polytechnics for degree courses, which is of benefit not only to industry and commerce but to the individuals concerned?
    Mr. Brooke: I am delighted to give the welcome for which my hon. Friend asks.

    Centre Européen Recherche Nucleaire
    Mr. Dalyellasked the Secretary of State for Education and Science if he will make a statement on the future of the British subscription to the Centre Européen Recherche Nucleaire (CERN).
    Mr. Brooke: Last March my right hon. Friend announced the formation of a review group, chaired by Sir John Kendrew, to examine the whole question of British participation in particle physics research, including our membership of CERN. I understand that the group will report to the chairmen of the Science and Engineering Research Council and the advisory board for the research councils in May, and when we have considered their advice my right hon. Friend will be able to make a statement. Meanwhile, the United Kingdom continues to participate fully in CERN.
    Mr. Dalyell: Would it not be humiliating throughout the international scientific community if this country were to fail to cover its subscription to CERN?
    Mr. Brooke: The purpose of the review is to examine the matter that I have described. We shall go through the whole process of receiving the report—[Interruption]—and determine our conclusions on the advice received.
    Mr. Speaker: Order. I ask the hon. Members to refrain from chatting.

    Teachers (Pay)
    Mr. Patrick Thompsonasked the Secretary of State for Education and Science if he will make a statement on the progress made towards settling the teachers' pay dispute.
    Sir Keith Joseph: Following the teachers' rejection of management's offer of 4 per cent. and their refusal of arbitration, the management panel has invited the teachers to agree to conciliation. ACAS has offered its services. It today opens exploratory discussions with the management panel and has invited the teachers' panel to similar, separate discussions:
    Mr. Thompson: Does my right hon. Friend agree that the present confrontation in our schools is harming our children's education for the second year running, and will harm it further if it continues into the examination period? Does my right hon. Friend further agree that the teachers' leaders would be well advised to encourage their members to go back into the classrooms and to return to the negotiating table so that talks can proceed?
    Sir Keith Joseph: I answer yes to both of my hon. Friends questions.

    Campaign for the Advancement of State Education
    Mr. Allen McKayasked the Secretary of State for Education and Science when he last met representatives of the Campaign for the Advancement of State Education; and what he discussed with them.
    Mr. Jim Callaghanasked the Secretary of State for Education and Science when he last met representatives of the Campaign for the Advancement of State Education to discuss standards in education.
    Sir Keith Joseph: I have not yet met representatives of CASE, but shall be doing so on 1 April, principally to discuss the resolutions from their last annual conference.
    Mr. McKay: When the right hon. Gentleman meets that organisation, will he discuss the lowering of morale of teachers and pupils due to his intransigence? Why does he think that people should go to arbitration when he refuses to fund any increase and when local authorities cannot afford to do so because of rate capping?
    Sir Keith Joseph: I am glad that the hon. Gentleman accepts that what local authorities can afford is a key issue. I expect that the people coming to see me will raise some such question.
    Mr. Jim Callaghan: The future of education is dependent on high morale among the teaching staff. In view of the current low morale, what will the right hon. Gentleman do about increasing teachers' pay?
    Sir Keith Joseph: I have offered the interest of myself and the Government in the introduction of an appraisal system that might offer teachers the possibility of better career earnings for effectiveness.

    Government Purchasing
    Mr. Thurnhamasked the Secretary of State for Education and Science what measures he proposes following the conclusions of the recent report by the Management and Personnel Office on Government purchasing.
    Sir Keith Joseph: Officials of the Department are preparing an action document on the conclusions of the report. The document will shortly be submitted for my approval.
    Mr. Thurnham: Will my right hon. Friend do all in his power to simplify Government purchasing procedures so that small firms can play their part in achieving the potential savings of £400 million a year?
    Sir Keith Joseph: Although the Department is a relatively small public purchaser we shall certainly, on the basis of the report, do our best to ensure clear responsibilities and efficient procedures for purchasing and obtaining better value for money.

  PRIME MINISTER

    Engagements
    Mr. Stanbrookasked the Prime Minister if she will list her official engagements for Tuesday 19 March.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and 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. Stanbrook: At a time when we, the people of a comparatively wealthy and successful country, are about to consider the distribution of our wealth, would it not be right to remember how lucky we are compared with the thousands of people dying from starvation in Africa—a continent in which Britain has hitherto made an immense contribution to human progress? Will my right hon. Friend confirm that Britain will play a leading role in the international campaign to find long-term solutions to the problem of famine in Africa?
    The Prime Minister: Yes, Mr. Speaker. At the United Nations conference last week on the emergency in Africa my right hon. Friend the Minister for Overseas Development stressed the need to sort out the underlying difficulties of some of the problematic countries in Africa, and pledged £125 million in development aid to 20 of the worst affected countries in Africa. That is in addition to the £60 million in emergency aid, and covers the coming financial year. On a longer term basis, my right hon. Friend has pledged £75 million to the World Bank special facility for Africa. We are well aware of the problem that my hon. Friend has highlighted.
    Mr. Beith: Does the Prime Minister share the view of The Times that the Foreign Secretary's speech on the

    775
    American star wars programme was muddled, mealy-mouthed and damaging to the Alliance? [Interruption.] Does the right hon. Lady believe that that statement represented a realistic assessment of the dangers of the star wars strategy?
    The Prime Minister: I reject the language and the conclusion in the first part of the hon. Gentleman's question. The policy was, and remains, in the four points set out at Camp David and reaffirmed when I was in Washington. My right hon. and learned Friend the Foreign Secretary was speaking in pursuance of that policy.
    Mr. Hayes: Is my right hon. Friend not greatly encouraged by the Manpower Services Commission's quarterly review, published today, which shows that 10 per cent. of the work force are now self-employed? Will that news encourage my right hon. Friend to make the very successful enterprise allowance demand-led?
    The Prime Minister: I noticed the report and the increasing numbers of people who are self-employed. That augurs well for the future of small businesses, as the self-employed gradually come to employ other people. I am afraid that for the answers that he sought in the last part of his question my hon. Friend must await the statement of my right hon. Friend the Chancellor of the Exchequer.
    Mr. Kinnock: The four points agreed with President Reagan are rather vague in several respects. For instance, can the Prime Minister tell us what veto she has that will ensure there will be no step from research into development, with all the consequent experiments, without her permission and the permission of the House?
    The Prime Minister: It is not a question of a veto. Research is permitted, and the constraints on deployment are those contained in the anti-ballistic missile treaty, signed in 1972 by both the Soviet Union and the United States, which fully permits research, but requires negotiation before testing and deployment, in accordance with the terms of the treaty.
    Mr. Kinnock: As these are matters of great concern, will the right hon. Lady tell us very clearly where she draws the line between research and development?
    The Prime Minister: Where it is drawn by the antiballistic missile treaty.
    Mr. Forth: Will my right hon. Friend undertake to instruct our representatives in the negotiations to enlarge the EEC that all details of costs to the United Kingdom and the Community should be given to the House before we are asked to approve such enlargement?
    The Prime Minister: As my hon. Friend is aware, we reached agreement at Fontainebleau, and this included the proportion of enlargement costs that would be borne by this country. It is not possible to say precisely what they are while the negotiations are still incomplete. However, I shall do my best to see that they are laid before the House at the relevant time.
    Mr. Wilson: Has the Prime Minister seen the report from the Australian Royal Commission, which surfaced yesterday, that previous British Governments had entertained a proposal for holding nuclear device tests in Scotland? In view of the anger about that proposal in Scotland, will she join me in condemning it as an act of aggression against the Scottish people?
    The Prime Minister: A letter used in evidence at the Australian Royal Commission showed that in 1954 a location near Wick was considered as a possible area for a minor trial of a triggering device in support of nuclear weapon development. It was not a nuclear device. The area was quickly rejected because it was considered unsuitable.
    Mr. Robert Atkinsasked the Prime Minister if she will list her official engagements for 19 March.
    The Prime Minister: I refer my hon. friend to the reply that I gave some moments ago.
    Mr. Atkins: Does my right hon. Friend agree that the French Government's deliberate procrastination over the development of the European fighter aircraft for use by the air forces of the United Kingdom, Germany, Italy, Spain and France is preventing the collaboration in that industry that we all want? In view of the imminence of international ministerial discussions on this matter, will she use her considerable influence with President Mitterrand to resolve, as a matter of urgency, French obstructiveness?
    The Prime Minister: As my hon. Friend knows, a good deal of work has been done on the European fighter aircraft. A common staff target has been agreed between the five air forces, and the industries of the five countries are now doing a feasibility study. I expect that the Defence Ministers will meet in May to make their assessment. However, my hon. Friend is right to say that it will be difficult to resolve some of the problems. Should intervention be necessary, I shall not hesitate to make it.
    Mrs. Renée Short: Does the Prime Minister agree with the statement made in the debate on the west midlands last Friday that a low wage is better than no wage at all?
    The Prime Minister: I believe that it is better to work for a low wage and to have it topped up by family income supplement than not to have a job.
    Sir Edward du Cann: Will my right hon. Friend make time today to note the mounting anxiety being expressed in all quarters of the House and outside it about the serious decline in the British merchant fleet? Will she consider whether she should appoint a senior Minister with responsibility for co-ordinating constructive Government policies to reverse that very worrying trend?
    The Prime Minister: I am aware of the decline in the British merchant fleet, because of severe competition from other parts of the world. I recognise my right hon. Friend's point that it is of strategic significance to have a good British merchant fleet of considerable size. I shall take his point to heart.
    Mr. Tony Lloydasked the Prime Minister if she will list her official engagements for Tuesday 19 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Lloyd: Is it not apparent to the Prime Minister that today we have another Budget for jobs? Will she specifically tell the House and the millions of unemployed people in the country when unemployment will begin to turn down dramatically? If the Prime Minister will not do that today, will she at least tell us that this Government have neither the wit nor the compassion to do anything serious about mass unemployment?
    The Prime Minister: The hon. Gentleman is probably aware that the number of those in jobs increased by 342,000 over the year to September and by 480,000 over the last 18 months. The rise in the working population is still continuing. The proportion of the population of working age who are in work is higher in this country, at 66 per cent., than in West Germany at 61 per cent., France at 61 per cent. and Italy at 55 per cent. We shall create more jobs and begin to reduce the number of unemployed when industry is even more competitive and produces goods and services that people both here and overseas will buy in greater quantities.
    Mr. Hill: Does my right hon. Friend agree that the Russians have breached the 1972 anti-ballistic missile treaty so many times in the last 10 years that there will have to be many safeguards if we are to develop the strategic defence initiative? Has my right hon. Friend had discussions with President Reagan about the safeguards?
    The Prime Minister: Various accusations about breaches of the anti-ballistic missile treaty have been made, in particular about radars and the direction and position of those radars. The place to sort those out is in one of the consultative committees provided for in the antiballistic missile treaty. I believe that this subject will be taken up at the Geneva talks.
    Mr. Pikeasked the Prime Minister if she will list her official engagements for Tuesday 19 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Pike: When will the Prime Minister take steps to stop the widening rift between the north and the south? When will the Government take steps to deal with the deprived regions of the country? Would not the first step be for the Government to take a positive decision and say that no development will take place at Stansted and that any public money that would have been used at Stansted will be used in the regions instead?
    The Prime Minister: With regard to the alleged north-south divide may I point out—[Interruption.] It is not right to talk of a straightforward divide between north and south. Parts of the north are very prosperous—[HON. MEMBERS: "Name them."]—while other parts have very high unemployment. There are also parts of the south which have very high unemployment. However, public investment per head of the population in the last year for which figures are available was £89 in the north, compared with £76 as the English average. It was even higher in Wales and Scotland. Public investment was purposely higher in the north to help with the unemployment problem.
    Mr. Heddleasked the Prime Minister if she will list her official engagements for Tuesday 19 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Heddle: Is my right hon. Friend aware that council house rent arrears have risen from £74 million in 1980 to a staggering £188 million today? Is my right hon. Friend aware that many local authorities are thus denying to thousands of single homeless people the right to rent a home? Are not these local authorities flying in the face of the interests of their ratepayers?
    The Prime Minister: My hon. Friend is correct. Rent arrears are far too high, and they are rising. The management is not good enough. Both the Department of the Environment and the Audit Commission have issued comprehensive guidance. It would be as well if the authorities followed this guidance and reduced the arrears, in the interests of their ratepayers.
    Mr. Ewing: To return to the number of people in work, is it not true that 2 million fewer people are in work now than when the Prime Minister came to office in 1979 and that her economic policies have effectively destroyed 2 million jobs in this country?
    The Prime Minister: As the hon. Gentleman will be aware, the amount of overmanning in British industry due to the refusal of the Labour Government to face fundamental problems, such as the steel industry, left us the problems to deal with. Had we not been able to deal with them, Britain would have had no industrial future because it would have had no competitive industries. It now has, thanks to this Government.
    Mr. Hannamasked the Prime Minister if she will list her official engagements for Tuesday 19 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Hannam: Is my right hon. Friend aware that development and exploration activity in the North sea is reaching record levels? Is this not due to the success of free enterprise, backed by a helpful tax regime? Will she apply similar tax incentives to the rest of the British economy?
    The Prime Minister: My hon. Friend is right. The development of the North sea was a great tribute to private enterprise. It was done quickly and with great profit and benefit to Britain, especially to the north-east of our country, where it has provided many jobs for industries associated with North sea oil development. That was added to and assisted by the right framework of taxation policy. That is the right recipe—the Government set the framework and people take advantage of it in private enterprise.

Budget
3.30 pm
Mr. Dennis Canavan: I beg to move, That leave be given to bring in a Bill to make the Chancellor of the Exchequer more accountable to Parliament on budgetary matters and to monitor his economic performance; and for connected purposes.
I am pleased to see such a good attendance for the First Reading of my Bill. I hope that there is a similar attendance at Second Reading and thereafter. My Bill was originally entitled the Finance Bill, but once the parliamentary establishment discovered that this would mean that the Treasury would have to rename its Bill the Finance (No. 2) Bill, pressures were put upon me to rename my Bill. Therefore, it is called the Budget Bill.
The purpose of my Bill is to bring our financial affairs under more public scrutiny, because I and an increasing number of people in the country believe that the Chancellor of the Exchequer is getting away with economic murder. He is a record-breaking Chancellor. He has probably broken more records than has Kenny Dalglish, except that the Chancellor is in the habit of scoring own goals. For example, he presides over record unemployment. He has a record deficit in manufacturing trade and a record low value of the pound against the dollar. We have record interest rates, a record number of bankruptcies, and the record of £3 billion of taxpayers' money spent on a 12-month vendetta against the miners. The Chancellor—where is he?—had the brass neck to tell us that that was money well spent. The British economy has been reduced to a shambles by an incompetent Chancellor, who has the brass neck to tell us to pull in our belts while he seems to become plumper and smugger. He does not seem to practise the austerity of the monetarist policies that he preaches.
At present, parliamentary accountability is limited. The Chancellor comes along here once a year in March to present his Budget statement. I have noticed that as soon as the Chancellor — where is he? — stands up, Mr. Speaker, you vacate your seat. I have often wondered about that. The content of his speech must make you as sick as it makes me. Then the Chancellor comes along with a mini-budget statement in the autumn in a vain attempt to repair some of the damage done by his main Budget in spring.
Under my proposals, there would be more scrutiny before and after the Budget. For example, many hon. Members on both sides of the House will have had mailbags full of letters from constituents complaining about the possibility of VAT being extended to children's shoes or books and periodicals, or about the taxation of pensions, or the need to have more public investment in jobs instead of giving tax handouts to the rich. What most of us do at present is photocopy the letter and send it across to the mandarins in the Treasury with a letter of support from ourselves, perhaps. Some bureaucrat at the Treasury just presses a key on the word processor and we get back a three-sentence reply. [AN HON. MEMBER: "Three months later."] Three months later, very often. To my mind that is not genuine consultation, and I hope that this is a point which appeals to hon. Members on both sides of the House.
I listened with interest to what the Chairman of the Select Committee on the Treasury and Civil Service, the right hon. Member for Worthing (Mr. Higgins), had to say
780
recently. He proposed the idea of a pre-Budget Green Paper—or a green Budget. I think that there is a lot of merit in that, and that is the principle of my Bill. But I also want post-Budget scrutiny so that we have continuous assessment of the economic performance of the Chancellor. A progress report would have to be presented to Parliament at least quarterly, and the Chancellor would have to come to the Dispatch Box and answer personally.
I have an example of the kind of progress report for which my Bill would provide. I do not want a subjective assessment; I believe in objective assessment. There would be chosen economic and other indicators and the performance of the Government would be measured on those indicators. Here is a progress report on the present Government since it took office in 1979; unemployment up 173 per cent.; job vacancies, down 50 per cent.; the pound against the dollar, down 47 per cent.; interest rates, increased 17 per cent.; company liquidations, up 201 per cent.; balance of trade in manufactures, down 175 per cent.; output of manufacturing industries, down 10 per cent.; economic growth rate, down 85 per cent.; council house rents, up 128 per cent.; prescription charges up 900 per cent.—and I suppose that we are in for another dose of the same medicine from the Chancellor this afternoon.
In case anyone disputes these statistics, I should say that the Library helped me to compile them, and I know for a fact that the Chancellor has a great respect for the Library staff.
So far the Chancellor has scored 0 out of 10. When I was a teacher I was always very reluctant to give any pupil 0 out of 10. I would try to give them 1 out of 10 if I thought that they were making an honest endeavour. So I looked at the whole Government record very hard and I found one small success. I am sure that when the Chancellor eventually comes in he will puff out his chest at the Dispatch Box and tell us all about it. He has managed to keep inflation to single figures. Even I would admit that that is an achievement, but I must remind him that we could have a zero rate of inflation if we reduced all economic activity to zero.
That is the economics of the graveyard and that is the direction in which this Chancellor is leading us. He is making Britain into an industrial and economic graveyard. If we are looking around for uneconomic units, he is the most uneconomic unit in this country. He should therefore be made redundant, and my Bill will make provision for that.
Hon. Members: Hear, hear.
3.40 pm
Sir Michael Shaw rose——
Hon. Members: Sit down.
Mr. Speaker: Order. Is the hon. Member for Scarborough (Sir M. Shaw) seeking to oppose the motion?
Sir Michael Shaw: Yes, Sir, I wish to oppose it, first because it is a quite unjustified misuse of the practice of the House and, secondly—[Interruption.]
Mr. Speaker: Order. The hon. Member for Scarborough (Sir M. Shaw) has as much right to be heard as the hon. Member for Falkirk, West (Mr. Canavan).
Sir Michael Shaw: The hon. Member's motion is a most excessive way of drawing one's virtues to the attention of the Committee of Selection so as to sit on a Finance Bill Committee.

781
More seriously, if it becomes a precedent, it will endanger a small right of the Back Bencher to be heard on important occasions. There are many other, more serious, objections to the proposition put by the hon. Member for Falkirk, West (Mr. Canavan), but I shall not dwell on them today.
The hon. Gentleman and I have in common a desire that the Chancellor of the Exchequer should be accountable to Parliament for the Budget. By happy chance, the Chancellor, whom I wish well, is here to account to Parliament this afternoon. Therefore, I shall limit my objections to the motion by allowing them to remain vocal, and I shall certainly not propose that the matter go to a Division.
Question put, pursuant to Standing Order No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—
The House divided: Ayes 103, Noes 4.

Division No. 162]

[3.42 pm

AYES

Alton, David

Davies, Rt Hon Denzil (L'lli)

Anderson, Donald

Davies, Ronald (Caerphilly)

Ashdown, Paddy

Deakins, Eric

Atkinson, N. (Tottenham)

Dixon, Donald

Beckett, Mrs Margaret

Dormand, Jack

Beith, A. J.

Douglas, Dick

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

Dubs, Alfred

Bermingham, Gerald

Duffy, A. E. P.

Bidwell, Sydney

Eadie, Alex

Boyes, Rolard

Eastham, Ken

Brown, Gordon (D'f'mline E)

Evans, John (St. Helens N)

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

Fatchett, Derek

Buchan, Norman

Fisher, Mark

Caborn, Richard

Flannery, Martin

Callaghan, Jim (Heyw'd & M)

Foulkes, George

Canavan, Dennis

Fraser, J. (Norwood)

Carlile, Alexander (Montg'y)

Freeson, Rt Hon Reginald

Carter-Jones, Lewis

Garrett, W. E.

Clark, Dr David (S Shields)

Hardy, Peter

Clarke, Thomas

Haynes, Frank

Clay, Robert

Heffer, Eric S.

Clwyd, Mrs Ann

Home Robertson, John

Corbyn, Jeremy

Howells, Geraint

Cox, Thomas (Tooting)

Hoyle, Douglas

Craigen, J. M.

Hughes, Robert (Aberdeen N)

Crowther, Stan

Hughes, Roy (Newport East)

Dalyell. Tam

Janner, Hon Greville

782

Jones, Barry (Alyn & Deeside)

Redmond, M.

Kirkwood, Archy

Roberts, Allan (Bootle)

Lambie, David

Roberts, Ernest (Hackney N)

Lewis, Ron (Carlisle)

Rooker, J. W.

Lewis, Terence (Worsley)

Ross, Stephen (Isle of Wight)

Litherland, Robert

Sedgemore, Brian

Lloyd, Tony (Stretford)

Short, Ms Clare (Ladywood)

Loyden, Edward

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

McCartney, Hugh

Skinner, Dennis

McKay, Allen (Penistone)

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

McKelvey, William

Smith, Cyril (Rochdale)

McNamara, Kevin

Steel, Rt Hon David

Madden, Max

Stott, Roger

Marek, DrJohn

Strang, Gavin

Marshall, David (Shettleston)

Thorne, Stan (Preston)

Maxton, John

Torney, Tom

Maynard, Miss Joan

Wallace, James

Meadowcroft, Michael

Wareing, Robert

Michie, William

Weetch, Ken

Nellist, David

Welsh, Michael

O'Brien, William

Williams, Rt Hon A.

O'Neill, Martin

Young, David (Bolton SE)

Park, George

Patchett, Terry

Tellers for the Ayes:

Pendry, Tom

Mr. Allan Rogers and

Pike, Peter

Mr. Kevin Barron.

Powell, Raymond (Ogmore)

NOES

Bulmer, Esmond

Kellett-Bowman, Mrs E.

Tellers for the Noes:

Rhodes James, Robert

Mr. Willie W. Hamilton and

Ward, John

Mr. David Winnick.

Question put and agreed to.
Bill ordered to be brought in by Mr. Dennis Canavan, Mr. Kevin Barron, Mr. Eddie Loyden, Mr. Allan Rogers, Mr. Martin Redmond, Mr. William McKelvey, Mr. Brian Sedgemore, Mr. Bill Michie, Mr. Gavin Strang, Mr. Ernie Roberts, Mr. Dick Douglas and Mr. Dennis Skinner.

Budget
  BUDGET
  Mr. Dennis Canavan accordingly presented a Bill to make the Chancellor of the Exchequer more accountable to Parliament on budgetary matters and to monitor his economic performance; and for connected purposes; And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 103.]
  WAYS AND MEANS

    Budget Statement
    Mr. Deputy Speaker (Mr. Harold Walker): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech, as in past years, copies of the Budget resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.
    3.52 pm
    The Chancellor of the Exchequer (Mr. Nigel Lawson): In last year's Budget statement I charted the course for this Parliament. Today I reaffirm the Government's determination to hold to that course, the purpose of which is nothing less than the defeat of inflation. We have not wavered from that purpose. Nor will we, but the defeat of inflation, essential though it is, is not enough. We must also do what we can to combat the scourge of unemployment. Nor is there any conflict between these two objectives. So my Budget today has two themes: to continue the drive against inflation and to help create the conditions for more jobs.
    I shall begin by reviewing the economic background to the Budget. I shall then deal with the medium-term financial strategy, with monetary policy, and with the fiscal prospect, both this year and next. I shall then turn to the Government's strategy for jobs, and the measures to implement that strategy. These will involve action on a number of fronts, including both tax reduction and tax reform.
    As usual, a number of press releases filling out the details of my tax proposals will be available from the Vote Office as soon as I have sat down.

    Budget Statement

      THE ECONOMIC BACKGROUND
      I start with the economic background.
      Once again, we can look back on a year of steady growth and low inflation. During 1984 as a whole, inflation remained at around 5 per cent. Output grew by a further 2·5 per cent., with investment up by 6·5 per cent. and non-oil exports by 9 per cent., to reach all-time record levels in each case.
      Manufacturing industry recovered particularly strongly, with output up by 3·5 per cent.—the biggest rise in any single year since 1973—exports up by 10 per cent. and investment by 13 per cent. The current account of the balance of payments has remained in surplus, for the fifth successive year. By international standards, too, the economy has performed well. Our growth was above, and our inflation below, the European Community average.
      Moreover, this progress has been achieved in the teeth of the coal strike, for which, in the short term, the nation has had to pay a heavy price. In the current financial year, the coal strike has reduced the level of national output by over 1·25 per cent. and worsened the balance of payments by some £4 billion. It has increased public expenditure by £2·5 billion and public sector borrowing by £2·75 billion. It has cost us confidence abroad and jobs at home.
      But the costs, both economic and constitutional, of submitting to this strike would have been infinitely greater than the costs that have been incurred in successfully
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      resisting it, and it is a remarkable tribute to the underlying strength of the British economy that it has been able to withstand so long and damaging a strike in such good shape.
      Looking ahead, we are now about to embark on what will be the fifth successive year of steady growth, with output in 1985 as a whole set to rise by a further 3½ per cent. Inflation may edge up for a time, perhaps to 6 per cent. by the middle of the year, but should then fall back to 5 per cent. by the end of the year and lower still in 1986.
      While there can be no disputing the strength and durability of the economic upswing, there is equally no disputing the fact that it is marred by an unacceptably high level of unemployment—and this despite the fact that the latest figures suggest that employment has risen by half a million over the past two years, with a further increase likely over the year ahead.
      If at home the past year has been overshadowed by the coal strike, internationally it has been dominated by the relentless surge of the dollar, which rose by a further 30 per cent. against all the major European currencies. To finance its massive budget deficit, the United States is importing a large part of the rest of the world's savings and exporting some of its own inflation.
      This is not a sustainable state of affairs. As Federal Reserve chairman Paul Volcker last month testified to Congress, the United States is living on borrowed money and borrowed time; but meanwhile, it is not only America that is paying the interest.
      All this has led to one of the most turbulent years in the financial markets within living memory. It has been, and will continue to be, a time for strong nerves and sound policies.

      THE MEDIUM TERM FINANCIAL STRATEGY
      We have already shown that we are not afraid to take action, however unpalatable, to keep the medium-term financial strategy on course in an unpredictable and uncertain world. That strategy was first launched five years ago next week. Our commitment to it remains as firm today as it was then. It was designed to bring down the rate of inflation and to ensure a reasonable growth of demand in money terms, and it has succeeded on both counts.
      We are determined to maintain steady downward pressure on inflation. It is not in the gift of any Government to eliminate short-term fluctuations along the way, but the underlying direction has to be downwards. It is this objective which governs the desirable growth of total spending power in the economy, as measured by money GDP.
      The Government's economic strategy has two key components: a monetary policy designed to bring down inflation and a supply side policy designed to improve the competitive performance of the economy.
      The supply side policy is rooted in a profound conviction, born of practical experience both at home and overseas, that the way to improve economic performance and create more jobs is to encourage enterprise, efficiency and flexibility; to promote competition, deregulation and free markets; to press ahead with privatisation and to improve incentives.
      The argument over which will have a bigger impact on demand—increased public expenditure or lower taxation — completely misses the point. The case for lower

      785
      taxation rests on supply side policy: lower taxes will help to enhance incentives, eliminate distortions, improve the use of resources and heighten the spirit of enterprise.
      The great mistake of post-war demand management, which still has some devotees today, was to react to rising unemployment by injecting more money into the system, whether through the Budget or through the banks. So far from halting the upward trend of unemployment, this simply generated runaway inflation. That course we will not follow.
      A policy for demand expressed unambiguously in terms of money provides a further important advantage, for it ensures that wage restraint will provide more jobs. I repeat today the undertaking I gave the National Economic Development Council last month: the medium-term financial strategy is as firm a guarantee against inadequate money demand as it is against excessive money demand.

      MONETARY POLICY AND THE EXCHANGE RATE
      Within the MTFS, the central role is played by monetary policy, for it is by controlling the growth of money in the economy that the Government are able to influence the growth of money demand. Last year I set target ranges of 4 to 8 per cent. for narrow money and 6 to 10 per cent. for broad money. Over the 12 months to mid-February, the targeted measure of narrow money grew at around the middle of its range, and that of broad money at just below the top of its range.
      For next year, I shall be retaining the same two target aggregates. I attach equal importance to both. The target ranges for 1985–86 will be those indicated in last year's MTFS—that is to say, a reduction in monetary growth of 1 per cent. in each case.
      There are those who argue that if we stick to sound internal policies, the exchange rate can be left to take care of itself. In the long run that may well be true, but significant movements in the exchange rate, whatever their cause, can have a short-term impact on the general price level and on inflationary expectations. This process can acquire a momentum of its own, making sound internal policies harder to implement. So benign neglect is not an option.
      That is why I have repeatedly argued that it is necessary to take the exchange rate into account in judging monetary conditions. There is no mechanical formula which enables us to balance the appropriate combination of the exchange rate and domestic monetary growth needed to keep financial policy on track, but a balance still has to be struck, and struck in a way that takes no chances with inflation.
      There can be no doubt about the Government's commitment to maintain monetary conditions that will continue to bring down inflation. Short-term interest rates will be held at the level needed to achieve this.

      PUBLIC SECTOR BORROWING
      While monetary policy is at the heart of the medium-term financial strategy, it needs to be buttressed by an appropriate fiscal policy.
      The outturn for the public sector borrowing requirement for 1983–84 was £9¾ billion, or 3¼ per cent. of GDP. In my Budget last year I planned to reduce it substantially in
      786
      1984–85 to £7¼ billion, or 2¼ per cent. of GDP. In the event, this year's PSBR looks like turning out at £10½ billion, or 3¼ per cent. of GDP—the same as last year.
      All but half a million pounds of this substantial overrun is directly attributable to the cost of the coal strike. I believe it was right to meet the large but once-for-all cost of keeping the economy going throughout the coal strike by borrowing, thus in effect spreading the cost over a number of years, but it is now necessary to return to the path I outlined last year.
      That means that the PSBR for the coming year, 1985–86, will be set at £7 billion, equivalent to 2 per cent. of GDP. As this year, some £3 billion will be financed through national savings.
      I have been urged by some to provide for a still lower borrowing requirement in order to impress the financial markets. Others have argued that the present high level of interest rates would justify a more relaxed fiscal stance.
      There is nothing sacrosanct about the precise mix of monetary and fiscal policies required to meet the objectives of the medium-term financial strategy, but this is not the year to make adjustments in either direction. The wisest course is to stick to our pre-announced path. This means that, for the coming year, a substantial reduction in the PSBR must take precedence over our objectives for reducing the burden of tax.

      PUBLIC EXPENDITURE
      Given the need to ensure that the Budget deficit is of a size that can and will be soundly financed, lower taxes can be achieved only by maintaining the firmest possible control of public expenditure.
      Controlling public expenditure is one of the most difficult tasks facing any democratic Government in the modern world. Public expenditure acquires its own momentum and creates its own vested interests. To control it requires constant vigilance, and a determination to succeed despite the inevitable setbacks. We have that determination, and have succeeded in bringing the growth of public spending below that of the economy as a whole. This achievement has required difficult decisions in successive public expenditure reviews, but there is no benefit to sound economic management or effective control from sticking to public expenditure figures which subsequent events have made unattainable.
      As my right hon. and learned Friend the Chief Secretary made plain in the recent debate on the public expenditure White Paper, the normal pre-Budget review of the fiscal prospect has had to take account of changes in the economic scene since the public expenditure review in the autumn. Of these, the most important has been the coal strike, whose public expenditure cost in 1984–85 is estimated at some £2¼ billion—about £1 billion more than allowed for in both the autumn statement and the public expenditure White Paper, which explicitly assumed that the strike would end at Christmas. There will also be some further cost in 1985–86.
      It now looks as if this year's public expenditure planning total will be exceeded by nearly £3¼ billion, of which over two thirds is attributable to the coal strike, but, quite apart from the coal strike, the upward pressures on public spending remain intense, not least from increased take-up of social security benefits and further local

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      authority overspending. In addition, since the White Paper was prepared, we have had to accommodate the effects of higher interest rates and a lower exchange rate.
      I have therefore reassessed the adequacy of the reserves for 1985–86, 1986–87 and 1987–88 which were provided in the January White Paper. In order to provide a more realistic basis on which to plan and control the level of public spending, I have judged it prudent to add £2 billion to the reserve and thus to the White Paper planning totals for each of the three years. At the same time, I have further increased the estimate for debt interest in each year.
      These increases in the size of the reserve will raise the planning totals for the next three years by about 1¼ per cent., but let there be no misunderstanding: the new totals still represent a tough target. No extra cash has been allocated to individual programmes. Calls on the reserve will still be judged on the strictest criteria. There is no slackening in our determination to curb the size of the public sector.
      Public expenditure will continue to fall as a proportion of GDP, as it has, the coal strike apart, since 1981–82. Expenditure is planned to stay broadly flat in real terms at about this year's level, excluding the costs of the coal strike. To achieve even these new figures, future public expenditure surveys will have to be at least as tough as their predecessors; and there can be no let-up in the tight control of individual spending programmes within the cash limits set for the coming year.
      On the other side of the public accounts, tax receipts, too, are now expected to be higher over the next three years, partly for related reasons, but not by as much. The scope I have for tax cuts this year is therefore only half the amount I said might be available in my statement to the House in November. In other words, the net effect after indexation of the measures I shall shortly announce will be to contribute some three quarters of a billion pounds to the £7 billion borrowing requirement I have set for 1985–86.

      THE STRATEGY FOR JOBS
      In determining the nature of those measures, within the overall framework of the medium-term financial strategy, my overriding objective has been to improve the prospect for jobs. It is important to be clear what this means. Jobs are created by firms that are competitive, efficient, profitable and well managed. This in turn requires a work force with the right skills, one that is adaptable, reliable, motivated and prepared to work at wages that employers can afford to pay.
      The extent to which Government—let alone a single Budget—can bring this about is clearly limited. We cannot instantly inculcate the spirit of enterprise by Act of Parliament, or abolish latter-day Luddism overnight simply by adding a few more pages to the statute book.
      We cannot even prevent trade unions from pricing their members out of a job. Last year, despite a further encouraging growth in productivity, wage costs per unit of manufacturing output rose by some 4 per cent. In the United States, Germany and Japan, unit wage costs actually fell. This is bad for our competitiveness and bad for jobs. Too much of the benefit of economic growth is currently being enjoyed in higher living standards for those in work, too little in the form of better job prospects for
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      those out of work. In a free society, the remedy lies in the hands of those responsible for collective bargaining throughout the economy.
      However, limited though the role of Government is, it remains an important one: to prepare the ground in which enterprise can best flourish; to remove obstacles to the effective working of markets in general and the labour market in particular; to correct the deficiencies in our education and training that make it hard for industry—and individuals — to adapt to change; to construct a pattern of taxation that does least damage to incentives, and in particular does least to deter people from taking jobs at wages that businesses can afford.
      We have made progress on all these fronts. Inevitably, it takes time for the effects to come through. That is not surprising — attitudes and behaviour acquired over decades cannot be changed overnight — and there is much still to be done; but there is no short cut. If it were possible to create jobs simply by boosting Government borrowing and Government spending, there would be no unemployment in the world today, for nothing is easier for a Government than to borrow and spend. Impatience is a bad counsellor.
      In setting financial policy for the year ahead I have had one object in mind: the continuing reduction of inflation. Equally, in deciding my individual Budget proposals within that overall framework, I have sought throughout to make those changes that will do most to promote enterprise and employment.
      Our attack on the evil of unemployment is clear, coherent and strong. My Budget today represents a further step along the road we have been taking since 1979. It will help us to ensure that more new jobs are created and that they will be new jobs that last.

      EMPLOYMENT AND TRAINING MEASURES
      I begin with some measures directly related to employment and training.
      One of the most long-standing problems in this country is our failure to prepare our school-leavers adequately for work. Since it was first launched in 1983, the youth training scheme has proved to be a very successful bridge between school and work. I has also helped to make young people's pay expectations more realistic. But too many trainees are still reluctant to accept rates of pay which reflect their inexperience, and too many employers still fail to recognise that training is an investment in their own commercial interest. This is in marked contrast to our major competitors overseas.
      The Government have therefore decided to promote a substantial expansion of the youth training scheme. Provided employers contribute a major share of the cost, the Government are prepared to provide further funds to launch this new initiative, over and above the existing £800 million a year of public expenditure on the YTS. The expanded scheme would offer places lasting two years for 16-year-old and one year for 17-year-old school-leavers, leading to a recognised qualification.
      The main aim of all this is a better qualified work force. It would also be a major step towards our objective of ensuring that every youngster under the age of 18 will either be in full-time education, or in a job, or receiving training, with unemployment no longer an option. But first we have to get the expanded scheme in place. It will

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      require the active co-operation of employers, trade unions and school-leavers, which I am confident will be forthcoming.
      The existing YTS provides foundation training and preparation for work. The expanded scheme will also involve occupational training for both the employed and the unemployed, geared to the needs of business and industry. In the long run, we would expect employers to meet the full cost, as those in other countries do, but I recognise that such a major change in attitudes may take time. I am therefore prepared to set aside a fixed sum in public funds to launch this new initiative and get it moving in the right direction.
      My right hon. Friend the Secretary of State for Employment will be arranging consultations through the Manpower Services Commission about the quality of the training, the share of the cost to be borne by employers, and the level of trainee allowances. We aim to complete these consultations by the end of June so that a second year will be available for as many as possible of the 16-year-olds leaving school this year. Provided the outcome is satisfactory, I have undertaken to increase the Department of Employment's programme by £125 million in 1986–87 and £300 million in 1987–88. This expenditure will be partly offset by savings in social security payments and the ending of the young workers scheme, which will close for applications at the end of March 1986.
      I am also providing the MSC with an additional £20 million in 1986–87 to finance a programme of appropriate in-service teacher training courses.
      It has become increasingly evident that our output of graduates in high technology disciplines is not keeping pace with the expanding needs of industry. My right hon. Friend the Secretary of State for Education and Science will therefore be announcing later today a special programme, costing around £40 million over the next three years, to provide additional places in engineering and technology at selected higher education institutions. In this case the cost will be met from within existing public expenditure programmes.
      While school-leavers are catered for by the youth training scheme, there remains the problem of the long-term unemployed genuinely seeking work. Under the community programme, local authorities and voluntary bodies provide temporary work for the long-term unemployed on projects of community benefit. This scheme, which at present provides 130,000 places has proved its worth, with a significant proportion of those who leave it going on to other jobs.
      I have therefore agreed to make funds available to provide an additional 100,000 community programme places by June 1986. These places will be for 18 to 24-year-olds who have been unemployed for six months or more, and other adults who have been unemployed for over a year. To accommodate this, the Department of Employment's programme will be further increased by £140 million in 1985–86 and £460 million in 1986–87.
      To an even greater extent than with the youth training scheme, the net public expenditure cost will be substantially less than the gross cost because of savings on social security benefits. The net addition to public expenditure as a result of all the proposals I have just announced will be £75 million in 1985–86, £300 million in 1986–87, and £400 million in 1987–88.
      We also need to do more to remove legislative impediments to the effective working of the labour market.
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      However well intentioned, these can only lead to fewer jobs. Accordingly, my right hon. Friend the Secretary of State for Employment will be extending to all employers the provisions on unfair dismissal which currently apply to small firms. The qualifying period for unfair dismissal claims will thus become two years for all new employees. This is a reasonable period of time and should lessen the reluctance of some employers to take on new people.
      In addition, my right hon. Friend will be issuing a consultative document about the future of the wages councils later this week. Wages councils destroy jobs by making it illegal for employers to offer work at wages they can afford and the unemployed are prepared to accept. This applies in particular to small employers and to youngsters looking for their first job.
      Mr. John Evans: The right hon. Gentleman should be ashamed of himself.
      Mr. Lawson: The document will cover a number of proposals for radical change, including complete abolition.
      My right hon. Friends the Secretaries of State for Employment and for Education and Science will be issuing press notices later today giving further details of these measures.
      Mr. Evans: Bring back sweatshops.

      TAX REFORM
      Mr. Lawson: I now turn to taxation.
      This Budget carries forward the theme of tax reform I set out last year; reform designed to make life a little simpler for the taxpayer; and above all reform designed to improve our economic performance over the longer term, on which the jobs of the future will depend.
      In my Budget last year I announced a radical reform of the corporation tax system. This had been preceded by the Green Paper on corporation tax issued by my predecessor in 1982.
      I am satisfied that the right way to proceed with major tax reform is to issue a Green Paper first, as a basis for full and informed discussion, followed by legislation when the results of that discussion have been fully digested.
      I therefore propose to issue a Green Paper later this year on the reform of personal income tax.
      The computerisation of PAYE makes this the right time to review the system of personal taxation. Most of the work will be complete by the end of 1987 and the full range of facilities will be available by 1989. The Green Paper will therefore discuss a range of options opened up by computerisation, from non-cumulation to closer integration between the tax and benefit systems, and including in particular a reform of the present system of personal allowances.
      It is the Government's firm policy to reduce the burden of income tax, but we need to make sure that the reliefs we can afford are concentrated where they will do most good.
      The present structure of personal income tax is far from satisfactory. Too many young people start paying tax at too low a level, and too many families find themselves in the poverty and unemployment traps. The system discriminates against the family in which the wife stays at home to look after the children. It denies to the partners in a marriage the independence and privacy in their tax affairs which they have a right to expect.

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      There is therefore a strong case for changing to a new system of personal allowances more suited to today's economic and social needs. Under this, everyone, man or woman, married or single, would have the same standard allowance; but if either a wife or a husband were unable to make full use of their allowance, the unused portion could be transferred, if they so wished, to their partner.
      This reform would produce a more logical and straightforward system. Far more people could be taken out of the poverty and unemployment traps, and indeed taken out of tax altogether, for a given sum of overall tax relief than is possible under the present system. It would end the present discrimination against the family where the wife feels it right to stay at home, which increasingly nowadays means discrimination against the family with young children.
      Husbands and wives would each be taxed separately on their own income irrespective of the income of the other. The aggregation for tax purposes of a wife's earned income and investment income with her husband's would end, thus removing what has become an increasing source of resentment among women.
      The Green Paper will set out full details of the proposals I have just outlined, as a basis for public discussion. After an appropriate period for consultation, it would be possible to legislate in 1987 and have a system on these lines in place by the end of the decade.
      There is also a case for changing the tax treatment of pension funds, as part of a thorough-going reform of the tax treatment of personal savings generally. Any fundamental reform of this kind would, in the same way, need to be preceded by the publication of a Green Paper.
      The House will, I am sure, be interested to learn that I have no such Green Paper in mind.
      Nor, indeed, despite the unparalleled pre-Budget agitation, do any of the detailed proposals in my Budget affect the tax-deductibility of pension fund contributions, the tax-free nature of pension fund income and capital gains, or the anomalous but much-loved tax-free lump sum.
      Meanwhile, I have a number of other important proposals for tax reform to announce today, which will both simplify the system and encourage enterprise.
      First, on Capital gains tax, last year I was unable to do anything about the acknowledged defects of this tax, notably its combination of unfairness and complexity, and undertook to come back to it this year. This I now do.
      I have decided that the right way to reform capital gains tax is to build on the important change made by my predecessor three years ago when he introduced the 1982 indexation relief. That relief, valuable though it is, and increasingly valuable as it will become, suffers from three serious limitations.
      First, indexation does not cover the first 12 months of the ownership of an asset. This provision was introduced to discourage the short-term conversion of income into capital, but it has made the tax very much more complicated for the taxpayer. I am now in a position to remedy this defect. Hon. Members will recall that I announced last month measures to put an end to the practice known as bond washing, the principal device for converting income into less heavily taxed capital gains. Having done that, I now propose to abolish the 12-month rule. So far as most disposals are concerned, this will take
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      effect from 6 April. In the case of certain fixed interest securities, however, the rule will need to remain in being until the anti-bond-washing provisions take effect on 28 February 1986.
      Second, the indexation does not at present extend to losses. I propose to remove this restriction.
      Thirdly, the present indexation provision unfairly discriminates against those who acquired their assets prior to 1982. For them, the allowance is based not on the 1982 value of the asset but on its original cost. I now propose to remedy that injustice. The indexation allowance will henceforth be based on March 1982 values. Capital gains made prior to 1982 will still not be indexed, of course, but at least all purely inflationary gains made since that date will now be free of tax, irrespective of when the asset was acquired.
      That three-pronged reform of capital gains tax will produce a fairer tax, make life simpler for the taxpayer, help the efficient working of the capital markets, relieve the burden on family businesses and encourage risk-taking and enterprise. Combined with the statutory indexation of the exempt amount, which will rise in 1985–86 to £5,900, these changes will remove some 15,000 taxpayers from liability altogether. Increasingly, the tax will be levied on real and not inflationary gains. With these reforms, I believe that the tax is now on a broadly acceptable and sustainable basis. The combined cost of the threefold reform I have announced is £155 million in a full year; but none of it falls in 1985–86.
      I turn next to the stamp duties. Following widespread consultation, I have decided that the time has come to simplify and modernise these ancient duties. I propose in this Budget to sweep away 15 separate duties, including the contract note duty and the 1 per cent. duty on gifts. Altogether, the changes I am proposing should reduce by over 40 per cent. the number of documents which require to be stamped.
      My final proposal for reform concerns development land tax. This is a particularly complex tax, which was introduced in response to the problem of soaring land values at a time of high inflation. Its chief practical effect is to discourage the bringing forward of land for development. This disincentive effect will grow as the gap widens between the 60 per cent. rate of development land tax and a corporation tax rate which is on the way down to 35 per cent.
      I have therefore decided to abolish development land tax altogether, with immediate effect. At the same time, I propose to cancel all deferred charges under the tax. The net cost will be some £20 million in 1985–86 and £50 million in a full year. That compares, incidentally, with a collection cost of some £5 million a year. Development gains will, of course, continue to be subject to income tax, corporation tax and capital gains tax, in the same way as any other income or capital gains.
      The abolition of development land tax will, I am sure, be especially welcomed by the building and construction industry. It will also remove no fewer than 200 pages of highly complex legislation from the statute book. This follows the abolition of the national insurance surcharge and the investment income surcharge in last year's Budget —three unwanted taxes swept away in two years.

      BUSINESS TAXATION
      I now turn to other aspects of business taxation. It cannot be repeated too often that it is businesses and not Governments that create jobs. The Government's responsibility is to foster the conditions which will encourage businesses to grow and to create more jobs. The measures I have to announce are designed with that end in view.
      First, on corporation tax, the reforms I announced last year set out a new and improved framework of business taxation for the remainder of this Parliament and beyond, so this year I have only limited changes to make. A full list is, of course, contained in the Red Book.
      As I promised last year, I have reviewed the scientific research allowance. Given the particular importance of expenditure on research and development if British industry is to hold its own in a competitive world, I have decided, exceptionally, not to reduce that allowance in line with the changes in the other capital allowances. A few minor changes apart, the scientific research allowance will remain at 100 per cent.
      I have also decided to modify the new capital allowance system as it applies to short-life assets. While the new structure of capital allowances enables most plant and machinery to be written off over a period that more than fairly reflects its useful life, I accept that there is a problem with those assets which enjoy only a short life, in particular high technology assets.
      Accordingly, from next year, a business will be able to exclude from its general pool of capital expenditure any asset which it believes will have only a short life, so that, if the asset is subsequently scrapped after, say, four years, it will be fully written off for tax over that period. I believe that this change will be widely welcomed. The benefit to business could rise to about £300 million in the early 1990s.
      I now turn to a number of other detailed measures affecting business.
      The number of employee share schemes has increased from 30 when we first took office in 1979 to some 850 today. The whole-hearted commitment of employees to the success of the companies in which they work is vital to our country's economic future. To maintain and build on this progress, I propose to reduce the retention period for profit-sharing schemes from seven years to five.
      I propose to take action to deal with tax avoidance by partnerships, following the consultative document issued last year.
      In my last Budget, I removed a competitive disadvantage to British manufacturers by levying VAT on imports. I have decided to modify the new regime in two respects.
      First, I propose to relieve from VAT certain goods which are imported into this country solely for repair, or for processing which does not change their identity, and are then re-exported to their owners overseas. Secondly, goods which are temporarily exported from the United Kingdom and then reimported after repair or processing abroad, will bear VAT only on the value of the repair or processing. These reliefs will take effect on 1 June and have a once-for-all cost in 1985–86 of £30 million.
      I propose to introduce secondary legislation to remove the constraint imposed by the Banking Act, which at
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      present prevents companies from financing themselves by a series of issues of short-term securities. That should provide a useful alternative to bank borrowing.
      I have no major new proposals this year on the taxation of North sea oil. I have reviewed the economics of incremental investment in existing fields, but I have not been persuaded that there is a case for introducing new fiscal reliefs at this stage. My only proposal for change, apart for some minor technical measures, is to remove immediate petroleum revenue tax relief for onshore exploration and appraisal expenditure. Onshore activities are sufficiently low-cost not to need that special incentive.
      In last year's Budget statement, I mentioned the Government's concern at the spread of unitary taxation within the United States, and the threat that this posed to the US subsidiaries of British companies. Since then, I am glad to note that several American states have abolished unitary taxation; but in others, notably California, no change has yet been made. We shall continue to press for action to be taken this year, and fully support the campaign being waged by the CBI and others on this issue.
      Finally, I turn to a group of measures of particular importance to smaller businesses and the self-employed, a sector of the economy where an increasing proportion of the jobs of the future is likely to be found.
      I have already announced a substantial reform of the capital gains tax. In addition, I propose to implement many of the proposals contained in last year's consultative document on capital gains tax retirement relief, notably to reduce the age for full relief to 60 and to extend relief to those who are obliged by ill health to retire before that age. This relief is particularly important to the proprietors of small businesses concerned at the capital gains tax they might have to pay when they come to sell their business on retirement.
      Although the business expansion scheme has been in existence only two years, it has already made an impressive contribution to the promotion and growth of new businesses. Last year, almost 20,000 people took advantage of the tax reliefs offered by the business expansion scheme to invest some £100 million in more than 500 companies. Over half of this went to provide equity capital for new businesses.
      I have two changes to propose. The scheme was designed to encourage investment by individuals in new and expanding businesses in risk areas. Accordingly, I propose to include within the scheme companies formed to carry out research and development. By the same token I propose to exclude from the scheme certain ventures which primarily involve property development. Building and construction will, of course, continue to be a qualifying trade.
      Last year I undertook to review the scope of VAT relief for bad debts, a matter of considerable concern to small businesses. In the light of legislation now proceeding in another place on the reform of the insolvency law, I propose to widen the scope of the existing relief. The new rules will take effect as soon as the provisions of the Insolvency Bill are implemented, and will cost some £25 million in a full year.
      I propose to increase the VAT threshold to £19,500 from midnight tonight.
      Over the past five years, the ranks of the self-employed have risen by well over half a million, or some 30 per cent., and the growth in self-employment has been a

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      particularly marked feature of the encouraging growth in overall employment that has occured since the spring of 1983.
      However, the self-employed suffer from one longstanding grievance so far as tax is concerned. While the national insurance contribution paid by an employee cannot be set against tax, the national insurance contribution paid by the employer on the employee's behalf can. Yet none of the national insurance contribution paid by the self-employed can be set against tax at all.
      Today I propose to remedy this grievance. As from 6 April, tax relief will be allowed for half the graduated class 4 national insurance contribution paid by the self-employed. In addition, I have agreed with my right hon. Friend the Secretary of State for Social Services that, as from the beginning of October, the flat rate class 2 national insurance contribution payable by the self-employed will be reduced from £4·75 to £3·50 a week. The benefit of these reliefs to the self-employed will be £55 million in 1985–86 and £155 million in a full year.
      All this adds up to a substantial package of measures to help small business and the self-employed, which I am sure the whole House will welcome.

      PERSONAL TAXATION: TAXES ON SPENDING
      I turn now to the taxation of personal income and spending. My Budget last year shifted some of the burden of personal taxation from earnings to spending. Today I propose to make a further move in this direction. Accordingly, I propose to increase the revenue from the excise duties by rather more than is required simply to keep pace with inflation — a less painful task now that inflation is relatively low.
      I propose to increase the duty on cigarettes and hand-rolling tobacco by the equivalent, including VAT, of 6p on a packet of 20 cigarettes. This will take effect from midnight on Thursday. I do not, however, propose any increase at all in the duties on cigars and pipe tobacco.
      I propose increases which, including VAT, will put between 1p and 2p a pint on most beer, depending on its strength, 1p a pint on cider, 6p on a bottle of table wine and about 10p a bottle on sparkling or fortified wine. In recognition of the current difficulties of the Scotch whisky industry, however, I propose to increase the duty on spirits by only 10p a bottle, well below the amount needed to keep pace with inflation. [HON. MEMBERS: "Hear, hear."] All these changes take effect from midnight tonight.
      I propose to increase the duty on petrol and derv by amounts which, including VAT, will raise the price at the pumps by approximately 4p and 3¼p a gallon respectively. This does no more than keep pace with inflation. These increases will take effect from 6 o'clock this evening. As last year, I do not propose any change in the duty on heavy fuel oil.
      I propose this year, however, to raise more revenue from the vehicle excise duty. For cars and light vans the duty will go up by £10 to £100. On the advice of my right hon. Friend the Secretary of State for Transport, the pattern of duty on lorries will be changed to correspond more closely to the amount of wear and tear that they cause to the roads. While there will be substantial increases in duty for some of the heaviest rigid lorries, for most lorries the rates will remain unchanged.
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      These changes in the excise duty will, all told, raise an extra £820 million in 1985–86, some £235 million more than is required to keep pace with inflation. The overall impact effect on the retail price index of these changes will be 0·5 per cent. This has already been taken into account in the forecast that I have given the House of 5 per cent. inflation by the end of the year.
      I now turn to VAT. I have followed with interest the speculation that has built up over recent months about my alleged intentions for VAT. Most of it—such as the so-called proposal to levy VAT on books—has concerned matters which have not even been under consideration. But to have revealed this prematurely would not have stilled speculation; it would merely have concentrated it on those matters that were under consideration — a practice that no Chancellor, rightly, has sought to encourage.
      I can now inform the House that, apart from one change I shall be proposing today, I do not intend to make any further extensions of the VAT base during the lifetime of this Parliament. This is, of course, a field in which European Community law has to be reckoned with and where we are bound by our treaty obligations, but as the House will be aware, where we are currently under challenge, we are vigorously fighting our case.
      The one extension I propose to make concerns newspapers and magazines. At present, while all other advertising is taxed, newspapers and magazine advertising is not. There is no justification for this anomaly. It is one thing to maintain that newspapers and magazines should not be liable to VAT: quite another to argue that those who advertise in them should enjoy a similar immunity. Accordingly, I propose that, from 1 May, newspaper and magazine advertising should be subject to VAT. This will raise £30 million in 1985–86 and £50 million in a full year.
      I also propose to change the VAT treatment of credit cards and similar payment cards—a part of the financial sector which has enjoyed exceptional growth over the past few years. I propose that, from 1 May, transactions between the companies providing the cards and outlets which accept them should be classified as exempt. This means that the companies will not be able to recover VAT in respect of such transactions. This will raise £15 million in 1985–86 and £20 million in a full year. It should not directly affect the charges made to card holders.
      I also have a modest VAT concession to make. I have decided to extend the existing VAT relief for medical or scientific equipment bought with donated funds for use in hospitals and the like to cover computer equipment for certain medical uses. Customs and Excise will be announcing the precise details of the relief, which will take effect from 1 May.
      Following extensive consultations, I propose to include in this year's Finance Bill legislation to implement most of the recommendations of the first two volumes of the Keith report on the enforcement powers of the revenue departments, including measures to deal with the problem of the late payment of VAT. This is expected to bring in extra revenue of about £50 million in 1985–86. By 1988–89, there will have been a cumulative once-for-all revenue gain of about £600 million. Proposals on the Inland Revenue aspects of the Keith report will follow in next year's Finance Bill.
      The VAT changes I have just proposed will bring in £90 million in 1985–86, rising eventually to £215 million in a full year. They will have no impact on the RPI. The

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      additional revenue raised from the excise duties and VAT taken together will help me to lighten the burden of income tax.

      PERSONAL TAXATION: INCOME TAX
      Before turning to income tax, I should briefly mention capital transfer tax. Since 1979, the burden of this tax has been very significantly reduced, and I propose to maintain that position this year by raising the threshold and rate bands set last year in line with statutory indexation. In addition, I propose to widen the scope of the existing exemption for amenity land surrounding a house of outstanding heritage quality. I am sure that this will be welcomed by all those concerned with the preservation of our national heritage.
      I now turn to income tax. On 6 April, the banks will move over to the composite rate system for the payment of tax on bank interest. I now need to legislate to put the corresponding composite rate payments by building societies on a similar footing, starting next year. This will not produce any additional revenue. As an administrative saving, I also propose to legislate this year to bring new loans above the mortgage interest relief ceiling into the MIRAS system by April 1987. The ceiling itself will remain at £30,000 for 1985–86.
      I need to set the 1986–87 car benefit scales for those whose employers provide them with the use of a car. As last year, I propose to increase both the car and fuel scales by 10 per cent. with effect from April 1986. This will still leave the scale levels well short of the true value of the benefit.
      To give further help to charities, I propose to increase from £5,000 to £10,000 the limit to which relief at the higher rates of tax is allowed for covenants.
      I now turn to my main income tax proposals. I propose to make no change this year in the rates of income tax. Once again, I believe that it is right to concentrate most of the limited resources at my disposal on raising the starting point for tax. Increases in the basic tax thresholds benefit all taxpayers, but they give proportionately more help to those on low incomes. This year, a Budget for jobs and for enterprise has to give high priority to raising the tax thresholds.
      The statutory indexation formula means that I should increase all the principal income tax allowances and bands by 4·6 per cent., which is the increase in the RPI over the year to last December, and then rounded up. For the higher rate thresholds and bands I propose this year to do just that. The first higher rate of 40 per cent. will be reached at a taxable income of £16,200 and the top rate of 60 per cent. will apply to taxable income above £40,200.
      For the basic thresholds I can do more. Statutory indexation would imply an increase in the single person's allowance of £100. I propose to increase it by precisely twice as much — £200 — from £2,005 to £2,205. Statutory indexation would imply an increase in the married man's allowance of £150. Again, I propose to raise it by precisely twice as much—£300—from £3,155 to £3,455.
      I propose to increase the age allowances this year by the same cash amount as the corresponding basic allowances. Thus the single age allowance will rise by £200 from £2,490 to £2,690 and the married age allowance will go up by £300 from £3,955 to £4,255.
      798
      These increases mean that most single people will enjoy an income tax cut of at least £1·15 a week and most married couples an income tax cut of at least £1·73 a week. Some 800,000 people on low incomes — 100,000 of them widows—who would have paid tax if thresholds had not been increased, will pay no tax at all in 1985–86. That is almost twice as many as would have been taken out of tax had the allowances merely been indexed.
      The income tax changes I have announced today will take effect under PAYE on the first pay day after 17 May. Their cost is considerable: £1·6 billion in 1985–86, of which roughly half represents the cost of indexation.
      The increase in the basic allowances of almost 10 per cent., or some 5 per cent. in real terms, means that for 1985–86 they will be more than 20 per cent. higher in real terms than they were in 1978–79, Labour's last year.

      NATIONAL INSURANCE CONTRIBUTIONS
      I have one last proposal to make. I have already set out the broad lines of the Government's strategy to improve the prospects for jobs. I have described a number of measures to improve training, remove legislative barriers to employment, and stimulate enterprise; and I have also raised tax thresholds substantially for the second year running; but I want to do more to improve job prospects for young people and the unskilled, among whom the problem of unemployment is most severe.
      I have concluded that an effective response to this problem must include direct action in two related areas — to cut the costs of employing the young and unskilled, and to sharpen their own incentive to work at wages which employers can afford to pay.
      I am therefore proposing, in collaboration with my right hon. Friend the Secretary of State for Social Services, a radical reform of the structure of national insurance contributions. The essential features of the contributory principle will be preserved. The changes will affect both employers' and employees' contributions.
      Given the limited resources at my disposal, I cannot afford this year to make a further substantial reduction in the overall burden of employment costs, following the abolition of the national insurance surcharge in last year's Budget. I therefore propose to abolish the upper earnings limit for the employer's national insurance contribution, which for 1985–86 has been set at £265 a week.
      Under existing arrangements, an employer pays in national insurance the same cash sum, which for the coming year would be roughly £28 a week, for all employees above the upper earnings limit, regardless of whether the employee is paid £15,000 a year or £50,000 a year. Under the new and arguably fairer scheme I am now proposing, the employer's liability will be the same flat 10·45 per cent. of earnings as at present applies below the upper earnings limit.
      The £800 million raised by this change in a full year enables me to make a substantial reduction in the cost of employing people at the lower end of the earnings scale. There, instead of the uniform 10·45 per cent., I propose to introduce a system of graduated rates.
      As now, there will be no national insurance payable for those earning below the lower earnings limit, which for 1985–86 has been set at £35·50 a week, broadly in line with the single person's pension, but for employees earning between this and £55 a week, the employer will in future have to pay only 5 per cent. instead of 10·45 per cent.; for

      799
      employees earning between £55 a week and £90 a week the new rate for employers will be 7 per cent.; and for those earning between £90 and £130 a week, the employer will pay 9 per cent. The full employers' rate of 10·45 per cent. will apply only for those earning over £130 a week.
      These changes represent substantial reductions in the cost of employing the lower paid. They will significantly improve the flexibility of the labour market and the prospects for jobs. I recognise that employers cannot be expected to welcome the increased cost of employing higher paid workers, but for business and industry as a whole the increase in the cost of the higher paid will be fully offset—indeed it will be more than offset—by the reduced cost of employing lower paid workers.
      Moreover, I propose to introduce a similar system of graduated national insurance contribution rates for the employees themselves at the lower end of the earnings scale. At present, those earning more than the lower earnings limit pay a flat rate of 9 per cent. on total earnings up to the upper earnings limit, and nothing on any amount they may earn above that limit.
      This system makes national insurance contributions a particularly heavy burden for the low paid. I propose that, in future, those earning between £35·50 and £55 a week pay at the rate of 5 per cent. and those earning between £55 and £90 a week 7 per cent. Only those who earn above £90 a week will be liable to the full 9 per cent. on their earnings. However, I do not propose to abolish the upper earnings limit for employees' contributions. It is an integral part of the contributory system on which their benefit entitlement is based. Moreover, if it were abolished, those on the higher rates of income tax would face unacceptably high combined marginal rates, taking into account liability to both tax and national insurance contributions.
      The changes I have proposed represent a substantial reduction in the burden of national insurance contributions on lower paid employees. In addition, as I have already indicated, I propose a corresponding reduction in the contributions paid by the self-employed. The Hate rate class 2 contributions, as I have already said, will be reduced from £4·75 to £3·50 a week.
      My right hon. Friend the Secretary of State for Social Services will include legislation to give effect to this restructuring of national insurance contributions in the Social Security Bill now before Parliament, and I expect the new rates to take effect from the beginning of October. I should make it clear that these changes are not intended to affect benefit rights, and new rules will be introduced to protect those rights. Nor will the changes affect arrangements for the contracted-out rebate.
      The overall cost of these changes will be £450 million in a full year, made up of £80 million less in employers' contributions, £270 million less in employees' contributions, and £100 million less in contributions from the self-employed. In 1985–86 the total cost will be £160 million.
      800
      The effect on job prospects will, over time, be substantial. The radical restructuring I have announced will encourage employers to take on the young and unskilled and give them, in turn, an incentive to seek work at wages that employers can afford. The cost of employing some 8½ million people on earnings of less than £130 a week will be reduced by almost £900 million in a full year. It will cost an employer £3 a week less to employ a young person or unskilled worker at just below £90 a week, and the take-home pay of some 3½ million people with earnings up to this level will be further increased, on top of the significant real increases in income tax thresholds I have already announced. Thus, a single youngster on just under £90 a week will pay about £1·80 a week less in national insurance on top of the reduction in his income tax bill of £1·15 a week—an overall increase in take-home pay of almost £3 a week.
      The reduction in the total burden on the low paid—income tax plus employers' and employees' national insurance contributions combined — is even more dramatic. For someone on £80 a week it is cut by up to 30 per cent., and at £50 a week it is cut in half.
      These are changes of a major order. They amount to a direct and powerful attack on disincentives to employment. They tackle the problem of unemployment where it is most acute. They complete my Budget for jobs.

      CONCLUSION
      In this Budget, Mr. Deputy Speaker, I have reaffirmed the Government's commitment to the defeat of inflation through the maintenance of sound money. I have made further radical proposals for taxation and national insurance, and abolished outright a third tax. In collaboration with my right hon. Friends the Secretaries of State for Employment, for Education and for Social Services, I have proposed a coherent and wide-ranging set of measures to promote new jobs. I commend this Budget to the House.

      PROVISIONAL COLLECTION OF TAXES
      Motion made, and Question,
      That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following motions—

      (a) Spirits (Motion No. 2)

      (b) Beer (Motion No. 3)

      (c) Wine and made-wine (Motion No. 4)

      (d) Cider (Motion No. 6)

      (e) Tobacco products (Motion No. 7)

      (f) Hydrocarbon Oil (Motion No. 8)

      (g) Vehicles excise duty (Motion No. 10)—[Mr. Lawson.]

      put forthwith, pursuant to Standing Order No. 114 (Ways and Means Motions), and agreed to.
      Mr. Deputy Speaker: I shall now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week and they will then be decided without debate.

  Budget Resolutions and Economic Situation

    AMENDMENT OF THE LAW
    Motion made, and Question proposed.
    That it is expedient to amend the law with respect to the National Debt and public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

    (a) for zero-rating or exempting any supply;

    (b) for refunding any amount of tax, otherwise than by a provision relating to the insolvency of a person to whom goods or services have been supplied;

    (c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

    (d) for any relief other than relief applying to goods of whatever description or services of whatever description. —[Mr. Lawson.]

    Relevant documents: European Community Document No. 10277/84, Annual Economic Report 1984–85 and the Unnumbered document Annual Economic Report 1984–85 (final version as adopted by the Council).
    5.7 pm
    Mr. Neil Kinnock: The custom is for the Chancellor of the Exchequer to be congratulated on his Budget. A Chancellor who is able to cut down on his previous year's delivery time to a new "low" of one hour 12 minutes this year deserves to be congratulated.
    There are certain aspects of the Budget which can immediately be commended. First, the Chancellor has relented about the changes in capital allowances, especially on scientific equipment and short-life investment goods. It is also appropriate for the Chancellor to receive support for making life easier for the self-employed who have to retire early through ill health. Most of all, we commend the Chancellor for the changes that he has made to national insurance contributions by both employers and employees. The cheers that were heard when he announced these changes were rather louder from the Opposition than they were from the Conservative Benches. Indeed, there was what could be called a deafening silence on the Conservative Benches, probably because the Chancellor's proposals were all contained in the Labour party manifesto for the 1983 general election.
    It is a shame that the Chancellor has taken so long to make these changes, despite the appeals to do so that were made well before the last general election; appeals which have been repeated by me and by my right hon. Friends since then. Who knows how many jobs might have been saved if successive Chancellors had taken the opportunity to reduce the national insurance contributions, especially since this Government raised them by 50 per cent. after they took office in 1979.
    There is much that is deserving of detailed attention and comment in this Budget, and I have no doubt that many of my right hon. and hon. Friends will want to do that. It is not the custom of the House that, in the speech immediately following the Chancellor, I should go into what could be called the nitty-gritty.
    The Secretary of State for Trade and Industry (Mr. Norman Tebbit): Just as well for the right hon. Gentleman.
    Mr. Kinnock: That was the nitty-gritty speaking. There is no one nittier and grittier than the Secretary of State for Trade and Industry.
    The Chancellor deserves the courtesies that go with clearly having spent considerable time and energy on making his Budget and compiling his speech. The right hon. Gentleman has clearly put a lot of work into the Budget. The problem is that it is highly unlikely that a lot of work will come out of the Budget.
    The Chancellor's advertisers, and, indeed, the Chancellor himself today, have repeatedly used the phrase "a Budget for jobs." Indeed, we have heard something even stronger. We heard the Chancellor referring to the scourge of unemployment and the evil of unemployment. Let us hope that that is a harbinger for much bigger actions in future to deal effectively with unemployment.
    We have heard all about Budgets for jobs before. We heard it last year. In one of the dying phrases of his speech last year the Chancellor talked about the Budget for jobs, and in the succeeding year unemployment in Britain increased by 143,000. That has been the case in each of the other six Budgets for jobs that have come from the Chancellor and his precedessor. All that we have seen after each of those Budgets for jobs has been a remorseless increase in unemployment from 1·25 million to the now registered 3·25 million, but actual 4 million unemployed in Britain.
    On that basis, sadly, the Budget will fail Britain again. Unemployment in Britain is higher now than ever before, and it has stayed higher for longer than ever before. It is more worrying to more people, both the employed and the unemployed, than it has ever been before. It is more financially and socially expensive and wasteful than it has ever been before. Action to fight unemployment is more necessary than it ever has been before.
    I know that Conservative Members are not too keen on listening to the unemployed—at least, not to all of them —but perhaps those who are keen on listening to the unemployed, on trying to relate to them and on campaigning on their behalf, can prevail upon their colleagues to ensure that we get that action which is more necessary than ever before. Unfortunately, little that the Chancellor said this afternoon properly recognises or responds to the unemployment which is higher, has lasted longer and is more worrying than ever before.
    We have heard the propositions that relate to the youth training scheme, to the community programme and to an expansion—although we did not hear exactly how much —of in-service teacher training. Let me say this about the YTS proposals, as far as we could distinguish them. The right hon. Gentleman talked about unemployment not being an option. That sounds like an encouraging phrase, but from the lips of the Government it is an ominous phrase, especially since we heard of the net costs of the scheme. Therefore, we are forced to conclude that there is a strong likelihood that the Government will withdraw benefit entitlement from young unemployed people who do not find themselves suited by training schemes or who cannot get work or education, and who therefore want to use unemployment benefit for the purpose for which it was originally paid at the beginning of the century—to look for work.
    Are the Government proposing—I shall gladly give way to have my question answered — to withdraw entitlement to benefit from unemployed young people? If they are, it will be a repeat of a tragic part of our history.

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    My father went to a training camp for training in the 1930s. The penalty for not doing so was withdrawal of his dole. It may be that, 50 years later, the youngsters of our generation are being offered exactly the same—absence of options, reduction of freedom—as a consequence of not wanting to undertake the form of forced training which the Government will be operating. Are we to have a conscriptive scheme? Are we to have a coercive scheme? Or are young people to retain their entitlement to benefit if they want to look for jobs, as well as getting any advantages that go with the expansion of the youth training scheme? The whole country and every youngster in it will want to know the answer to that question.
    The Chancellor of the Exchequer (Mr. Nigel Lawson): Had I any new proposals to make on that front, they would have been contained in my speech.
    Mr. Kinnock: We are now looking for an undertaking from the Government, and we shall press this continually, that, having not made or proposed any such changes today —if that is what the Chancellor means—no changes will forbid the payment of benefit to unemployed youngsters. That would be an elementary injustice and the young people of Britain would not tolerate it. They want jobs, education and training. They do not want to take those under coercion, and the Chancellor and other Ministers had better get hold of that.
    We have heard about the Government's policy on wages councils. That is about the most squalid of all the Government's policies on the labour market. We are being told that the real inhibition to the development of our economy is the £1·19 an hour that is offered by the hairdressing wages council, or the £1·70 an hour that is guaranteed by the catering wages council. If they were enforced there might be something more to be said, but last year inspectors made 10,000 notifications that employers had broken the regulations of the wages councils, and two prosecutions arose out of them. If the right hon. Gentleman is concerned about personal freedom, good labour markets and decent employer-employee relations he should be getting those inspectors to enforce the law as it has stood since 1919 and as it has been upheld by successive Tory and Labour Governments.
    What the country really needed today from the Budget was expansion, opportunity, justice, enterprise, and, most of all, jobs. This stagnant Chancellor has, in the face of all those requirements, simply given us a stalemate Budget which gives with one hand and takes away with the other, and which even threatens to jeopardise freedoms which have been narrowed over recent years.
    The Chancellor has today again turned his back on millions of our fellow citizens who are unemployed and millions who are poor. He has turned his back and waddled away from them, and he will not be forgiven for doing that. He has only just started to wake up to the fact that the assistance necessary to sponsor growth in this economy is a direct obligation of Government.
    Nobody claims that recovery can come only from Governments. Nobody claims that Governments must bear the full responsibility. But modern Governments can and must create the conditions in which what the Chancellor called the evil or scourge of unemployment can be fought effectively and vanquished by the Government and those prepared to assist them.
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    The fact is that there is no need for the Chancellor to insist on maintaining the course, as he put it. There are real and realistic alternatives. Those real and realistic alternatives have been put to him by the CBI, the road hauliers, the construction industry, the TUC, the National Economic Development Council and by a great chunk of the Conservative party in the House and throughout the country. They were put to him long before others by the Opposition.
    The very least that the Chancellor could have done today was to announce that he was prepared to provide an additional £3,500 million for investment and repair in housing, roads, sewerage systems, gas and electricity supply industries, training and research and development. He could have done that. He was prepared to find £2·5 billion to fight the miners. Why is he not prepared to do it to fight unemployment? That would show a real sense of priority on the part of the Government, and the jobs generated in those spheres as they have been listed by us and by others would be real jobs, not make-work schemes, not cosmetic covers for the unemployment figures. They would all be true contributions to the efficiency, safety and fairness of our society and our economy.
    The cost of not undertaking that major task of repair and development will only get higher as time goes on. The bills will only be bigger if that action is neglected now. The Prime Minister is fond of telling us that we must not maintain borrowing because we do not want to leave a debt to our children. It is very strange that the right hon. Lady is prepared to leave them a legacy of decay and danger because the Government will not undertake the proper expenditure now. Somehow she does not care that, by not spending, she and her Government are not only creating problems now but are creating despair for our children, about whom I know she cares. That is what the Government are doing by showing their willingness to borrow to maintain unemployment instead of borrowing to undertake new investment and provide new employment.
    When employers, industrialists, analysts, councillors, the Opposition parties and the Conservative party in substantial and increasing measure tell the Chancellor of the Exchequer that he is wrong, what makes him think that he knows best? It cannot be his record, can it?
    The Chancellor of the Exchequer is the parent of the medium-term financial strategy, the great design that was supposed to set and to keep "financial discipline"—as the right hon. Gentleman likes to put it — in the economy. Since they introduced that strategy in the 1980 Budget, the Government have destroyed 1·25 million more jobs than even they planned to destroy. In that process they have spent 10 per cent. more money than they intended to spend. They have printed 20 per cent. more money than they planned to print. They have borrowed £20,000 million more than under that medium-term financial strategy they planned to borrow.
    The Chancellor's brainchild of a strategy was intended to bring "a significant reduction," as the document put it, in interest rates. Instead, real interest rates have been at record levels for record periods of time and, in periods of that time, have been 50 per cent. higher than they were under the previous Labour Government.
    The right hon. Gentleman is the first Chancellor to have presided throughout his whole term of office over a manufactured trade deficit. He has presided over a bigger fall in the value of the pound than any other Chancellor in British history. He is the man who thinks that we have

    805
    a recovery when we have 4 million unemployed. He is the man who thinks that in this technological revolution Britain can depend on jobs which, as he has previously put it,
    "are not so much low tech as no tech".
    He is the man who told the House last July that the expenditure on the miners' dispute—2·5 billion—was a "worthwhile investment for Britain". This is the man who will not recognise that the ruinous cost of maintaining unemployment in Britain is the greatest single factor blocking even his desire, his plans, for durable growth, stability and confidence in our country. He has got himself into the position where even his own plans for tax reform and tax cuts are sabotaged by his own policies of higher unemployment.
    This is the man who told us on Sunday, in his interview with Mr. Harris in The Observer, that
    "financial discipline"
    is necessary because it is
    "exactly the same with a country"
    as it is for
    "any housewife".
    Would any housewife leave holes in the roof for want of some borrowing in order to undertake repairs? Would any housewife deliberately keep her grown-up children at home out of work rather than help them to get a job in the future? Would any housewife give money to a rich uncle rather than give anything that she had to spare to poor parents? Housewives would not do that, but that is exactly what the Government do.
    All those distorted priorities, all that neglect of unemployment, all those wasted resources, all the meanness towards the poor and the old, are features of this Government. That is their "financial discipline", and it would not be the financial discipline of any ordinary housewife in the land. The result of those policies is that there are more poor people living in deeper poverty in our country now than for decades past, and the Chancellor has done nothing truly effective to help them today.
    The higher tax thresholds and the pension and benefit increases which can be anticipated this year will not even keep those who depend upon those incomes at the levels at which they are now, because the Government's policy of increasing water, gas and electricity charges rents, rates, transport fares and prescription charges and the petrol rises will eradicate in short order any benefit that comes from those increases. Indeed, today, a week after we heard of the £2 prescription, we have the £2 gallon of petrol, and everybody knows exactly what the knock-on effect of that will be.
    This country needed a Budget for jobs and for justice. Britain needed a Budget for investment and for modernisation, a Budget which would help people to help themselves. That is the Budget which the Opposition would offer now and which people throughout this country want, because they recognise that it is a vital obligation of the Government to sponsor recovery.
    The Chancellor has responded to the deeply felt needs of the country by more of the policies that have already brought idleness and injustice on a massive scale. This Budget will not give scope for improvement, and it will not arrest or reverse the decline or decay in our economy and our society. It is not a Budget for healing divisions, for householders, for business, for giving security to the old, or for giving real opportunity and support to the young. Indeed, it is not even a Budget which could
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    reasonably be expected, if there were any serious competition from within the Government, to save the career of the Chancellor of the Exchequer.
    The right hon. Gentleman has told us that he has battened down the hatches and is staying on course. He is not on course. He is travelling in circles and sinking all the time. In this coming year we want the people of conscience and courage who exist on the other side of the House to join us to stop the right hon. Gentleman dragging our country down with him.
    5.28 pm
    Mr. David Knox: I should like to congratulate my right hon. Friend the Chancellor on his presentation. I have heard more exciting Budget speeches, but I certainly have not heard a briefer one. I regard both those remarks as complimentary because, in common with many people, particularly outside the House, I am getting a bit tired of excitement from Chancellors of the Exchequer. All such excitement does is to cause confusion and extra work and undermine the activities of people who are trying to run business and commerce in this country.
    I commend my right hon. Friend on his brevity, too. In the past, I have listened to some very long and boring Budget speeches, and I prefer the shorter version.
    I must confess that there were rather more items in the Budget which I found myself able to welcome than I had anticipated. I welcome very stongly the substantial increases in the thresholds for income tax, particularly for those at the bottom end. That is a welcome element of social justice.
    I welcome also the changes in the employer's national insurance contribution. It will be fairer than the existing system; and fairness, or an appearance of fairness, is most important. The excise duty increases this year are tolerable, and, as one who enjoys a glass of whisky, I find the increased duty on a bottle of whisky almost reasonable. I am pleased, too, that the VAT threshold has been increased, though my right hon. Friend might have increased it by somewhat more than he has.
    I am sure that all hon. Members join me in welcoming the fact that there is to be no change in the tax treatment of pension funds. It is unfortunate, however, that the Chancellor did not make this apparent some time ago. Much concern was caused to people by speculation about what might happen to pension funds. Among them were many who were looking forward to retirement and who were wondering what they would receive and whether it would be as much as they had anticipated.
    Firms were also concerned because they anticipated that they might have to introduce pension fund changes which would result in increased costs to them. Thus, although I welcome the fact that there is to be no change, it is unfortunate that that was not made clear earlier.
    I welcome the fact that there is to be no VAT on books, newspapers, journals, children's shoes and children's clothes—all items about which we heard much in recent weeks. I have no great objection to VAT being levied on newspaper advertising, because that would merely bring it into line with other forms of advertising.
    I welcome the promised Green Paper on the reform of income tax. I hope that it will lead to a measure of integration between income tax and benefits. That has

    807
    been needed for a long time, and I hope that we shall start more positively on that road as a result of the publication of the Green Paper.
    I come to some of the wider issues of economic policy which arise from the Budget. The principal economic problem facing Britain today is unemployment, and on its effects on unemployment the Budget will ultimately be judged, and rightly so. The Chancellor claims that it is a Budget for jobs. I hope that I shall be proved wrong, but I fear that it falls short of what is required to make a real impact on unemployment. I say that, first, because the Chancellor did not give details of any plans to try to stabilise the international monetary situation, and, secondly, because he has done nothing to increase substantially the level of domestic demand.
    In the first 25 years after the war we had relative stability in exchange rates under the terms of the Bretton Woods agreement. There was, therefore, a stable international economic order under which countries, co-operating with one another, could rebuild, develop and expand their economies. That provided Britain with the conditions which made it possible to operate the economy more efficiently and effectively than at any time in our history.
    In the early 1970s, through no fault of ours, Bretton Woods broke down. Unfortunately, it is not possible to recreate it. However, the most important action that the Government should be taking today is to work with our friends, particularly in the European Community, to create a greater measure of economic stability in the world, for there is no chance of permanent economic recovery so long as the present economic chaos remains.
    The fact that the pound is worth about half what it was worth against the American dollar four years ago and that its value has declined by about a third in the last 18 months, with all the disruption to our domestic economy that that has caused, is evidence of the urgent need for action to reduce fluctuations in exchange rates. Continual changes in the value of sterling are more damaging to our economy than high or low exchange rates, damaging though the latter can be.
    Immediate unilateral action which Britain could take, which would have beneficial results, is to join the exchange rate mechanism of the European monetary system. That would provide us with a degree of stability for 60 per cent. of our trade. It would be a step forward which would make it easier for the countries of the European Community to speak with one voice in international economic affairs and to take initiatives towards the reintroduction of greater international economic stability, particularly in terms of initiatives with the United States and Japan.
    We shall of course, be told that the time is not right for Britain to join the exchange rate mechanism of the EMS and that membership would restrict our freedom of manoeuvre. The absurdity of that argument is shown only too clearly when one asks, "What freedon of manoeuvre?"; because there is none and there has been none for some time.
    Even though nothing has been said about that today, I hope that there will be an early announcement that Britain is to join the exchange rate mechanism of the EMS and that then, with our friends in the Community, we shall use the consequent international economic muscle to try to bring
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    about a greater measure of economic stability in the world. That would benefit the economies of every nation. That is important for Britain because, without it, our domestic economy will inevitably remain weak and unemployment will remain at an unacceptable level.
    An improvement in the world economy, though an essential prerequisite to strengthening the British economy, will not cure our economic problems or of itself bring back full employment. It will require a substantial increase in the level of demand in the British domestic economy to take up the slack and bring people back into employment.
    It is nonsense to suggest that insufficiency of demand is not one of the main causes of unemployment. Usually that is argued on the basis of anecdotal evidence of some prosperous people and rising consumer sales. If demand were increased and the unemployed brought back into employment, more people would become prosperous, the already prosperous would become more prosperous and consumer spending would be even higher, quite simply because there would be more to share around.
    Demand will not rise automatically. Only the Government can make it rise other than marginally. It can be done by reducing taxation while not decreasing public expenditure or by increasing public expenditure while not increasing taxation, or by a mixture of the two. In other words, the Government can increase demand by increasing the public sector borrowing requirement. There is plenty of slack in the economy today in terms of unused or under-utilised capital and labour to enable that to happen without any inflationary danger.
    Only adherence to the now discredited theories of monetarism and to the medium-term financial strategy has prevented the Chancellor from increasing the PSBR today. He should have cut taxes by more than he proposes or, preferably, in present circumstances, announced a substantial programme of public investment in the infrastructure. That is desperately needed and it would have been of great benefit to the hard-hit construction industry and those who work in it.
    The effects of the tax cuts that the Chancellor announced are peanuts compared with the measures that should have been taken to enable us to return once again to full employment. It is no good thinking that tax incentives for businesses, schemes to encourage the establishment of new small businesses or other measures to improve the supply side—however admirable these may be in themselves and however useful they may be in the long term — will have any effect on the overall employment level in the absence of an increase in demand. Those measures will only attract jobs to particular areas, types of production or types of firm at the expense of jobs elsewhere. Jobs exist only when there is a demand for what is produced. Without that demand, there are no jobs. Without increased total effective demand in the economy as a whole, there cannot be significantly more jobs in the economy as a whole, and unemployment will remain at its present unacceptably high level.
    The same is true of tax incentives to individuals. There is no evidence that the tax incentives introduced in the 1979 Budget have had any effect on unemployment, although they might have had a beneficial effect if they had been accommpanied by an increase in total effective demand. The changes announced by my right hon. Friend concerning the community programme and training are, of course, welcome, but they do not involve the creation of

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    real jobs. The numbers involved will be small and there will be a marginal improvement in the unemployed statistics, but not much more than that.
    If we really want to bring the vast army of the unemployed back to work, we must aim to increase the rate of economic growth. The Chancellor's projected rate of growth for the coming year is just over 3 per cent. which, if achieved, will have no impact on unemployment, which will continue at about its present level. A real Budget for jobs would have aimed at a growth rate of 6 or 7 per cent. which, given the degree of slack in the economy, would have been sustainable for many years. That would have involved a substantial increase in the public sector borrowing requirement which would have been manageable because of our present volume of savings. I regret the fact that that has not been done. I am afraid that the Chancellor's Budget judgment leaves much to be desired.
    5.42 pm
    Mr. Gregor MacKenzie: Over the years, you and I, Mr. Deputy Speaker, have heard a number of Budget speeches. This one had the merit of being short in length, but it was also rather short on ideas. This Budget had been much heralded as a Budget for jobs. Like the hon. Member for Staffordshire, Moorlands (Mr. Knox) I worry about that aspect. If this was a Budget for jobs, goodness knows what it would have been like if it had been a Budget for something else. It strikes me that the Chancellor has not got to the core of the issue that worries every one of us—unemployment.
    Sometimes Chancellors forget that government is about people. Sometimes they forget that Budgets are about people and that, these days, people are more concerned about their jobs and the jobs of their children than about any other aspect of life. They are concerned that their young people should have jobs. For all this talk about YTS and so on, people want their families to have real jobs which are created by industry with the assistance of the Government. There is no point in giving a young person some sort of training for a couple of years only to throw that young person onto the scrap heap at the end of the period. Unemployment should loom much larger in the Chancellor's mind than it did in his speech today.
    The Chancellor seems to forget totally the social evils brought about by unemployment. Frequently we listen to the Prime Minister moralising about the values of family life. Nothing disrupts family life more than unemployment. The Prime Minister often moralises about all sorts of other social evils, but I believe that disillusionment, especially among young people, about unemployment is leading to hooliganism, vandalism, glue sniffing, drug taking and what we have seen during the last few weeks —which I think is now called "Millwallism". They are the work of unemployed young people. The hon. Member for Moorlands, as a Scot, knows as well as I do:
    "For Satan finds some mischief still
    For idle hands to do."
    Chancellors sometimes forget that that is a social problem. Above all, the skills and talents of hundreds of young people are being wasted. Those skills and talents could be used to create wealth.
    A number of us are worried about unemployment. Any Government who do not make reducing unemployment their first priority are failing in their duty to this generation and future generations. That is not just my view. Only the
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    other day, a poll conducted in Scotland investigated people's priorities. The poll showed that two out of three people said that they would much rather the Chancellor used the nation's resources to create jobs than to cut various taxes.
    Tax cuts may be welcome to some, but the Chancellor deludes himself if he believes that people dash off to invest in industry the few pounds' benefit they receive from tax cuts. All too often, instead of being invested in industry by the individual saver and investor, that money is spent on holidays abroad or on a BMW instead of a British-made car.
    I shall cite the number of unemployed people in my constituency, and I hope hon. Members will forgive me for making a parochial point. Tax cuts would be of no interest to the 7,332 people unemployed in my constituency. About 2,946 of them have been unemployed for more than six months, another 2,154 for more than a year and 1,360 for more than two years. About 400,000 people are unemployed in Scotland and nearly 4 million are unemployed in the United Kingdom as a whole.
    Recently, the Prime Minister told me in answer to a question that £1·497 billion was spent on unemployment benefit. That figure does not include the people who are taken off employment benefit after a year or those on supplementary benefit. That is a dreadful waste of the country's money.
    We talk about the benefits from North sea oil. The Prime Minister has told me that our revenue from North sea oil is about £8·8 billion and that 17 per cent. of that money is spent on unemployment benefit alone instead of to create jobs. We are paying people to kick their heels. I believe that during the next few months we should give more thought to that aspect.
    The hon. Member for Moorlands stressed, as did the TUC and dozens of other organisations, that to improve the economy we must first improve the infrastructure. The Government have a serious obligation to improve our road system, our rail system and all other forms of public works. That would be of tremendous advantage in helping to reduce unemployment. I am a bit simple about such matters, but it strikes me as exceedingly odd that, at a time when in Scotland we need houses and houses are crying out for modernisation and repairs, hundreds of people in the construction industry should be on the unemployment list. That is beyond my comprehension and, I am sure, beyond the comprehension of everyone.
    Ministers constantly tell us, and I accept it, that if we do not do more for industry and if it does not become more competitive, we shall fall behind in the international race. Recently, I read that we were one of the most inventive countries in the world. More inventions are patented here than anywhere else in Europe. Sadly, because of a lack of resources and because the Government are not prepared to provide assistance new inventions are developed and manufactured abroad.
    The Government's whole approach to industry worries every one of us. A clue to that is that the Government do not think hard enough about industrial problems. A few years ago I heard a Conservative Member—I dare not mention him by name as he is a young man for whom I have considerable regard, and it would not do his prospects in the Tory party any good—say that he wished that Treasury Ministers knew more about industry than they did about money. I wonder whether he has changed his mind, because I heard last week that New York hotels

    811
    were paying tourists 98 cents for a pound. That does not strike me as a blessing bestowed by Treasury Ministers. If they knew what they were doing, they would ensure that our revenue from the North sea—instead of 17 per cent. of it being spent on unemployment benefits and so frittered away — would be spent on research, development, training and investment in the modernisation of our older industries, as my right hon. Friend the Member for Islwyn (Mr. Kinnock) has just said.
    I should like the Government to spend more money on an effective regional aid programme. I cannot accept what the Prime Minister said at Question Time, when she claimed that we were not two nations. If the Prime Minister and her Ministers really visited the towns they would discover that there is a north-south divide. That is the sort of situation that the Labour party certainly wishes to end. The measures that I have outlined are the only way to create the jobs, and so the wealth, which the country sadly needs.
    Finally, for the past six years we have been told that we must be patient. Some of us are beginning to lose our patience. It is all very well for the Chancellor of the Exchequer to say that he now has inflation at only 4 or 5 per cent., but the cost of that is high unemployment. I do not believe that things are getting much better, and will never believe that they will get better until the Government have a change of heart and a change of policy. Nor will the millions who are unemployed in this country.
    5.54 pm
    Dr. Alan Glyn: I have a great deal in common with the right hon. Member for Glasgow, Rutherglen (Mr. MacKenzie). First, we have both heard Budget speeches from many Chancellors of the Exchequer. Today's Budget certainly had the virtue of being short and simple. I understand what the right hon. Gentleman said about unemployment, as, I am sure, does the Chancellor of the Exchequer. However, it is not easy to say how much money is spent on unemployment benefit and how much of it could be transferred to benefits in employment. I do not understand and never have understood that equation. Even successive Chancellors have been unable to carry out that equation. An attempt was made by a Government to inject money into the economy and to create jobs, but it failed. I wish that an easy solution could be found for what the right hon. Gentleman correctly described as one of the greatest social evils of our time.
    The right hon. Gentleman talked about two nations. We all know from personal experience of people who have come from the north to the south for jobs, and of their incredible frustration when they find that they cannot be housed or bring their families with them. I join the right hon. Gentleman and the House in a desire, not only to make the north and south one, but to create as many jobs in the north as are available in the south where, incidentally, employers are waiting to take up people to fill vacancies.
    The Budget must be considered as a whole, in terms of what it will do in future and in terms of what it does as a platform on which we can build. In the long term, it lays the foundations for the growth and creation of new jobs. It does not prop up old industries, which we have been
    812
    inclined to do rather than to create new industries in line with modern demand. That is a legacy which it will be extremely difficult to overcome.
    Unemployment is one of the terrible hurdles that we must overcome, and if we are patient, I am sure that we shall do so. I agree with the right hon. Gentleman that the creation of 400,000 jobs will not solve the unemployment problem. It will be a long time before the transition of our industries to modern technology will overcome that enormous problem.
    A main point of the Budget is to create the right atmosphere for a property-owning democracy, for houses and for share-owners. I know that the hon. Member for Rochdale (Mr. Smith) agrees with share owning and share participation by workers in industry. It is important to emphasise what the Chancellor said about maintaining control of public expenditure and, more important, control of inflation, because our entire policy is based on that. The rate of inflation was 18 or 20 per cent. some years ago. It is now about 5 per cent., and the Chancellor must take the credit for that.
    With regard to income tax, the Chancellor has placed the emphasis in the right place—that is, on the lower paid and on taking people out of the tax bracket altogether. He has also placed emphasis on small businesses and the help that he can give them. I shall not go into detail, because the Chancellor spelt it out well himself. However, he did not quite bring home the fact that small businesses are hampered not only by the tax system and the number of forms and complications with which they are faced. A one-man business must fill out heaven knows how many forms to complete his tax return. In many cases the forms have no value whatsoever—half of them are duplicated and the other half are consigned to the dustbin. They do not give a small business man the opportunity that he requires. Small business men are being given incentives. We depend on them, because a small business develops into a large business. That is how our whole economy has developed over the years.
    I should like to refer to taxation. In the Budget the Chancellor has given us what I have always wanted to see — a move from direct to indirect taxation. Direct taxation is an uneconomic form of tax because it takes a long time to collect and is a laborious process, whereas indirect taxation is far simpler. I welcome the reduction in the threshold, which is very important, and I also pay tribute to my right hon. Friend for being able to add to our reserves.
    My right hon. Friend touched on the problem of school leavers. We all know the tragedy. We hope that the scheme that he put forward will enable them to have at least two years' training, but the training that they receive must be in line with technological advances which this country and the whole world see. It is no good putting people into something which is not designed or oriented for the future. It is towards achieving that objective that the Government must put their entire resources and brains.
    I was interested in what my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) said about pension scares. We heard about all the scares on television, such as taxes on pensions and books. I do not mind the tax on advertisements, which is reasonable. All of us on both sides of the House have suffered from such scares. I believe that my right hon. Friend the Chancellor went a little further than he should have done when he said that there would be no retrospective legislation. He could

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    not deny those scares and say what he would do in the Budget. I understand that that would be unconstitutional. Nevertheless, we still have such scares, and I am glad that these ones have now been removed.
    We want to see the reform and restructuring of industry. We want new industries to be created and small businesses to be encouraged. Above all, we want the tax system to be simplified and reformed to make it easier to collect and beneficial to all concerned. Let us look forward in this platform Budget to seeing this country recover and businesses grow, accompanied by an increase in our standard of living. Let us hope that there will also be a reduction in unemployment, which is the tragedy of the nation.
    6.4 pm
    Mr. Cyril Smith: If I count proper Budgets as opposed to mini-Budgets, I think that this is the 13th budget that I have heard presented in the House. The title that has been given to it is the worst use of the English language that I have heard during all the Budgets that I have listened to. To describe it as a "Budget for jobs" is the greatest joke that I have heard for many a long year. If one examines this "Budget for jobs", what is the Chancellor's solution to the unemployment problem? He said that he was dealing with job creation and, in effect, that he would make it easier for employers to sack people. He said that people would have to work for two years instead of one year before they were entitled to protection from unfair dismissal. Therefore, the first measure that he has introduced to protect jobs makes it easier to sack people.
    Secondly, the right hon. Gentleman proposed the abolition of the wages councils. I speak as one of those who are revered by the Government— I have a small business, and I employ 38 people. I must tell the Government, as an employer, that I do not want the wages councils to be abolished, because they protect my business from unfair competition. They ensure that my competitors are required by law to pay the same minimum wage as I do. However, if the wages councils are abolished, the cowboy employers will be able to employ people at ridiculously low wages for about six months, pinch other people's customers and trade, and then disappear. Other people's businesses will decline because they do not have the custom. Therefore, anyone who imagines that wages councils are the enemies of employers, especially small businesses, lives in cloud-cuckoo-land. The abolition of the wages councils will not lead to more jobs. Ultimately, it may lead to fewer jobs because it could mean good businesses going to the wall as a consequence of short-term cowboy activities.
    The Chancellor then said that only businesses could create jobs. That is not true if by "businesses" he means private enterprise. Many businesses rely totally on Government finance to purchase goods. There are many examples, such as local authorities purchasing houses and hospital goods. In my part of the country, the water and sewerage systems are desperately in need of renewal. Scores of millions of pounds need to be spent on them. The purchaser is the water authority. If it relies on being financed directly by the water consumer, there is not sufficient capital for the required renewal. The alternative is to inject Government capital so that the Government can purchase capital goods and thereby create jobs.
    814
    Therefore, the Chancellor's statement that only businesses can create jobs is not true—if, as I suspect, the right hon. Gentleman means that only private enterprise can create jobs. It is on the section concerning the creation of jobs that I believe the Budget will be judged, in the long term, to have been a failure. Certainly, a £7 million public sector borrowing requirement is too low in the present situation. The Chancellor added that it takes a long time for policies to work and create jobs. He can say that again. The Government have been saying that since 1979. We are now in 1985—I do not know what constitutes a long time in the Government's eyes, hut it must be longer than six years.
    There are things in the Budget that one welcomes. It would be a funny Budget if there were not things to welcome. I welcome the extension of the youth training scheme to two years for 16-year-olds, but it is a great tragedy that it is not two years for 17-year-olds as well. We should interpret the word "training" literally and not have tarted-up jobs that are just excuses and palliatives for taking people off the dole. Whether a youngster is 16 or 17 when he goes into the scheme, two years are still required to train him. The figure should not be reduced to one year simply because the youngster is 17. The Government's concept of youth training, demonstrated this afternoon on the basis of two years for one age group and one year for another, shows that they see the YTS not as training but as an excuse for taking people off the dole. If that is the basis of the YTS, it will not do the job that it was meant to do.
    I make the following remarks with some irony. The Chancellor said that he would spend about £40 million on creating places for training in engineering. That will come good in the north-west of England and areas serviced by Salford university, a university that created engineering places. Three or four years ago the same Government destroyed hundreds of places at that university, which specialised in engineering. If that represents a U-turn in the Government's programme, it is to be welcomed. It is nonsense for a Government who have destroyed thousands of places in engineering training at universities, polytechnics and so on, to sit there and say that they have created more training places.
    I am delighted that the Chancellor had enough sense to leave pensions alone. I suspect it was political sense that moved him, never mind what he said about speculation. I believe that speculation was fuelled so that the Chancellor could see what the reaction would be. When he saw the reaction, especially from his own supporters and Back Benchers, he realised that he would have to back-pedal fast.
    I welcome the encouragement to small businesses and the self-employed, but more help could have been engineered for investment for small businesses. There are such things as direct grants, but if the Chancellor cannot provide them he could provide help for small firms through interest-free loans for investment in productive machinery, in tools, in tool making and in modern technology. If those are not possible, the Chancellor might persuade the banks, which get a rake-off every time bank rates rise, to provide two rates of interest on bank loans: one for those investing in productive machinery and another for those who simply want to borrow money for purposes that may in their interests be legitimate but which make no overall contribution to the economy or to industry.

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    The Chancellor's announcement that the tax on derv is to be increased by 3½p per gallon is serious. During the last six months, the price of a gallon of derv has been increased by 31p. Small hauliers are becoming extremely worried about the constant increase in the price. In the coming weeks the Government will hear more and more about the serious impact this will have upon small haulage contractors. Far from helping to create jobs, it may well destroy them.
    Let it be clear that transport is a basic cost of industry. If transport costs to the producer increase, he can only pass them on to the person buying the goods. I am not criticising the increase in the price of petrol, but I certainly criticise the increase in the price of derv. When pressure mounts on the Government, as it will, from the Road Haulage Association, the Government may be persuaded to think again.
    Any reduction in tax, whether direct or indirect taxation, is always welcome, but, as the hon. Member for Windsor and Maidenhead (Dr. Glyn) said, we are merely shifting from direct taxation to indirect taxation. In this context, indirect taxation is not merely putting a little on VAT. Let us remember the increases that have been approved even in the past few weeks. The Leader of the Opposition outlined them. The cost of gas and electricity is being increased to give more revenue to the Government and for no other purpose. The industries themselves see no reason to raise their charges, but the Government insist that they be raised. Whatever people save in taxation, they will have to pay in extra charges for gas and electricity.
    There is also the increase in prescription charges. That is not just an increase from £1·60 to £2; there are also the items which are being removed from the list and which people will have to pay for in full. Then there are the increases in council house rents, in transport charges and in rates. In many cases, the rate increases have been forced on councils not because the local authorities concerned have increased expenditure by more than the rate of inflation but simply because of the Government's rate-capping policy. The average taxpayer and the average ratepayer have to bear all those increases.
    When the Chancellor told us that he was reducing taxation, the national insurance surcharge or whatever, it sounded very good. It is good, taken in isolation, but if it is taken as part of the whole package it is not half so rosy. The reductions in taxation must be seen against the increases in charges for necessary services.
    This Budget is like every other Budget—a curate's egg. It is good in parts, but taken as a whole it is far worse than it appears at first sight. Certainly it has been misnamed if it is being called a Budget for jobs. Any effect it has on unemployment will be minimal. As the Leader of the Opposition said, it is a stalemate budget. The country needs a new attitude to unemployment. This Budget does not display it.
    6.15 pm
    Mr. John Stokes: Unlike the hon. Member for Rochdale, (Mr. Smith), I should like to congratulate my right hon. Friend on the felicity of his presentation of the Budget and on his courage and brilliance. The Budget was awaited this year with more than the usual speculation. Most of us received scores of letters from constituents about what it might or might not
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    contain. Perhaps the nation expects too much of the Budget, because, after all, the salvation of the country depends ultimately upon ourselves as individuals. All that the Government can do is to set the scene to allow us to get on with the job. Therefore, anything that the Chancellor can do to set us free from the shackles of state control is to be welcomed.
    This nation, which is so superb and united in war, is not always so good in times of peace and is sometimes inclined even to be divided against itself. In recent years we have certainly become a very difficult country to govern. The present Government, under the dynamic leadership of my right hon. Friend the Prime Minister, are trying to get us all to embrace capitalism more fervently and to allow the market to work more freely, as it does in the United States, where everyone believes in free enterprise and where there is no Socialist party.
    We also need more of the nationalism that one finds in some countries on the continent, particularly in France, among all political parties and throughout business. We need to be dragged into the last quarter of the 20th century to compete against the dynamic capitalists of the United States of America, Japan, Germany, France, Taiwan, Korea and so on. We have the brains and trading skills. What we need is the dedication which is so evident in most of our foreign trade rivals. Our business men should be the best men in the country.
    I judge the Budget, therefore, against the requirements of that background. In that sense it has been successful. Of course, a great deal more remains to be done. We give such colossal subsidies to so many special interests—farmers, industrialists, students, householders, savers—that it is no wonder that taxation is still so high. Of course, those subsidies cannot be reduced in one year. The reduction must be gradual and there must be the fullest explanation; far more than the Government are sometimes inclined to give us, hence the revolts against the Government by some middle-class supporters. Our working-class supporters are tougher and more loyal. They understand in a fundamental way what the Government are trying to do.
    I wanted the Budget to make it easier and cheaper for people to be taken on for work, and some good steps have been taken in that direction. I wanted substantial improvements in the tax lot of the lower paid, who, owing to our idiotic benefit system, are often little better off in work than when receiving state benefits. The Chancellor has gone some way towards doing that. It is probably the most important action that he has taken in the Budget. I should have liked to see stamp duty on house purchase removed to make the redeployment of labour easier. I welcome the reductions in the national insurance contribution from employers and employees. That is most important.
    I am sure that my right hon. Friend would have liked to do more, but his room for manoeuvre is strictly limited. He must now guard sterling and be seen to be guarding it. He must keep a tight hold on inflation. He must long, as we all do, for interest rates to come down. That is necessary for industry and commerce, but, alas, the time for that has not yet come. However, there are many good signs. Exports seem to be growing even faster, oil imports will diminish with the ending of the miners' strike, and the contribution of the new and growing service industries is an encouraging sign, although manufacturing recovery is slower than many of us would have wished. My right hon.

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    Friend has made a most sensible judgment about the size of the borrowing requirement—neither too much nor too little.
    Apart from the overall picture of the British economy, which is our main consideration in the Budget, I must also think of the position of my constituency in the west midlands. All hon. Members know that the recession there has been deep. I detect at last some signs of recovery, but it has been slow. The Budget will surely help the west midlands. My constituents are a sturdy lot and seldom complain. The Budget should help industry and employment there, but my constituents know that above all they must help themselves. That means that they must find new technologies, new products, new markets and cheaper ways of making things. The emphasis which for so long in the black country has been on production must now be on marketing and sales.
    I listened carefully to the new taxes on those who have company cars. I hope that the tax on the cars used by sales managers and salesmen will not be increased, because they are essential tools of that trade.
    We have no frills in the west midlands, and we dislike extravagance. I wish, therefore, that in the Budget we had heard of the demise of more quangos. Has the attempt to curb quangos stopped, or only been postponed?
    I welcome the emphasis given in the Budget to training. It is a vital aspect in which this country must catch up with its competitors. I also welcome the further help given to small business and the self-employed. The income tax changes are excellent. They could have been much more had it not been for the cost of the miners' strike; yet, costly as that strike was, it had to be won. We must all now hope for a much better climate of management-union relations in the coal industry and throughout industry.
    I believe that there is much more realism on the shop floor about the position in which this country finds itself. In all, I believe that my right hon. Friend has done well in the circumstances in which he found himself. I also believe that we have seen much to look forward to in future Budgets. The country is on the right economic road. The Budget will be well received in all quarters.
    6.24 pm
    Mr. Jim Craigen: I always enjoy the way in which the hon. Member for Halesowen and Stourbridge (Mr. Stokes) wraps himself in the Union Jack, but on this occasion he has even more optimism than I usually associate with him. When I heard the Chancellor say that there is much still to be done, I wondered how long the country could afford the present Chancellor of the Exchequer doing it, because his Budget is no answer to the problems that the United Kingdom faces now or will face in the last quarter of the present century, as the hon. Member for Halesowen and Stourbridge said.
    The Chancellor said that the defeat of inflation was still one of his objectives. The Budget can hardly be said to be a triumph for employment prospects in the foreseeable future. The right hon. Member for Old Bexley and Sidcup (Mr. Heath) had great difficulty in keeping a broad grin from his face when the Chancellor spoke about wage restraint and said that it would provide more jobs.
    Many of the measures spelt out this afternoon by the Chancellor gave every indication that he intends to dampen down the demand for wage and salary increases and the level of wages and salaries generally and, therefore, the level of purchasing power within the
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    economy. I thought that the proposal to chop the wages councils — a regulatory system we developed in this country for good reasons—was obnoxious. The low-paid sector of the economy will have the skids put under it with the disappearance of the wages councils. The recent Auld report on Sunday trading referred to the importance of retaining wages councils in the retail sector to preserve stability and to ensure the guarantees that the hon. Member for Rochdale (Mr. Smith) mentioned, because destroying wages councils will not necessarily help industry. It may destabilise the more responsible employers who look for a measure of stability in the running of their affairs, but the absence of regulation can destroy rather than create jobs.
    We tend to have more investment and more interest in training employees in higher paid industries because it becomes more worth while. That raises the issue of the two-year youth training scheme. What will it amount to? It is all very well, as the Chancellor did this afternoon, to talk about schools preparing young people for the world of work. One wonders into what world of work they will be inducted. My experience is that schools have more problems from demoralisation and lack of incentive because the young people know only too well the bleak prospects that face them when they leave school
    If the youth training scheme is to be financed by the employers, it will be a completely different creature from the present one-year training scheme launched by the Government, the employers and the trade unions under the aegis of the MSC. Employers will expect a great deal more value for money if they are responsible for funding a substantial part of the YTS. The Government should recall the difficulties that they had with employers regarding the levy under the industrial training board system if they are thinking of moving towards a self-financing two-year youth training period.
    I remind Treasury Ministers that on a previous occasion we considered the question of a compulsory youth training scheme. When the scheme was originally launched, I recollect that in the Select Committee on Employment we discovered that it would be more bother than it was worth and that it would probably cost more to create a compulsory scheme. We discovered that, for the percentage of youngsters who might opt out of the scheme, it was more worth while to have a voluntary system than to penalise young people who did not opt in.
    The Government should have a care lest the expanded youth training scheme envisaged today becomes no more than an extension of compulsory schooling.
    Mr. Dave Nellist: Will my hon. Friend confirm that, at the same time as the discussions to which he referred were taking place, a proposal was made by the Department of Employment to reduce the allowance with regard to the YTS to £15 a week? The amount that has been announced in the Budget will go nowhere to restore the allowance to what it would have been following its introduction by the Labour Government in April 1978, taking account of inflation or earnings, which would be £40 a week. The youngsters are already penalised by about £15 a week.
    Mr. Craigen: My hon. Friend is right. The Government have been consistently mean-minded about the operation of the training allowance. They have more or less coerced the Manpower Services Commission into

    819
    keeping it unfairly low on the ground that, were the allowance to be increased, it would be at the expense of the numbers of trainees. There is no doubt about the significance of the point made by my hon. Friend.
    This matter raises once more the whole issue of training. We always seem to think that if only the apprentices were better trained, the economy of the country would be on a better footing. Why do we not start in the boardroom? It is there that the key decisions are made about the value, scope and quality of training. It is interesting that the Treasury is now coming round to abolishing the young workers scheme. I can remember the Minister of State, Department of Employment, conceding that it was 90 per cent. deadweight, which meant that employers would have been taking those youngsters on anyway. The difference was that they were getting a handout in the process.
    The Government are coming round to the question of the long-term unemployed and the expansion of the community programme rather late in the day. I remember the predecessor of the present Secretary of State for Employment refusing to increase the number beyond 130,000. It now seems that there are to be another 100,000. There have been recent changes in eligibility for the scheme which are detrimental to married women. Moreover, I suggest that the scheme should avoid some of the bureaucratic red tape which creeps into such special programmes. I prefer to see worthwhile jobs being carried out by local authorities and other sections of the public sector than to have some artificial jobs created simply because they are the only alternative open to the Government.
    I listened with interest to the Chancellor's proposals on reform of personal allowances. In my view, it is proper that men and women should be on an equal footing in these matters. With regard to the references to women in the home, I wonder whether this announcement is a precursor of the demise of child benefit, and whether the Treasury in these changes has in mind squeezing out child benefit in the operation of personal allowances.
    Reference has also been made to pension funds. Most right hon. and hon. Members were inundated with letters arising from people's understandable fears about their future prospects. Coming at a time when all hon. Members are receiving letters about VAT on books, children's shoes and clothing, it struck me that this was a new form of Budget referendum by post—that we will judge by the volume of correspondence that we receive whether a project is likely to succeed. That was how the Chancellor eventually realised that he would need to keep off the grass with respect to pension funds.
    By and large, this has been a Budget of Green Papers. If Green Papers were mentioned once, they were mentioned several times.
    The Chancellor with his £2 gallon of petrol will hit some of the small business men about whom he always maintains he is so concerned and some of the rural areas, apart from motorists in general.
    Last year and this year we debated the White Paper on public expenditure. We know that the prospects for aiding the construction industry are bleak. No messages of hope for the construction industry were tapped out by the Chancellor at the Dispatch Box. It must not be forgotten that on occasions more than 50 per cent. of the jobs
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    available in the construction industry depend on public sector contracts, because private firms in the construction industry do not bother to distinguish whether the origin of a contract is public or private. They are interested only in the contract and the work that follows. With regard to the Chancellor's statement about business creating jobs, I remind him that the Treasury has done a great deal as a Luddite in the operation of its fiscal policy to destroy jobs, not least in the construction industry.
    When we hear about the overshoot in public expenditure, it should be borne in mind that, with the surge in the dollar, as the Chancellor described it, the Trident programme will be more costly than hitherto envisaged simply because the value of sterling has plummeted.
    We constantly hear about the need to contain public expenditure. However, we must ask about the cost of the Falklands programme in relation to public spending programmes generally and the absence of the necessary longer term political initiatives.
    I do not think that this Budget will present any great hopes or joys for the prospect of employment or new work. It is another indication that the Chancellor, although he is still on his feet, is on the ropes in the operation of the economy.
    6.38 pm
    Mr. John Browne: I welcome the Budget, and I congratulate my right hon. Friend, in the hope that my right hon. and hon. Friends will pass on my
    sentiments.
    I do not find it a glamorous or even an exciting Budget, but it is in my opinion very businesslike and interesting. The Budget has far deeper effects upon such matters as employment than almost any critic on either side of the House has yet acknowledged.
    It will be borne in upon all hon. Members in time what the Budget is really about. It is about enterprise and the creation of business, and it is about the creation of real jobs —the jobs that I have not heard mentioned so far by its critics. No hon. Member has yet spoken about the creation of real jobs.
    It is a significant achievement for our economy, the Chancellor said, and the economy has come through a great test. It has weathered the storm of the worst world recession ever recorded in history and a very worrying world economy.
    At the same time, there has been a serious drain, like an open sore, because of the vastly expensive miners' strike. However, in the end it was worth it, because it will result in better industrial relations well into the next century. It is the beginning of the end of the British sickness. The attitudes of both management and employees are changing dramatically as a result of the strike. I applaud my right hon. Friend's resistance of the temptation to fall in line with the normal, traditional, highly popular give-away at Budget time. We must face the reality of the cost of the miners' strike.
    The Budget is one for enterprise and real jobs. Some of its aspects, which have been grossly maligned by critics, will encourage enterprise and the creation of employment. We must encourage people to invest in business risk, because when that is successful real jobs are created. The new rules for indexation in the capital gains tax provisions will encourage investment. The allowance for the indexation of losses will encourage business risk that people can stomach. The rising of the thresholds on

    821
    capital transfer tax also encourages business investment. The reduction of the retention period to five years on employee purchase schemes encourages inside investors —it encourages employees to invest in their companies, which creates a much better morale within companies.
    The simplification of stamp duty reduces the cost of investment and therefore encourages the flow of funds into equity investments. The capital allowance scheme, with 100 per cent. write-off for high technology and short-term assets, encourages specifically and with fine tuning the direction of investment. High technology is the source of future revenue and jobs.
    My right hon. Friend mentioned increased integration with the computerisation of the PAYE and benefit schemes. I applaud that, because it will ensure that benefits are paid not to everyone as a right, but to the needy dependent upon their level of need. We must all grasp that.
    As the days and months unfold, people will increasingly realise the domestic effects of the Budget as an incentive to employment. The substantial increase in the expenditure and scope of the youth training scheme and the near-doubling in size of the community programme will increase job training. The raising of income tax thresholds will make inroads into the poverty trap and create a real incentive to be employed.
    During the six years that I have been in the House, I have asked for a new system of national insurance contributions to lower the cost of employment and increase the incentives to be employed. Therefore, I warmly welcome the graduated scheme announced by my right hon. Friend, although I had hoped that it would be more eroded in total. However, I understand that this Budget must keep the ship on course in difficult waters, and it is not the time to give anything away.
    I heartily applaud the measures to reduce the shackles of employment legislation on the incentive to employ. The extension to larger businesses of the rules that now apply to new and smaller businesses is a welcome trend. What is good for smaller businesses is good for business in general. I hope that my right hon. Friend will follow that trend in many other aspects to break down the shackles of employment and planning legislation, first on new businesses and then on business as a whole.
    I have always urged a Budget to encourage real employment; we have been lucky in this Budget and I thank my right hon. Friend for that. However, I was disappointed in two specific areas. I heartily support the exclusion of the property category from the business expansion scheme, as its inclusion was a wild abuse. I support the inclusion of research and development companies.
    However, my right hon. Friend has not proposed anything to deal with the problem of pool investments. Until the investments in a pool are actually invested in the companies, the rebate does not come through to the end investor. We should encourage small investors to participate in some of the pool investments. The scheme has not sufficiently encouraged start-ups as opposed to investment in businesses and the expansion of businesses. There must be something to encourage people to risk a start-up. It is too easy simply to pour money into an on-going business and obtain the benefits of the scheme. We want the money to go into new businesses—something that we have lacked for the past 40 years.
    822
    Secondly, I had asked that household employment should be allowed as a tax charge. That would reduce the black economy and have two huge advantages — it would increase the tax base and reduce unemployment. It would be a cheap investment for the Government.
    I wholly support the tight control of the public sector borrowing requirement and the cash limits. However, when my right hon. Friend comes to control public expenditure and make cuts in certain areas, he might consider whether, rather than looking for across-the-board percentage cuts on Government spending, it would be better to go in for something widely mooted in the United States — the practice of zero budgeting, where every programme must be re-evaluated and rejustified with each Budget. The Budget is actually built up rather than simply cut down.
    This practice has had beneficial effects in the United States. It has allowed for expansion in some areas and the complete cutting of programmes in other areas. It allows real cuts in spending with the minimum as opposed to the maximum amount of aggravation that usually comes with percentage cuts. That would be a good practice to follow in cutting public expenditure and ensuring value for money.
    It is a low-key Budget, but an interesting Budget with fundamental effects upon both enterprise and the creation of real as opposed to unreal jobs.
    6.48 pm
    Mr. Roy Hughes: Yet again we have been told that this is a Budget for jobs. It must be the mark 2 version, because during the 12 months since last year's Budget 143,000 more people have been put on the dole. The Budget contained the usual tax increases—I call them annual increments—on beer, wine, spirits, tobacco and, in a different category, vehicle excise duty. Car tax is to cost another £10 a year, yet cars are no longer a luxury. They are invariably used for journeys to work and for other essential travel. There will be a serious effect on road haulage. Most of our freight is carried by road, so the additional tax on road haulage will increase the cost of goods and services and make our firms less competitive in the markets of the world. Besides, it invariably fuels inflation.
    Given the huge amounts already collected by the Government in motor taxation, less than a third of which is spent on roads and road maintenance, it is time that the Government learnt the error of their ways. We are often told of the American example and about how millions of jobs have been created in that country, but one fact that is overlooked is that America has always had a low-cost fuel policy. That has undoubtedly been of tremendous benefit to the American economy.
    No one likes paying tax, but cuts in income tax are likely to have only a limited effect in creating new jobs, which allegedly is the Chancellor's aspiration, and, of course, there is always the possibility that, in a day or so, even these minimal decreases could be wiped out if the building societies increased their rates of borrowing.
    The changes in national insurance contributions are more welcome. It is suggested that they will make it easier for firms to offer low-paid jobs. In 12 months' time we shall be able to judge whether the Chancellor's proposals will have had a more than marginal effect on the level of unemployment.

    823
    The Budget seems to have been drafted in a vacuum. One might think that Britain had only a marginal unemployment problem. The vast size of the problem seems to evade the Chancellor's attention. The chairman of the Conservative party tells us to stop whingeing because we are enjoying a boom. Ministers live in a world of unreality. According to the official statistics, 3·25 million people are out of work. Many thousands more are on training schemes, and thousands do not bother to register for employment because they know that there will be no vacancies for them. In Wales, over 183,000 people are on the dole. That is 17·3 per cent. of the work force, and the figure has risen by more than 10,000 since February 1984. When will the Government give people a little hope?
    In the country as a whole, about 1·3 million young people are out of work. Their future is bleak indeed. Admittedly, the Chancellor has extended the training programme. In a sense we welcome that, but there is already some confusion about these matters. The Leader of the Opposition asked this afternoon whether there would be any effect on benefits if youngsters refused to join such courses. That question must be answered.
    This year is the International Year of Youth. How sad it is that there should be such massive unemployment among our young people. Is it any wonder that they turn to glue sniffing and football hooliganism? The social and human costs of unemployment are enormous. In Thatcherite Britain the rich get richer, while 15 million live on or near the poverty line.
    The National Health Service is being run down at a time when the demands on it are ever increasing. Waiting lists grow ever longer, especially in south Wales, and people are denied the treatment that they need.
    Private education is subsidised, while state schools are starved of funds. We see the deplorable spectacle of schools organising bingo sessions in order to buy essential textbooks. The teachers, who play a key role in our society are locked in a major industrial dispute over the poor level of their salaries.
    Investment in higher education is essential for the future economic, social and cultural well-being of our country, yet our universities have suffered a 10 per cent.
    824
    cut in their funding between 1980–81 and 1984–85. That represents a loss of £460 million of vital resources. During the same period, 30,000 well qualified young people who would normally have been assured of university places have been turned away. That is a waste of ability and talent.
    The biggest job is to put our people back to work. The Chancellor should have announced a massive investment programme for the public sector, to improve our industrial efficiency and our environment and to build up our rail and road network. What could be more logical at present than a major housing drive? The materials are largely home-produced. In south Wales our chief housing officers tell us that much of our housing will be fit only for slum clearance by the turn of the century. A large new housing programme, public and private, could take thousands of people out of the dole queue at a stroke.
    We all know that there are no easy answers in the attempt to halt Britain's decline, but investment must be a key factor. However, private companies have shifted production and capital overseas to the extent of £50,000 million since 1979. The Government should intervene to stop Britain being undermined in that way. That money should be invested at home.
    In the past we have always been told that there is no alternative, yet in recent weeks and months a host of alternative economic packages have been put forward. The Labour party itself has put a major package together. No doubt it will be outlined by the shadow Chancellor in the debate tomorrow afternoon. The CBI has its plan, and so do various journals, such as the Daily Mirror. The former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath) has suggested a £5,000 million package to boost the economy and create jobs. The Government should take notice of people such as the former leader of the Conservative party.
    There are alternatives, yet all that we have been given is another dose of monetarism. We need a change of policy. In recent weeks there has been much speculation about the future political career of the Chancellor. This may well be his final Budget. The future well-being of Britain now demands a change of policy and a change of Government.
    Debate adjourned—[Mr. Peter Lloyd.]
    Debate to be resumed tomorrow.

  British Railways Bill (By Order)
  Order for Second Reading read.
  7 pm
  Mr. Patrick McNair-Wilson: I beg to move, That the Bill be now read a Second time.
  The Bill is part of the continuing policy of the British Railways Board to achieve more efficiency and better services for its customers. It comes at a time when the highest level of investment for 25 years has been authorised. About £2·5 billion is to be spent over the next five years. Electrification of the east coast main line and the introduction of the new "sprinter" vehicles to replace the old diesel multiples are examples of that improvement in service.
  As my hon. Friend the Minister pointed out yesterday in the House, substantial losses have, of course, resulted from the miners' dispute. It is the board's determination not only to make good those losses, but to win back the lost business. The Bill will go some way towards changing the present structure of the board's network to take account of the need for greater efficiency.
  I shall point out those parts of the Bill that hon. Members may wish to study. Part I contains mainly the standard provisions that appear in all similar Bills. I refer, for example, to the general provisions in clause 3 that are relevant to railway construction, and to the application of the Compulsory Purchase Act 1965 in clause 4.
  Part II contains the most significant early changes and the power to make works. Several works which are outlined in the Bill will have some material benefit for the travelling public. For example, works Nos. 1 and 2 relate to London. Work No. 1, which is outlined in clauses 6 and 7, involves the reinstatement of the railway at Farringdon, which has lain disused since 1969. Using the tunnel at Snow Hill, it will provide a link between the board's midland main line service out of St. Pancras and the board's passenger network south of the Thames. It will ultimately link stations such as Bedford, Luton, St. Albans, Streatham, Croydon, Catford, Bromley, Sevenoaks and Gillingham with an uninterrupted service.
  Work No. 2, to which clause 8 relates, involves building a short railway of some 650 m joining the midland main line outside St. Pancras with the east coast main line at the King's Cross freight terminal junction. That will provide direct access for the movement of empty high-speed rolling-stock and will save a great deal of time, fuel and manpower. As it is directly within the board's King's Cross freight complex, it will certainly improve activities there.
  Work No. 3 involves the electrification of the east coast main line. I reassure hon. Members that there has been full consultation with the Tyne and Wear county council, and that the scheme has its full approval.
  Clauses 16 to 26 relate to the closure of level crossings. They represent part of a continuing programme to provide for more efficiency. If any hon. Members have points to make about individual level crossing closures, I shall endeavour to deal with them later.
  Part III is another standard provision dealing with the purchase of land, and rights over land.
  Part IV incorporates the provisions of the British Railways (No. 2) Act 1981.
  Part V of the Bill, which contains miscellaneous provisions, introduces several quite significant new
  826
  proposals. Clause 37 gives British Rail police powers to seek information as to the identity of a vehicle driver involved in offences either at level crossings or within station approaches. That power does not currently exist, and the Bill will bring those officers within the scope of the more general law.
  Clause 42 has caused some concern in south Wales, particularly for the right hon. and learned Member for Aberavon (Mr. Morris) and for the hon. Member for Neath (Mr. Coleman). The board proposes to cease to operate a swing-bridge over the River Neath. I should like to set the record straight. The ability to open the bridge was the result of the Rhondda and Swansea Bay Railway Act 1892, and it represented an attempt to provide access along the length of the river from wharves and jetties down past Briton Ferry. However, the swing-bridge facility has hardly been used in recent times. It was used 14 times in 1947, three times in 1948, only once in 1949, and once in 1956, but only for testing purposes, at the request of the Neath harbour commissioners.
  The board believes that maintaining the fiction of a swing-bridge that has suffered serious fires, whose dynamos and pumps have been destroyed, and which has been the subject of extensive vandalism over the past, say, 30 years, presents it with a cost that is no longer justified. Many of the wharves and quays have already disappeared, and a road bridge further up the river has already been built on the A474. However, I assure any in the area who are concerned that it will be possible for small craft to pass up river.
  Although the river is hardly navigable above the bridge, the clearance available at the bridge will be 5·2 m at high tide and about 10 m at low tide, which should allow any small pleasure craft easy access further up. I know the area well, and I am aware that there is a large sailing marina in Swansea. Those with larger boats may keep them there anyway.
  Part VI deals with general provisions, and then there are the schedules.
  This modest Bill is part of a continuing process to tidy up the system and to provide better services for passengers. I hope that it will be given a Second Reading. I commend it to the House.
  7.8 pm
  Mr. Christopher Murphy: In contributing briefly to this debate on the Bill, and in considering those items relating to works, I feel that I should begin with a plea to my hon. Friend the Minister to consider the introduction of a Government health warning that "commuting can seriously damage your health", if the recent report from the European Foundation for the Improvement of Living and Working Conditions can be cited in evidence.
  British Rail is ever the butt of criticism, whether justified or otherwise, but it is now taken to task—along with other forms of commuting—as the instrument of regular stressful journeys that can lead to hindrance in family relations, leisure activities and job satisfaction. Indeed, travelling to and from work by courtesy of British Rail, which the Bill will facilitate, especially via clause 5, can contribute to everything from sleeplessness and digestive disorders to skin complaints and excessive perspiration—the latter no doubt the consequence of the

  827
  "Will she come, won't she come" syndrome, well recognised by would-be travellers hopping up and down on station platforms wondering whether a train will arrive.
  It may already be evident from my opening remarks that I view the Bill with a mixture of support and circumspection, especially as I represent a constituency in Hertfordshire which has a great many regular rail commuters. My support comes for the evident improvements that will be made to the services of British Rail if this measure is passed by Parliament. My circumspection comes in consequence of the omissions from part II of additional improvements which would be of value to my constituents in Welwyn Hatfield.
  The purpose of the Bill primarily is to empower the board, as it states,
  "to construct works and to purchase or use land."
  However, no mention is made of the long-awaited redevelopment project at Welwyn Garden City station, nor of the possibility of creating a new station at Welham Green, for which I and many local people have been campaigning. But mention is made in clause 5 of works to be carried out in terms of the railway at King's Cross, which is the terminus for the eastern region line from the north, on which are the four stations in my constituency. The other three stations are Brookmans Park, Welwyn North and Hatfield, the last mentioned having been, with its staff, a recent award winner.
  Although the Bill could not be expected to cover all aspects of the inner suburban electric service, given the long title to the measure, it might be appropriate simply to mention that, despite the new rolling stock and revised timetabling, a number of difficulties unfortunately still exist. Nevertheless, it would be equally appropriate when considering the Bill, in particular part II, to mention that local people, whether travelling to King's Cross or to Moorgate, or, indeed, even further afield, have much benefited from a faster and more efficient service, albeit not a cheaper one. Commuter tax relief, which I have long sought, would have been a welcome addition to today's Budget statement by the Chancellor.
  On balance, it is my intention to support the Second Reading of the Bill tonight because of the importance of clause 5 and other aspects for hon. Members and their constituents, but I would make one plea. When hon. Members travel the length of Welwyn Hatfield as they come or go to or from their constituencies at high speed by rail, especially if they are enjoying the advantages of the 125 train, and cross the noticeable landmark of Digswell viaduct and get a brief glimpse of mid-Hertfordshire's towns and countryside, perhaps they will spare a thought for our extra needs. Then hopefully on the next occasion they will equally be prepared to support a further British Railways Bill relating to works designed to provide those additional and necessary improvements for my local commuters.
  7.12 pm
  Mr. Peter Snape: The House will be grateful to the hon. Member for New Forest (Mr. McNair-Wilson) for the customarily succinct manner in which he has performed the annual ritual of moving the British Railways Bill. My remarks will be exceedingly brief because, as the hon. Member indicated, there is nothing in the Bill which could be regarded as
  828
  controversial, although the hon. Member for Welwyn Hatfield (Mr. Murphy) managed to strike a suitably parochial note, not only by making a plea on behalf of his constituents, as we would expect from him, but by providing the Welwyn and Hatfield "Bugle", or whatever the weekly organ is known as, with a line or two that will interest his electors whenever that newspaper is printed.
  I hope the hon. Member will not feel that I am being unduly combative if I say that the service which his constituents enjoy, both to King's Cross and to Moorgate, would be welcomed by millions of people throughout the length and breadth of the country. Although there have inevitably been teething troubles on that route, I hope that the hon. Member will agree that now that it has settled down it is far superior to probably seven eighths of British Rail's commuter network. I hope that both the hon. Member and his constituents feel that British Rail has made a very good investment in improving communications in that part of the country.
  I welcome in particular the clause which deals with the Snow Hill link. I, like the hon. Member for Welwyn Hatfield, shall sound a somewhat parochial note by saying that although I welcome the clause, I believe, since I represent a midlands constituency, that it is the wrong Snow Hill with which it deals. Unfortunately, the grandeur of the Great Western Railway at the former Snow Hill station has not yet been restored. Although provision was made for such works in the last British Railways Bill, I understand that there has been a hold-up.
  Those of us who view the centre of Birmingham with a somewhat jaundiced eye believe that the bomb site appearance of the former Snow Hill station ought to be dealt with sooner rather than later and that the work for which parliamentary permission was given this time last year ought to be commenced. I hope that the Minister will be able to give an assurance that the delay will not be due to the fact that inevitably these decisions will now have to be taken by the Department of Transport because of the regrettable demise, if the Government have their way, of the West Midlands county council.
  On the clause that mentions the Snow Hill link with London, one of the regrettable legacies that our railway system has inherited is the unbridled competition that took place 100 or 150 years ago between the railway companies. In modern transport terms, that competition has resulted in journeys all too often commencing and terminating in the wrong place. The Snow Hill link will create through services between the southern and London midlands regions via Blackfriars and Farringdon. Once the link is opened, the hon. Gentleman's constituents will be able to travel in the same train as far as Sevenoaks, Chatham or East Croydon, or even further than that. I hope that when the scheme comes to fruition he will be led to praise at least some aspects of British Rail's management.
  Clause 33 gives a time extension to the Windsor link, as it is known, in Manchester. It deals with the Castlefield curve. The House has welcomed this clause in the past. Therefore, it appears to be about time that British Rail stopped talking about the need to connect two former competitors—the old Lancashire and Yorkshire Railway and the London and North Western Railway—and got on with the job.
  On behalf of the Opposition, I give a qualified welcome to the Bill. We hope that the works contained therein will

  829
  be completed before this time next year. Much though we enjoy listening to the hon. Member for New Forest, we should hate him to have to repeat himself.
  7.19 pm
  The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): It may be helpful if at this point I intervene to give a brief indication of the Government's view on the Bill. With the knowledge that you yourself, Mr. Deputy Speaker, represent a railway town and have a very special interest in it, I am sure that you will be following the debate with keen interest.
  My hon. Friend the Member for New Forest (Mr. McNair-Wilson) has shown his usual lucid mastery of the purposes of the British Railways Bill. The House should be grateful to him for the way in which he went through it. My hon. Friend the Member for Welwyn Hatfield (Mr. Murphy) put the case for the improvement of station facilities in his constituency with great diligence on behalf of his constituents. These matters would, I believe, best be raised by him direct with British Rail. I am sure that if he writes to the chairman his letter will receive careful attention.
  The hon. Member for West Bromwich, East (Mr. Snape) claimed that because of the way that the railways started, many journeys do not begin or end where people would like. That is another illustration of the constancy of change in the market for transport. When the Transport Bill returns to the Floor of the House, I shall look for the hon. Gentleman's obvious support.
  Mr. Snape: I know that the hon. Gentleman does not intend to introduce a controversial note, and before he does so he should reflect that the Opposition are interested in ensuring that there is transport where people want to go. We fear that the deregulation Bill will be a debussing Bill and destroy the system altogether.
  Mr. Mitchell: I shall not pursue the hon. Gentleman on that matter on this occasion. I am sure there will be happy opportunities for hunting him in future.
  830
  The Government have considered the Bill and have no objection in principle to the powers sought by the board. A few minor points have been raised with the Bill's promoters in correspondence, but I have no reason to doubt that these will be satisfactorily cleared up. A petition has been deposited by London Regional Transport, but I understand that BR and LRT expect to resolve this matter before the Bill reaches Committee. Therefore, I recommend to the House that the Bill be given a Second Reading to allow it to proceed in the usual way to Committee where its provisions can be considered in detail.
  7.21 pm
  Mr. Patrick McNair-Wilson rose——
  Mr. Deputy Speaker (Mr. Harold Walker): Order. With the leave of the House, the hon. Member may speak again.
  Mr. McNair-Wilson: May I elaborate on a point made by the hon. Member for West Bromwich, East (Mr. Snape) about clause 33? He is right to say that when work No. 2 was authorised in 1980 it was regarded as subordinate to the main work in the Act, the Castlefield curve, to which he referred. For various reasons with which we are now familiar that curve has never been built and the proposal has now been abandoned. However, the board still sees a good case for retaining the powers for work No. 2, as that will enable the junction between the Liverpool and Bolton lines at Salford junction to be simplified as part of a scheme for track rationalisation in connection with the construction of the Windsor link, as it is known, which is still planned to go ahead. I hope that that reassures the hon. Gentleman.
  The comments of my hon. Friend the Member for Welwyn Hatfield (Mr. Murphy) will, I have no doubt, be noted by the board.
  Question put and agreed to.
  Bill accordingly read a Second time, and committed.

  Cambridge City Council Bill (By Order)
  Order for Second Reading read.
  7.22 pm
  Mr. Robert Rhodes James: I beg to move, That the Bill be now read a Second time.
  The Bill is promoted by the Cambridge city council, Cambridge being the finest city in Britain, having the best university in the world and being not ill-represented in the House. It has a Labour council, but the Bill has the full support of all parties.
  The Bill's purpose is primarily to preserve by reenactment in contemporary form certain existing local Act powers which were inherited under the Local Government Act 1972. I should be happy to answer any questions that hon. Members may pose.
  Let me specifically refer to clause 6, which declares, for those who know Cambridge, Jesus Green to be a common and deems it to have been registered under the Commons Registration Act 1965. That has caused some concern in my constituency, but it is intended that the original common rights will be specified in an agreed amendment to be submitted in Committee.
  I commend the Bill most warmly to the House.
  7.23 pm
  Sir Anthony Grant: I intervene only briefly because one of the effects of the depradations of the previous Boundary Commission was to include part of the city of Cambridge, two wards to be precise — Trumpington and Queen Edith — in my constituency. That gave me two advantages—first, of
  832
  representing an agreeable part of the city, and, secondly, of having the good fortune to be a neighbour of my hon. Friend the Member for Cambridge (Mr. Rhodes James). Not only is he the most distinguished historian in the House, but he is a most noted academic. My hon. Friend, a fellow of All Souls, is a remarkable constituency Member. Nobody pleads the cause of Cambridge better than he does.
  Therefore, I am delighted to say that this modest measure will be of advantage to my constituents who live on the fringe and who enjoy the benefits of what my hon. Friend has rightly described as the most beautiful and successful university city in Britain, if not the world. It is non-controversial and I sincerely hope that it will reach the statute book.
  7.25 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): I endorse many of the comments made by my hon. Friends the Members for Cambridge (Mr. Rhodes James) and for Cambridgeshire, South-West (Sir A. Grant). It may be convenient for me to intervene briefly to give the Government's view of the Bill.
  The Government have considered the Bill and have no objection to the powers sought by the council. Neither my Department nor that of my right hon. Friend the Secretary of State for Transport have any observations on the Bill. Therefore, I recommend to the House that the Bill be given a Second Reading and allowed to proceed in the usual way to Committee, where its provisions can be considered in detail.
  Question put and agreed to.
  Bill accordingly read a Second time, and committed.

  C-Poultry Company Limited Bill (By Order)
  Order for Second Reading read.
  7.26 pm
  Mr. Robert Rhodes James: I beg to move, That the Bill be now read a Second time.
  7.27 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): The Bill falls mainly within the purview of my right hon. Friend the Secretary of State for Trade and Industry. He has no objection in principle to the powers being sought by the promoters of the Bill. He has raised a few minor points on the Bill which are under discussion with the promoters. I recommend to the House that the Bill be given a Second Reading so that its provisions can be considered in detail in Committee.
  Question put and agreed to.
  Bill accordingly read a Second time, and referred to the Examiners of Petitions for Private Bills.

  Harrogate Stray Bill (By Order)
  Order for Second reading read.
  7.27 pm
  Mr. Robert Banks: I beg to move, That the Bill be now read a Second time.
  The stray is an invaluable and unique asset to Harrogate. It is a central feature of the town's character, just as Hyde park is a feature of London's. The stray has been jealously guarded down the years and the Bill is to preserve its protection. It wraps around the centre of the town like a vast village green of some 200 acres, and the subsequent development of Harrogate owes much to the great Act of 1770—the Forest of Knaresborough Act— which set out to preserve the open walks which had become an essential feature of the spa. It said:
  "persons resorting to the said waters have always had the benefit of taking the air upon the open parts of the Forest".
  The forest disappeared, leaving wide open spaces, but today it is enhanced by trees that have been planted over the years and the remarkable number of crocuses which provide a carpet of colour at this time of year. During the second world war, the stray took on a different use when it was dug up to grow potatoes and vegetables.
  In 1792, Dr. Gamett praised both the chalbeate and sulphur waters, "the latter highly esteemed" and the "lively bracing air", not forgetting the "sociability of the company" and
  "the many pleasing and delightful scenes of the district".
  The growth of the spa was a consequence of private and public enterprise in harness. Similarly today, Harrogate is once again profiting from its role in the growing leisure and conference business and the wealth that we derive from it.
  Local doctors, Bain and Edgecombe, argued at the turn of the century that the bracing climate alone was an effective treatment for two conditions:
  "the physical and mental depression resulting from town life and sedentary occupation",
  and, secondly,
  "that state of brain fag which is the result of prolonged and assiduous mental work without a break".
  You will understand, Mr. Deputy Speaker, how much I value my weekends and recesses in my constituency. The importance of the stray for recreation cannot be over-emphasised.
  The Bill is promoted by the Harrogate borough council. The Local Government Act 1972 provided that with certain exceptions local legislation promoted by local authorities prior to reorganisation should cease. By subsequent order, the cessation date for such legislation in non-metropolitan areas is 1986.
  The Act of 1770 directed that the stray be set out as stinted pasture for the benefit and use of the freeholders and copyholders of Harrogate. The Act also directed that the land should thenceforward for ever remain open and unenclosed. By the Harrogate Corporation Act 1893 the powers of control and management of the stray were vested in the corporation of Harrogate, the freehold of the land remaining vested in the Duchy of Lancaster, having been part of the forest of Knaresborough of which His Majesty King George III was seized.
  The borough council has management powers over the stray and there are nowadays no individual rights of

  835
  common over the stray. Section 10 of the Harrogate Corporation Act 1893, from which clause 5 of the Bill is principally imported, provides:
  "The corporation shall (except as in this Act otherwise provided) at all times keep the Stray uninclosed and unbuilt on as an open space for the recreation and enjoyment of the public."
  Throughout its history, the stray has been widely used by the residents of Harrogate, both individually and in organised groups and teams, for many forms of recreational activity. Those activities include walking, running, picnicking, riding, soccer, rugby, grass-track cycle racing, golf, athletics and polo. Additionally, the stray is a focal point for school activities, events organised by various local and national charities, rallies, exhibitions, festivals, the town bonfire, fairs and circuses. The use of the stray for organised group games and events is subject to the permission of the council.
  Being situated in the centre of Harrogate, the stray, particularly during the summer months, is used extensively by, for example, those working in offices nearby who seek a breath of fresh air during their lunch hour. It is vital to preserve its status as open parkland for the free enjoyment of the many residents and visitors to Harrogate.
  Most of the Bill is a re-enactment of existing powers, but showing deference to recent common land precedents in local legislation. The management of the stray is maintained in the borough council, which has a duty to maintain the stray and the wells upon it, subject to certain powers to inclose. The powers are contained in clauses 4 and 6 of the Bill.
  The new powers are the following: first, to inclose for helicopter landings; secondly, to build new public conveniences — which, incidentally, have already been constructed — and changing rooms on the stray in specified plots. Thirdly, in accordance with approved departmental policy, opportunity has been taken by the promotion of the Bill expressly to repeal relevant provisions which are considered to be redundant.
  The borough carried out consultations with the Stray Defence Association and other organisations and individuals. General support for the Bill has now been universally given and full support has come from the Ramblers Association.
  A number of constituents have raised important points with me and I am fully satisfied that all representations have been considered. In particular, it was originally proposed to repeal the legislation making provision for water from the wells to be supplied without charge for the public drinking fountain situated outside the royal pump room. The fountain was originally provided in view of the earlier obligation for a free supply of water to be made available from the well inside the royal pump room. I am happy to say that this Bill now incorporates this obligation and perpetuates the only surviving link with Harrogate's great past as a spa.
  Local concern was expressed under the following headings: in relation to the stray, over road inprovements and the landing of helicopters; in relation to repeals of sections of earlier Acts, including sections under which low-cost or fine water is supplied to certain landowners in
  836
  the borough, to alleged interference with piling rights, especially through the repeal of a provision restricting boating on Lumley reservoir, and to the repeal of a provision under which a particular landowner has the right to construct a road over part of the stray.
  In relation to repeals, the borough council complied with Standing Orders of the House in giving notice of the intended repeal to those in whom the benefit of protective provisions was vested.
  Five petitions were deposited against the Bill, by the Harrogate Society, by a company and by a number of individuals. Negotiations or correspondence have taken place with each of the petitioners through parliamentary agents and a measure of agreement now exists between the parties. Draft undertakings sent to the petitioners have been endorsed by the borough council in return for the withdrawal of the petitions and it has undertaken to amend the Bill so as, first, to provide that land taken elsewhere in the borough as a substitute for any part of the stray used for road or path making improvements shall be no more than 100 m away from the stray border as delineated in the stray plan; secondly, to limit the number of temporary enclosures for the purpose of aircraft landings to 12 in any given year; thirdly, to save from repeal paragraphs 2 and 10 of section 11 of the Harrogate Waterworks Act 1897, relating to water supplies from Scargill reservoir and other matters section 23 of the Harrogate Corporation Act 1893, relating to land in Granby park area, and section 25 of the Ripon Corporation Act, relating to sporting rights.
  The promoters have agreed to introduce a new Bill to regulate Bogs field, and I wish to put this on the record. Bogs field was not included in the present Bill, because the council considered that, although historically it may have been part of the stray, it was different from the stray in topography, use and land ownership—the borough council owns the freehold. However, the borough council now accepts that statutory restrictions on its use and management should be enacted.
  The House can derive the satisfaction that I feel that this vital part of the heritage and environment of Harrogate will, with the passage of this Bill, be preserved. I am indeed conscious of the desire of the members and officers of the Harrogate borough council to perform their functions in the full spirit of this necessary preservation.
  7.35 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): This Bill is generally acceptable to us. My Department and that of my right hon. Friend the Secretary of State for Transport have a few minor reservations, which we are discussing with the promoters. There are a number of petitioners against the Bill and they will have a chance to present their objections to the Select Committee, which will be in a much better position than we are tonight to examine the provisions involved and will have the added benefit of expert evidence.
  I hope that the House will give the Bill a Second Reading and send it to Committee.
  Question put and agreed to.
  Bill accordingly read a Second time and referred to the Examiners of Petitions for Private Bills.

  Plymouth Marine Events Base Bill (By Order)
  Order for Second Reading read.
  7.36 pm
  Miss Janet Fookes: I beg to move, That the Bill be now read a Second Time.
  Plymouth is justly famous for its long association with ships and the sea, with daring voyages of exploration and in naval terms as well, and it currently houses a major naval base, but it has also become famous over the years for recreation sailing and international competitions.
  The present Bill seeks to have a marine events centre. It is soundly based and is a co-operative venture between Plymouth city council and a private firm, Dean and Dyball. We are urgently in need of this centre to provide all the facilities that are required for international yachting races and for lesser but none the less important activities. I believe that, once established, it will revitalise the area of Coxside in which it is situated and give great opportunities for employment, as well as being an additional recreational facility for the city of Plymouth.
  I believe that the Bill is soundly based, and I warmly commend it to the House.
  7.37 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): My right hon. Friend the Secretary of State for Transport's Department has raised a few minor points which are under discussion with the promoters, but I hope that the House will give the Bill a Second Reading and send it to Committee.
  Question put and agreed to.
  Bill accordingly read a Second Time and referred to the Examiners of Petitions for Private Bills.

  Scarborough Borough Council Bill (By Order)
  Order for Second Reading read.
  7.38 pm
  Sir Michael Shaw: I beg to move, That the Bill be now read a Second time.
  This Bill has been promoted by the Scarborough borough council. The House will recollect that the Local Government Act 1972 provided that, with certain exceptions, local legislation promoted by local authorities prior to reorganisation should cease. By subsequent order, the cessation date for such legislation in non-metropolitan areas is 1986. The purpose of the Bill is to continue the authority and power which the corporation has always had to continue it into the future.
  The Bill relates entirely to cliff railways or lifts at Scarborough and Whitby. The Whitby lift is at present operated under statutory provision under the Whitby Order 1914. The Scarborough railways are at present operated under section 24 of the Scarborough Corporation Act 1925. The Bill continues legal powers for the lift and the railways. It does this by express enactment. The Bill does not authorise the construction of new lifts or railways.
  These lifts and railways are important both to Scarborough and to Whitby since much of their trade is based on tourism and both towns have steep cliffs leading down to the beach. These lifts are, of course, of great assistance to visitors to the two towns. In addition, the Scarborough railway forms a vital link between the town, the conference hotels and the spa, which has recently been refurbished at a cost of well over £5 million.
  No petitions have been deposited against the Bill and I hope that it will be approved by the House.
  7.39 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): We have no objection to the Bill. I hope that the House will give it a Second Reading and permit it to go into Committee as quickly as possible.
  Question put and agreed to.
  Bill accordingly read a Second time and committed.

  Streatham Park Cemetery Bill (By Order)
  Order for Second Reading read.
  7.40 pm
  Mrs. Angela Rumbold: I beg to move, That the Bill be now read a Second time.
  The purpose of the Bill is to authorise the promoters, the Great Southern Cemetery and Crematorium Company Ltd., to make surplus cemetery land available for development purposes appropriate to the local community. The promoting company was incorporated in 1907 and its business consists of maintaining cemeteries and operating crematoria.
  Among the cemeteries belonging to the company is the Streatham Park cemetery, which is in my constituency, where it also has a crematorium. Owing to the increasing use of cremation for the disposal of human remains, there is more land available to the promoters at this cemetery than will be required by them for burials.
  The Bill is required since the lands for which power to develop is sought had technically been set aside for the burial of human remains and therefore come within the scope of the Disused Burial Grounds Act 1884. Parliamentary sanction must therefore be obtained to remove the application of that Act to the lands. In addition, parliamentary sanction is required to remove the effects of consecration in respect of part of the lands which have been consecrated, though never used, for the burial of human remains.
  If the Bill is enacted and if the company decides to develop or sell the lands, it will still be necessary for the company to obtain planning permission from the local authority, the London borough of Merton, in the usual way.
  It is not proposed to release any part of the development profits or proceeds of sale to the shareholders but to plough such funds back into the company. The company adopts a rolling capital improvement programme at Streatham Park cemetery and has already spent over £100,000 on major improvements, such as lawn clearance schemes, with considerable benefit to its appearance, and is scheduled to spend a further £96,000 on similar projects over the next two years.
  Under clause 3—"Power to sell or develop scheduled lands"—the promoting company is given power to sell or develop the scheduled lands. By clause 4 — "Discharge of trusts" — the scheduled lands are to be freed from the effects of Disused Burial Grounds Act and, so far as the consecrated land is concerned, from the effects of consecration. Clause 5 — "Power to use scheduled lands for other purposes" — enables the
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  scheduled lands to be used for any purposes as if they had never formed part of a cemetery. Clause 6—"Removal of human remains"—contains a code for the removal of human remains and has been included as a precaution because, to the knowledge of the promoters, the scheduled lands have never been used for burials.
  Although no formal objections have been lodged by any outside sources to the Bill, considerable concern exists among the residents of Mitcham about some aspects of the measure, arising from an experience in 1971. Therefore, when the Bill is in Committee, I hope that hon. Members will be asked to look carefully, on behalf of my constituents, at clause 4 and at the second schedule, which refer basically to unconsecrated land.
  I particularly ask for those provisions to be examined carefully because the disposal of human remains is a sensitive matter. Many of the relatives of my constituents have been buried there. My constituents are concerned because if the lands go for development, the possibility might arise that all the remains had not been removed within the context of the Bill. I hope, therefore, that in Committee the promoters will be questioned closely about that and asked to provide undertakings to assure my constituents that no part of the land which will be used for development purposes might still contain remains or that remains might emerge during the course of development.
  The House will appreciate that that would, were it to happen, cause immense distress to my constituents, remembering that, as I said, few matters are so sensitive as the disposal of human remains. I make that important reservation about the Bill on behalf of my constituents.
  The schedule to the Bill contains a description of the lands affected by the Bill, and a plan showing the lands has been deposited in the offices of the Clerk of the Parliaments and in the Private Bill Office of this House.
  The passing of the Bill is the only means by which the promoters may make use of the lands which are surplus to their requirements as regards the burial of human remains for the benefit of the local community.
  I reiterate that, if the Bill is to be for the benefit of the local community, the residents must be assured that there will be no impediment from their point of view to the disposal of human remains. With those reservations, I commend the measure.
  The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): The Government hope that the Bill is acceptable now to the House, will be given a Second Reading and may be allowed to proceed in the usual way to Committee.
  Question put and agreed to.
  Bill accordingly read a Second time and referred to the Examiners of Petitions for Private Bills.

  Sewers and Surface Drainage (Wales)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]
  7.46 pm
  Mr. Gareth Wardell: I am grateful for this opportunity to outline the problems associated with the non-adoption of sewers and surface drainage infrastructure in Wales.
  I first became aware of the problems of unadopted sewers in 1983. Until then, like most people, I thought of sewers only rarely, and then only in the vaguest terms as rather unsavoury topics. I have found, however, that sewers are just like the underpayment of DHSS benefits, the non-repair of rented property, breaches of the sale of goods legislation and many other problems about which people think that they have rights and are protected against financial loss when, in fact, they are not.
  The problems associated with unadopted and unadoptable sewers stem from 1981, when the now defunct National Water Council published a design and construction guide entitled, "Sewers for Adoption." The standards and requirements in that guide have now become the standards and requirements for sewers to be adopted by regional water authorities under sections 17 and 18 of the Public Health Act 1936.
  However those standards do not coincide with those laid down by the 1965 building regulations, which are administered by local authorities and which form the legal requirements for the construction of sewers. The two standards do not coincide because, while the building regulations meet health and safety standards, they do not incorporate the wider view relating to the standards of construction of the network as a whole.
  The regional water authorities are obliged by law to take wider considerations into account when sewers are to be adopted and maintained at public expense. In other words, the water authority criteria are higher. While the building regulations are statutory, compliance with water authority standards is not.
  Too often, the developer selects the cheapest and most convenient construction route—through private gardens, for example. Unfortunately, the potential house buyer—a totally innocent party—suffers because the sewers will never be adopted by the regional water authority. They are, in effect, unadoptable because they do not meet the "Sewers for Adoption" criteria. They will remain private sewers, for which the house buyer and future buyers will be legally and financially responsible for maintenance and repair.
  An example of that is now occurring at Gowerton, in my constituency, where a developer has recently been granted outline planning permission on what was an application for 112 houses, although there will now be fewer than that number. So far, the developer has not offered to enter into a voluntary agreement under section 18 of the Public Health Act 1936. It has been pointed out to the developer that, if he carries out his plans to lay the sewers of the estate on private land rather than alongside the access road, as requested by the Welsh water authority and the local authority, the sewers will not meet the "Sewers for Adoption" criteria. No matter what compromise is reached regarding diameter of pipe laying at the detailed planning stage, those sewers on that private estate will never be adopted. The developer rightly points
  842
  out that he is meeting all his legal requirements, but it remains a fact that future home buyers on that estate will have to pay for the short-sighted objective of the developer. In that way we are storing up problems for the future.
  The Welsh water authority estimates that in Wales 16,000 homes with sewers will not be eligible for adoption. In Lliw valley, which serves part of my constituency, approximately 2,800 houses have unadopted sewers. Householders are particularly angry when they encounter this problem, because they believe, not unreasonably, that throughout the stages of house buying they are protected from it.
  The house buyer notes from the estate agent's literature whether the house in which he is interested has a "public" or "private" drainage system. If he has what is described in this literature as a "private" drainage system, that relates to a cesspit or septic tank, and the price of the property often reflects the fact that the householder is responsible for the maintenance of the private system. However, if the estate agent's literature says "mains drainage," the house buyer is normally satisfied that no further questions need to be asked. Yet he may be taking on a shared responsibility for a system where far more expense can be incurred than in maintaining cesspit drainage, where the most that is usually required is replacing a pipe from the back of the house to the bottom of the garden.
  The house of one of my constituents, for example, is showing all the ugly signs of subsidence. Investigations are not yet complete, but it appears from the preliminary report than an unadopted and uncharted sewer pipe from a private housing estate of 30 houses comes across the field and under his house. The pipe is broken at that point and sewage is leaking into the clay on which the house foundations lie. I cannot yet state the legal and financial implications for my constituent and the others on the estate, but that sewer will have to be re-routed at the expense of the householders on that estate.
  If the system is defective at that point, it is not likely to be in good repair elsewhere. The householder will not be eligible for legal aid, even if he can seek redress from his solicitor or surveyor, or the local authority or water authority, none of which apparently was able to state the position.
  What are the implications for the building society which has an interest in the value of the property and in the householder's ability to meet repayments? What are the implications for the insurance company, if the householder is covered? That is the legal and financial morass that the present position poses for consumers.
  If the house buyer employs a surveyor and valuer to inspect his property before purchase, unless the property is showing signs of flooding or affecting foundations, there is no way in which a surveyor can assess or comment on the state of the sewer. The same applies to a building society surveyor. Even on new developments, sewers are normally in place and covered before house construction. It would therefore be impractical and unreasonable to expect to extend the scope of such reports to cover the adequacy of a sewerage system, but that again means that the buyer is not protected when he thinks he is and has paid fees to ensure that he is protected.
  Similarly, when a home buyer pays a substantial fee for conveyancing on his property, he expects that any aspect of his purchase which could result in his incurring an unexpected expense of thousands of pounds or could affect

  843
  the subsequent value of his investment would be pointed out to him by his solicitor. I understand, however, that it is not possible for a solicitor to provide this information and protection. A local authority can inform a solicitor whether the sewer is adopted and whether a section 18 agreement will take effect, but it cannot say, without the regional water authority undertaking a survey, whether an unadopted sewer system will be adopted under section 17. The standard form for solicitors' searches which is sent to local authorities does not ask whether the regional water authority has refused an application to adopt.
  Some of my constituents are new residents on an estate in Clydach where 300 houses are served by an unadopted sewerage system. Those new residents could not have been informed by their solicitors, or the local authority —neither of which knew about this—that the residents on the estate were applying for the sewers to be adopted. The residents will jointly have to pay, first, for a detailed camera survey of the sewers and then for any repairs, reconstruction or re-routeing necessary to comply with water authority standards for adoption.
  Some of those houses are 30 years old; others are new. How should the costs of adoption be apportioned —equally, on age of property or on length of residence? The whole matter is potentially a legal minefield, yet it could not be covered by solicitors' searches which the householder thinks cover him for such disastrous contingencies. We are talking of hundreds of thousands of pounds.
  Presumably, it was awareness of that that led the Secretary of State for Wales to overrule the Welsh water authority, Dwyfor district council and a public inquiry inspector, and to order the Welsh water authority to adopt the private sewers on the Maes Gerddi estate at Porthmadog. To repair those sewers will cost the Welsh water authority an estimated £200,000. I am delighted that the residents of the estate, who are responsible for the sewers, will not have to meet those costs, but I shall expect exactly the same consideration to be given to my constituents as, I am sure, will all Members on both sides of the House. If it is right for Wales, my English colleagues will want equal treatment.
  We must return to the root of the problem — the discrepancies between the building regulations and the 1981 "Sewers for Adoption" criteria, and the implications of that for sections 17 and 18 agreements. To give people the protection to which they are entitled, first, the voluntary status of section 18 must end, and, secondly, sewers must be constructed to adoptable standards, which means the regional water authority standards.
  New legislation should provide that a person constructing a sewer should build it so as to comply with the building regulations and with any higher standards necessary to comply with the adoption standards of the regional water authority, and make provision, pending adoption, by way of a deposit or bond.
  Such a measure, which would close the gap between building regulations and regional water authority adoption criteria, has virtually the unanimous support of regional water authorities and local authorities. The Principality Building Society and other building societies, the Building Societies Association and the Law Society are firmly behind that suggestion.
  844
  The Association of District Councils, whose members, as planning authorities, are placed in a most invidious position, has been pressing for that change since 1982, as has the Building Societies' Association. At that time, the Secretary of State for the Environment deflected those representations by saying that pressure would be brought to bear on developers to construct sewers to adoptable standards. Informal pressure and voluntary section 18 agreements have not worked. As my constituents know, developers continue to opt for the cheapest method of construction. I hope that the Minister realises that I shall not be fobbed off with that sort of reassurance tonight. Voluntary agreements have not worked. Meanwhile, we are continuing to store up tremendous and expensive problems for the future.
  I am aware that such a simple step will not resolve all the problems at a stroke. First, there will be instances of new sewers being connected to existing systems not complying with the adoption criteria. In 1936, with the introduction of the Public Health Act, a blanket adoption was given to existing public sewers. A similar solution was applied in Scotland under the 1968 Act when it was applied in 1973. However, a much more recent precedent for releasing home owners from the unknown financial implications of inadequate construction is the Housing Defects Act 1984. I see no sound or just reason why unadopted sewers should not be regarded in the same way as houses in that Act, especially as the Government should have been able to predict the problems inherent in the water councils' higher adoption standards not coinciding with the building regulations.
  Secondly, a developer may feel that the regional water authority conditions are unacceptably stringent, or that a bond or deposit requirement is unnecessarily high for a particular development. It would therefore be both sensible and practical to incorporate a right of appeal into the mandatory requirement. That would help the construction industry, which is labour-intensive. As the right of appeal is already a provision of section 17, the decline in those appeals should allow for a new provision, without an increase in administration costs or building costs associated with delay.
  Similarly, as water authorities are already consulted about planning applications, regardless of whether a section 18 agreement is being considered by a developer, I cannot see that mandatory section 18 agreements with the right of appeal would increase the administrative costs of regional water authorities. The procedure would be far more cost effective for the public. Indeed, the whole thrust of this call for legislation is in the public interest.
  I am sure that this issue will not stimulate the same interest as the economic statement of the Chancellor of the Exchequer earlier today, but for those people in homes with unadopted sewers, the need for change is just as important. When my constituents and other people buy houses and incur considerable expense in surveys and solicitors' fees, they think that they are protected from disaster. They are not, if they or their neighbour has unadopted and unadoptable sewers. Therefore, I urge the Minister, on behalf of the people of Wales, to take up this issue and to persuade his right hon. Friend the Secretary of State for Wales to introduce legislation to ensure that home buyers are given that protection which, as consumers, they have a right to expect and to which they are entitled.
  8.8 pm
  The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): I must first congratulate the hon. Member for Gower (Mr. Wardell) on his lucid and well-informed speech about the difficulties which can arise when foul and surface water sewers are not adopted. It is fortunate that the number of unadopted sewers which cause serious problems are few, but, nevertheless, when problems arise they are often difficult and expensive to put right and in the interim they can cause untold problems and worries for the residents who are affected. Therefore, I welcome the opportunity that this debate offers to explore some of the reasons why these problems have arisen, what remedy is currently available and to assure the hon. Gentleman that the Government are aware of the problems faced by some householders and are already considering what action needs to be taken. I should perhaps add that, although the hon. Gentleman has highlighted problems in Wales and particular cases in his own constituency, such problems are common to both England and Wales.
  I shall look at the commonest causes of non-adoption. Under section 20 of the Public Health Act 1936, as amended by the Water Act 1973, all sewers in public ownership at 1 April 1974 were deemed to be vested in the relevant water authority. Thus, there passed into the public ownership of the Welsh water authority over 12,000 km of sewers.
  I am sure that the hon. Gentleman is well aware that even today, some 10 years after the setting up of the water authorities, one of the biggest causes of complaint by them is the inadequate plans and records of their sewers. The local authorities, which originally owned the sewers before the setting up of the water authorities, are the same authorities, or their successors, who today still act as agents of the water authority in the building, maintenance and management of the local sewer network. Thus, of the 2,700 or so properties identified by the hon. Gentleman in his constituency as being served by unadopted sewers, some may, in fact, be public sewers, but, because of inadequate documentation at the time, the water authority did not accept responsibility for them. I am told that many of them are indeed the property of Swansea city council.
  I should add that the Welsh water authority has been very generous in its treatment of non-adopted sewers in this category, and in a letter to all its sewerage agency councils in 1980–81 it offered a final amnesty and to accept sewers into its ownership which were public sewers in 1974 but had been left off the sewer maps. I am sorry to say that the response from the district councils was very disappointing.
  The second cause of non-adoption is that the water authorities will not accept the transfer of sewers into their ownership until the development to which they relate has been completed. This seems to me to be a very sensible approach by the water authorities, and has many precedents in other fields. Clearly, the water authority needs to be absolutely sure of what it is taking on and to have the opportunity of examining and testing the complete system before adoption. This can lead to problems for householders when a builder takes several years to complete a development. In the interim, problems arising related to the sewer are the responsibility of the developer, who may or may not be quick to remedy the situation or who may or may not be the same as the original developer who started the work. In all of that, the
  846
  consumers who are paying their charge to the water authority for sewerage services find it difficult to understand why the water authority, or its agents the district council, will not act to help them.
  The third cause of non-adoption and the one which ultimately seems to cause most resentment is the sewer built by a developer which is put forward for adoption by the water authority under section 17 of the Public Health Act 1936 and is then found to be defective and not up to the standard required by the water auhority for adoption. The cause can be bad design; for example, the sewer is laid at the wrong depth below the road surface, or at the wrong gradient for it to be properly self-cleansing. Another problem often encountered is poor workmanship and materials. Even if the sewer conforms with building regulations, it may not conform with the standards required by the water authorities for adoption, which reflect wider considerations. I have to say that although I accept some of the points made by the hon. Gentleman on the difference in standard between building regulations and water authority adoption standards, many of the cases which have come to my right hon. Friend the Secretary of State for Wales show some failure, often on the part of the local authority, in inspecting and enforcing building regulations.
  So much for the causes of non-adoption. Now let us look at the remedy. The drain and/or branch sewer serving an individual property is the responsibility of the individual house owner. However, the main sewer is normally in the ownership of the developer until adopted by the water authority. If problems do arise with that sewer, the first remedy for the individual is to seek action by or redress from the developer, and that quite often leads to a satisfactory outcome. Even after completion of a development, if the sewer remains undadopted, the remedy for the householder is still with the developer or his successor in title ultimately through the courts.
  A common feature of cases that come to the attention of my right hon. Friends the Secretaries of State for Wales and for the Environment is where a developer has gone into liquidation and the residents themselves ask the water authority or its agents, the district council, to adopt a sewer. If the water authority refuses, there is a right of appeal to the Secretary of State under section 17(3) of the Public Health Act 1936.
  That section of the Act lays down certain specific points to which my right hon. Friends should address themselves, as well as the facts of the individual case. I must stress that each case is different, usually presenting a combination of problems, causes and special factors, all of which have to be taken into account in reaching a decision on whether the sewers should or should not be adopted by the water authority. To assist my right hon. Friends in coming to a decision, they nearly always offer the parties the opportunity to state their case before an inspector, appointed for the purpose, at a private hearing or a public local inquiry. I am pleased to say that there have been quite a number of instances where, because of the circumstances of the individual case, my right hon. Friends have been able to find in favour of the residents and to have the sewers adopted.
  The hon. Gentleman referred to the Maes Gerddi estate decision. A judicial review before the High Court on that section 17 case decision is pending, to which my right hon. Friend the Secretary of State for Wales is a party. I am sure the hon. Gentleman will understand that, for that reason,

  847
  I would not wish at this stage to get into a debate about the detailed application of section 17. He will realise that I must also be careful about how far I can discuss any individual cases that might ultimately find their way to my right hon. Friends for a decision on appeal under section 17(3) of the Public Health Act 1936.
  As the hon. Gentleman said, there is a way open to developers which readily overcomes the problems about which we are talking today. That has been available since the Public Health Act 1936. Section 18 provides for a developer to enter into an agreement with the water authority that the sewers will be adopted upon completion, subject to their being built to the standards set down in that agreement. This provides a safeguard for both parties, in that the developer will be able to discharge his responsibility for ownership and maintenance of the sewer upon completion, and the water authority is assured that the sewer is built to a standard that will ensure its adoption. The residents also have the benefit of knowing that any problems that arise will be dealt with by the water authority.
  The hon. Gentleman has been seeking assurances that the Government will take action to stop these problems arising in future. He has made several interesting suggestions, which I certainly promise to examine and consider with my right hon. Friends.
  In case the hon. Gentleman is not aware of the situation, I should inform him that a working party composed of officials from Government Departments and the water authorities is currently examining the existing legislation relating to sewerage and sewage treatment and disposal, to see what changes are required to bring the legislation up to date and to remedy deficiencies. This follows on from the view of the Law Commissioners that the existing sewerage legislation is in need of consolidation. One of the areas of difficulty identified by the working party is the adoption of sewers. I shall certainly pass on the hon. Gentleman's ideas to that working party for its consideration.
  The hon. Gentleman has pressed the case for a change in the law which requires developers to enter into a section
  848
  18 agreement with the water authority. This is certainly one option being examined by the legislative review group. The suggestion has the attraction from the residents' point of view that their sewers would be adopted. However, at that point one has to stop and examine exactly what is implied by such an agreement.
  Certain obvious questions arise. First, how far does adoption go? Is it just the main sewer, the main sewer and branch sewers, or all sewers and drains to the curtilage of a property? There are a number of other possibilities as well. Secondly, the adoption standards are often more stringent than the building regulations, as the hon. Gentleman noted, because of the longer-term needs of water authorities, and thus they are more expensive to implement. This has an obvious consequence for any purchaser. Thirdly, with the sort of agreement envisaged by the hon. Gentleman, how far should the water authorities go in planning for possible extension of development to the site? The cost of such provision to the initial developer could be very high. All that I can do this evening is pose the questions. I shall certainly not try to answer them.
  The present system of voluntary section 18 agreements works well and enables the developer to agree the extent of adoption and ensure the best balance of cost and service to the purchaser of property on the site being developed. Thus, though there are initial obvious attractions to the hon. Gentleman's proposition, all aspects must be carefully considered. The views that he expressed are helpful in this consideration. I assure him that they will be given further attention.
  This debate has been most constructive. I hope that the elucidation and assurances that I have been able to give to the hon. Member have helped to assure him that the Government are very much alive to the problems faced, thankfully, by a very small minority of the population. Nevertheless, they are important. I am also glad to confirm to him that the Government are actively examining what action needs to be taken both to stop these problems occurring in future and to deal with existing problems.
  Question put and agreed to.
  Adjourned accordingly at twenty-two minutes past Eight o' clock.

ENVIRONMENT
  Rate Support Grant
  Rate Support Grant
  Ancient Monuments
  Ancient Monuments
  Wild Birds (Conservation)
  Wild Birds (Conservation)
  Radioactive Waste
  Radioactive Waste
  Holiday Projects
  Holiday Projects
  Vehicle Exhaust Emission Control
  Vehicle Exhaust Emission Control
  Social Services Authorities
  Social Services Authorities
  Rent Arrears
  Rent Arrears
  Council House Sales
  Council House Sales
  Royal Docks (Enterprise Zone)
  Royal Docks (Enterprise Zone)
  "Mortgage Repayment Difficulties"
  "Mortgage Repayment Difficulties"
  Extremely Low Frequency Communications
  Extremely Low Frequency Communications
  Old Weston Road, Molesworth
  Old Weston Road, Molesworth
EMPLOYMENT
  Shell Refinery, Stanlow
  Shell Refinery, Stanlow
  Under-age Juveniles
  Under-age Juveniles
  Unemployment Benefit
  Unemployment Benefit
WALES
  Government Expenditure
  Government Expenditure
  Berwyn Consultation Zone
  Berwyn Consultation Zone
TRANSPORT
  Motorways (Signs)
  Motorways (Signs)
  M20
  M20
  Heathrow-Gatwick (Helicopter Link)
  Heathrow-Gatwick (Helicopter Link)
  Car Parks
  Car Parks
  Motorway Mileage
  Motorway Mileage
  Motor Cycle Helmets (Replacement Visors)
  Motor Cycle Helmets (Replacement Visors)
  British Rail (PSO Grant)
  British Rail (PSO Grant)
PRIME MINISTER
  Peterhead
  Peterhead
  Local Government Services (Privatisation)
  Local Government Services (Privatisation)
  Graduate Engineers
  Graduate Engineers
  Coal Industry
  Coal Industry
  Young People (Unemployment)
  Young People (Unemployment)
  Engagements
  Engagements
OVERSEAS DEVELOPMENT
  Central America
  Central America
  International Organisations (Financial Contributions)
  International Organisations (Financial Contributions)
THE ARTS
  Items in Lieu of Tax
  Items in Lieu of Tax
NORTHERN IRELAND
  Public Library Service (Report)
  Public Library Service (Report)
  Mobile Classrooms
  Mobile Classrooms
  Magherafelt-Moneymore Road
  Magherafelt-Moneymore Road
  Strip Searches (Armagh Prison)
  Strip Searches (Armagh Prison)
  Housing Executive (Painting Contracts)
  Housing Executive (Painting Contracts)
DEFENCE
  Porton Down (Yellow Rain)
  Porton Down (Yellow Rain)
  Low Frequency Communications (Scotland)
  Low Frequency Communications (Scotland)
  Nuclear Weapons (Testing)
  Nuclear Weapons (Testing)
  NATO (Northern Europe)
  NATO (Northern Europe)
  Test Ban Treaty
  Test Ban Treaty
FOREIGN AND COMMONWEALTH AFFAIRS
  Libya (Terrorist Organisations)
  Libya (Terrorist Organisations)
  Falkland Islands
  Falkland Islands
  Gibraltar
  Gibraltar
  Non-proliferation Treaty (Review Conference)
  Non-proliferation Treaty (Review Conference)
  Trident
  Trident
  South Africa
  South Africa
AGRICULTURE, FISHERIES AND FOOD
  Sugar Beet
  Sugar Beet
  Pesticides
  Pesticides
  Dairy Produce
  Dairy Produce
  Food Labelling
  Food Labelling
TRADE AND INDUSTRY
  Schools (Computers)
  Schools (Computers)
  Scrap Metal
  Scrap Metal
  Lonrho
  Lonrho
  Weighing Equipment
  Weighing Equipment
  Cable Television
  Cable Television
  Regional Industrial Policy
  Regional Industrial Policy
  Information Technology Equipment
  Information Technology Equipment
  House of Fraser (Purchase)
  House of Fraser (Purchase)
  Motor Vehicle Distribution Systems
  Motor Vehicle Distribution Systems
SCOTLAND
  Road Building (Contracts)
  Road Building (Contracts)
  Dornoch Firth (Road Bridge)
  Dornoch Firth (Road Bridge)
  Schools (Capitation Allowance)
  Schools (Capitation Allowance)
  Redundancies
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  Private Residential Homes
  Private Residential Homes
  Scottish Development Agency (Grants and Loans)
  Scottish Development Agency (Grants and Loans)
  Forest Estates (Sales)
  Forest Estates (Sales)
SOCIAL SERVICES
  Limited List Prescribing
  Limited List Prescribing
  Social Protection (Expenditure)
  Social Protection (Expenditure)
  Board and Lodging Payments
  Board and Lodging Payments
  Child Benefit
  Child Benefit
  Benefits (Review)
  Benefits (Review)
  Health Authorities (Executive Directors)
  Health Authorities (Executive Directors)
  NHS (Training Allowances)
  NHS (Training Allowances)
  Charges
  Charges
  Open University
  Open University
  Disabled People (Report)
  Disabled People (Report)
  "The Health Service in England"
  "The Health Service in England"
  "Mortgage Repayment Difficulties"
  "Mortgage Repayment Difficulties"
  Energy Saver Scheme
  Energy Saver Scheme
  Mentally Ill Patients, Salford
  Mentally Ill Patients, Salford
  Extremely Low Frequency Communications
  Extremely Low Frequency Communications
  Prescribing Levels
  Prescribing Levels
  NHS (General Services)
  NHS (General Services)
  Abortions
  Abortions
  Resettlement Units
  Resettlement Units
  Pesticides
  Pesticides
  Supplementary Benefit
  Supplementary Benefit
  Lynders Wood Court, Braintree
  Lynders Wood Court, Braintree
  Departmental Managers (Accounting)
  Departmental Managers (Accounting)
ENERGY
  National Coal Board
  National Coal Board
  Deep-Mined Coal
  Deep-Mined Coal
  Coal Miners (Dismissals)
  Coal Miners (Dismissals)
  NCB (Cash Requirement)
  NCB (Cash Requirement)
HOME DEPARTMENT
  Category A Prisoners
  Category A Prisoners
  Parole Statistics
  Parole Statistics
  Surveillance (Video Cameras)
  Surveillance (Video Cameras)
  Prisoners and Sentencing Policy
  Prisoners and Sentencing Policy
  Community Service
  Community Service
  Palace of Westminster (Members' Access)
  Palace of Westminster (Members' Access)
  MI5 (Director General)
  MI5 (Director General)
NATIONAL FINANCE
  Independent Schools (Tax Rebates)
  Independent Schools (Tax Rebates)
  Retirement Benefit Schemes
  Retirement Benefit Schemes
  Venture Capital and Business Expansion Schemes
  Venture Capital and Business Expansion Schemes
  Social Security (Taxation)
  Social Security (Taxation)
  Infrastructure (Investment)
  Infrastructure (Investment)
  Smuggling (Prosecutions)
  Smuggling (Prosecutions)
  Hot Take-away Food (VAT)
  Hot Take-away Food (VAT)
  Development Land Tax (Claim Costs)
  Development Land Tax (Claim Costs)
  Customs and Excise Sales (Criteria)
  Customs and Excise Sales (Criteria)
  Taxation
  Taxation
  Nationalised Industries Legislation (Proposals)
  Nationalised Industries Legislation (Proposals)
  Spirits (Excise Duty)
  Spirits (Excise Duty)
  Sterling Exchange Rate
  Sterling Exchange Rate
  Cash Limits
  Cash Limits
  Value Added Tax
  Value Added Tax
  Civil List (Payments)
  Civil List (Payments)
  Married Women (Investment Income)
  Married Women (Investment Income)
EDUCATION AND SCIENCE
  Teachers (Pay)
  Teachers (Pay)
  Outer London Boroughs (School Inspectors)
  Outer London Boroughs (School Inspectors)
  University Entrants (AS Levels)
  University Entrants (AS Levels)
  Voluntary Student Unions
  Voluntary Student Unions
  Higher Education
  Higher Education
  European Community Young Workers Exchange Programme
  European Community Young Workers Exchange Programme
  City and Guilds Institute
  City and Guilds Institute
  Open University
  Open University
  Primary Schools
  Primary Schools
  Further Education College Lecturers
  Further Education College Lecturers
  General Certificate of Secondary Education
  General Certificate of Secondary Education
  Children (Special Needs)
  Children (Special Needs)
  Adult Education
  Adult Education
  Inner City Schools
  Inner City Schools
  Special Education and Teacher Training
  Special Education and Teacher Training
  Science Expenditure
  Science Expenditure
  Natural Environment Research Council
  Natural Environment Research Council
  National Youth Advisory Council
  National Youth Advisory Council
  Teacher Assessment
  Teacher Assessment
  Pupil Costs
  Pupil Costs
  Further Education
  Further Education
  School Closures
  School Closures
  Rate Support Grant Settlement
  Rate Support Grant Settlement
  University Academic Staff
  University Academic Staff
  Solvent Misuse
  Solvent Misuse
  Assisted Places Scheme
  Assisted Places Scheme
  Non-Maintained Schools (Charitable Status)
  Non-Maintained Schools (Charitable Status)
  Pupils (Statistics)
  Pupils (Statistics)
  Drug Misuse
  Drug Misuse
  Teacher Training
  Teacher Training
  Engineering and Technology (Graduates)
  Engineering and Technology (Graduates)

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

Graduates: Employment Demand
Baroness Elliot of Harwood: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what was the percentage demand for graduates available for employment in 1983 and 1984 respectively.
The Earl of Swinton: My Lords, the information collected centrally on the employment of graduates relates to the first destination as at 31st December each year of graduates obtaining first degrees from higher education institutions in Great Britain. For 1983, this shows that of the 91,000 graduates covered, 51 per cent. were in permanent home employment, 24 per cent. in further study or training, 12 per cent. were unemployed, and the remainder fell into other categories. Information for 1984 is not yet available.
Baroness Elliot of Harwood: My Lords, while thanking the Minister very much for that most interesting reply, may I ask one further question? Do graduates in some subjects find employment more readily than in others? If this is the case, what are the Government going to do to encourage the output of graduates in these particular subjects?
The Earl of Swinton: My Lords, the specialist skills of graduates in electronic engineering, mathematics, and business-related social studies are sought by many employers. As a result of various initiatives, including the Government's information technology programme, the national advisory body's 1984–1985 planning exercise and universities' intentions to increase student intakes to scientific and technological subjects, engineering and computer science graduate output is projected to increase from its level of around 13,000 in 1980–81 to over 17,000 in 1989–90. However, the Government are considering what further measures may be necessary and they intend to make an announcement very soon.
Lord Orr-Ewing: My Lords, is my noble friend aware that in Japan there are eight times as many graduates in science and engineering per head of population as there are in this country, and this gap is becoming wider and wider? Can the Government encourage local industry to take an interest and perhaps provide scholarships, not only at the universities but also to science and mathematics teachers in local schools? Then there would be a strong encouragement of the best teaching and therefore
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the best chances of the right people going up to the universities in these disciplines.
The Earl of Swinton: My Lords, the Government are keen to encourage fruitful links between higher education and industry. A wide range of links already exists. Many have sprung from local initiatives. For example, almost all institutions have staff operating in liaison bureaux and industrial units whose function is to encourage and promote links with companies. A substantial number of institutions have set up or are planning science parks. Other links have arisen from Government-sponsored activities. For example, the Science and Engineering Research Council's teaching company scheme, which is jointly funded with the Department of Trade and Industry, brings together individual firms and academic departments to tackle a piece of research or development to mutual advantage. I do not know whether I can give an encouraging answer to my noble friend about the idea of providing scholarships for teachers in schools. I think that might run into some difficulties; but I shall certainly draw it to the attention of my right honourable friend.
Baroness Seear: My Lords, has the Minister figures available as to the successive placement rates of different universities and polytechnics? In particular, what is the placement rate of Aston University and Salford, both of which were severely cut by the UGC two or three years ago?
The Earl of Swinton: My Lords, I do not have any figures for the individual institutions. I shall have to find out and write to the noble Baroness with that information.
The Earl of Lauderdale: My Lords, can my noble friend say whether he is satisfied that there are sufficient courses in electronics and kindred subjects at universities all over the country? Is he aware that I am assured that there seems to be a certain deficiency in this area in Scotland?
The Earl of Swinton: My Lords, I do not think anyone in the Government is ever completely satisfied about anything. I am sure that there is always room for more. However, I understand that there are now about 35,000 more students in science and technology subjects ranging across higher education than there were in 1979–80.
Lord Tordoff: My Lords, is the noble Earl aware that the Chairman of the Conservative Party is very contented about everything?
The Earl of Swinton: My Lords, I am sure he is.
Baroness Lockwood: My Lords, is the Minister aware that the director of the Alvey programme, in evidence to the House of Lords Select Committee on Science and Education and Training for New Technologies, said that there would need to be a growth of 8 per cent. per annum over the next decade in the pool of scientists and technologists to meet the needs of industry? Has the Minister been assured that the figures that he has given us this afternoon will take that point into account?
The Earl of Swinton: My Lords, I understand that there is to be a debate on this subject on Monday of next week and the noble Baroness might be able to obtain better answers then. As I said, we are looking at these figures and an announcement is expected very soon.
The Earl of Halsbury: My Lords, can the noble Earl provide figures for unemployed graduates on thick and thin sandwich courses, as opposed to the average for the country? If not, can he provide me with the figures later?
The Earl of Swinton: My Lords, he could if the noble Earl would give him time. He is absolutely kerfuffled with figures here. Perhaps, in view of the fact that we have a long day's business, I had better write to the noble Earl with that information.
Lord Cledwyn of Penrhos: My Lords, in his initial reply, the noble Earl said that 12 per cent. of the graduates in the period in question are out of work. Is not this really a most serious state of affairs? Will he be good enough to say what this represents in numerical terms? How many are science graduates; how many are arts graduates? Can he say specifically what steps are being taken by the Department of Education and Science to place these graduates so that they may make a productive contribution to the country's economy?
The Earl of Swinton: My Lords, again, I have reams of figures. I think that it would be more sensible if I wrote to the noble Lord with those answers.
Noble Lords: No.
The Earl of Swinton: Right, my Lords, I shall start. Of first destinations, in 1982, permanent home employment accounted for 47 per cent., further education or training for 26 per cent., the number believed unemployed at 31st December for 13 per cent., and others for 14 per cent. In 1983, permanent home employment accounted for 51 per cent., further education or training for 25 per cent., the number believed unemployed at 31st December for 12 per cent., and others for 13 per cent. Of course, these figures are in themselves difficult. Included among those listed as unemployed, there may be some who should also be considered as "others". Obviously, there are foreign students and there are students such as young women who perhaps have had families while they are studying and have decided that they do not want to be employed. Of course, we are worried about the situation. That is why we are taking the measures to which I referred earlier.
Lord Hooson: My Lords, is the noble Earl aware of the number of science and mathematics graduates who are leaving the teaching profession to go into industry? Is he aware that an acute problem is arising over how our young people are to be taught science and mathematics in the future?
The Earl of Swinton: My Lords, that is very wide of the original Question.
Lord Cledwyn of Penrhos: My Lords, it would perhaps be better if the noble Earl wrote to me and placed the letter in the Library so that we can have an explanation of the figures.
Lord Annan: My Lords, will the noble Earl agree that there are many occupations which graduates in other countries are happy to occupy? Is he aware that in the Bay area in California the best restaurants are run by graduates of the history department of the University of California?
The Earl of Swinton: My Lords, I am glad to hear it. If ever I find myself over there, I shall make a point of eating in one of those restaurants.

NHS Expenditure Savings
2.45 p.m.
Lord Kilmarnock: My Lords, I beg leave to ask the first Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they propose to deduct the estimated savings on their limited list of NHS drugs from their commitment to 1 per cent. growth in real terms in NHS expenditure; and, if so, how they propose to calculate the relevant sum for 1985–86.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): No, my Lords. The intention behind the introduction of the selected list is to reduce the drugs bill by reducing costs. Planned expenditure already takes account of these savings.
Lord Kilmarnock: My Lords, while I thank the noble Lord for that reply, it is not quite so illuminating as I should have expected. On Budget day of all days, cannot we have a little financial clarity? Is it not the case that according to the Government's expenditure White Paper, Cmnd. 9428, at Section 10 on page 158, planned expenditure in the family practitioner services in 1985–86,
"reflects revised forecasts of demand but also takes account of measures already announced to limit the drugs bill".
How is this to work? How will we measure what is saved on the drugs bill? The noble Lord estimates £75 million. This is widely thought to be an over-estimate. If the savings are only £40 million, as widely predicted, will the £35 million shortfall be deducted from the allocation to the hospital service?
Lord Glenarthur: My Lords, on the basis of current forecasts of inflation, the figures in the public expenditure White Paper published in January, which the noble Lord has quoted, show that total NHS expenditure is planned to remain broadly level in economic cost terms in the year 1985–86. Health authority expenditure is planned to increase by about 1 per cent., as I am sure the noble Lord is aware, in recognition of the growing number of elderly people. There is a planned fall in expenditure on family practitioner services in economic cost terms but this is

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due to measures taken by the Government to reduce the drugs bill and to the change in the provision of the general ophthalmic service. In other respects, inflation and forecast demand for the family practitioner services have been fully provided for. As to the noble Lord's doubt about the estimate of £75 million, I have to say, of course, that this is a new departure. The estimates of likely savings must be subject to a degree of error, but we think that they are probably about right.
Lord Ennals: My Lords, in the light of the Minister's last reply, can he help to create some clarity out of what I believe to be chaos in the primary health care field? With greatly increased prescription charges and dental charges, changes in the NHS optical service, limited list prescribing, vouchers for people on supplementary benefit to pay for their NHS spectacles, the failure to publish the Binder Hamlyn report and the Government's own Green Paper, can we now be assured that the rumours that seem to be circulating of a voucher scheme for paying to general practitioners is untrue? Will he say that?
Lord Glenarthur: My Lords, I can read the papers as well. I have noted the remarks referred to. I do not believe them any more than I think the noble Lord should believe them. The Government record on the health service stands on its own. I have quoted it many times from this Dispatch Box. If the noble Lord would like me to give the figures for the family practitioner services and other parts of the health service, I shall willingly do so.
Lord Ennals: My Lords, I was really asking whether the noble Lord could give the assurance that the rumours were not true. I certainly read what appeared in the newspapers and I hope it is not true. I drew attention to it following an extraordinary number of changes in the primary health care scheme. Does he understand that this is causing great concern?
Lord Glenarthur: My Lords, the noble Lord knows that we are considering the Green Paper. It will be published in due course. I beseech him not to believe everything that he reads in the papers.
Lord Nugent of Guildford: My Lords, is my noble friend aware that the Secretary of State specifically stated in the other place last evening that these rumours were untrue?
Lord Ennals: My Lords, why not say so?
Noble Lords: Answer!
Lord Glenarthur: My Lords, I am grateful to my noble friend. I was personally convinced that they would not be true. I was not sure whether my right honourable friend had said so because I have not caught up with all that he said yesterday. We are dealing with the same matter later today. I am delighted to hear it. I was sure that it would be the case.
Lord Kilmarnock: My Lords, the noble Lord has referred to the planned savings on the family
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practitioner services. He has himself been good enough to admit that this is a trial run and that it is not clear how it is going to come out. for the sake of argument, only £50 million was saved rather than £75 million, can the noble Lord say what effect that would have on general planned National Health Service expenditure for the coming year?
Lord Glenarthur: My Lords, as I indicated, we estimate that the savings will be about £75 million. If it is the case that they do not match up to that figure then we shall have to consider the situation; but I do not think there is any point in speculating now about what has not happened.
The Countess of Mar: My Lords, can the noble Lord say where the £45 million handout going to chemists, for their expected shortfall after 1st April 1985 because doctors wrote fewer prescriptions in 1983, is coming from?
Lord Glenarthur: My Lords, with respect, I believe that that is another question.
Lord Kilmarnock: My Lords, would the noble Lord care to guarantee the 1 per cent. real growth for the hospital service in the Government's own expenditure White Paper?
Lord Glenarthur: My Lords, I am sorry, but I did not hear the first part of the noble Lord's supplementary question.
Lord Kilmarnock: My Lords. I asked the noble Lord whether he will guarantee the 1 per cent. growth in real terms for the hospital service projected in the Government's own expenditure White Paper.
Lord Glenarthur: My Lords, it is already in the White Paper. I do not think it needs a greater guarantee than that.

Civil Defence: Local Authority Response
2.51 p.m.
Lord Renton: 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 intend to monitor how local authorities are effectively organising, training and exercising civil defence volunteers.
The Minister of State, Home Office (Lord Elton): My Lords, yes. My honourable friend the Minister of State has undertaken in another place that he will continue to monitor local authorities' progress on implementing the 1983 regulations. This will include volunteer activity.
Lord Renton: My Lords, I thank my noble friend for that encouraging reply. May I ask him whether he is aware that most local authorities require guidance on the form of organisation that volunteers should be given, or should have? In this connection, will he bear

401
in mind the excellent precedent, commended by Sir Leslie Mayor when he was Co-ordinator of Volunteer Effort in Civil Defence, of the Devon Emergency Volunteers, who are self-governing but under the operational control of the local authority? Will he also bear in mind that Cambridgeshire provides another useful and slightly different precedent?
Lord Elton: My Lords, I am glad to say that the Devon Emergency Volunteers are a very fine organisation—one of the best. They are, of course, a useful model. We would not wish to impose either that model or the good one in Cambridge on other local authorities, which should have discretion to form their forces as suits their needs. If they need advice, I would refer them to Circular No. 2 of 1981.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that one of the problems here is that civil defence organisations are required to take part in the pretence that it is possible to provide civil defence against nuclear war? If the Government were to make it clear that their function was other than that, and that they had a function relating to civil emergencies in the unlikely eventuality of a non-nuclear war—something of that sort—the organisation would be easier and more people would join.
Lord Elton: My Lords, I am aware that the noble Lord opposite believes that it is humane to leave without prepared support the very many thousands of injured and homeless that there would be after a nuclear attack, but I do not share that view. I believe that the civil defence organisation, which is concerned with defence against conventional as well as nuclear attack, is something which even the noble Lord should support.
Lord Jenkins of Putney: My Lords, the noble Lord fails to distinguish between what is humane and what is inevitable.
Lord Renton: My Lords, is my noble friend aware that the help of volunteers in coping with all emergencies, in peace and war, will be welcome to local authorities, and that the view expressed by the noble Lord, Lord Jenkins of Putney, is but a diversion of a somewhat mischievous kind?
Lord Elton: My Lords, since our purpose is to arrive at the proper solution to our problems, I shall limit myself to saying that I believe that the civil defence organisation of this country, properly conducted, is the right one.
Lord Mishcon: My Lords, will the noble Lord the Minister take it that we on these Benches wish to make quite clear a position that has not been clarified up to now? Does he know that the policy of the Opposition is that the truth should be told to the people about the terrible consequences of nuclear war? If they were told that and knew that the situation was a little more helpful if they were to indulge in civil defence activities elsewhere, he might have more volunteers.
Lord Elton: My Lords, the possibility of nuclear war is a terrible possibility, and that is why the country as a whole supports Her Majesty's Government in preparing itself for its eventuality, and also to deter its arrival.

Resettlement Units for Homeless
2.55 p.m.
Lord Kilmarnock: My Lords, I beg leave to ask the second Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will suspend their plans for the closure of DHSS resettlement units for the homeless pending fuller discussions with local authorities and voluntary bodies on the provision of an adequate level of funding for replacement services.
Lord Glenarthur: My Lords, the process of regional consultation with local authorities, voluntary bodies and others to identify alternative resettlement arrangements is just beginning. No resettlement units will be closed until the results of that process are known.
Lord Kilmarnock: My Lords, I am grateful to the noble Lord for that reply. Does he not agree that local authority housing and social service departments would be very hard put to it to step in under the present regime of local authority finance, and also that the voluntary movement has neither the capacity nor the resources to run 24-hour direct access, off-the-street shelters for these unfortunate people? Does he not agree that this, at least, should remain a statutory obligation? Can he tell us whether he would have to bring in primary legislation in order to bring about this change?
Lord Glenarthur: My Lords, my right honourable friend the Secretary of State has a statutory obligation to supply either the space, in the form of resettlement units, or the finance for doing it. What is happening in this case is that the finance is being transferred to the voluntary agencies, which are better able to supply what the noble Lord so much wants to see.
Lord Avebury: My Lords, can the noble Lord give an assurance that in Greater London no action will be taken to close Camberwell until the replacement scheme is completed, or, indeed, to close any of the existing seven units in the capital? What additional provision does he think it is necessary to make in the capital to cater for the many hundreds of people who are now sleeping rough on the streets?
Lord Glenarthur: My Lords, in regard to Camberwell, the joint Department of the Environment and DHSS package agreed in 1981, which is known as the Camberwell replacement scheme, and which I know the noble Lord, Lord Avebury, is familiar with, is more than a replacement for the Camberwell resettlement unit, which currently accommodates about 200 men. It entails the provision of a London-wide basis of 985 new bed spaces,

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primarily by voluntary agencies for the single homeless. Some ex-residents of London resettlement units such as those to which he referred are already being housed in schemes which have opened. All the bed spaces are due to be available by 1987, so we believe that it is sensible to draw from this exercise lessons for the homeless in London generally before deciding on the future resettlement provision in the capital. But I can assure the noble Lord that no one will be cast out on to the streets.
Baroness Jeger: My Lords, can the noble Lord explain why his noble friend Lord Avon told me on 24th January, in reply to a Question, that the Government have no information about the number of homeless people and that local authorities have specific duties to provide appropriate assistance? When I ask local authorities about what assistance they are providing the only response I get is that because of rate capping they cannot provide this assistance. If the Government do not know how many people are sleeping rough, why do they close these places which provide people with somewhere to go? Surely it is quite wrong, if the Government do not know how many people are homeless, that they should shut down the places where there is at least some shelter.
Lord Glenarthur: My Lords, what the noble Baroness perhaps does not take into account in asking that question is that many of the old resettlement units were too big; they were too old-fashioned; they were in the wrong place; and they had the wrong sort of staff running them. I should have thought that the best way to spend the money that is available for that sort of thing is to put it to the good use of the voluntary agencies, which are much better organised in this respect and are capable of providing the service which the noble Baroness so badly wants.
Lord Winstanley: My Lords, the noble Lord has told the House that none of these units would be closed until the discussions to which he referred were completed. Is it not the fact that the unit at Fazakerley on Merseyside and the one at Walkden in Greater Manchester have in fact already been closed? Indeed, if they have not actually closed, is it not true that they are no longer functioning, which amounts to the same thing?
Lord Glenarthur: My Lords, they will not close until such time as the new arrangements have been made and that particular consultation process has been completed. To turn to Fazakerley, I think that the position is that the unit required a great deal of capital works and it may for some reason be uninhabitable at present. I am not sure of the particular circumstances of that unit but I shall certainly check up and let the noble Lord know.
Baroness Jeger: My Lords, instead of directing questions to the fact that some of these places are not full, should we not be asking why they are not full? It may be that people are not attending because there is something wrong with the centres. Why do we not try to find out why people who are sleeping on the streets
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do not go to these DHSS centres? There must be something wrong with the DHSS places. That is the question that I put to the noble Lord the Minister.
Lord Glenarthur: My Lords, the noble Baroness asks me why we are going to close these places, and at the same time she is suggesting that perhaps there is something wrong with them. It is precisely for that reason that we are diverting the financial resources, which up till now have gone to these units, to the voluntary organisations in the hope that they will be more successful than the DHSS units have been up till now.
Lord Kilmarnock: My Lords, the noble Lord says that the voluntary agencies are better able to provide this service. I ask him to read the very interesting briefing paper issued by the Campaign for Single Homeless People—CHAR—which says:
"The experience of voluntary organisations running nightshelters, crash-pads etc. is that they cannot properly meet the needs of the homeless people".
Will the noble Lord take that into account in his discussions? Will he say whether the whole of the £12 million annually which is at present outgoing on this service, and the £8 million that the Government plan to save on maintenance, will all be made available for the replacement scheme?
Lord Glenarthur: My Lords, as regards the first part of the noble Lord's supplementary, it is generally accepted—and I think that if he asks about it he will find that this is the case— by those who care for people without a settled way of life, that the resettlement process is more likely to succeed in smaller, informally run hostels or homes, than in the larger institutions, such as resettlement units. That has been confirmed by the department's monitoring of those voluntary projects in receipt of funding under Schedule 5 to the Supplementary Benefits Act. The noble Lord would do well to bear in mind that this process will take quite some time to complete. So far as charges are concerned, I can tell him that all the financial provisions which are made for DHSS units will be made available to the voluntary ones in the future, if they come about.

Betting, Gaming and Lotteries (Amendment) Bill [H.L.]
Report received.

Administration of Justice Bill [H.L.]
3.3 p.m.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(The Lord Chancellor.)
On Question, Motion agreed to.
Lord Denning Lord Denning moved Amendment No. 36:
After Clause 41, insert the following new clause:
(" . In section 9(6) of the Legal Aid Act 1974 at the end there shall be inserted—
"Provided that in the case of a matrimonial home, the charge shall only be for such amount as the court considers is just and equitable.".").
The noble and learned Lord said: My Lords, in this amendment I draw attention to the fact that over five years ago the judges found that the law was unjust and recommended that Parliament should reform it. Since that time nothing has come before Parliament to reform the law and so I have ventured to set down this amendment before your Lordships. However, I must first explain how it arises.
It arises, in legal aid matters, from what lawyers are inclined to call the "statutory charge". Let me explain the situation by giving the example of an ordinary accident case where a man without means wishes to bring a claim for an accident sustained at work, on a road or wherever. He has no money and so he seeks legal aid for the purpose. He puts his case—it may be quite a plausible one—to the area committee and he is granted legal aid. Thenceforward the legal aid fund will pay all his lawyer's expenses. So the action is started.
Then, in the course of the case, the defendants—who may have a good defence—say, "Well, it's no good fighting this case at great expense; we shall not get anything out of him or the legal aid fund. We shall settle". Let us suppose that they settle the case by paying £4,000. It is at this point that the statutory charge comes in. The legal aid fund then has a charge on the money recovered or preserved in those proceedings. If the legal expenses in the case which I have put forward amounted to £500, they could take that £500 out of the £4,000 which the man has been given. That is the charge which the legal aid fund has for the legal expenses against any property recovered or preserved. It is all very right and sensible in all ordinary cases. However, the matter to which I am drawing attention, and to which the judges have drawn attention, is the position as regards the matrimonial home.
Most couples have no other asset except the matrimonial home—it may be subject to a mortgage from a building society or the like—which may be worth £20,000, £30,000 or £40,000. It is their only asset. They both receive legal aid because neither of them has any means. Nearly all these cases are legally aided on both sides. The case will probably be brought out quite reasonably. One party may say that the house belongs to him or her and the other may say that it should be half and half or in different shares.
There is also the question of the custody of, and access to, the children. All those difficult matters are fought out with the legal aid fund paying the lawyers on both sides. The question which must be asked is: where does the charge come in? It may be that the house is sold and that the parties both agree to that course so as to enable each of them to buy another house or perhaps a flat. Therefore, the house is turned into money. It may be that one will pay out and will say, "Oh, I shall pay you £15,000 if you transfer your share of the house to me. You will have money in hand". That is money in hand which is recovered or
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preserved by the lawyers, by the legal aid fund. The legal aid fund has a statutory charge not only on the house—because that might be postponed—but whenever the house is turned into money in whole or in part it will have that charge.
Judges have drawn attention to this matter from time to time, and in a case which reached this House in March 1980—five years ago—my noble and learned friend Lord Simon of Glaisdale said:
"I presume to suggest that the appropriate executive and legislative authorities should urgently consider the problem raised in this appeal and make any consequent amendment of the Act or the regulations as may be desirable".
That wish and desire has been repeated in case after case not only by the President of the Family Division but by the Court of Appeal on three separate occasions quite recently; and just last December Lord Justice Oliver in the Court of Appeal summarised the whole position when he said:
"In the vast majority of cases the matrimonial home constitutes the only family asset of any value. Time and again sensible division of property within the limits of the frequently slender resources available founders on the rock of the attachment of the charge for legal aid costs. That is no criticism at all of the Law Society which has to administer the legal aid scheme within the framework of the Act and the Regulations as they stand.
But in Hanlon, Lord Simon described the desirability for reconsideration of these provisions as urgent. Now, over four years later, it is certainly no less urgent".
That was said in December of last year.
My amendment is simply to provide that the charge should be such as the court should consider just and equitable in the circumstances, so that if there is a charge for legal costs against some of the money, or a certain amount of the charge, the judge can say what it is. I therefore put down this amendment. After I put it down we had the 34th annual report of the Law Society. I am afraid that it was most disappointing. They issued a consultation paper in which they made one or two suggestions, such as that the charge on the money could be postponed, and the like. Then they went on to say, in late January of this year,
"This paper is issued as a consultation paper to enable comments to be obtained from the profession, the courts, building societies and other interested parties before proposals are put to the Lord Chancellor's Department. A list of consultees is attached".
There were then listed 15 bodies which still had to be consulted; and we know what that means. They all set up committees to do it; the committees will go into it. Those committees will report—whether it is the building society associations, the legal action group, or this, that and the other—and then the matter will go before the whole body. When does it ever get back to action? Indeed, in this very report it says:
"The responses and their consideration by the Legal Aid Committee fall outside the province of this year's annual report. It is hoped that during next year a full submission can be made to your Lordships for a change in the regulations".
It reminds me of our little nursery game of the stones of the plum, "This year, next year, sometime, never". We have "this year", "next year", and then "sometime during this parliament". That is why I put down this amendment. I am afraid that on Second Reading my noble and learned friend the Lord Chancellor suggested that it was not the time or the occasion to discuss these matters. This is a clause of the Bill which deals with legal aid. Five years ago it was described as urgent and I therefore put forward this amendment. It seems to me that we should cut all the

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cackle with all these committees and get down to the simple thing—a just and equitable charge. That is a sensible solution which I suggest. I do not know whether it will carry much weight in the quarters which really matter. I beg to move.
3.15 p.m.
Lord Simon of Glaisdale: My Lords, your Lordships have heard from my noble and learned friend that here is a source of injustice which has been outstanding in public gaze for five years and to the injustice and hardship involved there have been reiterated expressions by your Lordships' House, by the Court of Appeal, and by the Family Division of the High Court. It seems to me really unfortunate that the matter is now discussed for the first time on Report. It was put down by my noble and learned friend for discussion in Committee. Unfortunately what happened was this. It was immediately followed by a Motion by my noble and learned friend Lord Elwyn-Jones to leave out a highly contentious clause. That related to judicial review. My noble and learned friend knew, of course, that all his followers were passionately interested in judicial review and equally interested in the appellate procedure which related thereto. He also knew that "pallid ashes follow fire" and obviously he did not know how long that passion could be sustained. So he wanted his Motion to be discussed as the first item of the second day in Committee. He therefore persuaded my noble and learned friend Lord Denning to postpone his amendment, which is now before your Lordships, until Report stage.
What happened then may remind your Lordships of a passage from one of Fielding's novels which runs something like this. He forthwith,
"ravished this fair creature, or at least would have ravished her, if she had not, by a timely compliance, prevented him".
My noble and learned friend on the Woolsack, recognising that the clause had aroused universal hostility, made a few protestations of virtue and then allowed it to be negatived on collection of voices. My noble and learned friend the Lord Chancellor therefore lost his clause. My noble and learned friend Lord Elwyn-Jones lost the chance of defeating the Government in the Division lobbies, and your Lordships lost the opportunity of discussing a matter of profound social interest in Committee when a difficult problem could have been far better identified than is possible on Report.
As my noble and learned friend Lord Denning pointed out, this provision arouses particular difficulty and hardship in relation to the ordinary, typical divorce suit. Thus one must remember this frequently. At the moment nearly one in three marriages is liable to end in divorce and one child in five under the age of 16 is liable to find his parents divorced. What happens to the matrimonial home therefore is of not only profound but also widespread significance.
The typical divorce case consists of three matters. The first is whether the marriage can be dissolved. That is comparatively simple now—all too simple—and comparatively uncostly. Then there is the question of custody of and access to the children. That is frequently contested, whatever conciliation procedures can be adopted, and is apt to be expensive.
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The third matter relates to the matrimonial property and financial provision. That is very much influenced by the second matter, the question of the custody of the children, because the parent who has custody of the children will have a strong claim to occupation of the matrimonial home. Therefore when the matrimonial home is considered in a divorce case it comes into the case obliquely, quite unlike, say, a contest between landlord and tenant, or the question of who, under a will, ought to enjoy the ownership of the matrimonial home. It is because it comes into it obliquely, and almost inevitably in so many cases, that a provision which suits the normal case such as my noble and learned friend described is quite unsuitable in divorce.
In a normal case the solicitor has a charge for property recovered or preserved through his instrumentality. It is recovered if there is a claimant who is successful. It is preserved if there is a respondent who is successful. That charge by the solicitor of course only comes into effective operation if he is not paid by his client for the proper fees and disbursements that he made during the case. Therefore he is given a charge on property recovered or preserved.
My noble and learned friend has described the parallel in the legal aided action, and it is at the third stage after the proceedings are concluded that the charge comes into operation and into question. But perhaps I may just say this: at the initial stage of the assessment of resources and determination of what is a proper contribution by the legally-aided client, the matrimonial home is entirely left out of account. But, once the action is concluded, the legal aid fund, like the solicitor in unassisted litigation, has a charge. But, as I ventured to point out to your Lordships, in a divorce case the analogy with a private solicitor in a case, say, of landlord and tenant is quite unreal.
Up to 1976 the matrimonial home was entirely exonerated from charge. After 1976 the first £2.500 of any property recovered or preserved was exonerated, but otherwise the charge attached in favour of the Law Society as the custodian of the legal aid fund. My noble and learned friend has described the hardship which can arise. In the case that he mentioned, which came before your Lordships' House, it was decided that even though the matrimonial home only comes into the matter obliquely, if it is nevertheless in issue whether as to ownership or even as to occupation, then it is subject to the charge.
The second point which was decided was that all the costs, not merely of the property and the financial issues, were subject to the charge. The third point which was decided was that the Law Society could postpone enforcement, or could transfer the charge to some alternative home. But of course your Lordships will see that that merely postpones the problem: it does not dispose of it. In fact, in that case, the unfortunate wife would have been left homeless though she had the custody of the children.
The question of how the matter is to be dealt with is much more difficult. There is one obvious thing which should be done and that is to increase the £2,500 in line with inflation, but that merely tinkers with the problem. The second is to exempt the matrimonial home from the charge altogether. That was proposed by the Benson Committee. That was the position

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before 1976, and that was what was strongly endorsed by my noble and learned friend the Lord Chief Justice of Northern Ireland, who was sitting in the case that my noble and learned friend mentioned.
The disadvantage of that is that the matrimonial home may be of very great value, and it seems very unjust to the general body of poorer taxpayers if the matrimonial home is delivered unencumbered to a litigant. The third solution is to limit the charge to the costs of the property dispute. The one I recommended to my noble and learned friend on the Woolsack when I wrote to him about this was to give the Law Society a discretion provided one gave the Law Society guidelines such as the interests of children, or weighing the interests of the litigant against those of the general taxpayer.
However, there is a fifth possibility, and that is the one which is proposed in this amendment: it is to give the court an unlimited discretion. The difficulty about that, as I see it, is that the Law Society already has the discretion to postpone or to transfer to another home. It seems to me awkward to have the discretion exercised by two different bodies. The one thing which is certain is that here is an injustice and a social wrong which is clamant for redress. I therefore put my name to this amendment failing any better solution offered by my noble and learned friend on the Woolsack.
Lord Mishcon: My Lords, I propose to be extremely brief in endeavouring to put the view of my noble friends on this important amendment. The case for this amendment was put most succinctly by the noble and learned Lord, Lord Denning, and, if I may say so, in somewhat graphic terms but most feelingly by the noble and learned Lord, Lord Scarman, in the case of Hanlon v. Hanlon, when he described what your Lordships are considering at this moment as,
"a poverty trap set by the legal aid legislation in the very heartland of modern matrimonial law".
If the noble and learned Lord, Lord Scarman, can say that; if the noble and learned Lord, Lord Denning, puts his weight behind an amendment of this kind and if it is supported by the noble and learned Lord, Lord Simon of Glaisdale, your Lordships will realise that you are dealing with something rather serious and something which ought to have your consideration.
I can only tell you in this brief resumé of, so far as I am concerned, the merits of this amendment that there is nothing—and I say this as a practising solicitor—so heartbreaking to a spouse at the end of what are usually themselves heartbreaking proceedings as to he told that, although the matrimonial home has been recovered, let us say for the wife, which is the more usual case, there is a charge which is going to be put upon that home in the amount of the costs involved, subject only to an allowance of £2,500, and that those costs have as their reason that they are the costs of recovery, or retention, of the property concerned.
3.30 p.m.
There is one argument that has not been put forward so far in the discussion, as I remember, and that is the only reason for my rising. It is that that argument does
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not stand up to the practice of the law, because although it is true that if any litigant endeavours to obtain or retain property he may well have to bear the costs in that connection, in matrimonial proceedings (as I am sure the noble and learned Lord the Lord Chancellor will in fairness, if he is opposing this amendment, concede) it is absolutely exceptional for the judge to award costs to one party. Always each party pays its own costs. Therefore it must be unjust for the costs of these proceedings to be levelled, because it is a legally-aided case, upon the property itself, and therefore upon the person who, as I have said, has gone through enough—usually the wife.
We have an opportunity, not of loading the legal aid fund with what may be an expenditure which is not justified because of the worth of the asset; nor are we saying in this amendment, moved so ably by the noble and learned Lord, Lord Denning, that in no circumstances should there be a loading of these costs. What is done absolutely justly is to leave it to the court to consider what is just and equitable. If your Lordships have faith in our judiciary, as I am sure the noble and learned Lord the Lord Chancellor has, what could be fairer than to leave this to the discretion of the judge, he knowing all the circumstances of the parties, the worth of the home and so on, to do that which is just and equitable? We from these Benches ask your Lordships to do what is just and equitable in relation to this amendment.
Lord Lloyd of Kilgerran: My Lords, it is with the greatest diffidence that I dare to intervene on this occasion, but when I hear the noble and learned Lord, Lord Simon of Glaisdale, speaking on this amendment and saying that here is a social wrong clamouring to be dealt with then this is a matter which must be dealt with by your Lordships with the greatest interest and attention.
The noble and learned Lord, Lord Simon of Glaisdale, disclosed to the House that he had written a letter to the noble and learned Lord who sits on the Woolsack and indicated that certain guidelines might be given to the courts in dealing with this social matter. The noble Lord, Lord Mishcon, has said that all these matters should be left to the discretion of the judge. I shall not in any way speak about the discretion of judges, but I should have thought that it might help the judiciary on this social matter to have some guidelines. I should like to hear the noble and learned Lord, Lord Simon of Glaisdale, tell us what guidelines he has suggested to the noble and learned Lord the Lord Chancellor on this important matter.
Lord Meston: My Lords, in practice I come across the legal aid charge in matrimonial litigation almost daily. I understand the sentiments of this amendment, but I do not find it easy to support it in its present form. There are cases in which the cake is small enough even if the parties remain married. It becomes almost impossibly small when they become divorced, even before they start running up the costs of litigation. The impact of typical costs of, let us say, £2,000 becomes an almost intolerable burden. Indeed, the system under which the legal charge is presently operated does not always allow the court to perform its basic task of meeting the fundamental need of the

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family for accommodation after the breakdown of the marriage.
Having said that, one must face several facts which lead me to suggest that this amendment in its present form is perhaps aimed at the wrong target, or targets. When secured against the matrimonial home the charge is already subject to postponement, which can be an indefinite postponement and is always free of interest. Therefore, matrimonial litigants are already in a better position than other legally-aided litigants. To allow the removal of the charge altogether would put matrimonial litigants in a better position still. To allow abatement of the amount secured would be to remove an important sanction—a sanction which presently encourages settlement of matrimonial litigation without the costs thereof.
There are still more matrimonial litigants who get or give the impression that they are in effect driving around in a taxi with the meter covered up, and they have to be reminded from time to time that the meter, although covered up, is still working. With due respect to the noble Lord, Lord Mishcon, it is important that they are reminded of that at the beginning of the litigation rather than at the end. To allow a discretionary abatement in the present form would be to introduce yet another uncertain factor into an area of matrimonial financial law in which Parliament has already imposed a great number of wide discretionary factors on the courts, making it very difficult for those who have to advise litigants.
One other feature of this amendment which leads me to suggest that it is directed at the wrong target is that it is limited to the matrimonial home. The real anomalies and hardships of the present system arise because although the charge is postponed (indefinitely if necessary) when it is imposed upon the matrimonial home if that is recovered in the form of bricks and mortar, it operates automatically and immediately if the spouse concerned recovers cash rather than property, although that cash may all be needed for a substitute home. The other anomaly arises if, having recovered a home as such, the spouse then wants to sell it and buy a substitute home and finds that he or she cannot do so because, subject to the discretion of the Law Society, a charge may operate.
Those are the restrictions which create false economies from the point of view of the taxpayer, who is one of the interested parties in this sort of litigation, because they can inhibit people from selling up their homes, which may lead them to having to remain there although the mortgage on that property is being paid wholly or in part by the Department of Health and Social Security. Alternatively, it can force them into the public housing sector. As I know all too well as a lawyer, it also encourages devices to avoid the impact of the charge.
This therefore leads me to suggest that this amendment in its present form will not help. But I thoroughly understand its spirit and echo the words of the noble and learned Lord, Lord Denning, that something must be done.
The Lord Chancellor: My Lords, I shall try to deal with what I fear is a rather more complex question than the three first speakers would lead us to suppose,
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but I am greatly helped in his practical knowledge of the subject by the speech that has just fallen from the noble Lord, Lord Meston, who seems to be very near the truth of the matter. I said, I think on Second Reading but possibly at another stage, that I have no authority from my colleagues to use this Bill as a vehicle for unlimited and open-ended commitments on the public purse. I must reiterate that.
It is very important for the purpose of the administration of the legal aid scheme—and I am deliberately approaching the thing from the opposite end from the noble Lord, Lord Meston—that two principles should be borne clearly in mind. The legal aid bill to the taxpayer is one of the most—indeed, I think actually the most—rapidly increasing calls upon the public purse. That is not the fault of the Law Society, nor of the Lord Chancellor nor perhaps even of the litigants—because I have to consider both the criminal legal aid scheme, in which many of those legally aided do not want to be there anyway and the civil legal aid scheme, many of whose users are involved in matrimonial disputes, although most probably are not. But it is absolutely vital from the point of view of the administration of the scheme that no one issue should be viewed in isolation from the others, and it is vital to bear in mind that this is one of the demand-led subjects of public expenditure which can only be satisfied wholly at the expense either of other demand-led subjects of expenditure, or, alternatively, of one of the cash-limited subjects of expenditure.
It really is vital that those responsible (and the Minister responsible, such as he is, is myself) for legal aid, whether civil or criminal, should be entitled to retain a certain degree of priority which can only be done if one subject is not taken out and disposed of irrespective of the other priorities. Otherwise, a number of disagreeable alternatives would inevitably face the House or, rather Parliament—because I suppose that, in matters of public expenditure the other place is of primary importance—one of which would be to fail to extend the financial limits available and another of which might be to fail to extend the range of services which could be covered by legal aid at all. This one subject, which cannot fail to affect very significantly the total expenditure on legal aid, is something which should be approached with at least caution from the top as with the practical considerations which the noble Lord, Lord Meston, has quite rightly brought to our attention. That is the first thing that I want to say.
Secondly, my noble and learned friend Lord Denning quite rightly referred to the thirty-fourth report of the Legal Aid Advisory Committee. He summarised what they said, but I should like to read out the actual words. Last year—and I am reading from the 1983–84 edition—they said:
"Both we and the Law Society considered at some length the operation of the statutory charge in matrimonial proceedings".
That is the very statutory charge which is the subject matter of this amendment. They go on:
"Since then, the society has circulated a consultation paper to a number of organisations seeking views as to possible changes in the regulations".
My noble and learned friend was a little contemptuous of the Law Society in making fun of a consultation paper issued by the Law Society on the very subject

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matter of his amendment. This year, next year, sometime, never, he said with great contempt. But really the Law Society and the Legal Aid Advisory Committee surely are entitled to a little more courtesy than that.
3.45 p.m.
The report goes on:
"Once the society has assimilated the results of its consultation exercise and produced firm proposals we shall consider the matter again".
This is not the Law Society but the Legal Aid Advisory Committee, which is precisely my constitutional adviser, as to priorities in the expenditure of public money. To make fun of that and to ask when we shall expect action—and "Never at all!" was the clear implication—is, I think, disrespectful not only of the Law Society itself but also of the Legal Aid Advisory Committee which is the constitutional adviser of the Government in such matters; and to whose advice, of course, we would give the very greatest possible attention without necessarily being bound to it.
I come now to the merits of the matter. My noble and learned friend Lord Denning quite rightly started by considering the philosophy of what is called the statutory charge which is at the heart of our legal aid system and has been so from its start in 1949. I should like to add, respectfully, something about the philosophy of that charge. The legal aid scheme—and I am talking now only about civil legal aid—is not designed to provide a free service like the National Health Service or public education. It is designed in adversarial proceedings primarily to put a person without means in as good a position as an unassisted client paying his solicitor and counsel will be put into. That is the object of the scheme. It is therefore vital that the House should be aware of where the unassisted litigant would be in adversarial proceedings whether matrimonial or other.
The answer is this. Every plaintiff, or other claimant in civil proceedings, has to ask himself the question, at every stage of the proceedings, from their issue to the very end—unless he fights it to a judgment, which is the exception and not the rule, happily for our courts and happily for everyone else—whether the game is worth the candle, whether the costs will come to something more than the stake; and the stake as viewed not in the light of hindsight but in the light of prospective chances as to what he predicts (with the degree of uncertainty which, alas, accompanies all litigations) the litigation will cost. And when he does so, he is—I was about to say, "brought to his senses", but this would be something which I hope he has never lost—brought into confrontation with reality by the knowledge that his solicitor has a lien on the yield of anything that he may recover in the litigation.
So in the case of the unassisted litigant there is a first charge upon the proceeds of the litigation in favour of his own solicitor. This he must take into account at every stage of the case. The object of the legal aid scheme, as it exists, is to put the assisted litigant (who does not have to pay whereas the taxpayer does) in the same position as the unassisted litigant. Therefore, from the very first the legal aid scheme has provided for a statutory charge (which is what we are talking
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about) not in favour of the individual solicitor, because he is paid out of legal aid fund, but in favour of the legal aid fund itself.
That means that, like the unassisted litigant, the assisted litigant must pause before he presses on with his proceedings at any stage to ask himself how far the game is worth the candle. I use that popular language without any kind of pejorative implication for the assisted litigant. He must ask himself that question and he is forced to do so by the fact of the statutory charge. It is quite true, of course, that matrimonial proceedings are not quite the same as, let us say, a personal injury case arising out of a motor accident, which would be another typical type of civil litigation.
May I say—perhaps I should have made this point earlier—that of course the incentive in both cases ought to be to settle on reasonable terms. But that is something which shows part of the difference between the matrimonial case and the ordinary civil case. I think it is more, and not less, important in a matrimonial case to encourage the parties to settle on amicable terms. Indeed, when we were discussing a very different Bill last Session this was a point which was made very forcefully from every side of the House, and I think it is a sentiment which all of us who have practised would have very strongly in mind.
Therefore the statutory charge has an important, indeed an indispensable, part to play in matrimonial proceedings no less than in other adversarial proceedings, especially as—and here I say this sadly because I have been there myself personally as well as professionally—the parties to matrimonial proceedings are not unknown to each other and are very often at loggerheads with one another, embittered by the very cause out of which the matrimonial proceedings arise. So we must not approach the statutory charge in relation to matrimonial proceedings totally with starry eyes.
The fact is that the courts, the law and the profession already take account of the special nature of matrimonial proceedings. Existing legal aid arrangements take account of the possible hardship which can arise from them in relation to the matrimonial home in particular, by exempting the first £2,500 worth of property recovered—and of course it is not only the matrimonial home, but other types of property, which are involved—or preserved by an assisted person from the scope of a legal aid charge altogether; and that is a sum which can be viewed in relation to the capital limits in the limits for eligibility.
Moreover—and I think I am right in saying that the noble Lord, Lord Meston, for the first time adverted to this in the course of this discussion—where the property concerned is the former matrimonial home, enforcement of the charge may, as matters stand, be postponed in appropriate circumstances until its first sale to avoid undue difficulty and hardship being caused to the assisted person and—and these are most important and not necessarily taken account of in the amendment—the children of the family. In certain conditions such a postponed charge may even be transferred to a substituted property after sale for the same reasons and of course to the proceeds of the sale, which may be one of the options open to the court, as I think the noble Lord, Lord Meston, also pointed out.

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I should have thought that to ask the court, without any guidelines or guidance—and here I am grateful to the noble Lord, Lord Lloyd of Kilgerran, for bringing our attention to the question—from the Government (who are, after all, the paymasters in the name of the taxpayer, and are using taxpayers' money) as to what the other priority charges on the legal aid fund may be, to decide simply as between the parties in a matrimonial case how far it is just and equitable for the charge to bite, in the light of the case, is to ask it to achieve the impossible. I was immensely impressed with what the noble Lord, Lord Meston, said on that very topic. There are many exceptions, and we shall be coming to one or two of them in the course of this afternoon's discussion, but it is not in the main for the judges to decide how to spend public money, and to decide it when they have before them only the rights and needs of two parties bitterly opposed to one another, at any rate in a minority of cases, and not to have to consider the whole scene in the light of the social priorities of the legal aid scheme itself.
I am not by any means saying that there is not something to be discussed here. I make no reproach to anyone; on the contrary, I think that the House is indebted to every noble Lord and every noble and learned Lord who has played a part in this debate. But at the end of the day I am bound to say that I come down on the side of the noble Lord, Lord Meston, in saying that the target aimed at is not the right one, that the method adopted is not appropriate and that the House would be better to take the advice of the constitutional body, the Legal Aid Advisory Committee, and wait for their firm proposals when they come out. Although this will involve a certain amount of delay, the House should take comfort from the fact that it is simply not correct to say that nothing has been done. What has been done is to differentiate the matrimonial case from the others and not to put hopes on this particular amendment which, as I say, is not well thought out and has not on the whole been justified on grounds which I feel are convincing.
My noble and learned friend Lord Simon of Glaisdale, whose experience in this particular branch of the law is I shall not say quite unrivalled, but almost unrivalled, and who was for many years President of the Family Division, quite rightly said that he had put his name to the amendment in the hope of getting something done. I am not in a position to make promises; otherwise I would make them. I have taken on board the urgency expressed by those who have spoken, who are perhaps better entitled than Ito speak because although for many years I practised in family law, it was under a dispensation prior to the 1969 Act. The fact of the matter is that those who have spoken have more recent and deeper experience than I, but I would respectfully say to my noble and learned friend Lord Simon of Glaisdale that I have taken full account of what has been said.
I hope that I should never be unsympathetic towards those who are involved in family breakdown, but I must say that there are two sets of people who, whoever else may be involved in family breakdown, are not responsible for it. One is the other postulants to having a share of legal aid, whose rights ought to be considered in this connection with the other ones, and
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the second is the taxpayer, who has nothing whatsoever to do with the dispute. Having said that, I would have no reproach for my noble and learned friend for having aired the matter, but I suggest that the noble Lord, Lord Meston, came to the right conclusion.
Lord Denning: My Lords, the problems have been with us since 1980. Five years ago, in March 1980, they were pointed out in the Hanlon case. The possible solutions have been with us since March 1980. My noble and learned friend Lord Simon of Glaisdale has gone through them. So we have the problems and we have the possible solutions. But over those five years we have not had any solution at all, and the solution which we now have offers further consultations with 15 representative bodies, with the hope of reporting at the end of the year and, after that, reporting to the Lord Chancellor, who will then have to consider it.
That is why I have put down this amendment—to get something done. The solution which I have suggested seems to me the one way to cut out all this cackle and delay. Let the judge decide it; he can take the interests of the charge or the Government in hand and he can take everybody's interest in hand. That is why I suggested this solution of getting rid of all this talk and getting something done. But there it is.
I know that my noble and learned friend the Lord Chancellor has strong forces behind him and I do not think it is any good my taking the matter further here today. However, I hope as a result of this discussion, and these matters having been brought into public debate, that some urgency will be introduced into the subject which I think was said to be urgent in this House judicially five years ago. A month ago, a Lord Justice of Appeal repeated that it was still urgent. So I hope that the urgency will have impressed itself upon all those who are responsible for legislation.
4 p.m.
Lord Shinwell: My Lords, may a layman knowing nothing of the subject be permitted to ask a question? I have been listening to some wonderful speeches; but may I ask a simple question? If a matter is left to the discretion of the judge or judges, will it not be subject immediately to an appeal on either legal or moral grounds and therefore with no validity at all, unless it has the statutory legal validity provided by legislation?
Lord Denning: My Lords, in answer to that question. I agree that it is difficult to have guidelines for judges and it will take years to work out what the guidelines are. No, my Lords, leave it to the judges. There may be an appeal, but you can trust our Family Division judges. Do not worry about the Court of Appeal.
The Lord Chancellor: My Lords, I do not think my noble and learned friend indicated whether he was pressing the amendment and wanted me to put the Question, or wanted to withdraw it.
Lord Denning: My Lords, in the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Denning Lord Denning moved Amendment No. 37:
After Clause 41, insert the following new clause:
(" . In section 13 of the Legal Aid Act 1974 subsection (3) shall be omitted.").
The noble and learned Lord said: My Lords, I am afraid that I am on the same tack again. Here, five years ago, the judges suggested that the law was unjust and ought to be amended. Again, nothing whatever has been done about it, so I am on the same tack. Again, it has to do with legal aid, which to many people is a most important subject. Let me tell your Lordships what this is about and illustrate it by a case which came before us.
A lady in hospital in Birmingham—quite a poor lady—had a baby who was born deformed and she complained that it was all the fault of the surgeon. He was a first-class surgeon at Birmingham, but she said that he pulled too hard and too long, with the result that the baby's brain was said to be hurt. That case had to be contested through the courts right up to the House of Lords and it was held that the surgeon and the hospital authorities were not to blame. But there was all that expense running into £500,000 in legal costs, with great experts on each side.
What was to be done about the legal costs? Of course, the lady had legal aid. She could not pay anything and she did not get anything. But what about the Medical Defence Union or the hospital authorities? The costs in the Court of Appeal and in the House of Lords were ordered to be paid by the legal aid fund, which subsidised and financed this litigation, because there is a provision in the statute that the court can do what is "just and equitable".
What is to be done about the costs when the case is tried by the judge of first instance? The Legal Aid Act of 1974 stated that at first instance the position is different. If the case is brought by a legally aided person, he himself does not have to pay any costs but he gets them. What it stated was that if the case is brought by an unassisted person against a legally aided person and the unassisted person wins his case, he cannot get any costs at all against the legal aid fund, although he has been put to enormous expense.
I now go back to the report of the Legal Aid Committee in 1974 which stated:
"There is no logical justification for a distinction to be applied between cases tried at first instance and those on appeal. We, therefore, recommend that the same test be applied in all cases".
In 1983, the committee stated:
"We maintain our support for the proposal that there should be no different test between courts of first instance and higher courts. We see no distinction between them".
The statute has made the distinction.
I now want to deal with a case which goes back to 1979 and to what the judges said they thought about it. In that case, two coal miners had become television entertainers. They had been on "Opportunity Knocks" and they did jolly well out of it. They employed a manager or a managerial company to run their affairs and then an iniquitous transaction, as the judge called it, was forced upon these two miners. They were to get only £10 a week each. The profits were to go to the managers and there was a five-year contract. The miners won their case and they had the transaction set aside.
This is what Lord Justice Browne-Wilkinson said:
"In reality they had no option but to sue to get rid of those iniquitous transactions. Yet at the end of the day they are without the fruits of their success and burdened with a bill of many thousands of pounds as the price of their freedom. I express the hope that Parliament may look again generally at the case for giving an unsuccessful plaintiff wider rights to be paid his costs out of the legal aid fund".
In 1979, the judges asked Parliament to look again at the matter; but it has not looked at it at all since then. That was concurred in by Lord Justice Buckley.
Then in my own court in 1981 we had a case where a small trader with a photographic business sold it to another man for £5,000 down and £15,000 payable by £1,000 every quarter, or something like that. The trader received his initial payment of £5,000, but the defendant did not pay the rest of the instalments. When the trader sued for them, the other man said:
"This is all fraud. The takings of the business were not properly stated".
He resisted the claim with a charge of fraud. It was a cock-and-bull story and the judges said so when the case went before them. That man was putting up the charge of fraud simply as an excuse to get out of paying for the business. The case had to go to a court of law.
Of course, the plaintiff won his case, because it was a cock-and-bull story, as the judge found; yet he had to pay, I think, £8,000 costs. The defence had been aided all the time by the legal aid people; the case would not have been defended otherwise. The judge said:
"Mr. and Mrs. Theu will no doubt ascribe the disastrous consequences of their successful litigation to what in modem jargon might well be described as the 'unacceptable face of British justice' ".
Those were cases where the plaintiffs were unassisted, the defendant had legal aid and fought them, and the plaintiffs had to pay all the costs without getting a penny. But I am going to add further to that. There are not only those statements by the judges; there also is the 33rd annual report of the committee which, in November 1983, stated:
"We continue to support broadening the provisions of the Act to permit unsuccessful plaintiffs to receive costs from the fund".
So there we have not only the judges, but also the Legal Aid Committee itself. Why has not that injustice been remedied before in Parliament—the injustice of a plaintiff who is not aided suing one who receives legal aid?
But there is the reverse, much more frequent, position where a man with no money gets legal aid and sues a defendant who may be anyone; he may be a legal executive. A typical case was that of Mr. Kelly. I described it earlier and so I shall be very brief in dealing with it now. He was working for the London Transport Executive and he suffered a little cut to his head. He was not off work. He went on working for six months and then he became unemployed. Two or three years afterwards he went to his solicitors and told them a most plausible story, as some of these litigants do. He told them that he had had depression ever since the accident and that it was all due to the cut on the head he received when he was with the London Transport Executive. He got legal aid. The London Transport Executive felt that it would cost far more to fight as he was legally aided and so they offered him about £700. He would not take that. Nearer the trial they offered £4,000, but he would not take it. The case

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came before the judge and the judge said that Mr. Kelly was a chronic alcoholic. It was another cock-and-bull story and if he had been left on his own, he would never have brought the proceedings at all. His depression was all due to his chronic alcoholism.
The case came before the court over which I presided. The London Transport Executive said that they had been put to £8,000 in costs in fighting this man's claim, and that it was brought because of the legal aid fund. They said, "Can't we get some costs out of the legal aid fund because it is really they who are responsible for all this expense?" Although I was on the case I am afraid that I had to give way to the statute. The statute says that the defendant in a case such as that can get costs from the legal aid fund only if he suffers "severe financial hardship". The London Transport Executive were already about £8 million in the red and for them another £8,000 did not seem to be financial hardship. I am afraid I had to accede to that argument. I did not like doing it; but there we are.
What if that case had been before the Court of Appeal? As I have told your Lordships, the Court of Appeal can do whatever is just and equitable. Had we been able to do that, your Lordships can imagine what would have been the outcome in that case. The 33rd report of the Legal Aid Committee said:
"It is tempting to move forthwith to recompense out of the legal aid fund for the unsuccessful individual in all cases"—
the same as the Court of Appeal—
"but it would be reckless to do so without counting the cost".
Injustice is to be done because of the cost to the legal aid fund. I do not like that way of saving costs; I do not like that way of saving money; but there it is. They put it off:
"Your Lordships' officials should be asked to provide a realistic estimate of the cost to the legal aid fund".
There it is; again put off, with calls for estimates of the cost and so forth. How much longer are we to go on with this?
4.15 p.m.
These are combined amendments. One concerns the unassisted plaintiff who sues the legally aided defendant. I have the recommendation of the Legal Aid Committee in my favour. I hope that the noble and learned Lord the Lord Chancellor will accept that at least the unassisted plaintiff as against the legally aided defendant should get his costs out of the fund. On the other one, I know that the legal aid fund has put it off, but I should like the same in the Court of Appeal and at first instance—whatever is just and equitable. I know it will be said, "What about these guidelines?" I think judges can do what is just and equitable without bothering about guidelines. I trust the judges. My Lords, I beg to move both these amendments.
The Lord Chancellor: My Lords, the Question is that Amendment No. 37 be agreed to? But in spite of what my noble and learned friend has just said, I must tell him from the Woolsack that if he carries this amendment, he cannot propose the next one.
Lord Denning: My Lords, I am much stronger on the next amendment I think because the Legal Aid
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Committee has put this one off. In other words, if that is the fit and proper ruling, I shall rely on my next amendment because I am on unassailable ground there.
Lord Simon of Glaisdale: My Lords, I do not know whether my noble and learned friend has put the Question.
Noble Lords: Yes, he has.
Lord Simon of Glaisdale: My Lords, I confess I put my name to this amendment in error. My noble and learned friend Lord Denning was ill; I wanted Amendment No. 38 discussed and so I put my name to it. But the umbrella seems to have gone over amendments Nos. 37 and 38. As my noble and learned friend on the Woolsack has said, we are dealing as much with Amendment No. 38 as with Amendment No. 37.
When I used to be responsible to an extent for the administration of the legal aid scheme what seemed to me most unjust was the requirement that a defendant who was defending an action funded by the public should show at first instance severe financial hardship before he could get costs out of the legal aid scheme. As my noble and learned friend has said, that is not the test on appeal; but one asks, if the public funds an action which causes hardship, why should not the public meet that hardship? Why should there be the requirement of severe financial hardship?
My noble and learned friend on the Woolsack will no doubt say that this would cost money and that he promised that the Bill will not involve any burden on public funds. I have considerable sympathy for my noble and learned friend on that point because once one has been a Treasury Minister one bears the mark of Cain on one's forehead throughout life. But I think that my noble and learned friend on the Woolsack should tell us how much this minor meeting of a major injustice would cost.
I also suggest that your Lordships cannot be absolutely bound by any assurance that the noble and learned Lord the Lord Chancellor may have given to his colleagues.
Naturally, your Lordships will want to take account of that not only because of the affection in which your Lordships hold the noble and learned Lord the Lord Chancellor, but also because we would not want to jeopardise his chance of getting a useful measure of law reform such as this in a subsequent Session. Nevertheless, your Lordships cannot be absolutely precluded by what has been said between my noble and learned friend the Lord Chancellor and his colleagues. Your Lordships are a House of Parliament, and when a grievance is brought to your Lordships' attention your Lordships are not only entitled but, indeed, bound to rectify it.
The Lord Chancellor: My Lords, speaking now not from the Woolsack but from my theoretical place in the House provided by statute of Henry VIII, and therefore making no pretence of being impartial, perhaps I had better begin by explaining what these two amendments are about. The purpose of Amendment No. 37 is to remove the whole of Section 13(3) of the Legal Aid Act 1974. Amendment

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No. 38, which has not yet been moved, would remove subsection (3)(a). The reason why I said that I could not call the second amendment were the first to be carried is that one cannot remove paragraph (a) from a subsection that no longer exists. I thought it right to draw the attention of my noble and learned friend to this simple piece of logic.
Coming down to the meat of the matter, again we have to think of the underlying purposes of legal aid in the light of what I said, and will not repeat in detail, about the constraints on the administration, which are that it is demand-led, and anything which is increased in the way of expenditure in one direction would have to be met out of the provision for other demands for legal aid from those who may be in greater need. Therefore, an absolute principle must be one of priority. This fact was recognised by the advisory committee in the report to which my noble and learned friend who proposed this amendment referred, but to which he did not appear to have given his own attention.
Let us consider how the matter would have worked if there had been no legal aid scheme. There has always been an injustice, and an injustice on both sides, where a relatively impoverished man or woman sues a relatively wealthy corporation or person. The relatively impoverished person may not have the means to take his case to court. On the other hand, the relatively wealthy person knows that if he brings a case against an improverished man, then he will not be able to get anything at the end of the day for the simple reason that one cannot get blood from a stone. The state does not guarantee either the solvency or the honesty of potential defendants.
Secondly, if that position is reversed, the relatively wealthy defendant, sued by a relatively impoverished plaintiff, may find it more profitable to settle an unjustified claim than he would to fight it all the way to extinction for exactly the same reason but with the roles reversed.
With the legal aid scheme, ever since 1949 Parliament has decided to assist the impoverished person. This means that he suffers no injustice if he is completely exempt from paying the costs: the relatively richer party suffers all the injustice, if there is any and if he wins. If he loses, the of course he suffers no injustice at all.
The legal aid scheme provides that there be two tests before a plaintiff can start an action. One test is a test of means. He can of course start an action if he starts it at his own expense, but before he can invoke legal aid he must justify, both on capital and on income, the means requirement. The other test is one of merits. The test of merits, which I adumbrated in reply to the previous amendment, is that the person will not receive legal aid unless a group of legal practitioners—barristers and solicitors—decide that an unassisted client would be advised either to proceed or defend as the case may be.
That group of committees, which forms a network over the entire country, is intended both to defend the public purse and to defend the unassisted party. Until 1964, I think it was, the unassisted party was not saved at all from the potential injustice of his winning a case,
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either as plaintiff or as defendant, to which the state had contributed the means to his unsuccessful opponent. In both this amendment and that which succeeds it, we are therefore debating what we are to do about successful but unassisted parties.
It has long been a hobby-horse (if he will forgive my describing it as such) of my noble and learned friend that if the state subsidises the unsuccessful party then it ought to pay the costs of the successful party. With great respect, I do not wholly go along with him in that, and I never have. Certainly I do not go along with the proposition he made, first, that a successful plaintiff is in the same position as a successful defendant; secondly, that the costs of the appellate proceedings are on exactly the same footing as the costs of first instance.
When legal aid committees decide whether to give or withhold legal aid on the merits test, they only have the potential client's—the applicant's—word for it as to what really happened. They have not seen the other side of the case. They are in no better and in no worse position to advise the potential litigant than an ordinary solicitor or barrister would be if an ordinary unassisted client came to him.
But when a case comes to appeal, the cards are face up on the table. If the assisted party then, at the expense of the state and on the advice of the legal aid committee, proceeds to appeal for any reason, or to resist an appeal for any other reason, then he knows what he is in for. It is legitimate in most cases for the legal aid fund to be made to bear the burden if he is not successful. It is right, once the cards are played face upwards, for the legal aid fund to take the responsibility, if they choose, to go to appeal or to resist an appeal. They know what they are in for and they are not in the position of the court of first instance.
Nor, with respect, do I accept the view that a plaintiff is in the same position as a defendant. A plaintiff chooses to bring his proceedings, whether he is assisted or unassisted. The defendant is brought to court whether he likes it or not—unless he wants judgment to be given against him by default. It was decided in 1964—and, broadly speaking, this is the current position—that the state comes to the aid in certain circumstances (and gives to the court a discretion thereby) of the successful appellant or respondent on appellate proceedings.
4.30 p.m.
It comes to the aid of a successful defendant in first instance proceedings—but only, of course, a defendant; in other words, quoting the subsection 3 which my noble and learned friend desires to omit,
"the proceedings in the court of first instance were instituted by the party receiving legal aid; and
(b) the court is satisfied that the unassisted party will suffer severe financial hardship unless the order is made".
In my submission, it is quite clear from what I have already said that the amendment now under discussion is not acceptable because it would remove both of the safeguards for the Legal Aid Fund that stand in the way of a successful litigant in a court of first instance. I think I have said that sufficiently plainly to make it clear that successful defendants are in a stronger moral position than successful plaintiffs,

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and that the successful party in appellate proceedings is in a stronger moral position than it would have been at first instance.
So far, so good. However, the amendment proposes that both safeguards should be removed. On that, I think I should draw attention to what the Legal Aid Advisory Committee said in its 1982–83 report. It would be difficult to quote a great deal, but I shall quote two short passages. Paragraph 226 states:
"Whatever the supervision exercised by the Law Society's committees through the merits test and the control of cases as they progress, there will always be some cases when the legally aided litigant loses. That is inevitable, given the lack of perfect foresight. If legal aid had a 100 per cent. success rate, it would be likely that there were people being refused legal aid who had a good case.
"That said, it has to be recognised that people who defend or assert their rights by means of civil litigation are put to considerable trouble and expense. The general principle of the courts is that, if successful, litigants are recompensed through the operation of the costs system. In legal aid cases, however, the cost rules are much more restrictive. It is to this feature of the legal aid scheme that we now turn".
At paragraph 235 the report states:
"We conclude that the present legal aid costs restrictions can lead to injustice or hardship when people of moderate means who pay for their cases themselves and win against legally aided parties nevertheless find themselves having to bear all or almost all their costs.
"Furthermore, this injustice or hardship is a consequence of the legal aid system which was designed to give citizens equal opportunity before the law; it is primarily therefore one for the Legal Aid Fund to put right".
The point to which I must come is in paragraph 236:
"But the resources available for legal aid are limited and must be used to best advantage. As remarked at the outset of this review, money should not be spent unnecessarily on the costs of successful parties while there is greater unmet need elsewhere".
That, in much more succinct language, is what I said in reply to the earlier amendment. It is a matter of priorities. I continue quoting:
"As since noted, it is not at all clear from the data available what the level of the injustice or hardship is. Turning from analysis to recommendation, therefore, we are obliged to proceed with caution. The rightful disposition of the financial liabilities, where injustice or hardship is admitted, is clear enough. The Legal Aid Fund should itself bear the primary responsibility for meeting the costs of successful unassisted parties where it is deemed appropriate for these to be paid by the losing side. The Fund's right and ability then to recover from the unsuccessful legally aided party any part of sums paid under an award of costs should be a distinct and separate operation … The questions uncertain of answer are:

(i) when should it be appropriate for a successful unassisted party to receive payment for costs out of the Fund; and

(ii) how should this decision, and the amount of payment, be determined".

In my submission, it is clear that it would be altogether wrong to allow this Amendment, No. 37. The remaining amendment, which I will deal with when it is moved, deals with the question of successful unassisted defendants. At the moment we are dealing with both classes and I hope I have made it clear that this amendment is unsatisfactory in that it provides no sense of priorities; it tries to deal with an admitted problem out of context with all the others and all the questions of priorities; and it makes no distinction between appellate proceedings and first instance proceedings and proceedings begun by the assisted litigant and proceedings defended by the assisted litigant. I reserve what I have to say on the other point until the next amendment is moved.
Lord Denning: My Lords, I keep myself to the first part of my amendment; namely, that part dealing with unassisted defendants who have been sued by a plaintiff who is legally aided. The committee to which my noble and learned friend referred said there was to be no difference in principle between courts of first instance and courts of appeal. My noble and learned friend is rejecting that advice. He says that there is all the difference in the world. The next question of whether a successful defendant against a legally aided plaintiff has to prove severe financial hardship comes down to this. Justice should require that the plaintiff who is legally aided should pay the cost of the defendant. On the other hand, it does mean a cost to the Legal Aid Fund and a cost to the Exchequer. Indeed, the Legal Aid Advisory Committee said it could not make such a recommendation without counting the cost. Therefore, it is a case whether injustice is to continue because the cost of doing justice is too much. I do not accept that argument but, on the other hand, in view of the general discussion on this Amendment No. 37, I do not press it.
Amendment, by leave, withdrawn.
Lord Denning Lord Denning moved Amendment No. 38:
After clause 41, insert the following new clause:
(" . In section 13 of the Legal Aid Act 1974 paragraph (a) of subsection (3) shall be omitted.").
The noble and learned Lord said: My Lords, I have spoken to this amendment. There is a much stronger case here. I have quoted the judges from 1974 and 1982 saying that when an unassisted plaintiff sues a defendant who is legally aided and wins, and the legally aided defendant has wrongfully resisted the claim, in those circumstances the unassisted plaintiff should receive costs from the Legal Aid Fund. That is endorsed by the Legal Aid Advisory Committee advising my noble and learned friend. Accordingly, I should like to know whether or not he is going to go by the advice of his own committee. I beg to move.
Lord Simon of Glaisdale: My Lords, I would say only this. As I made apparent on the last amendment, the paragraph I should most like to leave out would be (b), not (a). My noble and learned friend on the Woolsack dealt with (b). However, he did not say how much it would cost to put that right. In other words, when public funds promote an action which causes hardship, why should it be incumbent on the defendant not only to show hardship but to show exceptional hardship?
The Lord Chancellor: My Lords, the last question of my noble and learned friend Lord Simon of Glaisdale is somewhat bizarre. Having decided that we were not going to omit subsection (3) altogether, my noble and learned friend Lord Denning says, "Well, let us at least leave out paragraph (a)". My noble and learned friend Lord Simon of Glaisdale then said that he should far prefer to leave out paragraph (b), though the amendment proposes to leave out paragraph (a), and then he went on to ask me how much the omission of paragraph (b) would cost.
Lord Simon of Glaisdale: My Lords, with the leave of the House, perhaps I may point out that I asked my noble and learned friend that question on the last amendment, to which it was strictly relevant.
The Lord Chancellor: My Lords, I fully accept the rebuke. I shall now give an answer—the answer which I would have given. I think it depends on this. As we are given no kind of indication of the circumstances in which a court, without guidelines, would come to award costs against the legal aid fund on the basis of what is just and equitable, I think it would be quite impossible to make an estimate of what the charge on public funds would be. It would be equally impossible for me to say—and I should have to ask myself this, were this amendment passed—what other provisions for legal aid, criminal or civil, I would have to leave out to accommodate this particular amendment. We have had the agreement of my noble and learned friend Lord Simon of Glaisdale, though not the agreement of my noble and learned friend Lord Denning, as to what to leave out. I am really being put in an unfair position.
However, with respect I would say this. The injustice, to the extent that there is one, is very much less than is generally appreciated. We spoke in the last amendment but one about matrimonial proceedings where, I must confess, the common case is when both parties are legally assisted. Therefore, it does not particularly matter from the point of view of adversarial costs which side is made to pay, unless in the exceptional case they have to pay out of their own pocket. So that does not really arise in relation to this particular amendment.
As regards ordinary adversarial litigation, a very high proportion of it is either personal injuries litigation arising out of a road accident or contract litigation arising out of a debt. I am bound to remind the House that there is such a thing as income tax and there is such a thing as compulsory insurance. In so far as personal injury litigation arising out of a road accident is concerned, it is the insurance company which pays but charges it against tax as part of its expenses. So to that extent there is not very much advantage in omitting the words "severe financial hardship" from paragraph (b). In regard to contract cases the same is of course true. A firm which brings a contract case in the course of its business sets off its costs against tax. Therefore, I think it is possible to exaggerate the degree to which injustice is caused.
The view which Parliament has taken hitherto and to which I suggest that it ought properly to adhere is that the successful unassisted defendant should be recompensed out of the legal aid fund or should be entitled to apply for recompense out of the legal aid fund if, and to the extent which, he shows severe financial hardship. It has been held judicially that that will also apply to the relatively small corporations.
4.45 p.m.
However, I do not believe that we should accommodate the successful unassisted defendant by giving him priority in the legal aid fund over, for instance, a possible extension of the financial limits which has to be made if only to meet with inflation every year, or the extension of the spread of the availability of legal aid which I am also being constantly advised by the Legal Aid Committee to allow.
These are questions of priority and they should be dealt with under the subject of legal aid. I repeat that
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they should not be dealt with out of context, one by one, in the context of an Administration of Justice Bill, so that we can consider only unassisted legally aided defendants instead of potential litigants in civil and criminal proceedings who may, as a result of passing this amendment, be deprived of legal aid.
While I would fully agree with that part of the speech of my noble and learned friend Lord Simon of Glaisdale, in support of either this or the previous amendment, in which he said nobody is bound by any assurance that the Lord Chancellor might have made to his colleagues, I think we should remember that what I have said by way of argument indicates the reason I was able to give that assurance. I think it is also true that the lower House, another place, is the real place where the expenditure of public money should be evaluated. In this particular context it should be evaluated in terms of legal aid generally and not in terms of the Administration of Justice Bill.
Incidentally, I am supporting the Legal Aid Advisory Committee in its general approach to the matter, but I am not accepting advice—which it certainly did not give and which it would be contrary to the advice to accept—that I should deal with this matter out of context of legal aid as a whole and without consideration of the other priorities upon the public purse in regard to this particular pocket.
Lord Denning: My Lords, when I sat as a judge I always sought to do justice and to remedy injustice. Now that I am retired and in your Lordships' House I will always seek to do justice and to remedy injustice. In these amendments which I have put before the House today I have sought to remedy injustice. What is the answer?—it is too expensive, if you please, to remedy injustice, the injustice must remain as it is. I do not agree with it; but there it is. It is the Government against me and I cannot win; so I withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Elwyn-Jones Lord Elwyn-Jones moved Amendment No. 39:
After Clause 41, insert the following new clause:
("Regional Legal Services Committees.
In section 15 of the Legal Aid Act 1974 after subsection (9) there shall be inserted—
"(10) The Law Society may establish Regional Legal Services Committees to encourage, stimulate and co-ordinate the availability and provision of legal services and may employ solicitors or other persons as secretaries to such committees.").
The noble and learned Lord said: My Lords, this is an amendment which could have the effect of greatly improving the provision of legal services throughout the country as a whole. It has the great benefit of being comparatively inexpensive. Most of the day we have been talking largely about money. Well, this is a modest demand. Parliament, in 1949, when it set up the legal aid service scheme, imposed upon the Law Society the responsibility of administering it. That is a responsibility which it has honourably carried out.
The Law Society has been pressing since 1977 for the setting up of regional legal services committees to co-ordinate the work of legal aid and to make improvements and proposals in regard to it. One of the first practical steps it took in this direction occurred in 1977, when the Law Society announced the formation

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of the Greater Manchester Legal Services Committee under the chairmanship of Mr. Sachs, now a judge, with, as its first secretary, Mr. Knott, who was employed by the Law Society technically on the legal aid administrative staff—in other words, payable by the public. It was an arrangement which, if I may say so, I approved at the time. Since that time, the committee has taken on a wider geographical remit and is known as the North Western Legal Services Committee.
The work of that committee has been examined first by the Legal Aid Advisory Committee, to which the noble and learned Lord the Lord Chancellor paid a tribute earlier in our discussion today and whose advice carried very great weight. It recommended that there should be regional committees to co-ordinate the development of legal sevices; solicitors, law centres, legal advice schemes, CABs, the courts, police, prisons, the probation service, etc. It has recommended that on several occasions. Then, when the Benson Royal Commission, in its turn, examined the work of the North Western Legal Services Committee, it spoke highly of the committee's value.
The Royal Commission heard witnesses not only from the Law Society and the Legal Aid Advisory Committee but also from the Legal Action Group. Its report reads:
"We consider that regional committees should be established which can speak for the public at large as well as for barristers and solicitors in private practice",
and the other bodies to which I have just referred. The Royal Commission reported that in its view the functions of the regional committees should include first,
"assessing the needs for legal and para-legal services in their regions and recommending how they should be met",
and, secondly,
"co-ordinating regional services and agencies".
It stressed that good collaboration is important because, at the end of the day,
"the provision of adequate services depends on co-operation between the legal profession and many other agencies and interests".
Indeed, one of the criticisms of the present legal aid administration is that it is perhaps too much in the hands of lawyers. This would be a way of extending the remit.
That is therefore an authoritative view from a source which was charged with examining how legal services could be improved. What followed was a recommendation that there should next be an advisory committee for the North East. That, again, was strongly supported by the Legal Aid Advisory Committee through the legal services conference. It was anticipated, if I may say so, that the funds to pay for the full-time secretary would be approved as emanating from the public purse. The Legal Aid Advisory Committee again supported and recommended that. But, alas, the answer is "No". The refusal, I am bound to say, has been a serious blow to the morale of those who have campaigned for the gradual expansion, co-ordination and development of legal services.
The National Association of Citizens' Advice Bureaux entered the fray and passed a resolution
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calling for the establishment of regional legal advice centre committees. Experience has shown the value of these committees in the provision of legal services. The cost, as I say, is minimal. Accordingly, I hope that this time, at any rate, we shall receive an assurance from the noble and learned Lord. I am sure that his goodwill exists in regard to this. It is my hope that he can now translate that into action—if he does not mind my saying so, I hope not impertinently—with an assurance that in this matter, at any rate, he will give a blessing to this modest proposal. I beg to move.
Lord Hutchinson of Lullington: My Lords, perhaps I may support this amendment and have the temerity to remind the noble and learned Lord that his constitutional adviser, the Lord Chancellor's Advisory Committee, also stated in its last report that overall responsibility for legal services must rest with central government. The committee goes out of its way to deplore once again the lack of any coherent strategy for legal services, particularly in the funding of law centres. Law centres, as the noble and learned Lord will know, are going through a very difficult time at the moment concerned once again with the question of money.
The committee has repeatedly lent its support to the formation of these committees. It underlines again the outstanding work done by the pioneer committee in Manchester, to which the noble and learned Lord, Lord Elwyn-Jones, has referred.
I understand—I do not know whether rightly—that the noble and learned Lord welcomed the idea of the Durham committee and wished it every possible success but expressed the view that he lacked any clear statutory power to make the necessary provision. In those circumstances, this amendment, supported by the noble and learned Lord's constitutional adviser, will enable him to do something that he apparently wants to do.
The Lord Chancellor: My Lords, I must say, before I discuss the merits of the proposal, that the legal aid fund is primarily there to provide legal aid and advice to assisted litigants or those seeking legal advice. The question is really whether it would be an inappropriate use of that money, which is designed to help those who are entitled to legal aid, legal advice and legal assistance, to provide this network of committees whether or not it is desirable to do so. My own provisional view is that it would be. I should, however, like to go back to the beginning. The noble and learned Lord, in proposing the amendment, was right in reminding us that in 1977, as Lord Chancellor, he gave his approval for the Law Society to appoint a solicitor employed in the legal aid administration as a liaison officer to promote and co-ordinate legal services in the legal aid area centred on Manchester. That liaison officer was to act as secretary to the Greater Manchester Legal Services Committee, which had recently been formed with the same aims as a voluntary experiment. The Lord Chancellor's department has continued to take a close interest in the work of that committee and I have permitted the continuance of the modest funding of the committee through the legal aid fund on the basis that it was a one-off experiment. In so far as the noble and learned Lord gave me credit for goodwill, which I hope I have

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towards all endeavours to do good, I think that I can claim that since 1979, which is an increasingly long period of time, I have shown that good will by at any rate not discontinuing the one-off experiment which he initiated.
5 p.m.
I am bound to say, however, that the noble Lord, Lord Hutchinson of Lullington, was correct when he said that I have never considered that I had specific statutory authority to provide for the provision of permanent support of this kind to the Greater Manchester Committee, which, as the noble and learned Lord reminded us, is now the North Western Committee, nor the establishment of any other such committees. That was one reason at least why I felt myself unable to sanction the use of legal aid funds for the similar committee in the North-East last year.
Clearly, as the noble Lord, Lord Hutchinson of Lullington, has rightly said, the purpose of this amendment is to provide that missing statutory authority; he was well entitled to say that. But there are surely other considerations to be borne in mind. The Royal Commission on Legal Services, which reported in 1979, commended the work of the Manchester Committee and recommended the establishment of regional legal services committees in other legal aid areas. In the White Paper setting out the Government response to the report, in November 1983, this Government acknowledged that the experience of the Manchester Committee suggested that such committees might have a useful role to play in some areas in bringing together those concerned with the availability and delivery of legal services; so to that extent the issue is not contested.
But I must remind the House we then added—I now quote the Government response:
"In the Government's view the value of such committees must depend on local circumstances, and the initiative for developing them in any area must rest with those who are directly involved there in the provision of legal services".
Against this background I feel that, as at present advised, this is another reason why it is not appropriate necessarily for the funding of such bodies to be provided by central Government, either through the legal aid fund, to whose purposes I have referred, or otherwise. Such gaps as there may be in the provision of legal and related services in a particular area are essentially matters of local concern, and in my judgment there should be a presumption that, at least at first instance, these needs should be met locally by and on behalf of the communities concerned.
Equally, the value of co-ordinating committees—this was the point made in the Government's response to the Royal Commission—must depend on local circumstances. The initiative for developing them in any area must rest with those who are directly involved in the provision of those services in those localities. I do not say that the efforts of the regional legal services committees are not worthwhile. I do not say that in the one case they have not proved effective—indeed, as the noble and learned Lord reminded me, I would commend the efforts of the Manchester Committee—but I do not believe they should
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necessarily thereby be held to be the responsibility of central Government.
Furthermore, as I have made abundantly clear on various amendments which have been tabled to this Bill, I do not have a licence from colleagues to increase public expenditure. It is an important part of my responsibility to Parliament to balance the many competing claims for additional expenditure from the legal services programme, which has in any event grown quite significantly in recent years; so that I feel constrained to say that I cannot agree to this amendment, and if ever I do so I must be in a position to decide my own priorities in the areas of greatest need. I hope I have not seemed wholly unappreciative of the work of these committees.
I should like to add something for the noble and learned Lord's own private consideration, though it be expressed publicly. I expect he has been concerned—certainly I have—about the nature of the Lord Chancellor's Office, which is a rather peculiar one, changing from time to time. It has even changed significantly in my own life-time, since my father held the post. It has become more and more remote from direct judicial work, which is in marked contrast to its history in the past, even as recently as 1936 to 1939. I am concerned myself, and I wonder whether the noble and learned Lord might not himself also feel concerned, that it should not divorce itself from what I have always believed to be its heartland responsibility, which is the preservation of the independence and impartiality of the administration of justice.
There have been a great number of suggestions to add to the administrative responsibilities of the office. Some of them have succeeded; others have not. If, as here, you get a totally new service, which is presented to us by this amendment, to be added to the responsibilities of the office through the means of the legal aid fund, which is not primarily designed for that purpose, I rather wonder what will become of the office in years to come. My own feeling is that advisory services are local, and I speak now not simply for the regional committees, to which this amendment is directed, but also for things like the Citizens' Advice Bureaux and the various law centres in the various localities. I have continued—again, I think I am entitled to remind the noble and learned Lord of this, as evidence of something of good will towards his work as Lord Chancellor—the seven law centres the funding of which he started when they were in deep financial trouble. I hope he will give me credit for that.
But at the same time I must tell him that I cannot myself see my way, as at present advised, to extend the services on a nation-wide basis, which I should have to do, with the aid of my noble and learned friend the Lord Advocate, throughout Great Britain and Northern Ireland. If they were to be so extended at all I should very much doubt the wisdom of placing it upon the shoulders of any Lord Chancellor's Office to administer that particular aspect of the matter. I hope I have not been too harsh, but so far as I am concerned the Government's answer is not to agree to this amendment.
Lord Elwyn-Jones: My Lords, I should like to express my gratitude for the fact that the noble and

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learned Lord the Lord Chancellor has maintained the commitment which I embarked upon (with of course no power to bind my successor) to sustain the law centres, which without that support would have foundered. The centres have given immensely valuable service in some of the worst deprived areas of London in particular, and in other areas as well. I make no apology for having initiated that, and I do not think the noble and learned Lord the Lord Chancellor apologises for continuing it.
The matters that the noble and learned Lord has characteristically raised give rise to important constitutional questions. I readily agree: the Lord Chancellor's Department has become a very high-spending department. At the moment the Commons has no control over it—not directly. I can see the moment coming. This is a danger and is a pointer to the Commons saying, "Right. It's time we took over; a nice Minister of Justice ought to take over this spending department". There could well be pressure that way.
But what is the alternative to what we have embarked upon? We decided in Parliament that the Law Society should accept the responsibility of administering the legal aid scheme. We did not thereby abdicate governmental responsibility; responsibility must lie in the Government somewhere. The question is: where? If I may say so, the present holder of that great office of Lord Chancellor has, in his term of office, extended the responsibilities by taking over criminal legal aid, and rightly. It used to be the Home Secretary's pigeon, now it is the Lord Chancellor's also. Therefore, he has been partly involved in the process, which was inescapable as I see it, of taking over more and more responsibilities for the provision of legal services. While it adds enormously to the burdens of the Lord Chancellor, I do not see that it in any way conflicts with his majestic position as the head of the judiciary with overall responsibility for the state of the law and its administration. It is a segment and a part of that. However, I shall not pretend that it has not given rise to various important and dangerous questions which perhaps we can discuss at greater length when there is not a long debate to follow this matter with about 20 speakers anxious to catch the ear of the House.
Suffice it to say that at this moment I shall not push the matter to a Division because obviously it needs further thought. I note the basically sympathetic approach of the noble and learned Lord the Lord Chancellor, but I am afraid that the difficulties that he has described must be faced; there is no escaping them. However, on that sombre note, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 42 [Remuneration for work done before making of legal aid order]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 40:
Page 32, line 17, leave out ("by a court").
The noble and learned Lord said: My Lords, with the leave of the House, I shall move Amendment No. 40 and I shall also speak to Amendment No. 42 on the Marshalled List.
Amendment No. 42: Page 32, line 21, leave out ("by the court") and insert ("to the legally assisted person").
These are drafting amendments, but it may be of assistance if I outline their background. Clause 42 enables the Lord Chancellor to make regulations prescribing the circumstances in which solicitors and counsel may be paid under a legal aid order for work done in, or in connection with, the proceedings before the application for legal aid is granted. Following the putting into effect of Section 6 of the Legal Aid Act 1982, legal aid orders can now be granted by criminal legal aid committees of the Law Society, following a review by such a committee of a refusal of legal aid by a magistrates' court. Some of your Lordships will remember the discussions which we had a year or two ago about that very subject.
The clause as drafted does not, in fact, allow for the regulations to include such orders. This amendment therefore removes reference to "a court" so that there is no limitation on regulations being made which relate to criminal legal aid committees. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 41:
Page 32, line 20, leave out ("advice or representation previously given") and insert ("representation or advice of any prescribed description previously provided").
The noble and learned Lord said: My Lords, this is a drafting amendment and it ensures that Clause 42, which inserts a new provision in the Legal Aid Act, will reflect more closely the existing language of the 1974 Act. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 42:
[Printed above.]
The noble and learned Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Foot Lord Foot moved Amendment No. 43:
After Clause 42, insert the following new clause:
("Legal Aid for proceedings for defamation
. In Part II of Schedule 1 to the Legal Aid Act 1974, paragraph 1 (which excepts proceedings wholly or partly in respect of defamation from the proceedings for which legal aid is available) shall cease to have effect.").
The noble Lord said: My Lords, I should perhaps start by explaining why it is that I am moving only at the Report stage what I hope will be regarded as a fairly important amendment. The reason I did not move it in Committee was not that I had not put it down, but the same reason as the noble and learned Lord, Lord Simon of Glaisdale, gave earlier as the reason why the noble and learned Lord, Lord Denning, had forgone his amendment at that time.
5.15 p.m.
Originally, I had intended to deal with my Amendments Nos. 43 and 44 together. I thought that such a course would save the time of the House. However, on reflection I think that it may save time if I deal with the two amendments separately. I say that because the House may observe that on the face of it I do not have any support for my first amendment, but I have very useful and helpful support for my second amendment. Both amendments are concerned with the matter of whether legal aid should be available in

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actions of defamation. I hope that I may be allowed to give the House a very brief history of this matter, which has been the subject of controversy ever since the initiation and introduction of legal aid in 1949.
When the legal aid system was instituted at that time, I well remember—and I dare say that the House will well remember—the very large and very rightful claims that were made for it, particularly by Sir Hartley Shawcross (as he then was) the Attorney-General. He claimed, quite rightly, that it was a major social reform, and he claimed that from that time onwards we should be able to glory in the fact that nobody in this country would be denied access to the courts of this country and, indeed, to the fount of justice, simply on account of lack of means.
However, from the very beginning it was decided that defamation actions should be excluded from the legal aid scheme altogether. As I understand it, the reason for that or, at any rate, the main reason was that many people had expressed the view that if legal aid were available in defamation actions there might be a flood of unmeritorious actions arising out of quite trivial circumstances. In particular, it was thought that there might be a whole series of slander actions brought in cases of the type where there is an exchange of abuse between neighbours over the garden wall. At any rate, that fear prevailed and it was decided from the outset that defamation actions should be excluded.
However, one finds that even at that time, if one goes back and reads the debates that took place on that Bill, that argument was contested, and it was contested upon three particular grounds. First, it was said that the apprehensions that there would be a flood of unmeritorious litigation were really unfounded and could very easily be safeguarded against. The second argument—and it was a formidable argument—was that if you were going to deny legal aid to the parties to defamation proceedings it would inevitably and inescapably involve grave injustice; it would deny the parties to a defamation action the very right in which Sir Hartley Shawcross gloried—that is, the right of everyone to have access to the courts, whatever the cause of the action, if his means did not permit him to pay for that action himself.
With regard to the third ground on which the exclusion of defamation from the legal aid scheme was opposed, I should like to quote the words which were used later on by the Faulks Committee on defamation. The committee said:
"It seems to us that a proper claim in defamation is at least as important to the average plaintiff as a claim in personal injuries, and should be treated in the same way under the legal aid system".
The matter went from 1949 onwards. The question of whether legal aid ought to be available in defamation proceedings has been considered by a whole series of committees and authoritative organisations. The history of the matter and the way in which it has developed has been fairly remarkable because I think I am right in saying that the various committees which have examined this matter since the 1949 Act have, in the end, been almost unanimous in their conclusion that the exclusion from legal aid of parties to defamation actions was unjust and, indeed, indefensible.
Perhaps I may refer first to a joint committee of the Council of the Law Society and the General Council of
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the Bar which met in 1967. That committee came down unanimously in favour of extending legal aid to defamation proceedings. They said that they thought the so-called risk of a flood of trivial proceedings could be very easily avoided. What they proposed was that when an applicant applied either to be a plaintiff or a defendant in a defamation action, he should be required by the legal aid committee before whom the application came to produce an opinion from counsel that his claim had merit. They went on to say that they thought that would eliminate the unmeritorious proceedings. But, as an added safeguard, they suggested that in those cases, whether the plaintiff or the defendant was the applicant for legal aid, when the pleadings in the case had been concluded the applicant should then again be required to obtain the opinion of counsel as to whether his case was still one for which it would he proper for legal aid to be given. The Joint Committee came to the firm and unanimous conclusion that, subject to those safeguards, there was no serious risk that the legal aid system would be abused.
I go on now to the Faulks Committee. The Faulks Committee was specifically concerned with the whole matter of defamation. They came to a very clear conclusion. They came to the conclusion, as they put it, that the great preponderance of the evidence which had been submitted to them supported the giving of legal aid in defamation proceedings. They expressed themselves in the clearest possible terms.
What they then recommended has more recently been supported in the Benson Report. It has been supported, as I understand, by the present Master of the Rolls. Perhaps I may add one other organisation to that. Throughout the whole of these last 35 years—or whatever it is—the proposal that legal aid should be extended to defamation has been consistently supported by the society known as Justice, of the council of which I am, quite undeservedly, the chairman. It is, of course, with the wholehearted approval of Justice that I am submitting these two amendments to the House tonight.
Perhaps the most remarkable way in which this argument developed is this. The Lord Chancellor's Advisory Committee on Legal aid, in its 19th report, which covered 1966 to 1967, then advised against any change, except in one small particular with which I do not think we are concerned. But later on, in 1974, the Lord Chancellor of the time, who was not the noble and learned Lord who now sits on the Woolsack, set up a working party to investigate the workings of the legal aid system. The working party's report in due course not only supported the Faulks Committee's recommendations but, going even further than that, said that they did not think it was necessary for the precaution of having two counsel's opinions to be taken. They thought that the legal aid committees were perfectly capable of sorting out the meritorious from the unmeritorious applications. As a result of the report of the working party, the advisory committee, in their 25th report, which was for the year 1974–75, fully endorsed the conclusion of the working party and in fact completely reversed the opinion which they had expressed some seven years earlier. That therefore is the situation as it stands today.
Perhaps I may conclude by quoting to the House the conclusion to which the Advisory Committee came in

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their 25th report. They said at paragraph 30,
"We share the Working Party's view that it is unnecessary for there to be special limitations on the grant of legal aid for defamation proceedings. Our predecessors recognised the experience of legal aid committees but, in our view, they were unduly cautious in supposing that such committees would be unable to distinguish meritorious from unmeritorious applications … Our advice is that the Working Party's view should be accepted and that legal aid should be made available, without any special conditions, for defamation … If your Lordship accepts this advice and makes the necessary regulations for this purpose under Section 7(2) of the 1974 Act, we would propose to keep the position carefully under review and to report to you immediately should it appear that any special guidance needed to be given to committees, either by way of notes from the Law Society or by an amendment of the Legal Aid (General) regulations".
I listened very carefully at an earlier stage in the debate tonight when the noble and learned Lord was expounding upon the two principles which he thought ought to guide us when anybody is proposing that legal aid should be given where it had not been given before. If I understood him aright, he said that no particular form of legal aid should be preferred to another. That is a sentiment with which I entirely agree. Of course, the fact of the matter is that if legal aid is now extended to parties engaged in defamation proceedings, they will not be being preferred to anybody else. They will at long last be brought up to the same level as every other litigant over the last 35 years.
The second matter which, as I understood it, he said should be a guiding principle was that we should pay due regard to the advisory committee which is the body which advises the Lord Chancellor upon matters of this kind. I hope that I have made it perfectly clear that ever since 1975–10 years ago—it has been the firm recommendation of the advisory committee that this ought to be put right. I ask: how long have we to wait before the recommendations of all these important and powerful bodies are put into effect? I beg to move.
5.30 p.m.
Lord Denning: My Lords, although I recognise the force of what my noble friend Lord Foot has said referring to all the committees, including Mr. Justice Faulks' committee, in favour of legal aid in defamation cases, I hope your Lordships will not accept this amendment. I have had a great deal of experience of defamation cases. It is very easy for a plaintiff to say that he has been defamed, and once he says that it would be easy for him to get legal aid because the legal aid committee could hardly refuse it because the burden in all these cases is on the defendant. The words are presumed to be false and malicious. The defendant has to prove that they are true, or whatever other defence he may have, and that can operate very harshly against defendants.
The other reason I would give is the chaotic state of our law of libel at the moment, which involves tremendous expense and would involve great expense to the legal aid fund. We have had many cases in the courts. I shall just give the one instance. At an auction in Grantham, the auctioneers, Bagshaws, put up three little pigs for sale. A man who was smart looking and very countrified bid £100 for the three little pigs. They were knocked down to him, and the name he gave was Boston of Rugeley.
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He took off the three little pigs and never paid for them. The auctioneers tried to find out who he was. They told the police, and they put advertisements in the paper for Mr. Boston of Rugeley. They never found him. Again, if you please, there was a real man, a Mr. Boston, a farmer of Rugeley, living 12 miles away. He said, "That is a libel on me", and he sued the auctioneers. "A simple case", Lord Diplock said. It took 15 days to try, with 13 separate questions put to the jury. "A tremendous waste of time and money" said Lord Diplock, and I would agree with him. The law of libel is in a chaotic state. I would suggest that defamation cases are not a fit case for legal aid to be given. Although I respect the opinions that have been given, they have been far too favourable to plaintiffs and far too hard on defendants. Although I say I respect the opinions, I would not support the amendment.
The Lord Chancellor: My Lords, we have heard two attractive speeches, one on each side. On this occasion I think it is a battle between logic and common sense, and I come down on the side of common sense on very much the same grounds as my noble and learned friend Lord Denning has just spoken about. I perfectly well agree that at first sight it looks anomalous, and in logic it must appear anomalous, to select one common law cause of action and say that it shall be outside the scope of the legal aid scheme.
But in addition to the points, to which I shall return, of my noble and learned friend Lord Denning, I point out that this is not part of the scheme as sanctioned by the Lord Chancellor, it is from the first, from 1949 onwards, embedded in the terms of the statute that it should be excluded. Therefore, it is not simply the Lord Chancellor speaking as the guardian of the public purse who says "No" to this. It is Parliament which has said "No" through successive Governments—Conservative, Labour, Conservative, Labour. None of them has thought it right to include defamation actions within the scope of the legal aid scheme. It should give one pause before one changes what has been the continuous view of Parliaments of different colours and led by different Governments over a period now of nearly 40 years.
I must say again what I said in a different connection a moment or two ago in response to another amendment, that I am personally convinced—not simply as a member of a team but personally—that if you are going to remodel the Legal Aid Act this is not the Bill to do it in. There may be minor improvements you can make to this Bill, but you have to look at the whole structure and not just at part of it out of context in the Administration of Justice Bill especially when, as a matter of fact, you are now being asked to expend a considerable sum of public money on something which Parliament has expressly prohibited Lord Chancellors from doing.
A number of distinguished bodies, catalogued by the noble Lord, Lord Foot, in his attractive speech, have taken another view. They have based themselves on logic. Most of them were composed of lawyers, or largely composed of lawyers. Well, I am bound to say, with the famous Mandy Rice-Davies, "Well, they would, wouldn't they?" To the cobbler nothing is quite so good as leather, and the legal aid scheme has been

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an immense advantage to my profession, and there is no logic in excluding defamation cases, there is only common sense.
I should like to underline the commonsensical remarks made by my noble and learned friend on the Cross-Benches. I believe that an immense flood of litigation against newspapers would inevitably ensue. I also believe that a number of totally trivial and unimportant cases would clutter up the courts between Lady Jemima Pot and Mr. Jeremiah Kettle. I fully agree that if they are able to litigate at their own expense there is, under the law as it now stands, no reason why they should not do so. But I can see every reason why they should not do it, both of them, assisted by legal aid, which is the effect of this amendment.
It is said that lawyers are very honest people, and so they are. "Lawyers can decide between the meritorious and the unmeritorious case of defamation". I wonder whether they can. What is a meritorious case of defamation? When does a case become trivial and litigatable out of one's own pocket, and when ought it to be done at the expense of the taxpayer? I do not know—and I speak quite honestly—on what basis counsel could possibly decide that, even if you had two counsel as was suggested in one of the valuable opinions we got.
I shall now go back to the second of the two points which was made by the noble and learned Lord, Lord Denning. I can only endorse what he said. I have not got anything like his experience, and certainly none of his experience on the Bench except what I have seen upstairs from here, but the law of defamation is in a chaotic state and it is most unpredictable in its results. That is quite certain.
It is all very well for the noble Lord, Lord Foot, to cite the Faulks committee. I owe the memory of Neville Faulks an apology. I promised, when I was in Opposition, to try to bring in a Private Member's Bill to implement—as the horrible word is now—the proposals of that committee. I am bound to say in humble apology to his shade that I found it quite impossible to do so.
I can only endorse what my noble and learned friend Lord Denning said. He cited the 1966 case of Boston v. Bagshaw. He will forgive me for not pursuing him very far down that road because I was the successful counsel in that case and, even when one is Lord Chancellor, one is not supposed to refer to cases in which one acted as counsel. I had a warning when he was Attorney-General from the noble and learned Lord, Lord Elwyn-Jones, many years ago, in another place, about that point of ethics. Thus I shall not pursue the 1966 case of Boston v. Bagshaw except that I think Lord Diplock in his pejorative remarks underestimated the cunning of the successful counsel in putting all 13 questions to the jury. There was one hidden among the chaff which carried a lethal bullet, which destroyed the plaintiff's case and which was unobserved among the rest of it. The jury found a verdict of £11,000 for the plaintiff; the judge entered the verdict for the defendant, the Court of Appeal upheld it.
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Let us consider two other cases in the same year, because I was not counsel in those cases. One was that of a cruel libel on a schoolmaster brought against a litigant in person. I cannot remember the name, but it was a cruel libel to which there was no possible answer. The litigant in person, the defendant, pleaded justification and fair comment. He turned his back on the court from the start and would not argue at all because he was angry about something. When the jury came to bring in their verdict, they brought in a verdict in his favour. When counsel asked the jury (wrongly, as it turned out) why, they said "Justification", for which there had not been a jot or tittle of evidence. The poor unsuccessful party went to the Court of Appeal, who said to him unsympathetically, "Counsel should not have asked that question", so the verdict stood.
That was the second case in that year, 1966. Case number three was that of a plastic surgeon. That case involved three separate voyages to the Court of Appeal: before a jury and up to the Court of Appeal; new trial and up to the Court of Appeal; new trial and up to the Court of Appeal. Eventually, it was arranged after this immense expense that this man should receive £1,500 for damages. I should have thought that the costs of that case were ten or twenty times the award for damages.
No; if we are to amend the law on legal aid, let us not do it in this Bill. If we are to do that, I am bound to tell the House that one of the things which would have a low priority in my scale of values would be the addition of defamation cases to the catalogue of those which attract it.
Lord Foot: My Lords, it would obviously not be at all acceptable to the House that I should pursue this matter tonight. I will not attempt to answer what the noble and learned Lord has said, except to make one observation. We have heard of the possible proliferation of actions if legal aid were to become available for defamation, especially against newspapers. I take that illustration to demonstrate what the noble Lord says is contrary to common sense. Let us consider the case of a newspaper which makes an entirely false accusation of fraud against an individual of small means. That is about as damaging a thing as one could imagine happening to him—worse then being knocked down by a bus. The noble and learned Lord says, "No, we could not allow that applicant to have the advantage of legal aid even if it means that he will never be allowed to pursue his claim". That is an illustration which renders obvious the unsatisfactory nature of the argument.
However, I do not propose to pursue the matter, and with the leave of the House I withdraw the amendment.
Amendment, by leave, withdrawn.
5.45 p.m.
Lord Foot Lord Foot moved Amendment No. 44:
After Clause 42, insert the following new clause:
("Legal aid for certain proceedings for defamation.
. In paragraph 1 of Part II of Schedule 1 to the Legal Aid Act 1974 (which excepts proceedings wholly or partly in respect of

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defamation from the proceedings for which legal aid is available) after the first "that" there shall be inserted

"(i) where the costs of the plaintiff in any such proceedings are met wholly or partly from public funds legal aid may be granted to any other party to the proceedings; and

(ii) ".").

The noble Lord said: My Lords, I hope that I shall be able to deal with this amendment in a couple of minutes.
Noble Lords: Hear, hear!
Lord Foot: My Lords, I am glad to have support from one quarter of the House. This is a much narrower issue than the one we dealt with just now. It results from a case which was recently before the Court of Appeal called Conerny v. Jacklin. What happened in that case was that Mr. Jacklin had been before a bench of magistrates charged with certain road traffic offences. He was convicted and fined, and was aggrieved at what had happened. He made a complaint against the police constable who had been the chief witness for the prosecution, under the police complaints procedure that the police officer had been guilty of perjury. That complaint was considered by the Police Complaints Board. They rejected the complaint, and the policeman issued a writ against Mr. Jacklin for libel.
In the ordinary way, neither of those parties, neither the policeman nor Mr. Jacklin, would have had any claim to legal aid because it was a defamation action. But under a statutory instrument passed in 1977, SI No. 583, it was provided that in proper cases the Police Federation committee could use the funds of the federation for the purpose of supporting a policeman in a libel action in his capacity as a policeman. I understand that in this case the committee of the Police Federation gave its authority that the expenses of the policeman in these proceedings should be defrayed out of police funds.
The Police Federation fund consists partly of private contributions from members and partly from public funds by a grant from the Home Office. The object of my amendment is to provide that where a plaintiff in a defamation action is being supported partly or wholly by public funds, in those exceptional circumstances, the defendant ought to be given the advantage of legal aid to present his case. Unless this is done, I suggest that there are considerable risks involved for anybody who seeks to make a complaint against the police. He is faced with the possibility that if his complaint is rejected he may then be confronted with a libel action which he may be quite incapable of defending because he does not have the means to do it. I understand that there are some 20 similar cases in the pipeline where a policeman is taking such proceedings based upon the written complaint of an aggrieved person. In those circumstances, I beg to move.
Lord Mishcon: My Lords, I am going to be even more brief than the noble Lord, Lord Foot, who moved this amendment. The noble and learned Lord the Lord Chancellor referred in a previous debate to a division between logic and common sense. He came down on the side of common sense because in that amendment he felt that there was a different approach if one looked at the matter from a logical point of view
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from the approach of common sense. In my submission this is a case where logic applies, common sense applies and both lead to the same end. I hope that in those circumstances the noble and learned Lord the Lord Chancellor would not regard this as being an amendment that should not go into a Bill of this kind. It is a very small matter. It applies to a very few cases. It does this to protect (as the noble Lord, Lord Foot, has said) a very sensitive part of the administration of justice.
It is mainly little people who one finds oneself dealing with in the matter of complaints against the police—not by any means exclusively so, but quite often it is little people. They have been wrongly treated; they feel that the police went beyond their proper powers. If the Police Federation back a member, and quite properly so, with the sanction of the Home Office and out of public funds (because, largely, they come from public funds) to bring libel proceedings mainly against a complainant, that complainant will be robbed of the power to defend those proceedings properly because he cannot be granted legal aid. We are restricting this amendment—and I emphasise that—to those cases where the plaintiff is able to obtain the assistance of public funds; so that one matches public funds with police funds in a matter which is of general public interest because we are dealing with the proper administration of justice as between two people. I support this amendment, as do my noble friends.
Lord Denning: My Lords, I hope that your Lordships will not accept it. This is a tiny suggestion of altering a principle. I hope that your Lordships will not accept it at all.
The Lord Chancellor: My Lords, I am bound to tell both the noble Lord, Lord Foot, and the noble Lord, Lord Mishcon, that, in so far as they are relying upon funds provided by the Police Federation, my information is that the money used in connection with the defamation cases referred to is solely the product of members' subscriptions. If I am right in that, the amendment would be wholly useless for the purpose, and the only purpose, with which they supported the amendment. It is true, of course, and I must say in qualification, that the Home Office provides public funds by way of specific contribution towards the salaries of three officials of that organisation. But the money in defamation cases comes from the subscriptions of members and therefore the persons who are defendants in those proceedings, however many or however few they may be, are not in fact having to face public funds in order to defend the cases.
The second thing that I would say is this. Obviously, senior public officials (and senior police officers, I suppose, for that matter) can in principle be regarded as employed persons. There are occasions—and I do not think that there are many but there are some—in which public funds are put at the disposal of a public official of one sort or another for the purpose of bringing defamation proceedings. They do not happen to be the ones to which the noble Lord, Lord Foot, referred. I should be less than frank with the House if I did not say that such cases existed; but the answer to

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that is this. A good employer must, in certain circumstances, back a senior employee if he has been the subject of this kind of wrong. And that is true whether he is the employee of ICI or the employee of a Government department. The fact is that in such circumstances it is wholly illogical to say that if he is the employee of a Government department, the defendant can go on legal aid and if he is the employee of ICI he cannot. This is a purely anomalous proposition and one which I would not ask the House to accept.
Lord Foot: My Lords, of course, I shall not argue with the noble and learned Lord upon a mere matter of fact. I have not got the statutory instrument by me now to refer to but no doubt the noble and learned Lord has already referred to it himself and he will no doubt agree with me that there is not a word in that statutory instrument which authorises Police Federation funds to be used to support a policeman in a defamation proceeding. There is not a single word in that statutory instrument which limits the money to money which has been subscribed by the members. The terms of the statutory instrument are entirely at large. They enable the appropriate committee of the Police Federation to use Police Federation funds for the specific purpose of supporting a policeman in a libel action.
I do not want to get into an argument on a matter of fact but I would ask the House to consider once again the very serious implications, as I believe them to be, for the whole complaint procedure if a person is going to find himself in this position. He is contemplating making a complaint against the police. If he realises that, if he goes so far as to make a complaint and to put it into writing, he may before long be confronted with an action for libel which he is utterly incapable of defending because he has not got the means to do it, that is going to make a major inroad, as I think, into the whole system of complaints against the police. On that ground alone—and I would urge the House to support this amendment—I am at present minded to take the opinion of the House.
5.58 p.m.
On Question, Whether the said amendment (No. 44) shall be agreed to?
Their Lordships divided: Contents, 98; Not-Contents, 116.

DIVISION NO. 1

CONTENTS

Airedale, L.

Campbell of Eskan, L.

Amherst, E.

Caradon, L.

Attlee, E.

Carmichael of Kelvingrove, L.

Aylestone, L.

Cledwyn of Penrhos, L.

Barnett, L.

Collison, L.

Beaumont of Whitley, L.

David, B.

Beswick, L.

Davies of Leek, L.

Birk, B.

Dean of Beswick, L.

Blyton, L.

Delacourt-Smith of Alteryn, B.

Boston of Faversham, L.

Bottomley, L.

Denington, B.

Briginshaw, L.

Diamond, L.

Brockway, L.

Elwyn-Jones, L.

Brooks of Tremorfa, L.

Ennals, L.

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Falkender, B.

Murray of Epping Forest, L.

Fisher of Rednal, B.

Nicol, B.

Foot, L.

Ogmore, L.

Gaitskell, B.

Oram, L.

Gallacher, L.

Pitt of Hampstead, L.

Galpern, L.

Ponsonby of Shulbrede, L. [Teller.]

Gladwyn, L.

Graham of Edmonton, L.

Prys-Davies, L.

Gregson, L.

Raglan, L.

Grey, E.

Rhodes, L.

Grimond, L.

Ritchie of Dundee, L.

Hampton, L.

Rochester, L.

Hanworth, V.

Ross of Marnock, L.

Hatch of Lusby, L.

Seear, B.

Hutchinson of Lullington, L.

Sefton of Garston, L.

Irving of Dartford, L.

Serota, B.

Jacques, L.

Shackleton, L.

Jeger, B.

Shepherd, L.

Jenkins of Putney, L.

Shinwell, L.

John-Mackie, L.

Simon, V.

Kilbracken, L.

Stedman, B.

Kilmarnock, L.

Stewart of Fulham, L.

Kirkhill, L.

Stoddart of Swindon, L.

Lawrence, L.

Stone, L.

Llewelyn-Davies of Hastoe, B.

Tordoff, L. [Teller.]

Lloyd of Kilgerran, L.

Wallace of Coslany, L.

Lockwood, B.

Wells-Pestell, L.

Longford, E.

Whaddon, L.

Lovell-Davis, L.

White, B.

Mais, L.

Wigoder, L.

Mar, C.

Willis, L.

Merrivale, L.

Wilson of Langside, L.

Milner of Leeds, L.

Winchilsea and Nottingham, E.

Mishcon, L.

Molloy, L.

Winstanley, L.

Monson, L.

Wootton of Abinger, B.

Mulley, L.

NOT-CONTENTS

Allerton, L.

Gridley, L.

Arran, E.

Hailsham of Saint Marylebone, L.

Auckland, L.

Avon, E.

Halsbury, E.

Baker, L.

Harmar-Nicholls, L.

Bauer, L.

Hayter, L.

Belhaven and Stenton, L.

Henderson of Brompton, L.

Belstead, L.

Henley, L.

Bessborough, E.

Hives, L.

Boardman, L.

Holderness, L.

Brabazon of Tara, L.

Home of the Hirsel, L.

Brougham and Vaux, L.

Hood, V.

Broxbourne, L.

Hornsby-Smith, B.

Bruce-Gardyne, L.

Hunter of Newington, L.

Caccia, L.

Hylton-Foster, B.

Caithness, E.

Inchyra, L.

Cameron of Lochbroom, L.

Ingrow, L.

Campbell of Alloway, L.

Kagan, L.

Cathcart, E.

Kinloss, Ly.

Coleraine, L.

Kinnaird, L.

Colville of Culross, V.

Kintore, E.

Cox, B.

Kitchener, E.

Craigavon, V.

Lane-Fox, B.

Davidson, V.

Lauderdale, E.

Denham, L. [Teller.]

Lindsey and Abingdon, E.

Denning, L.

Long, V.

Dilhorne, V.

Luke, L.

Drumalbyn, L.

Macleod of Borve, B.

Elibank, L.

Mancroft, L.

Elliot of Harwood, B.

Margadale, L.

Elton, L.

Marley, L.

Faithfull, B.

Marshall of Leeds, L.

Ferrers, E.

Maude of Stratford-upon-Avon, L.

Ferrier, L.

Fortescue, E.

Molson, L.

Fraser of Kilmorack, L.

Mottistone, L.

Gainford, L.

Munster, E.

Gibson-Watt, L.

Nathan, L.

Glanusk, L.

Norfolk, D.

Glenarthur, L.

Nugent of Guildford, L.

Gray, L.

Onslow, E.

Gray of Contin, L.

Orkney, E.

443

Orr-Ewing, L.

Simon of Glaisdale, L.

Perth, E.

Skelmersdale, L.

Peyton of Yeovil, L.

Stockton, E.

Plummer of St. Marylebone, L.

Strathspey, L.

Sudeley, L.

Porritt, L.

Swinfen, L.

Portland, D.

Swinton, E. [Teller.]

Rankeillour, L.

Teviot, L.

Richardson, L.

Teynham, L.

Rodney, L.

Trumpington, B.

St. Davids, V.

Tryon, L.

Saltoun, Ly.

Vaux of Harrowden, L.

Sandys, L.

Vivian, L.

Savile, L.

Windlesham, L.

Selbourne, E.

Wynford, L.

Sempill, Ly.

Young, B.

Shannon, E.

Zouche of Haryngworth, L.

Shaughnessy, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.6 p.m.
[Amendment No. 45 not moved.]
The Lord Chancellor The Lord Chancellor moved Amendment No. 46:
Before Clause 43, insert the following new clause:
("Application for judicial review by High Court.
.—(1) Section 31 of the Supreme Court Act 1981 (application for judicial review) shall be amended as follows.
(2) In subsection (3) for "of the High Court has been obtained" there shall be substituted—

"(a) of the High Court; or

(b) in a case falling within subsection (3B), of the Court of Appeal,

has been obtained".
(3) After subsection (3) there shall be inserted—
"(3A) Rules of court made for the purposes of subsection (3) shall provide that where an application to the High Court for leave to apply for judicial review has been refused, or granted on terms, by a single judge of that court (whether after a hearing or not, as the rules may in any case provide) the applicant shall be entitled to have the application heard and determined by a divisional court which includes among its members a judge of the Court of Appeal.
(3B) An application for leave to apply for judicial review which has been refused, or granted on terms by the High Court may be renewed before the Court of Appeal if (but only if)—

(a) it was made otherwise than in a criminal cause or matter and was so refused or granted by such a divisional court as is mentioned in subsection (3A); and

(b) that court or the Court of Appeal grants leave to renew the application.".

(4) In subsection (6), for "the High Court" there shall be substituted "the court".").
The noble and learned Lord said: My Lords, if I may, I will speak to Amendment No. 46, which is the immediate one, and also to Amendments Nos. 63, 66 and 67, which are consequential.
Amendment No. 63: Schedule 7, Page 62, line 3, leave out line 9.
Amendment No. 66: Schedule 8, Page 63, line 29, leave out from ("Court)") to ("shall") in line 30.
Amendment No. 67: Page 63, line 31, leave out ("decisions of the High Court pronounced") and insert ("applications for leave to apply for judicial review made to the High Court").
In the debate at Committee stage on the clause which was negatived, I told your Lordships what I proposed to do, and this new clause is the result of what I then told your Lordships I would do. We are discussing, just to remind the House, judicial review and we are discussing judicial review in civil proceedings and not in criminal proceedings. Broadly speaking, and without being held to accurate figures, about one-third of applications for judicial review are
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in criminal proceedings and the remaining two-thirds are in civil proceedings.
The original Clause 43, which was negatived, put a stopper on the recourse in a case where the High Court had refused leave to apply for judicial review. I then promised that I would introduce an amendment at this stage to provide that where the single judge of the High Court had refused an application for leave to apply for review the applicant should then be entitled to go to a Divisional Court. I further went on to say that the Divisional Court to which he could have recourse to renew his application (strictly speaking, it is a renewal of the application and not an appeal) should include among its members a judge of the Court of Appeal, who of course would be presiding.
I have in fact gone one better than that—better, that is to say, from the point of view of those who criticised the original Clause 43—and I have said that if the Divisional Court (and I am now looking at subsection (3A) of the new clause) refused leave to apply or granted it on terms, then by subsection (3B) of the new clause he has recourse to renew his application to the Court of Appeal. So I have done exactly what I have promised to do, and one better.
I explained at the Committee stage the need to save judicial time, and I need not repeat that. I have done what I promised to do and it is one better, I must add, in the case of an application for judicial review in a civil case than it is in a criminal case, because leave in a criminal case must stop at the Divisional Court, whereas I have allowed it to go one stage further, to the Court of Appeal. That may be thought to be anomalous: on reflection, I do not think it is, despite the fact that at any rate some of the criminal cases will involve the liberty of the subject.
The reason why I thought it was reasonable was not the very small minority of immigration cases, to which the noble Lord, Lord Hatch of Lusby, referred at the previous stage, but the fact that civil reviews have become in recent years of rather greater constitutional importance than the ordinary criminal reviews, which take place from very much lower jurisdictions. Therefore, civil cases can arouse more important issues. This is limited only to cases which, in the opinion of the courts adjudicating, are considered unarguable. If, of course, any one of the three courts—the High Court, the Divisional Court or the Court of Appeal—thinks it is arguable, the case will then be argued on its merits and can in the ordinary course go up to the House of Lords, as some of them have done. I think that this is a fair redemption of my pledge at the Committee stage. My Lords, I beg to move.
Lord Denning: My Lords—
Lord Campbell of Alloway: My Lords—
The Lord Chancellor: My Lords, I am to blame. If my noble and learned friend could just pause with me patiently, having put the Question I should have called the next amendment, which is an amendment to my amendment and which is in the name of the noble Lord, Lord Campbell of Alloway. I apologise to my noble and learned friend: the fault was entirely mine. I forgot the procedure.
Lord Campbell of Alloway Lord Campbell of Alloway moved, as an amendment to the amendment, Amendment No. 47:
Line 7, at end insert ("or
(c) of the House of Lords,").
The noble Lord said: My Lords, perhaps it is convenient to your Lordships for me to speak to Amendment No. 48 with this amendment.
Amendment No. 48: Line 26, after ("Appeal") insert ("or the House of Lords").
The object of these amendments, both of which relate to the jurisdiction of the Appellate Committee of your Lordships' House, is to expose and identify that nest of potential injustice which would be entrenched, even enhanced, if Amendment No. 46 as it stands were to go through, unless there were access to the Appellate Committee of your Lordships' House in all cases of refusal of leave to proceed by judicial review as proposed by these amendments. It is appreciated that this raises a new dimension of safeguards. I use the word "entrenched" because at present such access is denied, and I say "enhanced" because Amendment No. 46, although assuredly going far better than was promised—and there is no question about that—restricts the right of access to the Court of Appeal and, for all one knows, and I make this point in ignorance, may restrict the Court of Appeal for this purpose to a single judge alone.
6.15 p.m.
Amendment No. 46 is a compromise between the old Clause 43 and the status quo. It proposes the introduction of a new single appellate procedure in all cases where a single judge has refused leave to apply for judicial review, which is much to be welcomed, save in so far as access to the Court of Appeal is restricted. But as Amendments Nos. 47 and 48, to which I speak, rest upon Amendment No. 46, it is surely germane to consider whether there is any need at all for compromise, or any justification for this compromise, on grounds of administrative convenience, as affording any substantial relief to the work load of the judges in the Court of Appeal.
At the Bar—and we are assuredly no legal grandees; we are the work horses of the profession and are a little suspect of what we find in our nosebag—we are content, for what it is worth, with the situation as it is so far as the High Court procedures are concerned, and many of us remember what the noble and learned Lord, Lord Atkins, said in one of these cases under the old régime:
"Convenience and justice are often not on speaking terms".
But subject to some assurance as to the restoration of access to the Appellate Committee of your Lordships' House, I support Amendment No. 46, for whatever else may be said about it there can then be no potential injustice. Without some assurance, there having been no Committee stage at which full discussion could ensue, I find myself in some difficulty; hence these probing amendments.
The curtailment of the right of access to the Court of Appeal brings into relief a decision of the Appellate Committee of your Lordships' House some two years ago in which, slightly contrary to a prior ruling in 1966, it was held that there was no jurisdiction to entertain any appeal against a refusal of leave by way
446
of judicial review. In reaching this decision, reliance was placed on Section 3 of the Appellate Jurisdiction Act 1876, as interpreted by a decision of your Lordships' Appellate Committee in 1891. In consequence upon this decision which was made in December 1982, the Appellate Committee of your Lordships' House amended its own practice direction and standing orders applicable to civil appeals and judicial reviews of civil process, to rescind the old proviso to Standing Order 61A, which afforded access, and to deny all access. This was by the practice direction of 26th January 1983.
In order to identify the potential injustice, it proposed to use an immigration case decided by your Lordships' Appellate Committee in 1984 as an example—but it is only an example. It was a case in which your Lordships' Appellate Committee declined to follow its own decision in 1980 which stood as precedent. The fact that leave was granted in that case, contrary to that precedent, affords no sufficient, certain or satisfactory safeguard that the High Court or the Court of Appeal will not refuse leave and will, in all manner of cases, take a strict or narrow view of precedent. In one way or another, the liberty of the subject, as my noble and learned friend the Lord Chancellor has truly said, is often at stake in this type of case. The potential injustice arises because in all courts below the Appellate Committee of your Lordships' House there is an obligation to follow precedent in the grant or refusal of leave.
If a contention which goes to the substance of a complaint is bound to fail on the basis of established precedent, it would be entirely proper to refuse leave and so avoid the wasting of the time of the courts or a substantive hearing doomed to failure. Such a contention may relate to the nature and quality of a duty owed by an individual to the state or by the state to the individual, or both, which according to prior judicial decision has been defined with binding effect.
The scope for inherent error is manifest either because the Appellate Committee of your Lordships' House reverses a decision of the Court of Appeal which stood as precedent, or because the Appellate Committee declines to follow one of its own decisions which stood as precedent. This is exactly what happened in the case to which I referred, in relation to the nature and quality of the duty owed to the immigration officer which went to the substance of the complaint.
On the basis of precedent the Court of Appeal upheld the deportation order but the Appellate Committee declined to follow its own decision which has stood as precedent for about four years, quashed the deportation order and in the result reversed the decision of the Court of Appeal. If in that case—this is the potential injustice—leave had been refused on the basis of the old precedent, as might well have been the case, the applicant, instead of living in the United Kingdom with indefinite leave to remain as he does, would have been deported to somewhere or other.
Is it therefore not open to serious question whether the whole modern statutory process of judicial review such as it was introduced in 1977 should be fettered in any way by an Act of 1876 as interpreted in 1891? In this context, should it not also be pointed out that by

447
the decision of the Appellate Committee in your Lordships' House—two of them, in fact, in 1982—the old alternative remedy of seeking an injunction and declaration, a remedy exercisable of right without any need to seek leave, has been virtually emasculated?
As Amendment No. 46 restricts right of access to the Court of Appeal the introduction of the compensatory safeguard against potential injustice is sought by these amendments for the restoration of ultimate access to the Appellate Committee of your Lordships' House. The hope, albeit perhaps forlorn, is that some assurance may be given as to the recision of that old 1983 practice direction and the introduction of appropriate practice directions to achieve this end. In that spirit, that these are probing amendments for the purpose of discussion, I beg to move.
The Lord Chancellor: My Lords, the original Question was that Amendment No. 46 should be agreed to. My noble friend Lord Campbell of Alloway has now moved Amendment No. 47 which is an amendment to Amendment No. 46. The Question now therefore which I have to put is that Amendment No. 47 be agreed to.
Lord Broxbourne: My Lords, I wish in a very few moments, at this late hour (that comforting phrase to one who spent so many years in the late hours and laborious processes of another place) to support the amendment moved in characteristically clear and cogent terms by my noble friend Lord Campbell of Alloway.
It would be ungrateful not to thank the noble and learned Lord the Lord Chancellor for his Amendment No. 46. He has, as he indicated, done even better than his word in improving the original concept; and that is to be welcomed in that it lessens the restrictive effect of the previous proposal. But it would be more welcome still if it went that little bit further as proposed in the amendment of my noble friend Lord Campbell of Alloway.
The effect of Amendment No. 47, as your Lordships will see, is that, in the last resort, there should be an appeal to the Appellate Committee of this House. Resort to that would of course be rare but it should be available as a last resort in what would only and inevitably be a minority of cases. Judicial review with which we are here concerned raises notoriously complex legal issues from which the final adjudication of the Appellate Committee of this House should not be excluded. Encouraged by the authoritative precedent of the noble and learned Lord the Lord Chancellor earlier in the afternoon, may I give an ounce of illustration derived from my own experience in earlier days as counsel?
Many years ago I was concerned in a case of what was then certiorari—this was long before the introduction of the nomenclature of judicial review. We went to the Divisional Court and there succeeded by three judges to nil—the Divisional Court presided over by the distinguished Lord Chief Justice of those days. When I say "the Distinguished Lord Chief Justice of those days", I am not of course praying in aid the concept of expressio unius; all Lord Chief Justices are distinguished, I hasten to say.
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The other side took us to the Court of Appeal—the Court of Appeal was presided over by a distinguished Master of the Rolls—and a very distinguished court it was, as your Lordships will appreciate, when I say that it included my noble and learned friend Lord Denning, whom I am so glad to see is in his place today making such authoritative contributions to this debate. The Court of Appeal reversed the decision of the Divisional Court by three Lord Justices to nil.
We took the case to the Appellate Committee of this House and there we succeeded by three Lords to two. There, on a head count, as your Lordships will see with your characteristically quick mental arithmetic, we succeeded by six judges to five. It was a case, if I may say in passing, which made it easy for me to resist any temptation I might otherwise have had to regard law as an exact science.
One can envisage a hypothetical Lord Chancellor of those days, if he was confronted with the suggestion that an appeal to the House of Lords was a necessary safeguard of justice, and assuming that the law had then been as is now proposed and there was no such appeal, saying, "What is the need? Three Lord Justices and the distinguished noble and learned Lord, Lord Denning indeed, have said that this case should fail". But on the final decision that would have been wrong and justice would not have been done.
Your Lordships may say that that was an unusual case. Of course it was, but most cases on judicial review are unusual, and it is for those that we should cater here today. I would respectfully urge your Lordships to consider favourably the amendment moved by my noble friend.
Lord Elwyn-Jones: My Lords, as Amendment No. 47 proposes to amend an amendment which I, in due course, hope to have the opportunity to oppose, I have nothing further to say at this stage on this amendment.
The Lord Chancellor: My Lords, with great respect, two facts are quite certain in this tangled skein. The first is that the original amendment, and even the original Clause 43 which was deleted, had nothing to do with criminal cases which stop at the Divisional Court stage.
6.30 p.m.
The second fact is that the jurisdiction of the House of Lords, such as it is, is completely unaltered both by my amendment and by everything that has been proposed up to this stage. It is important to point out that my noble friends Lord Alloway and Lord Broxbourne must both have misunderstood the situation in which they find themselves. The 1983 case of In re Poh established that the House of Lords has no jurisdiction to hear this application as of now. We are debating not the appeal on its merits, but an application for leave to apply.
I have suggested in the original amendment, first, that the applicant should go to a single judge of the High Court. The single judge in the High Court says, "This is an unarguable case—no leave to apply". The applicant then goes to a Divisional Court consisting of one Lord Justice and two High Court judges and they say, "The case is unarguable—no leave to apply".

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Then it is thought, as I have provided, that the applicant goes on to the Court of Appeal, having been refused on the basis that the case is unarguable, and applies to the Court of Appeal for leave to apply. The Court of Appeal then says, "The case is unarguable—no leave to apply".
What the amendment does is simply to say that the present position of the House of Lords remains as it has always been and as the case of In re. Poh established that it is. It establishes also that that has always been so since 1891. My noble friend's amendment would upset the status quo for the purpose of going back on the decision of 1891. He asks for a fourth bite at the cherry, not on the merits of the case but on whether the applicant should have leave to apply on the basis that his case is even arguable. That is one bridge too far.
The case cited by my noble friend Lord Broxbourne, though I did not follow it in all its intricacies, must have been decided on its merits. If a case is decided on its merits, it is decided on the following set of circumstances under modern procedure: at one stage under a single judge or, if my amendment is passed, at the Divisional Court stage or, if my amendment is passed, at the Appeal Court stage, the applicant is given leave to apply and then proceeds on the merits. He then goes back to the Divisional Court. The case is argued on its merits and then it goes up to the House of Lords.
Incidentally, my noble friend Lord Broxbourne is not, I think, right when he says that if the case went to the House of Lords on leave to apply, it would go to the Appellate Committee—no, I think that he is right and that it would go to the Appellate Committee.
I am really saying that the applicant should not have four bites at the cherry as to whether his case is arguable and then two more bites on the merits of the case. This is really one bridge too far. I respectfully suggest that Amendment No. 47 is not an improvement on Amendment No. 46.
Lord Campbell of Alloway: My Lords, I am very grateful to my noble and learned friend the Lord Chancellor for the care he has taken in considering my proposal. I shall not take up the time of your Lordships' House, save to say this. It is not a question of an appeal on the merits of a case. It is a question of an application for leave. As for being a bridge too far, it is the only bridge available to cross if one seeks to divide justice from potential injustice.
The delightful decision of In re Poh is, in my respectful submission, wrong today; not wrong because it relies on the Act of 1876 and not wrong because it relies on the old decision of 1891 which interprets Section 3 of the Act of 1876, but wrong because today our modern processes ought not to be shackled by those ancient fetters.
I am grateful to my noble friend Lord Broxbourne for his support for the spirit of my amendment. In some cases there would be a fourth bite at the cherry, but what sort of a Court of Appeal are we to have? Is there any assurance that it will be anything other than a mere single judge? If so, ought we not to have the safeguard of a fourth bite at the cherry?
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I am grateful also to the noble and learned Lord, Lord Elwyn-Jones, as always. I understand wholly his position; that my amendment rests on Amendment No. 46. The noble and learned Lord opposes Amendment No. 46, and I wholly understand his position. In the circumstances I beg leave to withdraw the amendment.
Amendment to the amendment, by leave, withdrawn.
The Lord Chancellor: My Lords, I believe the correct procedure is for me now to call Amendment No. 48, which is consequential upon Amendment No. 47.
[Amendment No. 48 not moved.]
Lord Denning Lord Denning had given notice of his intention to move, as an amendment to Amendment No. 46, Amendment No. 49:
Line 27, at end insert—
("(3C) In any case when a single Judge or the Divisional Court or the Court of Appeal grants leave, that Court may, if it thinks fit, in lieu of sending it back to the High Court, go on and grant or refuse the same relief as the High Court itself would have done under subsection (1).".").
The noble and learned Lord said: My Lords, I put down this amendment but I oppose Amendment No. 46 entirely. In the circumstances I do not propose to continue with this amendment. The case of Poh, to which reference has been made, established in 1983 the law as it is at the moment, but it dealt only with the appellate jurisdiction of this House. The noble and learned Lord, Lord Diplock, expressly stated that he was not dealing at all with the jurisdiction of the Court of Appeal, and so far as the jurisdiction of the Court of Appeal is concerned, it was established in a case in 1966, Regina v. The Industrial Injuries Commissioner, in [1966] 2 Q.B. That was not appealed from and it still stands as law. I challenge anyone to say to the contrary.
What does that case mean in a situation where there is an application or an appeal from a refusal to leave? There were many such cases and I will tell your Lordships what happened. One can take the example of an immigration case. The judge below, or the Divisional Court, would refuse leave to go ahead and challenge the decision of the immigration authorities. The case would come to us for leave. If I thought there was anything in it, I would ask the authorities to bring the Secretary of State—the Treasury devil—to see if they had any objection. I would hear the case then and there and decide it, and then I would send it back. That procedure is still good law and it was never appealed against in 1966. In the circumstances my amendment is unnecessary, because that is still the law of the land. I am therefore withdrawing that amendment so that we can get on with the matter we really want to discuss; that is, the clause itself.
The Lord Chancellor: My Lords, I assume that what the noble and learned Lord means is that Amendment No. 49, as an amendment to Amendment No. 46, is not moved.
[Amendment No. 49 not moved.]
The Lord Chancellor: My Lords, the Question is that Amendment No. 46 be agreed to.
Lord Denning: My Lords, this is a most important occasion. The amendment deals with the most important jurisdiction of what we now call judicial review. It is a jurisdiction in which the courts restrain and condemn the misuse or abuse of power by any public authority, whether it be the executive Government, a local authority, a police commissioner or any lower tribunal. We now have the remedy of judicial review. It is inherited from our old writs of certiorari, prohibition and mandamus for which there always had to be leave from a judge. If that leave was refused, you could always go, as of right, to the Court of Appeal and ask for the decision to be heard again. That is the old law. This new law brings it up to date. It is a remedy for the misuse or abuse of power.
Before this new law came in every person had a right, and we exercised it, to deal with it in a different way. We allowed actions to be brought for a declaration that a public authority was doing wrong. I think it was in 1953 in the case of Barnard v. National Dock Labour Board. Barnard was one of a group of lighter-men who did not want to work one shift but wanted to work another. The National Dock Labour Board suspended them from working. The men brought an action in the courts for a declaration that the NDLB had no right to do that and had not dealt with them with natural justice. It was rejected. We gave the remedy in the Court of Appeal.
That decision was followed with great cases in the House of Lords. There was the case of Padfields when by reason of an action for a declaration we declared that the Milk Marketing Board (I dissented, like Lord Parker, and the House of Lords for once affirmed it) was wrong in its allocation of quotas. In the great case of Anisminic, this was, again, an action for a declaration which went from the judge to the Court of Appeal and to the House of Lords. Again, we had the remedy for abuse of power which was done by an action for a declaration. Every person in the land had the right to bring such an action. If a judge turned him down, he had the right of appeal to the Court of Appeal. I have sat on many such cases, that is how the system originated and now it is being supplanted not by an action for a declaration, but by judicial review.
It is said by my noble and learned friend the Lord Chancellor that it is an excessive use of the judicial time of the Court of Appeal. It is said that one whole month of a three-judge court was wasted. But what figures does he give? In 1983 there were 27 cases. In 1984 there were 34 cases. That is about right, if you please, but what does it come to?—less than one a week. We sit 40 weeks in the year. How long did they take? We have it from the Law Commission. When we refused an application, as we often had to, it took up to 20 minutes. The great majority were refused. In the few that were granted they might have taken up to an hour. Is that such an outrage of judicial time that we should abolish the right of appeal to the Court of Appeal or restrict it?
As regards the use of judge power, what is suggested in this new clause is not just one appeal to the Court of Appeal, as we had, but first an application for leave to a Divisional Court of a Lord Justice and to other judges and then a further application to the Court of Appeal—two more hearings, when previously all we had was one.
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6.45 p.m.
My objection to this amendment is far more serious than that. We are dealing with cases of the first importance. We are dealing with cases which concern the liberty of the subject. We are concerned with cases relating to the custody, education and welfare of children. Already, in the Supreme Court Act 1981, Section 18(1) (h), there is an absolute right of appeal; not by leave, but a right of appeal to the Court of Appeal. I refer to the immigration cases which we so often have. There was a youngster of 13 from Iran and it was arranged for him to be educated here at a public school and then go on to university. The immigration authorities refused him entry because he was going to stay for more than three years. They told him that the rules did not apply to him. He was detained and about to be deported. That case came before us in the Court of Appeal, as of right. We held that the immigration authorities had misconstrued the rules. The liberty of the subject was concerned and we allowed his appeal.
I can give many cases of that kind relating to the immigration authorities. So that is the first great step: there is already a right of appeal where the liberty of the subject and where custody of infants is concerned. That is what happened recently. Lord Justice Ackner had an adoption case where a little girl's mother had died when she was quite young. The girl was put out to foster parents, but the grandparents wanted custody of her and resisted the adoption order. The judges below would not interfere and on appeal to the Court of Appeal, Lord Justice Ackner, and the others, pointed out what an important case it was. They said how valuable it was that there should be the right of appeal in such cases.
I give the case which went to the House of Lords concerning one of these immigration matters. A boy aged 16 came to England with his parents with leave to come in for settlement. They had received permission in India, or wherever it was. He was here with his family for two years and then applied to bring his wife over because he had already been married—when under the age of 16. The immigration officer said, "He is guilty of fraud. He did not disclose to us that he was already married". Therefore, they held that he was an illegal entrant and they refused his appeal. The Court of Appeal refused his appeal.
The House of Lords heard the case and said, "Fraud must be proved against him. You cannot say he was guilty of fraud simply because he did not tell them he was married". So the House of Lords affirmed the principle that the liberty of the subject must prevail. That is just one instance of many—and most of them came about like this—where the immigration authorities have detained a person as being an illegal entrant. That is like the cases of the people who came in on the little boats and so forth. Such people have been detained as illegal entrants and have been about to be sent away. Their appeals have been refused by the Divisional Court and they have appealed to the Court of Appeal and the Court of Appeal have allowed their appeals.
A letter to The Times by the chairman of the Senate of the Bar, Mr. David Calcutt, said that the Court of Appeal has a different status altogether; it is stronger and it is authoritative and it can decide these matters

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without too much regard if the Divisional Court has gone wrong.
Let me tell your Lordships of the case which interests all the students, which is the kind of case with which we have to deal. This is the case of Mr. Hook. He was a street trader in Barnsley. After the market had closed one night he went into a side lane and relieved himself, passing water. The manager of the market said to him, "You can't do that kind of thing here". He said to the manager, "Oh, can't I? It is no business of yours. You b— off". That upset the manager a great deal. He took the matter before a committee of the council. The committee took away the man's licence. He went to a further committee of the council. They took away his licence. Therefore, he was deprived of his livelihood by this council.
He brought an application for judicial review. The Divisional Court refused it. They said, oh, it was an administrative matter, not a judicial matter. It came to the Court of Appeal and, as your Lordships can imagine, we were not going to let a man be deprived of his livelihood for just a tiny peccadillo of that kind and we restored that street trader's licence. That is the kind of case which we have and the kind of case which shows the importance of judicial review and the right of appeal to the Court of Appeal in it.
What do these new suggestions come to? They say, instead, this. When the judge in the first instance refuses an application, if you like you can renew it again to the Divisional Court of three judges—a presiding judge and two others. If they refuse it, that is the end of the matter unless you go to the Court of Appeal, or they give you leave to go to the Court of Appeal. You have to have leave every time. You have two distinct new hearings before a court of three judges. You have to have leave each time. That is, instead of what I suggest is the fundamental principle in our system: if a judge, even in the High Court or in the Divisional Court, refuses a man his remedy, then there is a right of appeal to the Court of Appeal, a court of standing, which will hear him give his arguments so that they can understand them, and then either refuse or grant his appeal as the case may be.
Therefore, it seems to me that this new procedure is wrong. It is wrong in this case to suggest that the court is overworked or that it needed a saving of time—less than one case a week, lasting a quarter of an hour. It is wrong to think that there will be any saving of judicial power by this amendment. It will mean going before two courts instead of one. The most fundamental principle of all is that there is a right of appeal—not by leave of anybody—from the judge to the Court of Appeal. Just the same as one had a right of appeal to the Court of Appeal in those old cases of the action for a declaration, so there should be in these cases under this new jurisdiction. It is a simple, expeditious remedy which should not be interfered with. I hope your Lordships will reject this proposal.
Lord Elwyn-Jones: My Lords, I join the noble and learned Lord, Lord Denning, in opposing this new clause. In my submission, it makes an adverse impact on a crucially important new right which has developed largely by the judges themselves, which
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gives strength and power to the individual citizen at a time of encroachment of executive power upon the lives of the citizen.
As has been indicated, a judicial review gives the power to the judges to correct abuse and misuse of power by any public authority, whether it be a Government department, the executive, a tribunal, an inferior court, a local authority or whatever the public authority may be. As the noble and learned Lord has said, an aggrieved person can come before the High Court judge to ask for leave to bring that body before the court to see whether there has been any misuse of power. The power depends upon leave being given by the judge. As the noble and learned Lord has said, at the present time, if that is refused, there is a right of appeal to the Court of Appeal.
With great respect, in my submission, no convincing reason has been produced for limiting or inhibiting or making greater difficulties for the enjoyment of that existing right. The reason that was given was to save judicial time. In my submission, the facts pointed to by the noble and learned Lord, Lord Denning, destroy that. The very basis of what was proposed has gone because under the proposal of this new clause there will actually be a greater use of judicial power than exists at the present time. Therefore, the purported reason for it has disappeared through the window.
In my submission, the safeguard that is given to the liberty of the subject at the present time should not be encroached upon or inhibited, as I submit this new clause would do. Therefore, I greatly hope that it will be rejected.
Lord Hutchinson of Lullington: My Lords, I too should like to oppose this amendment. I ask your Lordships to put your minds to considering why this amendment has been introduced at all. The view, certainly of the Bar, certainly of the noble and learned Lords who have spoken, and many others, is that this amendment is entirely unnecessary. It seems to have been introduced because the original clause, which was attacked in Committee and eventually abandoned, was introduced without any proper consultation, as the noble and learned Lord the Lord Chancellor conceded in Committee. It was introduced presumably and apparently simply for a matter of efficiency in order to save judge time. It had no other merit at all. As the noble and learned Lord who has just spoken has pointed out, this amendment on the face of it seems to take up more judge time and to involve a four-tier form of appeal instead of the perfectly straightforward and simple one which has obtained hitherto.
The only reason that one can see for this amendment is that it is in form a cosmetic amendment which has been introduced for some face saving reason. I should ask your Lordships simply not to support the amendment and let the situation remain as it was before. The Bar has expressed its view, as has already been mentioned, through the chairman's letter to The Times on 14th February. The point that he essentially made there was that a tribunal of the standing and independence of the Court of Appeal can take, and indeed has been seen to take, a line entirely different from that followed in the Queen's Bench.

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The most worthy judges, versed in the complexities of administrative law, may have the same worthy approach to a deeply held grievance by a citizen but also, very likely, the same limited point of view as that taken by the single judge. The Court of Appeal brings fresh air and a wide approach together with its overwhelming authority. The ability to go to the Court of Appeal in these circumstances dispels any slightly incestuous air that may arise in these circumstances.
7 p.m.
Your Lordships will remember that a most distinguished Lord Justice ventured before the Committee stage of the Bill to draw attention in the Court of Appeal to two cases that would never have reached the court if the original clause had remained in the Bill. He was rebuked by the noble and learned Lord the Lord Chancellor for so speaking. I am, however, bound to say, if I may, that if the Bill here introduces a reform which affects a body such as the Court of Appeal, with wholly inadequate consultation with members of that body, it would seem, would it not, a little unfair to criticise a member of that body for speaking up in a most courteous and straightforward way, pointing out what the effect of bringing in the clause might be.
I should like to add—I do so with the permission of the learned judge concerned—that a further example, in addition to the two that were referred to by the Lord Justice who spoke up, has come about recently and since the time of the proceedings in Committee. An applicant before Mr. Justice Hodson sought to quash three decisions of the Legal Aid Committee. He refused leave. That was done in writing. The applicant went to another judge and had an oral hearing, as he is entitled to do, and that judge gave leave on two of the heads but not on the third, which was the crucial one. The applicant then went to the Court of Appeal, and the Court of Appeal gave leave on all three. The matter went back and was heard by the original judge, Mr. Justice Hodson. He quashed all three of the findings of the Legal Aid Committee. That was yet another example of the value of an applicant, who feels he has suffered an injustice by some superior authority, being able to go to the Court of Appeal, and the Court of Appeal seeing what the other two judges had not seen—that there was here an essentially arguable point.
The only other point I should like to make—I echo in some way the remark about time made by the noble and learned Lord, Lord Denning—is that the figure of one month of judge time, which was given to the House as the time spent by the Court of Appeal on these applications, comes as a somewhat astonishing figure to the Bar. As has been pointed out, they dealt with 37 applications in 1984. Twenty-nine were refused and four allowed. The refusals could not possibly have averaged, in the view of the Bar, more than 10 to 15 minutes, most of them being quite hopeless. So far as the other four were concerned, by the time the argument has gone on for 30 minutes, it will become perfectly clear that there is an arguable point. It would seem, on that calculation, that it would amount possibly to about eight or nine hours of judge time and could not conceivably amount to one month.
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In those circumstances, I would ask your Lordships not to support the amendment and to say that this vital part of the law—the procedure of judicial review which is becoming more and more used by individuals who feel that, in some way, they have been sat upon or crushed by authority—should be left as it is. It works extremely well. The legal profession certainly would wish this amendment not to be passed. We have heard that the Court of Appeal does not object to the amendment, but we have not heard that the Court of Appeal supports it in any way.
Viscount Colville of Culross: My Lords, may I ask my noble and learned friend on the Woolsack one question that might assist me in my deliberations? It is this. Under subsection (3B) of the amendment, if the Court of Appeal is considering the question of leave to renew the application, will it not, in practice, at the same time, consider the question of whether the matter is arguable. If it does not do that, it will not know whether or not it is right to renew the application: So, in fact, it will be a single hearing before the Court of Appeal, effectively upon arguability, which will then decide whether or not the matter proceeds.
The Lord Chancellor: My Lords, I am not sure that I understand my noble friend's question. I shall, however, try to deal with it when I deal with the other arguments.
Lord Wilberforce: My Lords, with the deepest respect to my noble and learned friends and colleagues who have spoken, I venture to suggest that we are in danger of making too much of a pother about this matter. We had a great debate on Second Reading and points of view were expressed both ways. The noble and learned Lord on the Woolsack said that he wished to take the case away and bring forward another clause. He has brought another clause, elaborately drafted, in order to satisfy the objections made at the previous stage of the Bill. Here we have it in Amendment No. 46. It is not what I would have chosen, particularly because I happen to think that the proper route is quite a different one from that suggested in the Bill. Nevertheless, the noble and learned Lord, has, as he said, honoured his undertaking. In one respect he has more than honoured it. I do not feel that it is very profitable for us to be discussing in this forum the question of whether we are saving the time of one Lord Justice, two Lord Justices or half a Lord Justice. Those are matters which we should leave, I venture to suggest, to the noble and learned Lord and his advisers. We know that he has his constraints on manpower and finance. I am assured that he has taken them into account. For my part, I am not prepared to reject this package that he has offered us.
Having said that, there is one rough edge which the noble and learned Lord may be able to smooth down. That A the case to which some reference was made by the noble and learned Lord, Lord Denning, where the liberty of subjects is involved. One may often have cases, one does have cases, particularly immigration cases, where an illegal immigrant has been arrested prior to deportation. If that person wishes to challenge the order for his detention, he may do so in one of two ways. He can ask for a writ of habeas corpus or ask for

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judicial review. Some act one way; some another. If you go by habeas corpus, you can proceed all the way up the chain without leave. It is a right. If you go by judicial review, then, according to this clause, which would come before Clause 43, you have, at a certain stage, to get leave. It is an impossible position that if you chose one route you have to get leave, while if you chose another, you do not. Somehow or other this disparity has to be reconciled. It may be that it can be done by rules of court; I do not know. One way or another, I would be happier if, at some stage, the noble and learned Lord reassured me that there is not this difficulty of procedure according to the route you take.
I have just one other point. It has been said that the Bar is opposed to this clause. I do not believe there is any warrant for saying that. At the earlier stage, the chairman of the Bar wrote a letter to The Times objecting to the clause then before this House. He has not, so far as I believe—and this rests on a personal conversation—taken a similar position with regard to this clause. I do not expect he is enthusiastic about it, but for my part I do not believe there is any warrant for saying that the Bar as a whole, or through its accredited representatives, is opposed to this clause. I rather suspect that it adopts towards it an attitude something similar to mine: "Well, it's not what I would have chosen, but we ought to accept it in the spirit in which it's offered". I shall therefore be one of those who will not oppose the amendment. I hope that other noble Lords will be of like mind.
Lord Mishcon: My Lords, I am so glad that this matter is being approached in a completely non-controversial, non-hostile spirit and that your Lordships are in fact considering, perfectly quietly, the following question: should something which has stood the test of time, which has not been attacked in any way from the point of view of justice not being done, be altered unless there are overwhelming reasons for altering it? The question, in my submission, is as simple as that, although it does relate, obviously, to a most important subject, a most important procedure: namely, the one way, as a rule, in which the subject has the right to challenge the administrative decisions and other decisions of the executive.
The noble and learned Lord, Lord Wilberforce, whose voice is so much respected in this House, said that this is not the route he would have chosen. When he talks of the Bar Council, he says he imagines this is not the route that it would have chosen. Then why choose it? Why support an alteration to something that the Bar Council stands by? I can speak for the Law Society in this matter. I do not speak for it; I speak with the support of the Law Society in this matter. It wants the status quo, and the reason it wants the original arrangements to stand is that it wants the subject to have the right to go from one court to the other. It asks that so that there is no question of leave to do this. It wants to be able to obtain that leave, if not from the first judge in the court of first instance, to go as of right to the Court of Appeal.
It is right to say, with every courtesy to the noble and learned Lord, there was no deal done with this House on the last occasion. The noble and learned Lord brought forward an amendment, and did it with great
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ability and great clarity. This House decided that it did not want that amendment. It did not want this diminution of the right of the citizen. It did not want it merely because this was a way of reducing the work of the Court of Appeal. It was as simple as that, and this House dissented. This House did not dissent on any condition.
The noble and learned Lord, with his usual courtesy, said that as a result of hearing what was the opinion of the House he would consider the position and consider whether or not another amendment should be brought forward. The noble and learned Lord, with courtesy, with clarity, has brought forward another amendment, but this House has not undertaken to accept it. There was no contract entered into between the parties, not even as a matter of honour; and so this House now considers the noble and learned Lord's amendment.
Bearing in mind, as has been said, that the one reason for taking away a right of a subject in this important matter was the time that was going to be saved by the Court of Appeal, there are two short issues. The first is: should you in fact, only for the sake of saving the time of the Court of Appeal, take away a very vital right of a subject? The second thing is: is it realistic to think that this amendment saves the time of the Court of Appeal? This amendment provides that a judge of the Court of Appeal has got to sit on the Divisional Court; so you are taking away the time of a judge of the Court of Appeal. Then, if the Divisional Court decides, with the judge of the Court of Appeal there, not to grant leave, you make your application again before the same judge of the Court of Appeal and the remaining members of the Divisional Court. Then, if they refuse, you go to the Court of Appeal, even if it consists of one judge; so the time of another judge of the Court of Appeal is wasted.
Is it not sensible that what we do, if we cannot see a very good reason for altering a vital right, is leave the right where it stands at the moment and say to the noble and learned Lord who sits on the Woolsack, "Thank you for bringing forward another amendment and for thinking this out as an alternative to what you said last time, with which we didn't agree. But please forgive us. Even if we have to walk into the Division Lobby, we don't agree with you this time either".
7.15 p.m.
Lord Campbell of Alloway: My Lords, if I may intervene briefly, I should like to say that I find myself in some difficulty in supporting this amendment. There is the point that was made—and tellingly made —by the noble and learned Lord, Lord Wilberforce, about the quandary or the inequity that exists between habeas corpus and judicial review. I question how that could be cured by rules of court within the framework of Clause 46. Secondly, for the reasons already mentioned on the amendment to which I spoke earlier, there is no safeguard in the sense of the means of access to the Appellate Committee of your Lordships' House. That could be of importance.
I seek clarification of what "Court of Appeal" means in subsection (3B)(b) of the amendment. It says:
"that court or the Court of Appeal grants leave".
Will that be a single-judge Court of Appeal? What is to

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stop it? It seems that anything may be done by rules of court. If that is a single-judge Court of Appeal refusing leave, in my submission that would not be satisfactory. I should like some form of assurance on these three questions, quite apart from the point about necessity which has been made by various noble Lords, and recently by the noble Lord, Lord Mishcon. It is a matter that warrants clarification. At the moment, as an ordinary member of the Bar, I find myself in a certain difficulty.
Lord Hatch of Lusby: My Lords, it seems right that in a debate of this nature there should be at least one layman speaking among the lawyers. I want to confine myself, very briefly, to the case of the immigrants, which I have advanced before in relation to this Bill. I was very pleased when the noble and learned Lord on the Woolsack withdrew his notorious Clause 43.
I must draw to your Lordships' attention the fact that an increasing number of immigrants and potential immigrants to this country have begun to feel that we do not want them, that they are not equal before the law, and, even more important, that they are not equal in the treatment they get from administrative officers. This is not just my opinion. I draw noble Lords' attention to the report of the statutory body—the Commission for Racial Equality—on practices in the immigration regulations. This demonstrates that there are abuses in the immigration procedure. They are abuses which can best be dealt with by the process of judicial review.
However, as we have seen throughout the debate on this clause, that form of judicial review has been under attack. I am glad that the noble and learned Lord on the Woolsack withdrew his original Clause 43, or had it negatived. However, I must say on behalf of the immigrant organisations in this country that the substitute which we are debating at present has brought even greater puzzlement to many immigrants in this country and to potential immigrants, and it has done so for three reasons. The first reason is that it would appear that the substitution as regards the Divisional Court with a Court of Appeal judge is at least a debasement of the authority of the Court of Appeal, to which previously the immigrant could apply for leave for judicial review.
Secondly, it would appear—and I do not know whether this is the case—that possibly one effect of the new subsection (3A) (and I should like the noble and learned Lord to address himself to this matter when winding up the debate) is to withdraw a present right. This matter has already been mentioned in the debate. Is it the case that subsection (3A) would take away the dual right which an applicant has at present of submitting a written plea and, if that is rejected, of going before another judge and submitting an oral plea?
Thirdly, subsection (3B) of the amendment leads to confusion in this House and to confusion among legally trained Members of this House and outside this House. If that is so, then what effect must it have on the immigrants who have to go through this process? Surely it is clear that this confusion—and it has been mentioned by other noble and learned Lords—caused by the increase in the number of stages in the application for appeal, will only make it much more difficult,
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much more complicated and much more worrying to immigrants who are trying to get justice as against what they consider to be the unfairness practised by the officers of the Government.
I suggest to the noble and learned Lord that, so far as subsection (3B) is concerned, he is making the situation so complicated that no normal immigrant will feel other than that this is another way in which to prevent him from getting a review of his case as against a Government official.
The Lord Chancellor: My Lords, I have been utterly bemused by some of the speeches to which I have listened because they can only be explained on the basis either that noble Lords have not read or that they have not understood Amendment No. 46. Anyone listening to this debate would have assumed that Amendment No. 46 reduces the right of the applicant for leave to apply for judicial review by the removal of something that he already possesses. That is contrary to the truth, and the most superficial reading of my amendment would tell them that quite plainly.
Under the present law, the application is made originally to the Divisional Court in the person of a single judge, and, if refused, it goes to the Court of Appeal for a renewal of the application. It is not an appeal to the Court of Appeal; it is the renewal of an application to the Court of Appeal on refusal. What the new clause does is to add an additional right, and it does not take anything away. It means that if the single judge refuses it the applicant can then go to a Divisional Court which is composed as provided for in subsection (3A); and, if he gets it there, it is tried on the merits. If the Divisional Court refuses it, then it goes to the Court of Appeal. Therefore, he has three rights of application to the court, and not two. That is the difference.
There is only one matter that I should like to add. Of course, when Mr. Calcutt wrote he had not seen the amendment at all because he wrote before the amendment had been put down. He wrote under the misapprehension (under which it appears that the noble Lord, Lord Hutchinson of Lullington, still suffers) that there was no access to the Court of Appeal. The contrary is true. All that is provided by the amendment is that he goes to the Divisional Court first, and therefore has another right of access to the court. The estimate that I had about the amount of judge time taken in the Court of Appeal was received from the Court of Appeal itself. It may be right, and I think that it is—their estimate is more likely to be right than that of anybody else—and I repeated it exactly as I was given it.
As regards habeas corpus (which is the only interesting point that has been made) it is quite true, as my noble and learned friend Lord Wilberforce said, that habeas corpus is not affected by this amendment at all. It proceeds under Order 54 on its merits from the moment it starts right up to the House of Lords. This amendment deals only with applications under the Rules of the Supreme Court Order 53, and it gives an additional right of access to the court and does not take one away. First, it gives the right of application to the judge: secondly, it gives the right to make an application to the Divisional Court composed of a Lord Justice and two puisnes of the High Court;

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thirdly, it gives a right of access to the Court of Appeal. At the moment there are only two rights and not three. If any one of those three give him the right to apply on the basis that his appeal is arguable, then he gets his case argued on the merits and it goes up to the House of Lords in the ordinary way if either party is discontented.
This is the most extraordinary debate in which I have taken part for a very long time, because the speeches of the noble and learned Lord, Lord Denning, and the noble and learned Lord, Lord Elwyn-Jones, can only be explained on the basis that they have not either read or understood what I have put down for amendment. Of course there was no bargain. I have not only done better than I promised to do at Committee stage: I have actually added an additional right to the existing rights of the applicant.
The idea that by being given an additional right the applicant if he is an immigrant, thinks that he has had something taken away from him—which was the suggestion of the noble Lord, Lord Hatch of Lusby—is too absurd to be taken seriously. He has one extra right, and not one less. All I can say is that the result of giving him this additional right will be to save a certain amount of time in the Court of Appeal, because if any case is allowed by the Divisional Court—and the assumption which noble Lords have made is that they will be rejected—it will not be necessary to go to the Court of Appeal. If it is rejected by the Divisional Court—which, if it is arguable, will not be very frequently—the applicant will have the same right as he has now to go to the Court of Appeal.
As for the noble and learned Lord, Lord Denning, I know that he hankers after his quite illegal assumption of a jurisdiction at first instance. That was illegal, and it was put an end to by the practice direction of 1983 which was signed by both the present Master of the Rolls and the present Lord Chief Justice. I know that the noble Lord, Lord Denning, thinks that he was not committing a constitutional monstrosity by making the Court of Appeal a court of first instance; but he was. What is more, he was depriving the losing party in the Divisional Court of the additional step of appeal which he would otherwise have had. That is the inevitable result of trying to turn the Court of Appeal into a court of first instance.
When we come to the end of it, I have added to the rights of the subject, and not reduced them. Judicial time has been saved by providing the Divisional Court as a means of granting leave as well as of rejecting it. If it rejects it, or puts it on terms, then there is the right of access to the Court of Appeal. When the noble Lord, Lord Mishcon, asks me why a system which has stood the test of time should be altered, the answer is that it has stood the test of 1983 and 1984 and it was altered at the behest of those who are operating the system.
Lord Mishcon: My Lords, the noble and learned Lord is so kind to give way. Would he explain to the House what these words mean if indeed they have been misunderstood? I am looking at subsection (3B) of his amendment, which says:
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"An application for leave to apply for judicial review which has been refused, or granted on terms, by the High Court may be renewed before the Court of Appeal if (but only if)"—
and I omit paragraph (a) and go on to (b):
"that court or the Court of Appeal grants leave to renew the application".
Does that not mean, I ask the noble and learned Lord, that an application has to be made for leave before the Court of Appeal will hear it? And at the present moment that application is unnecessary?
The Lord Chancellor: My Lords, I quite see the noble Lord's question, but it is a purely drafting point. What it is intended to mean is that the Court of Appeal may give leave to renew the application and then grant it. If there is any point in that it is a purely drafting point. The effect of the amendment as proposed is I think perfectly plain. It is that you must first go to the judge, and, if you get leave, the case will be heard on its merits; if you do not get leave you have the additional right to go to the Divisional Court. I am afraid I must be allowed to say what I intended. You go to the Divisional Court and, if leave is granted, it is argued on its merits. If you do not, you renew your application to the Court of Appeal and, if it is granted, it is reviewed on its merits. That is what the amendment says. I think, and that is what it means. I do not think there is any ambiguity about it at all but, if there is, I will take it away for that purpose and consider any drafting which may be necessary.
But there is absolutely no value in the point whatever. An additional right is being given and the House should be under no misapprehension that if it votes against this amendment it is not accepting the additional rights.
Lord Mishcon: My Lords, by leave of the House, the noble and learned Lord is even more kind to give way a second time, but would he take it from me at all events—and I say this in all humility—that this is not a case of ambiguity. Many of us have been misled, I am sure unintentionally, by this wording. The wording is quite clear. It says, in clear terms, that the application for leave can only be renewed before the Court of Appeal "if—and it accentuates it—
"(but only if) … the Court of Appeal grants leave to renew the application".
That means in ordinary English that you have to go to the Court of Appeal and say, "Please will you give me leave to renew the application?" If the Court of Appeal refuses it, you cannot; and that is not—if the noble and learned Lord will forgive me for saying so—the present procedure.
The Lord Chancellor: My Lords, it is not the present procedure only because I have added a right intermediate between the single judge and the Court of Appeal. That is the only deviation from the present procedure. What I think the noble Lord has failed to apprehend is that when you go up the chain on an application for leave to apply for a judicial review, what you do on each occasion is to ask leave to renew your application and it is either granted or refused. It is as simple as that.

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If there is a drafting ambiguity, of course I will have it looked at. But I had explained the clause, which I think is plain. If it is not plain, then it shall be made plain.
7.35 p.m.
On Question, Whether the said amendment (No. 46) shall be agreed to?
Their Lordships divided: Contents, 82; Not-Contents, 97.

DIVISION NO. 2

CONTENTS

Airey of Abingdon, B.

Hood, V.

Aldington, L.

Hornsby-Smith, B.

Arran, E.

Hylton-Foster, B.

Auckland, L.

Ingrow, L.

Avon, E.

Keyes, L.

Bauer, L.

Kimberley, E.

Belhaven and Stenton, L.

Kintore, E.

Beloff, L.

Lane-Fox, B.

Belstead, L.

Lauderdale, E.

Brabazon of Tara, L.

Lindsey and Abingdon, E.

Brookeborough, V.

Macleod of Borve, B.

Brougham and Vaux, L.

Margadale, L.

Broxbourne, L.

Marley, L.

Caithness, E.

Marshall of Leeds, L.

Cameron of Lochbroom, L.

Maude of Stratford-upon-Avon, L.

Cathcart, E.

Chelwood, L.

Morris, L.

Coleraine, L.

Mottistone, L.

Colville of Culross, V.

Mountevans, L.

Colwyn, L.

Nugent of Guildford, L.

Cork and Orrery, E.

Onslow, E.

Cox, B.

Orkney, E,

Craigmyle, L.

Perth, E.

Davidson, V.

Rankeillour, L.

Denham, L. [Teller.]

Redesdale, L.

Drumalbyn, L.

Rodney, L.

Elibank, L.

Sandys, L.

Elton, L.

Savile, L.

Faithfull, B.

Selborne, E.

Ferrers, E.

Selsdon, L.

Ferrier, L.

Skelmersdale, L.

Fortescue, E.

Stamp, L.

Gibson-Watt, L.

Stockton, E.

Glanusk, L.

Swinton, E. [Teller.]

Glenarthur, L.

Teviot, L.

Gray, L.

Teynham, L.

Gray of Contin, L.

Trumpington, B.

Hailsham of Saint Marylebone, L.

Vaux of Harrowden, L.

Westbury, L.

Henley, L.

Wilberforce, L.

Hives, L.

Wynford, L.

Home of the Hirsel, L.

Zouche of Haryngworth, L.

NOT-CONTENTS

Airedale, L.

David, B. [Teller.]

Amherst, E.

Davies of Leek, L.

Attlee, E.

Dean of Beswick, L.

Aylestone, L.

Delacourt-Smith of Alteryn, B.

Baker, L.

Barnett, L.

Denning, L.

Beaumont of Whitley, L.

Diamond, L.

Beswick, L.

Elwyn-Jones, L.

Birk, B.

Ennals, L.

Boston of Faversham, L.

Falkender, B.

Bottomley, L.

Feversham, L.

Briginshaw, L.

Fisher of Rednal, B.

Brooks of Tremorfa, L.

Foot, L.

Bruce of Donington, L.

Gaitskell, B.

Campbell of Eskan, L.

Gallacher, L.

Caradon, L.

Galpern, L.

Carmichael of Kelvingrove, L.

Gladwyn, L.

Cledwyn of Penrhos, L.

Graham of Edmonton, L.

Collison, L.

Grey, E.

Craigavon, V.

Hanworth, V.

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Harris of Greenwich, L.

Nicol, B.

Hatch of Lusby, L.

Ogmore, L.

Henderson of Brompton, L.

Oram, L.

Heycock, L.

Pitt of Hampstead, L.

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L. [Teller.]

Howie of Troon, L.

Hutchinson of Lullington, L.

Prys-Davies, L.

Irving of Dartford, L.

Raglan, L.

Jacques, L.

Rea, L.

Jeger, B.

Rhodes, L.

Jenkins of Putney, L.

Ritchie of Dundee, L.

John-Mackie, L.

Rochester, L.

Kennet, L.

Ross of Marnock, L.

Kilbracken, L.

Seear, B.

Kilmarnock, L.

Serota, B.

Kinloss, Ly.

Shackleton, L.

Kirkhill, L.

Shaughnessy, L.

Kissin, L.

Shepherd, L.

Lawrence, L.

Simon, V.

Llewelyn-Davies of Hastoe, B.

Simon of Glaisdale, L.

Lock wood, B.

Stedman, B.

Lovell-Davis, L.

Stewart of Fulham, L.

Mar, C.

Stoddart of Swindon, L.

Mishcon, L.

Taylor of Blackbum, L.

Molloy, L.

Taylor of Mansfield, L.

Molson, L.

Tordoff, L.

Mulley, L.

Wilson of Langside, L.

Munster, E.

Winchilsea and Nottingham, E.

Murray of Epping Forest, L.

Nathan, L.

Winstanley, L.

Resolved in the negative, and amendment disagreed to accordingly.
7.43 p.m.
Lord Mishcon Lord Mishcon had given notice of his intention to move Amendment No. 50:
Before Clause 43, insert the following new clause:
("Reimbursement of costs incurred by reason of death or incapacity of judge.
. Where in any proceedings—

(a) in the High Court or a county court; or

(b) in the civil division of the Court of Appeal in which the court consists of two judges,

it becomes necessary to hold a new trial or to re-hear the appeal by reason of the judge who presided at the original trial, or one of the judges in the Court of Appeal, dying or becoming incapacitated in the course of the trial or the hearing of the appeal or before judgment is delivered, every party to the proceedings shall be entitled to be reimbursed out of public funds in respect of any additional costs incurred by him in consequence thereof, any such costs to be taxed by the proper officer of the court.").
The noble Lord said: My Lords, I wonder whether I would save the time of the House by asking the noble and learned Lord whether, at this stage, this is an amendment that he can accept.
The Lord Chancellor: My Lords, I think that I can give it some quite favourable consideration on the basis of my letter to the noble Lord, but only in that sense.
Lord Mishcon: My Lords, the noble and learned Lord generously wrote to me and said that the spirit of this amendment was one that he could understand and might well consider favourably. I hope I am paraphrasing his letter correctly. It may not be that an amendment can be brought forward by the Government in this House, although that would be the attempt, but at least the spirit of this might well be met in another place. If that be the correct interpretation of what he said—and I notice that the noble and learned Lord is nodding—it would be quite wrong of me to

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waste the time of the House. I merely want to thank the noble and learned Lord for his consideration.
[Amendment No. 50 not moved.]
Clause 43 [Power of High Court to make judgments binding on certain persons who are not parties]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 51:
Page 32, line 26, leave out first ("of") and insert ("relating to the estates of deceased persons or to trusts and falling within").
The noble and learned Lord said: My Lords, the amendments make it clear that persons who may be bound by the new notice procedure are limited to those affected by actions related to trusts or to the estates of deceased persons. May I take together the three amendments relating to Clause 43; namely, Amendments Nos. 51, 52, and 53?
Amendment No. 52: Page 32, line 29, leave out from ("persons") to ("who") in line 30.
Amendment No. 53: Page 33, line 4, leave out subsection (3).
These amendments are introduced as a consequence of my undertaking to the noble Lord, Lord Mishcon, at the Committee stage to introduce an amendment to this clause to make it clear that the persons who may be bound by the new notice procedure are limited to those affected by actions related to trusts or to the estates of deceased persons. These amendments achieve this effect by glossing subsection (1) so that the clause is confined to trusts and estates of deceased persons by removing subsection (3), which is no longer necessary since its effect is achieved by the new subsection (1), and by making a consequential amendment to subsection (2). I beg to move.
Lord Mischon: My Lords, I am most grateful to the noble and learned Lord.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendments No. 52 and 53:
[Printed above].
The noble and learned Lord said: My Lords, may move Amendments Nos. 52 and 53 together? They are both consequential. I beg to move.
On Question, amendments agreed to.
Lord Elwyn-Jones Lord Elwyn-Jones moved Amendment No. 54:
After Clause 48 insert the following new clause:
("Goods subject to seizure in execution.
.—(1) After section 137 of the Supreme Court Act 1981 there shall be inserted—
"Good protected from seizure in execution.
137A.—(1) The following shall not be liable to seizure under any execution or order of any court against the goods of any person—

(a) such tools, books, vehicles and other items of equipment as are necessary to that person for use personally by him in his employment, business or vocation; and

(b) such clothing, bedding, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of that person and his family.

(2) For the purposes of this section "family", in relation to a person means the persons (if any) who are living with him and who are wholly or partially dependent on him.
466
(3) Section 8 of the Small Debts Act 1845 is hereby repealed".
(2) For section 89 of the County Courts Act 1984 there shall be substituted—
"Good which may be seized.
89.—(1) Every bailiff or officer executing any warrant of execution issued from a county court against the goods of any person may by virtue of it seize—

(a) any of the goods of that person except—

(i) such tools, books, vehicles and other items of equipment as are necessary to that person for use personally by him in his employment, business or vocation; and

(ii) such clothing, bedding, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of that person and his family.

(b) any money, banknotes, bills of exchange, promissory notes, bonds, specialities or securities for money belonging to that person.

(2) Any reference to the goods of an execution debtor in this Part of this Act includes a reference to anything else of his that may be lawfully seized in execution.
(3) For the purposes of this section "family", in relation to a person, means the persons (if any) who are living with him and who are wholly or partially dependent on him.".")
The noble and learned Lord said: My Lords, we discussed this at an earlier stage in the consideration of the Bill. It deals with what goods are subject to seizure in execution of an order of any court against the goods of any person. The language and the description of the permitted goods is consistent with that which is contained in Clause 110 of the Insolvency Bill. The substantial wording is identical.
The existing exemption speaks only of "the tools and implements of his trade". That is replaced, as the House will see, in the clause, by the more sensible words:
"such tools, books, vehicles and other items of equipment as are necessary … in his employment, business or vocation".
This is wider and reflects modern conditions. In my submission it is ridiculous to deprive a debtor of anything that he needs to produce an income. It is a self-defeating operation in every sense.
The new clause refers to items which are necessary, as the House will see, for the,
"basic domestic needs of [the debtor] and his family".
This is wider than the reference in the existing law to wearing apparel and bedding, but it does not serve anyone's interests to reduce a debtor below that standard by threatening to seize everything apart from clothing and bedding. This would seem to be a reasonable provision to which I invite the sympathetic consideration of the Lord Chancellor. I beg to move.
The Lord Chancellor: My Lords, we discussed what was very much the same amendment at the Committee stage. When the noble and learned Lord first moved this amendment, he quoted from the Payne Report. Since then that has been overtaken by the Cork Committee's report on insolvency law reform. On the specific point of the need to prescribe a list of exempt goods, the committee concluded that it would not only be difficult to compile such a list but would entail the trouble and expense of taking detailed inventories. The way forward that was adopted is admirably suited to the case of insolvency: instead of lists of exempt articles, the categories of exemption are broadened, the monetary limit of exemption (now £250) is dropped and all the exempt goods are made

467
subject to the trustee's powers to claim them in certain circumstances.
However, the amendment attempts to import a part of that committee's recommendations on this matter without the counterbalancing safeguards which the committee realised were also necessary. In cases of bankruptcy, the careful attention of the trustee is the all-important factor enabling the more flexible approach of the bankrupt's needs to be adopted. In the general run of the enforcement of High Court and County Court orders by execution against goods, however, there is no trustee with the scope of authority and duties which that status confers. For example, neither sheriffs nor bailiffs who have to preside over executions would enjoy the power which it is envisaged that trustees should have under the insolvency legislation.
The wider definition of bankrupts' "exempt" property would be expressly subject to the trustee's power to sell any parts of that exempt property if he can find a cheaper substitute. For example, in the case of clothing, if he found a mink coat he might be entitled to sell the mink coat and to substitute a cheaper article of clothing. If he found a Rolls-Royce he might sell the Rolls-Royce and substitute a humbler kind of vehicle. So while a debtor's vehicles or wearing apparel would be excluded by the wider definition from his realisable estate, the trustee would have power to replace a Rolls-Royce with a Ford or a mink coat with a tweed. Thus, whilst the monetary limit, now £250, may be dispensed with under the insolvency legislation, the role of the trustee is the safeguard against abuse.
But if introduced into ordinary High Court and county court execution the amendment would have a quite different effect. It would confer extra protection on the debtor to the detriment of creditors. Sheriffs' officers and bailiffs need to know with certainty what can and what cannot be seized in execution. For them, the categories of goods which up to the monetary limit are not to be seized, is a necessary guide. It is no doubt imperfect, I grant, but, with the benefit of judicial interpretation and humane custom, the categories of exemption operate as an acceptable compromise between the conflicting wishes of creditors and debtors where there is no trustee in bankruptcy to act as umpire. By repealing Section 8 of the Small Debts Act 1845 and the existing Section 89(3) of the County Courts Act 1984 the amendment would repeal the monetary limits completely. Furthermore, the categories of those protected goods are greatly extended and would appear to protect many of the goods owned by debtors which could at present be seized and sold to pay off their debts.
Sheriffs' officers and bailiffs attempting to obtain payment on behalf of creditors within the strict limits of the law would be seriously hampered in their efforts by this amendment—bailiffs, perhaps even more so than sheriffs, as they are usually dealing with debtors who have few assets. Given fallible human nature, if debtors think they can avoid paying their debts, they will do so. What is more, this amendment would then protect such goods from being seized and sold.
As it stands, the amendment would be greatly detrimental to the interests of judgment creditors, and
468
for this reason I hope that the noble and learned Lord will perhaps not pursue it further.
Lord Elwyn-Jones: My Lords, I will naturally read with care what the noble and learned Lord has just said. What I said seems so simple, fair and just, but on closer examination it appears that these quiddities of lawyers present difficulties in the way. Therefore in the circumstances I am content to read what the noble and learned Lord read to us with his customary clarity. Therefore I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Lord Chancellor The Lord Chancellor moved Amendment No. 55:
After Clause 49, insert the following new clause:—
("Power of county courts to grant relief from forfeiture for non-payment of rent.
.—(1) Section 138 of the County Courts Act 1984 (provisions as to forfeiture for non-payment of rent) shall be amended as provided in subsections (2) to (4) of this section.
(2) In subsection (5), the words "Subject to subsection (6)," shall be omitted.
(3) In subsection (7)—

(a) for "enforced" there shall be substituted "enforceable"; and

(b) after "the lessee shall" there shall be inserted ", subject to subsections (8) and (9A).".

(4) After subsection (9) there shall be inserted—
"(9A) Where the lessor recovers possession of the land at any time after the making of the order under subsection (3) (whether as a result of the enforcement of the order or otherwise) the lessee may, at any time within six months from the date on which the lessor recovers possession, apply to the court for relief; and on any such application the court may, if it thinks fit, grant to the lessee such relief, subject to such terms and conditions, as it thinks fit.
(9B) Where the lessee is granted relief on an application under subsection (9A) he shall hold the land according to the lease without any new lease.
(9C) An application under subsection (9A) may be made by a person with an interest under a lease of the land derived (whether immediately or otherwise) from the lessee's interest therein in like manner as if he were the lessee; and on any such application the court may make an order which (subject to such terms and conditions as the court thinks fit) vests the land in such a person, as lessee of the lessor, for the remainder of the term of the lease under which he has any such interest as aforesaid, or for any lesser term.
In this subsection any reference to the land includes a reference to a part of the land.".
(5) In section 139 of the County Courts Act 1984 (service of summons and re-entry), after subsection (2) there shall be inserted—
"(3) Subsections (9B) and (9C) of section 138 shall have effect in relation to an application under subsection (2) of this section as they have effect in relation to an application under subsection (9A) of that section.".").
The noble and learned Lord said: My Lords, I should like to speak to this amendment with Amendments Nos. 59D, 64 and 68:
Amendment No. 59D: Clause 60, page 43, line 23, at end insert—("except section (Power of county courts to grant relief from forfeiture for non-payment of rent)").
Amendment No. 64: Schedule 7, page 62, line 31, column 3, at end insert—
("In section 138(5), the words "Subject to subsection (6),".").
Amendment No. 68: Schedule 8, page 64, line 16, at end insert—
("Relief from forfeiture in county courts
. The provisions inserted by subsections (4) and (5) of section (Power of county courts to grant relief from forfeiture for nonpayment of rent) shall not have effect in connection with any recovery of possession of land by a lessor which occurred before the commencement of that section.").
These amendments confer on the county courts jurisdiction to grant relief against forfeiture analogous

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to that which exists in the High Court. The county courts' lack of jurisdiction in this respect was criticised by judges in two recent High Court cases. The County Courts Act 1984 already contains provisions which enable a lessee to avoid forfeiture of his lease in cases where he has failed to pay rent and, which may be exercised right up to the time when the lessor regains possession of the lands under the court order. The amendment will confer a new and additional power on a county court to grant relief if the lessee or a person with interest under a lease, for instance a mortgagee or a sub-tenant, applies within six months after possession has been recovered.
The jurisdiction will not be quite identical to that of the High Court, whose jurisdiction derives partly from equity and partly from statute and precedent. Instead it builds upon the systematic code already contained in Section 138 of the County Courts Act 1984. Subsection (1) provides that Section 138 of the County Courts Act be amended in accordance with subsections (2) to (4) of this clause. The main substance of the amendment is in subsections (4) and (5). Subsection (2) corrects an error which occurred when the provisions of Section 191(1) of the County Courts Act 1959 and Section 23 of the Administration of Justice Act 1965 were consolidated and rearranged in the County Courts Act 1984. The associated amendments to Schedule 7 contain the necessary repeal.
Subsection (3)(a) substitutes "enforceable" for "enforced" in Section 138(7). The latter term does not take account of those cases where a lessor does not need to enforce his order for possession—for example, where he can re-enter peaceably after proceedings for possession have been brought. Subsection (3)(b) makes subsection (7), which at present bars a lessee from all further relief once a possession order has been enforced, subject to subsections (8) and (9A), which are the new subsections conferring the right to claim relief. Subsection (4) inserts new subsections (9A), (9B) and (9C) into Section 138 of the County Courts Act.
Subsection (9A) provides that where a lessor has taken county court proceedings for forfeiture against a lessee to obtain a possession order, and has thereafter recovered possession of the premises, the lessee can apply to the county court for relief. The application for relief must be made within six months after possession has been recovered and the court can impose such terms on the grant of relief as it thinks fit. These conditions reflect the High Court's powers under Section 210 of the Common Law Procedure Act 1852. The six-month period will enable the lessors to know with certainty that the period during which there is a possibility of the lessee applying for relief and the terms imposed—for example, the payment of all arrears and expenses incurred by the lessor—will protect the lessor's interests.
The words in parenthesis in subsection (9A) reflect the differing circumstances in which possession may be recovered. Some lessors may stay until a warrant for possession is executed and others may leave once a possession order is made or leave voluntarily so that the enforcement is unnecessary.
The new right is being conferred on all such categories of lessee. Subsection (9B) confirms that the
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effect of granting relief against forfeiture is that the lessee holds the property according to his original lease without a new lease. Subsection (9C) extends the right to apply for relief against forfeiture to persons with interests derived from leases—sub-lessees and mortgagees. At present, until possession is recovered by the lessor enforcing his right to forfeit, a sub-lessee or mortgagee can apply to the county court under Section 146(4) of the Law and Property Act 1925 for relief in the form of a new lease. Both the grant of relief and the terms are at the absolute discretion of the court. The court can also grant relief to a sub-lessee from demised premises. The only restriction is that the sub-lessee cannot obtain a term longer than that remaining under his original sub-lease.
8 p.m.
Subsection 9(c) does all the same things but is necessary because the protection of Section 146(4) of the Law of Property Act 1925 cannot extend beyond the recovery of possession by the lessor forfeiting the lessee's lease. Subsection (5) inserts a new subsection at the end of the present Section 139 of the County Courts Act 1984. The effect is to provide explicitly that the lessee who obtains relief in circumstances where the lease was forfeited without an action being brought will hold the land according to his original lease. In the case of the sub-lessee, the relief will take the form of the grant of a new lease.
The amendment to Schedule 8 contains the associated transitional provisions. Where the lessor has recovered possession of the premises in cases governed by Sections 138 and 139 before the commencement of the section, the lessee or sub-lessee will not be able to apply for relief. The amendment to Clause 60 removes the clause from the list of sections which came into force automatically two months after the Royal Assent. As some amendment to the rules will be required, it is desired to have an Appointed Day commencement. I beg to move Amendment No. 55 having spoken also to Amendments No. 59D, 64 and 68. I hope I have explained the thing with sufficient clarity, though not, perhaps, with sufficient brevity. I beg to move.
Lord Mishcon: My Lords, we entirely agree with the necessity and the advantageous nature of these amendments.
On Question, amendment agreed to.
Clause 52 [Power of High Court to appoint an arbitrator on behalf of party in default]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 56:
Page 39, line 21, after ("parties") insert ("or in some other manner specified in the agreement").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 56. At the same time, I would speak to Amendments Nos. 57 and 58.
Amendment No. 57: Page 39, line 33, at end insert ("(if the case so requires)").
Amendment No. 58: Page 39, line 36, at end insert—
("(4) Except in a case where the arbitration agreement shows that it was intended that the vacancy should not be supplied, paragraph (b) of each of subsections (2) and (3) shall be construed as extending to any such refusal or failure by a person as is there

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mentioned arising in connection with the replacement of an arbitrator who was appointed by that person (or, in default of being so appointed, was appointed under that subsection) but who refuses to act, or is incapable of acting or has died.".").
These are technical amendments to Clause 52 which make minor and useful changes. Clause 52 is concerned with the power of the court to appoint an arbitrator for a party who has failed to appoint an arbitrator. The noble Lord, Lord Hacking, suggested in Committee an alternative manner of solving the problem of parties in default. For reasons which I gave then the large part of what he suggested was not acceptable. However, minor changes to Clause 52 have been suggested which would be useful and should be made. The first and second of these amendments bring within the scope of the clause references by two parties to three arbitrators where the third arbitrator is to be appointed otherwise than by the two arbitrators appointed by the parties, the only case covered at present by the clause. The third amendment will allow the court to appoint a substitute arbitrator on behalf of a party who refuses to make a substitute appointment where that party's original arbitrator refuses to act, is incapable of acting or has died. I beg to move.
Lord Mishcon: My Lords, I repeat the comment that I made on the last series of amendments. This, too, is very necessary and very sensible.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 57:
[Printed above.]
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 58:
[Printed above.]
On Question, amendment agreed to.
Clause 54 [Proceedings in connection with European patents]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 59:
Page 40, line 44, at end insert—
("( ) In section 114 (restrictions on practice as patent agent), after subsection (2) there shall be inserted—
"(2A) Notwithstanding the definition of "patent agent" in section 130(1) below, subsections (1) and (2) above do not impose any prohibition in relation to the business of acting as agent for other persons for the purpose of conducting proceedings before the comptroller in connection with European patents (UK) to which section 77(1) above for the time being applies.".").
The noble and learned Lord said: My Lords, this is technical, to ensure that Section 84 of the Patents Act 1977, which is amended by Clause 54, will be the only provision restricting the carrying on for gain of the business of conducting proceedings before the controller in connection with granted European patents (UK). As Clause 54 is at present worded, the same facts would give rise to an offence under Section 84 and an offence under Section 114 of the Patents Act. The amendment will prevent this prospect which is perhaps not correctly described as "double jeopardy". The House will know what I mean. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 59A, 59B and 59C:
After Clause 56, insert the following new clause:
("Northern Ireland rules of court with respect to disclosure of expert evidence etc.
.—(1) Notwithstanding any enactment or rule of law by virtue of which documents prepared for the purpose of pending or contemplated civil proceedings, or in connection with the obtaining or giving of legal advice, are in certain circumstances privileged from disclosure, provision may be made by rules of court for requiring, in the case of civil proceedings of any description specified in the rules—

(a) a party who has been afforded a medical examination of another party to disclose to that other party the result of the examination;

(b) a party who proposes to adduce at the trial expert evidence with respect to medical matters, or matters of any other class specified in the rules, to disclose that evidence to every other party to the proceedings;

and any such disclosure shall be made by the furnishing of any such document or documents as may be specified in the rules, and shall be so made by such time as may be determined by or in accordance with the rules.
(2) Provision may be made by rules of court as to the conditions subject to which expert evidence may be given in civil proceedings.
(3) Without prejudice to the generality of subsection (2), rules of court made in pursuance of that subsection may make provision for prohibiting a party from adducing, except with the leave of the court, any expert evidence the contents of which were required to be, but have not been, disclosed by him in accordance with rules under subsection (1)(b).
(4) Any rules of court made in pursuance of this section may make different provision for different classes of cases and for other different circumstances.
(5) In this section "rules of court" means—

(a) rules of court made under section 55 of the Judicature (Northern Ireland) Act 1978; or

(b) county court rules made under Article 47 of the County Courts (Northern Ireland) Order 1980;

and nothing in this section shall prejudice the generality of either of those provisions.
(6) Section 71 of the Administration of Justice Act 1982 (which is superseded by this section) shall cease to have effect.").
Amendment No. 59B: Page 42, line 30, after ("56") insert ("and section (Northern Ireland rules of court with respect to disclosure of expert evidence etc.)").
Amendment No. 59C: Page 42, line 32, at end insert ("and the Administration of Justice Act 1982").
The noble and learned Lord said: My Lords, with the leave of the House I should like to move Amendments Nos. 59A, 59B and 59C together and to speak to Amendment No. 63A.
Amendment No. 63A: Schedule 7, page 62, line 11, at end insert—

("1982 c. 53.

Administration of Justice Act 1982.

Section 71.")

Amendment No 59A, will allow the Northern Ireland Supreme Court Rules Committee to bring forward rules of court with respect to disclosure of medical evidence. The enactment two years ago of Section 71 of the Administration of Justice Act 1982 was intended to enable the Northern Ireland Supreme Court and County Courts Rules Committee to make rules of court on this matter on lines similar to those already operating in England and Wales.
For this reason, Section 71 of the 1982 Act was modelled on its English equivalent, Section 2 of the Civil Evidence Act 1972, and contained a dispensation from the common law rule that evidence obtained for the purpose of litigation is privileged from disclosure. The members of the Northern Ireland Supreme Court Rules Committee have given careful consideration to the form which rules on the pre-trial

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exchange of medical reports should take. Their wish to make rules suitable to Northern Ireland practice and procedure is, however, frustrated by the fact that Section 71 of the 1982 Act requires the court to give a specific pre-trial direction about the disclosure of expert evidence in every case.
In England and Wales, the corresponding statutory requirement has been met by having automatic directions for disclosure applicable to all actions for damages for personal injury as part of the rules of the Supreme Court. However, automatic directions is a form of procedure which has never been part of court practice in Northern Ireland, and it has been decided that the best way to deal with this difficulty is to replace Section 71 of the 1982 Act by a new provision enabling the rules committee to make rules which require pre-trial disclosure of expert evidence but free from the need for the specific court order in every case. Rules made under this new clause may provide, first, that a party who has been afforded a medical examination of another party must disclose the result of it to the party examined; and, second, a party who proposes to call expert evidence, medical or otherwise, must disclose that evidence to all other parties to the proceedings.
The new clause also allows the enactment of the rules under which the disclosure can be made by production of a copy of the original expert report or by a statement of evidence based on it. The Government regard the introduction of rules of court on the pretrial exchange of medical reports as likely to enhance the prospect of the early settlement of actions and to reduce the number of consultants attending to give evidence in court. Either of or both of these developments should reduce the course of personal injury litigation in Northern Ireland. I beg to move Amendments No. 59A, 59B, and 59C.
Lord Elwyn-Jones: My Lords, these amendments will be very welcome in Northern Ireland. They will effect considerable savings of time and effort and procedure. It is good that the noble and learned Lord has taken advantage of this all-embracing Bill to introduce this useful piece of reform.
On Question, amendments agreed to.
Schedule 1 [Amendments of Solicitors Act 1974]:
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 60 and 61:
Page 44, line 36, leave out ("discloses conduct such") and insert ("involved conduct on his part of such a nature").
Page 44, line 38, leave out ("as aforesaid") and insert ("by a solicitor in connection with his practice").
The noble and learned Lord said: My Lords, these are Government amendments and, if I may, I will take Nos. 60 and 61 together, with the permission of the House. They are both drafting amendments, expressing more clearly the circumstances in which the Law Society is able to apply to the Solicitors Disciplinary Tribunal for an order preventing the further employment of a clerk who has behaved improperly, or for imposing conditions on it. Since no point of
474
substance is raised, I will not say any more unless noble Lords require it. I beg to move.
On Question, amendments agreed to.
Schedule 2 [The Council for Licensed Conveyancers: supplementary provisions]:
Lord Graham of Edmonton Lord Graham of Edmonton had given notice of his intention to move Amendment No. 61A:
Page 46, line 8, after ("are") insert ("nominated or elected by").
The noble Lord said: My Lords, in view of the pressure of time on our agenda, I do not propose to move this amendment but would give notice that I intend to bring it forward at a later stage.
[Amendment No. 61A not moved.]
Lord Graham of Edmonton Lord Graham of Edmonton had given notice of his intention to move Amendment No. 62:
Page 46, line 20, at end insert ("of whom at least two shall be persons who represent the interest of consumers.").
The noble Lord said: My Lords, the same considerations apply here as for Amendment No. 61A. I shall not move this amendment but will bring it forward at a later stage.
[Amendment No. 62 not moved.]
Schedule 7 [Repeals]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 63:
[Printed earlier: col. 443.]
The noble and learned Lord said: My Lords, this amendment is consequential upon certain amendments I have already spoken to. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 63A:
[Printed earlier: col. 472.]
The noble and learned Lord said: My Lords, this amendment is consequential upon Amendment No. 59A, and I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 64:
[Printed earlier: col. 468.]
The noble and learned Lord said: My Lords, I have to say that this amendment is consequential upon Amendment No. 55. I beg to move.
On Question, amendment agreed to.
Schedule 8 [Transitional provisions and savings]:
Lord Graham of Edmonton Lord Graham of Edmonton had given notice of his intention to move Amendment No. 65:
Page 63, line 10, leave out sub-paragraph (a).
The noble Lord said: My Lords, I do not intend to move this amendment and I give notice that I intend to bring it forward at a later stage.
[Amendment No. 65 not moved.]
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 66 and 67:
[Printed earlier: col. 443.]
The noble and learned Lord said: My Lords, these amendments are consequential upon Amendments Nos. 46 and 63. I beg to move.
On Question, amendments agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 68:
[Printed earlier: col. 468.]
The noble and learned Lord said: My Lords, I have already spoken to this amendment: it is consequential upon Amendment No. 55. I beg to move.
On Question, amendment agreed to.

National Heritage (Scotland) Bill
8.16 p.m.
Read a third time, with the amendments.
Clause 18 [Provisions as to National Library of Scotland]:
Lord Ross of Marnock Lord Ross of Marnock moved the following amendment:
Page 18, line 36, leave out ("thirty-two") and insert ("twenty-one").
The noble Lord said: My Lords, with permission, I think we could take the two other amendments at the same time.
Page 18, line 37, leave out from ("whom") to ("sixteen")
Page 19, leave out lines 1 to 13.
These amendments are fairly simple amendments, readily understood, and I hope they will commend themselves at long last to the Government. The effect of the first amendment is to reduce the number on the Board of Trustees of the National Library of Scotland from 32 to 21 by the removal of 11 ex officio members. One wonders why there were so many ex officio members in the first instance. To understand that, we have to go back to 1925, when the National Library Act was passed through both Houses. In 1922 the National Library offered itself—I should say that it was the Advocates, because there was no National Library then: the Advocates offered the library—to the Government, but the Government of the day were so hard up that they said, no, they could not take it over. What they did instead in 1922 was to offer £2,000 a year.
This, I would ask your Lordships to remember, was a library which was started in the reign of Charles II. After the British Museum, it had been probably the finest library in the world and it had the same privilege as the British Museum of getting a copy of every book that was published. But it was maintained by the Faculty of Advocates of Scotland, and by 1922 they just could not continue, first, from the point of view of the whole administration, and, secondly, because of the expense and the need for more space. So they offered it to the nation, but the Government of the day said, "No, we cannot afford it".
As a result of that event, in 1932 the Earl of Novar, Lord Balfour of Burleigh, Lord Rosebery and a few other people formed themselves into an endowment trust to get enough money to keep what was virtually a national library going. Some money was forth-coming, but then there appeared on the scene a Scottish baronet, Sir Alexander Grant, who offered £100,000—and £100,000 in the year 1923 was a very considerable sum of money. The Government said, "Yes, now that you have endowed it to that extent we will take it over".
Following that we had this Act which we are now amending. I think it was probably because of the national effort and the focus of attention on the national library and its importance to Scotland that we had so many ex officio members—and I would remind your Lordships that the number we have here is two less than it was; so if they all turn up at these meetings it is not so much a board of trustees as a public meeting.
As we have already found out by just asking people who happen to be in the House, as to the Lord Provost of Glasgow, we have the Lord Provost of Glasgow here, and he never remembers having been asked to go to it. We have the Lord Provost of Aberdeen in the House. He had never heard of it. I was Secretary of State for Scotland, and I do not know whether I was entitled to go there. Until we reformed this statute, there was no Secretary of State for Scotland in 1925; it was then the Secretary for Scotland. Actually, it was the man who became the Secretary of State for Scotland, because the post was created the following year, and in 1926 Sir John Gilmour became the first Secretary of State for Scotland—and he was, of course, the Secretary for Scotland who brought this to Parliament the year before. So it is understandable in the context, but that was 60 years ago. We do not need 11 ex officio members now.
What are left with? We are left with the reduction to 21: 16 appointed, five of them to be persons appointed by Her Majesty on the recommendation of the Secretary of State; and at least one of them should be representative of organised labour and five should be persons appointed by the faculty. I sincerely hope that I shall not hear from Minister of State the excuse that this would not fit in because we would not know what the faculty was. If he looks at Section 3 of the original Act, which is still there, it says:
"… the Faculty of Advocates (hereinafter in this Act referred to as `the Faculty')";
so the faculty is properly defined in the Act that we are amending and there is no worry about that one.
There will be four persons appointed jointly by the universities and two appointed by the Convention of Scottish Local Authorities. That is a reduction in respect of the Scottish local authorities, because there used to be two from the Convention of Royal Burghs and I believe that there were two from the Association of County Councils.
As a result of an amendment that was made to the original Act in the Commons by one Mr. James Maxton, the education authorities, which were separate authorities, were given appointed represent-

477
ation as well. Surely, five appointed by Her Majesty, five from the faculty, four from the universities, two from the local authorities and then the other five co-opted members of the board,
"being persons of eminence in literature or public life, not otherwise members of the Board",
is enough. It will be a long time before we look again at this subject, so let us make some sense of it. I hope that the Minister of State will now accept the amendment. My Lords, I beg to move.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, I know the tenacity of the noble Lord, Lord Ross of Marnock, and therefore I was not in the slightest surprised that he should have tabled an amendment at Third Reading. What is surprising is that the noble Lord's amendment should relate to the composition of the Board of Trustees of the National Library of Scotland, because this is a matter which has been discussed both here and in another place, and always with the consensus of opinion falling in favour of the course envisaged in the Bill as drafted.
I note that the amendments which the noble Lord has laid on this occasion differ slightly from those which appeared earlier. This time all he seeks to do is to remove the remaining 11 ex-officio trusteeships. The main point that I want to stress is this. The number which the noble Lord wishes to move is irrelevant in this context. The House has already heard on a number of occasions the objections which noble Lords opposite have raised on the constitution of the board, as amended in the Bill. When the matter was discussed in Committee, the noble and learned Lord, Lord Fraser of Tullybelton, spoke eloquently in favour of the present constitution. The ex-officio members, who would be removed by the amendment of the noble Lord, Lord Ross of Marnock, are valued not because of their attendance at board meetings, or because their attendance is indispensable, but because their identification with the interests of the library broadens the influence of the board in a helpful way.
During Committee we also heard the comments of the noble Earl, Lord Perth, who is especially well qualified to speak, since he serves as one of the members of the board who are co-opted by the trustees. He is therefore not affected by any particular factional interests. He, as your Lordships will recall, paid particular tribute to the contribution to the board of one of the very members whom this amendment would remove—the Lord President.
Having heard the views of the noble Lord, Lord Ross of Marnock, and of those of your Lordships who took part in the debate both in Committee and subsequently, I know that the mood of the House was that we were more or less united and remained in favour of the position as represented in the Bill. I believe that this remains the common sense approach. I hope that the House will continue to stand by it and that the noble Lord will agree to withdraw his amendment.
Let me just say to him that one of the important points is that all of the members are not expected to attend regularly, but the mere fact that they are members gives the board additional standing. It gives the board access to their views and opinions from time
478
to time and, indeed, it is preferable that the day-to-day events be looked after by a smaller group of people. Therefore, I find it difficult to accept the arguments put forward by the noble Lord, Lord Ross of Marnock. Certainly, no one can say that I have not heard them before, because the noble Lord has been meticulous in spelling them out at each stage, but I do not believe that what he seeks to do would be an improvement. Therefore, I ask the House to accept what we have agreed up until now and I hope that the noble Lord might consider withdrawing his amendment.
Lord Ross of Marnock: My Lords, in response to the Minister, I am surprised that he argues in respect of this amendment that the influence of a board depends upon people who never turn up. That is quite nonsensical. This is the first time that he has actually tried to justify these ex-officio members and he must be very grateful indeed to the noble and learned Lord, Lord Fraser of Tullybelton. But if I remember correctly, the noble and learned Lord, Lord Fraser, was concerned more about the faculty, the history of the museum, how much it depended on the faculty and how generous the faculty was in respect of the handing over of the museum in 1925.
I do not think any of the arguments produced by the noble Lord holds water. If the Lord President is so important, then he can be appointed by virtue of the five appointed by Her Majesty on the recommendation of the Secretary of State, because he is a person who is eminent in either literature or public life. So he is not denied, nor is anybody else denied, consideration on this board in that respect.
I pointed out that the noble Earl, Lord Perth, was on as a co-opted member. Why was it so important? I suppose that the same argument was used in 1925 with the Lord Provost of Perth—that he was important; there is no Lord Provost of Perth now. Was it because of the influence that he had and the standing that he gave? The same is true of the whole lot. The Minister of the High Kirk of St. Giles adds to the whole lustre and importance of this Board of Trustees.
Then there is the Member for Central Edinburgh. That may have been true in 1925, when Central Edinburgh was just Central Edinburgh. As a matter of fact, there was a very good Labour Member and he actually spoke. I have taken the trouble—and I hoped that the Minister of State had done the same—to read the reports of the debates in this House and in another place on the 1925 Act. It was Willy Graham who was the Member, but he was no relation to my noble friend. His brother-in-law will be remembered in this House. He was a former Lord High Commissioner of the General Assembly of the Church of Scotland, Lord Mathers, and he served in this House. As I said, he was the brother-in-law of William Graham, who was Financial Secretary to the Treasury in the Labour Governments of 1924 and 1929 and, unfortunately, he died fairly young.
But the person who brought a national outlook to the debates was James Maxton, who kept reminding people that this was a National Library and not an Edinburgh library. That was his complaint and he was the person who drew attention to the need to have education authorities represented, as indeed they were

479
when a change was made in Committee. But they had more spunk and more sense in those days in considering amendments. I am convinced that the reason for this long list of illustrious people is not so much the people as the positions that they occupy, because the people can be not worth tuppence from the point of view of contributing to the National Library. What matters is the positions and the lustre.
The library was being built up at the time when it was being taken over by the Government. I think it was in this House that it was recommended to the Earl of Haldane as worth supporting because it was an example of nationalisation and socialism. That was from the Lord Balfour of Burleigh. It was; but it does not require this list of 11 members.
I am sorry but I am not going to withdraw the amendment because I feel quite strongly about it. I do not think it makes sense; I do not think that the Government have looked at it. I am perfectly sure that the Government have not even looked at it. Certainly there is no indication from anything that has been said in the previous debates that the Government found anything at all to support it until they got a word or two from the noble Earl, Lord Perth, and from the noble and learned Lord, Lord Fraser of Tullybelton.
I just deplore the fact that after 60 years we should still have this anachronistic stuff. I thought that we might have done better than that after 60 years. This was probably the last Act of Parliament passed by a Secretary for Scotland. In the next Act of Parliament that same Secretary had been elevated to the position of Secretary of State. But for all that time it has been the Secretary for Scotland—it has been in the statute. When they bring that up to date surely they should have a look at this and ask whether it is worth while. It is not. These 11 people should have gone.
The Deputy Speaker (Lord Hayter): Is the noble Lord withdrawing his amendment?
Lord Ross of Marnock: My Lords, No.
On Question, amendment negatived.
[The remaining two amendments not moved.]
Lord Gray of Contin: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Gray of Contin.)
On Question, Bill passed, and returned to the Commons.

National Health Service (General Medical and Pharmaceutical Services) Amendment Regulations 1985
  National Health Service (General Medical and Pharmaceutical Services) (Scotland) Amendment Regulations 1985

    NHS Drugs Bill
    8.33 p.m.
    Lord Ennals: My Lords, I rise to move that a humble Address be presented to Her Majesty praying
    480
    that the Regulations (S.I. 1985 Nos. 290 and 296) be annulled [15th Report from the Joint Committee.]
    At the same time, I should like to speak to my Motion to resolve, That this House, while accepting the need for further savings in the NHS drugs bill, deplores the decision of Her Majesty's Government to deny to general practitioners the right to prescribe the medicines which they think most suitable for their patients.
    Before doing so, I should like to say to your Lordships that I feel it is absolutely disgraceful that an issue of this importance, making fundamental changes in the National Health Service, should be taken at this time of night in your Lordships' House. I make no reference as to who is responsible for this, but I think it is really quite shameful that the debate is starting after half-past eight in the evening.
    May I first refer to the Report of the Joint Select Committee on Statutory Instruments. I should like to quote two paragraphs from that report:
    "There were two areas of concern. The first was that there appeared to be differences between the lists of drugs on the two sets of regulations. In oral evidence, the Departments pointed out that while the England and Wales Regulations carry one alphabetically arranged list, the Scottish Regulations carry three separate alphabetical lists. There were still, however, differences between the two Regulations which were not intended and which had arisen through printing and compilation errors. The Departments admitted that, certainly in the case of S.I. 296 and possibly also in the case of S.I. 290, both Houses were being asked to consider regulations which were not accurate and whose errors would have to be amended by subsequent instruments".
    The second paragraph reads:
    "These regulations, inter alia, allow a chemist or dispensing doctor to provide a branded drug, notwithstanding the fact that it is listed in the Schedule, in substitution for a non-proprietary drug. While it appears as if these provisions allow chemists or doctors to continue to provide listed drugs, the Department explained that such substitution was only to take place in the case of the chemist or doctor not being able to provide the non-proprietary drug, for instance if he were out of stock. They agreed that a difficulty could arise if the non-proprietary drug was cheaper than the proprietary drug. If the reason for the former being unavailable was that the doctor or chemist had failed to take the normal precautions to secure that he had it in stock, he would be required to meet the difference between the price of the two drugs. If, however, he was able to satisfy the Department that it was not his fault that he was unable to obtain a stock of the non-proprietary drug, the Department would secure that he was reimbursed by the National Health Service. In any event, however, the chemist or doctor would fall outside his conditions of service if he were to charge the difference in price to the patient".
    First, that is bureaucracy gone mad. Secondly, we are being asked to approve of two instruments, both of which it is admitted and accepted are inaccurate. Furthermore, it has been established by the noble Lord, Lord Cockfield, on behalf of the European Commission, in reply to a question from the noble Baroness, Lady Elles, that the Government's action is, according to the Commission, illegal.
    But these arguments are the least of the arguments against these regulations, which introduce the concept of the limited list which for the first time since the creation of the National Health Service interferes with the clinical freedom of the doctor to prescribe what in his judgment of the patient's needs is best for the patient.
    If I am going to say anything good about the Government, let me do it now, because this is the only good thing I shall say about them. The second list is at

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    least an improvement on the first. I am suspicious that the first list was introduced as a joke and that the second list was the real list that the Government intended to introduce. The first list that was introduced was a pretty sick joke. As Dr. Michael Wilson, chairman of the General Medical Service Committee of the BMA, has said:
    "The law should not be brought into the surgery to dictate which drug should be prescribed. We have a revised limited list which will not enable us to meet all the clinical needs of our patients. Some will suffer".
    Mr. Kenneth Clarke, the Minister for Health, said roughly the same in a Channel 4 broadcast in 1983. He said:
    "Experience shows that, however many similar drugs there are, some patients benefit from one rather than another".
    Later he said in another place, on 22nd November 1983:
    "No, we are not convinced that such a list confining the judgment of the doctors will be in the best interests of the patient".
    I want to know what it is that has convinced the Minister for Health and the Secretary of State. I also have to ask what credence we are to place in future on ministerial assurances which seem so easily to be broken.
    But Mr. Kenneth Clarke I believe was perfectly right. Perhaps I can give one or two examples of situations which may well be created as a result of the route that the Government have decided to take. This is the first example given by a general practitioner. He has a patient with multiple sclerosis, who is still mobile and caring for her elderly mother but who suffers pain in her legs. He tried various medicines to control this but the patient suffered gastric side effects. He found, however, that soluble Distalgesic was effective and well tolerated by the patient. Yet this presentation of the drug would, under the revised list, no longer be available under the NHS in any form.
    In the same case, the mother had trouble sleeping, and this also affected the daughter. It was the doctor's clinical opinion that she needed night time sedation but he observed that most hypnotics cause undue 'hang-over' side effects. These are dangerous to the elderly. But the medicine lormetazepam is the fastest clearing benzodiazepine and especially suitable for the elderly. She was successfully introduced to this medicine, but under the limited list proposal it would not be available in any form. So the doctor's judgment on the basis of years of experience is to be thrown away.
    Perhaps I may give a second example which is pretty close to home. A disabled ex-serviceman in his sixties suffers from ankylosing spondylitis, which leads to a substantial degree of constant pain in the spine and the head. It sometimes strikes at joints in the shoulders and in the arms. After a good deal of trial and error, it was found that the most effective drug for this patient was DF 118: but that drug can no longer be prescribed. That drug, my Lords, is the one I am no longer allowed to have, or, rather, is the drug for which I will have to pay after April Fool's Day.
    I have not decided how best to deal with the pain involved, but I am reminded that the Secretary of State for Social Services, Mr. Norman Fowler, at a meeting
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    of the Conservative Medical Society on 1st December 1984, said that DF 118 would not be affected by the Government's limited list proposals. He repeated this on 5th December 1984, when opening Pfizer's new research facilities in Kent. As I asked before, what credence are we to place on assurances given by Ministers when, within a few weeks or a few months, they solemnly break their word?
    I can give several examples of that, but I will touch on only one other issue. It is one that happens to annoy me at the moment in my capacity as patron of the National Society for Non-Smokers. It amuses me somewhat that on the eve of Non-Smoking Day, and on the very day when the Chancellor of the Exchequer has very sensibly increased tax on cigarettes at rather more than the rate of inflation, a doctor will no longer be able to supply medicines to help smokers give up their habit. How crazy can you be?
    Apart from particular examples, the inability of doctors to prescribe what they and their patients know to be most effective can undermine the doctor-patient relationship. Patients, whether they have been in exempt categories or not, will be forced to pay for what they need and for what the doctor has said they need, or else take something that is less satisfactory. It is another way of pushing patients, whether or not they can afford it, into the private sector. It could be that such is the intention of the Government, and no doubt the Minister will comment on that point when he replies.
    I have referred to the patients: what about the doctors? In a personal letter to me a day or two ago, Dr. Michael Wilson, whom I have already quoted, stated:
    "The BMA joined with the Department and others in producing the Greenfield Report, published 4th February 1983. I was a member of that working party. The Report recommended that a national Limited List should not be introduced. That Report and all its recommendations, except the one relating to generic substitution, were accepted by the Government".
    He goes on to state:
    "We believe"—
    that is, the BMA—
    "a system of Regulatory Control would introduce a bureaucratic machine into an area where a joint approach, relying on professional action, could achieve so much more, across the whole range of prescribing, and avoid the doubts which have now been raised regarding the continued commitment of Government to a comprehensive health service. We have been saddened that, despite our contribution to the Greenfield Committee, there have been no discussions or consultations with representatives of the profession since the report was published in February 1983".
    I know that the Minister will say that there have been consultations with the professions about what the list should contain, but it is the principle that has never been discussed with the BMA, with the ABPI, or with any other responsible organisations.
    We should be fair to the general practitioners in Britain. They have contained expenditure on drugs in this country. They are at the bottom of the spending league, per head of population, among all the developed countries. The most recent figures for the number of prescription items per capita are: in the United States, 16·6; Italy, 11·3; West Germany, 11·2; France, 10; Spain, 9·6; New Zealand, 8·5; Australia, 7·7; and the United Kingdom, 6·9.
    Lord Ferrier: My Lords, if the noble Lord will allow me to intervene, it is not of our choosing that we find ourselves landed with this debate at this late hour. The noble Lord is speaking so fast, but so interestingly, that it may be prudent of him to let us hear more clearly what he has to say, and his quotations.
    Lord Ennals: My Lords, I must say to the noble Lord that I am very sorry if I was speaking too quickly. It was due to the fact that there are so many others who wish to speak and I do not want to deprive them of the opportunity because I happen to be the first speaker.
    I was making the point that regardless of the actual statistics, in terms of spending on health service prescriptions, Britain is at the bottom of the list. It is not as though the Government can say that there is great over-expenditure by doctors; and even that level of spending is under special circumstances.
    Over the past 10 years general practitioners have had to cope with a reduction in hospital beds of 20 per cent. They have had to cope with a reduction in the average length of stay in hospitals of 25 per cent. This is a very important consideration, because it means that far more responsibility is placed on doctors in serving their patients in the community. That is good in many ways, but it inevitably places additional responsibility on the doctor, in particular in regard to what he prescribes. Also, doctors have had to cope with an increase of 25 per cent. in those aged over 75—a group which, of course, needs the most treatment and the most prescriptions. Doctors have had to respond also to a professional request to reduce the quantities on repeat prescriptions so as to reduce waste, but that means more prescriptions for smaller amounts. Finally, general practitioners have to cope with heightened expectations as a result of medical advance.
    I find it very difficult to criticise the medical profession, who have sought to do their job well, and who have, as the noble Lord, Lord Kilmarnock, will point out when he speaks to his amendment, put forward themselves, as has the pharmaceutical industry, suggestions as to alternative ways in which the money could be raised.
    What about the pharmaceutical industry? Each time I have spoken in your Lordships' House about the pharmaceutical industry—and I have done so on a number of occasions—I have emphasised the very damaging effect which the Government's policies are likely to have an onward investment, on jobs and on exports. Time and again, while accepting that savings can be made in the drug industry, I have congratulated The pharmaceutical industry on the contribution it makes to our balance of payments, being in the front line of innovation and of research. The warnings I have issued to the Government they seem not to have taken seriously, but they have been proved to be true.
    A survey recently undertaken by the ABPI revealed that since the Government's limited lists proposals were announced in November last year investment projects to the value of £143 million in pharmaceutical production or research have been either cancelled or postponed. Some companies are naturally reluctant to make public announcements
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    about the cutbacks because of industrial relations and other considerations. However, Wyeth Laboratories, with headquarters in Maidenhead, Berkshire, have publicly announced the cancellation of a £30 million investment at Swindon—a matter which will no doubt be of great concern to the former constituents of my noble friend. Wyeth laboratories have also made 110 members of staff redundant at their plant at Havant, Hampshire.
    In September last year the Secretary of State, Mr. Fowler, opened new production facilities for A. H. Robins and Company at Langhurst, West Sussex. At that opening the president of the parent company hinted quite strongly that the firm were planning to set up a major European research and development facility on that site. Mr. Fowler himself said that he looked forward to seeing "Langhurst Mark II". The chances now are that Langhurst Mark II will not emerge, as the parent company is now looking elsewhere, to other countries, for another site.
    Mr. Fowler may also have sought to take comfort from the fact that he was asked to open a new plant for Pfizer in a former constituency of mine, in Kent, last year, and that he is being invited to open new research facilities established by Merck Sharpe and Dohme at Harlow in May of this year. I understand that the potential for developing the Merck Sharpe and Dohme research facilities at Harlow is now being seriously down-graded. I know that from conversations I have had with their most senior executives.
    Decisions by the parent companies of these two transnational corporations to invest in the project that Mr. Fowler has been invited to open, or has already opened, were taken at least five years ago. They were taken at the time when I was Secretary of State for Social Services. It would be quite wrong for him to cite these as examples showing that his current proposals will not damage future investment. I am convinced from the many firms which have spoken to me that the proposals will be gravely damaging to the British economy and to the work situation. The ABPI estimated that there would be a loss of roughly 2,000 jobs. My own union, ASTMS, has carried out a study which puts the figure at nearer 5,000 possible redundancies in production and research. Therefore, I fear that the pharmaceutical industry and its future in this country is now very much at stake. This I deeply regret because of the role I personally played in seeking to encourage firms to invest in Britain.
    In conclusion, I fully accept that there are savings to be made in our drugs bill. I say that in the Motion which stands in my name. I have always accepted the recommendations of the Greenfield Report in precisely that respect, including the right of general practitioners, if they feel it necessary, to insist that there should not be a generic substitute but that what they have prescribed should be provided. I should add that the instrument designed to contain drug profits is the PPRS. I have an interest in that, too, because I negotiated it when I was Secretary of State.
    One asks, why, instead of using the method that was set up for controlling drug profits and which has worked effectively for many years since it was negotiated in 1977, the Government should now embark on what I believe is a ridiculous and dangerous

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    scheme? It is dangerous because it takes away the rights of doctors; it takes away the rights of patients; it endangers the pharmaceutical industry; and it undermines confidence in the word of Ministers. Furthermore, it gives to Ministers the power to change the list, to add more items to the black list and take actions which could further undermine the interests of the patients. I fear that everyone involved, with the possible exception of the Government, though I doubt whether they are going to achieve their savings target, will suffer as a result. That is why I have sought to move this Motion. I beg to move.
    Moved, That an humble address be presented to her Majesty praying that the Regulations (S.I. 1985 No. 290) be annulled.—(Lord Ennals.)
    8.52 p.m.
    Lord Kilmarnock Lord Kilmarnock had given notice of his intention to move, as an amendment to the Motion of the Lord Ennals on Drug Prescribing, To leave out all the words after ("Government") and insert ("to implement these regulations without first giving the medical profession the opportunity to put into practice their own proposals for responsible prescribing for a trial period.").
    The noble Lord said: My Lords, I rise to speak to the amendment which stands in my name to the Motion of the noble Lord, Lord Ennals. I shall formally move my amendment at the end of the debate.
    There are many things which the noble Lord, Lord Ennals, said, with which I agree, and I shall return to some of them. My noble friends and I felt that this resolution, as phrased, might be interpreted as an advocacy of the status quo, while we believe that there should be substantial reforms in prescribing practice in order to save money on the drugs bill for redeployment elsewhere in the National Health Service.
    Our difference with the Government is that they have chosen control by regulation whereas we believe that they have lost a great opportunity to secure the consent of the profession to voluntary self-regulation. The list has become more acceptable since its first derisory draft, which looked as if it had been scribbled on the back of an envelope. However, even now there are severe drawbacks to the Government's chosen method. The noble Lord, Lord Ennals, instanced a number. I should like to mention the following.
    First, the clinical cover is not as thorough as suggested. There are categories of patients who quite simply are not catered for; for example, those suffering from coeliac disease who require special foods which are banned. Also, Complan food is banned. That seems to be very petty because it is used outside hospitals largely for the debilitated and for terminally ill patients. With the banning of solfadein there is no dispersable non-aspirin analgesic. Wright's vapourising fluid for respiratory diseases of infants has also gone. I could go on.
    That brings me to my second point. Faced with these therapeutic gaps, doctors are bound to prescribe upwards—trading up, I believe it is called—thus eliminating some of the savings that the Government imagine they are going to make.
    That brings me to my third point. It will not always be the doctor's fault if a more expensive drug is
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    substituted for a cheaper one. The regulations themselves state in paragraph 2.6(b) that a chemist may provide a branded drug, notwithstanding the fact that it is listed in the schedule—that is to say, it is on the black list—in substitution for a non-proprietary drug; that is, a more expensive drug if the cheaper one is not available. It is a sort of generic substitution in reverse. The 15th Report of the Joint Committee on Statutory Instruments, to which the noble Lord, Lord Ennals, referred, comments adversely on this self-defeating anomaly, as it does on the discrepancies between the English and Scottish regulations, on which I shall welcome the noble Lord's comments.
    These may be purely technical hitches which can be ironed out, but there are further serious legal queries hanging over the black list in the shape of the answer given by no less a person than the noble Lord, Lord Cockfield, to a question put by the noble Baroness, Lady Elles, to the European Commission, from which it appears that the list may be incompatible with Article 30 of the Treaty of Rome. This point was mentioned by the noble Lord, Lord Ennals. I hope we shall hear something on that from the noble Lord, Lord Glenarthur.
    My noble friend Lord Winstanley will deal with this matter at greater length. My noble friend asked me to say that it was through an oversight that his name was not included on the list of speakers and the fact that he will be speaking in the gap does not mean that his speech is a last minute improvised intervention. I know that he has important points to make on practical, medical and administrative matters and we look forward to his intervention.
    The fifth of my points, which may well be linked to the legal aspect, concerns an appeals mechanism to decide on the inclusion or exclusion of new drugs. The Secretary of State said that he will look sympathetically at this, but in the debate in the other place last night it emerged that no system has yet been agreed. That seems to be another reason for postponing the implementation of these regulations. The Government may care to ponder on the widom of introducing the regulation with effect from April Fool's Day. Even if an appeals mechanism is set up, it will absorb resources and time and it will further reduce any savings that are likely to be made.
    As regards these savings—and this is my sixth point—I have already raised in a Question earlier this afternoon the difficulty of identifying and accounting for them except on a very arbitrary basis. I was told in reply to my Question that general National Health Service funding will not be affected by the regulations; that is to say, that the Government's pledge of a 1 per cent. increase in real terms for the coming year will be kept. However, it seems to me that there is likely to be an effect. It has been widely suggested that the £75 million projected by the noble Lord when he made his Statement on the regulations is not likely to be forthcoming. If there is a shortfall, we want to know where it is to come from and whether or not it is to be taken from the allocation for the hospital service.
    I have given six drawbacks and I could go on to others. There is the withdrawal problem; there is the question of pharmacists' stocks which will be left on their shelves; and there is the confusion among elderly

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    people. There is also the Government disregard of the public response to the list as expressed through the mailbags of Members of Parliamment in the other place. There are not only people who have been, so to speak, whipped into signing petitions; there has also been a great deal of individual private correspondence in the mailbags of Members of Parliament. The Government have not paid enough attention to that.
    However, I do not want to pursue that at the moment. I want to pause here and state categorically that opposition to the Government's list does not imply Alliance endorsement of unbridled clinical freedom. I think it is well known that we would introduce generic substitution, where feasible, by the pharmacist, unless the doctor ticked a box or underlined the brand name, specifically asking the pharmacist to dispense that brand name and only that one. We hold that this would maintain a healthy and desirable level of clinical freedom because the doctor would have the last word and there would be no need for all this cumbersome appeals procedure.
    It has been calculated that, even under the Government's scheme, a major proportion of the savings will be made simply by generic substitution of benzodiazepine sedatives and tranquillisers and mild to moderate analgesics. Thus a large part of the objective of the Government could have been achieved without all this fuss and all this bad blood. Well, it is never too late to think again, so let us just look at what the profession now proposes. I do not want to go into all the accusations and counteraccusations that we have previously debated. There was undoubtedly lack of consultation, there was provocation, angry response by the BMA and so on. That is now behind us. What is now relevant is that the General Medical Services Committee of the BMA is prepared to be helpful and constructive, given the chance to do so, and so is the Royal College of General Practitioners. In an earlier debate I quoted from the BMA's letter to me of 4th February. I quote it again. These are their words:
    "You ask whether the GMSC could associate itself with an approach based broadly on Greenfield together with the self-monitoring proposals advanced from several quarters. The answer is yes".
    In particular, I like the approach of the Royal College of General Practitioners, which always seems to me to be highly responsible. I therefore attach importance to the letter of their Chairman. Dr. Irvine, to me on 11th March, in which he wrote:
    "Inevitably, the broadened list has taken much heat out of the matter. Nevertheless, I remain convinced that the proposal is intrinsically unsound and likely to cause difficulties for some patients after 1st April and, if recent news reports are correct, likely to save even less than the forecast if chemists are now to have the fees they would have lost made up".
    Incidentally, perhaps the noble Lord will comment on the way in which the Government propose to handle the question of chemists' fees. Returning to the proposals of the Royal College of General Practitioners for responsible prescribing, these seem to me to make much sense. I will not go into them in detail. They say that many GPs are getting to grips with the need to prescribe sparingly, working to practised formularies, listing drugs for particular conditions, prescribing generically, limiting the
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    quantity of drugs prescribed and being more explicit about when not to prescribe at all. The College is convinced,
    "that the way forward in general practice lies in refining and extending the use of the methods just described. Our approach has one particular advantage—that it covers every group of drugs"—
    and that is an important one because the proposal of the Government covers only a certain number of therapeutic categories, those that appear in the black list.
    The Royal College of General Practitioners also talks about the contribution that could be made by the Prescription Pricing Authority's computer to clinical performance review by individual doctors and practices. That is another important point. But I want to stress their conclusion. I am quoting again. They say:
    "This is a time for looking forward and for a constructive partnership between Government and profession, rather than for recrimination and conflict".
    They go on to urge the Government to think strategically and to bring together all concerned with the prescription and supply of drugs in order to agree and implement a properly thought-out plan for prescribing within the National Health Service.
    Before I sit down, I should like to turn to the speech of the Secretary of State last month in the other place. At col. 698 he said:
    "The selected list has achieved one thing—far wider recognition than ever before of the need for action on the scale and quality of prescribing. The debate that has taken place over the past few months has probably been the most extensive on prescribing in the history of the National Health Service".
    One would not disagree with him here and my heart lifted a little. I thought, "My God! The chap is going to be sensible and withdraw the list, having achieved his aim, which must have been all along to get everybody to think hard about this". I eagerly read on to find that he proposes to convene a conference involving all the relevant professional interests. "Even better", I thought, until I realised that one of the objects would be to set in its proper perspective the limited list proposal. That is to say that the conference would have the list as its starting point—not its ending point, but its starting point.
    Was there ever such an instance of doing things the wrong way round? Have your conference—great—but keep your list in reserve. The Secretary of State has people eating out of his hand. He has the profession eating out of his hand. He could make greater savings through voluntary co-operation than any that he could possibly hope to obtain from his white list and from his black list. I started and I finish by saying that the Government are losing a great opportunity if they do not withdraw these regulations and proceed on these lines.
    The noble Lord, Lord Ennals, has indicated that he will recommend his friends to support the inclusion of my amendment in his Motion. I am grateful to him for that. If the noble Lord decides to divide the House in due course, I hope all noble Lords from all parts of the House will support the amended Motion.
    9.7 p.m.
    Lord Glenarthur: My Lords, whatever the timing of this particular debate, this occasion is I think the fourth in as many months when noble Lords opposite

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    have chided the Government for choosing the method of the selected list to curtail a soaring NHS drugs bill. That bill now stands at some 1·n a year—and that is ten times what it was 15 years ago.
    As least the noble Lord, Lord Ennals, the noble Lord, Lord Kilmarnock and the Government have one thing in common: we agree that a bill of that scale is far too high. From what they have said, the Opposition seem to believe that the answer lies in attacking the pharmaceutical industry. We do, however, already control the profit levels on NHS sales achieved by the drug companies through the Pharmaceutical Price Regulation Scheme, to which the noble Lord, Lord Ennals referred. That is a scheme which we review regularly. We do not undervalue the advances in research made by the pharmaceutical companies and the resulting benefits to patients. Unlike the noble Lord, Lord Ennals, certainly if he supports his party, as I believe he does, we do not regard profit as a dirty word, and we have no wish to discourage the pharmaceutical industry from continuing its vital work in research and development.
    Lord Ennals: My Lords, I am grateful to the noble Lord for giving way. Will he withdraw that remark? I made no such suggestion at all. I made no attack on the pharmaceutical industry. I said that there are savings to be made. I did not say that profit was a dirty word. I hope that the noble Lord will withdraw allegations that are quite untrue.
    Lord Glenarthur: My Lords, I believe that the noble Lord is speaking for his party. It has stated that it has a long-standing policy, repeated in its last manifesto, and confirmed by the shadow spokesman in the other place, as recently, I believe, as during last night's debate, in which it talked about nationalisation of the pharmaceutical industry. If that is the case and if the noble Lord is supporting his party, I assume that that is the basis on which he stands. In any case, I cannot, for one moment, see that the industry is clamouring to accept further cuts in profit levels. Another cut in their profit levels was advocated by the noble Lord across the Floor of the House only a few weeks ago. Undermining the industry therefore is not, so far as we are concerned, an option. How much more damaging it would be, I say, to that industry to be brought into public ownership, which his party seems to advocate.
    The noble Lord, Lord Kilmarnock and the noble Lord, Lord Ennals enjoin us to adopt the recommendation of the Greenfield report on generic substitution. The noble Lord, Lord Kilmarnock, refers to us as generating bad blood over this whole issue. I would he the last person to discount the importance of more effective prescribing. We always encourage doctors to think generically. But we have given our reasons why we felt that to impose a requirement on doctors to accept generic substitution across the board would not be the best approach. It would, to a far greater extent than the selected list, infringe that clinical freedom which noble Lords opposite so loudly advocate. It would do far more damage to the drugs industry because it would cut across the whole range of drugs. It is plain to us also that the resulting savings would by no means match those we expect to achieve through
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    the selected list. The resources of the NHS are not limitless. The taxpayer is at present required to subsidise the production of luxury pharmaceutical items—and luxury they are, in many cases—with the result that money that would otherwise be available for further improvements to patient services is not spent to good effect. The noble Lord opposite and some of his noble friends are ceaselessly calling for such improvements. I must ask the noble Lord opposite, then, why they are standing in the way of sensible measures to achieve them.
    Lord Ennals: My Lords, because they are not sensible.
    Lord Glenarthur: My Lords, let me explain again why we are introducing a selected list and what drugs are affected by it. First, there are those which could be broadly described as "comfort medicines"—cough and cold remedies, laxatives, mild and moderate painkillers, indigestion remedies, vitamins and tonics. Some of these drugs are used to relieve the symptoms of chronic complaints or to offset the effects of other drugs in serious illness. But, in the main, they are used for commonplace ailments which will get better of their own accord. Most can be bought over the counter at chemists. Many have the same effect as other, cheaper, drugs. Secondly, there are the benzodiazepine tranquillisers and sedatives. In recent years, there has been a proliferation of drugs in this group. Again, many of them have exactly the same clinical use but some of them cost much more than others. Some graphic examples were given by my noble friend Lord Molson a week or two ago.
    In order to get value for money, we decided to allow under the National Health Service only those drugs, of the types that I have listed, which will meet all clinical needs at the lowest possible cost. On 8th November, during the debate on the Address, my right honourable friend the Secretary of State told another place about our plans and said that we welcomed comments on a provisional list of drugs to remain prescribable. We promised that all essential drugs would continue to be available at National Health Service expense. We have kept that promise.
    We received more than 10,000 letters during the consultation period. Many of these provided very helpful comments. The Chief Medical Officer set up a group of independent medical and pharmaceutical experts to consider the content of the list. This group considered all the comments received and, taking them into account, put forward a list of drugs in the groups affected which it considered would meet all clinical needs at the lowest possible cost to the National Health Service. We accepted their advice in full.
    There are about 100 drugs in the categories affected which will continue to be available under the National Health Service. This compares with the provisional list of 30, which was a minimum list of essential drugs—and no joke as the noble Lord, Lord Ennals, suggested it was. It was to be the basis for detailed consultation. Nearly all the additions are for reasons of convenience; for instance, to avoid patients having to take more than one drug at a time, or for palatability, particularly for children, old people and the dying.

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    We have been criticised for introducing a provisional selected list without prior consultation. But this criticism, endlessly resorted to by the noble Lord, seems to me frankly absurd. No democratically elected Government could go about their business satisfactorily if they were impeded at every turn in the formulation of policy by a requirement to hold prior consultation with every interested party before they could settle the general principles of their legislation. In this case, we do not regard the principle as being in question. We recognised that the drugs bill was unacceptably high, that it had to be reduced, and that the most effective way of significantly reducing it was by introducing a selected list. This method is consistent with a full and proper regard for patients' needs. It cannot seriously be said to diminish the doctor's clinical freedom. We promised to consult widely on the final contents of the list, and this we have done.
    Most of the drugs on the selected list are generic products, but there are a number of branded ones. This is because the Chief Medical Officer's group advised that in some cases there was no suitable generic drug available and that we should retain a branded drug, or a number of similar branded drugs, for the time being. Whenever a generic name exists the branded drugs are prescribable only by that name. This is to encourage further savings. On average, generic drugs are less than half the price of direct equivalents with brand names. By specifying the generic name any manufacturer can compete for a share of the National Health Service drugs business on the basis of price and quality: and we expect that manufacturers will soon bring on to the market equivalent generic preparations of those medicines which are at present only available under brand names.
    The regulations we are debating tonight list the products which will no longer be prescribable under the National Health Service. We have also produced a list of prescribable products, which is only a list of the main products to remain available. It is issued simply for guidance and has no statutory force. We have taken the opportunity of including in the list of substances not prescribable under the National Health Service those items which the Advisory Committee on Borderline Substances has advised are not drugs in the circumstances of general practice. These non-prescribable borderline substances are mostly ordinary products, like Flora margarine and Nivea face cream, which we believe are simply not appropriate charges against the health service. They are products over which the National Health Service has no price control. I could give further examples of this. It is an abuse of public funds, and one which we believe would scandalise an unwitting taxpayer if it were more widely known.
    The Countess of Mar: My Lords, can the noble Lord give examples of doctors who prescribe Flora margarine and Nivea face cream?
    Lord Glenarthur: My Lords, I cannot give examples of doctors. What I can tell the noble Countess is that there are examples of drugs which are prescribed under the arrangements which I have described and
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    are referred to the Advisory Committee on Borderline Substances. I can add to the list I gave Radiol fly repellant, Elizabeth Arden and Max Factor cosmetics, Colgate and Maclean's toothpastes, and even Persil non-biological washing-up powder. I can in due course give the noble Countess the details of more.
    The Countess of Mar: My Lords, are doctors really prescribing these things?
    Lord Glenarthur: My Lords, the regulations allow for it, and that is why we are making the changes that we are making.
    Lord Ennals: My Lords, it is an unfair attack upon doctors.
    Lord Glenarthur: My Lords, the regulations provide that, from 1st April, general medical practitioners may not prescribe and community pharmacists and dispensing doctors may not dispense at National Health Service expense the products listed in Schedule 3A to the regulations. General medical practitioners will, however, be able to issue a non-NHS prescription to NHS patients for Schedule 3A drugs to be used in the course of National Health Service treatment, if their patients wish it. They will not be able to charge a fee for such a prescription.
    We are charged by the noble Lord, Lord Ennals, and others that this creates a two-tier system. We say that it does not, for, as I have repeatedly pointed out, there will be no clinical need for patients to buy drugs not available under the National Health Service. We therefore envisage that such non-NHS prescriptions will be issued very rarely. Under the regulations, doctors will not be able to sell or dispense Schedule 3A drugs; but dispensing doctors will be able to supply and charge for those drugs to patients on their dispensing lists when they are prescribed as part of the patient's NHS treatment. For dispensing doctors the regulations will therefore effectively maintain the status quo, and their dispensing patients will look to them for the supply of all prescribed medicines. The regulations also make provision for named drugs to be prescribed to certain types of patients.
    I should now like to mention a number of specific issues concerning the operation of the selected list. As I explained to your Lordships on 21st February, we shall be setting up a professional committee to advise us on a continuing basis on the contents of the list. This committee will be asked to consider whether new drugs coming on to the market fall within the scope of the selected list and, if so, whether they should be available under the National Health Service. The selected list advisory committee will also regularly review the existing list. We expect to consult on the details of this new committee, including membership, as soon as possible so that there is no delay in the important task of maintaining the list.
    The noble Lord, Lord Kilmarnock, asked particularly about an appeal mechanism for individual patients. As he will be aware, we have received some representations that in exceptional circumstances doctors should be allowed to prescribe drugs not on the list when they think their patients need them. Our expert advice—and it is expert advice—is that the list

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    is comprehensive as it stands. Some patients may want a drug not on the list and decide to pay for it. That, of course, is their choice, but the expenditure will in our view be unnecessary.
    However, my right honourable friend the Secretary of State has said that, while he cannot consider any exceptional arrangements which would simply enable doctors to circumvent the selected list, he will be prepared to consider with the profession proposals it may have for overcoming any problems that genuinely arise for individual patients in the operation of the selected list. Indeed, my right honourable friend has already met the General Medical Services Committee of the BMA to discuss the question of an appeals mechanism.
    It was agreed that any mechanism should be non-bureaucratic and should be applied locally. Its exact status remains for detailed discussion; that is, the nature of the committee proposed and under what circumstances appeals should be allowed. It is precisely to consider these kinds of question that my right honourable friend the Minister for Health will be continuing these discussions tomorrow with the BMA and representatives of the Royal College of General Practitioners. We hope that a satisfactory agreement will take effect as soon as possible after 1st April, when the regulations come into force.
    I am concerned that some members of the medical profession seem to think that the Government are mounting an attack on them and their prescribing practice. I must stress that we are fully aware of the very important role played by doctors and only too willing to recognise that many of them are very careful to prescribe economically and effectively.
    However, there could be further improvements. Common sense, not great medical expertise, is often all that is needed to achieve economic and effective prescribing. Bathroom cabinets throughout the country are full of half-used bottles of medicine. In order to avoid such wastage of expensive products, no more than is absolutely necessary should be prescribed; and the patent can return to see the doctor if he needs further medication.
    Another area where improvements could be made is repeat prescriptions. It is obvious that repeat prescriptions over a long period can be very dangerous as well as wasteful. Patients need to see their doctors at regular intervals in order to have their medication needs reassessed. We very much hope that those doctors who are opposed to the selected list will not be so irresponsible, as some have threatened, as to demonstrate their opposition by following a policy of uneconomic prescribing. Such misuse of NHS resources would be deplorable.
    As your Lordships all know, the Government greatly regret the BMA's refusal to co-operate in discussions on the selected list. We hope, however, that, once the list has been introduced, we shall be able to work together to improve prescribing practice. As my right honourable friend the Secretary of State for Social Services said yesterday, the Government intend
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    to convene a conference involving the relevant professional interests to set the agenda for further discussions on prescribing standards and costs. Indeed, the noble Lord, Lord Ennals, referred to that matter in his opening speech. I hope that this conference will be the beginning of very fruitful co-operation between the Government and the medical profession.
    The Association of the British Pharmaceutical Industry (ABPI) has made some extravagant claims about the effect the prescribing restrictions will have on the industry. They have indulged in even wilder scaremongering about the effects of the list on the sick and the elderly. They have reputedly spent over £ 1 million on publicising some highly misleading claims. But the savings we expect to make from 1st April represent only about 5 per cent. of the industry's sales to the National Health Service and about 2½ per cent. of their total output. I cannot believe that such a small reduction is likely to compel many companies to stop investing, or that it will seriously affect exports or jobs. Neither should research suffer unduly. We shall continue to finance research on a very considerable scale. Last year we contributed to research and development costs to the tune of well over £200 million through the prices we pay for National Health Service medicines.
    The measures—the main details of which I have once again described—have been decided upon after a great deal of careful and detailed consideration. I ask your Lordships to consider carefully the arguments that I have put before you. With your Lordships' leave, at the end of the debate I shall refer to other detailed points which are raised. However, the selected list represents a sensible way of releasing £75 million a year—and more in the longer term—for important improvements in NHS care without in any way harming patients' interests. It is with confidence in that, that I commend the regulations to your Lordships.
    Lord Wilson of Langside: My Lords, before the noble Lord the Minister sits down, if I understood him aright, he said that he regretted the feeling that we on these Benches—and I think that he suggested that this was true of members of the medical profession too—felt that the Government were mounting an attack on the prescribing practice of the profession. If that suspicion is not justified, why did he quote these rather absurd illustrations in response to the intervention of the noble Countess?
    Lord Glenarthur: My Lords, the fact is that the items to which I referred in the regulations are the tip of an iceberg in some respects. As far as I am aware—and I certainly was not aware of it until I looked into it myself—these particular items could be dispensed under the arrangements which I described earlier. All these things have been prescribed by doctors. They have been prescribed very recently by doctors. I find it a very strange way of practising medicine, and I honestly believe that the average taxpayer would, too. It would be not only the pharmaceutical industry that we had to contend with if the prescribing of such common or garden items

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    became widespread; we would have to deal with the grocers' lobby as well.
    Lord Winstanley: My Lords, the noble Lord said that all these things have been prescribed, and prescribed recently by doctors. He has not been very specific and said which things. I have authoritative
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    information that there are items on the black list which have never in fact been prescribed since the National Health Service started on 5th July 1948. In other words, they are just there as window dressing.
    Lord Glenarthur: My Lords, we have the prescriptions and I dare say that, if necessary, I could get them and show them to the noble Lord.
    9.27 p.m.
    Lord Porritt: My Lords, until I came here this afternoon I was not aware of the batting order of speakers tonight. It was only after I arrived that I learnt that I was to follow the noble Lord the Minister. This, your Lordship may be surprised to hear, I consider to be a privilege, though it is equally a very difficult task because I disagree with a great deal of what he has said. His speech was, as ever, gracious, lucid, and comprehensive, but I sympathise with him for having had to make it so many times and in so many different forms over the last three months. I could almost make it myself, but not nearly as efficiently.
    To me, what the Minister has said tonight is just a new edition of what we have heard before. It amounts really to a defensive explanation of a measure which I would suggest is based on a false premise and a shattered principle. If that is true—and I firmly believe that it is true—then whatever is said to support it must be a specious argument. I hope not to deal too much with detail, but rather to expand perhaps the thoughts that this odd measure has raised over the months.
    However, I should first very much like to thank the noble Lord, Lord Ennals, for raising again, as he has done tonight, what I consider to be this rather miserable business of the limited lists. On the previous occasion some six weeks ago—I think on 2nd February —we could discuss it only in the context of an Unstarred Question. At that late hour on that occasion—it seems doomed always to be late hours for this discussion—when the attendance in your Lordships' House was pretty thin, there was no doubt whatsoever that there was almost complete opposition to this measure, apart from the noble Lords on the Government Front Bench. But of course no vote was taken.
    Although in the interim not very much really has happened—except for the substitution of two very dubious and contentious black and white lists for the original patently ill thought out and totally inadequate limited list—tonight's debate gives us the opportunity to express our opinion of this extraordinary maladroit proposition. It is a proposition which, despite the Minister's so-called explanations, remains generally unacceptable to both the medical profession and the pharmaceutical industry and may. I say also, remain likewise to a large number of voluntary organisations, charities and individuals. The change in form of the restricted list has already reduced the possible projected savings by 25 per cent. The implementation of the proposed regulations and the setting up of an appeal mechanism will undoubtedly lower the figure still further.
    Despite all this it seems—again from what we have heard tonight—the inexorable decision of the Secretary of State to proceed with the implementation of the scheme in two weeks' time. He continues to say—and we still hear this—that the BMA refused to discuss the matter with him. This of course is not true. The BMA and its GP Committee did refuse to meet him in regard to the limited list as this denied, and still denies, the basic right of a doctor to be personally responsible for the treatment of his patient. That is what I mean by a bond, and that is what is being broken.
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    From the start when the limited list was first produced without, as we all know very well, any consultation with anyone concerned, the BMA expressed their complete willingness to bring forward and discuss other methods of reducing an admittedly over-large drug bill. But may I say incidentally that this over-large drug bill is, as has already been mentioned tonight, considerably less in the United Kingdom than it is in most other countries of the world both in relative and in real terms. It has been correctly quoted tonight that in the USA, Japan, Australia, New Zealand and a lot of European countries, it is more than it is in this country.
    It is also a complete misrepresentation to say that the pharmaceutical industry has not made substantial contributions to the reduction of the NHS drug bill. This the Secretary of State has said. In 1983 the industry agreed to a 2.5 per cent. reduction in prices, and to a price freeze. In 1984 the return on their capital was statutorily reduced by almost 16 per cent. under the PPRS arrangements. This figure is almost certain to go down further still to 2 per cent. to 3 per cent. next month.
    We all know that the Ministry has made a complete U-turn on the Greenfield Report. The Minister originally stated categorically that the concept of a limited list found no favour, but that generic prescribing and generic substitution should be developed. The profession was very happy to go along with generic prescribing but objected to generic substitution. I feel strongly that the difference between these two processes is much misunderstood both in this House and elsewhere.
    Generic substitution leads to many difficulties and even dangers in deciding on the safety, the efficacy, and the bio-availability of certain drugs. Now we are told—and we have heard it again tonight—that as soon as a suitable substitute—and I underline "substitute"—can be found, yet more of the few branded drugs which remain on the white list will be removed. This is surely a thoughtless and a heartless cure of the health of the Treasury, and nothing to do with the cure of the patient.
    What patients want is neither a white list nor a black list. What they want is a personal list selected by their own doctors, which incidentally is what both the patient and the doctor were guaranteed at the inception of the health service, and of course for many years before that in the long accepted and sacrosanct confidential doctor/patient relationship. It is this deliberate breaking of a bond that I find so distressing and so depressing.
    If a doctor is going to be dictated to by a Government department as to what he does for the good of his patient then, my Lords, the vista is limitless and, to the profession, horrifying. If these regulations are brought into force it will of course mean alterations in the Medical Act, which lays down the terms of service of a general practitioner.
    As I stated in our previous debate on this subject, principles and politics make very bad bedfellows. It all comes back to the basic fact, which I have commented on in this House more than once but without any effect, I may say, that whatever may be possible with

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    companies, institutions, commercial organisations and so on, you cannot nationalise a profession. Ask the lawyers, ask the Ministers of the Church, ask the engineers and the accountants. They will tell you. The ideal of a comprehensive medical service no one would deny. It is irrefutable, but the implementation of that ideal is impractical and impossible if it is to be comprehensive. In the last 50 years so many countries all over the world have proved this. The demands of a health caring service which includes an ill health curing service have no limits. The means to fund them have very definite limits and so we are forced into a quagmire of priorities. This limited list is a classical example of priorities.
    When one talks about priorities one gets into the realms of moral and philosophical considerations. If these decisions are dealing with life and death, surely we are getting beyond the realm of politics. But this is not an occasion to belabour my hobbyhorse, except to say that in medicine (and, in pharmacology, the optimum use of drugs) policies take an unconscionable time to mature. Now, after 20, 30, 40 years, we are seeing our chickens come home to roost.
    There are a few more pertinent, though I am sure the Minister would say impertinent, points that I should like to make. Any discussion on the details of the amended list—and, we are told, the final list—would seem to be out of place in this debate, but my much more erudite and scientific colleagues have told me already that there seem to be very obvious flaws in both the white and black lists. The noble Lord, Lord Kilmarnock, has shown some of those already tonight. What they do is to make it increasingly difficult for doctors to satisfy their patients' legitimate needs.
    On the pharmaceutical industry side, I can only quote from well-informed articles published in reputable journals in the last month. I have already declared an interest, in that I am a director of a well-known pharmaceutical company. These articles show that in countries which have limited lists—and there are a number of them—the pharmaceutical industry is suffering badly and continuing to do so. Most important from our own industry's point of view, these countries will say quite frankly that they have not saved money. As the ABPI state, despite all the things that have been said about it,
    "they impede the free and fair working of the market place and distort competition".
    Despite what the Minister has said tonight, I should like to quote one company which I know well. What has happened in that one company is that it has lost 25 per cent. of its profits, which amount to many millions of pounds, to say nothing of a considerable quota of its workforce, up to nearly 500, and it has had already, on the presumption that the change will take place, to cut its extremely successful research programme. This has happened, so it is impossible to say that this is having no effect. We know that it is having a definite effect on the possibility of research.
    This is what is happening in the countries that already have limited lists. They have found their pharmaceutical industry slowly disappearing. No new drugs arrive and if they do arrive they take years to get
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    any recognition. A decreasing and pitiful picture is painted by the countries which already have limited lists.
    This industry that is being damaged—and there is no doubt that it will be damaged further—is an industry which exports £1,200 million-worth of medicines each year. It spends more on capital investment in Britain than it makes from the profits of the NHS; £50 million more. It spends £500 million a year on research and development, which amounts to about 10 per cent. of the world figure; and as has already been pointed out tonight, it attracts a vast amount of foreign capital investment, which is already being frightened off. I do not know, but it does not seem to me that it is very good business to do the pharmaceutical industry a wrong.
    There is another point that I was going to bring up, but the noble Lord, Lord Ennals, has already mentioned it. That is the question of the EEC. Perhaps your Lordships may say that that is not very important. But it is interesting, I think, that the two people concerned in the recent developments are both Members of your Lordships' House. The noble Baroness, Lady Elles, asked the question in the European Parliament, and the noble Lord, Lord Cockfield, replied on behalf of the EEC. The noble Baroness's question asked whether the criteria for setting up a limited list in this country were consistent with the rules of the EEC. The noble Lord, Lord Cockfield, in a long reply (which I have but which is too long to read to your Lordships) definitely, in essence, comes down without any doubt on the side of saying that according to Article 30 of the Treaty of Rome it will not be legal in the EEC but that it may be legal here. So this is yet another complication of this whole miserable business.
    I suppose that at heart I have been conservative (with both a little "c" and a big "C") all my life, but in recent months I have really begun to wonder what this Government are up to. The process of antagonising groups of hitherto faithful supporters by introducing relatively minor and, seemingly, largely unnecessary measures from a national point of view goes on apace.
    We have heard a fair amount of it in this House lately. First of all, we lose our trusty pound notes in favour of a heavy, dubiously recognisable coin. Then our cornershop post offices are threatened, the very core of rural village life and, probably more important, of community life in the conurbations. Then, as we had a long discussion about the other day, our cheerful, red telephone boxes are to be replaced by characterless erections of a colour far too reminiscent of those frightening wheel clamps that we have heard about recently. And now, on top of all that, we have the enforced removal of our favourite and well-tried medicines.
    It seems to me to be so much unnecessary interference for so little purpose. At the same time as they are doing this, they are also damaging the British community's health care and endangering one of the most valuable industries that the country has. Greedy hands are chipping away at the very jewel in the crown of the welfare state, its health service; and those same hands are the hands that have been faithfully promising to create a safe and sacred repository for the health service.

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    I hope that we shall see this proposition for what it is: a hasty and ill-thought-out manoeuvre to meet Treasury demands to cut public expenditure, and nothing to do with medicine or pharmacology, or drug discovery or promotion. I trust that in your Lordships' House we shall be able to show that principles still have some value and that we shall express in no uncertain terms our profound dislike of the limited list concept, and reject it.
    9.45 p.m.
    Lord Nugent of Guildford: My Lords, I have listened with interest to and, indeed, have been half-persuaded by the formidable advocacy of the needs of the pharmaceutical industry by the noble Lord, Lord Porritt. It was particularly interesting and, of course, cogent; but I have an impression, after the recent PR campaign that they have been running, that they are well able to speak for themselves—and some of their contributions were not entirely creditable. However, I much respect, indeed, much more than respect, the noble Lord who occupies such a distinguished position in the world of medicine and in many other places and who has been such a stalwart ally of mine on other campaigns. But in this particular context I am afraid that I do not agree with him.
    I recognise, of course, as any layman does, that any limitation of the clinical judgment of doctors is a serious matter. Like everyone else here, I know my personal obligation to the medical profession, but I just cannot accept that no limitation is justified in any circumstances. In fact, many doctors of my own acquaintance with whom I have discussed this matter, agree in principle with a limited list and, as all of us know, although the BMA and the general practitioners were heavily against it, the Royal College of Physicians and the Royal College of Surgeons are in favour.
    The Government policy for the National Health Service has been one of continuous expansion since we came into power in 1979. The last Labour Government were spending at the rate of about £7·75 billion a year in 1978. Today, we know, because the Minister has recently told us, that next year's estimate provides £17 billion for the National Health Service Vote. Even allowing for the cost of living increase over the years, that is a very substantial net increase and it really does refute what the noble Lord, Lord Porritt, rather unfairly said—that this was Treasury priority before patient priority. This Government have provided on a really splendid scale for the steady increase and expansion of the National Health Service, because we recognise that it is a sheet anchor to the life of this country. But, at the same time as they do that, my right honourable friend the Secretary of State has made it plain, as has my noble friend Lord Glenarthur, too, that they are committed to a determined drive to get good value for the taxpayers' money which is provided on this very large scale.
    That brings me, my Lords, to the case for the limited list. I am not going over it in detail at this time of night. We have heard about it from my noble friend Lord Glenarthur very clearly, but I should like just to repeat three major points. First, the annual bill for drugs is now £1·5 billion. That is formidable enough, but it is
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    steadily growing in net terms at the rate of 5 per cent. per annum. Secondly, the range of medicines also grows. In the last 25 years it has doubled to a range of some 17,000 medicines. Thirdly, the number of prescriptions in the last recorded year, 1983, was 334 million—a 40 per cent. growth over the past 25 years.
    In the face of this huge annual bill, plus, even more significantly, a continuous annual growth—and I address this to the noble Lord, Lord Ennals, who has been a Minister and knows all the responsibilities of that office—any Minister is bound to look at the situation; and if he does not, he should be castigated by Parliament until he does. No responsible Government could refuse to act.
    The fact is that, despite the comparisons made with other countries, we in this country, all of us, have a very large appetite for medicines and pills. The habit of our people is to pour cascades of medicines down their throats. That is an observation which perhaps the younger Members of this noble House may not remember, but some of the older ones will. It was made by a great Minister of Health, Aneurin Bevan, in 1950, when the Labour Government of the day were introducing prescription charges for the first time. I am glad to see the noble Lord, Lord Ennals, noting that observation. It is a very colourful one; I could not claim to have invented it myself. It makes the point that there really is an unlimited appetite here. There is a huge expenditure and it is growing every year. The Government of the day have an absolute obligation to tackle it.
    My noble friend has told us about how the limited list, which is now of roughly 100 drugs, has been compiled. There has been extensive consultation—sadly not with the BMA, but certainly throughout the profession—and the list includes some brand names where adequate generic drugs were not available. My noble friend has told us that the Secretary of State is setting up a commiteee of professional and independent advisers to review the limited list on a continuing basis, so that if new drugs occur or if mistakes are found to exist amendments can be made. Perhaps in a way even more importantly, he is already in consultation with the BMA and the general practitioners on the appeal machinery. So that the safeguards that we wish to see to give the flexibility that ought to be there, when introducing something as important as this, are there and will be made to work.
    As regards the pharmaceutical industry, of course I recognise its splendid record, its splendid profit-making record for the benefit of this country and of the export trade, and its outstanding successes in its research work. But I do not believe—and my noble friend has given us the figures—that the limited list will seriously affect its profitability. The fact is that 95 per cent. of the drugs which are not on the list can be bought over the counter without a prescription, as my noble friend has told us. But as I said before, some of its PR campaign fell well below the great reputation that that industry deserves.
    So this is a measure which is estimated to make a saving of £80 million per annum. Perhaps it will make rather less, but it will help towards this huge total which this Government have committed for the health

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    service next year of £17 billion—it is a very great credit to my right honourable friend the Secretary of State—to maintain the Government's policy of a continuous, expanding improvement of the service, and I feel that we should support the Government in making this modest measure of economy in a place where it can be made.
    9.53 p.m.
    Lord Pitt of Hampstead: My Lords, I am really sorry that we have come to this situation. I had hoped that the Government would recognise the need to halt in their march, and would rethink and rediscuss the whole issue and come to a more sensible solution. The drugs bill is as much in need of control as any other bill. The criticism that I make is that the method selected is basically wrong and it is based on wrong premises. We are frequently being told that it meets all clinical needs. That is impossible. Not even the whole pharmacopoeia meets all clinical needs. After all, if it did we would not have so much acceptance of, and even chasing after, alternative medicine. So, of course, it cannot meet all clinical needs.
    The other problem is the failure to recognise that people are individuals and individuals react differently to drugs. It is not necessarily the main ingredient of a drug to which they will be allergic or which they will find themselves unable to tolerate. It may be merely the way in which the drug is prepared. This is the rare point that this autocratic approach fails to understand. You cannot just say that certain drugs can be prescibed in certain ways for certain ailments—period. It is not true. There will be people for whom that drug ought in fact to be suitable but it is found to be unsuitable. That is why this question of doctors being able to prescribe for their patient what they think the patient needs is of the utmost importance in the treatment of sickness.
    I can give an illustration. I had a patient—in fact, she came to me from somewhere else. She was on valium. I gave her Diazipan. She was upset by that. I put her back onto valium and she was happy. I decided that there was need to change her treatment altogether. I tried to take her off Diazipan and put her on to something else. The strange thing is that if the limited list is now the law of the land, I would not be able to put her on it. In fact I changed her to Frisium and she was happy. This is the point. You get that with very many patients.
    The Minister has said that the limited list is mainly for guidance, but you know that is what I have been begging him from the beginning to accept—to produce a recommended list, because that makes sense. If you introduce a recommended list, most doctors will use it. That makes sense. But there will be patients for whom it is not suitable and doctors will be able to use other drugs for patients for whom it is not suitable. The Minister's list is a recommended list—that is sensible—but in the same breath he is also deciding that certain drugs should not be prescribed.
    It is not only because those drugs are expensive. I must confess that my favourite cough medicine is ammonium chloride and morphine. I find it extremely
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    effective—and it is very cheap. It is not, however, very nice. Some patients do not like it and to patients who do not like it, I give something else. But I find it very effective. But it is banned according to the list. I am a great believer in rhubarb compound mixture. I find that quite useful, too. Neither of these is an expensive drug. Both are very old remedies that have stood the test of time. Whoever was advising the Minister thinks that the mixture of the expectorant and the sedative is not a good thing and he therefore advised against it. I can assure you that I use ammonium chloride mixture without morphine and it is not as effective as ammonium chloride with morphine. That is my own experience.
    I find Asilone a most effective drug for flatulence. It is not more expensive than Gaviscon. Gaviscon is the comparative drug. But Gaviscon is on and Asilone is off.
    I am not using these examples in their own right, because that does not matter; I am using them in an illustrative sense. They illustrate that one cannot really draw up a limited list which will not affect some patients adversely. The Minister himself has said in the past that generic drugs are half the cost of branded drugs and that he wants to see more of them used. Therefore, the Minister should be pushing for generic prescribing. In his own words, generic drugs are half the cost of brand name drugs.
    Lord Glenarthur: My Lords, I will just say that we do encourage generic prescribing; it is generic substitution that we have not been able to adopt. The noble Lord knows the arguments for that. We have consistently recommended that doctors should adopt generic prescribing.
    Lord Pitt of Hampstead: I know, my Lords, and generic prescribing should be encouraged. I am speaking personally. I also believe that generic substitution can be negotiated. What is required is that the doctors should be in control of that and their willingness to allow substitution should be there.
    There are differences between the BMA and the Government over Greenfield and what Greenfield actually recommended. Greenfield recommended, for example, that a doctor should tick the prescription if he wanted the brand drug to be dispensed. The BMA suggested that a doctor should tick if he wanted the brand drug to be substituted. I confess that I prefer the Greenfield approach and I believe that the Greenfield approach could have been negotiated.
    The Government are not doing anything about that. There have been no discussions between the profession and the Government since that time until the 8th November, when the Government indicated that they intended to introduce a limited list. The Government's whole approach to this problem has been of a draconian nature. Actually I would use different words and say that they took the attitude that they were in power, that they knew best and that they would say what should be done.
    The Minister's right honourable friend in another place stated that no government would discuss issues

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    before they had indicated their intentions in Parliament. All governments since 1948 have done that. That is how the National Health Service has worked until now. The Government have always discussed with the profession what they have in mind. The profession has made suggestions as to how things can be done.
    In the past, the Government and the profession have reached agreement and things have been done. That is how matters have been handled since 1948. There is now the idea that one cannot start discussing an issue of importance such as this with representatives of the very prople who have to make it work. That I consider to be arrogant nonsense.
    The Government say that they are having these surveys and have seen limited lists in other countries, but the reports that we get suggest that the limited lists in other countries have not worked. In some cases they have made some savings—about half of what they thought they would—but in one particular case they found that as a result of the introduction of a limited list the cost was greater.
    What has always been possible is a reasonable saving on the drugs bill through an agreement between the Government and the profession, under which there would be an extension of local formularies and a measure of generic prescribing being encouraged with a certain amount of generic substitution also being agreed to; together with an agreement for smaller quantities being prescribed at any one time. That was always possible and would save a lot more money than the imposition of a limited list. However, the Government decided that they must impose their will and therefore introduced a limited list. So here we are with this limited list.
    As I said earlier, I am sorry that we have got to this. I hope that the House will pass my noble friend's Motion together with the amendment of the noble Lord. Lord Kilmarnock. Not that that will prevent the limited list from becoming law; because in accordance with the traditions of this House, it will become law. However, it will be an expression of the way in which we feel about this matter. I hope that, as a consequence of the House passing such a Motion, the Government will think again. The Secretary of State says there will be a conference. That conference should be held before and not afterwards. I invite the Government to make the conference the start of progress. This limited list is only—how shall I put it?—an irritation. It cannot be anything else but an irritant because it cannot have the effect that the Government seem to think it will. What it does is what the department said in its representations to the Greenfield Committee: it creates the maximum amount of ill-will.
    10.8 p.m.
    Lord Holderness: My Lords, not surprisingly, even at this early stage of the debate, some of the compelling arguments which I had prepared for your Lordships have already been laid before you. In view of the fact that the list of speakers is still long and the hour is late I shall do my best to be unusually brief.
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    It seems to me, having had an interest in but not an immensely close connection with the National Health Service for many years, that it is the issue of complete comprehensiveness which has been at the root of all the arguments about the service in the past four decades. It is here with us again today when ignorant laymen such as myself, unlike the distinguished experts such as the noble Lord, Lord Porritt and the noble Lord, Lord Pitt, have the difficult task of trying to weigh up the alleged damage to patients with the removal of complete prescribing freedom for the doctors against, on the other side, the benefit of additional resources released for other health purposes.
    It seems to me that the BMA could have given people such as myself great help and the pharmaceutical experts could have clarified a number of questions. However, there is no doubt that neither the association nor those who know most about the drugs, even when the Government's intentions to issue the list were perfectly clear, seem to have been willing to discuss possible amendments to the list. Therefore I cannot but be grateful for small mercies and grateful for the advice of the Secretary of State's own panel and for the support of the general principle of limitation from the two colleges in guiding me to what my decision should be. That still leaves me and other inexperts, as often before, without unanimous professional guidance and forced to reach a judgment on an important question on incomplete advice and partly on other grounds.
    One of the other grounds is obviously the financial ground. The financial arguments are certainly very compelling. Leaving aside the astronomical cost of the health service altogether, which has already been mentioned, or even the cost of the whole pharmaceutical service, I really cannot see that any Government could neglect the expenditure on this part of the pharmaceutical service nor the vast increase in prescribing without, on the other side, unanswerable and virtually unanimous arguments in favour of the free availability of all existing drugs and the complete freedom of doctors to prescribe.
    The situation we face, or I face, is certainly not that. Medical opinion does not seem unanimous, but the Government for their part can claim the support of considerable weight of expert opinion. The sector to which the regulations refer is limited and patients, even in that limited field, will not be denied free drugs for their treatment.
    Further, I applaud the wisdom of my right honourable friend in being willing, after advice, to expand the original provisional list. If, as my noble friend Lord Glenarthur has suggested, he can go a step further and find a way to include certain drugs, at present proscribed, for particular and exceptional circumstances, I think that my remaining worries will be removed.
    In my view the Government have significant professional backing for their proposals. The financial pressures on the pharmaceutical service are very great. The scope of the regulations is relatively small. I am convinced that my right honourable friend the

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    Secretary of State has shown—and I hope that he will show even more—sufficient flexibility to convince me that I shall be willing and able to support my noble friend tonight if it is necessary.
    10.13 p.m.
    Lord Hunter of Newington: My Lords, with all the discussion that there has been in your Lordships' House about the drugs lists and the debate on the pharmaceutical industry one would have thought that there could not possibly be any new factor to consider in this situation. However, there is an important new factor. It arises because on the day following our debate on the pharmaceutical industry the Secretary of State for Health made an announcement in another place about the long list of drugs which could not be prescribed in the health service and about a recommended list of drugs which contained at least three times more drugs than the original published list—in fact 120 as against 32. There are also other very important categories of drugs which have not been mentioned here, such as antibiotics, which of course remain unrestricted.
    The question we must consider is what, if any, difference the introduction of this new list, drawn up substantially by a committee of experts, chaired by the chief medical officer, makes to the situation. When the original drug list was published, many people had reservations about it. Of a substantial proportion of the medical profession who wrote to the Department of Health, 38 per cent. made it clear that they felt a drug list recommended by professional experts was something that they would support, 24 per cent. were against it and 38 per cent. were uncommitted. Again, at a Royal College of Physicians meeting to discuss this matter, only the proposer and the seconder of the amendment were not in favour of the professionally recommended drug list. It is a matter of great regret that the British Medical Association and the Royal College of General Practitioners have felt it necessary to object to the list on a point of principle and that they have not been fully involved in drawing up the finally recommended list.
    In considering the resolution of the noble Lord, Lord Ennals, one must examine all the factors that influence doctors in their prescribing and then consider whether the action of the Government is to be supported or deplored. Noble Lords may remember that, in the debate on the pharmaceutical industry, the noble Lord, Lord Kilmarnock, drew attention to the amount spent by the industry on promotion. This was somewhere in the region of £180 million a year, and the whole intention was to influence doctors to use a particular company's drugs.
    There are many other sources of information open to doctors. There are prescribing books like the National Formulary produced by a joint committee of the British Medical Association and the Pharmaceutical Society of Great Britain, and funded by the Department of Health and Social Security to ensure that this is sent to all prescribing doctors. There is a host of professional meetings which the Government, in the shape of the Department of Health, are willing to subsidise doctors to attend—this
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    in spite of the fact that they are contractors with the health service. So, much is done to make doctors familiar with drugs apart from the information provided by the industry. Also, most medical schools, in teaching clinical pharmacology, recommend to their students that generic drugs should be used when possible.
    Now that the recommended list has been available for examination and discussion for a period of time, it is well to examine how it meets the needs of doctors in practice. The information that I have received is that, accepting doctors' present prescribing habits, somewhere around 95 per cent. of their usual prescribing habits will be met and their patients' needs may be met to about the same degree. I understand that the list has been designed to meet all clinical needs. If that is the declared objective of the Government, then the profession and their advisers should be insisting that that comes about. It is for these reasons that I do not feel able to support the resolution of the noble Lord, Lord Ennals.
    There is, of course, the question of the pharmaceutical industry. Again, I agree with what the noble Lord, Lord Kilmarnock, said in the debate on the pharmaceutical industry that there is little reason to suppose that it cannot respond to the changing pattern of demand. What will have to change, I think, is the idea that in the United Kingdom all companies are research based. One would hope, however, that in the future the PPRS would distinguish between companies whose main research activities are based here and those which do a little research here but whose main research effort is elsewhere. I am saying that if the main research activity is in the United Kingdom, regardless of the fact that it is an American or a European company, this fact should be taken into account.
    I also believe that it is an urgent and important matter for the Government to address themselves to the question of the patent life of drugs. Those who achieve excellence in the pharmaceutical industry should make legitimate profit from it.
    Finally, I would urge that those who represent the medical practitioners—the British Medical Association and the Royal College of General Practitioners—should co-operate with the new, recommended proposals on the understanding that there is to be set up a machinery which will keep it up to date and ensure sensitivity to the needs of medical practice. It seems to me that in response to pressures—legitimate pressures—by responsible persons, largely fellows of the Royal colleges, the Government have moved very substantially over the content of this list. It seems to me to be very unwise for some professional bodies to remain apart from this important matter. They should, at least, while maintaining their objection in principle, test the Government's flexibility and good intentions over the future by co-operating in this way.
    10.21 p.m.
    Lord Molson: My Lords, I think it somewhat surprising that the noble Lord, Lord Ennals, should have moved this Motion apparently questioning the

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    right and indeed the duty of the Government to take the measures that they have taken. His party, if I understand aright its philosophy, stands for the general principle that the state should exercise a general supervision over the activities of various bodies in the state. That of course applies even more in the case of the National Health Service, where the Government are obliged to pay the bill. Any suggestion that the action of the Government implies an attack upon the National Health Service seems to me to be totally unfounded. Any economy that can be made in unnecessary expenditure upon drugs can, and I do not doubt will, be spent upon the extension and improvement of other aspects of the National Health Service.
    The amendment moved by the noble Lord, Lord Kilmarnock, seemed to me to be more in line with what I understand to be the philosophy of his party: that is, to take a more discriminating line and to seek reasonable co-operation between the Government and various bodies—in this case, of course, the medical profession. I think that he and also the noble Lord, Lord Porritt, perhaps stood for what I might call the complete autonomy of the medical profession. Recently, the autonomy of a number of professional bodies has had to be called in question. The solicitors have had to abandon their exclusive right to conveyancing; and that is not the only example. It seems to me to be perfectly clear that the Government are under an obligation to make certain that the clinical freedom of doctors to prescribe is contained within reasonable limits.
    The noble Lord, Lord Porritt, made a remark which I did not quite understand. I think he referred to the chickens coming home to roost after 40 years. It is just about 40 years ago that the National Health Service was introduced. I hope that the noble Lord does not mean to imply that he is opposed to the principles of the National Health Service. I remember very well that at that time the attitude of the medical profession was not wholly co-operative with the Government of the day, whom I supported. I do not speak with any desire to criticise the medical profession. I am the son and the grandson of doctors, and I have received much beneficial treatment from the medical profession, which I greatly admire. But I say that a limit must be drawn to the extent of its complete freedom to prescribe drugs.
    As I said on 20th February, I am wholly ignorant—or at least I was wholly ignorant—of this subject. However, partly as a result of a conversation with the noble Lord, Lord Hunter, I read a review of a book entitled The Wrong Kind of Medicine, and I bought it. It is compiled by a Dr. Andrew Herxheimer, who is the editor of Drug and Therapeutics Bulletin; a member of the World Health Organisation Expert Panel on the Selection of Essential Drugs; and, as a guarantee that he is not merely a theoretical chemist but has high standing in practical medicine, he is senior lecturer in clinical pharmacology at Charing Cross Hospital Medical School. I felt, therefore, that I could rely upon the information that I gathered from his book. I have never met him, but I have consulted him on the telephone.
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    I was so impressed by the book, that I sent it to a doctor friend of mine and I shall quote his reply. He said:
    "The book I found most interesting and quite informative. I tend to agree with you that the medical profession has taken an unnecessarily arrogant stance with regard to listed prescribing, but they all seem quite petrified that they will be dictated to in clinical terms if they give in at this point! I can see no logical reason why a series of professors cannot concoct a list which is satisfactory to most people … I see no reason why the future doctors should find any difficulty in coping with a restricted list as projected by the Government."
    I invite your Lordships' attention to my friend's reference to "professors". As a busy practitioner, he knows that the opinion of academics—like the noble Lord, Lord Hunter, who is so eminent in this sphere and whose contribution to this debate has been so helpful—is the opinion of those who specialise in this arcane study in a way that is quite impossible for the ordinary general practitioner to do.
    What emerges from my study of the book can be summarised in this way. Owing to the complexity of modern drugs, no ordinary practising doctor can prescribe without consulting the publications of expert bodies in this and other countries. In this country not only do we have the Government-appointed Committee on Safety of Medicines, of which the noble Lord, Lord Hunter, was such a distinguished member, but we also have the United Kingdom Joint Formulary Committee, as well as the unofficial Drug and Therapeutics Bulletin. In addition, the World Health Organisation produces a model list of some 250 essential drugs.
    The numerous pharmaceutical companies compete in the wonderful research which has produced such blessings to modern man, curing us of ailments from which earlier generations suffered and died, and relieving us also of pain. Not only must we be grateful to them for what they have done, but we must do nothing to obstruct further progress in this beneficial work.
    However, this beneficial work brings with it dangers and problems with which Governments must cope. The terrible thalidomide tragedy is only one example of the dangers that accompany this progress in making sophisticated drugs. There is always a price to pay for taking any medicine, varying from mere expense and inconvenience to an unpleasant or even dangerous effect.
    In studying this matter I have only been able to look up drugs which have been prescribed for me. I think it was in 1979 that the Dutch registration authority suspended the production or sale of Halcion for insomnia. I think, therefore, that it was unfortunate that my doctor in Scotland prescribed that for me, because it is said that it may have serious mental effects. I hope that any incipient insanity that you detect in me will not be attributed to the short course that I had of Halcion, but I do not blame that general practitioner. How should he know the technical investigations that had been made in Holland by a specialist body? I cite this as an example of why the Government are under a responsibility to have monitoring authorities looking at the safety of drugs and their possible side effects.
    If that is true with regard to the safety of drugs, why should not the same principle apply to the price of drugs? The National Health Service bill for drugs in

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    England alone is £1½ billion, and the number of drugs that can be prescribed is 17,000. How can a busy doctor evaluate precisely which branded drug, if any, to prescribe? I emphasise the word "branded". Many are virtually identical but produced by different competing companies at different prices. Many are similar or even identical to generic products sold at much lower prices. I do not hesitate to repeat what I have said on 20th February: that when I got my doctor to substitute Nitrazepam for Mogadon the cost to me each time I bought them went down from £12.02 to £1.77. Looking this up again, I find that had he prescribed Anxon—which is very much the same—the cost to me would have been ten times as much as that of Nitrazepam. My doctor was only prescribing what had been given to me by previous doctors.
    Dr Herxheimer has authorised me to say that in his considered opinion the lists produced by the advisers to the Government are—without committing himself to any individual items—in general fair and reasonable. I could give further examples but at this hour of the night I will not do so. However, I am satisfied that the Government are discharging their duty in producing these two white and black lists and that on the advice of their experts—to which I hope the British Medical Association will contribute in the future—they have produced lists which are satisfactory to those in the best position to judge.
    10.34 p.m.
    The Countess of Mar: My Lords, I do not hesitate to admit that there is an urgent need for action to reduce the National Health Service drugs bill. There is no doubt that there have been flagrant abuses by some doctors in prescribing unnecessary medicines; and that some patients have demanded drugs which they do not need.
    However, I do not think that the introduction of these regulations is the correct way to put matters right. Ever since the original proposals were presented to Parliament in November 1984 there have been clear, loudly-voiced indications that doctors bitterly resent the inference that they are irresponsible and lack judgment. They have indicated that they are prepared to put their own house in order.
    There is already in being the machinery to control frivolous prescribing, in the form of the Prescription Pricing Bureau and the family practitioner committees. Would it not have been more sensible to allow prescribing doctors to continue to use their clinical judgment in conjunction with advice and perhaps firmer vigilance from these bodies? The list itself has been variously described as "a squalid little cost-cutting measure", "an overhasty half-baked scheme" and "a rushed, ill-thought-through, damaging measure" by an Honourable Member in the other place. What do we think about it? The evidence is before us tonight if only we care to look at it.
    First of all, take those drugs on the permitted list under the heading of antacids. Gastrocote and Gaviscon tablets have the same constituents. Altacite, Actal, and Lord Pitt's preference, Asilone, all of which have differing modes of action, have been omitted, while Topal tablets, which have not been available for a number of years, are included on the list.
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    The permitted list of analgesics indicates the theoretical but not the practical knowledge of its compilers. The noble Lord, Lord Pitt, put it so clearly: pain is infinitely variable, as are the human beings who suffer it. I am reliably informed that this list would compel doctors to prescribe strong painkillers for mild to moderate pain. Aspirin is rarely prescribed because of its irritant qualities. Dextropropoxyphene—I have done well in pronouncing that—plus paracetamol, dihydrocodeine, dihydrocodeine plus patacetamol and pentaocine are only available under brand names. In other parts of the list brand names are used, so why not in this section? Febrilix, Paldesic, Panaleve and Salzone are not in MIMS—to doctors that is the equivalent to the vicar's Bible—and are therefore unlikely to have been prescribed.
    Under the list of substances not to be available at NHS expense from 1st April 1985—and I am going to press the noble Lord on this matter—I see Sainsbury's soluble aspirin. Not only do we have Sainsbury's soluble aspirin but Sainsbury's cold powders with blackcurrant. Sainsbury's hot lemon powders, Sainsbury's indigestion tablets, Sainsbury's junior soluble aspirin tablets, Sainsbury's paracetamol tablets, and Sainsbury's aspirin tablets.
    Most of us know that Sainsbury's brand name products are only available through their own stores, and so far as I know there are not pharmacies within their stores. The noble Lord said that all the items on the black list had at some time recently been prescribed by doctors. Does the patient take his prescription to the cash desk at Sainsbury's, or does he take his prescription to the chemist, who then sends a messenger to Sainsbury's to buy the paracetamol or the aspirin or the cold cure? Does he then run back to the chemist's shop, and the chemist then presents Sainsbury's soluble aspirin to the patient? I should be grateful for an answer.
    We all know how debilitating coughs and colds can be. One only needs to be in your Lordships' House when the bugs are doing their rounds. They cause numerous days lost from work. There may not yet be a cure for the common cold but the general medical practitioners are aware that patients are better able to work if their symptoms are relieved. I would not dream of going to see my doctor if I had a cold, but some people need the support of a qualified practitioner. Others may be prone to complications and early treatment may prevent these.
    There are no demulcents or compounds in the list, and there is only one nasal decongestant. Actifed is considered to be so useful that it was provided for American astronauts to take to the moon, and yet that is not on the list. Karvol capsules are of great benefit as an inhalation for infants, but, as they have been blacklisted, parents, however poor, will have to pay for them.
    As to other blacklisted preparations in this category, it is fatuous to suppose that doctors would have prescribed them. They would soon have been pounced upon by the Prescription Pricing Bureau. I wonder how many doctors prescribe those mysterious tablets B006 et al, or even know what they are. The permitted and not permitted lists seem to be an outstanding example of the naivety of politicians and bureaucrats

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    who believe that they know better than those who have undertaken a long and arduous training followed by years of practical experience.
    Now to the financial aspects of this measure. We are told that it will produce likely savings in the drugs bill of some £75 million, rising to a higher figure in due course; that these savings are sensible and that they will not harm the interests of the patients. Out of this £75 million I understand that £28 million is to be given to the chemists as compensation for the likely underpayment resulting from a fall in the script volume and the net ingredient cost when the limited list is introduced—as reported in the Chemist and Druggist of 23rd February 1985. A further donation of £17 million, making a total of £45 million, is to be given to them because general medical practitioners wrote fewer prescriptions in 1983. Did the GPs receive any reward for writing fewer prescriptions? Of course not, and they did not expect it. Why should chemists have a handout of around £2,000 each when the poor and the elderly are having to find more money out of their already slender resources for the drugs they need?
    We are also led to believe that chemists will be compensated for stock in hand which may be redundant after 1st April, but no offer has yet been made to the dispensing doctors who have stocks for which they have already paid. What are the proposals for them? Already we can see that the savings have dwindled to less than £30 million.
    Lurking somewhere in the Elephant and Castle are proposals for energy conservation in hospitals which would save £80 million a year, as reported in The Times of 13th February 1985. There is tremendous scope for saving in administration costs, which were £2,314 million in 1981–82. I am told that theft from hospitals is a major charge on the National Health Service and yet little seems to have been done to curb it. The Office of Health Economics Statistics shows that the cost of doctor dispensing is £2.90 per prescription and chemist dispensing is £3.14 per prescription. If all doctors were to be allowed to dispense there would be a saving of £ 106.5 million per annum.
    There is hound to have been a rise in prescription costs over and above the cost of living index. The noble Lord, Lord Ennals, gave several reasons. The population has increased. We have twice as many over 75s in the population as we had in 1948. This is a tremendous tribute to the National Health Service, but, as many of your Lordships will know, they need more sophisticated drugs to keep them going. Unemployment is responsible for a great many stress-related illnesses and the sufferers often need medication. Have the Government taken these factors into account?
    Well over half the population is entitled to free prescriptions. The young, the elderly and the poor, those who need and use the National Health Service most, are to be second-class citizens in sickness as well as in so many aspects of their lives because they will not be able to afford drugs not on the limited list. This surely was not the intention of those who originally conceived the idea of a health service for all.
    The sum total effect of this piece of legislation will be discontented doctors, unhappy pharmacists and
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    confused patients. The Government are dealing yet another blow in the solar plexus of our National Health Service. It opens the gates to further restrictions no matter how much the Minister may deny it, and all this for a saving equivalent to the cost of two miles of motorway!
    10.45 p.m.
    Lord Ferrier: My Lords, I am a growing lad and I was just going off to bed when I was stopped in the corridor to be told that Lord Molloy and somebody else had cut out and that I should follow the noble Countess, Lady Mar. Your Lordships will have to forgive me if I am a little upset. I am reminded of the stalker who got his rifle close to a stag who was browsing towards the march. He said, "There you are, sir, tak' your time, but be quick about it!" That is what I propose to do.
    The noble Baroness who has just sat down touched on a point which had not been raised previously in the debate, so far as I remember. That was the fact that an enormous amount of time and money is wasted by people who go to the doctor because they feel that they must go to the doctor. In fact, sometimes the surgery is a place where they can have a good chat. But, my Lords, a quarter of a century ago I was chairman of a group of pharmaceutical companies. I say that only to remind your Lordships of my experience and my respect for the industry which has been amply rewarded by listening to speeches such as that of the noble Lord, Lord Porritt, who really said practically all that I wanted to say—but not all.
    Many a time in your Lordships' House I challenged what I called in those days—and I am talking of a quarter of a century ago—the ritual dance which was executed at that time by the critics of the pharmaceutical industry. In those days "profit" was a dirty word. It is not so today. My noble friend the Minister has made it clear that he regards the industry with respect. At the same time there is no question about it, from what your Lordships have said this evening, that there is a feeling that there might be more sacrifices to be made by the pharmaceutical industry. I do not believe that that is so. As one noble Lord pointed out, the ability to research is being restricted by the sacrifices that the industry has already made in reducing prices.
    Things have, of course, changed since the days when profit was a dirty word. But the Minister, I think, is inclined to praise the industry so far as his department will let him. Nevertheless now we find the Government involved in what can well be described, and somebody has described it so, as bureaucratic lunacy. That is my view of it. Here is the paper as it applies to Scotland: 32 foolscap pages, 23,000 doctors. Really, is this particular manoeuvre going to pay? I doubt it myself.
    Frankly, I do not think it makes sense, as has been pointed out in the other place. This leads me to complain bitterly—and I hope that some of your Lordships will agree with me—at this debate having been shoved off into the midnight hours when it is of such great importance. We have not really had an opportunity yet of studying the debate in the other place and what was said there. After all, Hansard cuts off at 10 o'clock.

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    I do not think that the proposals in the papers make sense, and that is why I support the amendment of the noble Lord, Lord Kilmarnock. Is it possible that those whom the gods wish to destroy they first drive mad? Can we not use this amendment to give my noble friend the Minister and his "brother officers" in the department a chance to have another hack at it before it comes into effect on what, after all, is April Fools' day. I think it is a mistake.
    There are other ways in which money can be saved. The noble Countess who has just sat down has pointed out how it could be saved, how people could go to the doctor less, take a dose of salts or a spoonful of castor oil or buy an aspirin at the corner. I think that one method of saving would be the acceptance of manipulative therapy under the National Health Service in order to reduce the cost to the state of outgoings in respect of treatment, medication and even surgery which backpain involves. But that is another matter.
    Is this plan practical? What is going to be the cost to the ordinary GP? It is all very well, but I have discussed it with GPs and their time is money, particularly in widespread rural areas where, as I think the honourable Member for East Kilbride said in the other place yesterday, doctors and patients cannot pick and choose where they are going to get their medicine. They may have to go 30 miles to the nearest chemist. That is really why I support the amendment of the noble Lord, Lord Kilmarnock.
    Has not the time come to reduce the size of this cumbrous and obviously unmanageable department, the Department of Health and Social Security? After all, it was created only in 1968 and now it is manifestly, to the ordinary man in the street, unable to look after itself. I do not think it is fair to involve the Ministers concerned with this giant and apparently unmanageable spending organisation. The Departments of Health and of Social Security were merged in 1968. Has not the time come to separate them again and give the Ministers a chance to run the business properly?
    Something of the sort was hinted at during the debate here on the 27th February. For instance, my noble friend Lord Cullen of Ashbourne, in the debate on the spectacle muddle, pointed out that we shall have to retrace our steps over that. Since the 27th February this problem we are now debating has blown up. With respect to the noble Lord, Lord Winstanley, who in his speech the other day—or was it in a press interview?—referred to the Falklands expenditure as being an outgoing of money which we could ill afford, that is another matter; that is world politics. We are talking today of our housekeeping in our homes. Let us see what proposals the medical profession will make after reading the report of this debate. If, as I hope, your Lordships carry the amendment of the noble Lord, Lord Kilmarnock, that will give us another opportunity to oversee the question of prescribing.
    10.54 p.m.
    Lord Rea: My Lords, there are just a few more points that I feel should be made, but I hope not to keep your Lordships more than about five minutes. As
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    my noble friend Lord Pitt has indicated, the medical profession in this country has become acutely aware of the need to improve prescribing, not only because of considerations of cost, but also because over-prescribing is increasingly recognised as bad medicine in itself. It may actually harm patients and it certainly increases their dependence on the National Health Service.
    Our drug costs, as the noble Lord, Lord Ennals, has pointed out, compare very favourably with those of other advanced countries. The National Health Service does not encourage doctors to mollycoddle their patients, as do some other health care systems. There are increasing numbers of examples of groups of doctors taking steps to improve prescribing and to cut costs. Only last week I received a bulletin from the Royal College of General Practitioners which described six such schemes. The St. Mary's study, which I mentioned in the House on 6th February, showed how the provision of detailed feedback information to general practitioners by the prescription pricing authorities about their prescriptions could, if followed throughout the country, save £63 million, which is more than the present regulations will achieve, taking into account the compensation to pharmacists which the noble Countess, Lady Mar, has mentioned.
    My own experience of drawing up a limited list in the group practice to which I belong was published in the British Medical Journal of 8th February. I do not disagree with a limited list in principle. In fact, our limited list agrees rather accurately in the categories concerned with the white list which the Government have drawn up. But there is a very important difference. Our list was drawn up willingly by the doctors concerned, in association with a professor of pharmacology, Professor Laurence of University College, London, and we intend to implement the list very flexibly to start with, with frequent revisions, taking into account both doctor and patient response. We appear to have no such mechanism provided for in the regulations as they stand, and I hope that when he replies the noble Lord will give us a few more details about what is proposed.
    I have still heard no satisfactory explanation as to why the report of the Greenfield Committee, which was set up by the department itself and was representative of all the interests concerned, was not implemented in full. By enlisting the co-operation of a willing profession, a much better basis for a real lasting reduction in drug costs could be achieved. These are some of the reasons why I have no hesitation in supporting both the Motion of my noble friend Lord Ennals and the amendment of the noble Lord, Lord Kilmarnock.
    A final thought is that when the National Health Service was founded—and this particularly follows on from the speech of the noble Lord, Lord Porritt—the then Minister of Health, Mr. Aneurin Bevan, negotiated a tough but very honest deal with the medical profession, and one of the most crucial points in that deal was that the clinical freedom of doctors to treat patients as they thought fit should not be breached. It is a very odd twist that it is a Conservative Government that has first broken that trust, which is basic to the profession's participation in the National

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    Health Service. Up till now, GPs have mostly voted Conservative, and I think that 80 per cent. was the figure given in one survey in Pulse. But I can predict with little doubt that if these regulations come into effect the party loyalty of many of these basically conservative men and women is unlikely to be maintained.
    10.58 p.m.
    Lord Colwyn: My Lords, at this stage of the debate we are about equally divided for and against in our arguments on the Motion of the noble Lord, Lord Ennals, this evening. It is my intention to support the Government, and I have to admit that I have not so far heard any argument which could make me change my mind. Much has been said about the Greenfield Report. In their evidence to the Greenfield Committee, the DHSS expressed concern for individual doctors having to take account of a patient's financial circumstances when deciding whether to continue treatment with drugs not on the limited list. Those are very admirable sentiments but they are not consistent, for we are discussing this limitation within one week of a Government announcement raising prescription charges to £2 and continued persecution—for that is what it is—of the dental profession by the increase, again, of charges for dental treatment. I am tempted tonight to digress on this subject, which I hope we shall be able to discuss in the very near future.
    However, I started by saying that I support the Government—and I do—in that I agree with the principle of a selected list of medicinal products being mandatory for prescription within the National Health Service. The general practitioners are contracted and agree to work with the DHSS, and I see no reason why their list, like the National Health Service dental list, should not be limited by specific instructions as to their prescribing habits. The long list of drugs to be withdrawn was certainly interesting reading to me, although misleading; for despite having never heard of most of the products listed, a large number of them do not appear in the British National Formulary, and are therefore not available for prescription within the NHS. I am sure that most GPs were unaware until this list was published that there were so many variations of the seven categories of medicinal products that we are discussing this evening.
    Although the list is long and has not been available for sufficient time for detailed examination, I was unable to find a single item which could be considered of therapeutic value that was not covered on the approved list either by a single item or by a combination of items. I cannot believe that we shall shed any tears for the loss of Bonomint chewing gum; Clarkes blood mixture; Dr. William's pink pills; Indian brandy solution; Male gland double strength supplement tablets; Nurse Sykes powders; or Scotts husky biscuits. I have read reports over the past week which say that certain drugs that are essential will not now be available. The reports include an article by Oliver Gilley in the Sunday Times in which he gave several examples of popular medicines that are to be withdrawn. Each one mentioned was clearly available on the retained list under its generic name.
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    The noble Lord, Lord Ennals, spoke this evening of the dropping of the pain killer DF 118. This is still available as dihydrocodeine. He also talked of limitations in the benzodiazepine tranquillisers. He did not mention the name, but librium, valium, ativan, mogadon and normison are all available under their generic alternatives.
    As a keen advocate of the maintenance of health with a balanced diet and the treatment of disease by use and stimulation of the body's own defence mechanisms, I must support any measure which will limit the number of harmful substances that we continue to pump into ourselves, many of them on medical prescription, 350 million of which were issued last year alone. Perhaps this legislation will encourage people to look towards the use of homoeopathy and natural remedies, all of which are harmless and many of which are cheaper.
    Although I consider that the Government have made a sensible cost saving decision, I was delighted to hear the Secretary of State for Social Services say in the debate in the other place last night:
    "I am ready to consider with the profession whether in exceptional circumstances doctors should be allowed to prescribe drugs not on the list when they believe their patients need them".
    If he can stand by this—I have not been able to read his summing-up speech—surely the major objection to this regulation has been effectively answered. I also hope that this offer will overcome the problems for old-age pensioners and patients on supplementary benefit who may now find that a medicine they have considered essential for years is not available within the National Health Service. Perhaps the Minister can confirm that their cases will be covered by the availability of a special prescription if careful substitution and explanation by the general practitioner is not sufficient.
    Unless some of the medicinal products now blacklisted have solely relied on subsidy from the National Health Service and cannot survive without it, they will continue to be available either over the counter or on private prescription, most of them at prices considerably cheaper than the present prescription charge of £1.60. I do not see the limitation regulation as an infringement of the GP's right to prescribe the medicines which he feels most suitable for his patients. I see it as a logical cost effective business measure which, in my opinion and in the opinions of many doctors whom I know, should have been introduced many years ago. My Lords, I hope that you will support the Government in the event of a Division.
    11.5 p.m.
    Baroness Masham of Ilton: My Lords, I am pleased to be following a doctor and a dentist and I should like to say a few words on behalf of patients. I feel very worried that the relationships between the medical profession and the Government seem so strained. Doctors have to deal with the greatest responsibility of our society—life and death. Yet the Government are not giving doctors the chance to prove themselves in this respect, now that they realise that drugs have to be limited.
    This regulation seems to have been rushed through. For many people who are struggling with sickness and

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    the difficulties of life it must be very depressing to have to try to understand the message which the Government Ministers are trying to put over—because all the Ministers are young, active males in the prime of life, with boundless energy.
    I agree that everyone should accept the need to make further savings. Tonight I want to ask only three questions. First, should not this limited list regulation at least be delayed until the appeals procedure is ready? I have been telephoned by a woman whose new doctor has taken a great deal of time and trouble to wean her off the addiction of Valium by putting her on two lesser tranquillisers, which are suiting her. Those tranquillisers are now on the black list. What will happen in cases such as that? Will the doctor be able to prescribe what suits his patient, or will she have to go back to using something stronger?
    Secondly, can the Minister give me a good reason why Actifed cough mixture has been taken off the prescribing list? This mixture is cheap, popular, easy to take, and very effective in cases of croup in children. In fact, for patients who do not enjoy exemption from charges, it is cheaper to buy Actifed over the counter. But I am concerned about those who are exempt from charges: children, the elderly, the chronically sick, and those of social security.
    Finally, will the list be kept under regular review? I look forward to hearing the Minister's answers.
    11.8 p.m.
    Lord Mottistone: My Lords, we have heard many speeches, and I shall not be long. One consistent feature of this debate has been that even those noble Lords who are against this measure, with the possible exception of the noble Lord, Lord Porritt, recognise that there have to be economies made in the National Health Service. I believe we would all agree with that. Indeed, I have said before in your Lordships' House that if economies are not made in the National Health Service, it will gradually price itself out of existence, as has happened with other Government bodies.
    That is a very important point, and it is sad that those noble Lords who say they agree that there should be economies then go on to say, "But not in this area".
    Noble Lords: Not by this method.
    Lord Mottistone: That is what people always say, my Lords. I come from what was one of the oldest nationalised industries in this country—the Royal Navy. I suspect that in the days of Samuel Pepys, when he was introduced to create just such economies in that service, my predecessors in the Royal Navy were saying the same kind of thing as the opponents of this measure are saying now; that is, "Yes, we must have economies, but not in our area, not in this area". That is the problem.
    There needs to be economy; and the noble Lord, Lord Rea, said, yes, we must have this sort of economy provided we do it ourselves. But I suspect that that is not something which can readily be applied, otherwise the Government would have resorted to that. Indeed, I believe my noble friend said that they had considered it. That fact is, we have reached the stage—and the
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    figures given by my noble friend the Minister made this clear—that with the increase in drugs and the vast increase in cost there has to be a regulatory principle.
    I am able to say that my own GP, who raised the subject with me—I happened to be visiting him—rather than my asking him, said that he agreed very much with this. The only aspect he questioned was whether the positive list was right. He questioned whether the right sort of people had been on the committees advising the Government. I suspect from what I have heard tonight that the reason the right people were not there is that they did not want to be there. It is perhaps their fault that they were not. In any case, my GP said that he thought that such changes that he would make, if given the chance, were minimal. He thought that the principle was right, as the noble Lord, Lord Rea, thinks it is right.
    If one feels that I cannot see how one can possibly support the noble Lord, Lord Ennals, or the noble Lord, Lord Kilmarnock. It must surely be the case that we must have some sort of control. It seems to me that noble Lords who have spoken who know much more than I about these things, like the noble Lord, Lord Hunter, and my noble friend Lord Colwyn, are saying that there is nothing very much wrong provided that the Government—and I think the Government have already said they will—review the list and keep it up to date. That must be the right sort of principle. One should not grumble about whether the pharmaceutical companies will suffer. As my noble friend the Minister said, the pharmaceutical companies have been very well considered in this whole operation. Therefore, if we do have to take this to a Division—and I very much hope we do not because that would be inappropriate under the circumstances—I hope that the Government will receive all the support they deserve.
    11.13 p.m.
    Lord Winstanley: My Lords, the noble Lord, Lord Mottistone, said that those who support the Motion of the noble Lord, Lord Ennals, as amended by the amendment of my noble friend Lord Kilmarnock, believe that there should be economies but not in this area. We believe no such thing. We believe very positively, and have said over and over again in this House and elsewhere, that there should be economies in this very area but not in this way—which is a very different thing indeed.
    Most speakers in the past hour or so have said that the hour is late. The hour is late, but I must say that it is not our fault that it is so late. Frankly, I agree with other noble Lords that it is outrageous that your Lordships' House should be required to debate a matter of this importance in this way at this time. Noble Lords will recollect that originally this was the main business of the day. It warrants being the main business of the day. It is extremely important business. It is the kind of business which demands the full attendance of your Lordships' House with a full and thoughtful and, at the end of the debate, a clear and carefully taken decision. But the Government, for reasons of their own, at the last minute interpolated other business. If any noble Lord tells me that the Chief Whip expected the other business, in which the speakers were mainly to be Her Majesty's judges,

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    would go through quickly, he must think again. The Government's purpose in interpolating the other business was to make absolutely sure that this matter would not be ventilated in the kind of way that this House would have done, had it been given the opportunity to do so with a full House.
    I am bound to say, as many noble Lords have said, that the Government should think again. I think that the Motion, as amended, would give the Government an opportunity, if they accept it—and I know that they are not going to—not only to think again but to use the period while they are thinking again for something which could bring benefits far greater than those which could emerge from these regulations. In other words, as envisaged in the amendment of my noble friend, we would be trying another method of achieving vast savings, possibly much greater savings than can be achieved by this particular method.
    In the next few minutes I should like to say why I believe the Government should now think again. First, I think they should think again because the whole legality of the exercise upon which we are embarked is open to question. I honestly believe that if this order arrives on the statute book and comes into force on 1st April it will ultimately be challenged in the courts. If it is challenged in the courts I believe it will be successfully challenged. I should like to explain why.
    First I shall refer to the document which has already been referred to by the noble Lord, Lord Ennals, and others. That is the Fifteenth Report of the Joint Committee on Statutory Instruments which has looked at the order. The noble Lord, Lord Ennals, quoted at length from that report. I shall quote a little more briefly. However, because some time has passed since it was previously referred to, I shall just remind noble Lords that the report says this:
    "The Department admitted that, certainly in the case of [Statutory Instrument] 296 and possibly also in the case of S.I.290, both Houses were being asked to consider regulations which were not accurate and whose errors would have to be amended by subsequent instruments".
    It really is intolerable that we should be asked to give automatic assent to orders which are erroneous and faulty, and which require further orders to be made—further orders about which we have as yet heard nothing. That is the first ground upon which I think that maybe the whole provision is ultra vires.
    The second point is this. This, too, has been quoted. In response to the Question put by the noble Baroness, Lady Elles, in her capacity as a member of the European Parliament, we had the answer of the noble Lord, Lord Cockfield. I have it all here. He has said with the utmost clarity and made it quite clear that if we go ahead in this particular way we shall be in breach of Article 30 of the European treaty.
    I am prepared for Britain from time to time to be in breach of the European treaty. Indeed, we have been. In matters in which we have been in breach for very many years we have taken a very long time to put ourselves right. But that is a very different matter from knowingly going into breach of the treaty. We have been told that what we are about to do will put us in breach of Article 30. So that is the second reason why I think the whole procedure might find itself in difficulty in the courts.
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    There is a third and rather odd reason which is perhaps a little more remote. But I should say this. It is interesting that when the Act to which these regulations refer is amended in the way in which the regulations will apply different groups of people will be treated differently. That concept is known as hybridity, as noble Lords know. In regard to a Bill, of course, it results in somewhat lengthy proceedings before it can actually be done.
    However, let me explain what I mean. We have this list. Let us take the English list, never mind the Scottish list. Noble Lords know that we have different lists in the hospitals—totally different lists—which will be approved. That is an interesting point. Let me digress for a moment. What will happen? The noble Lord, Lord Ennals, has told us that for his complaint, about which we all sympathise with him, he has to take a particular drug, and a very valuable one, these tablets DF118. They are available on most of the hospital lists but they are not available on this particular list.
    Let us suppose that a patient in hospital is on a particular drug which is perfectly permitted on the hospital list. Then that patient is discharged. In the fullness of time the hospital consultant writes to the general practitioner and says, "This patient is on such-and-such a drug". The general practitioner says, "Oh, well, I cannot prescribe that because it is on the black list". What is to be the situation? Must the patient then go to the hospital pharmacy. If he does go to the hospital pharmacy and expects the dispensing to be done there, I should think he will get a rather strange answer.
    But what I am more concerned with is the fact that certain people who are more or less resident in hospital institutions will be able to get a certain drug, while other people who are not resident in those institutions, who are outside, but who suffer from the same condition will not be able to obtain that particular drug. In other words, we have different groups of people being treated differently under a statute.
    Then there is a fourth matter which I think raises grave doubt about the whole proceedings. It has already been referred to by other speakers. That is the whole question of the possibility of an appeals mechanism. As already stated in another place yesterday, the Secretary of State acknowledged that he felt there was a need for an appeals procedure and that he would be entering into negotiations to devise an acceptable procedure and to introduce it. When asked by Mr. Michael Meadowcroft why he should not introduce the appeals procedure before the regulations were implemented, the Secretary of State, Mr. Fowler, said, in a rather unusual reply, at column 697:
    "I cannot take the responsibility for the delay, which was entirely the fault of the General Medical Services Committee, not the Government".
    If an appeals procedure is necessary in connection with these regulations, then an appeals mechanism is necessary: it does not matter tuppence who is responsible for the delay. I accept that the Secretary of State is probably right and that the British Medical Association—not the General Medical Services Committee, which is a slightly different body—has some responsibility for the delay. Be that so or not, the fact remains that if these regulations require an

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    appeals procedure then they require an appeals procedure; we should know about it before the regulations come into force.
    We are talking about an appeals procedure that could possibly allow an individual doctor to override the blacklist in certain specific circumstances. But there are other needs for flexibility, for appeals and for changes. I shall come to them. First, however, there is the general matter. If these regulations come into force in the manner that is threatened and likely, I have no doubt that, if they are subsequently challenged in the courts, the challenge will be successful.
    I should like now to refer to other bureaucratic muddles which will indicate, I believe, the need for further thought. They are bureaucratic muddles that will be the inevitable consequence of the procedure upon which we are now embarked. I should first like to remind the noble Lord, Lord Glenarthur—I know that he is aware of this—that many modern group general practices, on the advice of his department and sometimes with the help of public funds, have computerised their operations, including their whole repeat-prescription systems. This is quite an important mechanism. It makes for economies. Repeat prescriptions are necessary for certain people—those suffering from epilepsy, diabetes or other conditions for which they require continuous therapy. By computerising repeat prescriptions, one can ensure that they get the right drug in the right amounts at the right interval, and also that they are recalled for a review of their prescription at the right intervals so that it can be reconsidered.
    The average general practitioner received the list only a week last Monday. Many did not receive it until the Tuesday or the Wednesday. In other words, the noble Lord and his colleagues are giving those general practitioners a matter of days in which to reprogram their computers—an enormous undertaking that will be a heavy burden for the doctors themselves and for those who work in their practices.
    I move to the consequences of the uncertainty about what is to happen to articles which chemists and dispensing doctors are left with—this was mentioned by the noble Baroness, Lady Masham—and which they will never be able to get rid of. It is interesting to find that this is already happening. I do not say this in any way as being to the credit of my profession. It is, however, obvious that dispensing doctors are now prescribing those particular items with a quite extraordinary rapidity to make sure that their shelves are empty of them by 1st April.
    The noble Lord, Lord Ennals, asked what he was to do about his DF 118 tablets. I can tell him one thing that he can do. He can come to me and I can give him a prescription, a bulk prescription, which will carry him far beyond 1st April. For some time I have been prescribing a substance—quite a valuable therapeutic substance, though, I agree, not an essential one—for two noble Lords, one who sits on the Government Benches and one who sits on the Labour Benches, which is now on the blacklist. What have I done? I have given both those noble Lords bulk prescriptions which will carry them far beyond 1st April.
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    I am merely suggesting to the noble Lord that what he will find, and what I am already finding, is that pharmacists are going to general practitioners they believe to be co-operative and saying, "Look, I'm going to have an awful lot of this or that left on my hands. Haven't you got any patients you might help?" This is not a very creditable kind of exercise, but I think it is right to warn the noble Lord that he will find that the drug bill initially is not going to go down; it is going to go up. It is going to go up for that particular reason.
    Now let us move to another uncertainty. I want to say—
    Lord Kinnaird: My Lords, if I may be excused for interrupting, before the noble Lord has to prescribe any more drugs can we not get on and vote?
    Lord Winstanley: My Lords, it is not my fault that we are here at this hour, and the noble Lord should use his undoubted influence with those who manage Government business. I intend to say what I have to say, and I hope that other noble Lords will listen. If the noble Lord who has intervened does not wish to listen, I think that possibly we could do without him when the vote comes.
    Let me now refer to the consequences of the uncertainty about an appeals mechanism and flexibility with regard to the list. This is a matter which has been referred to by many noble Lords in the course of the debate. It is a matter of the utmost importance, particularly to the pharmaceutical industry. If a list system is to work effectively, we must have a mechanism, an understandable mechanism, whereby new drugs, if they are valuable and useful and economic, can be added to the list, and old drugs which have become obsolete can be removed from it. We have heard nothing yet about that mechanism. Indeed, that is partly why there is grave anxiety in the pharmaceutical industry. As certain noble Lords have said, it is threatening the whole question of investment in the pharmaceutical industry in this country. One noble Lord mentioned Robbins, who have opened a new place. I had the honour of hosting a reception for them on that occasion. Unless we hear what is to be the mechanism for adding new things to this list—if we are to have a list—I am very doubtful whether the noble Lord will find that as many new things do in fact arrive as have been arriving in the past.
    I have been talking in the main about the white list. I should like to come for a moment to one or two items on the black list. I do not want to have an argument about it, but, as the noble Lord will recollect, I intervened and we talked about things such as Flora margarine. My recollection of the actual situation is that there are some substances which in certain limited circumstances can be prescribed if it is held that in regard to those cases in which they are prescribed they are in fact a drug rather than a food; or, as in the case of the other item which was mentioned—Nivea cream—they are a drug rather than a cosmetic preparation. To hear some people talking about the freedom with which some of these things have been prescribed you would think that there have never been any constraints at all on what a general practitioner can prescribe. Of course there have been constraints.

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    The noble Lord, Lord Glenarthur, in response to my intervention, when I said that I doubted very much whether certain of these substances had been prescribed at all since the National Health Service started, said he would show me the prescriptions. I should be delighted to see them. When I see the prescriptions I shall ask him what on earth his department has been doing to allow those prescriptions to go through. There is a mechanism, and the mechanism that has existed in the past is as follows. If a doctor's prescribing habits are extravagant, if there is excessive prescribing or extravagant prescribing, he is called to account. The general practitioner receives twice yearly an analysis of his prescribing costs—how much per patient, how much per prescription, how that relates to and compares with prescriptions, and the cost per head for other doctors in comparable areas. If his prescribing costs exceed substantially those of other doctors, he is called to account. That has been the system. If he was found to have been prescribing extravagantly, the excess could be, and often was, deducted from his remuneration.
    If the noble Lord, Lord Glenarthur, tells me that doctors have been prescribing almost everything from rice pudding onwards, I would ask, "What on earth has the department been doing?" I have made inquiries about these matters and I am told that there have been two cases—two only—in which Flora was held, in the particular circumstances in which it was prescribed, to be a drug in those cases and therefore it was allowed by a medical services sub-committee when a hearing was held. Does it mean that it can be prescribed by anybody for anything? I think that the same applies to Nivea. Therefore, it seems to me that there are items on the black list which have never really been prescribed and I can only assume that they have been put on that list as a kind of window dressing to show how necessary it was to intervene to stop doctors prescribing in this extravagant way.
    I must repeat once again that those of us who support this Motion, as amended, believe—and believe very deeply—that there should be major economies in the drug bill. We believe that there could be major economies in the drug bill, but we do not believe that any of those economies will be achieved by this particular route.
    This is almost the last possible occasion on which to ask the Government to think again. I really do wish that they would do so. They are making a grave mistake. I do not think that they will achieve the results for which they hope. I believe that they will find that the drug bill will go up rather than down, that there will be all kinds of administrative muddles, and that the exercise will prove to be costly, rather than the reverse.
    However, I am quite sure that, if the Government were prepared to proceed by another route, they could save not the small amount which they are proposing to save, but at least £200 million a year on the drug bill without detriment to the patient and without doctors having to forfeit their clinical rights in any serious way at all. I support very strongly the Motion of the noble Lord, Lord Ennals, as amended by the amendment of my noble friend Lord Kilmarnock.
    11.32 p.m.
    Lord Wilson of Langside: My Lords, my task in winding up this debate from these Benches has been rendered much the easier by the speech just made by my noble friend Lord Winstanley. As I listened to the debate I made up my mind that I would not shake—indeed, was incapable of shaking—the conviction of the noble Lord, Lord Colwyn, but it occurred to me that perhaps my noble friend's speech had given the noble Lord at least some food for thought.
    It would be unforgivable at this time of night, even with the noble Lord, Lord Kinnaird, gone, to repeat what has already been said so effectively. However, at the risk of transgressing in that connection, let me say that we were surely indebted to the noble Lord, Lord Ferrier, for expressing his outrage at the timing and placing of this debate. It really is quite outrageous, as I think both he and my noble friend Lord Winstanley said (and I apologise for repeating it), that we should be placed in this position without the opportunity to consider in particular the legality of the implications of what was said in the debate yesterday in the other place and what is said in the Fifteenth Report of the Joint Committee on Statutory Instruments, and the implications also of the provisions of Article 30 of the Treaty of Rome. It is a great pity that we were not able to give more mature consideration to those matters in this debate. I hope that the Minister in his reply will be able to reassure us on these matters.
    Turning to the debate, I should like very briefly to deal with some of the matters which have been raised. I was puzzled by some of the comments which the Minister made in opening. I was puzzled in particular when he objected to the criticisms relating to the lack of consultation on the part of the Government. I can understand the circumstances, because I do not like corporatism myself—I always associate it with Benito Mussolini. I can understand the Government feeling that there are some matters upon which they must make up their own mind. However, when we look at the history of this matter—certainly the recent history, because of course the history of the expenditure on drugs or the drugs bill is longer than that—it seems quite absurd to complain.
    The recent history begins with the Greenfield Report. If you examine this, you find that, having accepted this report, the Government suddenly did a U-turn on it without any consultation. And, after all, the report had commented on the circumstances: that the committee had had to work from a timetable; they had not been able to look in depth at all the topics which arose in discussion; and they expressed a willingness to continue their work if the Government wished them to do so. But, without any adequate consultation, the Government did, in effect, a U-turn. In the face of that situation, to criticise us for complaining of the lack of consultation I should have thought was quite unfounded. I have been throughout puzzled at the apparent indifference of the Government to the criticism of Members of this House such as the noble Lord, Lord Porritt. They cannot answer it. They simply appear to ignore it.
    Might I deal with two comments that were made by two of your Lordships who have spoken in the debate.

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    The first on which I would touch was that of the noble Lord, Lord Holderness. Like myself, he said that he spoke from the position of an ignorant layman—and I do too. I could understand the reasonableness of his approach to the whole matter. One could not quarrel with that. But I was puzzled as to the grounds on which he reached the conclusion that, in the face of the professional opinions which had been expressed, no Government could ignore the expenditure implications of the matter. We are not suggesting from here that any Government should ignore the expenditure implications of this matter. Surely the gravamen of our attack is the competence of the Government's handling of the whole matter, because of course the whole matter started with the storm which arose within the medical profession from the Government's first list, which, on any view now, is seen to have been quite a dotty one.
    The noble Lord, Lord Nugent of Guildford, said that, while acknowledging that the limitation of the clinical judgment of a doctor was a serious matter, he could not accept that no limitation would be acceptable in all conceivable circumstances. I do not think that any one would necessarily quarrel with that. But here again the point surely is that in the known circumstances the problem of excessive expenditure on drugs could be dealt with without limitation on the clinical judgment of the doctor. In other words, with all respect to Lord Nugent of Guildford, the point which he made was not a valid point. Of course, with expenditure running at £11½2 billion a year no responsible Government could refuse to act, we would agree. It is the way that they have acted that we are complaining about, and that surely has been made clear in this debate.
    The noble Lord, Lord Molson, who also contributed thoughtfully as he always does, referred to the autonomy of the medical profession and said that the Government were simply discharging their duty in a way which he thought would be satisfactory to all concerned. That appears to ignore entirely the letter from the chairman of the General Medical Services Committee, which was referred to in detail—and I shall not repeat it—by the noble Lord, Lord Ennals, in opening the debate.
    That is all I have to say on what was said in the course of the debate. It does not seem to have got through to the Government that what we are attacking is the competence with which they have handled this matter, and the unnecessary upset it has caused within the medical profession, without whose co-operation the success of the National Health Service will be less than it would be otherwise. I would commend to the House the amendment of the noble Lord, Lord Kilmarnock.
    11.41 p.m.
    Lord Glenarthur: My Lords, with the leave of the House, perhaps I may say that we have covered a lot of ground in this debate in which many expert and eminent Members of your Lordships' House have taken part. I am grateful for the many helpful remarks which have been made on this side of the House which have led to a balanced discussion. Perhaps I may try to answer some of the points which have been raised
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    tonight. There are rather a number of them, but I shall do my best to cover as many as I can.
    Before I do so perhaps I ought to say a word or two about the timing of the debate tonight. I am sure that the noble Lord. Lord Ennals, the noble Lord, Lord Winstanley, and the noble and learned Lord, Lord Wilson of Langside, will understand that this subject is a matter for the usual channels. It was agreed through them that today's order of business would be what it was, and that is a matter for them and not for me.
    The next point which concerned your Lordships was the report of the Joint Committee on Statutory Instruments raised by the noble Lords. Lord Ennals, Lord Kilmarnock and Lord Winstanley, and the differences between the English and Welsh and Scottish schedules. I am the first to admit that there have been typing errors and errors of omission here. There are only three minor differences. I need not go into the details now. My right honourable friend has already announced in another place that these trivial errors will be corrected in amending legislation.
    As for the question of legality, which the noble and learned Lord, Lord Wilson of Langside, raised I have to tell him that so far as the Joint Committee on Statutory Instruments are concerned they have not queried the legality of the regulations, and indeed the Deputy Speaker in another place ruled only yesterday that the differences between the English and Scottish schedules did not affect their legality. I quote what he said at col. 684:
    "I have looked at the 15th report, and I must tell him that there is nothing that invalidates the regulations before the House".
    The noble Lord, Lord Porritt, was one of several of your Lordships who raised the matter of the answer to a question in the European Parliament and suggested that the recent European answer was to the effect that the selected list is illegal under the Treaty of Rome. Lest anyone should misunderstand perhaps I ought to say that that particular answer set out certain criteria for such schemes and confirmed that the European Commission would try to ensure that national schemes met these criteria. There was no suggestion that the selected list is illegal in European law, and the Government are satisfied that it meets our obligations under the Treaty of Rome. Those who raised that will be aware that it is a matter for the lawyers, and I am not one, but nevertheless we are confident that what we are doing is perfectly legal.
    So far as substitution in reverse is concerned, which was a point raised by the noble Lord, Lord Kilmarnock, I can tell him that the joint committee commented on the arrangements for reimbursing a pharmacist who dispenses a proprietary product when a generic one is not available. These are long-standing arrangements which have nothing to do with the selected list, and the joint committee's fears that they could lead to disputes between pharmacists and their FPCs have not in practice been borne out over the years.
    Earlier in the debate the noble Lord, Lord Ennals, produced a couple of quotations. Perhaps the most recent and the most important was the quotation from my right honourable friend the Minister of State for Health which suggested that he had rejected the selected list in November 1983. What my right

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    honourable friend rejected then was an across-the-board selected list, and that the Government continue to reject.
    Perhaps I may assure the noble Lord—and my noble friend Lord Colwyn made this point for me—that he can find DF118 on the list as dihydrocodeine tablets BP; so he need not get a monthly, yearly or 10-yearly supply of drugs from the noble Lord, Lord Winstanley.
    A point raised by the noble Lord, Lord Ennals, and by the noble Lord, Lord Porritt, concerned the United Kingdom's position in the spending league. They quoted examples of countries with higher prescribing rates than the United Kingdom, but they conveniently ignored those with lower rates, such as Holland, Canada and the Scandinavian countries with their so-called model health care systems. Spending leagues are largely beside the point when all Western Governments agree that they spend too much on drugs. Even the BMA accepts that economies are possible. We have heard nearly everybody tonight agree that economies are possible and so I do not understand the defence that is made in relation to other countries.
    I am the first to acknowledge the involvement of the noble Lord, Lord Porritt, in the pharmaceutical industry and his very great experience. The savings expected through the selected list account for less than 5 per cent. of NHS sales of 21½2 per cent. of total sales of the pharmaceutical industry. The United Kingdom is only 4 per cent. of the world drugs market. We are talking about a tiny fraction of 1 per cent. of world trade in drugs. I do not believe that that effect will be enough to bankrupt a successful industry.
    My noble friend Lord Nugent pointed to a steady increase in National Health Service funding. He referred to the National Health Service as the sheet anchor of the life of this country and also pointed to the enormous growth recently in the number of prescriptions—a 40 per cent. growth. He quoted Aneurin Bevan and what he said about the cascades of drugs. I am grateful to him for his remarks. He highlighted many points that I have endeavoured to make from this Dispatch Box over the months which have indicated quite clearly that in funding the NHS this Government are committed to its best interests and we stand by everything we have said.
    The noble Lord, Lord Pitt, in his remarks spoke of clinical need. He spoke about a recommended list. He felt that a recommended list was the best way to proceed and not the selected list that we have discussed. I have to tell him that the point about that is that it would not guarantee the savings which we require in these circumstances. He spoke about opting in. He preferred the Greenfield recommendations. I know that the noble Lord has a keen involvement and will shortly have a keener involvement in the British Medical Association, but the BMA rejected the Greenfield proposals.
    Lord Pitt of Hampstead: My Lords, the noble Lord the Minister really must not persist in that. The BMA did not reject the Greenfield proposals. What the BMA recommended is what I said in my speech. Greenfield proposed that unless the doctor ticked the
    530
    prescription, there should be generic substitution. What the BMA recommended was that the doctors should tick the prescription when they agreed to generic substitution. To say merely that the BMA rejected Greenfield is unfair.
    Lord Glenarthur: My Lords, the fact is that the BMA did not accept the recommendations in the totality which came out of the Greenfield report, whatever the noble Lord says.
    He went on to describe the process of consultation and said that it was quite wrong of us to have adopted this particular mechanism without discussion. He said that it was important in principle that with all changes of this sort there should be full prior discussion. I cannot agree that that is a sensible or practical way and I do not think that the noble Lord, Lord Ennals, would think so either; because if he is going to go down that road, I can only say this. When faced with the sort of cuts which had to be made as a result of the IMF loans in, I think, 1978, when substantial cuts had to be made, for example, in capital spending in the National Health Service, the Government were faced with a situation that would lead to just the sort of discussions which the noble Lord is now advocating in the case of the selected lists.
    As for the remarks of the noble Lord, Lord Pitt, about general prescribing, can I say that we accepted the advice of independent experts that the drugs on the selected list should be generic whenever possible. I am very glad that the noble Lord, Lord Pitt, agrees with me on this. Where branded products such as Maalox and Gaviscon are on the list, it is because the advice was that there was currently no suitable generic equivalent. We shall be encouraging the manufacture of suitable generics to replace them. I might add, in part answer at least to the noble Countess, Lady Mar, that in the case of antacids the experts did not think that any of the branded products were ideal, either. They are retained temporarily because they are a bit nearer to the ideal than available generic drugs but will be replaced in due course.
    My noble friend Lord Holderness applauded the appeals procedure which I described in my early remarks, and for that I am grateful. He called for flexibility from my right honourable friend the Secretary of State. I am quite sure that my right honourable friend will note his remarks and, indeed, I can assure him that my right honourable friend is always flexible in matters like this. It is important in this case that the procedures which we have set up are brought into effect soon in order to achieve the savings for other parts of the health service which are needed. I am grateful to him for making those points.
    The noble Lord, Lord Hunter, set in context the views of the medical profession and their support for the list. I, too, am tempted to quote the many doctors I have spoken to, who have just as sincere views about clinical freedom as has the noble Lord, Lord Pitt, and the noble Lord, Lord Porritt, but who support the Government's proposals. He made one or two other remarks about patent life. That is a complex area and one that I shall have to write to him about. I would not dream of tackling a subject like that without the noble Lord, Lord Lloyd of Kilgerran, being here. I see that he was here earlier. Perhaps that was an even better

    531
    reason for not going down that particular road. The noble Lord, Lord Molson, said that claims that savings would not be made were quite wrong. He said that that view was quite unfounded. I have to agree with him entirely on that. He thought we had only scratched the surface, quoting drugs affecting him. He quoted particular drugs that he knows well and he also quoted some stunning examples of possible cost savings.
    The noble Countess, Lady Mar, asked particularly about Sainsbury's products. The fact is that they are prescribable as things stand at the moment. If we do not list them, doctors who wish to be awkward will start doing so. It would then be the pharmacist who would have to run round to Sainsbury's to get them, and not the patient. Not all the products in the black list have been prescribed recently. Those I have specifically mentioned have been. The noble Countess is sure that no doctor would ever prescribe most of the items in the black list. What possible objection can she have to the Government saying that it is not permissible to do so? What restriction on judgment or clinical freedom is it to tell a doctor that he cannot do something that, according to the noble Countess, he would never dream of doing anyway?
    The noble Countess went on to talk about the naivety of the politicians and bureaucrats in producing a list. That is not the case. The lists were drawn up by eminent doctors and pharmacists and later on, if time permits, I may go into more details on that. She spoke about other savings that could possibly meet the needs of the health service in raising finance. Of course, she will be well aware that we have established a general management function within the health service, have set about cost improvement programmes, and have set about Rayner scrutinies, all of which together have produced so far something like a 1 per cent. saving which can be applied elsewhere in the health service; so it is wrong to suggest that in pursuing this particular means we are not going to add to that already significant improvement.
    We have been into the details of the Greenfield proposals, which the noble Lord, Lord Rea, also raised. It was a question of clinical freedom that worried the BMA in the first place; and that is what I was trying to allude to when I referred to Lord Pitt's remarks. It is a fact that doctors under those circumstances would not have had all the clinical freedom that I think the noble Lord, Lord Rea, would like them to have.
    My noble friend Lord Colwyn made a robust and helpful speech. He referred, particularly latterly, to the appeals procedure but he thought that many major objections to the scheme had been answered. I also believe that many objections have been answered.
    The noble Baroness, Lady Masham, asked me a number of questions. I shall try to answer two: in particular why Actifed was removed from prescription. The fact here is that expert advice is that there is no clinical need for compound cough mixtures such as Actifed. The British National Formulary says that they have no scientific basis and no place in the treatment of respiratory diseases. I quote:
    "Such preparations are to be deprecated not only as irrational but also for administering a large number of drugs to patients in inapproprate dosage and in excess of their needs."
    532
    I believe that this very clear and cogent expert opinion is more than adequate explanation for our decision to accept the advice of our experts that Actifed should not be available.
    So far as weaning people off Valium is concerned, the fact is that no benzodiazepines should be used for long-term treatment and questions of relative strength, as such, do not really arise. There are real difficulties over reducing dependency, not always soluble by substituting one variety of tranquilliser for another. The ultimate goal, of course, is to avoid the prescription of these drugs in the first place. As to the noble Baroness's question about the review, I can assure her that we are setting it up and I referred to the details in my earlier speech. My noble friend Lord Mottistone referred to the committee, which I mentioned just now, and I can let him have the details which show quite clearly that all the people on it were experts in their field. I am grateful to my noble friend for his helpful remarks.
    I must say that I am a little surprised, and to some extent sad, that the noble Lord, Lord Ennals, and others opposite have chosen to oppose measures which are designed to produce significant and sensible savings by sensible means. I am surprised that they have chosen to pitch their tents on what I think is rather shaky ground. I often wonder about the noble Lord, Lord Ennals', view and I often think of the noble Lord as an apostle in search of a creed. But I am not sure—and I suspect that this is his problem too—that he knows just which followers he is seeking to recruit. I have answered his charges and those of other noble Lords opposite several times during the last few weeks, and I have to say that the force of their arguments, in my view, has diminished rather than increased, as the beneficial nature of our proposals and the unsatisfactory present situation have become more widely understood. Their advocacy has certainly become more strident, but in that I think it has become less convincing. They have not been able to marshal really sound reasons for their opposition to the measures: nor have they presented credible alternative policies for limiting an astronomical NHS drugs bill without harming doctors', patients' or taxpayers' interests.
    The principal features of the selected list are that it will meet all clinical needs; it will help to encourage the prescribing of generic preparations rather than more costly brand-name equivalents without seriously diminishing the doctor's clinical freedom; it will have only minimal effect on the overall profitability of the pharmaceutical industry; and, above all, it will release additional resources for further improvements in patient care in the National Health Service.
    By contrast, the noble Lord and others opposite—who are, I think, anything but united in their total approach to this problem and have no credible policies to advance—have put forward proposals which range from simple support for generic substitution to wholesale nationalisation of the pharmaceutical companies. My Lords, the noble Lord says he has not said a word, but it is the stated policy of his party. If he wants to stand up now and refute it, then I shall be all too willing to listen to him. Enforced generic substitution in itself would only tinker with the edges of the problem: it would not produce the savings

    533
    needed for further improvements in our health service and it would infringe doctors' liberty to a far greater extent than the selected list.
    I respect the sincerity with which the noble Lord, Lord Kilmarnock, holds the views he has put forward, but I hope he will agree that what I have said tonight makes more sense than he previously understood, and, I hope and believe, good sense at that. Our final selected list is the result of enormously wide consultation and consideration. I am convinced that our proposals are the right ones. They are the only ones which avoid the dangers that I have described and achieve results leading to the improvements we need. That is why I ask your Lordships to reject decisively the Motion before the House tonight.
    Lord Shaughnessy: My Lords, before the noble Lord the Minister sits down, he commented on one of the parts of the 15th Report of the Joint Committee on Statutory Instruments, but he neglected to say anything about the second point raised in that report. I wondered whether he would care to comment on it now.
    Lord Glenarthur: My Lords, without referring to all the notes that I have before me, I could not possibly find out which point that was. But I will certainly look at it and let the noble Lord know.
    12 midnight
    Lord Ennals: My Lords, I am sorry to rise at precisely midnight, but it certainly was not my fault that the debate started as late as it did or that so many noble Lords took such an interest in it. I want briefly to thank those who have supported my Motion, as amended by the noble Lord, Lord Kilmarnock, and indeed others who have spoken in the debate.
    The Government may conceivably win in the Lobby tonight, but I believe that they are on very shaky ground for reasons that have been given, which I will certainly not repeat. The noble Lord, Lord Glenarthur, said that I had become increasingly strident, but if anyone has become increasingly strident it is the noble Lord the Minister himself, who made extraordinary statements as if he was quoting me about things that I have never said at all.
    I want to make just three points in relation to his remarks and then only two in relation to those of other speakers. First, on consultation, he really gave no satisfactory explanation at all for the failure to consult in either a discussion document or a Green Paper. In fact, he went so far as to say that that is not how Governments work. Maybe that is not how this Government work, but it is how most Governments in the past have worked. When we came to the PPRS, which he will recognise as the principal means of controlling prices and profits within the pharmaceutical industry, there was a consultation period of well over a year before we finally reached agreement with the pharmaceutical industry, though, of course, we had to compromise. One has to compromise in everything that one does.
    It was said that the Government had no alternative. Of course there were alternatives. It was simply that they chose the wrong one. Why did Ministers who, in
    534
    statements that have been quite clearly quoted and that are known to the whole House, had turned down the limited list, do a U-turn? Ministers who said that the idea was wrong now say that this is the only way to do it. It is incomprehensible how they could have done so.
    The Minister totally failed to justify his suggestion that GPs have been playing dirty, in a sense, in prescribing Flora margarine, make-up and all this utter nonsense. I do not think it helps the Minister's case, or the Government's relationship with the pharmaceutical industry, or with the doctors, openly to attack doctors and the pharmaceutical industry in the way that he has done. If he suggests that I have been making an attack upon those industries, he knows perfectly well that that is not true. I just want to raise two points that were mentioned in the debate—
    Lord Brougham and Vaux: My Lords, will the noble Lord allow me to intervene?
    Lord Ennals: My Lords, it will only prolong the debate, but, yes.
    Lord Brougham and Vaux: My Lords, will the noble Lord answer my noble friend's question about the Opposition's nationalisation plans?
    Lord Ennals: My Lords, I will make it absolutely clear. When I was Secretary of State for Social Services, I made it plain that it was not the policy of the Government to nationalise the pharmaceutical industry. Had I not done so, it would have been impossible to attract into this country the new investment as a result of which the present Secretary of State is having the pleasure of opening research laboratories for which I made provision as Secretary of State.
    I said I wanted to make two comments in relation to other speeches. I thought that the noble Lord, Lord Porritt, made a remarkable speech. The noble Lord is one of our most distinguished doctors, and his reputation stands head and shoulders above most of those in the profession. When he said that this was a breach of a bond, this, I believe, was the most important statement that was made in this debate. I want to say to the noble Lords, Lord Nugent and Lord Mottistone, that of course I do not believe that there is anyone who is criticising the Government at this stage who does not accept that we have to make cuts in drug costs. Let me make that quite clear. It is not the argument as to whether there should be cuts in drug costs. After all, it was I who introduced the PPRS in the first place. I should make it clear that what is at issue in this debate is whether the method the Government have chosen, quite contrary to the views of their own advisory groups and without consultation with the professions, is the best way to do it.
    My noble friends, those on the Alliance Benches and many on the Cross-Benches have indicated quite clearly that they do not believe that the Government are going about it in the right way and do not believe that the proposals that are before the House are acceptable. I therefore withdraw the Prayer but I stand by the Motion that is standing in my name. I indicate in advance that I will accept the amendment which

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    will be formally moved by the noble Lord, Lord Kilmarnock, and ask all those who are critical of the Government to think again.
    Motion for annulment, by leave, withdrawn.
    Lord Ennals Lord Ennals had given notice of his intention to move that an humble address be presented to Her Majesty praying that the Regulations (S.I. 1985 No. 296) be annulled. [15th Report from the Joint Committee.]
    The noble Lord said: My Lords, I do not wish to move this Motion.

NHS Drugs Bill
Lord Ennals: My Lords, I wish to move my Motion formally.
Moved to resolve, That this House, while accepting the need for further savings in the NHS drugs bill, deplores the decision of Her Majesty's Government to deny to general practitioners the right to prescribe the medicines which they think most suitable for their patients.—(Lord Ennals.)
Lord Kilmarnock: My Lords, I think that this is the moment at which I should move the amendment standing in my name to the Motion moved by the noble Lord, Lord Ennals. I beg to move.
Moved, as an amendment to the above Motion, To leave out all the words after ("Government") and insert ("to implement these regulations without first giving the medical profession the opportunity to put into practice their own proposals for responsible prescribing for a trial period.").—(Lord Kilmarnock.)
The Deputy Speaker (Lord Nugent of Guildford): My Lords, the original Question was that the Motion for a resolution in the terms set out on the Order Paper be agreed to, since when an amendment has been moved in the terms set out on the Order Paper. The Question is, That this amendment be agreed to?
12.8 a.m.
Their Lordships divided: Contents, 28; Not-Contents, 51.

DIVISION NO. 3

CONTENTS

Dean of Beswick, L.

Porritt, L.

Ennals, L.

Rea, L.

Gallacher, L.

Robson of Kiddington, B.

Graham of Edmonton, L. [Teller.]

Rochester, L.

Seear, B.

Grey, E.

Shaughnessy, L.

Hacking, L.

Simon, V.

Kilmarnock, L. [Teller.]

Stewart of Fulham, L.

Lawrence, L.

Stoddart of Swindon, L.

Lloyd of Kilgerran, L.

Taylor of Blackburn, L.

Mar, C.

Tordoff, L.

Masham of Ilton, B.

Wilson of Langside, L.

Nicol, B.

Winchilsea and Nottingham, E.

Pitt of Hampstead, L.

Winstanley, L.

Ponsonby of Shulbrede, L.

536

NOT-CONTENTS

Abinger, L.

Holderness, L.

Avon, E.

Hornsby-Smith, B.

Bauer, L.

Hunter of Newington, L.

Beloff, L.

Hylton-Foster, B.

Belstead, L.

Ingrow, L.

Brabazon of Tara, L.

Kinnaird, L.

Brougham and Vaux, L.

Lauderdale, E.

Caithness, E.

Lindsey and Abingdon, E.

Cameron of Lochbroom, L.

Long, V.

Campbell of Alloway, L.

Marshall of Leeds, L.

Cathcart, E.

Molson, L.

Chelwood, L.

Morris, L.

Colville of Culross, V.

Mottistone, L.

Colwyn, L.

Nugent of Guildford, L.

Craigmyle, L.

Peyton of Yeovil, L.

Davidson, V.

Rankeillour, L.

Denham, L. [Teller.]

Saltoun, Ly.

Elton, L.

Savile, L.

Gibson-Watt, L.

Skelmersdale, L.

Glanusk, L.

Swinton, E. [Teller.]

Glenarthur, L.

Teviot, L.

Gray, L.

Trumpington, B.

Gray of Contin, L.

Westbury, L.

Harmar-Nicholls, L.

Wynford, L.

Henley, L.

Zouche of Haryngworth, L.

Hives, L.

Resolved in the negative, and amendment disagreed to accordingly.
The Deputy Speaker: The Question now is, That the original Motion of the noble Lord, Lord Ennals, be agreed to?
On Question, Motion negatived.

Luton Borough Council Bill [H.L.]
Reported from the Unopposed Bill Committee with an amendment.

London Docklands Railway (No. 2) Bill
Recommitted to an Unopposed Bill Committee.
House adjourned at sixteen minutes past midnight.

  DISARMAMENT: MINISTERIAL RESPONSIBILITY
  DISARMAMENT: MINISTERIAL RESPONSIBILITY
  BRITISH CITIZENSHIP: REGISTRATION FEE
  BRITISH CITIZENSHIP: REGISTRATION FEE
  METROPOLITAN POLICE: INSPECTORATE
  METROPOLITAN POLICE: INSPECTORATE
  GEOGRAPHIC INFORMATION: HANDLING
  GEOGRAPHIC INFORMATION: HANDLING
  RRS "CHARLES DARWIN"
  RRS "CHARLES DARWIN"
  WORKS OF ART: TAXATION AND INDEMNITY
  WORKS OF ART: TAXATION AND INDEMNITY
  SHIPPING: LIGHT DUES
  SHIPPING: LIGHT DUES
  ANGLO-SOVIET TRADE: SHIPPING
  ANGLO-SOVIET TRADE: SHIPPING
  PUBLIC WORKS VEHICLES: TACHOGRAPH EXEMPTION
  PUBLIC WORKS VEHICLES: TACHOGRAPH EXEMPTION
  LOCAL AUTHORITY VEHICLES: VED EXEMPTION
  LOCAL AUTHORITY VEHICLES: VED EXEMPTION