Sitting of 20 March 1985

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

    Iran and Iraq (Prisoners of War)
    Mr. Robert C. Brownasked the Secretary of State for Foreign and Commonwealth Affairs if he will, in conjunction with other European Economic Community Ministers, make a protest to the Governments of Iran and Iraq concerning the torture of prisoners of war as highlighted by the United Nations report issued last month.
    The Minister of State, Foreign and Commonwealth Office (Mr. Richard Luce): We share the view expressed in the United Nations report that the situation concerning the treatment of prisoners of war in Iran and Iraq gives cause for serious concern. When the United Nations has completed its examination of that report we shall consider what supplementary action' might be appropriate, either unilaterally or in conjunction with our partners in the Ten.
    Mr. Brown: I thank the Minister for that reply. In view of the flare-up in the Gulf and the horrendous casualties on both sides, why do neither the British Government nor the international community make any great effort to bring an end to this dreadful war? Why has the Minister not sought a meeting of the General Assembly of the United Nations, and why has he not imposed a ban on the sale of arms to both Iraq and Iran?
    Mr. Luce: I assure the hon. Gentleman that we view the recent developments in the Iran-Iraq war as extremely serious. The hon. Gentleman may realise that on 15 March the President of the Security Council issued a statement appealing for an end of the hostilities and for a resumption of the agreement of last June that there should be no attacks on the civilian populations of either side. We strongly support and endorse that. Within the European Community, we have made strong representations to both the Iranian and Iraqi Governments in support of that statement. We shall go on working with our friends in the Community and elsewhere to make special efforts towards peace.
    Mr. Marlow: In view of the reports by the International Commission of Jurists of the torturing of prisoners in Fara'a, including cigarette burning, beatings and hoodings, by the Israelis, will my hon. Friend take up this issue?
    Mr. Luce: I take note of my hon. Friend's comment, but the question is about prisoners of war in the conflict between Iraq and Iran. The United Nations report is still
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    being studied and examined. When conclusions have been reached, we shall do all that we can to see that they are implemented.

    President Mubarak
    Mr. Mikardoasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Her Majesty's Government's meetings with President Mubarak of Egypt.
    Mr. Luce: My right hon. Friend's discussions with President Mubarak reflected the excellent state of Anglo-Egyptian relations. They had a full discussion of Arab-Israel peace efforts; the Prime Minister expressed support for the President's efforts, and those of King Hussein, to make progress towards a negotiated settlement. The Prime Minister and the President also expressed serious concern about the situation in Lebanon and in the Sudan.
    Mr. Mikardo: I thank the Minister for that reply. This question may be a little unfair, but does he think that there is a realistic expectation of negotiations between Israel and the joint Jordanian-Palestinian delegation within the reasonably near future?
    Mr. Luce: All I can say is that where there are signs of any constructive efforts to move in that direction, it is our job and obligation as a Government to do all that we can to encourage them. We have noticed what happened in the agreement between King Hussein and Mr. Arafat on 11 February. We have observed with interest the remarks of Prime Minister Peres of Israel, in which he has some favourable comments to make on some of the developments taking place and some of the speeches that are being made from the Arab side. We shall do our utmost to encourage that process.
    Mr. Walters: Should the moderate Arab leaders such as President Mubarak and King Hussein fail to persuade the Americans of the need to launch a major peace initiative, will my hon. Friend consider the possibility of a joint Euro-Arab approach to President Reagan to persuade him of the need for an initiative while circumstances remain favourable, like the particularly good arrangements made between King Hussein and Mr. Arafat, and before it is too late?
    Mr. Luce: I have carefully noted my hon. Friend's suggestion, which he also made in last Thursday's Adjournment debate. I think that he will know as well as I do the extent of the contact between ourselves and the President of the United States. There have been two meetings between my right hon. Friend the Prime Minister and the President in the past three months, including talks on the subject of the middle east, and there has also been extensive contact between distinguished Arab leaders, including President Mubarak and King Fand. The Foreign Minister of Jordan is also in Washington this week. Thus, there is extensive contact. We are also very pleased to support the fact that President Reagan has announced that he is prepared to launch renewed efforts to get peace negotiations going. This week it has been announced that Mr. Murphy will be sent as a special envoy to the middle east to try to get things moving.
    Mr. Campbell-Savours: How does the Minister respond to Mr. Mubarak's suggestion that unless there is action on Israel there will be an outbreak of action and

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    extremism by the individual Islamic groups? What does the hon. Gentleman intend to do about that? Does he intend to refer that conversation to the American President and to ask for action on that?
    Mr. Luce: I am not sure whether the hon. Gentleman is talking about Israel's actions in the Lebanon, or about the occupied territories. If he is talking about the occupied territories, I must repeat that the British Government take a very strong view in condemning the existence of settlements in the occupied territories. Indeed, we are deeply concerned by the evidence of the economic conditions of those who live in the occupied territories. We have now stepped up the amount of bilateral aid that we are prepared to give to Palestinians living in the occupied territories. We believe that the conditions there and the existence of the settlements are not conducive to peace.
    W. Hayes: Among the many important issues that my hon. Friend raised with President Mubarak, did he mention the question of the kidnapping of certain people in Beirut? If so, can he tell us what progress is being made on the possible release of the British national involved, as some information can then be given to his family?
    Mr. Luce: Of course we discussed the question of the Lebanon. My hon. Friend will know that on the serious matter of the kidnapping of two British subjects, Mr. Nash and Mr. Levick — about which there is great concern—the Islamic Jihad has claimed responsibility. The British ambassador and the British Government are pursuing the issue most vigorously through all possible channels in order to identify where they are and to seek their release. We are also approaching other Governments whom we think may be able to help. We take the kidnappings very seriously. As my hon. Friend knows, the British ambassador has made it plain that we do not feel that British subjects living in west Beirut—numbering about 70—would be wise to stay there in present conditions.
    Mr. Anderson: Does the Minister accept that it would have been a serious blow to the peace initiative if President Mubarak had returned home just with a mild rebuke from Washington, and that the Prime Minister's positive response is, therefore, most welome? Is there any serious prospect of us engaging our EEC partners and possibly building on the Venice declaration in respect of the middle east, as that would certainly be welcome to several Arab countries?
    Mr. Luce: I am grateful to the hon. Gentleman for his earlier remarks. I reaffirm that we are strongly committed to the two principles of the Venice declaration, because we do not believe that there can be any peace unless the principle of the right of Israel to exist within secure boundaries and the principle of the right of self-determination of the Palestinians are recognised. We are in very close touch with our European partners in the Community. We regard the point made by the hon. Gentleman as a matter of importance, because we think that collectively we can bring some influence to bear.
    Mr. Mark Robinson: Does my hon. Friend agree that President Mubarak represents a significant factor in further progress towards peace in the middle east? Will he confirm that during the recent talks the Government encouraged President Mubarak to continue with his endeavours?
    Mr. Luce: We listened with great interest to the practical ideas that President Mubarak put forward, which I believe are designed to mesh in with the proposals that King Hussein and Mr. Arafat launched on 11 February. We have already made it plain that we will do everything that we can to encourage that process. We note that President Mubarak and King Hussein are working very closely together, and, indeed, met this week.

    Geneva Arms Talks
    Mr. Stephen Rossasked the Secretary of State for Foreign and Commonwealth Affairs what representations Her Majesty's Government made to the United States Government prior to the resumption of the Geneva arms talks.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): Both before and since the beginning of the Geneva talks on 12 March we have maintained close contact with the United States. My right hon. Friend the Prime Minister and I had discussions with President Reagan and Secretary of State Shultz in December and February. Those talks covered all aspects of the issues which will be the subject of the Geneva negotiations.
    Mr. Ross: Given Mr. Richard Perle's criticisms of the Foreign Secretary's speech, reported in the newspapers today, will the Foreign Secretary tell us exactly where we now stand on the star wars issue? Did he make any representations about the extra 21 multi-warheaded MX missiles? Is it not time that we called for a freeze by both sides to give the talks a chance to succeed?
    Sir Geoffrey Howe: A freeze would not be a useful contribution to the prospect of conclusions on balanced arms control, because it would immobolise the imbalance that currently exists, not least in intermediate range nuclear weapons.
    As my right hon. Friend the Prime Minister said yesterday,
    "The policy"
    —on star wars—
    "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."—[Official Report, 19 March 1985; Vol. 75, c. 779.]
    The 21 MX missiles are part of the programme of modernisation to which the United States is committed. That is one aspect of the search being undertaken at Geneva for an effective agreement on arms control, including a reduction in nuclear weapons on all sides.
    Sir Peter Blaker: Will my right hon. and learned Friend confirm that in his speech last week he supported the American research on the strategic defence initiative, as the Prime Minister has done? Is that not the right course for our Government to take, given that the Soviet Union itself is widely known to be conducting research?
    Sir Geoffrey Howe: I entirely agree with my right hon. Friend. That is one of the points that I have made clear not only in that speech but on many other occasions, including discussions with representatives of the Soviet Union and her allies. The Soviet Union has for many years been engaged in research in that field, and has moved further towards deployment within the limits of the 1972 treaty. It is essential for the West to match that research and the way in which it is being carried out.
    Mr. Heathcoat-Amory: Will my right hon. and learned Friend repeat and emphasise his misgivings about the strategic defence initiative passing the research stage? Does he agree that if the SDI does not work it will be a gigantic waste of money, and that if it works it will simply encourage the development of the alternative nuclear weapons delivery systems to which Britain and Europe are particularly vulnerable?
    Sir Geoffrey Howe: I quite understand that point. That is why we have emphasised—it was one of the points agreed at Camp David—that research should certainly proceed. As members of the American Administration have made clear, we cannot know what the research programme that the President and Secretary of State Weinberger have directed will uncover.
    It is also clear—another of the Camp David points—that the deployment of SDI-related weapons would be a matter for negotiation in the context of existing treaty obligations.
    Dr. M. S. Miller: Does the Secretary of State accept that there is considerable applause on this side of the House—and some from his own side—for his lukewarm attitude to the strategic defence initiative? Will he go a step further and make it clear to President Reagan and to the Americans that star wars is a lot of nonsense and that the enormous amount of money that will be spent on this research would be far better spent in other fields?
    Sir Geoffrey Howe: I invite the hon. Gentleman to address that serious question on the right basis. Research into defence technology in space has been undertaken by the Soviet Union for many years, and the Soviet Union projects into space more than twice as many objects of that kind as the rest of the world together. It is therefore important for such research to be sustained. It is equally important to stress that the outcome of that research is by no means concluded and that, as the Camp David points made clear, the deployment of SDI-related technology must be a matter for negotiations.
    Mr. Ian Lloyd: Does my right hon. and learned Friend agree that the defence of the free world for at least four decades has depended on, now depends on and will in the future depend on the capacity of the free world to maintain and create a superior defence technology? Will he assure us that nothing will be done to prejudice that capacity?
    Sir Geoffrey Howe: The defence of the world from the prospect of war in the past 40 years has depended on the effectiveness of the nuclear deterrent. It is equally clear, as was set out in one of the four points at Camp David, that the aim of the United States and the West is not to achieve superiority but to maintain balance, which is crucially important, taking into account Soviet development.
    Mr. Nellist: Is the Foreign Secretary aware that, parallel to the resumption of the so-called disarmament talks in Geneva, there was a two-day United Nations conference which tried to raise $1·5 billion to save 30 million people in Africa from the effects of starvation? As the major world powers spend £1 million a minute on weapons and armaments, does the Foreign Secretary agree that that problem could have been solved not in two days but in one if the real issue—total disarmament—had been taken up at Geneva?
    Sir Geoffrey Howe: The hon. Gentleman is right to draw attention to the importance of the world doing everything that it can to address itself to the problem of starvation, and worse, in Africa. That is a programme in which we have taken a leading part. If he wants to compare that with the other major issue to which he referred, he should take account of the fact that the Soviet Union spends probably twice as large a percentage of its gross national product on arms as, and that her record of giving aid to such countries compares lamentably with that of, the free world.
    Mr. Nicholls: Will my right hon. and learned Friend accept that probably the main reason why the Russians came back to the disarmament talks is that they were convinced that the West was prepared to defend itself? Was not the West's lead in star wars technology such that the Russians had no alternative but to come back to the negotiating table?
    Sir Geoffrey Howe: I am sure that one of the factors which has persuaded the Soviet Union of the need to resume the arms control talks, which she had left, has been the continued and effective unity of the North Atlantic Alliance, as demonstrated and sustained by the continued deployment programme of intermediate range weapons in Europe.
    Mr. Norman Atkinson: When the Foreign Secretary refers to the imbalance between nuclear weapons possessed by NATO and those possessed by the Soviet Union, and goes on to say that that was the initial discussion at Geneva, is that on the assumption that the true numbers are put on the table for negotiation? If so, why does the Foreign Secretary refuse to confirm to Members of Parliament the exact numbers of nuclear weapons possessed by Britain?
    Sir Geoffrey Howe: The hon. Gentleman will find that the extent to which the Government and the country have laid open the nature and scale of our weapons, as set out in successive White Papers, compares very favourably with any other country.
    Mr. Baldry: Although the negotiations at Geneva are important, disarmament talks are also taking place at Stockholm, and there are talks on the control of chemical weapons. What initiatives are the Government taking on the control of chemical weapons, which are just as frightening as nuclear weapons to mainland Europe?
    Sir Geoffrey Howe: I am grateful to my hon. Friend for reminding us of the importance of achieving a worldwide ban on chemical weapons, such as we seek. Probably the hardest issue is verification. He will know that that is a subject on which the United Kingdom has taken a leading part. We tabled several proposals directed at that problem—in 1983 and 1984—and on 12 March 1985, my hon. Friend the Minister of State presented further proposals to that end in Geneva. My hon. Friend is right to underline the importance of this matter.
    Mr. Healey: May I congratulate the Foreign Secretary on the penetrating and comprehensive critique of the star wars programme that he made the other day, and on provoking an alarming outburst of hysteria from the editor of The Times? As President Reagan said that he was ready to consider a ban or moratorium on tests of anti-satellite weapons, whereas the Foreign Secretary said that the future is now, will he now make the negotiation of such

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    a ban the main objective of British policy, and will he seek to extend it to a ban or moratorium on all tests of space systems which are capable of verification by national means?
    Sir Geoffrey Howe: The right hon. Gentleman is right to draw attention to the importance of verification, which is a crucial part of any effective disarmament agreement. He is right also to remind the House that in my speech I was commending the statement by the President of the United States in his United Nations address about his willingness to work for agreement in ASAT technology. I respond, as always, with gratitude to the congratulations extended by the right hon. Gentleman, but I remind him that he should read the speech as a whole and understand beyond doubt that the speech was based firmly and squarely upon the existing policy as set out by my right hon. Friend to the President at Camp David.

    Middle East
    Mr. Tom Coxasked the Secretary of State for Foreign and Commonwealth Affairs what responses have been monitored by the Foreign and Commonwealth Office from Palestinian spokesmen about clarification of their attitude on the Hussein initiative; and whether they accepted United Nations Security Council resolution 242, modified by 338, since the Prime Minister's statement of 26 February, Official Report, c. 173–74.
    Mr. Luce: We have noted a number of statements by Palestinian spokesmen representing different shades of opinion. King Hussein's initiative does not refer explicitly to United Nations Security Council resolutions 242 and 338, but spokesmen have drawn attention to the fact that it is based on the principle of
    "Comprehensive peace as established in United Nations and Security Council resolutions".
    Mr. Cox: Is the Minister aware that in February the central committee of the PLO completely rejected resolution 242 and that it is seeking to destroy the whole of the Hussein initiative? In the light of such action, how can the state of Israel believe statements about groups respecting its security and right to exist as a country? That is what this issue is about, and that is why there is such great concern in Israel about the kinds of statements that the PLO has been making.
    Mr. Luce: I think that it would be to Israel's benefit, as Prime Minister Peres said in some of his comments, to take seriously what King Hussein and Mr. Arafat have said in their joint statement. As I have said in my main answer, the statement refers to United Nations Security Council resolutions. Those resolutions talk about the exchange of territory for peace. I believe that that could form a basis for discussion between the Arab world, the Palestinians and the Israelis. All that we can hope to do is to look for the constructive points that have been made, pick them out and try to help their development. It is for the parties involved to do this, but we must encourage those positive points.
    Mr. Latham: Since King Hussein, President Mubarak and Prime Minister Peres have simultaneously during the past few weeks either lanuched initiatives or responded favourably to them and have made similar statements in Washington, is it not time that they all met to do something about those initiatives?
    Mr. Luce: We very much hope that there will now be progress towards some agreement about the basis for discussion. We hope that there can be direct discussion between the Palestinians and King Hussein on the one hand and Israel on the other. We have noted that President Mubarak has some practical ideas in this direction.

    Geneva Arms Talks
    Mr. Brandon-Bravoasked the Secretary of State for Foreign and Commonwealth Affairs what role the United Kingdom has played in the disarmament talks which commenced in Geneva on 12 March.
    Mr. Luce: The United Kingdom is not a party to the bilateral talks between the United States and Soviet Union which began on 12 March. We have, however, played a full part in consultations within NATO on the subject of nuclear and space weapons. We remain in contact at the highest level with the United States and Soviet Union.
    Mr. Brandon-Bravo: I welcome that reply and especially the expressions of solidarity with NATO. Will my hon. Friend comment on those areas where we are perhaps directly involved and can take a positive lead?
    Mr. Luce: I am grateful to my hon. Friend for that question. As he heard a little earlier, my right hon. and learned Friend the Foreign Secretary stressed that only last week, on behalf of the British Government, I tabled a fresh set of proposals designed to improve the system of verification in a comprehensive agreement on chemical weapons. The House should be aware that Britain abandoned its chemical weapons over a quarter of a century ago, that the United States has not produced additional chemical weapons since 1969 and that the Soviet Union has acquired more than 300,000 tonnes of nerve agents. This is a serious situation, which makes it all the more urgent that we should progress towards a comprehensive agreement.
    Mr. Cartwright: Has the Minister noted the appeal made earlier this week by the Federal German Foreign Minister, Mr. Genscher, that there should be a direct European voice in the Geneva discussions? Do the Government support that approach? If so, what steps will they take to try to secure that direct European involvement?
    Mr. Luce: My right hon. and learned Friend the Foreign Secretary and other Ministers proposed that there should be greater co-operation, possibly through the Western European Union, on security matters within Europe. There is already a great deal of consultation within the NATO Alliance, which includes the European contributors to the Alliance. The range of consultation is extensive.

    Human Rights (Afghanistan)
    Mr. Moynihanasked the Secretary of State for Foreign and Commonwealth Affairs what assessment his Department has made of the United Nations report drawn up by Mr. Felix Ermacora on the subject of human rights in Afghanistan.
    Sir Geoffrey Howe: We entirely endorse the report's conclusion that gross violations of human rights are occurring in Afghanistan. We continue to urge Soviet

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    leaders to end the immense human suffering inflicted on the Afghan people—which is detailed in the report—by withdrawing their forces.
    Mr. Moynihan: Does my right hon. and learned Friend agree that it is the Government's duty to make strong representations over alleged human rights violations in Afghanistan, especially in view of the Ermacora report, which states that there are an estimated 50,000 prisoners being held in Afghanistan, alleged torture in gaols, a deliberate policy of bombing villages and summary execution of captured guerrillas?
    Sir Geoffrey Howe: I entirely agree with my hon. Friend. The Afghan people have been denied the fundamental human right of self-determination. There is massive suffering in Afghanistan as a result of continuing Soviet occupation, including loss of life and the destruction of villages and crops. The tactics adopted last year were even more brutal than before. They included high-level indiscriminate bombing and the depopulation of some areas. The world must never forget that it is the presence of more than 100,000 Soviet troops that is maintaining a regime that is unacceptable to the Afghan people. We do not miss any opportunity of drawing that to the attention of Soviet leaders.
    Mr. Skinner: What kind of hypocrisy do we have to listen to from the Government over Russia and Afghanistan? In 1980, the Government, led, of course, by the Prime Minister, were demanding that British athletes should not go anywhere near—
    Mr. Speaker: Order. The question is about human rights in Afghanistan.
    Mr. Skinner: My supplementary question is on that subject, Mr. Speaker. The Government were demanding that British athletes should not go anywhere near Moscow because of the invasion of Afghanistan. Within 12 months the great and grand boycott had been called off by the Iron Lady. Over the past two years both the Prime Minister and the Foreign Secretary, as well as almost every other Minister, have trotted across to Moscow whenever there has been a chance to do so. How can they adopt these double standards?
    Sir Geoffrey Howe: The hon. Gentleman's lack of comprehension of this subject surpasses that which we have come to expect even from him. The Government are acting and speaking on behalf of the House and the nation in seeking to promote better relations between East and West, between the United Kingdom and the Soviet Union and its allies. In the course of doing that we should not allow the world to forget the continuing Soviet occupation of Afghanistan in a war that has continued for longer than did the war between the Soviet Union and Germany. The invasion still persists and I raised this subject with Mr. Gorbachev at Christmas. It has been raised with the Soviet Union on other occasions. It is regrettable that there has been no change so far in the Soviet position.
    Sir John Biggs-Davison: As the Prime Minister and my right hon. and learned Friend the Foreign Secretary seem to be finding the new Soviet leadership somewhat affable, could it not again be put to them that East-West relations could be transformed if they would end what one might call their Vietnam in Afghanistan?
    Sir Geoffrey Howe: My hon. Friend is underlining the very point that I have made. It is important not to allow
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    our approach to policy towards the Soviet Union to fall out of balance. We want to achieve, and we are seeking to achieve, improved relations with the Soviet Union and its allies. We must not allow that to lead us to overlook continuing important issues of the sort that my hon. Friend has raised. We have taken every opportunity to draw this to the attention of the Soviet Union and we shall continue to do so.
    Mr. Anderson: Does the report give the answer to those in the United States and elsewhere who claim that the United Nations is selective in its human rights considerations?
    Sir Geoffrey Howe: I think that there are always bound to be views about the selectivity of almost any organisation. On this point, the hon. Gentleman is right to remind the House that the voting in the General Assembly of the United Nations last year was 119 in favour of a motion condemning the Soviet occupation of Afghanistan with only 20 against, a record majority. It is quite right that that should have been recorded and that we should remind the House of that fact.

    Geneva Arms Talks
    Mr. Meadowcroftasked the Secretary of State for Foreign and Commonwealth Affairs whether he will recommend the inclusion of the British independent nuclear deterrent in the Geneva arms reduction talks.
    Mr. Luce: We have made it clear that, as far as the United Kingdom's independent deterrent is concerned, it would be wrong as things stand for us to seek to trade reductions with a super power. But we have made it clear that if Soviet and United States strategic arsenals were to be very substantially reduced, and if no significant changes had occurred in Soviet defensive capabilities, the United Kingdom would want to review her position and to consider how best she could contribute to arms control in the light of the reduced threat. That remains our position.
    Mr. Meadowcroft: While I note the Minister's earlier comment that Britain was not a party to the talks at Geneva, may I ask whether he believes that it would assist those talks if Britain were to be a party to them? If that is the case, surely a pre-condition to participation in those talks is the willingness to include our own independent nuclear deterrent in the talks on disarmament.
    Mr. Luce: No. To go back to the hon. Gentleman's first point, I think that the essential pre-condition for any progress in the very serious arms race that has been taking place in the last few years is that the two main super powers, who possess the vast bulk of the strategic arsenal of the world, should get together and see whether they can make progress. As the hon. Gentleman knows, the British Government support the June communiqué issued by Mr. Shultz and Mr. Gromyko. We give every support to that. We are in close consultation with the United States. With regard to the British deterrent, the position is as stated in my answer to the question.
    Mr. Leigh: Will my hon. Friend accept that, given that this country on occasions can maintain only one Polaris submarine at sea, a reduction in our nuclear capability would mean, in effect, a cancellation? Will he also accept that there is a difference between accepting that and

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    helping the disarmament negotiations by allowing our nuclear weapons to be taken into account in the total number of Western forces?
    Mr. Luce: Indeed. We have to consider what is the minimum requirement to provide an effective deterrent in our independent strategic deterrent force. That is a factor that we have to keep in mind all the time. We have to remind ourselves that our forces are literally only 3 per cent. of, for example, the strategic forces of the United States and/or separately of the Soviet Union, and that it must be for them to see whether they can make progress, as we hope they will. Thereafter, of course, we can consider our position.
    Mr. Healey: Following the question of the hon. Member for Gainsborough and Horncastle (Mr. Leigh), is the Minister aware that Mr. Gromyko himself said that the Soviet Government were seeking not a reduction in British nuclear forces but only that they should be counted in the balance of offensive forces on the Western side in the Geneva talks? Since Her Majesty's Government in the 1983 White Paper on defence said that the Russians must take account of the British nuclear forces, what possible objection is there to allowing the Russians to take account of those forces in the arms talks?
    Mr. Luce: At this stage what is important is that the two super powers, which are the main possessors of all strategic weapons, should get together and try to see whether they can make progress. As I have said, our position is quite clear. If they make substantial progress, we can reconsider our position.

    VE Day (40th Anniversary)
    Mr. Sumbergasked the Secretary of State for Foreign and Commonwealth Affairs if he will make it his policy to make any invitation to the Soviet Union to attend ceremonies in the United Kingdom to commemorate the 40th anniversary of VE Day conditional on the Government of the Soviet Union revealing details of the fate of Raoul Wallenberg.
    Mr. Woodallasked the Secretary of State for Foreign and Commonwealth Affairs whether he will seek to make an invitation to the Soviet Government to participate in the VE Day 40th anniversary celebrations in the United Kingdom conditional on the release from the Union of Soviet Socialist Republics of Soviet war veterans and others.
    Sir Geoffrey Howe: We hope that the 40th anniversary of the end of the war will be seen in all countries as an occasion for a rededication to the causes of freedom, human rights and the dignity of man for which victory was won. We do not believe that it would be either appropriate or effective to set preconditions to foreign representation at our national commemoration. However, we have on several occasions pressed the Soviet Government to provide further details on the important question of the fate of Raoul Wallenberg.
    Mr. Sumberg: Does my right hon. and learned Friend agree that it is somewhat ironic that in 1985 we are commemorating the 40th anniversary of peace and freedom, yet that heroic man Raoul Wallenberg is probably enduring his 40th anniversary of imprisonment? Is this not an ideal opportunity to get the Soviet Union at long last to tell us and the world the truth?
    Sir Geoffrey Howe: I agree with my hon. Friend that the 40 years of peace that we shall be commemorating have many blemishes upon them, a particularly important one being the fate of Raoul Wallenberg. As my hon. Friend knows, the Soviet claim is that he died in prison in the Soviet Union in 1947. I assure my hon. Friend that we shall continue to make inquiries about the matter until we achieve a satisfactory answer.
    Mr. Winnick: In view of the immense contribution made by the Soviet Union to the defeat of Hitler's Germany, would it not be ludicrous to make any condition about the Soviet Union participating in the 40th anniversary? That having been said, is the Foreign Secretary aware that many of us find it very difficult to understand why the Soviet authorities continue to deny information about Mr. Wallenberg? Does the Foreign Secretary agree that the Soviet authorities should make clear when Mr. Wallenberg died and in what circumstances — and particularly why he was kept in custody at all, bearing in mind the very brave role that he played in trying to save lives near the end of the war?
    Sir Geoffrey Howe: It is not often that I have the opportunity of agreeing with the hon. Gentleman, but I am glad to be able to do so and to acknowledge the point made in the first part of his question. I am sure that the whole House will support any representations that we continue to make on this important matter.

  EUROPEAN COMMUNITY

    Budget Rebate
    Mr. Lambieasked the Secretary of State for Foreign and Commonwealth Affairs when he expects to secure from the European Economic Community the United Kingdom abatement of £625 million in respect of 1984.
    Sir Geoffrey Howe: The timing of our abatement remains as laid down in the Fountainebleau conclusions, which provided for it to be made available in 1985.
    Mr. Lambie: Is the right hon. and learned Gentleman, in spite of his answer, still prepared to guarantee that the abatement will, despite other factors, be given in 1985? If not, why have the Government agreed to supplementary loans this year totalling £350 million?
    Sir Geoffrey Howe: The Community is committed by the Fountainebleau agreement to the introduction of new own resources not later than 1 January next year. There is no dispute in the Council that the Fountainebleau agreement must be implemented, and that in accordance with it we must receive the £590 million abatement of our 1984 budgetary contribution in the course of 1985. At this moment in the Council we are continuing to press for the establishment of the instruments that will assure that.
    Mr. Marlow: If my right hon. and learned Friend were in the happy situation that he was owed £625 million by somebody, would he lend that person more money until he had his money back?
    Sir Geoffrey Howe: If I were in the relationship of a partnership with the Community, in which we are working together, and in which I know, as I have told the House, that there is no dispute in the Council or the Community

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    that the Fountainebleau agreement must be implemented on time, I should approach the matter on the basis of that fact.

    Policy and Reforms
    Mr. Maxtonasked the Secretary of State for Foreign and Commonwealth Affairs what reforms are currently under discussion within the European Economic Community.
    Mr. Knoxasked the Secretary of State for Foreign and Commonwealth Affairs what further proposals he intends to place before his European Community partners for the development of Community policies.
    Mr. Rogersasked the Secretary of State for Foreign and Commonwealth Affairs what are the current priorities of the European Economic Community.
    Sir Geoffrey Howe: The Community's first priority is to reach decisions in the enlargement negotiations and on implementation of the Fontainebleau conclusions. A number of proposals for longer-term institutional change have been put forward in the Ad Hoc Committee on Institutions, which will report to the March European Council.
    Mr. Maxton: In view of the 7 per cent. increase in the agriculture budget, in a Community budget in which agriculture now represents 74 per cent. of the total, and in view of the unwillingness of any of the EC countries to accept any cuts in agricultural prices, will the Foreign Secretary tell us what has happened about the reform of the common agricultural policy—or does he agree with his Conservative colleague, Mr. David Curry, a Member of the European Parliament, that we should forget about the reform of the CAP because it is impossible?
    Sir Geoffrey Howe: That would be a curious and discouraging conclusion to reach, and I would certainly not reach it. One of the major purposes of the Fontainebleau agreement was to establish a framework which would secure a gradual reduction in the percentage of resources being devoted to the CAP. Since that time the process of reform has been moving steadily forward. The 1985 proposals put forward by the Commission show a determination to control costs. The wine reform regime agreed in Dublin has now been implemented. The agricultural structures agreement has been achieved at a level that is much lower than was originally expected. In all those ways the process of reform is taking place and will continue.
    Mr. Knox: Will my right hon. and learned Friend impress on his colleagues at the Treasury that one of the main stumbling blocks to the development of the Community as an economic force is Britain's failure to join the exchange rate mechanism of the EMS?
    Sir Geoffrey Howe: I would not take the same view as my hon. Friend on that, not simply out of natural love and affection for my former colleagues at the Treasury, but because if the United Kingdom were to join the exchange rate mechanism of the European monetary system it would be important for us to do so in a fashion that would contribute to the increased stability of that organisation, and not the reverse.
    Mr. Rogers: In the continual reassessment of priorities within the European Community, will the right hon. and
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    learned Gentleman bear in mind that in recent years the European Commission has said that tackling unemployment is to be its top priority? Will he press for alterations in the distribution of moneys within the budget, especially as about 5 per cent. of it goes to regional spending, 5 per cent. to social funding, but over 74 per cent. to agriculture? Will he do something about that?
    Sir Geoffrey Howe: The hon. Gentleman underlines the importance of the agreement, which has been reached and is being implemented along the lines that I have just described, for the reduction in the share of agriculture spending as part of the Community budget. It is also important that the Community is able to support technological and other programmes that contribute to the advancement of employment. The Community and its member states must also apply themselves to the process of deregulating their economies to liberate opportunities for job creation and to take steps to establish a single internal market in the Community, because that would make a powerful contribution to the creation of jobs throughout Europe.
    Mr. Dykes: Did my right hon. and learned Friend mean when answering my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) that the pound was too shaky for us to join the EMS? If the other members, on all the evidence, are reasonably keen for us to join, why can we not do so?
    Sir Geoffrey Howe: A number of factors, with which my hon. Friend is familiar, must be taken into account. The objective of Government policy remains to join when the time is appropriate. It is important for us to be sure that the manner and timing of a decision to join the exchange rate mechanism is such as to contribute to the stability of the mechanism, and not the reverse.
    Dr. Owen: The right hon. and learned Gentleman must be aware that a month ago we could have joined the EMS at a trade weighted index of 69·8, which has now risen to 74·5. Is he aware therefore, that we have lost a historic opportunity to enter and stabilise the currency at a competitive rate?
    Sir Geoffrey Howe: I do not agree with the right hon. Gentleman on the precision of that diagnosis. Other factors, apart from the relative parity at any one time, must be taken into account.
    Mr. Teddy Taylor: Is it not far more urgent to reform the food aid programme, bearing in mind that figures published in the Official Report yesterday showed that the combined amount of food sent to Ethiopia and Sudan in the last 15 months was less than the amount that the Common Market sends to the Soviet Union and its allies every week? Is that not a shameful insult to the starving people of Ethiopia, bearing in mind that we have heard nothing but grand plans of what the Common Market could do but obviously is not doing?
    Sir Geoffrey Howe: If the food programme were expanded to absorb all the food surpluses available throughout the Community, that would involve disposing of that food at a much lower price, if not at a zero price, and the cost of so doing would exceed substantially that of which my hon. Friend already complains. [Interruption.] The reality is that the food disposal programme produces some revenue from the disposal of some food. If my hon. Friend is complaining about the

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    scale of that cost already, there must be some balance between the food that is disposed of on the market and the food that is disposed of by way of the substantial programme already sustained for Ethiopia.
    Mr. Deakins: Why is the Foreign Secretary ready to agree to an extension of majority voting in the Council of Ministers? Would such an extension apply to interpretation by the council of the financial guideline for agriculture?
    Sir Geoffrey Howe: There could be more majority voting within the Council of Ministers on the basis of articles of existing treaties. We believe that it would be appropriate to consider more frequent use of the existing powers for majority voting, while maintaining absolutely the right of member states to insist on the Luxembourg compromise being observed in respect of national interests. The price proposals made by the Commission on the agriculture guideline have been put forward within that guideline. Any change in those proposals would require unanimity within the Council.
    Sir Peter Blaker: What progress is being made with the liberalisation of trade in invisibles? Will my right hon. and learned Friend assure us that the Government continue to regard that as a high priority?
    Sir Geoffrey Howe: I agree with my right hon. Friend that one of the aspects of the internal market where we want to make early progress towards liberalisation is in respect of services, especially those that would earn us invisible exports. We have been trying to do that with insurance for some time. We intend to ensure that that is one part of the programme that the Community adopts for early comprehensive progress on the internal market.
    Mr. Foulkes: Why is the Foreign Secretary right and Tory MEP David Curry, who is actively working within the Community, wrong when he said that we should stop pretending that we can reform the CAP or even the Budget? Will the Foreign Secretary confirm that his appointment of former MEP Adam Ferguson as the Minister of State's special adviser, at a salary in excess of £21,000, to liaise between the Foreign Office and the European Parliament is meant to try to stop honest men like Mr. Curry blurting out embarrassing truths?
    Sir Geoffrey Howe: I have the utmost respect for Mr. Curry. I have heard his view in a single sentence uttered in the House this afternoon on two occasions. It is such a conclusively futile conclusion that I cannot believe that it represents the entirety of wisdom uttered by Mr. David Curry. It is of the utmost importance to continue reforming both the common agricultural policy and the budget.
    Regarding the other part of the hon. Gentleman's question, the appointment of Mr. Adam Ferguson is a sensible and essential change to make to improve and extend contact with MEPs and the Community on other issues. Regarding the nature of his appointment, it is worth noticing that in 1984, the last year for which figures are available, the Government had only 18 special and personal advisers of this sort, whereas in 1978 and 1979 the Labour Government had 25 and 22 such advisers respectively. The Labour party would be better placed to make such criticisms if it ensured that its MEPs made a more constructive contribution to the European Parliament.
    Mr. Teddy Taylor: May I beg leave to—
    Mr. Speaker: No, not at this moment.
    Mr. Taylor: Surely, Mr. Speaker, I am entitled to—
    Mr. Speaker: Order. We often hear things in the Chamber that we do not like.

    Harmonisation
    Mr. Pikeasked the Secretary of State for Foreign and Commonwealth Affairs what proposals for harmonisation between member states are currently under discussion within the European Economic Community.
    Sir Geoffrey Howe: The Commission's proposals for harmonisation cover a wide and varied field. A full list of all Commission proposals outstanding on 1 October last year appears in Council document number 19748/84, a copy of which is available in the Library of the House.
    Mr. Pike: Does the Foreign Secretary agree that the European Community would do a lot better if it stopped dreaming up ideas for a European stamp and for a European passport, and instead, made a determined attempt to remove the high unemployment level of more than 12 per cent., which is the scourge of the EC? Should that not be the EC's prime objective on harmonisation at present?
    Sir Geoffrey Howe: It would help the hon. Gentleman's appraisal of the subject if he were reminded that there is no proposal for a European stamp or a European passport, but for the introduction of a common form passport, including the British passport, in 1987. It would help him further if he would understand that one of the most important ways of reducing unemployment in the Community would be the establishment of an internal market on the basis of standard measurements, standard units, and the reduction of national differences. If he is truly in earnest about unemployment, he would do better if he supported the programmes for harmonisation in the Community.
    Mr. Harris: Will my right hon. and learned Friend continue to keep his feet firmly on the ground, in particular over harmonisation? Will he pursue measures that will mean something to the people of this country by breaking down trade barriers and resist some of the more grandiose schemes put forward by some of our partners with regard to institutions?
    Sir Geoffrey Howe: My hon. Friend has raised two separate points, one related to institutional changes, which is a separate issue. He is right to remind the House that harmonisation of the wrong things or in the wrong way can involve heavy compliance costs which stand in the way of job creation and economic activity. Provided that one is addressing oneself to the right kind of harmonisation, in particular for new products and new markets, where we need the unity of the European market to compete with the rest of the world, harmonisation can do a great deal of good.

    European Parliament (Communications)
    Mr. Bidwellasked the Secretary of State for Foreign and Commonwealth Affairs what steps he has taken to improve communication with the United Kingdom members of the European Parliament.
    Sir Geoffrey Howe: I have recently written to all British Members of the European Parliament in an effort

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    to improve the flow of ideas and information between them and the Government. We are also continuously seeking ways of improving existing briefing arrangements.
    Mr. Bidwell: Is the right hon. and learned Gentleman aware that the leader of Labour Euro MPs said that the Tories from this country in the EEC were split four ways? Is it any wonder, as the famous Mr. Curry has said, that the party at Westminster and Euro MPs are the same as "gravy train merchants, carpet baggers"—
    Mr. Speaker: Order. The hon. Member must not quote. He should paraphrase.
    Sir Geoffrey Howe: I am afraid that the wisdom of the hon. Gentleman's observations rather trailed away at the end of his trail. I cannot make any sensible observations.
    Mr. Yeo: In communicating with MEPs, has my right hon. and learned Friend had time to consider the abolition of passport and customs controls within the Community, because such a step would bring alive the advantages of membership far more clearly than any other institutional reform?
    Sir Geoffrey Howe: I am grateful to my hon. Friend for reminding the House of the importance of achieving considerable simplification of frontier controls of passports, goods and services. That is one of the subjects being studied by the Committee on People's Europe, whose recommendations we shall be considering shortly.

    Voting Procedures
    Sir Anthony Meyerasked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had this year with the French and German Foreign Ministers regarding the improvement of decision making within the European Economic Community.
    Mr. Hugh Brownasked the Secretary of State for Foreign and Commonwealth Affairs if changes in voting procedures within European Economic Community bodies are to be considered at the forthcoming summit in Brussels; and if he will make a statement.
    Sir Geoffrey Howe: I have discussed possible improvements in Community decision-taking bilaterally with other Community Foreign Ministers on several occasions. The issue has also been discussed at length in the Ad Hoc Committee on Institutions — the Dooge committee — whose report will be discussed at the June European Council.
    Sir Anthony Meyer: As my right hon. and learned Friend has just said, the completion of the internal market is a prime British objective. Is it not a matter of some anxiety, to say the least, that the French and German Governments appear to have taken considerable steps in that direction by improving their common decision-making? If such a thing continues, shall we not find ourselves shut out from the decisions that are of prime concern to us in this country?
    Sir Geoffrey Howe: My hon. Friend, unusually, has failed precisely to follow the point of what has taken place. The decisions taken recently by the French and German Governments and extended to the Benelux Governments relate to the relaxation of frontier controls at land frontiers. They have not been making any proposals for changes at
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    seaports or airports, which is a different issue. He will find that our arrangements for entry at sea and airports are as free as they can be and compare well with those operated by others in the Community for similar places.
    Mr. Brown: Does the Foreign Secretary think that moving towards a greater use of majority voting procedures will enhance harmonisation within the EC? Can he offer an opinion as to whether the accession of Spain and Portugal would be desirable in that context?
    Sir Geoffrey Howe: I am sure that the accession of Spain and Portugal will make an important contribution to the stabilisation of democratic communities throughout Europe, including those two countries. I am equally sure that the accession of those two countries will require the Community to use its existing decision-making procedure more expeditiously and effectively if it is to continue to work properly. It is for that reason that we believe that an increased use of majority voting, in accordance with existing articles, would be of advantage, provided we maintain our respect for the Luxembourg compromise.
    Mr. Alexander: My right hon. and learned Friend has referred to improved arrangements here, but the whole point is that in the rest of the EC the arrangements at land frontiers are still as bad as they ever were. Surely, then, the decision-making is at fault.
    Sir Geoffrey Howe: Again, I think that my hon. Friend does not quite understand the distinction I was making. The arrangements arrived at between France and Germany have very recently been agreed for extension to the three Benelux countries. They are intended to produce improved frontier controls within those five countries. They do not yet extend to the other Community countries. They are concerned with land frontiers, as distinct from sea frontiers and airports, with which we are concerned.
    Mr. Healey: Does the Foreign Secretary agree that the lugubrious ritual through which the Community at present avoids taking all necessary decisions has left it without any budget for the current year, yet with an expensive agricultural policy whose only obvious beneficiary is the Soviet Union?
    Sir Geoffrey Howe: The right hon. Gentleman is always capable of summing up the most complicated questions with a laconic and imperfect wit. The fact is that the Community's decision-taking processes are in need of improvement, are being improved and are addressing themselves to questions of importance to the people of this country and of Europe as a whole.
    Mr. Teddy Taylor: On a point of order, Mr. Speaker. Is it appropriate at this stage to make the point that I hoped to make—
    Mr. Speaker: Order. As long as it is not a continuation of Question Time. If it is a point of order that I can answer I shall be delighted to do so.
    Mr. Taylor: Is it appropriate at this stage to raise as a point of order my intention to raise on the Adjournment the wholly unsatisfactory nature of the answer given to question No. 73, which included an unjustified personal attack on my MEP simply because of the views which he expressed and which he is entitled to express as a member of an elected assembly?
    Mr. Speaker: It is perfectly in order to do that.
    Mr. Healey: On a point of order, Mr. Speaker. You will recall that at the end of questions a month ago I expressed a view, widespread on both sides of the House, about the inadequate time available for Foreign Office questions. Can you tell us, Mr. Speaker, whether you have had any communication from the Leader of the House about improving matters?
    Mr. Speaker: I have had no such communication, but I understand that discussions are going on and that a decision may be taken shortly after the Easter recess.
    Sir John Biggs-Davison: Further to the point of order raised by my hon. Friend the Member for Southend, East (Mr. Taylor), Mr. Speaker, can you give guidance? Has the procedure changed? If an hon. Member is dissatisfied with the reply to a question, is it right that the notice that he wishes to give to the effect that he will seek to raise the matter on the Adjournment should not be given at the time but at the end of questions?
    Mr. Speaker: The hon. Gentleman is right. I should have allowed the hon. Member for Southend, East (Mr. Taylor) to raise his point of order at the time. I confess that I thought he was on a rather different tack.
    Mr. Meadowcroft: On a point of order, Mr. Speaker. I wonder whether you noticed that no fewer than six Labour Members were not in their place to ask questions that they had tabled—
    Mr. Speaker: Order. I am afraid that is definitely not a matter for me. I do not think that we want to start that sort of game.
    Mr. Meadowcroft: May I put it to you, Mr. Speaker, that you are very zealous to protect the interests of Members of Parliament who want to ask questions at Question Time? Many hon. Members come to ask supplementaries to questions that have been tabled. Would you consider whether it is possible to exact some retribution on those Members of Parliament who are not here to ask their questions?
    Mr. Speaker: Order. No. I think the retribution is that other hon. Members manage to ask their questions, as a result of some other hon. Members not being present.
    Mr. Skinner: Further to that point of order, Mr. Speaker, could you institute a regime to ensure that every day you have a list of those Members who attend the House? For instance, today you could draw up a list that shows that the Liberals never manage to have more than three members in the House—
    Mr. Speaker: Order. I do not think that I could do that. It would put an intolerable load upon me.
    Mr. Skinner: And then, perhaps, you could draw up a list of all hon. Members who voted. You would be able to ascertain that the leader of the Social Democratic Party did so on only 34 per cent.—
    Mr. Speaker: Order. These interesting statistics, are nothing to do with me.

Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [19 March].
  WAYS AND MEANS

    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 importance; or

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

  Budget Resolutions and Economic Situation
  [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).]
  3.35 pm
  Mr. Roy Hattersley: In his new year's day message to the City and the world, the Chancellor of the Exchequer promised Britain a Budget for jobs—[HON. MEMBERS: "Where is he?"] Now, only the most gullible of his supporters would believe that the Chancellor had kept that promise. When next year the Chancellor or his successor introduces the Budget for 1986, unemployment will be no less than it is today. Indeed, the probability is that it will continue to rise throughout the next 12 months. Yet, had he chosen to do so, the Chancellor could have begun to put Britain back to work—[HON. MEMBERS: "Where is he?"] Might I suggest to my hon. Friends that, while they naturally resent the usual absence of the Chancellor, it is probably better that we proceed without calls for him, because if we call he might come.
  When next year the Chancellor or his successor introduces the Budget, unemployment will certainly be no less than it is today—perhaps a great deal more. I also repeat that the absent Chancellor, had he chosen to do so, could have introduced a Budget which began to put Britain back to work. The nation's tragedy and the Chancellor's disgrace is that once more he and the Government have chosen the high unemployment option.
  At another phase of the Chancellor's pre-Budget cycle, he decided to excite hopes of tax cuts. Today, nobody believes that the hopes which he encouraged have been realised. Indeed, the total annual tax burden will rise by a further £4 billion between now and the next Budget. Table 5·4 on page 39 of the financial statement makes it clear that, between the 1979 general election and the end of the present financial year, the total increase in our annual tax burden will be about £26 billion. That is the
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  increase imposed on Great Britain by a party and Government who won two general elections on the promise of tax cuts.
  What most families may have received yesterday in the form of tax reductions will not compensate for the extra charges, payments and indirect taxation which they must pay. Many of those charges were not announced in the Budget. They were announced to prepare the Budget's ground and to enable the Chancellor to put as good a face as possible on yesterday's dreary event. However, prescription charges, water rates and bus fares are still to be paid, and they are the basis on which the Chancellor was able to make his other proposals.
  In addition, one direct result of the Government's folly will cost many families virtually as much as the income tax reduction provides. A married couple with one child will enjoy an income tax reduction of £7·50 a month. However, even if the building societies make no further increase in their lending rate, which I fear is a most optimistic assumption, the cost of an average mortgage has gone up since Christmas by £7·25 a month. Even if there is no further increase on Thursday, Friday or next week, the one fact of the mortgage increase, which was the direct result of the Chancellor's mishandling of the sterling crisis and the increased interest rates that followed, will virtually wipe out the average reduction in income tax.
  No wonder that the Chancellor's supporters were so glum yesterday afternoon. As the speech went on, they edged nearer and nearer to the edges of their seats, waiting for the rabbit that they assumed that the Chancellor would produce from his hat. At the end of his speech, in the words of Dorothy Parker, they looked like men who had bought tickets for a quite different play.
  The Chancellor's unpopularity is not confined to his party. He is, according to the evidence and the polls, the most unpopular holder of his great ofice in modern history. It would be both mistaken and uncharitable to jump to the obvious conclusion and blame that unpopularity on his personality and character. As I was defending the Chancellor for an uncharacteristic moment, I shall repeat what I said now that he has come into the Chamber. We were discussing the unpopularity from which he uniquely suffers. In a mood of typical charity, I repeat that it would not be right to jump to the obvious conclusion and attribute his unpopularity to his personality and character.
  Equally, it would be wrong to assume that the right hon. Gentleman's unpopularity is a result of the incompetence with which he has performed his duties, although the combination of bluster and indecision with which he faced the sterling crisis in January did not make him a national hero. The Chancellor's status and standing—
  Mr. Christopher Hawkins: Is this economics?
  Mr. Hattersley: Does the hon. Gentleman wish to say something, or is he just going to shout?
  The Chancellor's status and standing is largely a result of a single characteristic. He represents, indeed he personifies, the callousness of Conservatism. He is essentially the man who does not care, as was demonstrated yesterday in his attitude towards the wages councils. The wages councils were created by the Prime Minister's greatest of all heroes, Sir Winston Churchill. They were created to protect the weak and the vulnerable. The then Mr. Winston Churchill said when the Bill was introduced:

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  "It was formerly supposed that the workings of the laws of supply and demand would naturally regulate or eliminate that evil"—
  that is, the evil of living on less than a decent wage—
  "But when you have no organisation, no parity of bargaining, the good employer is undercut by the bad, and the bad employer is undercut by the worst."—[Official Report, 28 April 1909; Vol. 4, c. 388.]
  It is to that situation that the Chancellor proposes to return us. The weak-minded reliance on the free market will cause much anguish and deprivation to the men and women who now receive a modicum of protection, provided by the wages councils.
  As to the workers who are covered by the wages councils provisions, far from causing unemployment, they have, over the past five yars, been its principal victims. In the last decade, the average earnings of wages councils employees have fallen from 73 per cent. to 65 per cent. of the average national wage, and the notion that we might find some economic salvation in depressing their wages still further is simply grotesque.
  Indeed, even if the formula worked, we would only be replacing one sort of grinding poverty with another, and that is not the sort of society in which I, or my hon. Friends, wish to live. Yet the abolition of the wages councils and the abolition of employment protection are part of the price that the nation pays—
  The Secretary of State for Employment (Mr. Tom King): Abolition?
  Mr. Hattersley: If the two-year rule is introduced, it will be abolition in everything other than name. If the right hon. Gentleman does not understand that, he does not understand the workings of the legislation over which he is supposed to preside. That rule, that new change and the abolition of the workers' councils—or rather the wages councils—[AN HON. MEMBER: "Workers' councils?"] The hon. Gentleman is quite right — we shall create some of them, not abolish them.
  The price for abolition is the price that the nation has to pay for the half-thought-out, superficially clever but fundamentally flawed economic prescription on which the Government now operate. That prescription is called the medium term financial strategy. It has collapsed under the weight of its own contradictions.
  Indeed, yesterday afternoon the Chancellor of the Exchequer performed the last rites over the corpse when he warned the House and, for all I know, the country and perhaps the foreign exchanges about "benign neglect" of the exchange rate. Until 11 February, benign neglect was official Government policy, but then it was called the free float of sterling. If the Chancellor of the Exchequer shakes his head, perhaps I should remind him of something that he said in the House on 12 July:
  "We have demonstrated by action that there is not an exchange rate target".—[Official Report, 12 July 1984; Vol. 63, c. 1399.]
  My word, was not the Chancellor of the Exchequer proved right in February? Has he not learned the lesson since? Why does he not have the good sense to avoid the volatility that is now doing so much damage by openly admitting that there is now an exchange rate policy, and admitting, therefore, that the medium-term financial strategy has collapsed?
  The Chancellor of the Exchequer (Mr. Nigel Lawson): There is no exchange rate target. That remains the position. If the right hon. Gentleman contests that, does he say that he thinks there should be an exchange rate target? If so, what is his preferred target?
  Mr. Hattersley: I told the right hon. Gentleman at the time of the February crisis—using almost exactly the same words as the Prime Minister, but I make no apology for that—that, thanks to the Government's mismanagement, the sterling rate had settled lower than it should have done. It was necessary for the right hon. Gentleman to make up for his misdeeds by taking some positive action about a proper rate. But I do not believe that the possession of a target is the same as the announcement of one. The right hon. Gentleman knows that perfectly well. He will not announce a target, but he should have in his mind—and I suspect that he does — a target that he is now prepared to defend. Until 11 February he was not prepared to do that, and consequently we had all the difficulties that characterised that difficult and dangerous month.
  The medium-term financial strategy now exists only as a series of targets which are constantly revised but very rarely achieved. Yesterday, the failures of the Government's forecasting were institutionalised by the announcement that the contingency reserve is to be increased by £2 billion this year and next year. Indeed, the Chancellor of the Exchequer is now preparing for his forecasting errors a year before he actually makes a forecast. Yet he continues with his manic pursuit of the elusive targets. It is, I suppose, for that reason that he failed to provide the remedy that the country so desperately needs to the unemployment crisis. That remedy is a substantial investment in public capital. That is the most certain and beneficial way of creating new jobs.
  I am delighted to see that the Prime Minister has become a belated convert to that cause. Yesterday, during Prime Minister's Question Time, she told my hon. Friend the Member for Burnley (Mr. Pike):
  "Public investment was purposely higher in the north so as to help with the unemployment problem."—[Official Report, 19 March 1985; Vol. 75, c. 781.]
  If that is why the Prime Minister pushed public investment to the north, and, if she was right—as I believe she was—in saying that that is how public investment works, why is she not applying the same policy to the whole country, and why has she cut the level of public capital expenditure by more than 20 per cent. over the past three years?
  We believe that the Prime Minister was right about the way in which public investment works, and that is why we regret, and resisted, the £3·3 billion reduction now scheduled for between last year and 1987–88.
  Mr. Edward Leigh: If public investment is so effective, why is the area that has received the most public investment—the north-east—suffering from the highest level of unemployment?
  Mr. Hattersley: The first answer is that, for structural reasons, as the Prime Minister pointed out yesterday, that area has the greatest problems. The hon. Gentleman should address that question not to me but to the Prime Minister, who argued yesterday that more investment in the north-east produced more jobs. He should also ask the right hon. Lady why, if that policy works in the north-east, it should not be applied all over the United Kingdom.

  873
  I know what answer the Chancellor would give. He would say that that cannot be done, because of the potential effects on public borrowing. We accept, of course, that we need prudent control of public borrowing. We also need a better definition of public borrowing than the public sector borrowing requirement, according to which investment in British Telecom was classified as a liability on the day before privatisation and as an asset on the day afterwards. But even if the inflated and bogus definition of the public sector borrowing requirement, which includes capital in a way unknown in any other OECD country, is taken as our guide, the level of public borrowing in this country is lower than the OECD average. Yet, although the figure for public borrowing is lower than in many of our successful competitors, the Chancellor insists that it must be cut again this year from 3·25 per cent. of national income to 2 per cent.
  If the public sector borrowing requirement had simply been left at the same figure, and augmented by the use of what the Chancellor calls fiscal adjustment, he could have financed a £5 billion job package. Resources should have been divided initially between a job creation programme and public investment. As the construction industry geared up and training programmes produced the necessary manpower, the emphasis should have been switched to new roads, sewers, hospitals and schools and to the building and renovation of houses.
  All the work that would have been done under that programme is desperately needed and could be justified on its own merits. Reporting to the Government three months ago, the National Economic Development Council made that clear. It said:
  "delays in maintenance so sharply increase necessary expenditure in subsequent periods that no rational discounting process can justify them".
  If we do not invest now in restoring our decaying roads and houses, we will have to spend far more in the future on replacing derelict roads and houses.
  Mr. John Butterfill: Can the right hon. Gentleman explain, if he really believes what he is saying, why it was that, when he was last a member of the Government, unemployment doubled? Why, for example, if he believes in the capital investment programme, did the Government of whom he was a member cut the hospital building programme altogether? The right hon. Gentleman says one thing when in government and another when in opposition.
  Mr. Hattersley: It is not just me who believes what I am saying. The Confederation of British Industry, the engineering employers, the Trades Union Congress, the construction industry and the road haulage industry believe what I am saying. Indeed, the right hon. Member for Old Bexley and Sidcup (Mr. Heath) believes what I am saying, as do a substantial number of the hon. Gentleman's party. The comparison between what happened when we were in office and what happens now is clear. The comparison is based on the certainty that, during the past five and a half years, unemployment has risen by more than 2 million. For the hon. Gentleman to suggest that we were somehow deficient in these matters when unemployment was 2 million lower than it is today is to stand the facts on their head.
  If the Government did not prefer the high unemployment option, they could have a PSBR cost of £2·5 billion, which would create 100,000 genuine jobs and
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  restore the crumbling fabric of the country. If we spent the same amount—the other half of the £5 billion package — on direct job creation schemes, we should reduce unemployment by a further 200,000 this year. After two years, that programme would reduce unemployment by 1 million.
  Could we be told by the Chief Secretary over what period the Chancellor expects his measures to have an effect and how great an effect that will be? At the moment, we have what the Chancellor claims to be a Budget for jobs, without knowing when it will work, what its effects will be or what estimates have been made of the unemployment reductions that he anticipates. Can we be told at least the reductions in unemployment that the direct job creation measures are expected to create and when they will move into success?
  Of course, the Chancellor will go on to insist that his attack on unemployment is also concerned with the use of wages to stimulate jobs. In that respect, I repeat the general welcome for the principle of the changes in national insurance contributions which my right lion. Friend the Member for Islwyn (Mr. Kinnock) offered the House yesterday, although I wish that the Chancellor had summoned up enough courage to extend the employee's contribution to the top of the income scale and to use the extra revenue for greater relief at the bottom. The Chancellor will know that the man or woman earning £55 a week—the key figure in the formula—will still, after that formula is applied, pay a higher rate of national insurance contribution than he or she did under Labour in 1979. The Chancellor will also know — I put it no higher — that there is a great danger of a wage or national insurance trap applying at about £55 a week.
  Perhaps the Chief Secretary will explain how, in the new circumstances, he justifies the national insurance scheme still levying a smaller percentage of earnings from the rich than from the poor. Putting those reservations aside, I welcome the new scheme as far as it goes, although I do not believe for one moment—nor, I think, does the Chancellor — that it will have a significant effect on the number of jobs. Without a general increase in demand, the overwhelming likelihood is that it will simply reshuffle employment from skilled to unskilled jobs.
  We were told last year that a similar measure —abolition of the national insurance surcharge — would reduce unemployment but, since then, unemployment has risen by 120,000.
  Mr. Richard Holt: It would have gone up more.
  Mr. Hattersley: Somebody says that it would have gone up more. Would somebody like to have a guess how many? Was it not the Secretary of State for Employment who cried that it would have gone up more? Nobody wants to put a figure on it. Is there any advance on 120,000? I think not.
  The second item that we were told last year would increase jobs was tax cuts. They also clearly failed. I hope that the Chief Secretary will say exactly how the tax cuts are supposed to work to promote employment. Are they supposed to hold down wage costs by acting as a substitute for negotiated increases? If they are, they will not widen the gap between wages and social security payments.
  The two supply side arguments which the Chancellor has advanced to justify his wages policy as a means of

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  creating new jobs work against each other. In any event, the idea that a significant number of men and women choose unemployment because they can do almost as well on social security is an insult not only to the unemployed but to the intelligence of anyone who examines that proposition.
  The unemployment crisis comes not from an imaginary reluctance to look for work but from a real inability to find it. Two weeks ago the director of the CBI told me that his members all over the country were reporting vacancies which they could not fill. I promised him that, putting aside specialist employment—where the problem is not paying but trading — I would fill every Birmingham vacancy about which the CBI notified me. I have to report that the CBI has not yet taken up my offer. Notwithstanding that, I extend that offer to every Conservative Member of Parliament who believes that unemployment is the result of the unemployed's reluctance to work. The people are there looking for jobs; the Government's duty is to find the jobs for them
  Look at the simple figures. On the Government's own figures, today unemployment stands in excess of 3,300,000 and there are fewer than half a million unfilled vacancies. Even if six people refuse to take a job, a seventh is still waiting for employment. Yet, yesterday, the Chancellor had a message for the men and women who were looking for jobs. It appears in column 792 of Hansard under "Employment and training measures". His message was:
  "Impatience is a bad counsellor." —[Official Report, 19 March 1985; Vol. 75, c. 792.]
  I must say to the Chancellor, on behalf of my unemployed constituents, that it is a great deal easier to be patient in No. 11 Downing street than to be patient in the dole queues.
  How long does the Chancellor expect the patience to last? One hundred thousand people have been unemployed for five years or more. Have they been patient enough? Have they waited long enough? Does the Chancellor urge patience on them? Putting it more simply and directly, can we be told when the unemployment measures will work? For five years, every ministerial broadcast on the subject and every prime ministerial pronunciation has told the House and the country that, sooner or later, the unemployment prospect will improve and jobs will be found. When will that happen—this year, next year, sometime, or never under a Conservative Administration?
  The Chancellor told the House yesterday, and, I understand, repeated it to journalists verbatim, that his room for manoeuvre in the Budget was limited by the effects of the coal dispute on Government expenditure. That is a selective version of the Chancellor's public spending problem. Fourteen months ago, to make the Chancellor's strategy seem plausible, the 1984 public expenditure White Paper was based on a series of wholly unjustifiable assumptions, which I told the Chief Secretary during that debate were unjustifiable — assumptions about public sector pay, about local authority spending and about unemployment. Because of those errors—in part, intentional errors—the contingency reserve was spent before the cost of the major contingency was calculated.
  What is more, the Government clearly badly under-estimated the cost of the miners' strike. Yesterday the Chancellor replied to a letter I sent him a fortnight ago
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  asking him a series of questions. He declined to answer most of the questions — for instance, he did not say whether the cost of the Trident programme, which was wholly carried out in the United States, has been included in the Government's estimate to pad out the figure. The right hon. Gentleman did, however, answer a question about the cost of the miners' strike, saying:
  "What I actually said on 31 July was that the cost of resisting the strike was a worthwhile investment."
  The Chancellor seeks to re-write both Hansard and history. That is what he meant to say. [Interruption.] Even now he is crying that it is clear in Hansard. On 31 July 1984, the Chancellor said:
  "even in narrow financial terms, it represents a worthwhile investment". —[Official Report, 31 July 1984; Vol. 65, c. 306–7.]

  Mr. Lawson: Is this resisting the strike?
  Mr. Hattersley: No. The truth is that the Government woefully miscalculated the cost of the miners' strike. I give the Chancellor credit for this: if the Government had not under-estimated to such a degree, the right hon. Gentleman would probably have had the sense not to prolong the strike for as long as Government intervention prolonged it.
  Mr. Tim Yeo rose—
  Mr. Hattersley: Wait until I get to the end of the subject.
  Another question arises from the Government's attitude to these matters and the way in which the Chancellor now whines about the costs that his policy have made necessary. I asked him this second question during the last public expenditure debate. It is a question that my right hon. Friend the Leader of the Opposition asked the Chancellor yesterday. I repeat it today, and I believe my party will repeat it for the rest of this Parliament—if the Government could afford £3 billion to fight the miners, why cannot the Government afford £3 billion to fight unemployment?
  Mr. Yeo: Does the right hon. Gentleman not recognise, as every hon. Member and everyone in the country recognise, that the only real miscalculation in respect of the miners' strike was made by Mr. Arthur Scargill? Does the right hon. Gentleman not recognise that everyone knows that the financial, social and employment consequences and costs of giving in to that strike would have been much more massive than any cost that the Government have paid?
  Mr. Hattersley: The hon. Gentleman is welcome to his opinion. My only criticism is that the hon. Gentleman did not explain the point to the Chancellor, before the Chancellor made a quite different point. The Chancellor said:
  "even in narrow financial terms".
  Clearly, that does not stand a moment's examination.
  I repeat: if the Government could afford £3 billion to fight the miners, they should be able to afford £3 billion to deal with the greatest scourge of our generation—the curse of continual unemployment. What is more, the Government should be able to afford something in this Budget to help the worse off—the lowest paid. Precious little has been done for them. The lowest paid will pay the largest percentage of their income in increased charges and indirect taxes and their real incomes will suffer most from

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  deteriorating public services. We believe, and have urged this point on the Chancellor, that the right hon. Gentleman should have helped families most in need of help—
  Mr. Lawson: That is exactly what we did.
  Mr. Hattersley: —by programmes specifically designed to help the three groups on whom the financial pressure is the greatest—the pensioners, families with young children and the long-term unemployed.
  The House may have escaped hearing the Chancellor's cry that that is exactly what he has done. I hope that the Chief Secretary will tell me exactly what the Chancellor has done in the Budget to help pensioners and families with young children, particularly unemployed families with young children. I hope that the Chief Secretary will not only tell me what has been done to help the long-term unemployed but remind the House of the difference between unemployment benefit levels after 12 months and unemployment benefit levels after 12 months and a day. The Chancellor should have provided a pension increase of £5 a week for the single pensioner and of £8 for a married couple, a child benefit increase of £3, which is by far the easiest, best and most direct way of helping to alleviate poverty and an extension of supplementary benefit for the long-term unemployed. That would have cost, in addition to the statutory upratings, which I assume the Chancellor has already provided for, £2·825 billion in a full year.
  I have no doubt about where that money for the poverty programme should have come from. Before yesterday's Budget, the Government—twice elected on promises of tax cuts—had increased the annual tax bill by £21·5 billion. They have now increased it to over £26 billion.
  Against this background of general increase, one group has enjoyed tax reductions. This group comprises the 5 per cent. of highest income recipients. In principle, we all believe in tax cuts but cutting taxes, especially for one group, is not a discreet choice. The price that we have had to pay for cutting the taxes of the well off is increased charges for welfare benefits, reduced public expenditure and limits on the PSBR which prevent a decent job package and a regional aid programme appearing in the Budget. I hope that the Chief Secretary will explain the justification for a policy which over five years has helped the rich at the expense of the poor. I think that the right hon. and learned Gentleman is just the man to explain why that has been done.
  Mr. John Maples: If the right hon. Gentleman were the Chancellor of the Exchequer, would he restore the 98 per cent. rate of income tax which was a feature of the previous Labour Government?
  Mr. Hattersley: I was coming to that. I have a major objection to the 98 per cent. marginal rate of tax because hardly anyone paid income tax at that rate except pop stars with huge investment incomes and rotten accountants. I want to see an added tax contribution from the wealthiest members of society, but 98 per cent. on the marginal pound is not the answer. The answer lies in a higher rate of average taxation by removing some of the tax privileges which the wealthy in our society presently enjoy. There is something deeply demeaning—
  Mr. Douglas Hogg rose—
  Mr. Hattersley: I shall give way to the hon. Gentleman in a moment.
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  There is something deeply demeaning in Conservative Members and newspapers, who have not raised a word about the deprivation of unemployment and the problems of poverty, producing or using headlines about the dozen or two dozen who might have to pay high rates of taxation on the last pound of their gigantic unearned income. My objection to the 98 per cent. rate is that it does not operate in a way that will produce the revenue that I want to see. There will not be a 98 per cent. rate in those circumstances, but £3 billion should be contributed by those who have been the only beneficiaries of Government policy.
  Mr. Hogg rose—
  Mr. Hattersley: No, I shall not give way for the moment. I shall be more than happy later to give way to the hon. Gentleman, of all people.
  The other scare about high rates of taxation comes from the notion that by taxing unearned income we shall be taking the savings of individuals with little money, little independence and a low standard of living. When the unearned income surcharge was abolished last year, the starting point was £7,000. At that time it was thought to be produced by about £70,000 in the bank. I am not suggesting that £70,000 in the bank is a fortune, but in my constituency I doubt whether there are a dozen people with that sum in the bank. However, there are thousands who need decent child benefit, who cannot afford to pay for their children's school meals and who, above all else, want a job which will give them something like a decent standard of living.
  Mr. Butterfill: Would the hon. Gentleman give way?
  Mr. Hattersley: No. I gave way to the hon. Gentleman a short time ago, and no one can regard that as a rewarding experience. I give way instead to the hon. Member for Grantham (Mr. Hogg).
  Mr. Hogg: The right hon. Gentleman has told the House how he proposes to finance what he is pleased to call his poverty relief programme, to the tune of £2·5 billion. Apparently it is to be achieved by withdrawing tax privileges. It will be helpful if he tells the House exactly what tax privileges he has in mind. Do the privileges include mortgage interest relief and contributions to pensions? Does he suppose that the withdrawals that he is contemplating will raise the money, or will he hit the average taxpayer?
  Mr. Hattersley: I knew before the debate started that we would have a scare about mortgage interest relief. The hon. Gentleman has given me the opportunity to say, as I was able to say to the distinguished economics editor of The Times, that I do not have the slightest intention of attacking the concept of home ownership. One of my complaints about the Government is that they have made home ownership so difficult, especially for those seeking new mortgages. As for tax privileges, I believe that 14 of them are listed in the latest publication of the Institute of Fiscal Studies. These are tax privileges that are available to the very rich with expensive accountants and they are a scandal when set against the payments that they receive. No one wants to see—[HON. MEMBERS: "Name them".] I am not sure whether Conservative Members are crying "Name them," or saying that they claim them. I have no doubt that some Conservative Members claim the tax privileges that I have in mind.

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  The idea that the highest 5 per cent. of income earners should be the principal beneficiaries of tax cuts which the Conservative party proposes, when every other group in the population is paying more and getting less, is not a vision of society which I believe civilised and decent men and women outside the House are prepared to accept.
  The Government's callous disregard for families in the middle of the income scale as well as at the bottom have marked them out from every one of their Conservative predecessors. That callous disregard for the poor, including those with low incomes is the hallmark of the Budget. Indeed, it is the hallmark of the Government over the past five years. I believe that their callous disregard for these considerations will result in their defeat at the hands of an electorate which rejects tax cuts at the expense of public services and rejects unemployment at the expense of policies which the Government have abandoned merely to protect the privileged. The British people have a great deal more concern for the poor in general, including the unemployed, than the Government realise. As a result, they will rise up and sweep the Government out of office.
  4.17 pm
  The Chief Secretary to the Treasury (Mr. Peter Rees): The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has opened the debate with a characteristic and almost endearing combination of irrelevance and bombast. [Interruption.] The Leader of the Opposition may well laugh. We listened with care to his speech yesterday. It is a difficult speech for a Leader of the Opposition to make. Alas, the parts that had obviously been prepared for him did not fit the measures that my right hon. Friend the Chancellor of the Exchequer had announced, and so he had to extemporise. Unfortunately his extemporising did not tie in with the more formal parts of his speech. We shall come to that in a moment. I shall deal also with the points of the right hon. Member for Sparkbrook, if any serious points were made by him, in the course of my speech.
  First, I shall take up two of the general observations that were made by the right hon. Member for Sparkbrook. He has told us that he will not make an attack on home ownership. I am sure that that will be reassuring for the country, which will remember his uncharacteristically diffident admission at the close of the first debate which he conducted on behalf of the Opposition on the sale of council houses, that when the Labour party was returned to power it would take back into public ownership council houses which had been sold. We are glad that life has moved on—
  Mr. Hattersley: I remember distinctly the intervention to which the Chief Secretary has referred. The right hon. and learned Gentleman's allegation is untrue and I hope that he will withdraw it now rather than seek to do so later in the day.
  Mr. Rees: If the right hon. Gentleman is so stung by what I have said, I will check the record. I shall check Hansard and if I am proved to be wrong I shall be delighted to withdraw—[Interruption.]
  Mr. Speaker: Order. The House wants to hear what the Chief Secretary has to say.
  Mr. Rees: Mr. Speaker, what is important, and this is the point that I am making, is that—[HON. MEMBERS:
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  "Withdraw."] I am not exactly certain what I am supposed to withdraw. If the right hon. Member for Sparkbrook assures the House that at no time was it in his contemplation that the Labour party would take back into public ownership council houses, I am very happy to accept that assurance. All I am saying is that the right hon. Gentleman obviously has developed his thinking on this question. [Interruption.] I have said that I am very happy to accept reassurance from the right hon. Gentleman. I have made my position absolutely clear. If the right hon.Gentleman— [Interruption.]
  Mr. Speaker: Order. I do not see why the Chief Secretary should be subjected to such barracking. He is seeking to explain his position.
  Mr. Rees: I am very happy to rest on what I said a moment ago, Mr. Speaker, and I think that Opposition Members should study that before they show such indignation.
  Mr. Barry Sheerman: On a point of order, Mr. Speaker. Is the Minister withdrawing what he said when he says that he is resting on what he said a minute ago, or is he reaffirming what he said? We must know, if the disorder on the Opposition Benches is to cease.
  Mr. Speaker: That is the problem. Because of the noise, it was impossible to hear exactly what the Chief Secretary was saying.
  Mr. Rees: I have said very clearly that if the right hon. Gentleman wishes to reassure the House that at no time did he assert that the Labour party would take back into public ownership council houses that had been sold to their tenants, then I am very happy to accept the right hon. Gentleman's reassurance. I said that a moment ago. I am merely accepting the reassurance of the right hon. Gentleman. Does he wish to give me another one?
  Mr. Hattersley: Let me make it clear to the Chief Secretary that he is not accepting my reassurance—that is not the issue. The issue is what he said that I had said. What he said that I had said was that we would take back into public ownership the houses which had been sold to their tenants. It is not a matter of my reassurance; it is not a matter of any degree of speculation; it is a matter of false allegation. The right hon. and learned Gentleman now has two choices. The first is to withdraw it with what grace is left to him now. The second is to wait until Hansard is published and then withdraw it more shamefully.
  Mr. Rees: Mr. Speaker, I think that we are getting a little far from the debate on my right hon. Friend's Budget statement. I am not certain what I am asked to withdraw, quite honestly.
  Let me move on to the next point. The right hon. Gentleman also asserted that in principle we all believe in tax cuts. The right hon. Gentleman—[HON. MEMBERS: "Withdraw."]—in case the House did not hear, asserted that in principle we all believe in tax cuts. [Interruption.]
  Mr. Speaker: Order.
  Mr. Rees: If I may go back to the assertion of the right hon. Gentleman, he said that in principle we all believe in tax cuts, yet that comes after—
  Mr. Sheerman: On a point of order, Mr. Speaker. If you compare the attitude of the Minister whenever

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  Rossminster was uttered in Committee or in the House with what he has said to my right hon. Friend the Member for Sparkbrook, I think that you will know, Mr. Speaker, that some kind of an apology or withdrawal is now in order.
  Mr. Speaker: I am not responsible in any way for what is said in debate.
  Mr. Hattersley: Since I am now not so much enraged as embarrassed by the right hon. and learned Gentleman's performance, I shall explain not only the reference to him but his error. In the wind-up of the debate to which he referred, the Opposition were asked whether we would abolish the legislation and withdraw the right to buy, and we said, of course, that we would. That is not the allegation which the right hon. Gentleman made. The right hon. and learned Gentleman made the allegation that we would return to public ownership houses which had been sold to individuals. That he must withdraw, and he must withdraw it now.
  Mr. Rees: On the assurance of the right hon. Gentleman — [HON. MEMBERS: "Withdraw."] Mr. Speaker, it is very difficult to know against this barrage what I am expected to withdraw. I am very happy to withdraw on the reassurance of the right hon. Gentleman that it is not part of the policies of the right hon. Gentleman and his right hon. and hon. Friends to take back council houses into public ownership. If I may say so, this is not relevant to the debate on which we are embarked.
  The other point that the right hon. Gentleman made was that—[Interruption.]—in principle we all believe in tax cuts.
  Mr. John Morris rose—
  Mr. Rees: I am sorry, I will not give way, not even to the right hon. and learned Gentleman. [Interruption.]
  Mr. Speaker: Order. I ask the House to let the Chief Secretary continue. [HON. MEMBERS: "Withdraw."] Order. I distinctly heard the right hon. and learned Gentleman say that he would withdraw. [HON. MEMBERS: "No."]
  Mr. John Morris rose—
  Mr. Rees: No, I am not giving way to the right hon. and learned Gentleman. [Interruption.]
  Mr. John Morris: On a point of order, Mr. Speaker. You said a moment ago that you distinctly heard the right hon. and learned Gentleman say that he wanted to withdraw. A moment or so earlier, he had said not those words, but that he was not sure what he was supposed to withdraw. In those circumstances, might it not be more convenient to check exactly what the right hon. Gentleman did say?
  Mr. Speaker: Order. This is the problem. When there is so much noise, it is very difficult for anybody to hear. Perhaps I should have said that I thought I heard what the right hon. and learned Gentleman said. Let us now continue in an orderly manner, otherwise the debate will be very unruly.
  Mr. John Morris rose—
  Mr. Rees: No, I will definitely not give way. [Interruption.] Although it might not have been possible—
  Mr. Sheerman rose—
  Mr. Speaker: Does the hon. Gentleman wish to raise a point of order or a point of argument?
  Mr. Sheerman: It is a most important point. Mr. Speaker, either you did hear the Minister say that he withdrew or you did not hear. It must be clarified, or the Minister is hiding behind the skirts of the Speaker.
  Mr. Speaker: I said a moment ago that because of the noise it is very difficult to hear what is being said, but I thought that I heard those words uttered. In the interests of the House, will the Chief Secretary say again what he said a moment ago?
  Mr. Rees: Mr. Speaker, I thought that I had made my position absolutely clear on this. I said that on the reassurance of the right hon. Gentleman I was very happy to withdraw. [Interruption.] Mr. Speaker, I hope that we may continue to debate my right hon. Friend's Budget statement, and not the Labour party's housing policy. I would, however, be happy to debate with the right hon. Gentleman—although he did not spend a great deal of time on the subject—the Labour party's tax policies.
  Mr. Richard Holt: On a pont of order, Mr. Speaker. In all the hubbub, may we have it confirmed one way or the other—because I could not hear what the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said — whether it was the Labour party's policy to withdraw from council tenants the right to purchase? I could not hear the answer.
  Mr. Speaker: The hon. Gentleman will know that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) read something from Hansard. If the hon. Gentleman will wait until tomorrow morning he will be able to read it.
  Mr. John Morris rose—
  Mr. Rees: I want to debate, if I can, some of the other points made by the right hon. Member for Sparkbrook. [Interruption.] I do not think that I can say more than I did say— [Interruption.] I should like to come in due course to the Labour party's tax policies.
  Mr. Allan Rogers: On a point of order, Mr. Speaker. I am not quite sure of the rules of procedure of the House but, as I understand them, it is improper for one hon. Member to call another hon. Member — or dishonourable Member—a liar. [Interruption.] I gather that that is correct. That being so, is it not incumbent on anyone speaking in this House not deliberately to lie or to distort the views or the statements of another hon. Member? Any hon. Member who does so opens himself to being called a liar.
  Mr. Speaker: That is a pedantic argument. The whole House has heard the exchange between the two Front Benches on the matter. I think that it would be profitless to pursue it further. Will the Chief Secretary continue?
  Mr. John Morris: Further to the point of order, Mr. Speaker. My hon. Friend the Member for Rhondda (Mr. Rogers) has made a very important point and, with respect, it is not a pedantic matter. When there is a challenge to the Official Report, surely every hon. Member has a right to expect that matter to be put right. If there is a mistake in the Division Lobby, one can come to the House to have the matter corrected. If there is any other mistake, which touches on the honour of an hon. Member, he can have the

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  matter put right on the Floor of the House. The right hon. and learned Gentleman, in seeking to give his reassurance, has not been withdrawing the allegation that he specifically made — that my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said in terms that we would take back houses that had been sold to individual council house tenants. That is the matter on which the right hon. and learned Gentleman has been asked to withdraw—
  Mr. Speaker: Order. Every right hon. and hon. Member must take responsibility for his own speech. I cannot answer a point of order such as that.
  Mr. Rees: If I may perhaps deal with the subject of the debate—[Interruption.] If I may—
  Mr. D. N. Campbell-Savours: Where is the right hon. and learned Gentleman's integrity?
  Mr. Rees: I shall not accept lessons in integrity from the hon. Member for Workington (Mr. Campbell-Savours).
  Mr. Campbell-Savours: On a point of order, Mr. Speaker. Is not the record clear? Is it not laid out in the Official Report, which is there on the Opposition Dispatch Box? Is it not clear that the Chief Secretary knows precisely what the House demands of him? We are asking him to withdraw a statement that he made and that he knows is completely untrue. If he is a man of integrity, why does he not make a withdrawal, which will take only seconds, and allow the debate to continue? I assure him that we intend to keep on pressing him until we get it. The debate rests in his hands.
  Mr. Speaker: Order. I say again that it is not a matter for me; it is a matter for debate.
  Mr. Rees: It may be that right hon. and hon. Members on the Labour Benches did not hear accurately what I said. I suggest that they wait and read in Hansard tomorrow—[HON. MEMBERS: "No".] If they wait until tomorrow they will find that I have entirely accepted the reassurance offered by the right hon. Member for Sparkbrook. [Interruption.] I do not know why hon. Members are getting so exercised about the matter. I could not possibly be expected to say more.
  Mr. Allen McKay rose—
  Mr. Rees: My hon. Friends are worried about the diversion of time in what should be an important debate. [Interruption.] I have already—
  Mr. McKay: On a point of order, Mr. Speaker. I want to be helpful. Is it within your power or jurisdiction to ask now for a transcript from Hansard so that we and the right hon. and learned Gentleman may be sure what was said? If it is shown that he said what we believe he said, it is up to him to apologise. Is it within your jurisdiction to ask for that?
  Mr. Speaker: Even if it were within my jurisdiction, the hon. Gentleman will understand that it would be drawing me into the debate, and that is not my function.
  Mr. Rees: I am very happy to say — [HON. MEMBERS: "Withdraw".] I hope that the House will at least
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  allow me to say what I want to say. I made it very clear about 10 minutes ago that, on the reassurance of the right hon. Member for Sparkbrook, I withdrew my remarks. [Interruption.] Further than that, I do not see what I can honourably be required to do. [Interruption.] If there is any doubt about it, I suggest that right hon. and hon. Members would do well to check the matter in Hansard. I hope that I have now made it absolutely clear that I said — [Interruption.]—that on the reassurance of the right hon. Member for Sparkbrook I was very happy to withdraw my remarks. I said that 10 minutes ago. Labour Members must be very short of issues to debate, if I may say so, if they choose to ignore what I said and to engineer a slightly frivolous encounter.
  Mr. Dennis Skinner: Come on, withdraw.
  Mr. Rees: I have now said three times, if not four, that I withdraw. I cannot reasonably be expected to say more. Other right hon. and hon. Gentlemen are being deprived of the chance to contribute to what I believe is an important debate. [Interruption.]
  Mr. Speaker: I think I should say to the House that a large number of right hon. and hon. Members are seeking to take part in the debate. It will be impossible for me to call them if the Chief Secretary is unable to continue his speech.
  Mr. Skinner: On a point of order, Mr. Speaker. Without wanting to get too deeply involved in what has occurred, but just for future reference, will you explain why, on one recent occasion when I was asked to withdraw a statement when I called the SDP leader a pompous sod and I gratuitously withdrew half of it, I was told by you that I had to withdraw the lot or nothing at all, and that if I did not I would have to go out of the door and take an early bath? Why is that ruling not being applied to the Chief Secretary?
  Mr. Speaker: The hon. Gentleman knows the answer. He used two words that are unparliamentary. The Chief Secretary has not used any words that are unparliamentary.
  Mr. Roland Boyes: On a point of order, Mr. Speaker. When my hon. Friend the Member for Bolsover (Mr. Skinner) called the SDP leader a pompous sod, that was a matter of opinion—
  Mr. Speaker: Order. Let us not pursue past history.
  Mr. Boyes: My hon. Friend the Member for Bolsover had a personal opinion about an individual, but what the Chief Secretary said is a matter of fact. What he said is wrong, and that is the difference. If the words had been used by my hon. Friend the Member for Bolsover (Mr. Skinner) I do not doubt that by now he would have been on his bike down the road. The words were said by a senior Minister. He should be asked to withdraw unreservedly, to apologise, and then resign.
  Mr. Speaker: So that we may now make progress, let me assure the hon. Member for Houghton and Washington (Mr. Boyes)—I am sure that he knows this as well as anyone—that to me, it matters not whether it is a senior Minister or a Back Bencher; the same rules apply to everyone. However, the situation as explained by the hon. Member for Houghton and Washington is entirely different. This is a matter of debate. No unparliamentary words have been used. I distinctly heard—I am sure that the whole House heard—the Chief Secretary say on

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  several occasions that he withdrew the remark—[HON. MEMBERS: "No."] I heard him say it. I do not know what else the right hon. and learned Gentleman can do.
  Mr. Neil Hamilton: On a point of order, Mr. Speaker. Might it be for the convenience of the House if I quoted what the Labour party said in its manifesto on this issue, which will bear out—
  Mr. Speaker: Order. If the hon. Member catches the eye of the Chair later, he will be able to do that.
  Mr. Sheerman: On a point of order, Mr. Speaker. I came to the debate because I thought it important to hear the Chief Secretary's speech. Only one person in this Chamber is obstructing that process, and that is the Chief Secretary who will not conform to what you, Mr. Speaker, said—namely, that he should withdraw the remark that he made. If he does that, the proceedings will continue, but my hon. Friends and I cannot allow them to continue unless he withdraws the remark.
  Hon. Members: Shame.
  Mr. Speaker: Order. I hope that that was not a threat. I did not ask the Chief Secretary to withdraw anything. That is not my role in this instance. I said that I heard him say that he had withdrawn, and that is a matter of the record.
  Mr. Rees: Perhaps I may now revert to the main theme of the debate—[HON. MEMBERS: "No."]—and to the Government's economic strategy, which was clearly outlined in the days of Opposition before 1979, which was restated after the election of that year and in all subsequent years and which has been consistently followed.
  In brief, the Government's overriding objective is to establish a healthy, flexible and dynamic economy from which real sustainable jobs will come and which alone can finance our public expenditure commitments, whether in health, social security or education. We must get to the roots of the unemployment problem rather than treat only the symptoms of our condition.
  Mr. Sheerman: On a point of order, Mr. Speaker. I cannot allow this to continue — [HON. MEMBERS: "Sit down."] — without asking you whether the Chief Secretary will assure the House that he will examine the Official Report and make a statement after having done so. If he gives that assurance, he may be assured that most of my hon. Friends will discontinue our points of order—[Interruption.] May we be assured that a statement will be made about what was said, once the Official Report has been examined?
  Mr. Peter Rees: I shall continue to deal with the Government's economic policies — [HON. MEMBERS: "No."] Our overriding objective is to establish a healthy, flexible and dynamic economy from which real sustainable jobs will come and which alone can finance our public expenditure commitments, whether in health, social security or education. We must get to the roots of the unemployment problem rather than treat only the symptoms of our condition. Real sustainable jobs are generated by a dynamic, flexible economy. An economy debilitated for two decades or more could not be expected to generate jobs on the scale required or the resources for all the good things that hon. Members on both sides of the House want for the country.
  It is no accident that countries that have performed best and have produced the highest standards of living for their
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  people are those in which the economy has not been overburdened, overtaxed and overstretched. The twin themes of our strategy were set out in 1980 and I hope the House will forgive me if I restate them.
  The first is the continued reduction of inflation. That in turn involves unrelenting concern with public expenditure and borrowing. The second is to ensure that the economy in all its aspects, but particularly the labour market, is working as smoothly and effectively as possible. Hence our concern with supply side measures, some of which may seem small but which, in the aggregate, are important, and I shall deal with both.
  My right hon. Friend announced yesterday that the public sector borrowing requirement for 1985–86 should be £7 billion. That is the same figure as we announced last year and the same percentage of the gross domestic product, 2 per cent. Siren voices will whisper that we could support a higher figure and that other countries do. Events in past months demonstrate that the markets still view warily, even though we may feel that such wariness is unjustified, this country's economic performance. Thus, I hope that, on reflection, the House and the country will see some virtue, as we do, in consistency.
  Some might regard that consistency as being of a somewhat austere kind, but we see some virtue in a lower figure than might be advocated by some. They will feel, in particular, that while oil revenues are at their peak, there is a case for reducing public sector borrowing. The right hon. Member for Sparkbrook argued for a public sector borrowing requirement of something over £10 billion; if I have that wrong, he will correct me.
  The right hon. Member for Glasgow, Hillhead (Mr. Jenkins)—we are pleased to see him back in our debates — who is perhaps the most distinguished economic spokesman for the SDP and Liberal parties, will, I hope, support us in that, as his claim to fame as Chancellor of the Exchequer was that he produced a balanced Budget in 1969, and we remember that with admiration.
  To the right hon. Member for Sparkbrook, I quote what his right hon. Friend the Member for Leeds, East (Mr. Healey) said in November 1976:
  "We must, therefore, aim at a steady and continuous reduction in the size of our PSBR". — [Official Report, 30 November 1976; Vol. 921, c. 716–7.]
  The right hon. Member for Sparkbrook, if he is anxious about that, might wish to look at the Official Report for that date. I hope that he will be courteous enough to check the quotation.
  Underlying the amount of our borrowing requirement lies the question of public expenditure. We have recently debated the public expenditure White Paper. I said then, and I repeat, that the containment of public expenditure is, and will, I suspect, always remain a continuing, arduous and thankless task.
  Even when inflation falls faster than expected, which it did between 1981 and 1983, and even when the gross domestic product grows faster than expected, the problems remain. In an elective democracy, the pressures for more expenditure are there the whole time. The pressures to improve the National Health Service, to add to the social security programme and to extend local government services, to name but some of the areas of sensitivity, will always be likely, if unchecked, to outrun the resources that we can make available.
  In the debate on the public expenditure White Paper, and in my evidence to the Select Committee on the

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  Treasury and Civil Service, I emphasised that circumstances had altered since the material for the White Paper had been brought together before Christmas. I emphasised then that public expenditure, borrowing and revenues would have to be considered again at Budget time. I instanced—and was much pressed on—the cost of the coal strike. Even now, the costs for 1984–85 are difficult to quantify with absolute precision, but they are likely to be, as my right hon. Friend stated yesterday, about £2·5 billion, and there will be some further cost in 1985–86.
  Beyond that, the turbulence of the last few months, which no deftness of touch could have stilled, developments in the exchange markets and in interest rates, which will temporarily feed through into the retail price index, have affected our calculations. All in all, for the current year there is likely to be an overrun of the borrowing requirement of £3·25 billion, and a public expenditure overrun of nearly £3·5 billion. To bring public expenditure back on to the path set out in January's White Paper would involve, therefore, an extremely large real decline, if one compares the balance for 1985–86 with the likely outturn of 1984–85. I must again emphasise that the pressures that I have outlined will continue.
  Despite those uncertainties, and so that our position should be seen in its true perspective, I can tell the House that we have succeeded in holding expenditure to central Government cash limits. The pressures on programmes which are not subject to cash limits remain intense. We have been much pressed by commentators, not least by the Treasury Select Committee, that our figures should eschew optimism and be firmly realistic. On that basis, and recognising the events of this year and the continuing pressures that I have outlined, we decided to add £2 billion to the reserve, and so the planning total for each of the three years covered by the White Paper. In short, we decided to build up the reserve to ensure that it is adequate to cope with unexpected developments.
  The decision represents no change in the Government's policies of public expenditure. Planned expenditure has been falling as a proportion of GDP since 1981–82. The fall is planned to continue. Spending will be held constant in real terms while the economy continues to grow. However, I must emphasise that that pattern will still require consistent restraint.
  Our decision certainly does not offer a soft option on public expenditure. Cash limits must hold as they have held hitherto. In the public expenditure survey for future years there can be no relaxation of our approach to this crucial aspect of our economic policies. I hope that the good sense and realism of the decision to add to the reserve will commend itself to all thinking Members of the House and the public.
  Indeed, I recall with pleasure and admiration the words of the right hon. Member for Sparkbrook to the Ruskin Fellowship on 15 May 1984. He said:
  "The assertion that a massive increase in effective demand would be a certain and automatic remedy"
  to unemployment
  "is no longer convincing … There can be no dash for growth."
  He will recall and, if need be, repeat those wise words. Now, the right hon. Gentleman and his hon. Friends assert that they want a dash for growth, and that my right hon. Friend's Budget is not a Budget for jobs. First, there is no evidence of a lack of demand.
  Mr. Terence Higgins: Will my right hon. and learned Friend explain the terminology "reserve" that he and the Chancellor of the Exchequer have been using? Previously, it has normally been known as the contingency reserve, and I am not sure whether he is referring to that. Secondly, he referred to £2 billion in each of the three years. I understand that the interest charges which are not included in the planning total, contrary to the advice of the Select Committee, are expected to be higher. Will he tell us how much higher they will be?
  Mr. Rees: My right hon. Friend follows these matters closely and knows that the reserve covers both contingencies and overruns in the estimation of demand-led programmes. Therefore, it is more accurately described as a reserve. He is right that an additional figure will be included for debt interest, which will be £500 million.
  Mr. Higgins: Each year.
  Mr. Rees: I return to the point made by the right hon. Member for Sparkbrook, today and by the right hon. Member for Islwyn (Mr. Kinnock) yesterday. There is no evidence of a lack of demand. Retail sales have increased by 5 per cent. in the three months to February 1985 compared with a year ago, business investment increased by 12 per cent. in 1984, manufacturing investment by 13 per cent. in 1984, and investment in the construction and service industries by 12 per cent. That does not bear out the right hon. Gentleman's point that there is a shortage of demand.
  We must analyse the problem of unemployment more coolly and with less rhetoric. The population of working age increased in the 12 months to September 1984 by 450,000. In the same period, 390,000 extra jobs were created. Opposition Members may say that that is not fast enough, but it is a travesty of the truth to say that the economy is not responding to our measures. The right hon. Member for Sparkbrook is, therefore, right to approve the adjustments to the national insurance contributions and the abolition of the national insurance surcharge last year. However, by implication, he will surely admit that some of our measures will create the right climate for increased jobs.
  Mr. Jack Straw: Since the Chancellor of the Exchequer yesterday described the Budget as a Budget for jobs, and as I anticipate that the Chief Secretary will confirm that the Treasury calculated that these measures would lead to an increase in jobs, will he now tell the House the estimated number of jobs that these measures will produce?
  Mr. Rees: No, Sir. We do not take a mechanistic view of the economy, as the hon. Gentleman appears to do.
  Mr. Straw: One hundred thousand? One million?
  Mr. Rees: No, we are calculating, as the Treasury press release made clear yesterday, that 150,000 extra jobs will be created over two years, as a result of the addition to the youth training scheme and the increase in the community programme, and 200,000 by the spring of 1988. That is a provisional calculation. I hope that on the more general measures I shall demonstrate that we hope that there will be a climate which will create jobs. We cannot make a precise calculation.
  Mr. Dave Nellist: The figures that the right hon. and learned Gentleman gave are a

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  cosmetic fiddling of the dole figures. They represent the people who will be taken off the 3·25 million unemployed list and transferred to schemes. It does not answer my hon. Friend's question about how many jobs the Chief Secretary expects the measures to create. If the answer is 200,000, as has been floated in the press, what will the Chief Secretary tell the remaining 4 million people who will not get jobs from the Budget?
  Mr. Rees: The hon. Gentleman cannot have listened closely to my answer, which was that the general fiscal and insurance contribution measures make it impossible to calculate the figure. After all, they are creating a different climate, and opportunities and incentives. We cannot give a figure with scientific accuracy. I gave the estimation of the increase in jobs—that is, the number of people who would be taken off the unemployment figures through YTS and the community programme measures. I hope that that will satisfy the hon. Gentleman.
  Mr. Peter Pike rose—
  Mr. Rees: I shall not give way, but shall press on.
  I now turn to the tax and other measures in my right hon. Friend's Budget. We inherited a tax system which reflected all the Socialist prejudices of the previous Government. Today the right hon. Member for Sparkbrook said that we all believed in tax cuts. However, within the past fortnight he told us that he proposed to reintroduce the penal tax rates that prevailed in 1979. I remind the House that income tax rates were rising to 98 and 83 per cent. Since he suggested that he would abolish the upper earnings limit for the employees' contribution right up the scale, I hope that he will confirm that he is contemplating a top rate of income tax of about 91 or 92 per cent. It may be that I misunderstand his calculations, but that seems to follow from what he said.
  Mr. Hattersley: I had determined not to interrupt the right hon. and learned Gentleman but to leave him alone in his glory. While some of my hon. Friends may forgive him for misquoting me from a debate five years ago, it is a little more difficult to forgive him for misquoting me from today's debate. He is describing policies which half an hour ago I said categorically were not mine nor my party's.
  Mr. Rees: I am sorry if I misunderstood his policy. Because his speech was so devoid of any sign of his policies, I had to glean them from his shadow budget.
  Mr. Hattersley: He reads the Daily Mail.
  Mr. Rees: If the right hon. Gentleman is now retracting what he said and is saying that the Daily Mail misreported him, I accept that. He also held a press conference. Is he now saying that he will not abolish the upper earnings limit for the employees' contribution? [Interruption.] The right hon. Gentleman would. Presumably it would have to be superimposed on the top rate of income tax that he has in his sights. I understood the right hon. Gentleman to say that he would reimpose all the tax burdens that we have painfully dismantled since 1979. There may now be a slightly different edge to his policies, but it is difficult for the House to weigh contributions from Opposition right hon. and hon. Members because they have not been free with their policy thoughts. They should perhaps take the House into their confidence.
  All that the Opposition propose is in the name of redistribution. I describe it as a rage to destroy, because
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  any redistribution that they contemplate seems to be in favour of the state. In a different sense, redistribution has taken place under this Government but more positively. Dare I touch on this sensitive subject again? It has been by the sale of council houses at a discount, by employee buy-outs — the National Freight Corporation offers a good example — by more generous share incentive schemes, and by public participation in privatisation measures. Those redistribution measures are critical and important to ensure the proper diffusion of wealth in our society. I contrast them with the prejudiced contributions of the Opposition.
  It apparently has not occurred to the right hon. Member for Sparkbrook — at least he did not mention it in his speech — and his right hon. and hon. Friends that one conspicuous reason for the poor performance of the United Kingdom economy in the decades before 1979 was that the tax system accurately reflected their prejudices. It was designed to discourage incentive, risk-taking, and the accumulation of savings, it drained companies of resources and it diminished the availability of capital for productive enterprise. In short, it was calculated to reproduce here the rigidities and failures of the east European economies.
  We are trying to fashion a tax system in harmony with the needs of the 20th century, the needs of a more effective economy and the needs of a more mobile and enterprising society. It involves a process of tax reform and tax reduction. The speed at which we can move must depend in part on the ingenuity which we can show, but also on the resources which we can command — which in turn will depend on the containment of public expenditure.
  Last year, building on the achievements of my right hon. and learned Friend the Foreign Secretary, we initiated far-reaching reforms of corporate taxation, which will bring pre-tax and post-tax profits closer into line and which are designed to encourage profitable investment. Inevitably there are areas that need to be reviewed. That is why businesses are to be given the option of depooling short-life assets so that they can receive a balancing allowance if disposed of at less than written down value. That is why the scientific research allowance has been retained at 100 per cent.
  Personal taxation is at the same time more intricate and, in view of the numbers of taxpayers involved, more costly to reform and more difficult to administer. My right hon. Friend has said that our intention is to publish a Green Paper covering a number of possible ways of reforming personal taxation which we should like to consider following the time when the Revenue has computerised the administration of PAYE. I should emphasise the massive scale of this computerisation exercise which is the largest in Europe and possibly in the world. It will affect somewhat more than 20 million taxpayers directly or indirectly. We believe that it would be folly to contemplate fundamental tax reforms before that great administrative measure is properly in place and working smoothly, but we must plan against that date.
  One option in those reforms that we particularly favour — the fully transferable allowance — would end I he discrimination between one-earner and two-earner married couples. The new structure would give a relatively higher allowance to married men supporting families. It would give married women equality and the possibility of complete privacy and independence in their tax affairs. It would overall be a more rational and comprehensible

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  system, better adjusted to the personal aspirations and economic needs of our time. In case any hon. Gentleman should suggest that we should go for a system of fully separate personal taxation, rather than transferable allowances, I will confess, without embarrassment, to a Tory prejudice. We believe that the tax system should recognise the special status of marriage.
  As I have said, the need for consultation and detailed planning means that a new system cannot be in place until 1990, although we intend to legislate in 1987.
  Mr. Fred Silvester: One of the disappointing aspects of this part of the package is the delay. As we have already had a Green Paper on the options available for the taxation of married women, why can we not now have a White Paper, which would clearly set out the Government's conclusions, rather than a Green Paper, which implies that the decisions set out in the press release are not final, and that the whole matter is still in the melting pot?
  Mr. Rees: I understand my hon. Friend's point, but the Green Paper will set out our views. We shall not leave the public or the House in doubt about them. As I said, as these administrative problems must be faced first and therefore legislation is some time ahead, it is right that we should consult fairly widely to take the mind of the country on this important reform of personal taxation which will follow the reform of corporate taxation initiated last year.
  In the meantime—I hope that this will command the support of the whole House — we have decided to concentrate resources on increasing the threshold of income tax. The resources are not inconsiderable—£1·5 billion in 1985–86 and £1,870 million in a full year. If the House wishes to know the figure, the cost above mere indexation is £730 million for 1985–86 and £910 million for a full year.
  That is a real increase in the basic personal allowances for the fourth successive year. Thresholds will now be over 20 per cent. higher in real terms compared with 1978–79. Part of our long-term programme is to raise the starting point for income tax progressively and to reduce the burden of direct taxation.
  It is a measure completely compatible with our economic strategy. It will take some 800,000 taxpayers out of tax. It will help the unemployment trap. It will improve real take-home pay. It should encourage working people to accept lower pay increases. It should, in short, improve incentives for the individual and the competitive position of business, apart from the supply side consequences which will not be negligible. It will give the greatest proportionate benefit to the lower paid.
  I hope that the hon. Member for Thurrock (Dr. McDonald), who I think is to reply, will have the grace to acknowledge the advantages of that measure, to which the right hon. Member for Sparkbrook did not refer at any length.
  In parallel with our proposals on the income tax thresholds are the reforms we shall bring forward to the structure of employee and employer National Insurance contributions. This radical restructuring will encourage employers to take on young people and unskilled workers and give them an incentive to take jobs at wages that employers can afford. Almost 1 million families with
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  children will benefit, including 300,000 with family earnings under £90 a week. That is not a negligible achievement.
  Since the employment statistics show that self-employment provides an increasing source of new jobs, it is right that we should turn our attention to that sector of the market. Sub-contracting, for example, not only in the public sector, but by the larger public companies, will, we believe, depend on an increasing class of self-employed. It is right therefore that the structure of our tax and national insurance system should recognise and foster this trend. The reduction of class 2 contributions and the introduction of tax relief on half class 4 contributions, which recognise a long felt grievance of the self-employed, will encourage the contribution that self-employment is making and has progressively to make to the economy.
  Again in regard to reform I commend to the House the abolition of yet another tax, development land tax. We recall the circumstances which led to its introduction which, I hope, will not be reproduced at any rate under this Administration. The reasons for repeal will, I hope, be recognised and approved. Apart from the pleasure of removing over 200 pages of legislation of formidable complexity from the statute book, the repeal will, I hope, release a flow of projects which will do more for housing, or for the infrastructure, than any uncritical application of public moneys.
  I revert to the basic themes of the Government's economic policies. The public expenditure measures, and the fiscal measures which are their counterpart, are designed to make for a smoother working and expanding economy from which profits, investment and jobs will flow. Let us not under-estimate what has been achieved already. The unemployment figures remain obstinately high, but employment is increasing.
  Let me record that in 1984 company registrations reached a record level of 100,000. Let me record that retail sales were up by 4 per cent. in 1984. Let me record that construction industry output was up by 3 per cent. in 1984. Let me record that exports in manufactures were up by 10·5 per cent. last year. Let me record that the country's current account has been in surplus for five successive years. Let me record that total investment is at an all-time high.
  Without an atom of complacency we can point to results achieved so far. It may be objected that this is a cautious Budget. I would not object to that, but there is a time for caution and a time for boldness. It is an imaginative Budget. It is a Budget which is part of a coherent, consistent and successful strategy. It is part of a strategy that we intend to see through. It is part of a strategy that was clearly put to the country and overwhelmingly endorsed both in 1979 and in 1983. It is a Budget that I have no hesitation in commending to the House.
  5.12 pm
  Mr. Richard Wainwright: The Budget speech yesterday, in sharp contrast to the performance of the Chief Secretary today, was briskly lucid. I am afraid that I cannot join those who have said that the record brevity of the Chancellor's speech was cause for congratulation. If hon. Members encourage Chancellors to be ever more brief when they make their Budget statement we shall encourage assertion, of which there was a great deal yesterday, rather than argument, which always takes

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  longer, and we shall be allowing Chancellors to skate over matters which embarrass them but ought to concern the House greatly.
  For instance, it has already been said to me, from outside the House, that yesterday the Chancellor made no serious reference to the consequences for the general national economy of the £3·25 billion overshoot in the public sector borrowing requirement during the current year. He regretted it but he did not explain all the horrors that presumably, in view of his stance on economic affairs, must follow from it. The people who have complained about the lack of reference to that have reminded me that last year, when various hon. Members on both sides of the House recommended a PSBR of approximately the size that it is turning out to be, they were told that they would be unleashing all kinds of evil things on the economy and that they ought to be ashamed of themselves and should know better. The Chancellor owed the House — I hope the Financial Secretary will repair the omission tonight — some explanation of what the Government consider has happened because of the very large overshoot.
  Mr. John Townend: Now that, by accident of the miners' strike, the hon. Gentleman has got the PSBR that he required, can he tell us why we have not got the jobs? Will he not accept that one reason for high interest rates is because we have overshot the PSBR?
  Mr. Wainwright: It never astonishes me when the hon. Member for Bridlington (Mr. Townend) completely misses the point. There was no suggestion that any critics in the House of last year's Budget would have spent the extra PSBR on costly oil imports or on anything of that sort. I simply made the point that the House is entitled to know what the Government think are the main economic consequences of such a large overshoot in the PSBR.
  Another matter on which we should have had a paragraph from the Chancellor — again I hope the omission will be repaired this evening because I am sure the Financial Secretary can do so—is the possibility of a substantial fall in the dollar, which is a preoccupation of everybody round the world who watches the financial scene. We should have been told what preparations in outline the Chancellor has for dealing with a marked change in the exchange rate, which the majority of commentators think will happen during the current year.
  The main omission was any explanation of the single sentence in which the Chancellor said:
  "At the same time, I have further increased the estimate for debt interest in each year."—[Official Report, 19 March 1985; Vol. 75, c. 791.]
  It is common ground that one of the great virtues of all the ceremony, fuss and attention that our annual Budget receives is that it is an opportunity for the Government to make a major signal to all the business, financial and economic interests of the nation as to their intentions for the coming year. That is a valuable opportunity which justifies much of the special concentration on the Budget speech.
  The speech yesterday contained very little by way of signal. On future interest rates the indications were very definitely confusing. Clearly the whole purpose of the Chancellor's main Budget judgment was to try to ease interest rates down as quickly as possible—an ambition that all of us would applaud. Indeed, if we do not get back to single digit base rates fairly soon, there will be a bleak outlook for investment and other capital expenditure.
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  Having indicated that a reduction in interest rates was one of his prime aims, the Chancellor then inserted the throw-away sentence that in regard to Government interest he has most exceptionally altered his public expenditure White Paper, on which the ink is scarcely dry, and has increased the estimate for debt interest in each year. Surely the House is owed an explanation of that remarkable change but, of course, it has not had it.
  By fairly common consent this is the toughest Budget for, at any rate, four years. What is the nation to receive in response for putting up with this austerity? The Budget, for all its severity and, no doubt, the courage required to introduce such a disappointing Budget to one's own side of the House, will not attack the heart either of the twin evils of rising, prolonged unemployment or deep family poverty. It is by those two tests that we on the alliance Benches at any rate, and I guess most hon. Members, want to judge the Budget.
  On unemployment, may I plead with the Government to be a little more refined and, indeed, more accurate in their reports on jobs? At the moment it is clearly Government policy to treat even a part-time job as a full-time job for the purposes of their returns to the House and their statements. It is dishonest, unhelpful and greatly misleading to treat part-time jobs in that way.
  I am sure that all hon. Members are familiar with manpower statistics in business and other spheres, in which a part-time job is meticulously recorded as half a job or three quarters of a job. However, in the last year or two, in the Government's language any job which has brought the employee to the notice of national insurance staff is simply recorded as a job, and the unspoken implication is that it is full-time. Any stimulus which the Government's general measures give to employment as a result of this Budget will largely be in respect of part-time jobs.
  I regret to say that the interesting and admirably intended restructuring of national insurance will not overwhelmingly benefit those who are genuinely low paid for a full week's work, but will immensely add to the attractions for employers to take on part-timers. Such people are often quite well paid if one takes account of the modest hours that they work. In general, there has in recent years been a marked trend, with Government encouragement, for employers to move over to a part-time work force. That is not a satisfactory answer to the real hard core of the unemployment problem.
  As to deep poverty — usually family poverty — the lifting of thresholds, although pleasant and admirable for taxpayers, sidesteps the real problem. A very modest bonus for the generality of taxpayers, especially those earning up to £13,000 a year, is an extraordinarily expensive way of scattering largesse and means that only a few crumbs will reach the really poor.
  The alliance parties would have considered two measures as much preferable to the indiscriminate raising of thresholds for every taxpayer, especially in a year such as this. We would have preferred a broad increase in the scope of family income supplement. That is a Conservative measure in origin, although we know that no one loves it very much. Yet for all its crudity and the means testing that it involves, it permits meaningful amounts of cash to go into the hands of households where the money is desperately needed. In cost benefit terms, FIS is the quickest and most direct way of relieving, although not curing, deep family poverty.
  Mr. Andrew F. Bennett: Does not the hon. Gentleman accept that it makes the poverty trap that much more acute?
  Mr. Wainwright: It makes the poverty trap wider but more shallow. I am not advocating FIS as a great reform to last for all time. I am simply explaining how deep poverty could be relieved at a time of great economic stringency at relatively modest cost. In fact, the two measures that I am advocating would cost the Exchequer less than the proposed increase in thresholds.
  The other attack on poverty was rightly mentioned by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who referred to the long-term unemployed whose clothing and household requirements have worn out and who should, at long last, be entitled to the full long-term supplementary benefit rate. The alliance parties along with others have pressed for that for many years.
  Those are our two alternatives to the raising of the thresholds, although we look forward to better years under better financial management when the thresholds can be raised very considerably indeed.
  Some taxes are not required to go into a Budget. They are never the subject of a Budget resolution, and need never receive the explicit sanction of the House of Commons. I refer to the deliberate increase in taxation which this Government levy through their powers over the nationalised industries. Nothing which has been done by way of raising thresholds or anything else will compensate poor households for the recent average 4·5 per cent. increase in gas prices and the coming 4·3 per cent. increase in electricity prices. Neither industry regards those increases as necessary for its own purposes, but they have been forced upon them by the excessively stringent external financing limits imposed by Government. Also on the horizon is an average 12 per cent. increase in water rates, as well as various other increases in official charges.
  At this point I wish to welcome two measures which are not all that modest. The first, which it is estimated will bring benefits of about £300 million a year to British industry, is the Government's welcome change of heart on capital allowances for short life assets in industry and commerce. Last year, alliance Members pleaded with the Government, both in Committee and on Report, pointing out that their reducing balance method of writing down would cripple those who use machinery with a short life cycle. We were thinking of machinery which quickly became obsolete in fast-developing technology or which wore out quickly because of the strenuous tasks it had to perform. I congratulate the Treasury on a most ingenious method—apart from the unfortunate term "depooling"—which puts it well ahead of the accountancy profession and top of the league for fiscal ingenuity.
  The other welcome part of the Budget is the long overdue reduction from seven to five years in the length of time that an employee, under an approved scheme, must keep his or her shares intact in order to get full tax relief. Seven years has seemed an age to middle-aged workers, and in many cases made the schemes sound scarcely worth while. Five years is much more realistic, and I am glad that the Government have come round to that view.
  The national insurance contribution has for long been conveniently excluded from Budgets because it was a kind of crude poll tax which no Government wanted to advertise. It is, however, a source of enormous annual revenue. I congratulate the Chancellor on bringing it
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  frankly and openly into the Budget statement and on making a start on restructuring. This is only experimental, and involves severe traps at £55 and £90. It will make pay increases of practically negligible value unless they are in the order of £6 or £7 a week or more, but that is unusual in poorly paid occupations. This will place a severe burden on the admirable, dynamic, high technology firms that employ highly paid staffs.
  For example, if a boffin is paid £20,000 a year, the employer will have to fork out another £730 a year as the employment cost of keeping that person on the payroll. The employment cost for a man on £20,000 a year will become no less than £2,090 simply by way of national insurance contribution. I realise that the money must be found somewhere, but I doubt whether that part of the experiment will survive for very long.
  In the longer term, one must ask why our benefits and pensions have to be paid for by, of all things, a payroll tax. Why are jobs singled out to be the subject of taxation for financing benefits and pensions? There is no longer any logic in the system. It belongs to the era before the two world wars. It needs to be looked at root and branch, and I am glad that the examination has at least been started.
  As people are gradually coming to realise, this is the year in which it is likely that our North sea oil value of production will be at its peak. We should be thinking, as many people already are, about how the country will pay for its imports and other necessities when the oil ceases to provide any export value to our balance of payments. I am bound to say, with a heavy heart, that I cannot see any measure in the Budget which will assist our other industries and services to fill the enormous gap that looms ahead, and to make up for the loss of our oil exports and revenues. I hope that I am wrong, but nothing has yet shown that the Government are tackling that matter with either the resolution or the flexibility that is required.
  5.31 pm
  Mr. Francis Pym: For a number of years, both while I was a Minister and since, like the hon. Member for Colne Valley (Mr. Wainwright), I had the strongest reservations about the wisdom of the Government artificially raising energy prices and water charges. However, although the hon. Gentleman criticised that policy, he did not make any alternative suggestions as to where the additional income would come from.
  I congratulate my right hon. Friend the Chancellor on his presentation. His was one of the best-constructed Budget speeches that I have ever heard, and it was remarkably concise. The contrast with the speech of the Leader of the Opposition yesterday, and that by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), the deputy leader of the Labour party, is striking, to say the least.
  The proposals that my right hon. Friend announced yesterday have so far attracted predictable reactions both within and outside the House. It is fair to say that on the Conservative Benches the response has been more one of muted welcome than of positive enthusiasm.
  Many of my right hon. Friend's measures clearly command broad support, and quite rightly so. The reduction in national insurance contributions at the lower end, the raising of income tax thresholds, the extension of the youth training scheme and of the community programme, the measures to help small businesses and the self-employed, and the prospect of a future convergence

  897
  of the tax and benefits systems are all to be welcomed warmly. There is nothing in the Budget to which exception can sensibly be taken and much in it that is highly commendable.
  However, there is a world of difference between avoiding a bad Budget, which this most certainly is not, and producing a really good one. The proposals need to be judged not only on what they contain but on what they do not contain. The fundamental question is whether this Budget, and the whole economic and industrial approach of the Government, add up to a coherent strategy that will encourage the sustained growth of our economy and the prosperity of all our people in the future.
  My right hon. Friend the Chancellor took as his theme "a Budget for jobs". Within the context of his viewpoint, that is what it amounts to. However, for those who take a broader view of the role of Government and see a more positive scope for their action, it is not that. It is a Budget that will do a certain amount to remove disincentives to employment, and that is obviously essential, but it does not look like a Budget that has been conceived with the stimulation of employment on a substantial scale as its main objective. If it had been, the first requirement would have been the rewriting of the medium term financial plan and an increase in the PSBR.
  I find it extraordinary that my right hon. Friend the Chancellor takes a rigid attitude to the PSBR, protesting that the slightest increase would wreck everything. His assertion that increased borrowing would fuel inflation is not borne out by the facts. He has announced an overshoot of £3 billion, a fact that appears to have no impact on inflation. I find it ironic to speculate that, had the Government chosen to recoup the cost of the miners' strike by passing it on to the consumer, that course of action would have been inflationary. By absorbing the cost into Government spending, the Government have avoided the inflationary effect.
  The fact is that my right hon. Friend the Chancellor is operating within a straitjacket of his own choosing. I very much admire the agility of his performance, but we should be questioning why he has bound himself up in this way in the first place. This straitjacket makes it impossible for him to produce a real "Budget for jobs". His proposals veer in that direction, but they do not go very far.
  In that context, the real question is what the Government's economic policy is, which is not an easy question to answer. The Chancellor has announced, as is customary, the Treasury's forecast of the immediate economic outlook, but he has not amplified that to give us his assessment of the problems that confront our economy over the coming years, or provided us with a strategy to meet them.
  My right hon. Friend has given us a modern version of "1066 and All That"—a world of good things and bad things. Inflation is a bad thing. Cutting taxes is a good thing. Public expenditure is a bad thing. Monetary control is a good thing. Unemployment is a bad thing, but it is clearly a better thing than borrowing money. In fact, borrowing money for any purpose is the worst thing of all. In consequence, we have a Budget that picks its way, with my right hon. Friend's great skill, through a landscape dominated by fear of the bogey man of borrowing. Its principal flaw is that responsible financial management, however necessary, does not in itself constitute an economic strategy. To me, the lack of such a strategy is the glaring gap.
  898
  As the starting point for a proper strategy, both sides of the House would do well to stop debating what factors have contributed to the present position, and to look with fresh eyes at where we are now and where we should be going. Trying to apportion blame between the so-called years of profligacy, the so-called over-deflationary policies of the Government and the effect of the world recession is ultimately a fruitless exercise. It is the future that matters. We need to look anew at the present and the future and we should take into account three main factors — growth in output, international competitiveness and unemployment.
  Thank goodness we now have some growth. No one pretends that it is enough, and it still has not returned us to the level of output of 1979. Everything that we want to achieve for our country is dependent on attaining a high and sustained level of growth. That will be difficult enough anyway, but all the more so against the background of a progressive fall in oil revenue.
  The level of growth that we need will not be achieved without an improvement in our competitiveness. We have made gains in productivity, but most other major countries have made bigger strides than we have. We are no more competitive today than we were six years ago, and probably less so. We still have a lot of progress to make.
  The third major factor is unemployment. Many of us have spoken about the social and human evils of mass unemployment and especially of mass long-term unemployment as it exists in many communities it Britain today. The economic evil is no less immense, and it was good to hear my right hon. Friend acknowledge this.
  A huge proportion of the natural resources of the country are lying to waste, financed by a massive payment that brings no long-term gain to the people, or to the country as a whole. Despite the very welcome rise in the number of people in work, there are no signs that the number of people out of work will fall appreciably, at least for some years to come. To many right hon. and hon. Members it is inconceivable that such an unacceptable situation should not substantially influence the objectives and the strategy of the Government.
  The correct economic objective must surely be that which would be pursued by a company that found itself in the same unfortunate circumstances: to seek growth by simultaneously improving performance in existing areas of business, investing in new areas of business, and making the most of all the resources available.
  The strategy that flows from such objectives should have three main features. First, the achievement of growth and the prospect of new long-term jobs are dependent not only on continuing to improve our performance on the supply side, but on stimulating the demand side. Secondly, improvements on the supply side are dependent on increased levels of investment — especially in new technology, but in other things too — on a further reduction of inflation and of industrial costs, and on a stable exchange rate. Thirdly, the stimulation of demand is dependent on injecting more money into the economy, through increased public sector investment.
  The consequences of such a strategy would be the opportunity for a sustained growth in output, an increasing competitiveness in British industry, and the creation of more jobs both immediately and in the long term. 1 must stress that there is no reason why inflation should rise in consequence—and no reason, in fact, why it should not fall further.

  899
  If such a strategy, or something close to it, lay behind the Government's thinking, I would have hoped and expected that yesterday's Budget would have included all the following features and not just some of them: an increase in Government investment in the public sector, with a consequent increase in the PSBR; incentives to investment in the private sector; a reduction in the cost of employment for both employer and employee; the creation of a major regional aid and development programme, and a programme to make possible far greater mobility of labour—a point mentioned by my right hon. and learned Friend the Chief Secretary; further assistance towards the creation and success of new businesses; and the announcement of a more considered attitude towards the exchange rate.
  When one compares these measures with those announced by my right hon. Friend the Chancellor of the Exchequer, the differences are more substantial than the similarities. For that reason, my fear is that this Budget will not achieve the objectives that my right hon. Friend has set for it. I hope that I may prove to be wrong, but that is what I think. None of my right hon. Friend's changes go in the wrong direction, but few of them go very far in the right direction.
  It seems to me that the time has come to question some of the assumptions that have governed economic policy for the past six years, and to question why British industry is less competitive internationally, despite attempts to make it more competitive. It is time to question why, although the conditions for growth have supposedly been created, the output of manufacturing industry is lower than it was six years ago; and why an increase in company profits has accompanied a decline in investment in manufacturing industry. It is time to question why the control of inflation has not led to much growth, to greater competitiveness or to reduced unemployment.
  My right hon. Friend the Chancellor of the Exchequer assured us yesterday that his Budget was directed towards the continued control of inflation and the reduction of unemployment. Significantly, he added:
  "Nor is there any conflict between these two objectives."—[Official Report, 19 March 1985; Vol. 75, c. 787.]
  But experience to date has been the opposite. The continued control of inflation has been accompanied by an inexorable rise in unemployment. I agree with my right hon. Friend the Chancellor that the two objectives need not conflict, but since — on present policies — they have conflicted, how can one have confidence that they will not continue to do so?
  I do not think that it is unreasonable to ask whether we are any nearer to an answer to our main economic problems than we were six years ago. My answer would be, not much, with the exception of inflation. In that case, surely it is time to look for changes in policy. There seems to be little advantage in reshuffling a pack that has so far, at any rate, failed to produce any aces.
  Mr. John Townend: My right hon. Friend has put forward an alternative policy of increased expenditure on the infrastructure. But are not many of his suggestions those that were carried out by Mr. Mitterrand after being elected to power in France? They resulted in a higher rate of inflation, increased unemployment and in an ultimate volte-face.
  Mr. Pym: No, indeed not. If my hon. Friend reads tomorrow the speech that I have made, he will find that that is certainly not the case. I have argued quite carefully, and I hope reasonably briefly, that it is right to consider an alternative approach on the evidence of the results so far of our present economic policy.
  We all share the objectives that my right hon. Friend the Chancellor of the Exchequer outlined yesterday. What we need is a strategy that will deliver them. My real criticism of the Budget and of economic policy in general is not that it is wrong, but that it is inadequate for the problems that we face and the task in hand.
  5.46 pm
  Mr. Doug Hoyle: The Chief Secretary's speech was marred, although it need not have been if he had had the decency — I do not want to go over what was said before—to apologise properly to the House. Hon. Members might then have listened to him with more rapt attention, but I am not too sure whether his speech would have told us much more.
  The right hon. Member for Cambridgeshire, South-East (Mr. Pym) damned the Budget with faint praise at the beginning of his speech, and then put forward an alternative Budget that would have given the people of this country far more hope. I agree with him that it is time that the Government asked themselves, if their economic strategy is not working after six years, what confidence anyone can have that it will work at all. Yesterday, the Chancellor of the Exchequer forgot to mention that he has presided over the greatest ever fall in the pound and over a great increase in unemployment. According to the Government's figures, unemployment stands at about 3·3 million—
  Mr. Austin Mitchell: After the Government have Tebbitised the figures.
  Mr. Hoyle: In the real world—where it matters—we know that unemployment stands at over 4 million, and is still rising. I agree with my hon. Friend the Member for Great Grimsby (Mr. Mitchell) that the Government have massaged the figures to make them appear to be as low as possible. Nevertheless unemployment is still rising. There has been a lack of investment in British industry and there has been no rise in productivity. But at the same time billions of pounds have gone overseas quite freely. That money should have been invested in British industry. Instead it has been invested in our competitors. Thus, all the time we have been strengthening the economies of Japan and other nations. Their products now compete highly successfully with British products not only in the other nations of the world but in this country. As a result there is even more unemployment.
  There has also been a dramatic rise in interest rates. Therefore, I cannot see any hope of the economy recovering in the next 12 months if the Government's strategy remains one of a little tinkering here and a little tightening of bolts there. Indeed, as my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) has said, not only is there no recovery, but the infrastructure of the nation is still decaying. Not only is there not enough investment in manufacturing industry, there are appalling standards in other vital sectors of the economy, especially education at all levels. Standards in higher education are falling. We are losing the seed corn.

  901
  We have a tatty and tarnished Health Service that is also in decline. It is apparent to the rest of the world, and it is dawning on hon. Members on the Government Benches, that our nation will continue to decline while the Government pursue their current economic strategy.
  The Chancellor's speech yesterday suggests that no lessons have been learned. I was always taught not to look into the crystal ball when I could read the book. The Chancellor prefers to look into the crystal ball because what he sees in the book is too horrible to contemplate. He is not prepared to hold up his hands and say that the Government have been wrong, even though, apart from the reduction in inflation, nothing has improved.
  For the first time, under this Government we face a deficit on our manufacturing trade. If we are not a manufacturing nation we are nothing, yet nothing is being done. We were told that the Government's measures would make us more competitive, leaner and keener. However, they have not done so. As the right hon. Member for Cambridgeshire, South-East said, productivity is no higher now than it was six years ago. Indeed, it is lower.
  Nevertheless, a terrible cost has been paid in the regions of this country for the Government's activities. While listening to the Chancellor's speech yesterday I was wondering what effect the Budget will have on areas such as my own constituency and other areas in the north-west, the north-east and Yorkshire, and on ports such as Grimsby. The answer is that it will have no effect at all on such areas. Indeed, rather than getting better, the situation in such areas will get worse.
  All that the Chancellor said yesterday was that if wage levels were depressed even further, we would in some way become more competitive. He has not learnt a simple economic lesson. Perhaps there should be a primary course for the Prime Minister and the Chancellor in Keynesian economics. The Chancellor is simply depressing purchasing power, when we need a boost to the economy to raise purchasing power.
  Mr. Austin Mitchell: The Prime Minister recently went to the United States to lecture President Reagan and to tell him that he could have our failures instead of his success. Perhaps it would have been better if President Reagan — the only Keynesian economist who does not yet have grey hair — could come here to lecture the Prime Minister about the economy.
  Mr. Hoyle: I have my doubts about President Reagan's hair. However, he has learned better than our Prime Minister how to use the economy, and he has learned how to use a deficit budget. We hear time and time again from the Government Front Bench that we have much to learn from the American economy about the revival of small businesses. We should also learn that the American economy has been revived by pumping purchasing power into it, not by depressing wages. If depressing wages was the answer, Calcutta would be the Mecca for us all, and so would Bangladesh.
  The tragedy of the Government's policies is that they will create a low-technology, low-wage, low-economy society when what we need is a high-technology, high-wage, high-productivity society that looks forward rather than looking back to the 1920s and the 1930s.
  People in the regions are feeling the effects of the Government's policies. One of the things that the
  902
  Government have succeeded in doing is pushing the frontiers of the depressed north even further south. That area now encompasses the west midlands, an area that was once the manufacturing barometer of the nation. In the past, when we were closer to full employment, people looked to the west midlands to see, for example, what was happening to the motor industry. One has to look very carefully now to find any motor industry there at all. The place is a shambles. It is a desert.
  Mr. Roger King indicated dissent.
  Mr. Hoyle: The hon. Gentleman shakes his head, but the Conservatives will suffer in the west midlands at the next election unless Government Members pay more attention to the right hon. Member for Cambridgeshire, South-East, and less to the Chancellor. The Government offer nothing to the west midlands car worker, the unemployed steel worker in my area, the unemployed textile worker in north-east Lancashire or the unemployed coal miner.
  There is no sign of a revival, and the Government have done nothing not only for what used to be the basic industries but for the scientific industries of the future. There is now to be a tax on companies for employing people who have the expertise and scientific knowledge that might pull them companies out of the mire. Such people are needed in management if we are to have any chance of success.
  The situation is tragic. However, as we frequently hear, the Government have one asset that no other Government have had before. They have the windfall of North sea oil. Unfortunately, the day of North sea oil may now be over. It will last for a little longer—thank goodness for that—but the reserves will become more difficult and more costly to extract.
  North sea oil has provided the Government with £l2 billion that they would not otherwise have had. However, the tragedy is that, instead of using those resources to build the new science-based industries of the future, the Government are paying out £17 billion in unemployment pay and social benefits. That is the economics of madness, yet there is no evidence of any new thinking at all on the Government Front Bench.
  At long last the Government are crying about the plight of the unemployed, but they are making no attempt to solve the problem. They would have done better to invest some of the £12 billion windfall in the industries of the future.
  We should also be plugging the gaps that permit money from the pension funds and the insurance companies, for instance, to flow overseas. We should be directing that money back into the long-term future of this country, especially by investing it in the new industries.
  I welcome the absence of one measure from the Budget. The Chancellor did not introduce a tax on occupational pensions. Perhaps that was because of the strong representations from my own union, the Association of Scientific, Technical and Managerial Staffs. I had a very heavy postbag on the matter and I am sure that many other hon. Members did too. On the other hand, the reason may be simply that the Government have upset so many of those who misguidedly supported them at the general election that they decided not to take that horse to the last fence.

  903
  The Budget lacks flair and imagination. All we need is a little more common sense and for purchasing power to be put back into the economy. We should invest in infrastructure — modernise ports, build houses, build new schools and get rid of the antiquated institutions in which our children are still educated, build hospitals and equip them properly and employ some of the nurses and doctors who are out of work to look after the needy. That must make far more sense, and it is how to create real jobs. Everyone put back to work would pay income tax and spend money on consumer goods such as textiles, motor vehicles and washing machines, thus putting others back to work. There is no sign of that. Indeed, there is no sign that the Chancellor understands the mechanism.
  One thing will now exercise the minds of many Conservative Members — they are now only two years away from the general election.
  The Financial Secretary to the Treasury (Mr. John Moore): Three.
  Mr. Austin Mitchell: They have counted it down to the day.
  Mr. Hoyle: Conservative Members will be pressing for a change which brings jobs to their constituencies and some security for those that are left. There was much speculation before the Budget and it was said that unless the Chancellor got it right, this would be his last Budget. My reaction, and that of many others in the City, trade unions and business, is that this is a non-Budget. It has already been forgotten, as has what it will do for the people. It has no imagination, flair or vision. Moreover, it will bring no hope to the regions or those I represent.
  6.2 pm
  Mr. Michael Hirst: Once the initial reactions to the Budget have passed, it is difficult to avoid assessing its implications for one's constituency.
  I thank my right hon. Friend for declining to extend the scope of VAT to books, for the largest employer in my constituency—I have no shame in disclosing this naked self-interest — is a leading firm of publishers and the headquarters of a large educational publishing company is also in my constituency. My colleagues in the Treasury were aware of my strong representations on behalf of those companies, which were deeply worried that VAT could seriously damage their business.
  I am heartily glad that my right hon. Friend effectively squirted a puff of DDT at the lobbyists who, I suspect, were responsible for our having enormously heavy mail bags during the past four months. His declaration that there are to be no further changes in VAT in this Parliament are welcome inasmuch as they ought to guarantee a rather lower level of constituency mail for the rest of the parliament.
  I welcome my right hon. Friend's commitment that there will be no change in the fiscal treatment of pensions without prior consultation. I am firmly one of those who believe in legislative change after as wide consultation as possible. That is more desirable than Budget diktat, which can produce change rapidly. For that reason, I welcome my right hon. Friend's intention to produce a Green Paper on the reform of personal taxation. I am strongly attracted
  904
  to the notion of a personal allowance for both a husband and a wife. Such a long overdue reform will end an unfair discrimination against married women who choose to stay at home and look after their children rather than to seek employment.
  I am also attracted by the possibility of bringing the tax system and the benefits system more closely together. Computerisation in the Department of Health and Social Security and the Inland Revenue should be recognised as an opportuniy for a greater coincidence of those systems, and therefore greater efficiency.
  Like many others, I shall judge the Budget by its success in creating jobs and shortening dole queues. Notwithstanding what Opposition Members have said, I welcome the incentive to business to take on young people. I have listened to the outrage which appears to come from the Opposition. The word "sweatshop" is bandied about. There is an obscenity in the argument which supports an artificially high wage for a young person at the expense of another young person who remains on the dole. I welcome Treasury Ministers' courage in being prepared to acknowledge that and to give great hope to young people who are currently without a job.
  I welcome unreservedly the fact that the Budget puts more into the pockets of the lower paid through tax cuts and national insurance cuts. There might indeed be groans in the boardrooms of the City about the extra cost of employing skilled people who can command high salaries, but it is not unreasonable to expect companies that employ people at the top of the tree to make a sacrifice for those who are at the bottom of the heap.
  Like many other right hon. and hon. Members, I represent a constituency which has pockets of high unemployment. I am fortunate in coming from the west of Scotland and having a constituency in which the overall level of unemployment is less than 10 per cent., but that figure masks areas of considerably higher unemployment. It is hard not to be moved by the plight of youngsters who come to my surgery telling of their miserable experiences when applying for jobs. They apply again and again and suffer constant rejection or, worse, would-be employers decline to acknowledge their applications. I often feel guilt at their helplessness and the worries that are feelingly articulated by their parents. I am therefore extremely glad that the youth training scheme is to be extended to all youngsters without a job or the prospect of higher education on leaving school.
  Nothing can be more wrong or demeaning than a school leaver finding himself sliding on to the dole and a life of institutionalised idleness. The extension of YTS to two years will present a great challenge to the Manpower Services Commission to be even more successful in seeking out employers prepared to take on people in training vacancies.
  In areas such as mine, the MSC should endeavour to identify more local vacancies so that young people do not find that their fairly modest remuneration is whittled away by higher transport costs. A recent study in Strathkelvin showed a rather unfortunate shortage of training vacancies. I hope that the MSC will recognise the challenge implicit in an extension of the training period and do its best to find additional vacancies.
  I am pleased also that my right hon. Friend the Chancellor has recognised the plight of the long-term unemployed and has been prepared to act. The Opposition

  905
  have only shed crocodile tears. By boosting the community programme, my right hon. Friend has shown the long-term unemployed that they are not the forgotten ones.
  I have had a chance to visit many useful community programmes to see their operations. I have been intrigued by the fact that I, a Government Back Bencher — I am almost an island of blue in an ocean of red and, like my hon. Friend the Financial Secretary, represent a west of Scotland constituency — received invitations to visit projects in the west of Scotland. Having recorded my appreciation and admiration for a particular project, a few months ago I received a letter from the project's organisers asking me to send a warm letter of support to the area's manpower board requesting funding for a second year.
  Mr. Jim Craigen: Did you do so?
  Mr. Hirst: I did. I also sent a letter to a major project in the hon. Gentleman's constituency. I am sure that he will be grateful to me for doing so.
  In welcoming the changes, I cannot let the matter pass without articulating the concerns that have been so forcefully expressed by many people in the construction industry in the west of Scotland. A number of my constituents have positions of responsibility in the construction industry that present them with enormous difficulties in keeping together a core of skilled people to preserve their business and to take advantage of the upturn in construction activity. As one who has come from the business world, I recognise the difficulties of coping with vagaries of demand in business and the challenges thereby presented to management. I can only speculate on the extent to which the Chancellor could fund additional capital projects without damaging his medium term financial strategy. I dare say that the House could engage in such a discussion for the rest of the day. I recognise that there is a delicate balance between the borrowing requirement, interest rates and the imperative of low inflation, which is essential in encouraging investment and job creation.
  Mr. Craigen: I am grateful to the hon. Gentleman for giving way to one who is part of that portion of red. Why have the Government singled out housing and construction for such cuts in investment, given the employment potential that the hon. Gentleman rightly sees in housing and construction?
  Mr. Hirst: The hon. Gentleman cannot overlook the fact that low interest rates are the most compelling stimulant to the creation of private housing. Demand for private housing is enormous and as yet, unrequited in the west of Scotland. Private housing would be provided when stable economic conditions bring about low interest rates.
  Mr. Andrew F. Bennett: When?
  Mr. Hirst: The hon. Gentleman knows jolly well that interest rates are at their present level because of the budget deficit in America and the misery exported to the rest of the world by the artificially high borrowing requirement in America.
  Whatever our views on the extent to which there should be a public sector borrowing requirement, we are united in our acceptance of the importance of low interest rates and the benefits they bring, spreading throughout industry to every borrower and home buyer.
  906
  I remind the hon. Member for Warrington, North (Mr. Hoyle), who talked of dismal levels of investment, that investment is running at an all-time record rate, but the trouble is that purblind commitments to ideology prevent him from seeing that much of the investment comes from the private sector. I have no doubt that the hon. Gentleman would prefer that investment to come only from the public sector. If we had the type of pools winner spending that is constantly advocated by the Opposition, the pound would be worth 90 cents, interest rates would be even higher and inflation would increase again. If the Labour party ever has a chance to form a Government, it would end, as has happened before, in tears, with the doctors from the IMF coming to give us the kiss of life.
  Mr. Hoyle: The hon. Gentleman talks about interest rates being higher. Present interest rates are only high compared to previous rates under his Government. In fact, interest rates in real terms are overall about 30 per cent. below the rates in relative terms than when we were in government, and there was real spending power.
  Mr. Hirst: The hon. Gentleman must make a proper and valid comparison. He cannot escape the basic truth that, if his party were in government and spending at the levels it says, interest rates would be much higher than they are. If the Budget package which the Leader of the Opposition was seeking yesterday were implemented, there would have been no cut this afternoon in lending rates—far from it.
  The Chancellor has set aside an additional £2 billion each year for the next three years to boost his contingency reserve. I hope that that money will be spent to create jobs and not, as it was last year, to defend liberty from the abuse of industrial power for political ends.
  Having made that point, I stake a claim for Scotland's hard-pressed domestic ratepayers who, next year, will suffer a rates increase perhaps more than twice the value of the tax relief given in the Budget through increased personal allowances. I am sure that my hon. Friend the Financial Secretary will forgive me if I import into the discussion a little of the concern expressed so strongly by my constituents. I know that he is aware of this worry.
  As a professional accountant, I welcome many of the worthwhile — albeit undramatic — changes in the tax regime. In deference to so many of my colleagues who wish to participate in the debate, I may, as a member of the Standing Committee on the Bill, discuss the changes more fully later. [Interruption.] I assure the Opposition that I am expressing a desire to serve on the Standing Committee.
  Mr. John Maxton: May we have an assurance that, if the hon. Gentleman sits on the Standing Committee on the Finance Bill, he will play a more active part than most of his Tory colleagues have done during consideration of that Bill in previous years?
  Mr. Hirst: The hon. Gentleman will know, because he sat opposite me during much of the discussion in Standing Committee last year, that when I and most of my colleagues opened our mouths we spoke quality rather than quantity, unlike the Opposition. I have no doubt that
  "guid gear comes in sma' bulk",
  which means that something that is worth while comes in small bulk.
  The balance in the Budget proposals is about right in their emphasis on maintenance of stable economic

  907
  conditions and job creation. I represent a constituency in which the haves and the have nots are well represented. The Budget will give me the opportunity to look both straight in the eye and tell them that there is hope for all of them.
  6.20 pm
  Mr. Peter Pike: The Chancellor of the Exchequer introduced the Budget as a package for jobs, but I would not describe it in those terms. If anything, it is a charter for lower paid jobs. That is about the only thing that can be said for it in terms of employment. My constituents will not see the Budget doing anything to help prospects in Burnley. I am concerned by further signs that the Government will abolish wages councils. This poses a threat to those who work in low-paid industries, and it must be of serious concern.
  Many working people receive low pay and in the past that has done nothing to save their jobs. Yesterday the Prime Minister stood by her statement that low pay is better than no pay. There may be a little truth in that statement, but it is not an acceptable position for those who are having to work for low pay. Many employees of the Government who are engaged in public service, many hospital and local government employees and many in industry are working for unacceptably low wages. However, they still face redundancies and the threat of job losses is ever-present. Low pay does nothing to stop that. Anyone who works should receive a wage that enables him to live properly. He should not have to depend on benefits such as the family income supplement and unified housing benefit. That is wrong and we should be changing society to ensure that those in work no longer need to claim those benefits.
  About two months ago, one of my constituents told me that he was working in a factory after having been unemployed for two years. He told me that his pay on the top line was £50 a week and that that was the wage which all the workers were receiving, apart from the foreman, who was receiving the extravagant wage of £54 a week. Would Conservative Members like to try to live and support a family on that sort of wage?
  I do not accept the claim of the Chancellor of the Exchequer that the Budget will create jobs. The job losses that will result from the Government's actions will far outweigh any job gains that stem from the Budget. It was significant that the Chief Secretary was unable, when he sought to respond to the intervention of my hon. Friend the Member for Coventry, South-East (Mr. Nellist), to say how many new jobs will be created. He was able to describe the effects of the increased funding of the youth training scheme and the community programme, but he could not say how many new and real jobs would be created.
  Local government is suffering capital cuts, and this will result in many people becoming unemployed. The Government's overall package, which is not confined to the Budget, will produce an unacceptable increase in unemployment. The Chancellor of the Exchequer talks about low wages. I believe that, if he were to be paid on the basis of productivity for his Budget, he would take a cut. That might be a good thing.
  The Chancellor of the Exchequer referred yesterday to the many rumours that had been circulating about the
  908
  Budget. Perhaps he welcomes the rumours, even if he does not create them. They enable him to say after the Budget statement, "Well, it was not as bad as you expected." He hopes that the newspapers will give publicity to the things which he has not done but which the rumours suggested he would. Such publicity draws attention away from the measures that he has proposed and the measures which he should have taken but has not. Our attention tends to be drawn from the significant issues by the false rumours that circulate.
  I welcome the fact that the Chancellor of the Exchequer did not include proposals in his Budget adversely to affect pension funds, to tax lump sum payments or to tax pension fund investments. I served as a worker-director of a large pension fund before I was elected to this place. I served also as a trustee of a county council pension fund. I am concerned about the considerable investment of the pension funds in overseas countries and believe that more of their investment should be within the United Kingdom. It is nonsense to say that the funds have a prime duty to protect those to whom they will pay a pension when they retire, when they are jeopardising the jobs of those whom they are trying to protect by investing so heavily in overseas countries.
  Mr. Hoyle: Does my hon. Friend agree that protection of the pension funds lies in the appointment of more worker-directors such as himself? Does he agree that they should constitute at least 50 per cent. of the board?
  Mr. Pike: I have always supported the concept of worker-directors of pension funds. They are a most useful addition to the pension fund boards. Unfortunately, most worker-directors and other participants from the work force do not have any real powers and serve only in an advisory capacity. Their powers should be increased.
  It was rumoured that the Chancellor of the Exchequer would tax gas and electricity, newspapers and books. He did not do so, but he has proposed — I predicted two or three weeks ago that this would happen — to levy VAT on newspaper advertising. I accept that the present absence of VAT on newspaper advertising is an anomaly, but the Chancellor of the Exchequer's proposal to remedy it will have serious consequences, especially for the local and provincial press. Advertising budgets are tightly controlled, and the Chancellor's proposal, if implemented, will mean that there will be less money available to the local press, and this could well jeopardise jobs. I do not always agree with what appears in the local press—very often I disagree with the opinions that are expressed and printed in local newspapers — but it will be a bad day for the country if further local and regional newspapers cease to exist.
  Mr. Hirst: Does the hon. Gentleman agree that the levying of VAT on television advertising but not on newspaper advertising is an anomaly and that it is desirable that it is overcome?
  Mr. Pike: I can only assume that the hon. Gentleman has not been listening to my remarks. I recognise that there is an anomaly, but that does not necessarily mean that it should be removed. I believe that the Chancellor's proposals will place many local and regional newspapers in jeopardy. Advertising revenue is vital to their survival and if it is cut they will be placed in severe difficulties.
  I am pleased that the Chancellor proposes to increase the single man's allowance and the married man's

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  allowance. This will be of great benefit to the lower paid. It will be more valuable than any reduction in tax rates. However, the increased allowances will be of no benefit to those who are paying no tax, and there are many in that position.
  The Chancellor's proposals will benefit a married man by just under £2 a week and a single man by just over £1 a week. However, the increases in the price of petrol, beer and cigarettes will mean that the Government will take more, especially from working people, than they are giving. They are giving with one hand and taking back more with the other. My constituents will say that the increased taxation of beer and cigarettes will bear heavily on working men and their pleasures. This will be evident to them when they note the Chancellor's treatment of cigars and whisky, which is more favourable.
  The Conservative Government were elected in 1979 and we should take account of their 1979 Budget, in which they reduced income tax at the ordinary rate by 3p but introduced a 23p reduction for those on the top band of income tax. That is indefensible and has given a massive benefit to highly paid people. Few people in my constituency benefited from the 23p reduction at the top of the scale. It would have been better to give more tax concessions in favour of the people at the lower end of the scale.
  We have a responsibility to ensure that people have a decent standard of living. I have already said that people should receive a proper living wage. The same applies to pensioners. As a minimum, the link to wages should be restored. This would have resulted in the pensioners receiving more.
  There are many anomalies in what the Government have done, but they are doing not one single thing that will solve the problems facing the country. One should consider not only the Budget, which does nothing to improve the number of jobs in the country, but other aspects—housing is in decline, hospitals are in need and there are long hospital waiting lists.
  The record of the Government is a disaster. Until the Government and the Chancellor change direction, we will continue in a downward spiral. The Government should make a positive change in direction and start on a determined effort to create jobs. Only when the Government move in a completely different direction from that which they have been following for the past six years will we really begin to solve the problems facing the country and to deal with the difficulties that are facing so many of our constituents.
  6.31 pm
  Mr. George Walden: I hope that the hon. Member for Burnley (Mr. Pike) will excuse me if I do not follow the line of thought that he was developing.
  I think that this is an excellent Budget, not least because it has one quality which in my view deserves more attention and perhaps more praise from the Opposition Benches—the quality of social solidarity. Most of the so-called give-aways in the Budget are at the bottom end of the scale. They are not in the form of sterile handouts, but are carefully calculated to stimulate employment and to motivate people to look for work. While I think this is an excellent Budget, I also believe that it is a limited one, for a number of reasons that I wish to outline.
  First, I believe that there will be another budget in a few months' time which will be a benefits budget. So great is
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  the proportion of public expenditure currently accounted for by the Department of Health and Social Security—if we continue at this demand-led rate, it will be approaching half the total public expenditure — that, when the reviews which are currently being undertaken by the Secretary of State for Social Services come to fruition, it will amount to a benefits budget on its own. In contemplating that mini-budget which is to come, I hope that the Government will give it the same thrust that my right hon. Friend has chosen for his Budget. By that, I mean the concentration of effort and money where it is most needed, and dynamic thinking: not in terms of handouts but of helping the poorest in society in ways that make us more able to help each other in the future.
  Secondly, the Budget is a rather limited one in the sense of what it omits. It is true that in our society benefits are now given from the cradle to the grave literally, starting with child benefit and ending with death grant. I am concerned not so much by the fact of those benefits, but because in this country to a much greater extent than other countries people start thinking about the grave so soon after the cradle.
  That brings me to the delicate territory of pensions. The Chancellor implied that there is a case for considering pensions, but he also said that there would be no Green Paper on pensions. Thus the case for considering pensions will not be articulated at this stage in the form of a Green Paper. One does not have to be a great politician to understand the reason for that. I suggest that we keep this ball in the air. We should not lose sight of overall economic objectives. We are talking about £7 billion of tax forgone. From some figures that I saw today, I understand that the total has increased by £2 billion in the last two years alone. In a way, that is a splendid thing, and we all know the case for pensions — God knows we have received enough letters spelling it out. But let us not lose sight of the extent of the pensions business in the country, and the distorting effects that it can have on investment and possibly on jobs. Recently I was looking at some very nice paintings which had been bought by the British Rail pension fund and it crossed my mind that there are not many British jobs in French impressionists, so let us bear that aspect in mind.
  Mr. D. Nellist: Does not the hon. Gentleman recognise that when Arthur Scargill and others in the National Union of Mineworkers argued the point about pension funds investment in British industry, Arthur Scargill was removed from the board of trustees because that decision was held not to be within his competence. How can the hon. Gentleman make the point that he has just made?
  Mr. Walden: The difference between me and the hon. Member for Coventry South-East (Mr. Nellist) is that he is talking about compulsion and I am talking about freedom. The hon. Gentleman implies that the Government should take control of how pension funds are invested—
  Mr. Nellist: No.
  Mr. Walden: I will rephrase that—to direct that investment. The fact that those pension funds are given tax relief and are so large I suspect tends to have an inhibiting effect on the spirit of enterprise in the country and bence on jobs. In a sense, therefore, the hon. Gentleman and I are talking indirectly about the same thing from different angles.

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  I deal next with another limitation of the Budget.
  Mr. Douglas Hogg: My hon. Friend is exploring the possibility of subjecting pensions to tax, but is not the problem that the greatest sum, £4,000 million, arises because the contributions are exempt? There will be great hostility to bringing those into tax. What would be more acceptable, subjecting the funds themselves to tax, would being in only about £650 million.
  Mr. Walden: My hon. Friend and I may have looked at different figures, and I am perfectly prepared to accept that his figures are right. The last figures I saw show that the tax relief on pension funds is more like £2·5 billion. I shall look at that again in the light of my hon. Friend's comments.
  The second limitation in the Budget to which I wish to point concerns mortgage interest relief—another matter not too popular among many of my hon. Friends, but I think that we should keep these questions in mind. In my view, the extent of current mortgage interest relief is another distorting element in the British economy. I would link it—because it is linked organically—to the question of pensions. I will give one small, colourful example. I was recently told that the fashion among hitherto rather prim civil servants is not to get married unless they actually have to because together they benefit to the extent of £60,000 tax-free on a house. That is a minor but colourful example of the distorting effect that the extent of mortgage interest relief can have. Here we are talking of £3 billion and, as in the case of pension relief, this is not static but rising.
  The third avenue that the Chancellor of the Exchequer seems implicity to have closed is VAT. I shall not launch into a long discussion of VAT. I shall say only that I hope that, difficult though it is, he will pursue his strategy of going from direct to indirect taxation wherever possible.
  In his decisions on pensions, mortgage tax relief and VAT, the Chancellor of the Exchequer appears to have cut off three important and—in terms of tax relief—very expensive areas. I do not think that we are in any position to do that. We should put constantly before the British public the facts about the benefits that they are receiving and what it means with regard to the Government's limited ability to bring down direct taxation. It would be a pity if the three areas that I have mentioned were to be lost from sight. We have all had many letters about them, and I think that the honest course is to go on putting those issues before the public, because there should be more discussion about them.
  I should like to refer to an indirectly related subject —the state of relations between the Government and the TUC. In his speech the Chancellor of the Exchequer rightly talked a great deal about the youth training scheme and other forms of training. It is obvious that there is little scope for fruitful discussion at present between the Government and the TUC on such questions as how far employment can be inhibited by excessive wage rises. But if the Government can increase their contacts with post-Chernenko Russia, surely we can increase our contacts with the post-Scargill TUC.
  Mr. Nellist: He is still there.
  Mr. Walden: The hon. Gentleman says that Mr. Scargill is still there. I believe that he is politically dead;
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  I certainly hope he is. One way to ensure the political death of the former miners' leader— as I prefer to think of him—is to go along the path that I have suggested, and to deal with the TUC on common ground. That common ground is training and what we can do together for our young people. I was glad that, in the Chancellor of the Exchequer's speech, he mentioned the need to consult the TUC about expanding the YTS. I hope that he will follow it up energetically.
  We have a reforming rather than a radical Budget, and I well understand the constraints on the Chancellor of the Exchequer that made it so. It has been unfairly said of him that he backed away from the problems. It would be fairer to say that the problems backed away from him.
  6.43 pm
  Mr. Dave Nellist: In one sense the Budget fulfilled one of my expectations. I did not expect any real relief for the more than 4 million unemployed and the further millions who have low standards of living. My expectations were fulfilled, because the Budget provided no real relief for those millions of people in our society.
  The Chancellor of the Exchequer had the gall yesterday to describe his Budget as a Budget for jobs. It can more accurately be described as a low-wage Budget. It does nothing for the more than 4 million unemployed. The few jobs that may be created by some of his measures will be essentially low-wage jobs.
  Last night, on the BBC television news, in an analysis of the Budget, an employer who had been listening to the live radio broadcast of the Budget was asked whether he thought that it would increase jobs. He said that he might consider taking on another young worker at the expense of an older worker, because it would become cheaper to employ young people. The Chancellor of the Exchequer's measures will not reduce the number of unemployed; they will simply shift the burden of unemployment increasingly up the age scale.
  I believe that most of the changes in the employer's national insurance contributions will result not in businesses taking on new workers but in extra profits for those businesses. Chancellor of the Exchequer's measures are highly cosmetic. We have heard about the reduction in unemployment that is supposed to follow from stepping up the YTS and the community programme. A figure of a third of a million has been mentioned in regard to the two schemes. This afternoon, the Chief Secretary to the Treasury talked about 150,000 jobs being created by the expansion of the YTS. It is supposed to be a training scheme. Its failure is that at the end of the training there are no jobs for the vast majority of the youngsters concerned. We have heard of £1 billion being spent on those schemes, but when the net cost and the benefit of the so-called savings are taken into account, the cost is £75 million. That is less than the Government have been spending in one week on trying to break the National Union of Mineworkers.
  It is all very well for the Prime Minister to shout about a task force to deal with football hooliganism. We do not hear her talking of a task force to deal with youth unemployment. There are 237,000 youngsters of 16 or 17 who are not on youth training schemes. At present they are claiming supplementary benefit. Yesterday the Chancellor of the Exchequer said that unemployment will no longer be an option.

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  That is a dangerous confirmation of what I have suggested, in the past few months, lies behind the thoughts of the Prime Minister and her Cabinet. They want to remove those youngsters from supplementary benefit and to introduce economic and industrial conscription. There is no guarantee that the youngsters will get jobs at the end of their training. The expansion in the scheme is taking place in order to fiddle the dole figures and to try to maintain that unemployment has been reduced by a third of a million.
  There has been no mention of the allowances paid under the training scheme. When shall we hear from the Government that they intend to increase the allowances? The youth opportunities programme was introduced six years ago. If the allowances had been increased in line with inflation or earnings, the youngsters on YTS would be getting £40 a week today. Instead, the allowance has been frozen for years at £25 and it is now only £26. That is why there is a need for measures such as my own private Member's Bill to provide a genuine and decent training to youngsters and a minimum trade union rate for them of £55 a week.
  Youngsters recognise that nothing that the Tory Government have done up to the present, or even in yesterday's Budget, alters the material fact that there is no future for the majority of young people leaving school. In 1983 in Coventry during the general election slogans were sprayed on the subway walls saying, "Vote Tory, retire at 16". That is what young people think of the Government's policies.
  There are now rumours about the abolition of the wages councils, which protect the lowest paid 10 per cent. of the working population in shops, in hotels and in slightly more obscure occupations such as coffin manufacture and ostrich feather manufacture. Such people are on £40, £50 and £60 a week and need protection. If the Tory Government carry out their threat to abolish the wages councils, the trade union movement will have to organise a massive recruitment drive among those workers to offer them the hope of some protection.
  In the past 24 hours, the Budget has been seen, and it will be seen in retrospect, as a Budget to drive down wages. It is offered by the Treasury Bench as a Budget that will create jobs. Where is the proof? At least a dozen times I have asked Ministers in the Department of Employment to justify the assertion that if the wages of young people are cut more jobs are created. Since the Tories came to office young people's wages have fallen by 8 per cent. for boys and 12 per cent. for girls. In the same period youth unemployment has tripled. Therefore, how can it be said that cutting wages creates more jobs? The only solution that the Tory Government are offering to cure unemployment is to have two workers doing the work of one and sharing the wage between them. The Government are trying to massage and fiddle the dole figures in some magical way to achieve that result.
  Mr. John Townend: Will the hon. Gentleman give his opinion on the decision of the Electrical, Electronic, Telecommunications and Plumbing Union? It realised that apprentices had fallen in numbers because of the high starting wage. Therefore it agreed to a substantial reduction in the starting wage. As a result, the number of apprentices in the union has increaseed, whereas in other unions it has declined.
  Mr. Nellist: The answer is simple, and I have made the point to the EETPU in the past two years. The price of that agreement has been to reduce the wages and allowances paid to apprentices in the industry. It would have been far better for that union to follow the policy of the sheet metal workers and the Transport and General Workers' Union. They argued with the management at Massey Ferguson in Coventry that there should be a trade union rate of pay for those on youth training schemes. As a result, the youngsters in that firm are getting £74 a week, with a guarantee of a job at the end of the scheme. It is the task of the trade union movement to protect and enhance the conditions of workers and not to cut the wages of apprentices.
  This, therefore, is a low-wage Budget. When we consider the Chancellor's proposals in that light, and particularly the extension of unfair dismissal clauses to firms with more than 20 employees, we see the danger in the context of the general anti-trade union feelings of the Government, because some employers will use the change to attack trade union rights. In doing that, they will attack those who take on the job of shop steward in the first two years of their employment. I can foresee employers replacing youngsters aged 20 and 21 with cheaper, ex-YTS 17, 18, and 19-year-olds, sacking the 20 and 21-yearolds before they have achieved two years' employment.
  We have already seen that happen, particularly with older women workers and youngsters who have left, or are still on, YOP schemes. Nothing has altered the scandalous postition by which part-time workers who work 12 to 16 hours a week must complete a five-year probation period before getting the most elementary unfair dismissal protection. That is another aspect of this low-wage Budget.
  Great play has been made with the so-called give-away aspects of tax changes. Despite the Chancellor's attempts to cloak himself with a generous reputation, the increased allowances will mean, for most workers, £1·50 or £1·80 a week extra. But that has already been taken away by the previous announcement of price rises in gas, electricity, water and prescription charges and by the rises announced yesterday in the price of cigarettes, beer and petrol.
  Nobody is fooled by the separate announcements that have become the hallmark of the Government. There was a time when all such announcements were made at one time, in the Budget. They included dental and prescription charges. Now, the Government separate increases of that sort by a couple of weeks, hoping to take the sting out of what they are doing.
  When those increases are contrasted with the changes at the other end of the tax spectrum, such as in capital gains tax and the abolition of development land tax, it is clear that they have been warmly welcomed—I don't think—by the people in the dole queues. There was no dancing in the streets of council estates in Coventry last night over the widening of relief from capital transfer tax on land surrounding homes of architectural heritage, despite the fact that much of the worst housing in Britain could qualify for that on age alone. None of those changes will be welcomed by the majority of the population.
  I wish to concentrate on what was not done in the budget. The Chancellor told lobby journalists that he was boxed in. We know why the right hon. Gentleman found himself in that position. He was boxed in by the £6 billion

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  that the Tories caused to be spent in the last year on the "worthwhile investment"—the Chancellor's phrase—of trying to destroy the National Union of Mineworkers.
  We had the ludicrous announcement yesterday—as we had last Friday, when we debated the west midlands — that, somehow, we were in the fifth year of successful and sustained growth. We have had a plethora of statistics to justify that statement, showing a few percentage points increase in this or that index. But the Chancellor never tells us the base to which the statistics are supposed to relate.
  The engine of any economy is manufacturing investment. That is still 25 per cent. lower than when the present Prime Minister walked through the door of 10, Downing street in 1979. Manufacturing production is still less than it was during the three-day week of a previous Tory Government in the early 1970s.
  The Chancellor tries to depict trade unionists as Luddites. The Tories have presided over the biggest example of Luddism this century. They have destroyed one in five factories in Britain. It is all very well for the Tories to talk about creating small businesses. The easiest way to do that today is to start with a large business; it will soon turn into a small one under their policies. They have tripled unemployment. Britain has become a second-rate country with third-rate living standards. The Chancellor completely ignores the real position of capitalism in Britain.
  In The Times, with pictures, appeared these words which appropriately described what the Chancellor did not mention when he presented his Budget yesterday:
  "After the war Great Britain was the third largest steel producer. Now we are 10th.
  In 1900 Great Britain made 60 per cent. of the world's shipping. Today we make 3 per cent.
  Britain once exported motor bikes to over 100 countries. Now we import almost every machine we buy.
  After the war almost every car on the road was British. Now over half are foreign.
  Britain pioneered the world machine tool industry. Now our share is 3·1 per cent.
  Britain discovered the wireless. We now import 96 per cent. of all personal and portable radios.
  Britain made the first practical computer. Now we have 5 per cent. of the information technology market.
  We once made all the textile machinery in the world. We now make 8 per cent."
  That is an incredible advertisement of the present state of affairs. Since the Spanish empire collapsed 300 years ago, no economy in history has declined faster than Britain's in the last 30 years.
  Mr. Hirst: Is the hon. Gentleman aware that the appalling unwillingness of the trade union movement to change working practices has been responsible for the total decline in Britain's economic performance?
  Mr. Nellist: I could not for a moment accept that. It has been due to the appalling inability of those who have had the real stewardship of British industry, the employers, for refusing to invest in industry and who, instead, have allowed £50 billion to leave the country in the last five years.
  Trade unions do not have control of those investment decisions. Indeed, even Parliament does not have control over them. We have never been presented with a Dunlop (Closure) Bill, a Courtaulds (Reduction of Workers) Bill
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  or a GEC (Subsidy for Short-time Working) Bill. Decisions of that type are made in boardrooms by the directors and major shareholders of British industry. They are responsible for our lack of competitiveness and for all the money that has flowed abroad in the last five years.
  The British economy will, once again, be heading for recession in the coming year or two, but it will be far worse than it was in 1974, 1976, 1979 or 1981. Already, Britain is seen abroad as a nation comparable to a Third-world offshore tax haven. In The Economist on Saturday appeared an advertisement relating to a report which could be purchased for £60, and another for $120, headed, "United Kingdom as a tax haven". It claimed:
  "With low effective tax rates, reinforced by a wide range of government assistance to business by region and sector, the United Kingdom is a tax haven for those who know their way around."
  That is what the Government have turned our economy into.
  It can more accurately be described as a rentier economy, an economy that depends on the ownership of shares, materials and investment abroad, rather than investment in our manufacturing industry. That spells future further massive attacks on the living standards of working people in Britain. That is the real reason why the Ridley report was written in the mid-1970s and enacted by the Conservatives to attack the NUM, hoping to demoralise the union and strip away the power of trade unions to defend their members.
  What has the Budget done for Coventry? Ten years ago, two thirds of the people working in that city were employed in manufacturing, mainly for 15 companies which produced cars, engines, machine tools and telecommunications equipment. About 60,000 jobs have gone from those industries in the last 10 years. I told the House a couple of weeks ago that in one ward in the centre of the city—Coventry, South-East, which I represent—the unemployment rate was 32 per cent. It has now risen to 36·9 per cent.
  When young workers, men over 60 and women workers who are not allowed to register for supplementary benefit are added to the total, the real rate of unemployment in that city centre area is over 50 per cent. For those workers, the cosmetic approach of the Budget means nothing.
  The Chancellor says, "Hang about. The Government have no responsibility or ability to create jobs. Only the economic climate can create employment." That is not true in Coventry, nor, I suspect, is it true of other parts of the country. Many of Coventry's job losses have been due to Government decisions, particularly the closure in recent years of major parts of British Leyland.
  Now, almost two in five—50,000 out of 135,000—workers there depend on central or local government spending for their livelihood. The largest is the city council, with 10,500 full-time and 7,000 part-time workers. yet Coventry city council has lost £80 million in the last five years as a result of Tory cuts, for example, in housing subsidies. Money spent by that means could have created jobs for building workers and provided better homes for people in the city.
  When one adds to that the number of jobs lost through cuts in the NHS, DHSS, Inland Revenue, which once employed 9,000 people, and other public services, such as the university; in nationalised industries such as the gas, electricity and coal boards; in nationalised companies such as Rolls-Royce; in part nationally owned companies such

  917
  as British Telecom; and in all the other companies which rely on Government contracts in, say, defence, such as Alvis, GEC, Dunlop and Courtaulds, and other firms which supply those companies, we find that 40 per cent. of the jobs in Coventry are dependent on decisions made by the Government. Thus, the reduction in the number of workers in that city has been caused by decisions taken by the Conservatives in the last six years.
  The Chancellor spoke of five years of successful economic recovery. Several of his leading supporters in boardrooms are talking of a new golden age in British capitalism. If prospects are so good, why has £50,000 million left the United Kingdom and gone abroad during the past five years to low-wage anti-trade union economies, such as South Africa, Brazil, Korea and Argentina? Where is the so-called patriotism of those directors that they would rather invest abroad than in British companies and jobs?
  The little increases that we have seen in the British economy have been largely due to North sea oil. Without that crutch, there would be an even more calamitous drop in capitalism compared with our overseas rivals. Last year, for the first time since the days of Queen Elizabeth I, we imported more factory-made goods than we exported. At one time, we were known as the workshop of the world, but now we are more accurately described as the warehouse of the world. We have lost those world markets because of a lack of investment, especially during the past 25 years, and now we are also losing domestic markets.
  We have seen the rise of the Chancellor and the Prime Minister — the representatives of finance capital as opposed to industrial capital. The Tory Cabinet has the ludicrous idea that manufacturing industry does not matter, that it can be replaced by service and financial industries. Some Tory Back-Bench Members have even talked about a rise in tourism as providing jobs, as if unemployed ship workers, car workers and steel workers can get jobs as beefeaters at the Tower of London. That is a stupid idea.
  The service sector is entirely dependent on manufactuing for its products. Bankers depend on computers, hairdressers on scissors, hotels on furnishings and journalists—not many are present now—on typewriters. The production of real wealth is based on the production of manufacturing wealth. Yet that is the sector that the Government seek to ignore.
  More than 30 per cent. of industry is now idle, and nothing that the Chancellor said will get that unused capacity moving. The Library estimates — I have challenged Treasury Ministers on this figure — that £200,000 million of investment would be needed in manufacturing industry merely to catch up with Germany, Japan and America. That is 40 times the present annual rate. Even on an exponential of that figure, under present policies it would take until the year 2025 before British industry was as competitive as those countries. There is no prospect of this Government or the capitalist system following that path. The Government and its supporters have given up re-tooling industry at that rate. They have convinced themselves that the only road to economic salvation lies in a further massive decline in the living standards of the British working class. That is why we have had a cheap wages Budget.
  The Budget will not work. The next economic downturn will expose British capitalism still further, and squeeze foreign and domestic markets, with a consequent
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  rise in unemployment. Nothing in the Budget will fundamentally alter the long-term decline of the British economy.
  For that, we need an early general election and a new Socialist Labour Government. We need public ownership, and workers' control and management of industry and finance across the commanding heights of the economy. We need a proper Socialist economic plan, which will not provide profits for a few thousand friends of the Chancellor and the Government, but fulfil the needs of millions of people. It must be based on a shorter working week with a maximum of 35 hours, early retirement and other measures to share work. It must end low pay and set a national minimum wage of at least £100 a week, with pensions to match. It must provide a massive boost to public expenditure to build thousands of schools and hospitals, and the millions of homes that are needed.
  At present, 400,000 building workers are unemployed, yet millions and millions of bricks are stockpiled. Money is sloshing around in the financial system and people are living in 6 million damp houses. The Government cannot, and do not want to, match the needs of working people with the skills that can fulfil their needs. For that we need a Labour Government with Socialist policies. For those reasons I call on the House to reject the Budget, to demand the resignation of the Chancellor and to tell him to take the rest of the Government with him.
  7.4 pm
  Mr. John Townend: The House can judge the validity of the speech of the hon. Member for Coventry, South-East (Mr. Nellist) by the fact that he took a number and doubled it. He quoted the cost of the miners' strike as £6 billion, but page 40 of the Red Book sets it at £2·5 billion. It is also clear that he supports the policy of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) of attacking pension funds. He agrees that pension funds should be forced to bring their funds back from investment abroad, where they have been invested in the best interests of pensioners, and to invest them in projects which Labour Members think are socially and politically advisable. We all know what would happen to pensions if that were done.
  At the beginning of the debate I was a little surprised at the disruption. However, I now have a copy of the Labour Party's general election manifesto. I understand the sensitivity of Labour Members about their council house policy. The manifesto states that the Labour party would
  "End enforced council house sales, empower public landlords to repurchase homes sold under the Tories on first resale and provide that future voluntary agreed sales will be at market value."
  That policy was clearly unpopular with the electorate at the general election, and I understand why there was such uproar when that policy was quoted today.
  To make a fair and unbiased judgment of the Budget, it is necessary to understand the constraints that severely restricted the Chancellor's ability to produce an exciting, innovative and tax-reducing Budget. Those constraints were the strength of the dollar and the weakness of oil prices, which had a considerable effect on currency markets; the cost of the miners' strike, which admittedly went on longer than expected; and the continued failure of the Chancellor's colleagues in some of the major spending Departments, especially the Department of

  919
  Health and Social Security, to keep control of public spending. The board and lodging allowance, for example, cost £62 million in 1979, has escalated out of control, and this year will cost £570 million.
  I drew the attention of the House to many of these matters during the public expenditure debate, and I shall not repeat the arguments now. However, I shall comment on one aspect of public expenditure, which was dealt with in the Budget and the Red Book—that is, the increase in the contingency reserve of £2 billion for each of the next three years.
  I accept that by doing that the Chancellor is being realistic and has accepted the recommendations of the Treasury and Civil Service Select Committee. However, the Government have yet again abandoned their public expenditure policy. We all know that we were elected to reduce public expenditure and that that policy was abandoned some time ago. Then the Government substituted the objective of keeping public expenditure broadly level in real terms. It is clear that once again the Treasury has had to submit to pressure and realism, and the planning total in real terms will be £1·2 billion more in 1986–87 than it was in 1983–84. In that year public spending will take no less than 40·5 per cent. of the gross domestic product. That compares with 39·5 per cent. when the Government came to power. In seven years, far from cutting expenditure, expenditure has risen in real terms as a percentage of GDP. I therefore find it strange that there is so much criticism of the so-called cutting of expenditure. It is an unsatisfactory record for a party committed to cutting spending.
  I know that my right hon. Friends will maintain that there is only an increase in the contingency reserve and that it will not necessarily be spent. If one studies the Government's record in relation to the contingency reserve one sees that it is extremely likely that once a sum is in the planning total it will be gobbled up by the avaricious spending Departments.
  As one who accepted and accepts the constraints facing my right hon. Friend in the Budget, it was clear that there would not be many resources available for dramatic tax reductions. As with most hon. Members, especially as the representative of a constituency in the north of England which has considerable unemployment, my first criterion was for the Budget to create jobs. To achieve that, it was essential for my right hon. Friend to reassure the markets that the Government had not weakened in their commitment to continue the battle against inflation. If that could be done, conditions would then be created for early reductions in interest rates which are at an unacceptably high level and do more than anything to prevent an expansion in the economy, an increase in investment and the creation of jobs.
  By taking a tough line, by bringing the PSBR back to the planned level of £7 billion, by keeping monetary targets tight and by putting an extra £2 billion into the contingency reserve, the Budget has increased the confidence of the market. We have already seen interest rates come down by half a point today.
  I say to my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym), who is no longer in the Chamber, that it is all very well to advocate increasing public borrowing year on year, but it all has to be paid back. If one studies the way that interest charges
  920
  are escalating in the national accounts one sees that by 1987–88 interest will cost as much as defence and far more than education.
  One of the problems that has been in the forefront of the minds of many Conservative Members and many people outside the House, is the employment trap whereby workers in low-paid jobs are often little better off than they would be if they stopped work and went on social security. In some extreme cases they are even worse off being in work. It is surely ridiculous that unemployed people cannot afford to take available jobs. It is clearly wrong that a man working should be little or no better off than if he is not working. That problem could be reduced by raising tax thresholds — [Interruption.] If the hon. Gentleman does not think that there is a problem he should go back to the people in his constituency.
  The problem can be solved only by dealing with benefits and restricting increases. Even if my right hon. Friend had used all the available resources this year to raise thresholds he would have made only a minor impact on the problem. However, my right hon. Friend did far more than expected by his imaginative proposals for restructuring national insurance contributions, on which I congratulate him most heartily. A married man earning £80 a week is now £3·33 a week better off. That is an excellent start, but we now look to my right hon. Friend the Secretary of State for Social Services to close the employment trap further when he reviews benefits.
  Mr. Nellist: The hon. Gentleman talks about cutting benefits to create a wider gap between those who rely on supplementary benefit and those who go to work. Will he tell the House how many salaries he draws?
  Mr. Townend: Such personal attacks do the House no good. If the hon. Gentleman is so interested he can look in the Register of Members' Interests. It has always been accepted in the House that it is not in the best interests of Parliament or the people for Members of Parliament to be full-time politicians with no other interests. People with other interests—many Opposition Members have other interests—bring their business experience to the House. I am not ashamed of being the third generation to run a family business giving jobs to more than 100 people.
  The restructuring of employers' national insurance contributions will encourage them to take on unskilled workers at the bottom end of the labour market, and it will partially reduce the advantage that part-time workers have enjoyed in the past. It will create new low-paid jobs. It surprises me that Opposition Members seem to think that it is better for people to be unemployed than to be in low-paid jobs. That is an insult to the unemployed. One of the problems is that many of the people who regrettably are on the unemployment list are unskilled. There are vacancies for skilled people in many areas. The demand is for the creation of unskilled jobs which, by their nature, tend to be low-paid.
  Mr. Robert N. Wareing: If we need so many skills in this country, how does the hon. Gentleman justify the Government's closure of 29 skillcentres?
  Mr. Townend: Many of them were not being used to the full, and that is why they were closed. The Government have put billions of pounds into the youth training scheme.

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  The restructuring of national insurance contributions will benefit those employers who employ unskilled and lower paid workers. That is of great benefit to the north where pay levels are lower compared with the south and the City. The people in the north are not on £30,000, £40,000, £50,000 and £60,000 a year as they are in the City. I strongly support the other measures in the Budget designed to encourage employment—in particular, the additional 100,000 places on the community programme. I support the expansion of the YTS. In those places where there are vacancies on the YTS, I see no reason why social security benefits should not be withdrawn from school leavers who refuse to take part in such schemes.
  The removal of social security benefits will remove the option of idleness. No one should encourage youngsters to turn down a training opportunity so that they may lie in bed all day or roam around the streets. That does those young people a disservice. I do not know whether Opposition Members are aware of the facts of life. If a youngster leaves school and goes onto social security benefit and remains there for 18 months or more he becomes unemployable. We do a great disservice to those youngsters. I have four children. If my children could not obtain a job, I should prefer them to be on a YTS scheme. I should welcome the Government removing their social security benefit to encourage them to go on the scheme.
  Mr. Wareing: Does the hon. Gentleman agree with the DHSS which at present withdraws benefit from school leavers who go on to take academic courses at colleges of further education? That is what happens now.
  Mr. Townend: Yes. The right way to deal with that is with educational grants. On the hon. Member's argument everyone who is on an advanced course or at university should be on social security for the whole time. That is nonsense.
  I was disappointed that my right hon. Friend announced that a consultative document was to be issued on wages councils, especially after what he had said:
  "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."— [Official Report, 19 March 1985; Vol. 75, c. 794.]
  If that is so—and I agree with the Chancellor—surely we should get rid of the councils straight away and not procrastinate with a consultative document. If my right hon. and hon. Friends in the Department of Employment believe in a free market and in people having the right to price themselves back into work, the councils should be abolished. It would be no good tinkering with them, as some hon. Members have suggested, so that they excluded young people under the age of 18. If young people have the right to price themselves back into work, so have older people. The Opposition have put forward a good case for abolishing wages councils. I think it was the Leader of the Opposition who said that 40 per cent. of workers covered by wages council regulations were getting below their entitlement. If the system is not working, it might as well be abolished.
  I welcome the help that is to be given yet again to small businesses. I hope that small businesses and the self-employed realise that year after year, in Budget after Budget, this Government are bringing forward more and more measures to encourage that vital part of our economy that will produce, and is producing, a considerable proportion of the new jobs that we need. I welcome
  922
  particularly the VAT relief on bad debts. That will be particularly helpful for small businesses. I welcome, too, the fact that owners of small businesses will be able to retire at 60 and get the capital gains tax benefit. That will encourage the promotion of younger managers. I welcome the reduction of class 2 national insurance contributions and the tax relief on class 4 profit related contributions which has been a running sore with the self-employed for a long time.
  My right hon. Friend was constrained, but he has continued his policy of tax reform by abolishing the development land tax. I am surprised that the Opposition should object to that, because the abolition of that tax should do more than anything to stimulate development and to create new jobs in the construction industry.
  When we have regard to the constraints that were facing him, we realise that the Chancellor has produced an imaginative Budget which has reassured the markets and provided a basis for lower interest rates. I am disappointed that the banks did not bring their rates down by one point today. The Budget will encourage the employment of more people and will significantly reduce the employment trap. At the end of the day it must be made clear again and again that it is not the Government who produce jobs, but industry, management and workers who combine to produce the right goods that customers both here and abroad want at the right price and the right time.
  People talk about lack of demand. They have only got to go on to the high streets and the main roads and they will see the number of cars from abroad, the amount of white goods pouring in from Japan and other Asian countries and the increase in imports from the EC. That shows that the demand is there. Given the right atmosphere, which the Government are continually trying to create, if British industry seizes the opportunities and if there is co-operation between management and men we can win back those markets and create the jobs that are so necessary.
  On reflection in a couple of years' time the Budget will be seen in a similar vein to the 1981 Budget which gave a firm economic base for recovery. This Budget will also give a base for a third Conservative general election victory.
  7.23 pm
  Mr. Andrew F. Bennett: I never cease to wonder at the effrontery of hon. Members like the hon. Member for Bridlington (Mr. Townend) who coyly refuses to tell us how much he is earning from the two jobs that he is so proud of, whether it is up to £100,000 or whatever. He does not tell us how much he earns but it must be very close to £100,000.
  Mr. John Townend: I can assure the hon. Member that it is nowhere near that figure.
  Mr. Bennett: Until the hon. Member is prepared to tell us, we can only conclude either that he does not want to tell the tax man what he is earning or that he has a guilty conscience about it.
  Mr. Nellist: He would need £100,000 in the bank to belong to Lloyds.
  Mr. Bennett: If the hon. Gentleman is so keen to lecture people on low pay, he has a duty to tell us how much he earns. He also has a duty to examine the problems in his own constituency. I suggest that the depressed state

  923
  of much of Bridlington is a result of low pay, because many people in the catering industry suffer from extremely low pay. There will be a fair number in his constituency who are breaking the existing wages regulations. He should also be aware that many people cannot afford to go to holiday resorts like Bridlington because of the implications of low pay. If he is concerned about board and lodging allowances, the best thing that can be done about that is to provide people with homes of their own so that they do not have to claim board and lodging allowances. The hon. Gentleman should think carefully about the implications of his speech for his constituents. Low pay is no good for the majority of people in the country and certainly no good for his constituency.
  Yesterday the Chancellor was almost strutting before us, like a rooster, proudly proclaiming his anti-inflation and pro-jobs Budget. Today his Budget seems less attractive and more like a feather duster, perhaps moving a little dust from here to there. When the majority of my constituents have had a chance to examine the Budget, they will think that it has as little relevance as feathers floating in the wind. They will not be impressed by the Chancellor's proposals to fight inflation. The £2 gallon of petrol will not go down well with them. The Chancellor claims that his tax changes will put only 0·5 per cent. on the retail price index but that will be an excuse for other people to add a little here and a little there. It will soon mount up to substantial increases.
  The people will be faced not just with the increases in the price of petrol and in other duties. Added to those are all the other increases that the Government have imposed during the past fortnight. The latest was the increase in prescription charges. Then there is the extra amount that people will have to pay for mortgages. I think that since Christmas the average mortgage has increased by about £7 per month, and there is the prospect of a further increase this week. There is also Government pressure on local authorities to put up rates. They have also twisted the arm of water authorities to put up water rates. They have put pressure on the gas and electricity boards to increase their charges even though the boards do not want to do so.
  When my constituents add up all these increases they do not believe that the Budget is anti-inflationary. They fear that it is very much a move in the opposite direction. They are also looking with alarm at the proposal to increase the television licence fee, which will hit most of them, particularly those on low incomes.
  The Budget offers nothing at all to the increasing number of my constituents who face long-term unemployment. They will find the extra costs that I have just listed increasingly hard to bear. I had hoped that the Chancellor would have done something positive for the long-term unemployed. The first thing he could have done was to allow those who are stuck on short-term supplementary benefit to go on to the long-term rate. It is crazy that someone who has been on supplementary benefit for over 12 months should still be on the short-term rate that is designed to tide people over from one week to the next and which makes no allowance for the need to replace major household items.
  There should have been a far greater effort to help people generally who are on benefit. I do not think the Government have any idea of what it is like to live on benefits. I should like to give some examples from my
  924
  advice bureau. A pensioner couple described to me last Friday night how they have got into a routine of walking almost a mile and a half down from Brinnington, one of the estates in my constituency, into Stockport town centre, where they walk round the shops, not to buy anything but so that they can keep warm during the morning. When they have spent some time in the warm shops they walk back home. They do that so that they do not have to light the fire until the afternoon. They are trying to avoid heavy heating bills.
  Another gentleman from Haughton Green came to my advice centre at the weekend. He talked about having an income of £41·75 and about the problems of paying for heating during the coldest spells of the winter. Because he is in a badly maintained council house with high heating costs he found that almost half his weekly expenditure for two weeks went on heating. He had to make a choice between whether to keep himself warm or to have sufficient to eat. Most of his household items involved small amounts of money, yet this constituent gave me a long list of things he could not afford on long-term unemployment benefit.
  Mrs. Edwina Currie: I do not wish to decry anything that the hon. Gentleman has said, but I came across a case at my advice bureau recently of a married gentleman with two children and a mortgage who on supplementary benefit was entitled to £181 a week. That was the sum that I got him.
  Mr. Bennett: I certainly accept that some people get substantial sums, especially if they have been enticed into taking out an expensive mortgage, perhaps by the Government's enthusiasm. I suspect that a large slice of the sum that the hon. Lady mentioned will be for mortgage interest. However, the hon. Lady does not live in the real world if she thinks that the majority of people on benefit are entitled to such sums. Perhaps the hon. Lady would care to tell someone with an income of £41·75 how he can accumulate sufficient money to buy a washing machine or a fridge—
  Mr. Austin Mitchell: Give him a nice warming lecture.
  Mr. Bennett: That person can just about buy his food but cannot afford margarine or butter. Anyone looking down the list of items that he presented to me will appreciate the considerable difficulty he faces. Similarly, anyone living in the real world will know the acute hardship that is caused for someone living on benefit. For example, such people are often forced to place a piece of wood or a board underneath the settee once the springs go because they cannot afford to have it repaired.
  Many of my constituents are suffering on benefit, yet the Chancellor did not offer them any prospect of help. Presumably, in this year's social security uprating, such people will get just enough to keep up with inflation—if they are lucky—rather than enough to ensure that they can enjoy some of the luxuries and benefits that the vast majority of people in work enjoy.
  Mr. Christopher Hawkins: It does no good to argue that on the one hand some people on benefit get £180 a week, which is probably too much, and on the other that some get only £41 a week. The real problem with the social security system is that some people get that far too little, while some get far too much. That is why the entire

  925
  system needs to be reviewed. I agree with the hon. Gentleman that heating is a serious problem. In my own constituency, there are houses that cost around £20 a week to heat. Would not it be sensible to have a winter rate and a summer rate for old age pensioners and those on social security—
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman's intervention is turning into a speech.
  Mr. Bennett: I do not accept the hon. Gentleman's argument. For many of my constituents, and I am sure many of the hon. Gentleman's, greater help could be provided if they were given money to spend on insulation, thereby making their properties much cheaper to heat.
  The Chancellor's great claim was that he would increase job opportunities by introducing the new national insurance contribution system. However, I doubt whether he has looked at the practicalities of such a system, because it adds to the poverty trap by imposing a wages trap. It will be extremely difficult for those of my constituents who work in jobs such as shirt making to decide the point at which they should stop producing another item so that they do not cross the threshold and end up worse off. If that is difficult for the individual, it will be a bureaucratic nightmare for the employer. The civil servants who advised the Chancellor to dream up this scheme clearly do not appreciate the problems of people on low pay, particularly those who work in the clothing industry, who are employed on piece rates. It will be exceedingly difficult for such a worker to ensure that he or she does not cross a series of thresholds.
  Difficulties will also be created when people on low pay are offered small amounts of overtime. They may well have to say, "We would like the money, but if we do half an hour's extra work we could end up worse off as a result." The Government must look at this carefully. They should consider allowing people to average their income over several weeks. That would help such workers avoid the possibility of going over the threshold one week and falling below it the next. That element suggests that this is much more a Budget for low pay rather than a Budget for jobs.
  My constituency also needs a reversal of the Government's decision to close Denton skillcentre. That is absolutely criminal, especially as many of my constituents want the opportunity to obtain additional skills. Not only are the Government closing the skillcentre, they are also making the rehabilitation centre unviable. They have now told me that they are trying to find a new site for it, with all the disruption that that will mean. That is extremely unfortunate.
  The Government can create many jobs in my constituency by quickly building the M63 from Brinnington to Denton. That would create many jobs in the construction industry and enhance the opportunities for Tameside to attract industry to the area. Similarly, many jobs could be created and the prosperity of the area enhanced if the Government put up the money for the rail link to Manchester airport.
  Many of my constituents would dearly love decent council housing, and it is criminal that Stockport and Tameside do not have the resources to build new houses in significant numbers because of the Government's policy. Here again, that would create jobs and relieve much of the hardship caused to the individuals.
  926
  The same is true of housing repairs. Houses in the Brinnington, Betley road and Somers road estates are crying out for council renovation. Similar problems are to be found in Tameside. It is totally criminal that the Government refuse to allow unemployed building workers to improve such property.
  There is also a desperate need for home improvement grants, yet the Government's policy means that no money is available and as a result many people are kept out of work. Many other jobs could be created if the local authorities had enough money to spend on road surfacing.
  One of the nursery schools in my constituency is the Popular street nursery school. It is attached to the Popular school, and I was wondering whether the Chairman of Ways and Means would be in the chair, as that was the school he attended. He must have kicked a football around the playground, but there is now a nursery unit with special provision for handicapped children. In spite of persistent efforts to get the Tameside and Glossop area health authority to provide the necessary physiotherapy, we are continually told that because of economic and Government manpower restraints, it is unable to employ sufficient physiotherapists for that nursery.
  These are all examples of the way in which the Government could improve the welfare of my constituents while at the same time providing jobs. We have heard about the review of the income tax system. I welcome that. However, what will happen to rates and local income tax? Do the Government intend moving towards a local income tax system? If not, what do they intend to do about rates? The review of rateable values has been deferred again and again. The excuse was that the Government would come forward with a solution to the rating problem. If they do not do so, the argument is that there should be a revaluation and that it should be determined on market value rather than rented value. I hope that the Government will say whether their reform of the taxation system will go towards the local income tax option.
  We are grateful that VAT has not been imposed on newspapers, but we are worried about the implications of VAT on advertising for local papers, and in particular about the VAT that will go on advertising by many local organisations holding jumble sales and other such things telling people about their activities. The imposition of VAT will have a disturbing effect on organisations that are already struggling to make ends meet.
  The Chancellor claimed that his Budget is anti-inflation and pro-jobs. However, it may turn out to be pro-inflation and anti-jobs. The only claim that can be made for it in the long term is that it is pro-low pay. My constituents are fed up with the Chancellor and would like him to go quickly. More important, they want a change of Government as well.
  7.40 pm
  Mr. Douglas Hogg: The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) outlined the Labour party's spending policy when opening the debate. He clearly had in mind a considerable sum. He began by calling for expenditure on public investment of £3·5 billion. He then said that he wanted to promote a massive policy of poverty relief. Here, he was talking about an extension in child benefits and a substantial increase in the old-age pension. He put a value on that of £2·75 billion. As the House will appreciate, these figures are but part of the Labour party's spending programme.

  927
  There is never a debate in which the Labour party does not call for a reduction in user charges, an increase in subsidies or a massive expenditure on some programme or another.
  The sums that the Labour party's policy contemplates being spent are great. I hope that, when she winds up, the hon. Member for Thurrock (Dr. McDonald) will tell us how the Labour party's policy will be financed. I intervened in the speech of the right hon. Member for Sparkbrook and asked him to be specific about this. He did not clear up the point, or even try to. He said that he believed that the spending programme could be met by taking away the tax privileges that had been conferred since 1979. He equivocated about that as well, because he said that he did not want to go back to the penal tax rates for which he was responsible when he was in office.
  How real and sensible is the Labour party's approach? The amount of money that it is contemplating spending cannot be met from such sources of income. The Labour party could increase the PSBR by £3 billion or so. I would contemplate that, as I am not too dogmatic on that issue, but that would be only a small part of the whole. Even if one were to take the total value of tax concessions made since 1979 to the higher rate taxpayers, in the first year of full operation that would produce only £3,000 million. If one did away with tax relief for higher rate taxpayers on mortgage interest, that would produce only £150 million.
  The significance of this is that if the Labour party wants to spend such sums, only part of which have been disclosed to us tonight, it has substantially to increase the burden of direct taxation on the ordinary taxpayers. That is the conclusion that the House must see and the country must learn.
  Mr. Gerald Malone: I may be able to help my hon. Friend with this sum by reminding him of another policy recently announced by the Labour party. That is the policy of controlling the depletion of North sea oil, so a Labour Government would lose revenue there as well. I agree with my hon. Friend that that, too, would have to go on direct taxation.
  Mr. Hogg: I am obliged to my hon. Friend. He makes an extremely valuable point, which adds further weight to what we are saying. In the Labour party's policy, although it is not fully disclosed, is the determination to impose on the ordinary taxpayer a heavier burden than that which is contemplated by this Government.
  Mr. Austin Mitchell: Not so.
  Mr. Hogg: The hon. Gentleman may say, "Not so," but the Labour party cannot count. Those of us who have looked at this problem and sought to balance expenditure against borrowing and revenue see that there is a massive shortfall, and that the Labour party must increase direct taxation. The Labour party will have to attack either pension contributions or the mortgage interest relief if it is to raise anything like the amounts that it wants to raise.
  Mr. Gerald Bermingham: Does this not all depend on what one spends the money on? If one spends it on senseless things such as armaments and unnecessary things such as Trident, more money will have to be raised for secondary programmes. It also depends on what investment is put into the country. If one allows £30
  928
  billion to flow out of the country, that is £30 billion less invested in the country, which could generate more income and in turn more revenue.
  Mr. Hogg: The hon. Gentleman is not facing up to the problem. It is possible to redeploy expenditure between programmes, and one can make a policy decision between one policy and another and one programme and another. However, such savings are small in the context of the expenditure being called for. There is some force in what the hon. Gentleman says about investment, but the lag time is so much that finance has to be put up front, and that means either heavier taxation of the kind that I have suggested, or a borrowing policy that is wildly in excess of what the country can afford.
  Like my right hon. Friend the Chancellor, I feel that he was operating within constraints. Broadly speaking, those constraints are inevitable. I do not see how he could substantially increase the PSBR. It could be marginally higher than the £7 billion that he has in mind, but at the most we are talking about an increase of £3 billion. At the same time, it was essential that he should reassure international markets that the Government's prime object was to defeat inflation. Therefore, he was constrained by factors that he had to take into account. However, within those constraints he has achieved effective targeting of the resources that it is within his ability to dispose of. That is a considerable achievement.
  When my right hon. Friend the Chancellor comes to review the success of his policy in two or three years, I think that he will conclude that one of his most important measures has been the expansion of the youth training scheme. The Government are entitled to considerable credit for what has been done. To give 16-year-olds a two-year training scheme is an important policy. However, although it is right that employers should carry the major part of the increased cost, it is also right that the Treasury should recognise that the public interest is being served by this policy. That being so, we should not be too niggardly with the Government contributions towards the increased costs. If the Treasury is too frugal at this stage, the scheme may not live up to our expectations.
  When one has a two-year scheme, one is giving employers and employees the opportunity to develop a training scheme that has the advantage of providing training in up-to-date technologies, the kind of technologies that will survive through the 21st century, when those going into the scheme will be at their most productive.
  It is important that the Government should seek to encourage employers to provide training in precisely those areas that are likely to have a viable long-term future. Some fiscal encouragement should perhaps be given to promote that end, such as giving zero-rated VAT status to machinery or computers that are installed primarily in order to provide training within the YTS.
  Before turning briefly to taxation, I shall make three specific points. The first concerns stamp duty. It is a great pity that we did not take the opportunity to abolish the stamp duty on property transfers. That would have been an encouragement to the construction industry that would be worth giving. Secondly, I recognise that we have raised the bands for capital transfer tax by the statutory amount, but I hope that the Government do not suppose that they have done all that their supporters want them to do during the lifetime of this Parliament. They have not.

  929
  Thirdly, my hon. Friend the Minister will appreciate that in the 1984 Budget marked changes were made to capital allowances. That was all right for the corporate traders, because they benefited from the reduced corporation tax, but it was not so all right for the non-corporate traders. I think particularly of farmers, as there are many non-corporate farmers. They were badly hit by the reduction in the value of the capital allowance introduced in the 1984 Budget. The Government must see what can be done to provide more parity in the matter of capital allowances between non-corporate traders and corporate traders in agriculture. I have made some suggestions in writing about capital allowances, and I should be grateful if my hon. Friend the Minister would look at them.
  I have two points to make about taxation. First, I warmly welcome the decision of my right hon. Friend the Chancellor of the Exchequer to mount a full inquiry into taxation, and particularly the personal tax relief system. I am glad that it will be preceded by a Green Paper. Indeed, all tax changes of magnitude should be preceded by one. It is not right to introduce them in a Budget without prior consultation. I particularly welcome the proposal that husbands and wives should have separate tax allowances, capable of being transferred to the other partner if the allowance is not fully used up. That is a valuable step forward. Thus, I heartily welcome my right hon. Friend's decision to examine tax allowances and the income tax system generally.
  My second point concerns national insurance contributions. I said earlier that I thought that, when my right hon. Friend the Chancellor came to consider his period in office, he would perhaps value most highly the expansion of the youth training scheme. But the other thing that he will feel very satisfied about concerns the changes that he has made to the national insurance contribution system. There have been two changes: the reduction in the cost of employing persons at the bottom end of the pay scale, and, perhaps just as importantly, the reduction in the total deductions from pay that are now made for workers at the lower end of the wage scale.
  Two very important consequences flow from that. First, I am certain that the changes and reductions will encourage employers to take on more staff than they would otherwise do. Secondly, if we reduce the net cost of being in work at the bottom of the pay scale, it will do something positive to alleviate the poverty trap.
  My right hon. Friend the Chancellor of the Exchequer said, when introducing these measures, that he regretted that he did not have more resources to devote to the reduction in the national insurance contributions borne by employers and employees. I echo that. I very much hope that in the 1986 Budget he will place even more emphasis on national insurance contributions, and that he will do more to reduce the cost of national insurance contributions to employers and to the lower paid employees.
  This was a modest Budget, but it can be fully supported, and I very much hope that the House will do so.
  7.55 pm
  Mr. Austin Mitchell: The reaction of Conservative Members has been very interesting. Most of them have stayed away in embarrassment, but those who have spoken have said very little about the Budget.
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  We had a sort of economic diatribe from the hon. Member for Grantham (Mr. Hogg), who displayed an economic eccentricity that is almost certainly inherited. His sole recourse was not to defend the Budget but to attack the Labour party and thoroughly to misrepresent it. My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) made it quite clear that the money for our proposals would be raised by increasing the PSBR, so that it remains a constant proportion of gross domestic product. Indeed, Gavin Davies has made it plain that the PSBR could be doubled to about £16 billion without causing any inflationary monetisation.
  Thus, we would increase the PSBR and we would take back the tax concessions given to the wealthy—that small proportion who have benefited so disproportionately under this Government. That is all. That would raise the money for our programme, which has been carefully announced and costed. Yet the hon. Member for Grantham tars that programme with all sorts of false smears and accusations.
  That is one way of defending the Budget. The other way of defending the Budget involves the obscene spectacle of the well-heeled, like the hon. Member for Bridlington (Mr. Townend), demanding cuts in low pay sustained by cuts in benefits, so that low pay and benefits can pursue each other down pari passu. That is their only answer to the economic difficulties that their Government have created. To demand sacrifices of others when they have loyally supported policies which have destroyed jobs and generated such poverty is obscene in today's politics.
  That is my reaction to the defence put up by Conservative Members. But my reaction to the Budget was, sadly, to feel rather sorry for the Chancellor of the Exchequer. I know that it is difficult to feel sorry for someone who is so cocksure of his own abilities but he has had to put up with a succession of editorials, and comments in the newspapers and from his own Back Benchers, praising the Budget with faint damns. He has also had to put up with the very unfair situation that he was sprung into by the Prime Minister.
  Until January, the Chancellor was running a more accommodating policy than he was prepared to admit. It was the sort of accommodating policy that he wanted to pretend had fallen off the back of a lorry, but he was really expanding the money supply without it showing in the M3 figures by gobbling up commercial bills, which was of some benefit to industry. He was letting the exchange rate fall slowly and was not trying to deter that process. He was tiptoeing away from monetarism, and was trying to smuggle in improvement past mummy like a naughty boy who has brought in some sweets.
  Suddenly the whole situation degenerated and collapsed on him in January, because the Prime Minister intervened to stop the pound falling. She interprets the exchange rate as some sort of phallic symbol. Any threat to the exchange rate is a threat to the national virility. The Prime Minister therefore intervened in a way that the Chancellor of the Exchequer had not been doing. Her signals to the markets so complicated the situation that we had the fiasco of January when everything was thrown into confusion. The Tory party in a crisis, particularly under this Government, reverts to orthodoxy. The Chancellor of the Exchequer was put back on a short lead, and has been on it ever since, as the Budget demonstates.
  It was rather sad, because the career of the great tax reformer and the great economic reformer, that had begun

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  with such a bang, ended with a whimper at the whim of the bankers. He is now back to piggy-banking economics and budgets. This is a Budget of know nothing and do nothing, particularly for the poor and for those in the poverty trap. Since 1979, the number of those in the poverty trap has increased threefold to a present total of a quarter of a million families. The Budget will take 5,000 of those families out of the poverty trap—and that is all. It does nothing for the old or for the unemployed. Whatever the poor and the less well-off will gain through tax cuts will be taken back through increased prescription charges, increased excise duties and increased charges for water, electricity and gas. Any measly sum that they may be given with one hand is immediately taken back with the other.
  Above all, nothing is done for the social and economic problems that beset our country, and, to my mind, perhaps the paramount accusation is that nothing is done for Grimsby and its people.
  Yesterday we saw the pathetic spectacle of a Chancellor chained to the Prime Minister's outdated orthodoxies, miserably peddling his pathetic wares and trying to pass the blame for the Budget on to Arthur Scargill, as if it were Arthur's Budget rather than Nigel's.
  The mountains—that is not a physical description of the Chancellor though he may accept it if he wishes—have laboured and have produced a ridiculous mouse. This is not a Budget — it is a bludge-it, a fudge-it, a perpetual financial fidget. It is only a confirmation of the strategy of preceding years—that of moving furniture on the deck of the Titanic and pretending that one is doing something to prevent the ship from sinking. And most of the furniture has been taken from the steerage passengers to improve the conditions of the first-class passengers.
  No other Government since the war have enjoyed, like this Government, the great opportunity of North sea oil. That was an opportunity to expand and to put aside the balance of payments constraints that have shackled every other attempted expansion. The Government have thrown away that huge overdraft facility. They have done what a small-minded man would do. This is not a Budget for the small man—it is a Budget for the small-minded. The Government have simply moved the furniture, and they have moved it between the rich and the poor.
  The effect of this Budget and this Government's preceding Budgets has been to cheese-pare the benefits to which people would have been entitled had the rules existing under the Labour Government been maintained. About £1 billion that should have gone to beneficiaries under those rules has been held back, while at the same time £3 billion a year has been given to a very small percentage of the population—primarily to those earning over £20,000 a year and, most of all, to the top 5 per cent. of the population. In this and the preceding Budgets, £3,000 million a year has been handed out to such people. That is an obscenity.
  It is especially obscene to hand out benefits to those paying capital gains tax and capital transfer tax and then to talk about abolishing the wages councils that protect the earnings of the less well paid. The Government have a responsibility not to indulge in such grabbing, but they believe that the rich are not working hard enough because they do not get enough money, while the poor are not working hard enough because they have too much money.
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  That is the simple belief that motivates the Government. Such economics is obscene at a time when the Government have a responsibility to expand the economy and to improve the welfare of all—not to take from the poor to give to the rich.
  The Government have used the effect of North sea oil on the balance of payments to finance imports and destroy jobs, and they have used the tax revenues to support the unemployment generated by that process. They have used North sea oil to destroy industry. Profits are now rising. Of course they are—any firm that could survive the squeeze from 1979 to 1981 must now be doing well—but we have lost an enormous amount of capacity in the process.
  Industry is not emerging fitter, leaner and healthier. Despite all the cries from the Government Benches about rising investment, manufacturing investment, which is crucial to survival and jobs, has been running in the past five years at only 75 per cent. of the previous five years. Investment is falling, unit labour costs are rising, and the gains in productivity of which the Government boast are illusory. On the Government's reasoning, one could improve the batting average of a cricket team by shooting the last three batsmen. And even that benefit has petered out over the past year. We have shown less improvement than our competitors.
  What formula is that for industrial and manufacturing success? What has the agony of the past five or six years been about? All that unemployment, all that discipline, all those constraints on industry and all those high interest rates have achieved only the preface to an even bigger failure in years to come.
  The Government have concentrated on juggling. They have juggled between the public and the private sectors. They have taken wasteful resources from the private sector — the people whom their policies have taken out of work—and put them in the public sector by giving them unemployment benefit and supplementary benefit. Meanwhile, the Government have taken productive assets from the public sector and flogged them to their friends in the private sector. It has been a bankrupt's progress—an attempt to keep going.
  The result of those policies has been economic disaster. In the five years to 1984, we lost 1·7 million jobs in manufacturing industry. That is 22 per cent. of manufacturing jobs. The rate of loss was greater than in any other advanced industrial country. Other countries are still prospering by dint of doing what we have destroyed our capacity to do. Japan makes hi-fi equipment, West Germany makes cars and Italy makes white goods.
  Where will the jobs come from if we do not rebuild manufacturing industry? It is all very well to talk about new jobs in the new industries, but that development requires a climate of buoyancy, growth and the expectation of profit. Profit demands the expectation that things will improve. Under the present Government, there is no possibility that things will get better. The Government mean to carry on with discipline. Discipline is the enemy of investment because it is the enemy of the kind of profit and expansion that we need if there is to be investment.
  These policies will never pay. The only new development that we are seeing takes the form of a few Japanese cast-offs. The outdated technology of Japan is being sent here for small-scale production units to supply the British market. Such are the developments for which

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  the Prime Minister goes grovelling round the world. She is pathetically, gibberingly grateful for droppings from the table of Japan.
  What should the Chancellor have done? He should have stimulated economic development by spending on the infrastructure. Infrastructure is a fashionable word. Five years ago, we would not have known what the infrastructure was. Well, perhaps I might have known what my own infrastructure was. But the word is now so fashionable that even the daring revolutionaries of the CBI have got up off their knees to demand spending on the infrastructure.
  This country is characterised by a creaking and disintegrating infrastructure. It is like the out-of-date theatre in which Laurence Olivier played in "The Entertainer": "Don't clap too loud — this is an old theatre." The stage is now set for the Widow Twankey and her team. The audience in the stalls is very well-heeled, but there are murmurings from the poor and badly-dressed people in the gods, the foundations are creaking and groaning, and there is a rising smell from the sewers.
  The Government must spend money on the infrastructure in order to stimulate economic expansion. In the building trade, 400,000 people are out of work. By borrowing, and putting those people back to work, we would stimulate the economy. The Government will not do that because they do not like the public sector. It would have to be done by government, and government is their enemy. To this Government, the public sector is either a mulch cow—they take the money from electricity and gas—or, if it is profitable, it is something to be flogged off. The public sector must be used to stimulate investment in the infrastructure and so to stimulate the economy.
  The second thing that the Chancellor should have done is to compensate people for poverty. The victims of Thatcherism demand compensation, and they should get it. I would have increased child benefit to £16 or £17 a week, and I would have taxed it. That would have been fair. To increase the benefit massively and to tax it would have been the most effective way of alleviating poverty directly. That measure would have gone to the core of the problem. As has been said, those who have been out of work for one year or more should, as a matter of social justice, get the long-term rate of supplementary benefit. It would cost only £500 million in a full year and make a difference of £12 a week for a couple. It is their due. It is social justice that they receive that rate from a Government who have created long-term unemployment, which is now three times its level of the 1930s. Indeed, even short-term unemployment is higher now than it was in the 1930s.
  The Government should have stimulated jobs not by fiddling with the national insurance contribution, as they have, but by giving new jobs a national insurance holiday and by raising the limit, which comes in far too abruptly at £35·50, to £50. I should like the national insurance contribution to be transmuted into a simple social security tax. It is a form of income tax, after all. There is no reason why it should come in at £35·50. If the Government want to help the low paid, especially part-time workers, they should put national insurance contributions on income tax and make them what they effectively are — a social security tax. That worked well in New Zealand.
  I would subsidise new jobs. It would cost about £4,000 a year to subsidise a new job. The cost of keeping people
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  unemployed in benefits paid and tax revenue lost is £6,000 a year. It is economic sense to subsidise firms that create new jobs.
  The Chancellor should have paid attention to getting interest rates down. We are told that that has been the object of Government policy for six years. After six years of travail, difficulty and record interest rates, interest rates are at their highest real level since 1922. That is some achievement. All that to get interest rates to their highest real level since 1922. They are a drag on the whole economy. Indeed, the economy is being crucified by them. With interest rates, the free market will not work. It gives the banks too much power. Every time that there is a threat to the pound—there have been four in the past few years—the banks come in a Gadarene rush to push up interest rates, usually led by Barclays. To give the banks so much power over interest rates is to put the ivory poachers in charge of an African game park. The free market lets them push up interest rates, and they benefit by doing so. The Chancellor should take control of interest rates and, if necessary, expand the money supply to hold interest rates down and to get the pound down still more.
  Although the pound is now undervalued against the dollar, it is overvalued against the deutschmark. Everyone chooses to forget that in 1976 we promised the International Monetary Fund that we would maintain the competitive position of British manufactures at home and abroad. Since then, the pound has been allowed to increase in real terms, because of our higher rate of inflation, by 40 per cent. against the deutschmark. That is why we have a deficit of £5 billion with West Germany in manufactured trade. That is why they are destroying jobs in the west midlands. It is crucial to get interest rates down and to remove that disparity.
  The key to the Budget's failure is its failure to deal with the public sector borrowing requirement. We need deficit financing on the scale that the American Government have gone in for to stimulate the economy. I am going further than the Opposition Front Bench. I must point that out to the hon. Member for Grantham or he will wilfully misinterpret everything that Labour Members say. If purchasing power is deficient, and there is therefore a deficiency of demand, the only way in which to compensate is to increase demand and spend money. Demand is deficient because we have 4 million people out of work. It is no use telling us that there is a demand there for Japanese cars.
  Bearing in mind the stage in the economic cycle and allowing for expenditure on unemployment, we are not in deficit but in surplus—to the tune of 2 per cent. of gross national product, according to OECD figures. Not many other countries are in surplus, and those that are are usually doing almost as badly as us. However, we are doing worse than most because our surplus is bigger. The United States, Japan and Italy are in substantial deficit. do not give me this nonsense about Keynesian expansion. The United States is doing what we should be doing — running a deficit and stimulating the economy by it.
  The Chancellor talks to us of recovery from the depths of the depression that he and the Government have created. However, there will not and cannot be a recovery, nor can we describe the glimmering as genuine recovery, until unemployment begins to come down and until we have made some way in replacing the capacity that has been destroyed, especially in the disastrous years of overvaluation. The Government told us how good for us was

  935
  the over-valued pound during 1979 and 1981. We can talk of recovery only when social justice can be restored because unemployment has fallen. All that happens until then is "gather ye rosebuds while ye may, make money while you can" and stash it away overseas in the productive capacity of our competitors. The Budget is a tragic waste of opportunity. This is the last strong year of the oil peak.
  Mr. Stuart Randall: Does my hon. Friend agree that the Budget is irrelevant to the country's problems? Does he agree that the Government are relying on the Fowler report and a mass of Green Papers? Will not the Government rely on the Young report and therefore does my hon. Friend—
  Mr. Deputy Speaker (Sir Paul Dean): Order. Interventions should be brief.
  Mr. Mitchell: It is utterly irrelevant because the Government's only solution now, on the basis of the Fowler reviews, is to start cutting benefits. That is their answer to the difficulties that they have created.
  Like the Government, the Budget is a tragic national waste. It is a waste of opportunity as, for the first time, we are self-sufficient in oil and do not have a balance of payments problem that comes from that. The Government have even thrown away the balance of payments benefit of oil because we now have so little room for necessary expansion, because they have wasted oil revenues. The Government and the Budget have wasted human resources by throwing people on the scrap heap. Many of them are strong of back or young. They want to get into the habit of working and to contribute to industries that they have watched being destroyed. We also have the waste of high interest rates, which are a crippling burden on the economy, the waste of under-capacity and of £17 billion every year spent just to finance unemployment. That is a conservative estimate based on the House of Lords Committee's estimate of the cost of unemployment. That is the biggest folly of all— wasting £17 billion every year on keeping people out of work rather than investment in capacity and growth.
  The verdict is that the Chancellor fiddles while Britain sinks. Interestingly, I heard at a Christmas service, at which I read the lesson, a text from the book of Isaiah which was read by my hon. Friend the Member for Huddersfield (Mr. Sheerman). The text stated:
  "You have enlarged the Kingdom and increased their joy".
  The Government's real responsibility is to enlarge the kingdom to build up the economic strength of the country and to provide the framework within which industries can grow. The enterprise economy about which the Government talk needs the framework of Government management so that the economy can grow. That enterprise climate cannot develop as a result of discipline and depression. The Government have a responsibility to provide the framework of economic management in which the climate of enterprise and expansion can grow to enlarge the kingdom and increase their joy. The Chancellor has weakened the kingdom and increased their misery.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. I remind the House that the time for debate is limited. Brief contributions will mean that fewer hon. Members will be disappointed.
  8.20 pm
  Mr. Gerrard Neale: I apologise to my ministerial colleagues and to the House in general for the fact that I was not present for the opening speeches because of Select Committee duties. Although I am tempted to follow the path of some of the prejudices of the hon. Member for Great Grimsby (Mr. Mitchell), I shall resist the temptation, in view of your request for brevity, Mr. Deputy Speaker.
  I congratulate my right hon. Friend the Chancellor and his colleagues on what they have done. The abolition of development land tax is extremely welcome. I am pleased that my right hon. Friend has not done anything on the pension fund front because, while the state pension system is under review, it is only right and proper that we should do nothing to discourage people from opting out of that state pension system and taking up private pensions. I am also pleased that my right hon. Friend has not imposed VAT on books.
  A number of changes on the small business front will be welcomed, including VAT threshold and relief for bad debts. I am sure that my right hon. Friend knows that the small business community is never satisfied. It is always seeking further assistance, but there is no doubt that these changes will be most welcome.
  In keeping careful control on public expenditure, my right hon. Friend has sought to do what he can to assist people, especially the low paid and the unemployed. I know, because I represent a constituency which has one of the highest unemployment levels and endures low average pay levels, that the Budget is especially welcome. It has considerably helped the low paid by lifting their tax thresholds disproportionately in comparison with the thresholds of those on high pay. The changes in national insurance contributions will make a real difference to employers' abilities to consider employing low-paid people and to the take-home pay of the low paid.
  I am pleased that my right hon. Friend is examining seriously the future of a contentious issue — wages councils. In an area such as mine there is no doubt that there is work to be done but, whatever the Opposition may like to pretend, the fact is that work often does not generate a great deal of profit—whether it is distributed as profit to the employer or distributed as wages and salaries to the employed. If work does not generate a great deal of return, high wages cannot be paid.
  In the west country, people who are willing to employ and people who are willing to be employed are unable to enter into such arrangements because of the law on wages councils. No one—least of all myself—is in favour of a low wage economy. We cannot escape the fact that, because certain types of work have only a low return, wages are low. I am keen to ensure that careful consideration is given to wages councils — not necessarily with a view to their total abolition, but to ensure that they do not fetter opportunities to find work in low pay areas, such as the west country.
  The enlargement of YTS and the community programme is especially welcome. Throughout the country, and especially in the west, there is evidence that new jobs are being created. There are more jobs now, but they are often taken by people in their 30s and 40s,

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  including, perhaps, women whose children are old enough for their mothers to go out to work. Employers prefer such people to the youngsters leaving school or existing youth training schemes.
  It is only right and proper that we should examine why that is happening and take every measure we can to increase the attractiveness as potential employees of young people leaving school or training schemes. I welcome the steps that the Treasury is taking to provide two years of training for 16-year-olds and one year for 17-year-olds. The community programme could not have been increased more than it has been. If my right hon. Friend the Chancellor had sought even to double it, it would have been impossible to find sufficient projects because of the controls that would have been necessary.
  The Opposition must always examine local trade union attitudes to community schemes. Too often, such schemes are inhibited by the unions' attitude to pay rates. The Opposition should examine their conscience when they speak out so loudly and gladly about their concern to put the long-term unemployed on community schemes.
  I urge my hon. Friend the Financial Secretary to pay careful attention to the review of board and lodging allowances by his right hon. Friend the Secretary of State for Social Services. It is all very well for the Opposition—I note that the hon. Member for Denton and Reddish (Mr. Bennett) is back in his seat — to speak with sincerity but dogmatically about levels of board and lodging and about creating more housing.
  I have said in the House that the position in the west country is similar to that in many other places. There is virtually 30 per cent. unemployment in Newquay in my constituency. A substantial proportion of those unemployed people have nothing to do with Newquay. They were not born in Newquay and have only in recent times come to the town. I have been told unofficially that more than 2,000 young people have come to Newquay merely to claim the board and lodging allowance, with no prospect of obtaining work. They are doing so because the system encourages that action.
  I know that my hon. Friend the Financial Secretary—I commend him for this—is determined to match work with potential employees, but we must consider how the system is working. We must ensure that people cannot enjoy uninhibited mobility to move from one area of unemployment to another to claim higher benefits when it is evident that there are not employment opportunities in the new area or, if there are, that there is already a pool of unemployed labour to take them up.
  Mr. Butterfill: In my constituency, 7,000 people are on board and lodging who have come to the area only recently. It is estimated that nearly 4,000 of them come from greater Merseyside.
  Mr. Neale: I agree entirely with my hon. Friend. Surely it is possible for a simple system to be devised to meet what I suspect is the case of the hon. Member for Denton and Reddish. If someone genuinely wants to move from one place of work to another and genuinely has interviews to attend, it will be possible for information and evidence to that effect to be produced. However, in my constituency, and in that of my hon. Friend the Member for Bournemouth, West (Mr. Butterfill), people are arriving at this time of year from places such as Glasgow. They are choosing to move into towns with seasonal
  938
  employment such as Newquay. They expect to find work, but if they do not they are entitled to claim benefit. This is one of the nonsensical consequences of uninhibited mobility.
  Mr. Andrew F. Bennett rose—
  Mr. Neale: I would rather not give way. The hon. Gentleman did not give way to my hon. Friends and I am conscious that others wish to contribute to the debate.
  The enterprise allowance scheme is a marvellous way of encouraging the long-term unemployed to find work. It is commendable that we encourage people to start up their own businesses under the scheme, especially in areas which involve subcontracting. We give them every encouragement by way of the allowance but it must be nonsense for us to place in front of them almost hopeless hurdles before they can overcome the 714 certificate procedure. I know that changes have been made recently and that if a new contractor can obtain a guarantee from the bank that he will be able to meet his tax liability, a 714 certificate will be issued, but I urge the Financial Secretary to give the procedure the most careful consideration.
  I understand the historical reasons why the procedure was introduced but it should not be beyond the wit of any of us to devise an arrangement to enable someone who starts a new business, especially under the enterprise allowance scheme, to establish through his accountants, probably with a letter of confirmation, that it is a bona fide new business. This should enable him immediately to gain clearance and a 714 certificate without the paraphernalia of a bank guarantee or anything else.
  It has been suggested in correspondence that I have had with my hon. Friend and his Department that it is not an inhibition to provide that arrangements can be made through those with whom he contracts—for example, a constituent firm — that they deal with the tax implications. The procedure is an inhibition on those who are starting a new business under the enterprise allowance scheme, and I urge him to remove it as soon as possible.
  I am becoming increasingly concerned by reports that are reaching me from constituents and from accountants practising in Cornwall about the attitude towards small businesses and the self-employed by Inland Revenue staff. It appears on examination that we cannot necessarily criticise the staff for their actions. I suspect that my right hon. Friend the Chancellor of the Exchequer has said that the money-collecting processes of the Treasury should be tightened. I presume that he takes the view that one should run an efficient Department and that tax due to it through the Treasury should be paid. Perhaps that approach deserves some commendation, but it is imposing a degree of examination and analysis of the affairs of some of the self-employed in my constituency which is incredibly disruptive and which goes beyond what is fair and justified in some instances.
  It is necessary only to deal with those who are in the process of starting a new business or venture to understand the pressures that are upon them during the first two years or so to get their business established. If they are to live in fear of such detailed analysis and investigation and to know that they must prove their innocence in tax affairs, we are not encouraging them to start their own businesses. I ask my hon. Friend the Financial Secretary carefully to consider the various incidents which I have related to him in the past. I suspect that others have provided similar examples.

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  Within the constraints that the monetary position has placed upon my right hon. Friend the Chancellor of the Exchequer, I feel that he has introduced a good Budget. He has attempted to apply the available resources in the right directions. He has tidied up a number of areas which needed tidying up. I feel that, within the constraints that have been placed upon him, the Budget will offer greater hope to low wage areas and areas with economies that have a low level of activity such as Cornwall. The Budget will help them to improve their positions.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. It might help the House to know that the speeches from the two Front Benches in reply to the debate are expected to begin at 9 o'clock. This means that the time available for Back Bench contributions is very limited.
  8.37 pm
  Mr. Michael Hancock: For the Chancellor of the Exchequer to present his Budget suggesting that it was a package for jobs was pushing credibility to the extreme. The way in which Conservative Members have tried to justify that statement has been eccentric if not bizarre. No hon. Member, certainly not on the Opposition Benches, could have been left in any doubt about the eccentricity in the suggestion that the Budget will serve to shorten dole queues. It is aimed and targeted more at the man in the City than at those queueing at the jobcentres and labour exchanges. It will do little except provide for fiddling at the margins. Some of the proposed changes will increase the number of unemployed instead of boosting job opportunities.
  During the debate that took place last week on unemployment I said to the Secretary of State for Employment that the alliance budget was worth considering. He gave the impression that he was intent on taking on board some of the issues that I raised in the debate and I hoped that he would pass them on to the Chancellor. The policies that alliance Members have advocated consistently would provide the Chancellor with the opportunity to set a new political and economic course and to start the difficult task of reuniting the nation. The policies that we advance offer that new approach. They would allow the Government to start turning the rising tide of unemployment and assist industry to become more competitive. They would provide special help for those in most need such as the long-term adult jobless, the young, the elderly and working families caught in the poverty trap.
  The Chancellor ignored, unfortunately, the arguments that I advanced last week in the debate on unemployment. He has ignored also the arguments that have been advanced consistently by Opposition Members and Conservative Members. It has not gone unnoticed by me during the nine months in which I have been a Member of this place that individual Members have pleaded on many occasions for something to be done to alleviate unemployment. At the same time they have offered solutions. Unfortunately, we have a lazy, lethargic Chancellor who chooses not to listen to these pleas. He chooses instead to go along the old trail that has been trodden before. The result is a Budget which is nothing more than a sackcloth package. It has been shorn of the
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  attractive tax reform trimmings that adorned the Chancellor's first Budget last year. His latest effort ensures another lean year for the unemployed.
  In 1984, the Chancellor introduced his first Budget and proclaimed that it was a Budget for jobs. However, unemployment increased by 130,000 during the year. This year he has ensured that the jobless figures will undoubtedly go on rising by sticking so fanatically to his financial strategy. One can only guess how many jobs will be lost in the coming year.
  The Budget is nothing more than a con trick, just like last year's. The Chancellor has not really given anything away. Last year, public borrowing overshot the Chancellor's target by a massive £3·3 billion. Even allowing for the £2·75 billion cost of the miners' strike, last year's public sector borrowing requirement would have turned out at approximately £8 billion. This year, he means to cut borrowing by a further £1 billion. This extra deflation means that the Government will be taking more money out of the economy than they are putting in. On recent trends, this will cost a further 100,000 jobs, severely limiting the effect of expanding special employment schemes.
  The Budget has done nothing for jobs, competitiveness or compassion. The Chancellor could have used the resources by which he put up tax allowances for those in work to rebuild the crumbling fabric of Britain—for new house building, and the improvement of housing, road building and sewerage, and for maintenance generally of the shabby and dilapidated infrastructure in the country. Alternatively, he could have used the money to help those worst hit by the recession, the long-term unemployed and families in the poverty trap.
  Opposition Members have repeatedly stressed this afternoon the difficulty that people living in that poverty trap face—not weekly, but daily and hourly. I witness at my advice surgeries many pensioners who struggle not only to see the week through but to survive the day with the escalating costs of heating and food bills. Many of them go very much without the essentials of life.
  The Chancellor announced two main job creation packages in the Budget, both of which we on the alliance Benches have long advocated. First, he announced a restructuring of national insurance contributions, something universally welcomed by hon. Members in the last two days. It is hoped that this will provide employment opportunities for the young and unskilled on low earnings. Unfortunately, it will do nothing to get to grips with the problem of the 3·5 million people who sign on. It pays but lip service to the problem.
  A Conservative Member spoke today about crocodile tears being shed by the Opposition. I have seen so many crocodile tears shed by Conservative Members that the place is awash with them. They pay but lip service to the problems facing the communities of the country.
  The Chancellor's second announcement concerned the expansion of the community programme by an additional 100,000 places, and the extension of the youth training scheme to a two-year programme. We would welcome this, as have many other hon. Members, but, if the YTS is expanded to a two-year programme and employers come forward to offer jobs, we hope that there will be some strict control of the calibre and ability of those firms to maintain that programme, and to make sure that people are given a real opportunity of learning a skill and having two years'

  941
  worthwhile employment, with a real measure of hope that the training will sustain them in worthwhile employment in the future.
  The Chancellor has increased allowances by 5 per cent. more than inflation for the standard rate taxpayer, but he has done little to help the badly off and relieve the poverty and unemployment traps. A more effective way of doing this for the same money would have been to increase the family income supplement and to extend the long-term rate of supplementary benefit to those unemployed for more than one year. It is absurd that those people who have been unemployed for over a year and who need most help are denied it because of the way in which the Government have chosen to manipulate the manner in which benefits are paid.
  I find the Chancellor's whole attitude in the last few months grossly irresponsible. There is particularly the way in which he has allowed speculation about the VAT increases and pension rights to be used as a political football. He should have done the honourable thing and clarified the position, particularly on pensions. Perhaps then there would not have been the bitter scenes that were witnessed round the country in which senior police officers took early retirement to avoid the possibility of their benefits being taxed.
  Every newspaper in the country has been worried about its future because of the possibility of the imposition of VAT. The manufacturer and the retailer of children's shoes and clothes were crying out for a specific statement from the Chancellor that this was nothing more than speculation, and that he had no intention of imposing VAT. Is it right that the Chancellor should allow a period of some four or five months of such speculation? Of course it is not. It is totally irresponsible. He made no effort to allay those fears, which were so rightly expressed.
  What did we hear in the Budget? There was no VAT on newspapers, but there was VAT on advertising. The consequences of that pose a real threat to many of the provincial newspapers in the country, because the VAT will go on the very advertising on which many provincial newspapers survive. Is it right that VAT should have been imposed on death, marriage and engagement announcements, or, indeed, on the selling of individual items offered in the bargain basements that are found in so many newspapers? The very substance that keeps those papers in operation will be threatened yet again.
  The alliance would have done more to help the jobless with a programme of investment. I am sure such a programme would have received the support of many of the Chancellor's right hon. and hon. Friends, had they had the backbone to stand up for it.
  The Budget is nothing more than a Budget for the city slickers. It is not for those who are sick of the never-ending poverty and unemployment. It offers no hope and no compassion. It is a mealy-mouthed and hard-hearted attempt to pursue the same dogma. I end where I started. It is the Budget of a lazy and incompetent Chancellor who chooses to ignore the stark reality that hits hon. Members in the face every time that they go into their constituencies, if they are truthful. It is about the poverty, the unhappiness and the heartbreak that long-term unemployment brings.
  8.46 pm
  Mr. John Butterfill: I made a speech in my constituency in Bournemouth last weekend in which I told those present what I hoped would be, and
  942
  what I hoped would not be, in the Budget. Hon. Members can imagine, therefore, how pleased I was when, on hearing it, I realised that almost everything that I had hoped would not be in it was not in it and that most of what I had hoped would be in it was in it.
  I am particularly pleased that we have expanded the youth training scheme. I believe that it makes an enormously valuable contribution to the training of our young people. I am surprised that it has been so much criticised by Opposition Members. I can remember that they produced two or three Green Papers on youth training when they were in power, but succeeded in doing nothing. How they can criticise the Government not only for introducing the scheme but for subsequently substantially extending it I fail to understand.
  Similarly, I am delighted that 100,000 more places are provided on the community programme. It has been enthusiastically taken up in Dorset and in the west country as a whole. It has provided useful employment. I know that in my constituency there are sponsors for the community programme who were looking for additional funding, and I am grateful to the Chancellor for making it available.
  In particular, those in my constituency who are involved in the tourist industry will appreciate the changes that have been made in taxation thresholds and national insurance. They will undoubtedly encourage greater employment of low-paid people. Many people in the tourist industry in my constituency have told me that they have been advertising vacancies for a long time. I know that they are not very well paid. The problem is that, when one takes into account the benefits people can get, one realises that they are often no better off taking a job. What the Chancellor has done now at least will encourage the filling of those places, and it will encourage people to take up employment which in the end must be to the economic benefit of the country.
  I am sorry that the hon. Member for Coventry, South-East (Mr. Nellist) is no longer in his place. He sneered at the tourist industry and thought it incredible that Conservative Members regard it as worth while. I remind Labour Members that tourism provides 1·4 million jobs. The next largest industry, the construction industry, employs fewer than 900,000 people. Tourism is by far the most important industry in employment terms.
  Tourism produces about £5 billion a year in foreign revenue for Britain, making it our third largest industry in terms of overseas earnings. Therefore, its importance should not be under-estimated. I should like the hon. Member for Coventry, South-East to know that, apart from providing jobs for waiters, chefs and part-time workers, the tourist industry and, in particular, hotels, create many jobs in the construction industry. They create jobs in the manufacture of cutlery in Sheffield and linen in Lancashire. They employ people to make buses and coaches to carry tourists. Tourism is one of our most important industries. Therefore I am particularly grateful to the Chancellor of the Exchequer for helping it in the way he has.
  With the present exchange rate of the pound against the dollar we have a unique opportunity to expand our tourist industry considerably. Therefore, I should have liked to see a little more help given to the work of the British Tourist Authority in promoting Britain overseas and in encouraging overseas visitors to come to Britain — particularly because tourism brings employment to the

  943
  regions. I am surprised that a midlands Member such as the hon. Member for Coventry, South-East does not appreciate that. I remind him that the chairman of our own Back Bench tourism committee is a midlands Member, and that Birmingham is one of our great and expanding centres for the tourist industry.
  I shall not apologise for mentioning one or two things that the Chancellor of the Exchequer has not done. The hon. Member for Great Grimsby (Mr. Mitchell) — unfortunately, he is no longer in his place—referred to an extension of child benefit. I cannot imagine anything that would be less appropriate to our problems. The difficulty with child benefits and other similar universal benefits is that we pay out enormous sums and then collect back an enormous amount in taxation. That policy does not redress the fundamental problems. It does not help people to avoid poverty. There are still many genuinely poor and deprived people. Child benefit is not the route to take. I would rather see increases in family income supplement or special arrangements for supplementary benefit that would get rid of child benefit altogether.
  There are special groups to which we are not necessarily addressing ourselves. The Minister will not be surprised if I mention the blind, because he will know that the early-day motion in my name, calling for a blindness allowance, has now been signed by over 250 hon. Members. It is a benefit that is direly needed by the blind, who are one of the special and deprived groups. I propose to table an amendment to the Finance Bill, if I am able to do so, calling for a blindness allowance to be introduced.
  There are many measures in the Budget that will be extremely helpful to the nation as a whole and to my constituents in particular, and I congratulate the Chancellor of the Exchequer on them. I am particularly pleased with his measures to assist the self-employed. The self-employed and the non-corporate sector as a whole represent one of the most neglected components of British business life. Much has been done for the corporate sector but the non-corporate sector has suffered. Excellent schemes such as the business expansion scheme are, by definition, not available to the non-corporate sector. I hope that the Minister will consider whether ways can be devised to introduce something similar to the business expansion scheme that would be of benefit to the non-corporate sector.
  I am most grateful to the Chancellor of the Exchequer for what he has done for the self-employed about early retirement and for the changes in national insurance contributions, which redress a long-standing grievance in that area.
  On balance, it is an excellent Budget which has maintained the Government's policy on course. It has set the scene for the continued expansion of the British economy. It is most encouraging to see overseas observers such as the OECD predicting that once again Britain's economy is likely to grow faster than that of any of our other European competitors. What a refreshing change that is from the years when the Labour Government were in office. I urge the Chancellor of the Exchequer to continue with his present policies, because I am sure that they will lead to our success as a country.
  8.56 pm
  Mr. Gerald Bermingham: I shall try to be brief because my points are in themselves extremely brief. I do not believe that there is anything to be gained by going back to what happened in previous years and by comparing the performance of one Government with that of another. I am a realist and recognise that economic factors change from time to time. However, I wish that the Government would stop blaming everybody else. Last year it was the Americans, this year it is the miners, and no doubt next year the Americans will be blamed because of their over-valued dollar. That is all counter-productive. I prefer to consider what the Government have done in the Budget.
  The Government have done nothing in the Budget for the ordinary man in the street in my constituency. The idea of changing the Employment Protection Acts so that no one is protected in the first two years of employment is not very fair. We all know what will happen, because it has already happened in some small industries. When a young man, after two years of training, is employed at the age of 17 he begins to earn a wage, but when he reaches 19 and his wage becomes realistic, the firm gets rid of him. That happens all the time. One has only to be a practising lawyer to see the result. Under the Government's proposals the young will get the push, and I plead with them to think again.
  There is the suggestion that the wages councils may be abolished. I am glad that there is to be a Green Paper on the subject, so that representations can be made. We are likely to see the redevelopment of the sweatshop and of the outworker. We all know the scandals of the outworkers in the lace industry in Nottinghamshire and elsewhere. We know about the scandal of the outworkers in the garment industry. We have begun to see the creation of small businesses in which shirts and other garments are made. Low wages are paid and workers are exploited. It is already beginning to happen among the ethnic minorities.
  Hon. Members with legal experience and practical knowledge of industry know that such cases are now coming forward. The Government must not go about matters in that way but must consider the real cause of unemployment, which, simply, is a lack of jobs. Abolishing wages councils will not help in any way. It will simply mean that more people will be exploited, because that is human nature. After all, why did we establish wages councils in the first place?
  The fact that 40 per cent. of wages have been found to be below the rates fixed by wages councils is no reason for abolishing the councils. It is like saying that because several million cases of theft occur every year, we should abolish the Theft Act and let everybody go stealing. In reality, certain people will exploit other people. The Government cannot run away from that by abolishing wages councils and allowing the exploitation to continue. Instead, they should do something about those who pay below wages council levels.
  I have a constituency interest in the construction industry because glass and bricks are made in my area. I urge the Government to reconsider, before the Bill is enacted, the production levels — I am talking not of monetary but of volume levels — of glass used, for example, in double glazing, and the number of bricks used in housing repairs and so on.

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  The result of last year's imposition of VAT on double glazing and insulation has been wholly counterproductive. The volume of goods sold in the market place is consistent with it having been pointless, and it has resulted in a considerable number of job losses. It is not too late for the Government to change their mind about that. I have been pleading for a year for VAT to be removed, and today I plead again.
  There is a direct relationship between insulation and heat loss. There is no point in the Department of Energy appealing to companies to become thermally efficient while the Treasury is making it too expensive for them and householders to afford it. If the 15 per cent. rate of VAT were removed, we should start to insulate the nation, so reducing our heating bills, making houses more habitable and the quality of life improved.
  I have declared my interest—as glass and bricks are made in my constituency—on several occasions. There are now pockets of unemployment in my area nearly as high as 40 per cent. The way to cut that is to get my people back to work. To do that, the Government must learn to invest in people and property.
  This is a mean little Budget. It does not seem to take us anywhere down the road to full employment. Any future Budget that takes us down that road will have overwhelming support because we all appreciate that the curse of our time is the curse of unemployment. That curse can be lifted only by positive, rather than negative, actions by a Government who are really in control.
  9.3 pm
  Dr. Oonagh McDonald: I wish to make it clear at the outset that I do not intend to comment on the speech of the Chief Secretary, in view of his refusal to withdraw his deliberate distortion of remarks made about my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) in relation to our policy on council house sales. The right hon. and learned Gentleman refused to withdraw the statement that he made on that point and, by his behaviour at the outset of his remarks, he destroyed not only his speech but himself.
  In last year's Budget we met a swashbuckling, reforming Chancellor. This year he has disappeared and in his place we have Nervous Nigel who, if today's Private Eye cover is to be believed, is more concerned with his own job than with the jobs of others. Indeed, I would not put any bets on his job lasting much longer, following this Budget. One might call it a Budget for the job of Nervous Nigel rather than for the jobs of others.
  Again and again the Chancellor of the Exchequer expressed his anxiety about jobs, but there is nothing in his Budget that will produce them. He has boxed himself in with his medium term financial strategy. No one did that to him; he insists on doing it to himself. He has further boxed himself in through his mismanagement of the sterling crisis. I am not surprised that his right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym) said that the Chancellor's strategy had put him in a strait-jacket. That is another way of expressing what I intended to say.
  After six years of Tory Government, the right hon. Member for Cambridgeshire, South-East said, it was time to question some of the assumptions underlying the Government's economic strategy. Indeed it is. Since the general election in 1983, the position has got worse. According to Government figures, unemployment then
  946
  was 2·9 million, or 12·4 per cent. of the work force, and inflation was running at 3·7 per cent. On the Chancellor's calculations, by June 1985 inflation will be running at 6 per cent., and unemployment will be at least 3·2 million in the second quarter—that is an average of all the forecasts, as we do not have a Treasury forecast.
  After six years, it is time to reconsider the Government's underlying strategy. A less austere fiscal stance would be beneficial to the entire country, and could be consistent with a stable exchange rate. Stability matters most, after the fluctuations from day to day, and even within a day, that we have seen since Christmas. We want a stable exchange rate. That is possible, together with a higher level of real output, if the Government change their underlying stance.
  The right hon. Member for Cambridgeshire, South-East said that we should have an investment programme. That is the way to produce jobs. I had hoped that my right hon. Friend the Member for Sparkbrook would miss the Prime Minister's words at Question Time yesterday, but he used her statement and I wish to refer to the Prime Minister's moment of truth. It is always disappointing when colleagues pinch some points that one wishes to make. It was a moment of truth for the Prime Minister when she found herself naturally forced to admit that public investment was purposely higher in the north to help the unemployment problem. If she would remove her ideological spectacles for a moment, she could see what the country's genuine problems were and how to deal with them.
  Yet the Government have set aside the calls for public investment, which they have received from all sides. It is no longer merely a Labour cry, but is echoed even on Tory Benches, by the representatives of industry, the Confederation of British Industry and the established newspapers. On every side the Government faces calls for increasing investment, but they deliberately set them aside.
  Instead, the White Paper plans to cut capital spending by a further £3·3 billion. Housing finance is especially badly hit. The Government propose a reduction in capital spending from £3 billion this year to £2·3 billion in 1987–88. The Building Employers Confederation judges that a 5 per cent. drop in capital spending on construction work will cause a loss of more than 600,000 jobs, and a drop in the work load worth about £500 million.
  The sheer stupidity of the Government's view was well set out in the Audit Commission's report which was covered by The Guardian of 11 March. It stated:
  "There will be a shortage of 500,000 homes and a council house repairs backlog of £15 billion."
  Every moment that goes by makes those repairs both more necessary and more expensive. The need for those repairs is reflected in the human misery suffered by people who live in damp, leaky houses. To delay repairs, to allow them to accumulate and to become more expensive, and to refuse to provide the homes that people need is little short of crazy at a time when needs are increasing so rapidly. Investment is necessary for jobs, innovation, competitiveness, expansion, to improve the environment and to ensure that people have decent working conditions. All those reasons justify investment and justify the Government borrowing a little more to ensure that investment.
  The Government have made great play of reducing employers' costs. They claim to have done that, first, by

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  removing the national insurance surcharge and now by the changes in national insurance contributions introduced in the Budget, but to allow the infrastructure to continue to deteriorate adds to industry's costs.
  Hon. Members will be aware that the CBI made proposals as to how the infrastructure should be improved. Its proposals were modest. It was mainly interested in road improvements. The improvement in the infrastructure that it proposes—the removal of bottlenecks and the building of some new roads, especially in East Anglia—would reduce transport costs by 10 per cent. That would mean an annual saving to industry of £2 billion. That is a way substantially to reduce employers' costs and to increase efficiency and productivity. Why not do that?
  The irrationality of the Government's attitude towards infrastructure investment is now beyond belief. I would almost go so far as to say that it is no longer a political point; it is common sense. Work must be done if we are to have efficient industry and create wealth, yet the Government reject that and can give no sensible reason for so doing. The Financial Secretary will perhaps come up with a reason that no one else has managed to come up with so far in the debate that has been taking place not just on the Budget but during the preceding months.
  Instead, the Government turned to wage cuts. That is the bottom line in the Budget. It comes out in their attitude towards wages councils and the Chancellor's clear, although not fully expressed, desire for their abolition. It also comes out in the national insurance contribution changes, because if we study those changes carefully we see that they are designed to encourage lower wages. There will be less incentive to allow wage increases at the new bottlenecks which have been introduced into the structure.
  The Times today said that Ministers were going around saying privately that 500,000 jobs will be created by the Budget over two years. I am not surprised that Ministers said it privately. If they had said it publicly, evidence would have to be produced and there is no evidence for it. It is a wage-cutting Budget, but the Government have no evidence to show that it will work, but they produce two reasons for it. They point to the American experience and they talk about flexibility in the labour market.
  "Flexibility in the labour market" are polite words for poor working conditions, insecurity and disgusting wage levels. The Government conveniently forget that America and many other western countries have minimum wage legislation. It is not half as secret as wages councils minimum wage levels. Minimum wage levels in the United States are widely publicised. One can hardly get on public transport buses in those parts of the United States that have them without knowing the minimum wage level. The 7 million jobs that have been created in America since 1982 have not been created because wages are low or because there is no wages legislation. They have wages legislation.
  To bolster the Government's belief in low wages and provide evidence, after the Chancellor's claim about the number of jobs that would be created by a 1 per cent. wage cut, the Treasury produced a working paper. I read it carefully and I found it extremely interesting. The basic argument in the paper is that lower wages increase company income, and, given that increased company income combined with lower wages, companies will
  948
  immediately decide to employ labour rather than to invest in equipment. That is utterly unrealistic. Let us consider a precision engineering firm with increased company income that wishes to expand. Will it say, "We will forget about the new sophisticated piece of machinery which would enable us to compete with other firms and instead we will hire a couple more engineers with slide rules."? What nonsense. It is an entirely unrealistic paper. Indeed, its authors come to that conclusion, because they say that there is no evidence for the claim that increased company income and lower wages will lead to increased employment.
  The Government have no reason for their supposition. It is utterly disgraceful that the Chancellor should try to force down wages in this way. It is not a new solution. It was the kind of thing that used to go on in the 1930s when there was an attempt to push wages down and when people undercut each other in trying to obtain jobs. It is an old solution. It did not work in the 1930s and there is even less reason to suppose that it will work now.
  When hon. Members talk about the need to hold wages down, and particularly when they talk about wages councils, they carefully omit to mention the actual wage levels that are set by wages councils. I intend to rectify that. Let us take a 16-year-old. The highest rate for a 16-year-old is £59·20. This information is in a Hansard written reply of 18 March. The lowest rate for a 16-year-old is £29·71. The highest rate for an adult—this is for an unusual type of employment where one could not foresee an enormous expansion—is £97·20 per week, but that is for a non-residential club steward in one of the larger licensed London clubs. With the best will in the world I do not think that reducing wages in that sector would lead to an enormous expansion in jobs.
  Mr. John Townend: That is the minimum wage?
  Dr. McDonald: I shall give the minimum wage, about which hon. Members on the Government Benches complain continually. The lowest rate set by a wages council for an adult is £47·50 per week. What I find so utterly disgusting is that even the highest rate I have quoted is an amount that many hon. Members on the Government Benches would think nothing of spending on a dinner for two in one of the most expensive London restaurants.
  I have listened to the hon. Member for Bridlington (Mr. Townend) complaining about these wage levels. When I look up the Register of Members' interests, I find that he is not satisfied with his parliamentary salary but has at least two other jobs and is also a member of Lloyds, for which in practice, though not in theory, he has to show basic wealth of £50,000. Therefore, the wage levels that I have quoted are in many cases amounts that he would not miss in a week.
  Mr. John Townend rose—
  Dr. McDonald: I do not think there is any need to give way to the hon. Gentleman. He has had his say on more than one occasion about wages councils and he complains endlessly about the wage levels that are set. I think it disgraceful—
  Mr. Townend rose—
  Dr. McDonald: —that he does so, given his background. What has the hon. Gentleman got to say for himself?
  Mr. Townend: I am obliged to the hon. Lady for giving way eventually. Does she really expect the House to accept that £59 is a reasonable wage for a wages council to set as a minimum wage for a 16-year-old who has just left school, who is probably of very low ability and who is unskilled? Does she honestly think that that school leaver of probably low ability and low motivation should receive that amount? We must remember that that is the minimum wage, and not the wage set for the cleverest or brightest 16-year-old. Does she not agree that someone of low ability and no experience will not get a job if that is to be the minimum wage?
  Dr. McDonald: I sometimes feel that the hon. Gentleman thinks that these people should live on 10 quid a week. The job which earns £59·20 is that of a laundry worker. It is hardly pleasant work. I agree that not many qualifications are required, but the work is not pleasant, it lasts for a full week, and 59 quid is not a lot of money. The hon. Gentleman would not even miss that amount each week. It is disgraceful that he should attack such wage levels.
  Mr. Nicholas Budgen: Will the hon. Lady give way?
  Dr. McDonald: Conservative Members suggest that the abolition of the wages councils will greatly increase jobs—
  Mr. Budgen rose—
  Dr. McDonald: The estimates based on the Treasury's economic model suggest that the abolition of wages councils would create no more than 8,000 jobs over the next five years. That is the number of jobs lost every month since the Government came into office. It is disgraceful that the Government should even consider this as a way of increasing employment. Many jobs have been lost under their regime, and there are far better ways of increasing employment.
  Mr. Budgen rose—
  Dr. McDonald: I shall not give way.
  The Government fondly believe that it is possible to foster a low-wage, low-tech economy. That is not the future for this country. High skills are available, as are great inventiveness and huge research facilities. That research is put to good use, and the notion that we can fall behind and endeavour to compete with Third-world countries over wage levels is utterly misconceived.
  Mr. Budgen rose—
  Dr. McDonald: I am not giving way.
  Mr. Budgen: Why not?
  Dr. McDonald: Because I have several more points to make, and I wish to do so in the time remaining to me.
  Instead, the Government are prepared to rely on oil and to destroy manufacturing industry, one fifth of which has already been lost since 1979. If this Government remain in office from 1979 to 1988, they will have obtained £75 billion from oil revenue, and in the same period they will have spent more than half of it on unemployment and social security benefits, merely to keep an army of at least 3 million and possibly 4 million unemployed.
  When this Government again go to the country, one of the most serious complaints will be the waste of those oil revenues. The public know that that money has been
  950
  squandered on unemployment and that it has not been ploughed back into investment. Revenues at this level will continue for only a short time longer, and the way in which the Government have squandered them is quite unforgiveable. The people of this country will not forgive them.
  The Government have done nothing about jobs. They have presented this Budget as a Budget for the poor and for families. The Chancellor has wept crocodile tears over the plight of those caught in the poverty trap. I shall not refer to the unemployment trap, because that exists mainly in the minds of Conservative Members. Fewer than 4 per cent. of people face replacement ratios of 90 per cent. of their income in work when unemployed — a tiny proportion. That is why I shall not spend time on the unemployment trap. Instead, I shall spend time on the poverty trap, because the Government have done little to aid those who suffer from it. The Budget has done little to aid the poor altogether. The Chancellor has thrown away a golden opportunity.
  Last week a book called "Poor Britain" was published. It was based on the surveys carried out by the authors for London Weekend Television. It showed considerable public support for a serious anti-poverty programme. It even showed that people were prepared to pay not a lot, but a little, more income tax to pay for such programmes. The proposals that we have made for raising child benefit and pensions could be paid for by the funds that the Chancellor has already used and other funds available to us which could be put to a better purpose than those for which the Chancellor has used them.
  Mr. Douglas Hogg: Spell it out. What do you mean?
  Dr. McDonald: The hon. Gentleman is merely yapping away from a sedentary position.
  Let us examine the way in which the Chancellor has used the amounts that are available to him in charging income tax and national insurance contributions. Those on levels of income of £60 a week, £90 a week or £200 a week, the average male earnings, will benefit by £1·73 a week as a result of the combined alterations in income tax and national insurance contributions. However, someone on £40,000 a year will receive £7·21 extra a week, a substantial change, but a change that is entirely in line with the changes made in the tax burden so far. The better-off have received far greater benefits through all these changes than those of average and below average income.
  To take a typical family of a married couple with two children, with an income of £150 a week, the increases in weekly expenditure as a result of changes in water, rates, vehicle excise duty, cigarettes, beer and wine will wipe out £1·35 of the alleged benefits from the changes in taxation and national insurance contribution. These increases were announced both before the Budget and in the Budget statement itself.
  Worse still, by the changes in the national insurance contribution, the Government have created a whole new set of poverty traps. They have done nothing to ease the number of those caught in the poverty trap. Rather, they have increased it. For example, someone earning £89·99 a week pays a national insurance contribution of 7 per cent., which is £6·30. If he earns £90 a week, national insurance contributions go up to 9 per cent., and the cost is increased to £8·10 so that marginal increase in wages

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  produces a new cost of £1·80. That is the kind of poverty trap created by the changes in the national insurance contribution.
  Mr. Douglas Hogg: As I understand it, the hon. Lady is decrying the changes that have been made in the national insurance contributions, whereas the Leader of the Opposition welcomed them and said that he had been calling for them for a long time.
  Dr. McDonald: The national insurance contributions should be more fairly distributed. One of the ways that the Government might have done this would have been to bring those earning over £265 a week into national insurance contributions net. This has been ill thought out, and as the Chancellor is supposedly so concerned about the poverty trap that he raises personal allowances and alters national insurance contributions, he should have done it with a great deal more thought. He should not have produced several new poverty traps, which is just what he has done.
  I now come to those caught in the traditional poverty traps. I refer to the 270,000 families who are estimated to be caught in them. That number represents a threefold increase since 1979. But only 5,000 to 10,000 of those families will be lifted out of the poverty traps by the Budget changes. The Government have done nothing to ease the problem of those poverty traps. Instead, they have made the position considerably worse.
  The Government had the opportunity of gaining tremendous public support for the Budget, and should have introduced a programme for the immediate relief of poverty. They should be increasing child benefit by £3 a week, because that is the best way of helping poor families with children. It ensures that they receive an increase in income without being caught in a poverty trap. The Chancellor of the Exchequer should also be increasing pensions in order to benefit many poor pensioners who are still on basic state pensions. Instead, he has thrown that opportunity aside.
  Sir William Clark rose—
  Dr. McDonald: I shall not give way; I am about to conclude my speech.
  The Chancellor of the Exchequer has lost public support. The Budget will not do anything for jobs or for families. It is a dismal, miserable Budget brought in by a Nervous Nigel of a Chancellor who will not be hanging on to his job for long as a result of this disgraceful Budget.
  9.31 pm
  The Financial Secretary to the Treasury (Mr. John Moore): Those of us who heard the speech of my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym), and the way in which when he complimented my right hon. Friend the Chancellor of the Exchequer on his presentation, will want to compliment him on his presentation too. I was particularly pleased about the way in which he warmly welcomed the changes in the national insurance contributions and the changes in income tax thresholds, the youth training scheme, the community programme and measures for small businesses and the self-employed. I recognise that there were areas of criticism that he shared with other hon. Members, but I shall come to those later.
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  I particularly compliment my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst). I heard interventions during the debate suggesting that he was not effective in Committee. But those of us who were in Committee last year know how effective he and his Scottish colleagues were. Indeed, they were so effective in persuading my right hon. Friend the Chancellor of the Exchequer, that he recognised the difficulties through which the Scotch whisky industry is passing and ensured that the Budget would help that industry.
  Mr. Maxton rose—
  Mr. Moore: Among other things, the debate concentrated on one legitimate major concern. Many hon. Members emphasised the problems of employment and unemployment, and discussed whether the Budget or Budgets of a similar nature would contribute to jobs. My hon. Friend the Member for Strathkelvin and Bearsden, my right hon. Friend the Member for Cambridgeshire, South-East, the hon. Members for Colne Valley (Mr. Wainwright), for Portsmouth, South (Mr. Hancock), for Warrington, North (Mr. Hoyle), for Great Grimsby (Mr. Mitchell), for Denton and Reddish (Mr. Bennett), and for St. Helens, South (Mr. Bermingham), and my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) sought in their different ways to address themselves to the critical question of unemployment and jobs. It is right and proper that I should deal first with those points.
  I do not in any way doubt the sincerity of the comments made by the hon. Member for Thurrock (Dr. McDonald). I recognise the sincerity with which hon. Members on both sides of the House have expressed their views about the awful problem of unemployment. But I am concerned that hon. Members may give false hope to those who are suffering and who are out of work if they suggest that there is some simple money answer. I share the views of those who see unemployment as an evil, but with respect, I think that we must understand its causes. In particular, I do not wish to go beyond the Government's remit. We must understand those causes that are Government-induced.
  I understand full well that sometimes one does not wish to look to the past but, with respect to my right hon. Friend the Member for Cambridgeshire, South-East, I must say that, although in my position of some responsibility I should like to look to the future, I must, in looking for the causes of unemployment, look to the past.
  I hope that the hon. Member for Birmingham, Hodge Hill (Mr. Davis) will not mind if I remind him of the days in the late 1950s when he was a student at University College and I was a student at the London School of Economics, and the debates that he, I and others had at that time. [Interruption.] I trust that that modest remark will not create difficulties for the hon. Gentleman.
  These important problems are not confined to the past five or six years. I and many others who have come into politics in the past 10 or 15 years remember the debates of the late 1950s. In the middle and late 1950s, unemployment averaged 300,000 a year. We were told that a higher level would create unacceptable social and industrial unrest. I remember the period between 1964 and 1970 when unemployment averaged 450,000 a year; the period between 1970 and 1974 when unemployment averaged 660,000 a year, and the period between 1974 and 1979 when unemployment averaged 1·2 million.
  I am quoting statistics, and I do not quote statistics that are not verifiable. I recognise the tragedy of today's

  953
  average. I am conscious of the appalling level of unemployment today, when the figure is well over 3 million. But in my view the situation has been caused in part by the way in which our country, and Governments of the major two parties, represented here today, reacted to the challenge that faced, after the second world war, an essentially trading nation, one third of the GDP of which was involved in world trade. What was of great importance was the way in which, as a trading nation, we sought to respond to changed conditions, and to the need for new products, better services and better pricing.
  In a competitive world, we should have been flexible and competitive. Instead of that, what were we? It was our people as well as our politicians who failed. Our people chose to buy foreign goods. It was not just a question of foreigners choosing not to buy our goods. It behoves us in this debate to concern ourselves with what the Government's role has been in our failure, and with the Government's attempts to correct it. However, we must reconcile ourselves to the fact that macro and micro policies over the generations have compounded our problems.
  Mr. Austin Mitchell: Then why are all the chickens coming home to roost only now?
  Mr. Moore: I have listened to the debate with considerable patience. I hope that I will now be given an equal opportunity to argue my case.
  At the macro level, all Governments have reacted to rising historical unemployment by trying again and again to inject more money into the system. They have all had good and sincere reasons, but the consequence has been to breed inflation. In the 1970s, we reached almost the ultimate absurdity. There has been much debate today about the need for increased demand. During the 1970s, nominal demand increased by over 300 per cent., but productivity did not increase by much more than 20 per cent. Those who argue that the Chancellor should increase demand even more should remember that since the beginning of 1981 we have increased real demand by 3·25 per cent. a year. When the Labour party was in office, there was an average annual increase in real terms of 2·75 per cent.—a smaller real increase in demand. I should like to stress to those of my hon. Friends who would like an increase in demand that, in real terms, it is increasing. As my right hon. Friend the Chancellor said yesterday:
  "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."
  At the macro level, we did precisely the reverse of what we should have done and at the micro level we strangled our economy with a panoply of controls on wages and dividends. Moreover, we reacted to prices by putting controls on credit or hire purchase. All those controls were put on for legitimate and sincere reasons, but they made an economy that had already been weakened by inflation less flexible, less able to adapt to the markets and less able to be competitive in the world in which we have to earn our living.
  During the past five years, we have reversed those policies. At the macro level, our medium term financial strategy has brought down inflation and created the conditions for sustainable growth. At the micro level, we have disposed of most of the controls and introduced policies concerning competition, deregulation and
  954
  privatisation. Domestic productivity has improved, as has competitiveness, though not sufficiently. There have been the beginnings of change.
  The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) legitimately asked when the changes will occur. I have not talked, and do not propose to talk, about the problems of the world recession, changing technology and the changing pattern of demography. However there is no question but that the Government have set the proper macro and micro framework. As my right hon. Friend said, the framework has broken inflation and produced productivity. He continued:
  "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 those out of work. In a free society"
  happily, that is what we still are—
  "the remedy lies in the hands of those responsible for collective bargaining throughout the economy." — [Official Report, 19 March 1985; Vol. 75, c. 789·92.]
  The second major theme of the debate has been the burden of taxation. It was started by the right hon. Member for Sparkbrook and taken up by my hon. Friends the Members for Cornwall, North (Mr. Neale), for Grantham (Mr. Hogg), for Bournemouth, West (Mr. Butterfill), for Strathkelvin and Bearsden and for Buckingham (Mr. Walden) and the hon. Members for Thurrock, for Burnley (Mr. Pike) and for Great Grimsby. The facts are clear—the burden of tax is up relative to 1978–79 by £23·8 billion. Why? Because our first job was to repair the ravages of the previous years; to repay international debts, to control borrowing and to reduce inflation. Taxation is at least an honest form of burden on present generations, whereas inflation is a dishonest burden on future ones.
  Opposition Members have not asked how and in what way taxes are up, in what way they are down and who pays. Two fifths of the increase is from the North sea. Do the Opposition want us to give profits back to the multinationals who extract oil? Another two fifths has come from an increase in taxes on expenditure. As my hon. Friend the Member for Buckingham said, that is part of our philosophic commitment to a switch from taxes on income to taxes on expenditure. Most of the remaining increase comes from increases in local authority rates and employees' national insurance. We get no help from the Opposition on, for example, controlling rates.
  The Opposition do not discuss where taxes have decreased. We should compare income tax now with what it was under Labour. Income tax as a precentage of total taxation and national insurance contributions is down from 32·7 per cent. in 1978–79 to 25·6 per cent. in 1985–86 —a significant change. This again confirms our belief in the need to shift taxes from those generating wealth at work.
  Income tax and insurance contributions as a percentage of the total are down from 39·6 per cent. in 1978–79 to 34·3 per cent. in 1985–86. My hon. Friends the Members for Strathkelvin and Bearsden and for Cornwall, North have welcomed the fact that, in real terms, the threshold will have increased by 20 per cent. since 1978–79 and that 1·25 million of our countrymen and women will have been taken out of tax altogether. I should have thought that that was a significant achievement.
  The burden carried by employers, from whom jobs flow, is another aspect of taxation that is fundamental, and the Opposition have shown their sheer brass neck in even questioning this. The employers' percentage of total taxes

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  and national insurance contributions should drop from 14·1 per cent. of the total in 1978–79 to 9·1 per cent. in 1985–86. That is a significant change. In certain areas we are seeing obvious reductions—for example, through the national insurance contribution.
  Mr. Hoyle: The hon. Gentleman said that only employers create jobs—that jobs are created only by demand. We have been saying to the Government that they are decreasing demand, and that that is the problem with their strategy. Demand is decreasing so that jobs are not created.
  Mr. Moore: Nominal demand has been increased in some radical ways in the past. That did not prevent the extraordinary increase in unemployment that we have seen, ratchet-like, since the 1950s. It has not solved the problem. Demand in real terms has been increasing during the past three years by a greater rate per year than it did under Labour.
  Mr. Campbell-Savours rose—
  Mr. Moore: The hon. Member for Thurrock specifically asked me to compare the burden of taxation under Labour and Conservative Governments as it affects working people, especially those at the bottom of the scale. What would the tax burden have been if Labour had still been in office? How has the average employee fared under both Administrations? Ignoring any additions that the right hon. Member for Sparkbrook might recently have suggested in attempting to ensure that the Labour party loses the next election, if we had the same pattern and indexed system as when Labour last left office— unchanged, without the action that we have taken on thresholds — £6·25 billion more in taxes would have been paid by millions of our fellow citizens and employers would have paid £3·75 billion in 1985–86 through national insurance. That would have been £10 billion additional taxes.
  Mr. Bermingham: I would not disagree with the hon. Gentleman's figures. Will he, however, tell the House which socio-economic group has received the greatest tax deductions? Does he agree that, in value terms, the answer is those at the top end rather than those at the bottom end of the scale?
  Mr. Moore: I shall come specifically to the group that has benefited most at the bottom. By definition, if there are absurd, contorted forms of taxation—for example, taxes of 98 per cent.—and if changes are made, some of those at the top are bound to beneift more from a progressive system. Let me answer the questions specifically for those whom the hon. Gentleman thinks are his natural supporters. If Labour had been in power, what would have happened to the ordinary taxpayers—those in work? I shall remind hon. Members of the position when Labour was in office, because one judges the comments of politicians by their actions in government.
  I shall give the Opposition the best set of statistics at my disposal. Between 1973–74 and 1978–79 a married couple with two children on half average wages would have seen their real take-home pay increase by 4·3 per cent. A married couple with two children on average wages would have benefited by about 1 per cent. A similar family on one and a half times average earnings would
  956
  have seen their real take-home pay reduce by 1·1 per cent. The family on twice average earnings would have seen a decrease of 1·5 per cent.
  During the period of Conservative Government a married couple with two children on half average earnings have seen their real take-home pay increase by 12 per cent. A similar family on average earnings have seen an increase of 13 per cent. The same size family on twice average earnings have had an increase of 14 per cent. By definition, those at the top of the income scale must have improved their position. Do Opposition Members not care for those at the bottom of the scale, whose position has improved radically under the Conservative Government? Have they lost track of that?
  Mr. Austin Mitchell rose—
  Mr. Moore: No, I shall not give way. I have already given way on more occasions than Opposition Front Bench spokesmen and a limited time remains available to me. To the extent that the Opposition are concerned to assist the Government in further reducing tax levels, I am sure that my right hon. Friend the Chancellor of the Exchequer and I will be delighted to have their support whenever Divisions take place on this issue.
  Infrastructure spending has been mentioned by many of those who have contributed to the debate, including my right hon. Friend the Member for Cambridgeshire, South-East, my hon. Friends the Members for Strathkelvin and Bearsden and for Bridlington (Mr. Townend), the hon. Member for Thurrock, the right hon. Member for Sparkbrook and the hon. Members for Warrington, North, for Portsmouth, South and for Great Grimsby. [Interruption.] I imagine that those who have participated in the debate, or have sought to do so, wish to have recognition of the fact that they did and wish me to address myself to the issues that they sought to raise. I ask those who were not present to participate in the debate to have a little patience while I respond to the contributions that have been made to it.
  I found the comments of the hon. Member for Thurrock on infrastructure spending rather strange. She suggested that the Government are rejecting such spending. I remind the House of the facts, which are always relevant. Fixed investment in the entire economy in 1984, both public and private, is expected to be an all-time record of £55 billion at current prices. It is calculated that public sector capital spending will show an estimated outturn of £22 billion in 1984–85. That is an overall 3 per cent. rise in real terms since 1979–80. Of course these are unpalatable figures for Opposition Members.
  We have heard strange comments about expenditure on roads and housing repair and maintenance from Opposition Members. Capital spending on national roads in 1985–86 will increase by 22 per cent. in real terms above the 1978–79 level. Capital expenditure on housing repair and improvement will increase by 37·5 per cent. in real terms above 1978–79 levels.
  I recognise that there will be those who have questions and complaints about certain aspects of infrastructure spending. However, my hon. Friends the Members for Bridlington and for Strathkelvin and Bearsden recognise that in such a massive programme there is a balance between the Government's ability to sustain such a programme while maintaining a certain level of interest rates and ensuring that there is no return to the horrifying levels of inflation that we have experienced.

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  The hon. Member for Colne Valley was kind enough to refer to the changes that we are seeking to make on short-life assets. He was right to remind us that Liberal Members discussed the issue and voted upon it in Committee and in the House last year. He is right to identify this as an important area of budgetary changes for British industry and, therefore, for jobs. My right hon. Friend the Chancellor of the Exchequer announced the new arrangements that are aimed at assets whose working life is shorter than the average because of heavy use or rapid obsolescence.
  For many years, annual writing-down allowances on most business machinery and plant have been calculated on a pooling basis and the cost of the plant goes into the pool, the proceeds from sales are deducted from it and the writing-down allowance of 25 per cent. is given on the balance.
  The proposals on short-life assets will enable taxpayers to elect to have the assets depreciated separately from the main pool—depooling—for a period of up to five years. Taxpayers will have two years from the end of the year in which the asset is acquired to make their election. Thus, the new arrangement will have the twin advantages of enabling assets whose working life is very much shorter than the average to be fully written off while at the same time maintaining the advantages of pooling for the generality of business machinery and plant. I know that this will be much welcomed by British industry at large.
  Beyond that, the House may recall that I announced during the Report stage of last year's Finance Bill that we would be providing in this year's Bill for free depreciation for the writing-down allowances for new ships. We have now decided that, as from 1 April, free depreciation should apply also to writing-down allowances for expenditure on second-hand ships on the same basis as earlier announced for new ships. Given the scale and lumpiness of investment in ships, and the strategic importance of the industry to the country, owners should not be deterred by the tax system from taking advantage of the opportunities which there are in the market today for acquiring nearly new second-hand ships at prices well below those for new vessels.
  Other points raised by three Opposition Members left me almost speechless. The hon. Member for Great Grimsby raised the question of electricity and gas prices, and tried to suggest that somehow the Chancellor was taking, through price rises in this area, what he had given through tax and national insurance contribution changes. I shall put on record the facts on the prices for the domestic consumer in these areas.
  Before 1984, domestic gas and electricity prices were frozen for 15 months and two years respectively. Increases since then have been at or below the prevailing inflation rate. For gas, they were 4·5 per cent. on average from January 1984, and the same from February 1985. For electricity, they were 2 per cent. from April 1984, and are expected to he on average 4·5 per cent. from this April. Domestic energy prices—this is the key point—have therefore fallen in real terms in the last three years.
  958
  It would be embarrassing to remind the Opposition that when they were last in office electricity prices went up 2 per cent. every six weeks.
  Mr. Nellist rose—
  Mr. Moore: I think that the facts are always more interesting and more important than some of the pontifications on the subject.
  With rising real output, continued low inflation, record levels of investment and welcome increases in productivity, the past year has been one of achievement. However, while we have seen sizeable increases in employment, I recognise that we still face tragically high levels of unemployment.
  It has also been a year of turbulence in the financial markets. The coal strike—
  Mr. Nellist rose—
  Mr. Speaker: Order. The Minister is not giving way.
  Mr. Moore: I would give way to those hon. Members who have the courtesy not only to speak but to spend most of their time in the Chamber throughout the debate.
  Mr. Nellist: On a point of order, Mr. Speaker. You will wish to know, Mr. Speaker, because it pertains to your role in the Chair, that not only was I here for most of the debate, but that I spoke for 20 minutes—and I was here last night, as was my hon. Friend the Member for Great Grimsby (Mr. Mitchell).
  Mr. Speaker: As the hon. Member knows, if the Minister is not giving way, he must resume his seat, and that is exactly what happened.
  Mr. Moore: The coal strike exacted a heavy cost in terms of reduced industrial output and higher public sector spending and borrowing. The strong dollar has dominated the international financial scene. This is the background against which the Budget decisions have been taken.
  Our first priority remains to keep up the fight against inflation through firm monetary and fiscal policies. After last year's disruption, we are determined to get public borrowing as a proportion of the gross domestic product back on to its downward trend. The Budget is designed to ensure that this is done, and that the monetary and public sector borrowing requirement profiles are realistic and achievable. Within this framework, we have been able to make a modest reduction in the burden of taxation. We have been able to introduce some important measures to boost employment, and we have continued with out programme of tax reform. The extension of YTS and the community programme will help to reduce unemployment and produce a more skilled and adaptable labour force. Reductions in tax and national insurance contributions will improve the incentives for employers to create new jobs and the incentives for workers to fill them.
  I believe that the Budget is good for inflation, good for enterprise, and thus good for jobs. I commend it to the House.
  It being Ten o'clock, the debate stood adjourned.
  Debate to be resumed tomorrow.

  National Vegetable Research Station
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]
  10 pm
  Mr. Alan Howarth: This is the second Wednesday night in succession on which a Minister has been good enough to come to the Dispatch Box to answer a debate on the very pressing and serious problems facing agricultural research in Britain. Last week a Labour Member, the hon. Member for Pontypridd (Mr. John), raised these issues. I congratulate him on doing so, and on his good fortune in beating me to it in the ballot.
  While the Minister, my hon. Friend the Member for Medway (Mrs. Fenner)— I very much appreciate the fact that she is here this evening—stood her ground unyieldingly in last week's debate, she did acknowledge the importance of agricultural research, the need for new sources of finance to be forthcoming from industry, and the need for an end to the present uncertainties. Therefore, I take what she said as an expression of the same shrewd and sympathetic attitude that she showed when she visited the national vegetable research station last September.
  Professor Bleasdale and his staff at Wellesbourne, and I myself, very much appreciated my hon. Friend's willingness to make that visit at our request. We also appreciated the tribute that she rightly paid then, when she said, in an interview with the Warwick Advertiser:
  "I am most impressed by the work of the NVRS. The station makes an invaluable contribution to ensuring the continued efficiency and competitiveness of the UK vegetable growers."
  My hon. Friend the Minister is well qualified to make that judgment, and I should like to highlight to the House some of the facts that underpin it.
  The watercress industry in Britain, worth about £4 million a year, would not now exist but for work done by NVRS scientists. Nor would we have a £19 million onion industry. Work on disease control and physiology of over-wintered onions has resulted in an increase in home production from 26,000 tonnes to 200,000 tonnes a year, with a corresponding reduction in imports. The reduction in storage losses from disease alone is estimated at £5 million a year. Very fittingly, the NVRS received a Queen's award for industry for that work.
  Fungal diseases of the oil seed rape crop have been a serious problem which, if unchecked, would have been causing losses estimated at between £20 million and £40 million a year. Control was previously by means of repeated and expensive spray treatments with fungicides. Work at NVRS has developed a seed treatment which is now applied to over 95 per cent. of the seed used in Britain and has virtually eliminated the disease damage. The research cost was only £30,000 because of the expertise and facilities available at Wellesbourne.
  A research programme on inter-cropping, using one application of spray and fertiliser for two crops, and so reducing inputs both of chemicals and of energy, is producing encouraging findings. Work on the fertiliser requirements of vegetable crops has led to the development of sophisticated models which allow the optimum amounts to be applied for efficient crop nutrition. The annual benefit of that to the vegetable industry is £7 million. Moreover, there is an environmental as well as an economic benefit to this approach of developing minimum
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  input systems, and so reducing the damage caused by high levels of nitrates and other fertilisers in rivers, lakes, and, ultimately, water supplies.
  The NVRS, in conjunction with Oxfam, maintains a gene bank which is indispensable to assisting poorer countries to grow vegetables appropriate to their own conditions, and thereby to feed their peoples. The gene bank is a resource for all countries and reflects the international standing of the NVRS.
  From these few examples of the work of the NVRS it is abundantly clear that this research establishment confers valuable benefits. Its work has led to reduced costs for industry. It has contributed towards the achievement of a higher degree of self-sufficiency in food and security of supply for the United Kingdom. It has led to an appreciable benefit to the balance of payments, both in import saving and in increased exports, and these trends could be enhanced.
  Vegetable growing is virtually unsubsidised and there are no vegetable mountains, so that increased output does not mean a drain on resources. Vegetable growing is somewhat more labour intensive than other forms of agriculture, so we should encourage it in the interests of rural employment.
  As a result of the work of the NVRS, the housewife has vegetables of a type that suit her better, available at more times of the year and at steadier prices. The environmental benefits of NVRS research are also becoming of increasing significance. Moreover, the argument for producing and eating more vegetables in the interests of good health is powerful.
  My right hon. Friend the Minister of Agrciulture, Fisheries and Food has endorsed the recommendation in the report of the committee on medical aspects of food policy that the nation should eat more vegetables. Investment in vegetable research will lead to a saving of costs in the National Health Service, a point that should surely carry weight as the Government establish their priorities in public expenditure.
  The New Scientist of 15 November reported the finding of a large-scale study in Japan showing that eating vegetables every day reduces the risk of cancer, and I have been glad to see that my hon. Friend the Member for Oxford, West and Abingdon (Mr. Patten), the Under-Secretary of State for Health and Social Security, in a campaign to encourage people to adopt a diet less conductive to heart disease, is also urging them to eat more vegetables.
  The Minister may perhaps agree that in what I have said I have, in effect, made a case for increased funding for vegetable research, both relative to research on arable crops and absolutely. What the NVRS would ask for—and I only endorse its plea— is level funding and a settled financial environment. What, however, the NVRS actually faces is much worse than that, and the present prospect for the NVRS, of further cuts on top of those already made is black indeed.
  In 1984–85, 11 posts were lost at the NVRS. For 1985–86, another 17 posts, including 13 in science grades, have been sacrificed. The NVRS will have lost 28 posts out of 224 in the two years to April 1985. Money that might have been spent on research has been spent on redundancy costs. The NVRS has additionally been asked by the Agriculture and Food Research Council to identify further savings of 18 per cent. for 1986–87.

  961
  Not only does the NVRS do work worth millions of pounds for the nation, but does it in a prudent and responsibly cost-conscious manner. Such scope as there was for the elimination of marginal expenditure was more than used up in the first round of cuts. The cuts for 1985–86 will cause the existing research programme to suffer. The further cuts which are envisaged will mean the dissolution of research teams and the complete abandonment of some research projects.
  The threat to the NVRS is but an aspect of the wider threat to horticultural research, which is itself but one part of the whole programme of agricultural research, which faces the prospect of cutbacks which will be draconian. The Government have announced their intention to cut expenditure on agricultural and food research and development by £10 million in 1986–87 and by £20 million in 1987–88. As Lord Selborne, chairman of the AFRC has said
  "Cuts of this magnitude would probably lead to the closure of at least two institutions and to a further damaging curtailment of programmes throughout the research service."
  The new AFRC corporate plan indicates that on top of the 550 jobs lost this year a further 650 jobs—nearly half of them the jobs of scientists—are to go in the next three years. The fall in the AFRC budget between 1982 and 1987 will be between 15 and 20 per cent. It must be borne in mind, too, that the rise in the cost of research, with the sophisticated equipment involved, outruns the general rise in the cost of living.
  I appreciate, of course, that it is the Government's hope that the shortfall in Government funding to the AFRC will be made up by an increased contribution from industry. It is not unreasonable that this should happen, given the great benefit that industry has received from AFRC research. There are, however, risks in this approach which must be guarded against. I hope that the means of ensuring a proper contribution from industry will be a levy on the relevant industries, since the priorities of public research ought to be determined more disinterestedly than they are likely to be by industry itself negotiating specific contracts. I am aware, too, that the Government are awaiting the advice of the Priorities Board, and that no particular research establishment should assume the worst for itself until the priorities have been made clear. At the same time the NVRS has grounds for the most serious apprehension. It has been asked to prepare large-scale savings, as I have said. The AFRC corporate plan published in December 1983 identified various research areas as being over or under supported or in balance. Vegetable crop research was one of the areas described as being in balance. But then, in August 1984 Lord Belstead said
  "We are over three years decreasing our support for agriculture and horticulture work and increasing that on food."
  In the debate on 13 March, my hon. Friend the Parliamentary Secretary confirmed that
  "there are likely to be some changes in relative priorities."
  —[Official Report, 13 March 1985; Vol. 75, c. 413.] Priorities in research should be kept under review. In the debate on 22 December 1983 my hon. Friend the Under-Secretary of State for Education and Science alluded to the danger that the pattern of organisation can unduly dictate scientific priorities. I put it to the Minister that, similarly, priorities should not be determined by a notion that the Government have that they can get away with putting in less money by dint of extracting more from industry. The source of the funding should not distort our best judgment as to research priorities.
  962
  Overall retrenchment on the scale envisaged would be catastrophic for agricultural and horticultural research. What makes this prospective damage seem so disproportionate and gratuitous is that the figures which are so large in relation to the budgets of these research establishments are small in relation to other budgets. An AFRC budget of £121·6 million in 1984–85, even before it is cut in real terms, represents only 6·8 per cent. of this year's forecast public expenditure of £1,779·8 million under the common agricultural policy and on national grants and subsidies. the AFRC costs taxpayers less than 1 per cent. of the total value of the product of British agriculture. These ratios seem odd at a time when we need to reduce surpluses—where they exist; I have said, there are no vegetable mountains—and when, in the words of Sir Ralph Riley, secretary to the AFRC and a member of the Government's Priorities Board, we must think in terms of
  "new objectives for agricultural research in changed economic conditions … We require significantly to increase the competitiveness and efficiency of production rather than its volume; to sustain the effective use of land and practise farming in ways that do not offend the increasing "green" sensitivities; and to ensure that the cost of imported food does not become an insupportable burden on our balance of payments when the contribution from oil diminishes."
  New crops, new diseases, new market and economic forces, for example, constraints on price support and enlargement of the EEC, and looming environmental and soil structure problems all enhance the importance of research.
  At a conference in December my right hon. Friend the Secretary of State said that his concept of a modern British agriculture was based on four principles: a more competitive British agriculture; British agriculture and the British food industry supplying a larger share of our domestic market; help for farmers to meet changing demands in diet and pesticide control; and greater emphasis on conservation and enhancement of the environment. Agricultural research is an essential prerequisite of all these policies. The work of the NURS specifically underpins each of them.
  The National Farmers Union, in its document "The Way Forward" published in December, observed that
  "the provision of adequate funds for horticulural research, development and advice is vital."
  They have expressed themselves to me as being "extremely concerned" at the present position.
  I do not propose to enter into what I take to be an unproductive debate about whether by one measure or another the United Kingdom is spending more or less than other countries on agricultural and horticultural research. I hope I have made the crucial point that such research is an investment in the vital interests of our country and, that, if anything, we need more of it.
  In conclusion therefore I ask my hon. Friend to answer these questions. Will he and his right hon. and hon. Friends recognise the irreparable damage that the proposed cuts, if not restored, will do to the research services in agriculture and horticulture? Will Ministers therefore take steps to ensure that the food, horticultural and agricultural industries provide funds for research which will at least make up the shortfall before the Government proceed with the cuts that they envisage? Will Ministers accept that research needs a stable framework of finance and needs to be rescued from the hurly burly of politics? Will my hon. Friend acknowledge that, apart from the personal difficulties and distress that career disruption causes,

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  research is a fragile, creative enterprise? Will he acknowledge that successful research depends upon complete and enthusiastic concentration and that present uncertainties and anxieties are demoralising and liable to be damaging to the quality of research?
  I know that my hon. Friend is sympathetic. He is on the record as saying:
  "The work done by the research councils and universities in scientific research is of fundamental importance to us all."—[Official Report, 22 December 1983; Vol. 51, c. 624.]
  I appreciate that in much of what I have said I have inevitably dealt with matters which are not, at any rate in particular aspects, within my hon. Friend's ministerial province. None the less I hope very much that in answering this debate he will be able to respond constructively to the considerations I have put forward, and that he will give clear and positive answers to the questions that I have put to him.
  10.16 pm
  The Parliamentary Under-Secretary of State for Education and Science (Mr. Peter Brooke): I am grateful to my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) for giving the House the opportunity to debate this important matter. I thank him for the serious and sober manner in which he has presented his case. We debate science too little in the House. Every opportunity is therefore to be welcomed, even in the circumstances such as he has described this evening. I am grateful to my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food for being present tonight on the Front Bench, because the interests of our Departments in agricultural research march together.
  The national vegetable research station, which is situated at Wellesbourne in Warwickshire, is a state-aided agricultural research institute which receives its funds through the Agricultural and Food Research Council. The AFRC supports a total of 22 such research institutes in England and Wales, together with seven Scottish agricultural research institutes which are funded by the Department of Agriculture and Fisheries for Scotland. The network of institutes constitutes the agricultural and food research service.
  Within the AFRS, the remit of the NVRS is to undertake research on the production of outdoor vegetables, to maintain and where possible improve the competitiveness of United Kingdom vegetable growers, to meet the needs of consumers and to avoid undesirable impacts of production systems on the environment. This is clearly important work, and the NVRS, which was established in 1949, is currently working on a range of essential vegetables including various kinds of beans, sprouts, cabbages, tomatoes and many other familiar vegetables.
  I understand that the station has received the Queen's award for technical achievement in recognition of its contribution to onion production in the United Kingdom. The control of a disease known, with accuracy but perhaps infelicity of language, as neck rot has extended the period in which home-grown onions are available. The NVRS's research on the control of fungal disease of oilseed rape, as my hon. Friend said, has also contributed to substantial savings in production costs by the industry, and the station has also done important work on the fluid drilling of pre-germinated seeds and on reducing fertiliser requirements.
  964
  I say all that in acknowledgement of the valuable work that the station has done and is continuing to do. Nevertheless, AFRC's decisions about the future funding of the station have to be taken in the light of the council's scientific priorities and of the resources made available to it by the Department—by way of grant in aid from the science budget — and by funds from the Ministry of Agriculture, Fisheries and Food, which commissions work of a more applied nature of particular and more immediate importance to the industries concerned.
  The AFRC is having to address the consequences of reductions in the funding it receives both from the science budget and from the Ministry. The science budget reductions stemmed from the advice given to my right hon. Friend by the Advisory Board for the Research Councils in 1982, and were taken account of in the council's first corporate plan which was published in December 1983. In the light of that plan, and of the council's total resources in 1984–85, which were £46·7 million from the Department and £52·1 million from MAFF, the NVRS's recurrent budget for 1984–85 was set at £2·59 million. This amount was approximately the same in cash terms as the previous year's and thus obviously represented some reduction in terms of the work the station could do. I understand that this reduction in real income was not out of line with reductions elsewhere in the AFRS. As a result, however, 16 posts at the station have been lost this year out of a total complement of 208, 10 of them by compulsory redundancy. My hon. Friend referred to that trend.
  Although some of the work which the NVRS does is strategic research paid for out of the science budget, the greater part of the work, about 87 per cent., is commissioned work paid for by the Ministry of Agriculture, Fisheries and Food. The announcement by my right hon. Friend, the Minister for Agriculture, on 22 January, that the agriculture Departments' research and development budgets are to be reduced in 1986–87 and 1987–88, will almost certainly mean that further reductions will have to be made in AFRS research programmes. The NVRS, with its high proportion of commissioned work, can hardly expect to escape from having to bear a share of these. I understand that the agriculture Departments are awaiting the advice of the priorities board, as my hon. Friend mentioned, on how reductions between the various sectors of research and development they support might be apportioned; thus, it is too early to say what the precise effects on NVRS will be.
  As my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food said in reply to the hon. Member for Pontypridd (Mr. John) in the Adjournment debate on 13 March, to which my hon. Friend also referred, the reductions in the Ministry's planned expenditure reflect the Government's intention that industry should contribute financially towards the R and D from which it benefits and be more fully involved in determining the scale and nature of the R and D programme. The extent to which NVRS is successful in attracting funding from industry will clearly also have a bearing on the quantum of work which will in future be sustainable at the station. In this regard, I would note that, hitherto at least, it has not been the council's practice to reduce allocations to institutes on account of their having been successful in attracting outside funding. I understand

  965
  that the council has no plans at present to change this practice, which clearly provides a valuable incentive to enterprise.
  In the meantime, the AFRC published earlier this month its second corporate plan, covering the period 1985–90. The new plan notes that the programme of restructuring started in 1984 will continue. It cannot, of course, yet quantify the effects of any further reductions in activity brought about as a result of the loss of commissioning funds from MAFF.
  With regard to horticultural research, the second corporate plan announces a review of this area of work aimed at improving the operational efficiency of AFRS programmes through unified management and by strenghtening links with MAFF's Agricultural Development and Advisory Service. I understand that the review is looking at all horticultural research in the AFRS —the total value of which is some £9 million annually —with a view to seeking reductions of the order of 18 per cent., a figure quoted by my hon. Friend. This review, which is being conducted by a working party headed by Professor John Harper, FRS, will advise the AFRC plants and soils research committee and, through it, the council, on how best rationalisation and savings can be achieved. The institutes mainly concerned, apart from the NVRS, are East Malting research station and the Glasshouse Crops Research Institute. I understand that there has been detailed consultation with the directors concerned in drawing up a proposed strategy which will be considered by AFRC's council in April. The advice of the Priorities Board for Agriculture and Food R and D will, of course, be taken fully into account as this exercise develops.
  For the immediate future, I understand that the council has allocated NVRS a provisional recurrent budget of £2·58 million for 1985–86, recognising that this represents a further reduction in terms of the work the station will be able to do. No assessment of the number of further job losses has been made, nor indeed will that be possible until the overall financial position and the priorities of research in 1986–87 are clearer. When that point is reached, I understand that AFRC aims to make a statement outlining its strategy in the various areas of research for which it is responsible.
  I should like to clarify and stress the fact that, in terms of the reductions in funding to which my right hon. Friend the Minister of Agriculture, Fisheries and Food referred, it is £10 million in the first year— 1986–87 —and a further £10 million in 1987–88. The £20 million is a cumulative figure embracing the two years.
  My hon. Friend also referred to levies. Ministers will wish to consider the full range of possible options and methods of funding, and would not, therefore, want to exclude any options, including levies, at this stage, although they raise special difficulties.
  My hon. Friend also asked about industry funding and the timing of the reductions contingent upon that funding. The agriculture Ministers are considering industry funding
  966
  of research and development and have asked for the views of the priorities board on how this might be done. The Government's view is that it is not unreasonable for industry to bear a part of the cost of a service from which it benefits, as my hon. Friend the Parliamentary Secretary said last week. When the priorities board has given its advice, agriculture Ministers will consult the industry about the mechanisms which might be appropriate for securing its greater involvement. Ministers do not embark on this exercise with any predetermined areas for industry support in mind.
  As to timing, while I cannot give my hon. Friend the assurance which he sought, I would emphasise that my right hon. Friend's announcement on 22 January does not envisage any reduction in planned expenditure in 1985–86, and the full reduction is not due to take effect until 1987–88. It is considered that this will allow adequate time to take the necessary decisions and to consult the industry on how it can be fully involved in the funding of the research effort.
  I wholly sympathise with those whose job it is to plan and conduct research in times of financial difficulty and some inevitable uncertainty. I recognise that it is not easy to sustain high morale among staff, especially the scientists, whose energy and creativity is the essence of a successful research enterprise such as that conducted at NVRS. Changes of the order of those currently in progress in AFRC present practical and personal problems as well as opportunities. The Department is doing what it can to ease the transition to a lower level of science budget funding. The ARFC's grant in aid for 1985–86 of £50·3 million includes an element of £4·8 million to assist with necessary restructuring.
  I repeat that the implications of the reductions in the agriculture Departments' research and development budgets have yet to be considered, both from the point of view of the future work programme of the NVRS and more generally. The Departments concerned with the ARFC are urgently considering this matter so as to allow the consequential implementation to proceed smoothly. The House is not so full tonight that my hon. Friend can have missed the scale of advice available to me on the periphery of the Chamber from among all the interested parties, and that in itself is an index of the importance we attach to, and the concern we all feel for, an orderly process.
  I echo the views expressed by my hon. Friend the Parliamentary Secretary in the debate on 13 March, when she pointed out that, even with the reductions which are now taking effect or are in prospect, the Government will still be making a major contribution to agricultural research. I have no reason to suppose that this will not apply equally to research on vegetables, which is the business of NVRS, as elsewhere.
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes past Ten o' clock.

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

Microelectronics: Assistance to Small Firms
Lord Rodney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what proportion of the assistance granted under the microelectronics application programme, since it was established in 1979, has been given to firms employing fewer than 200 people.
Lord Brabazon of Tara: My Lords, under the microelectronics application project, 64 per cent. of grants for development projects by number, and 53 per cent. in money terms, have gone to firms with fewer than 200 employees. Of companies receiving grants for feasibility studies, I estimate that about two-thirds, in both number and cash terms, are of the size specified. Training and awareness activities under this project are primarily aimed at smaller firms, and the proportion by which these have benefited, while not separately identifiable, is likely to be substantial.
Lord Rodney: My Lords, I should like to thank my noble friend for that encouraging reply. Will he confirm that once the present review is complete, high priority will continue to be given to the MAP scheme with particular emphasis on self-help from firms to introduce microelectronics into their products and their manufacturing processes?
Lord Brabazon of Tara: My Lords, my honourable friend the Minister for Information Technology announced a review of Government support for innovation schemes in another place on 12th November. The microelectronics application project is affected by that, and I cannot anticipate the outcome. However, an announcement will be made about it very shortly. The Government regard the encouragement of the application of microelectronics as a valuable part of the overall programme. I can certainly say that we shall continue to treat it as such.
Lord Bruce of Donington: My Lords, can the noble Lord say whether the total amount of Government assistance expressed in money terms was greater or less than the £150 million that the rescue of the lame duck Johnson Matthey cost?
Lord Brabazon of Tara: My Lords, I do not think that the comparison really has much to do with the Question which is on the Order Paper.
Lord Orr-Ewing: My Lords, is my noble friend aware that Germany is spending about twice as much as we are spending in Government help to this industry and to the component industry that serves it,
542
and that France is spending over three times as much as we are injecting into this industry? Should we not therefore increase our assistance so that we can compete with those two commercial competitors?
Lord Brabazon of Tara: My Lords, I was not aware of the comparative figures for Germany and France. However, I can tell my noble friend that, so far as the number of United Kingdom manufacturing firms employing microelectronics is concerned, we compare very favourably with both those countries. The most recent figures, relating to 1983, show that in this country 47 per cent. do so compared with 51 per cent. in West Germany and 38 per cent. in France. My noble friend will have to await the outcome of the announcement which I mentioned earlier.
Lord Glenamara: My Lords, can the noble Lord say anything about the regional destination of these grants? How much, for example, has gone to the North-East of England where unemployment is very much higher than anywhere else in the country?
Lord Brabazon of Tara: My Lords, I have no figures for the grants on a regional basis. I know that courses, seminars and training take place all over the country at all times. As to the use of microelectronic processes, the figures for the North are quite encouraging. Between 1981 and 1983, the figure for firms using this application has risen from 44 per cent. to 71 per cent.
Lord Bruce of Donington: My Lords, as the noble Lord considers that my first supplementary question was irrelevant, perhaps he will kindly inform the House of the total amount of the expenditure under this head and so enable your Lordships to judge the relevancy of that supplementary question.
Lord Brabazon of Tara: Indeed, my Lords. Current spending runs at about £14 million a year.
Lord Diamond: My Lords, will the noble Lord say whether the assistance that is given includes assistance towards the type of structure of the employing bodies? I have in mind, for example, assistance towards encouraging some co-operative form of ownership and management—I include workers' co-operatives—of small businesses of this kind.
Lord Brabazon of Tara: My Lords, I do not think that the scheme specifically aims at any kind of small business, co-operative, private or whatever. I do not think that recipients are specified in that way.

Mining Subsidence: Cost
2.41 p.m.
Lord Davies of Leek: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what are the on-going costs for surface damage and subsidence in mining areas.
The Parliamentary Under-Secretary of State, Department of the Environment (The Earl of Avon): My Lords, at the end of the financial year 1983–84 the total provision for subsidence damage was £280 million. An estimate for 1984–85 is not yet available.
Lord Davies of Leek: My Lords, I thank the Minister for that reply. Can he say whether those figures include the 27,000 new claimants for damage by mining subsidence at the present time?
The Earl of Avon: My Lords, I am not absolutely certain about that. The financial provision for subsidence damage is, I think, a matter for the board. An estimate for 1984–85 will be given in the board's annual report to be published in August this year.
Lord Harmar-Nicholls: My Lords, may I ask my noble friend whether the figure he has given includes subsidence from limestone workings as well as mining subsidence? This is a problem in the middle of England which is just as acute.
The Earl of Avon: My Lords, I am not aware that it does, but I shall let my noble friend know.
Lord Winstanley: My Lords, will the noble Earl confirm that the Mining Subsidence Act, which requires the National Coal Board to compensate people who have suffered damage as a result of mining subsidence, requires the Coal Board to pay that compensation only when it, the National Coal Board, is satisfied that the subsidence is complete? Is the noble Earl aware that the National Coal Board very rarely is satisfied that the subsidence is complete, and that there are sometimes very long delays in paying the compensation? An example is in Leigh in the county of Lancashire, where a local authority housing estate had virtually to disappear through the ground before compensation could be paid.
The Earl of Avon: My Lords, the noble Lord makes his case by a bit of exaggeration, but I agree with him that this can happen.
Lord Taylor of Mansfield: My Lords, can the Minister confirm that the system of accountancy has been changed by the National Coal Board and that instead of subsidence costs being a national charge on the Coal Board's funds they are now an individual responsibility on each separate pit?
The Earl of Avon: My Lords, inasmuch as the National Coal Board is a centralised institution, that is indeed the case. I believe it is board policy at the moment to repair subsidence damage rather than pay cash compensation, thus helping to maintain the nation's housing stock, avoiding dereliction and blight and assuring those living in mining areas that their environment is not to be sacrificed in the interests of the nation's need for coal.
Lord Nugent of Guildford: My Lords, can my noble friend say what part of this total sum is payable to the water authorities in respect of damage to mains and mains sewers caused by subsidence?
The Earl of Avon: My Lords, not without prior notice.
Lord Taylor of Blackburn: My Lords, I am sure the noble Earl is not aware that he has not answered the question of my noble friend Lord Taylor of Mansfield. My noble friend asked whether the Minister is aware that the charges are not distributed throughout the industry but are charged against each particular pit, which makes that pit uneconomic.
The Earl of Avon: My Lords, I am grateful to the noble Lord for clarifying what the noble Lord asked earlier. I was not aware of that, but I shall find out about it.
Viscount St. Davids: My Lords, has my noble friend any figures for the damage suffered by the British Waterways Board, which I believe is a rather heavy sufferer in this particular direction? I believe it receives only a part of the compensation that it should for the damage that it suffers.
The Earl of Avon: My Lords, I am not aware of that. I am sure that the agreements would have been to the best advantage of everyone.
Lord Shinwell: My Lords, is the noble Earl aware that compensation was never paid when the pits were privately owned, or was very rarely paid? It began only under nationalisation. Although there may be complaints about some aspects of nationalisation, at any rate those who have suffered from subsidence have received compensation.
The Earl of Avon: My Lords, I can only thank the noble Lord for his wisdom about those earlier days.

International Fund for Agricultural Development
2.46 p.m.
Lord Hatch of Lusby: My Lords. I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is their present policy towards the International Fund for Agricultural Development.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, the Government support the International Fund for Agricultural Development. We shall contribute to the new replenishment of its funds if, as we hope, it can be agreed.
Lord Hatch of Lusby: My Lords, may I thank the noble Lord the Minister both for that Answer and for writing to me following my raising of the same question in a recent debate. Can he tell us what Her Majesty's Government contributed last year to the international fund and what they contributed when the fund was established, I believe under a Labour Government? Can he say, further, what is the kind of

545
figure that they have it in mind to contribute this year to the fund, after its agreement has been delayed for over 12 months?
Lord Trefgarne: My Lords, the sum which we contributed to the initial funding of this organisation was £18 million. The sum which we contributed to the first replenishment was £12.9 million. That latter sum constituted about 5 per cent. of the total of the OECD countries' share to the funding of the organisation, and I imagine that our contribution to the second replenishment will be of the same order.
Lord Bauer: My Lords, is it not the case that this fund is one of three rival multinational organisations in Rome, with very similar objectives, the others being FAO and the World Food Programme? Have not their activities been much criticised by aid supporters as wasteful, ineffective, even corrupt, because of lack of control by the donors and lack of independent budgetary control? If OPEC withdraws from support of this fund should we not follow their example? Should we not in any case concentrate on direct bilateral aid which we can monitor more effectively?
Lord Trefgarne: My Lords, I am afraid I do not share the jaundiced view of my noble friend about this organisation. A recent evaluation of some of its programmes suggests that it generally achieves worthwhile results.
Lord Oram: My Lords, is not the main lesson we should draw from the current famine in Africa that we should do all that we can to help the African countries develop their own agriculture in order to prevent famine in the future? That being so, is not IFAD, in contrast to what the noble Lord, Lord Bauer, has said, one of the most cost-effective organisations for achieving just that purpose? Will the Minister accept our commendation of his reply to the noble Lord, Lord Bauer?
Lord Trefgarne: My Lords, I am not sure that this organisation is the most cost-effective of the organisations working in this field. However, as I said just now in answer to my noble friend, it does a worthwhile job and we shall continue to support it within the framework of the agreements to which I have referred.
Lord Mackie of Benshie: My Lords, is it not the fact that the most effective method of using the fund is to train and to support training in ancillary devices in agriculture, such as irrigation, because by following such a course far more will be achieved in the long term than by any form of food aid? Of course, I am not talking about famine aid.
Lord Trefgarne: My Lords, I think that the noble Lord is right. We want to cure the disease rather than just treat the symptoms. Indeed, that is why we so strongly support the task that this organisation is carrying out.
Lord Harmar-Nicholls: My Lords, will my noble friend bear in mind that we ought not to take the supposed perfectness of these organisations for
546
granted, because they do need monitoring? If we think back as far as 1955 and to the problems that arose in the FAO when all kinds of things were happening which caused great disquiet, it is perhaps as well to remember that these organisations do need watching.
Lord Trefgarne: My Lords, I agree with my noble friend that we need to be sure—and need to continue to assure ourselves—that the funds that we make available are properly spent.
Lord Brockway: My Lords, arising from the question put from the Opposition Front Bench and the noble Lord's answer, I should like to ask whether it is recognised that agricultural development in the Continent of Africa is absolutely necessary, particularly as a contribution to ending the appalling famine that is taking place there. In view of those facts, will the Government increase their contribution and provide technical assistance to African governments to develop their own agriculture?
Lord Trefgarne: My Lords, I ought to make it clear that the Government are not necessarily in a position to do precisely as the noble Lord requests. We are not actually in the driving seat so far as this organisation is concerned. Contributions are agreed among all the donors. As the noble Lord will no doubt be aware, there are three baskets of donors and we go along with the general consensus.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord be kind enough to say what is holding up the second replenishment, and when do the Government hope to be able to make an announcement about it?
Lord Trefgarne: My Lords, I cannot be precise as to when an announcement will be made, but a large number of nations are involved, as I am sure the noble Lord will be aware. The two principal groupings are OPEC and the OECD and it is necessary for those two groupings to agree (and, indeed, for the groupings themselves to do so) before an agreement can be reached.
Lord Hatch of Lusby: My Lords, while I thank and applaud the noble Lord for his commendation of this organisation on its cost-effectiveness—I understand that its administrative costs are no more than 5 per cent.—may I ask whether it is not to be regretted that the British contribution to the fund has apparently, according to his figures, fallen by one-third since it was initiated? Is it not also the case that this year the total funds available to the international fund will be roughly half those of its previous budget?
Lord Trefgarne: My Lords, of course the last matter to which the noble Lord referred has yet to be decided. However, the percentage of the OECD funds which we contribute has remained about constant throughout the time that we have been making contributions to this organisation, and I imagine that that will continue.

Chiropody: Recognition and Careers Advice
2.54 p.m.
Lord Gainford: 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 are satisfied that the work done by chiropodists is fully recognized; and what encouragement is given to enter the chiropody profession.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): My Lords, we fully recognise the value of the services provided by chiropodists. Members of this profession in the National Health Service and in private practice play an important part in helping to maintain a person's mobility. We provide careers advice and publicity on chiropody which is widely used by local authority careers officers.
Lord Gainford: My Lords. I thank my noble friend the Minister for that encouraging Answer. Will Her Majesty's Government pay particular attention to the encouragement and importance of the chiropody profession in view of the problem of mobility for the ever-increasing number of veteran citizens?
Lord Glenarthur: Yes, my Lords, I can tell my noble friend that we understand that the chief chiropodists of district health authorities and all members of their staff are actively involved in disseminating information to school children by taking part in career talks. I hope that that will help to achieve what my noble friend wants.
Lord Wells-Pestell: My Lords, are we to understand from the Minister's reply that the National Health Service will use the services of any chiropodist? Is it not a fact that there are several professional organisations of chiropodists whose qualifications vary considerably, and that it is only wise to accept chiropodists who hold a particular qualification?
Lord Glenarthur: My Lords, the noble Lord is partly right, but there are no proposals to restrict the practice of chiropody generally to state registered practitioners. We are considering advice from officials based on discussions which they had last year with bodies representative of all the professions supplementary to medicine (including both registered and unregistered chiropodists) on the question of the protection of title. However, I cannot anticipate the outcome of that consideration. I can assure the noble Lord that there are no Government proposals to impose restrictions on the practice of any of the professions concerned which would have the effect of depriving anyone of his livelihood.
Baroness Seear: My Lords, is it the case now—as it used to be—that grants for training for chiropody are only discretionary and not mandatory? If that is so, as I believe it to be, is it not very foolish, when we bear in mind that there is a shortage of chiropodists and that it is a profession that appeals to a large number of
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very competent young people who could qualify very satisfactorily if they could raise the funds for the training?
Lord Glenarthur: My Lords, I am afraid that I am not in a position to comment on grants for training as such, but I shall certainly find out about them and let the noble Baroness know. However, so far as the question of possible increases in pay are concerned—which is another factor which some people consider will encourage greater entry into the profession—I can say that only state registered chiropodists are eligible to work in the National Health Service. Indeed. I think that that comment adds to the answer which I gave to the noble Lord, Lord Wells-Pestell. On the 1983 figures, approximately 67 per cent. of such chiropodists worked in the National Health Service on a whole-time or part-time contractual basis. That represents a 10 per cent. increase over the 1982 figures.
Lord Broxbourne: My Lords, as one who has taken a sympathetic interest in this matter since the passage of the Professions Supplementary to Medicine Act 1960. I ask my noble friend to do everything possible—and indeed urge his colleagues so to do—to assist and promote the praiseworthy efforts of this profession to keep the country on its feet.
Lord Glenarthur: My Lords, I note my noble friend's remarks.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that I strongly support the noble Lord, Lord Gainford, in his tribute to the value of this profession? Is the noble Lord aware that that value is being eroded at present because of severe reductions in services to patients? In some areas the reduction has been as high as 50 per cent. Therefore, although we have a valuable service, it is being eroded at present.
Lord Glenarthur: My Lords, I note the noble Lord's remarks and, yes, there is a shortage of chiropodists. As I indicated to my noble friend Lord Gainford, we are doing what we can to encourage recruitment to the profession. A number of schools for chiropody have opened. Since 1978 four have opened, at Plymouth, Huddersfield, Belfast and Sussex, and that has led to a 52 per cent. increase in student output. A fifth school will open later this year at Northampton and there are plans to open another at Southampton in 1987. I understand that plans for schools at Preston and Ipswich are being considered, and that is quite encouraging.
Lord Wallace of Coslany: My Lords, I think that the noble Lord has misunderstood me. The reduction in services is due not to a shortage of chiropodists but to the financial restrictions on the use of chiropodists in various services. That is the problem. I am well aware that there is a shortage of chiropodists. However, the present reduction in services is due not to that shortage but to financial considerations.
Lord Glenarthur: My Lords, I note the noble Lord's remarks, but I do not think that I can necessarily go along with him on all that he said.
Lord Winstanley: My Lords, will the noble Lord recognise that the patients concerned were very satisfied indeed with the work done by the home chiropody service which was provided for elderly people in many areas? Is it not a matter of great regret that the home chiropody service for the elderly has now virtually disappeared? Can anything be done now to restore the service?
Lord Glenarthur: My Lords, I do not know off the top of my head whether or not anything can be done to restore it. No doubt it was stopped for perfectly adequate reasons, and I shall look into it and familiarise myself with all the arguments.
The Lord Bishop of Norwich: My Lords, as a tailpiece, or rather as a footnote, to the Minister's helpful answers, may I ask whether he knows that one of our own bishops in the Church of England is married to a highly qualified and practising chiropodist? Does he feel that the fact that the bishop looks after the souls and his wife looks after the soles enhances the view of the nation about the bishops and encourages this magnificent profession of chiropody?
Lord Glenarthur: My Lords, I am greatly encouraged by all that the right reverend Prelate said and I take note of it. As one who has to do a certain amount of thinking on my feet, I do not think that I can really comment further than that.
Lord Ennals: My Lords, in order not to put my foot in it again, may I also be associated with those who congratulated the chiropodists on the excellent work they perform, in particular for the elderly and the handicapped? Is the noble Lord aware that my noble friend Lord Wallace is right in two respects? Would the noble Lord not agree that there is a great shortage of chiropodists, partly because of shortage of funds but also, contrary to what he said, simply because of a shortage of trained chiropodists? Is he aware that there are 10 applications for every place in the training schools in the country? With an ageing population and therefore a steadily increasing demand for chiropody, is it not essential that more places are made available for people who are anxious to be trained in this important task so as to help elderly people keep on their feet?
Lord Glenarthur: My Lords, I have described to the noble Lord, Lord Wallace, how we are taking steps to increase the number of places available. However, the fact remains that, at the end of the day, the number of chiropodists employed and the ways in which they are employed is primarily a matter for individual health authorities to determine in the light of local needs and available resources; and that I am sure the noble Lord will understand.
Lord Wells-Pestell: My Lords, notwithstanding the fact that there may be a shortage of qualified chiropodists, will the noble Lord assure the House that only qualified chiropodists will in fact be used, otherwise there may be more people taken off their feet?
Lord Glenarthur: My Lords, it is the case, as I said earlier, that only state registered chiropodists may operate within health authorities.

Business
3.3 p.m.
The Earl of Swinton: My Lords, with the leave of the House, I should like to say a brief word about the length of speeches in this afternoon's debate standing in the name of the noble Lord, Lord Wigoder, to which your Lordships have agreed to apply a five-hour time limit. On the principle that the mover is allowed approximately 20 minutes and that the Minister should rise to reply not less than 25 minutes before the scheduled end of the debate, I should be grateful if other speakers in the debate would limit their speeches to a maximum of 15 minutes. If any noble Lord speaks at greater length, he will do so at the expense of later speakers in the debate.

Official Secrets Legislation
3.4 p.m.
Lord Wigoder Lord Wigoder rose to move to resolve, That this House calls upon Her Majesty's Government to introduce legislation which will repeal Section 2 of the Official Secrets Act 1911 and replace it with a measure which would protect specified classes of information whose wrongful disclosure would cause serious national harm; and to bring forward proposals to establish a general right of access by the public to official information, subject only to specific exemptions.
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I should like to begin by making it clear that at least for my part it is post Ponting rather than propter Ponting. I have no desire to examine the particular circumstances of that unhappy case, although from time to time it might be necessary to refer to it. What I seek to do is to see whether there can be established in your Lordships' House a general consensus of opinion that Section 2 of the Official Secrets Act ought to be repealed and ought to be replaced by something far more specific and far narrower in its provisions, and also to see whether there is a general consensus of opinion that the public should have increased access to official information.
I have no desire to inflict upon your Lordships a history lesson. I refer only for a moment to 1889, which was the year when the first Official Secrets Act was passed. I do so merely to draw your Lordships' attention to the fact that in that Act it was made an offence for a Crown servant to communicate official information to a person to whom it was not in the interests of the state or otherwise in the public interest to communicate it. That was an interesting expression, "in the interests of the state or otherwise not in the public interest". If that phrase had been in the existing Section 2 of the 1911 Act, there would have been no difficulty about the recent trial at the Central Criminal Court. As it was, I am bound to say, referring to that trial for, I think, the last time in the course of my observations, that the trial judge, if I may respectfully say so, was entirely right in his interpretation of the expression "in the interests of the state". He did no more than follow the case of Chandler in 1963 in which, if I remember rightly, my noble friend Lord

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Hutchinson of Lullington led me for the defence. Contrary to appearance, my Lords, he is in fact a year or two older than I am! It is clear that the trial judge was right and that much of the criticism levelled at him has been wholly irresponsible.
Section 2 of the 1911 Act was passed, indeed, the whole Act was passed, I am sorry to have to say, by a Liberal Government. It was passed, having been discussed for rather less than half an hour in the other place and for not much more than half an hour in your Lordships' House at a time when there was a scare about German espionage. I can only say that perhaps even the greatest of Liberal Governments, the greatest of Governments, indeed, are entitled to make just one error in the course of their lifetime.
Section 2, because of the various disjunctives employed in it, creates in fact something over two thousand different offences. Eliminating the various alternatives, the essence of it is this—and I quote the relevant words:
"If any person having in his possession … [any] information … which he has obtained owing to his position as a person who holds … office under Her Majesty, … communicates [it] to any person, other than a person to whom he is authorised to communicate it, or a person to whom it is in the interest of the State his duty to communicate it, … shall be guilty of [an offence]".
In other words, it applies to any information which a civil servant has obtained owing to his position.
There are four objections to Section 2 as it stands. The first is that it is ludicrously wide in its application. Taken literally, it means that it would be an offence to disclose what type of biscuit the Secretary of State has with his morning coffee; what is the colour of the carpet in the Secretary of State's room. All these are matters which come, strictly speaking, within the purview of Section 2 as it is now drafted.
The second complaint about Section 2 is that in an attempt to restore some common sense to the situation, the Attorney-General's consent is made necessary before there can be a prosecution. That may, of course, eliminate some of the more frivolous prosecutions; nevertheless it leads, and must lead, to an entirely random and haphazard application of the Act. Some Attorney-Generals might well have prosecuted Ponting and not Miss Massiter. Other Attorney-Generals, equally properly, might have taken precisely the opposite course. It is wrong that in a matter of this kind so much should depend upon the whim of an Attorney-General, however responsibly—I make no criticism of any Attorney-General on this matter— he seeks to exercise a quite impossible responsibility.
The third objection to Section 2 as it stands is one which we on the Liberal and SDP Alliance Benches feel particularly strongly. It seems to place politicians, and particularly Governments, in a privileged position. It sets out a situation in which they are to be regarded as more important than any of the other great organisations of this country. Many of them do far more good for the people of this country than any Government have ever done. This is an attitude of mind perhaps exemplified by the present Prime Minister when she wrote these words in February this year to Mr. Kinnock:
"Civil Servants, whatever their rank, have a special degree of responsibility imposed on them by the nature of their office, and their duties, and by the confidence that is thereby reposed in them".
All of us would accept that there is a very important place for confidentiality, trust and loyalty, not only inside the Government but outside in all the various organisations to which I have referred. It seems to us quite wrong that criminal sanctions should be available against the civil servant when other organisations manage perfectly satisfactorily with their ordinary internal disciplinary processes without need for recourse to the criminal law.
The fourth objection to Section 2 is one that I cannot elaborate upon because it would take much too long; but towards the end of Section 2 there are a series of subsections which make it an offence also for people to receive and transmit information that has been improperly divulged to them. Those subsections are extremely difficult to construe or to understand. Again the most important case under that section which your Lordships may remember in the early 1970s involved the Sunday Telegraph and Mr. Jonathan Aitken. Lord Hutchinson and I stood this time side by side and endeavoured to analyse the meaning of that part of the section. It so happens—this is not in any sense a commercial—that the defendants were acquitted and therefore the argument never went to the Court of Appeal and never received higher judicial authority. But it was quite clear that the remaining part of Section 2 is extraordinarily difficult to understand and construe, and it is ambiguous to a fault.
In those circumstances, it is perhaps hardly surprising that a demand has grown up for repeal of Section 2 and for its replacement by specific limited provisions that would set out precise areas in which it would be an offence for information to be wrongly communicated. I take on board of course the danger that if the existing Section 2—which is to some extent inoperable and unenforceable as we have seen from recent events—is replaced by an effective Section 2, it may result in rather more prosecutions than are taking place at the moment. Nevertheless, I believe there is a real case for replacing Section 2 by something far more precise and for not having such an appalling piece of legislation on the statute book. At the same time there has grown up a movement asking not only that Section 2 should be repealed, but also that the public should have a greater access to official information. This is the reverse side of the coin.
Without going back further than 1970 I can quote the Conservative Party manifesto at that election. The Conservatives pledged themselves to eliminate unnecessary secrecy concerning the workings of Government. Whoever drafted those words might perhaps have had a wry smile the day before yesterday as he listened to the exchanges in your Lordships' House between my noble friend Lord Gladwyn and the Government. They pledged themselves to do that, which they did not, and also to review the operation of the Official Secrets Act, which they did. They set up the Committee presided over by my noble friend Lord Franks. That Committee reported in 1972. The Committee, in its own words,
"found section 2 a mess. Its scope is enormously wide. Any law which impinges on the freedom of information in a democracy should be much more tightly drawn. A catch-all provision is saved from absurdity in operation only by the sparing exercise of the Attorney General's discretion to prosecute. Yet the very width of this discretion, and the inevitably selective way in which it is exercised, give rise to considerable unease. The drafting and

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interpretation of the section are obscure. People are not sure what it means, or how it operates in practice, or what kinds of action involve real risk of prosecution under it."
That Committee, not surprisingly, had the advantage of the assistance of the Attorney-General who gave evidence at the time. He is now the noble and learned Lord, Lord Rawlinson of Ewell. In his evidence at the time the noble and learned Lord said:
"Much information in the hands of Civil Servants and others can be disclosed without any damange to the interests of the State, and it is wrong in principle that a criminal statute should make it an offence to do something which is not contrary to the public interest. I would welcome therefore a solution which narrowed the categories of information to which the section applies."
It is hardly surprising that in those circumstances the Franks Committee suggested the repeal of the Act and proposed its substitution by a series of measures that might perhaps form the basis of any future action on Section 2. The Committee recommended, first, that there should be a general protection against disclosure of information which might injure the security or safety of the state or the community. I do not think anybody would quarrel with that. Secondly, they proposed that there should be a series of specific subjects in which, equally, the following areas of disclosure should be prohibited. They were: defence and internal security, foreign relations, and the value of sterling and the reserves, Cabinet papers, law and order, and the affairs of private citizens and private concerns. Some of us may wish to discuss in detail one or other of those headings. However, I believe that the report and the recommendations of the Franks Committee provide a basis upon which we can act in future and perhaps have our discussion this afternoon.
The result of the proposals of the Franks Committee was no more than that in 1973 the Government in the other place debated them on a Motion to take note of the situation. Despite their pledge to legislate, nothing further happened until the Government, as your Lordships will remember, fell in 1974. They were replaced by a Labour Government. The Labour Government made a brave promise in their manifesto. They said they would,
"replace the Official Secrets Act by a measure to put the burden on public authorities to justify withholding information".
They did not. What happened was that in November 1976, some two years later, there was a statement by the Home Secretary which, in essence, accepted most of the proposals of the Franks Committee and promised legislation in the following Session. That never arrived. There was a White Paper in 1978, but there was no legislation and that Government fell in 1979.
A Conservative Government were then returned. This time there was no pledge in the manifesto, but a promise in the Queen's Speech to replace Section 2 of the Official Secrets Act. At least that Government tried to do so. In October 1979 they introduced a Bill called the Protection of Official Information Bill. Those words really say it all. It was not a Freedom of Official Information Bill: it was a Protection of Official Information Bill. It is not entirely surprising that its very restrictive provisions were found to be so offensive that the Government were mauled—if that is the right word—in the Second Reading debate in your Lordships' House where the Bill was introduced. I am happy to have taken a small part in the mauling and
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the Bill was withdrawn altogether some 15 days after Second Reading in your Lordships' House. Perhaps the moral of this is that parties, when they are in opposition, find access to official information and reform of the Official Secrets Act a very tempting programme, and one upon which it is indeed possible, perhaps, to gain a substantial number of votes. When they get into office they appear to be overwhelmed by the Whitehall ethos, and they find, for one reason or another, that it is quite impossible to make any progress.
Alongside these various Government measures there have of course been one or two private Members who have sought to take the matter further. The most successful (the only one, I believe, whose Bill became an Act) was in 1960, when a Private Member's Bill was brought in which gave the public the right to attend local authority meetings—a great step forward. It was introduced and piloted through the other place by a young lady with the name of Mrs. Margaret Thatcher. There have been other measures since. My honourable friend Mr. Freud introduced a Bill in 1979; Mr. Meacher introduced one later in the same year; Mr. Hooley introduced one in 1981; and there is one before the other place at the moment in the name of my right honourable friend Mr. David Steel.
With that brief summary, I venture to suggest that the case for the first part of this Motion is really quite overwhelming. The arguments really are difficult to rebut. The case is very simple: the present Section 2 is absurdly wide. It is ambiguous. It places the Attorney-General in an impossible position, and it brings our legal system into disrepute.
I turn briefly therefore to the other part of the Motion, the other side of the coin: the proposition (which again I think your Lordships may find it not easy to dispute) that in what we like to think is a democratic society the public have a right, if they choose to exercise it, to participate in the process of decision-making. That they can do only if they are provided with the raw material, and that means, in fact, the essential information that is needed to enable them to discuss intelligently and sensibly policy matters, not only after the policy is announced, when it is very often too late, but while the policy is in the process of being formed.
May I give your Lordships a few examples of the kind of documents that ought to be available to the public but which, under our secretive society, are not? There are the technical background papers to new road schemes; for example, traffic flow forecasts. There are environmental impact studies, such as the reports of the Air Pollution Inspectorate. There is non-security information about what goes on inside prisons; for example, what books are available in the library for prisoners to read. There are preports on product tests, and there are valuers' reports. There is a whole series of papers, documents, surveys and studies, the release of which could do absolutely no harm to anybody but which would serve to create a better informed electorate.
I hasten to say that I am not suggesting for one moment that freedom of information or access to official information should involve any access to such matters as internal or interdepartmental memoranda;

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and, indeed, the Campaign for Freedom of Information, which has been very active in the last year or two, very sensibly, your Lordships may think, made it perfectly clear in its first statement:
"The campaign … will not seek the disclosure of information that would … endanger national security; impair relations between the government and other governments or organisations; adversely affect the value of sterling or the reserves; adversely affect law enforcement or criminal investigations; breach genuine commercial confidentiality; invade individual privacy, breach the confidentiality of advice, opinion or recommendation tendered for the purpose of policy-making".
The campaign draws a distinction of course between advice, opinion or recommendation and scientific or technical advice, or background factual information which ought to be made available.
Can it seriously be said that the public have not a right to documents of the type that has been indicated? Can it seriously be said, too, that the public have not a right to information held about themselves on official files, which may be wrong? It may be inaccurate. It may operate very much to their detriment. In only the last Session we passed the Data Protection Act, which gave the individual citizen a right to see his file if it was computerised. What about the vast majority of files that are not computerised—such things as, for example, school records, social security records, housing records and documents of that kind, which might materially affect the happiness and well-being of the individual citizen but might very well be wrong, and to which he has no access and is never given the chance to put right? It is no wonder that there has been a great swell of opinion in support of increasing access to official information.
I say at once that one must beware of one's bedfellows in this matter. There are some on the extreme Left or the extreme Right whose object is not increased access to official information but to bring government to a grinding halt. With them we want nothing to do. Perhaps I may add that I also find it a little strange to be on this occasion perhaps in danger of being in bed with the media. I say that because the media, I believe, share many of our objectives in this discussion, but sometimes their motives are not, perhaps, the motives of some of us who seek to support these proposals. It is not chance, I think, that the media are paying rather more attention to this debate this afternoon than they have paid to any of our other debates in the course of the last few weeks.
The last question is: how do we achieve increased access to official information? There is a case for saying, "Let us try without legislation. Let us follow up the Croham directive of 1977; let us follow up the Justice report in 1978." But one is bound to say that the Croham directive has never really been acted upon, and it may be that one is forced to the conclusion that although one might try some form of administrative action first, one is going to be obliged in the end to introduce some form of legislation. The wording of the second half of this Motion covers both eventualities. It does not specify that there must be legislation: it simply asks the Government to bring forward proposals to establish a general right of access subject to specific exemptions.
The last matter to which I would refer is this. It is sometimes said that constitutionally it is not appropri-
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ate to a parliamentary democracy of our type to have freedom of information legislation. It has been said with some force by the Prime Minister. I can only say that in at least three other countries that have parliamentary democracies of our type, the Westminster type—Canada. Australia and New Zealand—there is legislation of this kind, and interestingly enough it has been brought forward on each occasion by the Conservative Party in those countries. The demand that is expressed in this Motion goes. I believe, across party lines. I hope and believe that the Liberal-SDP Alliance is in the forefront of this discussion, but it goes beyond party and there is support forthcoming from members of all parties and of none. It is a demand, first, to repeal Section 2 and replace it by something more sensible and more logical; and, secondly, to make our society more open and to make our democracy more of a reality. I beg to move.
Moved to resolve, That this House calls upon Her Majesty's Government to introduce legislation which will repeal Section 2 of the Official Secrets Act 1911 and replace it with a measure which would protect specified classes of information whose wrongful disclosure would cause serious national harm; and to bring forward proposals to establish a general right of access by the public to official information, subject only to specific exemptions.—(Lord Wigoder.)
3.30 p.m.
The Minister of State, Home Office (Lord Elton): My Lords, the matters which the noble Lord, Lord Wigoder, so clearly and persuasively has placed before the House this afternoon are of great importance and of great interest. They have, of course, been matters of great importance ever since the Official Secrets Act was passed more than 70 years ago. And they have been the subject of wide public interest for many recent years. But that does not make this debate in any way less important; although it does suggest that agreeing on a solution to the problems we are asked to look at is very far from being an easy matter.
Look, for instance, at the first thing that this Motion refers to: Section 2 of the Official Secrets Act, It is now almost exactly 14 years since the Conservative Government of the day appointed a departmental committee, chaired by the noble Lord, Lord Franks, with terms of reference,
"to review the operation of Section 2 of the Official Secrets Act 1911, and to make recommendations".
The committee included Members of both Houses of Parliament and representatives from the media. It received a formidable volume of both written and oral evidence. In September 1972, it made an unanimous report. That report recommended that Section 2 should be replaced by a new Official Information Act which would protect a more limited range of information than that covered by the section. Noble Lords will recall that the committee proposed that only particular sorts of information should be protected. Those were information about defence or internal security, about foreign relations, about currency or reserves, about law and order, about Cabinet documents and also information entrusted in confidence to the Government by a private individual or concern.

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There was not sufficient time for the then Conservative Government to take this forward. In 1974 they were succeeded, after an earlier coal strike, by a Labour Government. It was not until July 1978 that that Government published a White Paper containing their proposals for an Official Information Act. It is worth noting that the White Paper, which was published by a Labour Administration, was based very largely on the recommendations of the Franks Committee. But time ran out on that Government. My own party took over Government from the party opposite in 1979.
My noble and learned friend the Lord Chancellor introduced, as the noble Lord, Lord Wigoder, reminded us, a Protection of Official Information Bill into your Lordships' House on 5th November of that year. That Bill would have repealed Section 2 of the 1911 Act and replaced it by other measures. From that alone, it must be clear to your Lordships that we are not satisfied with Section 2 and that we should like to see something else in its place. The form we would like that something else to take can be seen in that Bill. Once again, the Bill, like the White Paper, was broadly based on the recommendation set out in the Franks Report. But it did include some of the improvements on the Franks proposals that were suggested by the White Paper of the other party. It was, I believe, a good Bill. It would have effected notable improvements.
A good many of the difficulties which recent critics have identified in the operation of Section 2 would have been avoided if it had become law. Unfortunately, however, although your Lordships gave the Bill a Second Reading, your speeches revealed a good deal of hostility to its contents. I would not describe the debate in exactly the terms chosen by the noble Lord, Lord Wigoder, but it was clear that it did not have too many friends. That hostility was echoed by a number of interests outside this House and it rapidly became clear that in a number of important areas there was no agreement—and no prospect of agreement—in which the Government could share about what ought to be in it. In the end the Government had to draw the sad but unavoidable conclusion that we could make no further progress, and we withdrew the Bill.
It is a Bill, nonetheless, that the first half of the noble Lord's Motion now demands. That is why I thought I should remind your Lordships at the outset that the last one resulted from work by both governing parties and that it perished for lack of agreement. There was of course no lack of agreement that some official information does have to be protected. The Motion does not suggest (and I doubt very much whether any of your Lordships will suggest) that every scrap of official information should be available to all and sundry. You could not run a business like that. You could not run a bank, or a firm of lawyers or a doctor's practice without keeping some items of information strictly to yourself. So we are not therefore concerned only with matters of military security.
But we must not forget security. The military security of the state, our relations with other countries, do concern every one of us because every one of us stands to suffer very severely if these matters are prejudiced. And I do not have in mind only the sort of
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breach that could lead directly to the defeat of our forces in war or to the undermining of our relations with other countries. Lesser breaches can affect very closely our ability to bargain with other nations and secure the best terms for our people in a number of matters. We are not therefore striking a simple balance between the interest of the individual, on the one hand, and the interest of the state on the other. Those interests are bound up together. Government, as the executive arm of the state, have a duty to protect the interests of all of us, and each of us has a right to expect that they will.
The second part of the Motion asks not for "legislation"—and Lord Wigoder drew attention to this in his concluding remarks—but for "proposals". It is in a way complementary to the first part. The first seeks by legislative means to set a narrow fence round information that must be held only by Government and those appointed by Government. The second seeks to improve public access to all other information. Again, convention, and the clock, prevent me from responding immediately to the detail of what the noble Lord has proposed. I shall return to that when I reply at the end of this debate, although the accumulation of detail by that time will mean that, as usual, part of our exchanges will be by correspondence.
I think the most useful material I can provide at the beginning of the debate is a reminder of our general approach as it is at present. This was set out by the Prime Minister in another place only last month. She said that we have a clear policy to make available as much information as possible while preserving the confidentiality essential to the effective working of Government. Ministers in charge of departments were asked to give this their close personal attention when we took office in 1979. Those were the Prime Minister's instructions. They do not sound like the words of a Government obsessed with secrecy. But if there are any remaining doubts, it is worth looking at the result of this approach, and in considering what we do next we ought in any case to consider the level of access the public now has to information.
To start with you only have to look at the reports of the proceedings of this House and its committees and of the other place and its committees—or even the daily newspapers—to see that there is a vast quantity of detailed information available about our activities and policies of Government. I am not talking about trivia or propaganda. I am talking about solid information which is the essential ingredient for informed discussion. But your Lordships will want, I do not doubt, concrete examples of specific Government initiatives and decisions that make the difference between what we do now and what was done by Governments less than 10 years ago. Let me take one of my own areas of responsibility for a start. And what I shall say does not seem to me to fall short of the pledge that we gave in our 1970 election manifesto (to which the noble Lord referred), nor does it seem to me to fail to match up to the expectations raised by my noble and learned friend Lord Rawlinson in the evidence which he quoted.
At the end of 1980 my noble friend Lord Whitelaw—Leader, as he now is, of this House—decided to open up one of our most

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celebrated and crowded prisons, Her Majesty's Prison at Strangeways in Manchester, to the television cameras. The television cameras did not I think scan the title of the books in the prison library but it was a new and, for the prison service, a dramatic departure that has been followed by greater openness to the media ever since and has generated a reforming pressure of which, as the Minister concerned, I am acutely aware every day of my working life.
And that was not just an isolated flourish. In 1983 we appointed a committee—the Control Review Committee—to look at the way in which we deal with our most difficult and disruptive long-term prisoners, a typical subject for an internal inquiry. We appointed it because we thought we were not doing the job well. The report contains an extremely frank discussion of how past policies had failed and how our present efforts were not much better. It was a sensitive report, full of professional and technical information which exposed much that urgently needs to be put right. Not exactly a gift to the Home Office PR Department, but we published it in July 1984.
Since 1979 we have appointed an Inspector of Prisons who can be removed only on a resolution of both Houses of Parliament and we publish every report he makes to the Secretary of State no matter how critical it is of the department or of Government. That was a new departure—just as it was a new departure for the Department of Education and Science to start publishing all the reports of formal inspections by Her Majesty's Inspectorate of Schools and to publish also their annual survey of the effects on education of local education authorities' expenditure policies.
I could go on, my Lords, to refer to the Board of Inland Revenue making available for publication evidence to the Keith Committee covering their enforcement powers, their powers of entry and inspection and, more important, their prosecution policy, tax defaulters and the black economy. But I have said enough to remind your Lordships of the change in the flavour of these things since 1979.
I will only mention in addition, therefore, the programme run by BBC radio in the last few years about the Civil Service, in which serving civil servants talked freely to Mr. Hugo Young about current problems and issues in a series which I believe was called, "No, Minister". It was generally agreed that, by letting the microphones in, we had opened up Whitehall in ways which had never previously been known.
I do not therefore argue against a flow of information from Government to public. Far from it. That is not the question. The real question is, rather: is the present level and type of access to information yet adequate, or can we put something better in its place? I look forward with interest to hearing ideas that may come forward on this question during the debate, but I think I should just make the position quite clear on the question of who takes the formal decision on what information should be released.
The noble Lord, Lord Wigoder, has mentioned that in some other countries these decisions have been given to the courts or to an information commissioner not unlike our own ombudsman, or to some kind of
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tribunal. My Lords, courts, tribunals and ombudsmen of various kinds have very valuable parts to play. But would it really be right to give this area of decision-making to them? Our view is that it would not be right. Under our constitution, Ministers are accountable to Parliament for the work of their departments, and that includes the provision of information, If the noble Lord wants to see the material of decision-making displayed for the public to use, let him look at the reports of proceedings of the departmental select committees of another place, and there he will find it. The issues at stake are essentially political and, in our view, the right place for Ministers to answer for their decisions in the essentially political area of information is in the political arena of the country, which is Parliament.
That is the background against which I believe we should look at any proposals for improving access to information. If we can improve access to information in a sensible way, without breaching that principle, then we are ready to listen to ideas. But let us not underrate the very wide access we already have, let us not discount its parliamentary safeguards and let us not forget that any more formal arrangements are bound to add both to our bureaucracy and to the cost to the taxpayer.
Your Lordships will realise from what I have said that both our recent experience in these matters and a proper caution about what is actually achieveable mean that I do not offer a prospect of definitive action in this field. I must also emphasise again, so far as the second part of the Motion is concerned, that any proposals to give a general statutory right of access to Government information are unacceptable to us in principle; and the noble Lord has accepted that. Nonetheless, the Motion contains so much with which we have sympathy that I have no intention of asking your Lordships to resist it. I shall, instead, listen with very close attention to any new ideas on how the present situation might be improved.
3.44 p.m.
Lord Elwyn-Jones: My Lords, I observe from The Times TV programmes today, in relation to this debate, that it said:
"Lord Wigoder (Liberal) opens for the Alliance and Lord Elwyn-Jones leads for the Government".
I can only regard that announcement as premature and dependent upon the outcome of the next general election, which is perhaps a little way off.
This debate is an important one, and it starts from certain acceptances, I think, of common ground. I think it is no secret, at any rate, that Section 2 of the Official Secrets Act, which has been so well dissected by the noble Lord, Lord Wigoder, is by now almost totally discredited. Way back in 1972 the Franks Report said. "Section 2 is a mess." It is; and Atttorney-Generals who have had the misfortune of trying to give effect to it have found themselves in a mess, if I may venture to say so, sometimes in consequence of its condition. Few will quarrel with the statement of the noble and learned Lord, Lord Scarman, calling for the repeal of the Official Secrets Act, Section 2, lock, stock and barrel and for its replacement by a more narrowly-defined protective measure and a Freedom of Information Act. With that I broadly agree.

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The not so well disposed may call this, from my point of view and my record, a somewhat belated conversion. It is indeed the case, as the noble Lord, Lord Wigoder, has indicated, that politicians in all countries, when they are in office and in power, are reluctant to concede that, apart from good reason, Government information is, and should be, public information. As Mr. Floyd Abrams, the American authority in this field, pointed out in an engaging Grenada lecture last year, Thomas Jefferson wrote that if he had to choose between a government without newspapers and newspapers without a government, he would unhesitatingly prefer the latter. But the Thomas Jefferson who wrote that was not yet in office; and when he was then he, as President, wrote:
"A few state seditious libel prosecutions of some of the most prominent offenders in the press would have a wholesome effect in restoring the integrity of the press".
So there is the change that follows office, and its abandonment. Lord Acton, after all, warned us a long time ago that power tends to corrupt. However, it is not always a condition which remains, and sometimes it is even avoided by the galaxy and joy of power.
So far as my own involvement in these matters is concerned, I take comfort in referring to the Green Paper published by the Labour Government in March 1979, which, long before the noble and learned Lord, Lord Scarman, gave his great weight to the campaign for the repeal of Section 2, recognised that the catch-all effect of Section 2 is no longer right. It announced:
"the Government intends that it should be replaced by provisions which would restrict criminal sanctions for unauthorised disclosure or communications to a strictly limited range of information".
That was announced at that time, and it would have been our intention. The paper added:
"This reform will not of itself increase the flow of information from Government since the criminal law is concerned only with what should not be disclosed and open government is concerned with what should be disclosed. The Government sees reform of Section 2 as an essential step in creating the climate in which greater openness can prevail".
The opportunity of giving effect to the proposals in its Green Paper was denied to the Labour Government, and as we have been told it was a Conservative government that introduced the Protection of Information Bill in 1979 which proved to be an ill-fated attempt to deal with Section 2.
Clause 1 of that Bill set out the protected information, disclosure of which attracted the criminal sanctions set out in the Bill, and it did so in six categories. Category (a) referred to information relating to defence or international relations, the unauthorised disclosure of which would be likely to cause serious injury to the interests of the nation or endanger the safety of its citizens. But that test was to be conclusively decided not by evidence to that effect to be given in court, but simply by a certificate—the "say-so" of a Minister.
That certificate, as indeed the Bill said, was to be "conclusive evidence of that fact." The result of course, as I ventured to say in the debate that we had upon that Bill, would have been that the main issue in a trial would, in effect, be decided by a Minister's certificate before the trial ever began. Not surprisingly, the Bill received very rough treatment in the House and went into the sand.
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I believe that the time has now come for another legislative effort to be made, and I regard this Motion as a very timely one indeed because I fear it is the case that there is a general lack of public confidence in the present law and in present arrangements regarding the public's access to official information. That lack of confidence is very serious and is something to which the Government should pay most careful heed.
What we who support this Motion—and I am very delighted to hear from the noble Lord the Minister that it is not the Government's intention to oppose it—are looking for and thinking about is already in existence, and is indeed practised in several Commonwealth countries whose democratic traditions came from us. I have in mind particularly Canada, Australia, New Zealand and then of course the United States of America. We do not need to follow those precedents slavishly but they are a good pointer and their experience is, I believe, reassuring.
They have not disregarded the need for the relevant law to be such as to prevent the likelihood of causing serious injury to the interests of the nation or endangering the safety of its citizens. For example, the United States Freedom of Information Act exempts from disclosure, among other materials, classified material based upon defence or foreign policy needs, trade secrets and confidential commercial and financial information, private personnel and medical files and law enforcement investigatory records. Those areas of official documents are protected.
But the value of the American experience has proved to be great. Speaking of the impact of the American Freedom of Information Act, Mr. Floyd Abrams who, as I said, is an authority in this field, said this:
"How could one object to an Act which resulted in news articles revealing, among other things, the My Lai massacre in Vietnam, the FBI's harassment of domestic political groups and the CIA's illegal surveillance on American college campuses?"
He cited in his speech a number of examples of the kind of information revealed by the Freedom of Information Act. As illustrations, he mentioned documents which by virtue of the operation of the Act had to be released; documents released to the Governor of Utah on the radioactive fall-out from atomic bomb testing in a neighbouring state, and others which showed that governmental officials knew of the health hazards, including cancer, but publicly insisted that there was no danger. As a result, Governor Scott Matheson was able to prepare testimony on federal compensation for victims of the testing.
Then an even more remarkable example was in the documents which the FBI had to release by virtue of the operation of the Act and which showed that J. Edgar Hoover, the FBI's director, had authorised the sending of a fraudulent letter by a fictitious person to a Hollywood gossip magazine, stating that the person had been at a rally where Jane Fonda and a Black Panther led a chant proposing to kill the then President, Richard Nixon. The material was used by Jane Fonda in litigation which she started against the FBI and which, not surprisingly, was ultimately settled out of court with the FBI agreeing to cease such activities in the future. It is true that we have no CIA

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and no FBI in this country; but are we certain that there are no skeletons in equivalent cupboards in this country?
As I have said, we need to restore public confidence in Government. We should not need to rely on leaks to enable the public to be better informed about what the Government are doing. There has been a good deal of leakage. The fact of that leakage is in itself significant. There is a need for the information, and lack of confidence is contributing to activities of that kind.
A question has already arisen in our discussion as to whether the situation can be remedied by voluntary action by the Government, in opening the doors more readily to the cabinets of information. Without becoming too party-motivated in this debate, I venture to think that a great deal more can be done. Certainly in the later period of its office, the Labour Government greatly widened the avenues of information, and I think it is the case that there has been a certain amount of widening this time, too, particularly through the active work of Select Committees in the House of Commons and indeed in this House. That has released a great deal of information which previously would have been withheld. So I am not painting a totally black and negative picture; but I think I am not exaggerating when I say that the public is extremely unhappy about the lack of confidence between the Government and the public and the failure to fulfil open government in any real sense.
Therefore, my conclusion—and I am not saying it is an easy task, as experience has shown—is as follows. Legislation is probably necessary, and if we look to other countries with similar histories, similar constitutions and similar traditions to ours which have tried legislation and introduced Freedom of Information Bills, they have proved very well worthwhile; and I venture to think that at the end of the day that will be necessary in this country as well.
3.59 p.m.
Lord Denning: My Lords, I am sure that your Lordships will welcome the almost unanimous view on all sides of this House that Section 2 should be repealed; that it should be replaced by some narrower and clearer definition; and that, in the long run, there should be a considerable increase in the amount of information available to the public.
For myself, I should like to start with Section 2 of the 1911 Act. I welcome the verdit of the jury in the Clive Ponting case. They disregarded, as far as I can see, the direction of the judge and in spite of his direction they unanimously found Clive Ponting not guilty. There is a precedent in this regard. That verdict should lead to a change in the law, just as 200 years ago, when freedom of speech was imperilled, it was the verdict of a jury which compelled a change in the law. It will take me only a minute or two to remind you of the case.
Junius wrote in the London Evening Post words which were said to be a seditious libel on King George III. He wrote that the King did not know the language of truth until he heard it in the complaints of his subjects. The printers and publishers were charged with seditious libel—criticising the Government of the day, if you please. The case was tried before Lord
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Mansfield and a jury, and for once Lord Mansfield got his law wrong. He said that the question of libel or no libel was for the judge himself to decide; all the jury had to decide was whether or not the words were printed and published. That was virtually a direction to them to find the printers and publishers guilty.
The jury went out for five and a half hours, so long that Lord Mansfield went back to his home in Bloomsbury Square to await the verdict. Then, after five and a half hours, in defiance of that great judge, the jury found the printers and publishers not guilty; and it is said that the "hoorays" and "hurrahs" reverberated across the metropolis until they reached the ears of Lord Mansfield himself in Bloomsbury Square. Well, my Lords, if you have read your newspapers, you will have seen that after the verdict of "not guilty" in the Ponting case there were "hoorays" and "hurrahs" from those who were present in court.
I give the illustration of that case because that does not mean that the jury thought that Clive Ponting was a first-rate man doing what was right; they meant only that it had not been proved that he had been guilty of a criminal offence. There we come to the rub of the matter. That is where Section 2 is completely wrong. Every piece of legislation which provides for a criminal offence with penalties should be clear and distinct so that every man shall be able to know what he can or cannot do.
Perhaps it is not necessary to have such an obvious statement but in 1962, in the case of Shaw, Lord Reid said:
"It has always been thought to be of primary importance that our law, and particularly our criminal law, should be certain; that a man should be able to know what conduct is and what is not criminal, particularly when heavy penalties are involved".
Section 2 is so wide that it covers every little communication by a civil servant outside of official information and makes him guilty. It is so ambiguous that no one can say what this means or what that means. Indeed, it is so uncertain in its operation that you do not know whether something is a criminal offence. The Attorney-General is the one who decides from these wide words whether you are guilty of a criminal offence. That is the width and ambiguity of Section 2.
In the Ponting case, much discussion took place around the words,
"in the interests of the state".
If Clive Ponting did what he did out of a duty "in the interests of the state", he was not guilty. If he did not do it "in the interests of the state", he was guilty. It is not reported generally but from the reports of The Times the judge seems to have said that "in the interests of the state" means in the interests of the Government of the day. I would repudiate that suggestion altogether and quote from the Chandler case, which was the only case upon the matter, in 1964 Appeal Cases, in which Lord Reid said:
"'State' is not an easy word. It does not mean 'the Government' or 'the executive'. Perhaps 'the country' or 'the Realm' are as good as anyone can find. I would be prepared to accept 'the organised community' as being as near a definition as one can get".
Lord Devlin said:
"I agree that in an appropriate context 'the security, safety and interests of the state' might mean simply the public or national safety and interests but in this statute it is used to describe the organs of government of the country".

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Those words, as I read them, do not warrant the summing up of the judge in this case and, if I may say so, the words "in the interests of the state" still mean what the ordinary person would mean by them—the interests of the country or the Realm; and on that point, every individual can have a different opinion of his own. Every jury can have a different opinion of his own. But it is so uncertain and so ambiguous that you do not know where you stand. That is the vice of this Section 2. It is completely uncertain and ambiguous. No one can tell where he stands or what he can or cannot do. That is why it should be repealed.
But let me also say a few words about the position of the Attorney-General. What an embarrassing position for him. What is he to go by? The Franks Committee—perhaps I may commend the report of that committee; it was absolutely first class, by first-class people—said this about the role of the Attorney-General in this matter:
"The essence of it is that he draws upon his political experience and is able to obtain the views of the responsible Minister on the national interest for the purpose of exercising more efficiently his impartial law enforcement role. He is not influenced by party considerations in the exercise of this role".
So he can go to the responsible Minister to see what is or is not in the national interest. What a position to place the Attorney-General in! He is in a most invidious position. He must be independent of politics; independent of any party considerations; and yet he is to determine whether to prosecute or not in the national interests.
The Attorney-General is given an almost impossible task by Section 2. I would agree with what the noble and learned Lord, Lord Scarman, has said: it is high time that Section 2 was repealed. Indeed, I am not sure whether after the Ponting case it is not a dead letter already. It is the last nail in the coffin of Section 2. But repeal by itself is not enough.
We urgently need a clear, defined Official Secrets Act. I would be with almost anyone in a responsible position in saying that we must have confidence maintained throughout our Civil Service. Confidence must be maintained on those essential matters. It must of course be maintained on national security, and also on many other affairs which affect the government of the land. Confidence in the maintenance of security is important throughout our Civil Service and throughout our businesses, and so on. Everyone in business will know that. It is most important to have confidence in the security of all proper communications, and therefore we should replace the 1911 Act by new provisions on the lines so well recommended by the Franks Committee.
There is a further point; the last one and perhaps the most important of all. What about some specific provisions for more open government, for more communications to be made available to the media and the press? In the climate of today I believe that all of us would be in favour of that, provided that vital interests are not thereby left imperilled.
It has been suggested by some that the courts could decide whether or not information should be released. The courts could not do such a job as that. As the noble Lord the Minister, Lord Elton, has said, in a way it is for the Minister responsible to decide this matter,
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realising the importance of open government but also realising the importance of preserving confidentiality. Then if the Minister goes wrong, he can answer questions in Parliament. So we should repeal Section 2 and replace it by something much more definite and certain in our criminal law, and somehow allow for more open government.
4.12 p.m.
Lord Maude of Stratford-upon-Avon: My Lords, I realise that it might be considered rather bad form for a Member of your Lordships' House, and especially a rather junior one, to start his speech by enumerating what he considers to be his own qualifications for speaking on a subject as controversial as this. If I briefly try to do so, it is only to show that I am able to take a fairly objective and impartial view, having been not only on both sides but in the middle as well.
I have been a practising journalist of one kind or another for 50 years, including some years as a newspaper editor. I have been a parliamentarian for 30 years, and for a couple of years a Minister, during which time I had the responsibility for looking into one departmental leak. My years as a Minister were spent with the remit which was laughingly described as the co-ordination of Government information services. During all those years I was steadily accused by the media and by the Opposition of being there to stifle the release of information, to prevent the press and the public finding things out.
On the contrary, I can say with my hand on my heart that I spent most of those two years trying to persuade Ministers and senior civil servants to reveal more and to explain more than they were ever apparently willing to do. In that I was loyally and willingly supported by the heads of the information services in every Government department because they recognised, as I did, that Governments suffer far more often from being too secretive and from failing to explain what they are doing at the time than they do from excessive communicativeness.
I do not dissent for a moment from what has been said by the noble Lord, Lord Wigoder, and the noble and learned Lord, Lord Denning, about Section 2 of the Official Secrets Act. We all know that it is a mess. The only thing which can be said in favour of it, I suppose, is that it may be better to have a bad law that is unenforceable than a reasonably bad law with which nobody is ever satisfied. But one point I must make to the Government is that when they come to replace that Act, as they must do, then whatever they do, and however narrowly they draw the new Act, they will never, ever, satisfy all the media. This is in the nature of things. They must just grit their teeth and face the fact. Least of all will they ever satisfy those who nowadays call themselves investigative journalists, many of whom apparently proceed on the principle that they have a right to know everything and that any means short of murder are in order to enable them to find out.
There have been so many cases of leaks to newspapers over the past 10 years or so, and what has been happening is, I am sorry to say, in part due to a very substantial deterioration in journalistic ethics. Even more remarkable is the fact that this deterioration has taken place most markedly among those

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newspapers which used to be regarded as the more responsible "heavies". I believe that I can honestly say that when I set out as a young journalist some 50 years ago no responsible editor, night editor or news editor would ever have dreamt of publishing a confidential Government document which he knew to have been obtained by theft or by a breach of confidence on the part of an official servant. He would have regarded that as unethical, immoral and, to use an old-fashioned word, unpatriotic.
Nowadays, if a newspaper—the Guardian, the Observer, or even The Times—can get hold of an official document, they publish it on the front page, under banner headlines, in triumph, as if they had succeeded in cocking a snook at the Government, however unimportant the contents of the document may be. If it is secret and if they have it, it is regarded as a triumph.
In my view this practice has quite the opposite effect to that which the editors no doubt believe it has. It does not bring us any nearer to more freedom of information. It merely makes the Government, Government departments, Ministers and civil servants more secretive and more costive. What the Pontings and the others are doing is not any great demonstration in favour of the right of the public to know or in favour of freedom of information; it is quite simply a breach of professional ethics and a breach of confidence in which the newspapers are not only conniving but which they are actively encouraging.
The fact of the matter is that the more this kind of thing happens, so far from freedom of information being encouraged or furthered, secrecy becomes more ingrained and more likely to be the rule. If no official document can be secure, much less will be put on paper and distribution lists will be rigidly pruned on a strict need-to-know basis. If no ministerial committee can be secure, and if no conference between a Minister and his advisers can be secure, fewer of those mettings will take place and fewer matters will be discussed in the way they ought to be discussed if proper decisions are to be arrived at. Decision making will be pushed further and further back into fewer hands, and into smaller smoke-filled rooms, with less being available even to Members of Parliament.
So this matter requires very careful handling by the Government. They should not give way to some of the wilder cries for freedom of information with which they are no doubt now over-familiar. The Government must now take a deep breath and, possibly after prolonged consultation, reach a decision about what is to replace Section 2 of the Official Secrets Act, knowing that it will not be universally popular or universally acceptable. The Government must also say that this is the last chance to do it. We cannot go on every few years having an attempt to deal with this problem which proves to be unacceptable either to the media or to Parliament and then let matters lapse for another four or five years. The Government have to get the maximum of agreement that they can between all the interested parties. They must then put it down on paper—whether a Green Paper, a White Paper or straight into the form of a Bill—and put it before Parliament, making it quite clear that if this cannot be carried by Parliament the
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situation will just be left as it is and people must lump it. I see no alternative to this that would not lead to chaos.
I should like to turn for a moment to the question of freedom of information. This is always a popular cry. It is always heralded by the announcement that the public, people at large, have a right to know this, that and the other, if not almost everything. I may be a crusted old high Tory but I always become rather suspicious when people talk loudly about rights and too little about duties. I believe that in this case the right way to approach this very delicate problem is to concentrate much more on the duty of governments, Ministers, and Government departments to inform than on the right of the individual to find out. Despite my puny efforts, and those of some of my successors, governments are still far too costive with information. In many cases local authorities are even worse, as are other public statutory bodies. Above all—and this is far from being in their own interests—they are far too unwilling to explain what they are doing, or trying to do, before a flaming row breaks out in the country. There needs to be much more intelligent explanation and they would then find their heads of information in each department only too willing to advise and cooperate in this respect. That would save a great deal of trouble for the Government and avoid much alarm and despondency among the public.
I would add—and I hesitate to say this having been up for some time—that if Parliament were doing its job rather better, governments would not find it nearly so easy to get away with unnecessary secretiveness. Far too many parliamentarians are prone to put down Questions as a matter of form and when they get an unsatisfactory Answer they write to the constituent and leave it at that; whereas if the Answer is unsatisfactory they ought to go on hammering until they get the information that they think the constitutent has a right to have.
Apart from that, I believe that to approach this matter from the angle that the individual has a right to know certain things, with specified exceptions, is the wrong way to go about it. The Government ought to lay down categorically what officials, Ministers and Government departments must tell the public. Let us have clearly established a duty to inform, and let us make that as wide ranging as we can. Then let us have a code of practice which will perhaps go wider than that. But I believe that anything which tries to hide behind reservations with phrases like "the national interest", "public interest" and "national security" are always going to lead to more trouble than they can ever do good. There is no general right to information. There cannot be. Nobody could run a government, a business, or anything, if everyone had a right to know everything that went on. But there is no reason why the strictest rules should not be laid down and enforced as to certain information which Ministers, officials and Government departments have no right to try to conceal, and that they have a duty to make available to those who ask for it, or even to publish without being asked, information which common sense dictates should be widely known. I believe that that is the right way to go about it and that the other way is wrong.
A general right of freedom of information for the public on almost any subject, subject to reservations,

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would cause enormous bureaucratic confusion and would lead to an enormous waste of time and correspondence. It would probably need the employment of a great many more public servants. Therefore, the Government must deal with the matter this way. I believe that they could go far in allaying public disquiet. They could do much to make their policies more easily understood. Obviously there will always be matters which have to be kept secret. The thing to do is get as wide an agreement as possible on what those matters are and then ensure that the widest possible frankness is used in official circles when informing the public on important matters.
4.28 p.m.
Lord Hutchinson of Lullington: My Lords, my reaction to my noble friend's Motion can be summarised in four words: "Here we go again!" The noble Lord, Lord Maude, who has just spoken, referred to the Government holding further "prolonged consultation". Since the Chandler case over 20 years ago we have had the Radcliffe, the Younger, the Fulton and the Franks reports. We have had the White Paper of 1978 and the Green Paper of 1979. We have had the ill-starred Protection of Official Information Bill; and we have had the Croham directives. We have had Mr. Freud's Bill; and now we have Mr. Steel's Bill. We have had the condemnation by senior judges, senior civil servants, politicians, lawyers and the victims of Section 2. There is nothing more to say about Section 2; and yet this Government, as did the previous Government, continue to invoke Section 2 of the Act. It did not sound to me, in listening to the noble Lord the Minister, that he in any shape or form looks with disfavour upon that section still being in existence.
To have prosecuted Mr. Ponting under this Act was one of the most extraordinary decisions that has been taken in recent years. Win or lose, the Government were clearly on a hiding to nothing. Having of course fatally used the criminal law against Miss Tisdall, where there was no danger to national security, not to use it against Ponting would have appeared, I suppose, as though the Law Officers were trying to save Ministers from embarrassment—an example of the knock-on effect of an originally disastrous decision.
But the Labour Government launched similar prosecutions, too. It was a Labour Attorney-General who used Sections 1 and 2 against two young journalists of good character and an ex-soldier from Cyprus in the ABC case. It was that Attorney-General who was told by the judge in that trial that the charges under Section I were oppressive, and whose case collapsed after five highly expensive weeks in court because the defence painstakingly proved that every item in the possession of those journalists, allegedly so secret that its communication would have undermined the security of the state, was in fact culled from public sources—including, if I may say so, the existence of GCHQ at Cheltenham. It was that learned Attorney-General who instituted in that case, unbeknown to the defence, the secret vetting of the jury. I must say that it was with some degree of cynical amusement that I watched the protestations of the Labour Front Bench in another place in the Ponting debate.
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All these cases were in a sense political prosecutions in that they involved the disclosure of information through breaches of trust which would embarrass the Government in power. So long as the law affecting Government information is based solely on the concept of administrative secrecy, on the prohibition of disclosure and on no other principle at all, so long will there continue to be this recurring resort to the criminal law and so long will the common sense and broad understanding of juries acquit the accused.
The time therefore has come—has it not?—to approach the whole problem from another direction and to lift it onto a higher level of principle. The protection of national security and the accountability of the security services necessarily involve matters of the highest principle. They invoke no less than the protection of the fundamental rights and freedoms of the individual citizen and the safety of the state. They involve the individual's right of free speech.
The noble and learned Lord, Lord Scarman, who certainly could not be described as a crusty old Tory, has put it like this:
"Section 2 is inconsistent with the modern development of our law and with the discernible new trends in the law's protection of the fundamental rights and freedoms necessary to the maintenance of a free democratic society".
What we are discussing in fact is the right of the citizen to the information which is necessary for him or her to have to exercise his or her democratic rights. It is the right to know—to know the basis on which decisions which affect the common good are made. This right to know—this need to know—is enshrined in Article 10 of the European Convention on Human Rights. Alas, as your Lordships will know, one quarter of the cases which have been found proved against member states of the European Community have in fact come from the United Kingdom.
That right to know is enshrined in Article 10, and yet, as the noble and learned Lord, Lord Scarman, pointed out, there exists at present no general principle in English law that is enforceable in the courts enshrining that right. Far from there being such a right, the disclosure of information in this country is a matter simply of executive policy—of Government or local government discretion. The law is not a law for the protection of the individual's fundamental rights, but, as the 1979 Bill so revealingly made clear in its title, the protection of official information. It is simply a law which manifests in legal form the concept of administrative secrecy.
The approach therefore to the repeal of Section 2, and indeed to the repeal of the whole of the Official Secrets Act, which has been so profoundly demanded by the noble and learned Lord, Lord Scarman, must be, first, to lay down the principle of the citizen's right to know, and then to spell out the necessary limitations to be put on that right. We must start by establishing that basic right and making it enforceable in the courts, and that means the drafting of a form of Freedom of Information Bill. That should not involve any great difficulty, because in Mr. Steel's Bill we have an excellent beginning; and, secondly, because, as has already been pointed out, other parts of the Commonwealth—those parts to which we have bequeathed a love and respect for our common law—already have legislation of this kind.

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Information technology is vastly increasing the storage of information and also undermining relentlessly attempts at excessive secrecy. Satellites now transcend national jurisdictions. By making Governments more accountable to the citizen and officials more accountable to Ministers, we strengthen democracy, Governments win greater confidence and the two-way passage of information between Government and citizen will lead possibly to better governmental decisions. Leaking and whistle-blowing will then cease in the land. It is not, if I may say so with the greatest respect to the noble Lord, Lord Maude, media morals which cause leaking and whistle-blowing. It is excessive secrecy.
I sincerely hope now that the Government will think on a bigger scale, on a scale quite different from that indicated by the noble Lord the Minister in his speech—these little matters of television cameras in Winson Green Prison, and so on. We talk of the flow of information. This is a trickle which can hardly be seen on the mountainside of secrecy. I sincerely hope that the Government will think on a bigger scale, in a non-partisan way, free from dogma.
There is now a developing consensus on how to proceed. To the noble Earl, Lord Gowrie, consensus means thought without intellectual force or vigour. But to formulate policy based on the deeply held and thought-through beliefs and principles of others, as well as on one's own, is, I would suggest, a far more difficult intellectual exercise than the stubborn and facile confrontation of conviction politics.
Recently an eminent Australian judge, the President of the Court of Appeal of New South Wales, Justice Kirby, who gave the second of the 1984 Granada lectures, speaking to a British audience, said—and I commend it to your Lordships:
"Being an Anglophile, I would give you many things. But if you would accept one only, I would give you freedom of information. That wave is coming. It is borne forward by technology and by example. It renews accountable democracy. It stimulates responsible freedom in the media. It obviates the plague of leaks that spring up in a world of too many secrets. It encourages a questioning and self-confident citizenry. It deserves your belated attention".
4.40 p.m.
Lord Hatch of Lusby: My Lords, the Official Secrets Act was passed to protect national security. The trial of Clive Ponting at the Old Bailey reveals how easy it is for Section 2 of the Act to be used for the protection of political reputations. This was a political trial. I have been told that the revelations of the Ponting trial concern only the House of Commons. Not so. They concern Parliament. Since January 1983, Ministers in this House have constantly misled and deceived the House in answering questions that I have put to them. I do not cast any aspersions on any of them personally. Indeed, I may say that any individual I shall mention in my speech I have given notice to beforehand.
I do not cast aspersions on them personally. They have no doubt done what they have been told to do. I accept that probably they did not know the facts. These deceptions are the responsibility of the Government and under our system they are finally the responsibility of the Prime Minister.
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In the time at my disposal I have only the opportunity to make a small selection from a constant misleading set of answers given to my questions since January 1983. On 17th January of that year, in discussing paragraph 110 of the Government White Paper on the sinking of the "Belgrano" and on the Falklands campaign, it was stated that, on 2nd May, HMS "Conqueror" detected the Argentine cruiser "General Belgrano". The Government knew at that time that that was not true. I raised that in the debate on the White Paper. It was not corrected. The noble Lord, Lord Belstead, then Minister of State at the Foreign Office, simply referred me to an answer given by Mr. Blaker in another place on 30th November 1982. That answer had already been overtaken by information and events. It was not to be until 4th April 1984, some 15 months later, that the Government were to admit that what I had suggested was true.
On 12th May of the same year, 1983, I asked a question about a statement of 1st May 1982 attributed to Mr. Pym when, as Foreign Secretary, he arrived in Washington. The statement was that Her Majesty's Government had no intention of taking further military action except to defend the exclusion zone. The noble Lord, Lord Belstead, gave me this astonishing answer:
"I am surprised that the noble Lord ascribes such a statement to my right honourable friend the Foreign and Commonwealth Secretary at a time when the task force was steaming towards the Falkland Islands". [Official Report, 12/5/83; col. 555.]
That was a correct report. So far as I know, apart from the statement made by the noble Lord, Lord Belstead, in this House to me, it has never been queried.
I come thirdly to an Unstarred Question that I put down in this House on 13th July 1983. By this time, the noble Baroness, Lady Young, was Minister of State at the Foreign Office. I asked her, after giving her notice, 10 specific questions. If your Lordships read the debate that followed my Unstarred Question, you will see that not one of those 10 questions was answered accurately. Again, I make only a small selection from them. I asked her about the statement made by Mr. John Nott (as he then was) the then Secretary of State for Defence, on 4th May 1982. The statement was that the "Belgrano"
"was closing on elements of our task force".
On 13th July 1983 the Government knew that this was not true. The "Belgrano" was, in fact, sailing away from the task force at the time that she was sunk and had been doing so for some 11 hours. It is quite fair that, in the middle of hostilities, a Minister may very easily make a mistake. But if a Minister makes a mistake of that kind, surely it is incumbent on him and members of the Government to correct it at the earliest possible moment.
Lord Bruce of Donington: Hear, hear!
Lord Hatch of Lusby: My Lords, in the same debate I asked the noble Baroness, Lady Young, to account for the statement also made by Mr. John Nott (as he then was) on 5th May 1982, when he stated that the decision to launch the torpedo was clearly one taken by the submarine commander. Earlier, the noble Lord, Lord Belstead, had answered the same question

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to me. His answer was that the decision was taken by the Prime Minister and the War Cabinet. They cannot both be right. One must be untrue. I think that this House has a right to truthful answers.
By this time—by the time of the debate on my Unstarred Question—the 1983 general election had taken place. During the course of that general election, the Prime Minister had spoken on the BBC television programme "Nationwide." She had spoken to a Mrs. Diana Gould of Bristol. And when Mrs. Gould asked her why the order to sink the "Belgrano" was given when the cruiser was sailing away from the Falklands, the Prime Minister answered, and again I quote:
"But it was not sailing away from the Falklands".
In June 1983, the Prime Minister knew that the "Belgrano" was sailing away from the Falkland Islands and away from the task force at the time she was sunk.
I come now to the Peruvian peace plan. I have never made any assertions that I know the truth. I have tried to find out the truth. I still do not know the truth. Questions on this subject have been answered by the noble Baroness, Lady Young, and other Government Ministers. All have consistently said, as has the Prime Minister, that Her Majesty's Government only received the first notice of the Peruvian peace plan three hours after the sinking of the "Belgrano". I do not know the truth but I do know, because I saw and heard him, that Mr. Cecil Parkinson, who was, at the time the decision on the "Belgrano" was taken, a member of the War Cabinet, stated on Panorama in 1984 that the knew all about the Peruvian peace proposals, primarily those of President Belaunde. Again, I do not know whether the Ministers, who have answered me, or Mr. Cecil Parkinson, were telling the truth. I do know that they could not all be telling the truth. If so, surely it is the right of this House to ask why Ministers or former Ministers have been deceiving both Parliament and public.
I am sorry that the noble Lord, Lord Thomas of Swynnerton, is not in his place and will not be speaking in this debate. I have alerted him to the fact that I shall be mentioning him. What many of us would like to know is what were the actions of the noble Lord, Lord Thomas of Swynnerton, in Peru at the time of the Peruvian peace proposals. He is, I believe, a fluent Spanish speaker, with the ear of the Prime Minister. We have never been told, and it is time that we were told.
I pass, finally, to a time less than a year ago. As noble Lords will know, I was asking a number of Questions. Indeed, some noble Lords may have been weary of hearing my Questions, which were aimed at trying to get at the truth of the sinking of the "Belgrano", the Peruvian peace plan, and the Falklands Campaign in general. They have now continued for two-and-a-half years. On 28th March 1984 I asked whether it was the case that HMS "Conqueror", the submarine, had been tracking the "Belgrano" for the 30 hours before the "Belgrano" was sunk. The noble Lord, Lord Trefgarne, by then an Under-Secretary of State, had changed the Government's tack. Those who have read Clive Ponting's book—I recommend it to all noble Lords, because it reads like a detective story—will know that
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the Government had then taken a decision to adopt a different stance to those of us who were asking Questions on the "Belgrano", in particular Mr. Tam Dalyell, the Member for Linlithgow, to whom I cannot pay high enough respect as a Member of Parliament who knows what is the duty of a Member of Parliament.
Lord Elton: My Lords, will the noble Lord forgive me for using a little of his precious ration of time to say just this? He has the ear of the House and possibly the ear of the media. He is using it to make serious allegations about a large number of my honourable, right honourable and noble friends whom the procedures of this House forbid to defend themselves in the course of this debate; and therefore their answers will not be heard. He had an Unstarred Question on exactly the same matter on which he could have made these charges and had them rebutted. I hope that that will be noted by your Lordships and that my silence will not be taken in any sense for acquiescence in anything he has said.
Lord Hatch of Lusby: My Lords, may I repeat to the House and to the noble Lord the Minister that each of the individuals mentioned in my speech has been given prior notice that I would be mentioning him. I did ask an Unstarred Question, and I have quoted from the debate on it. I have pointed out to the House that on that Unstarred Question, after giving notice to the Minister that I would be asking 10 specific questions, I did not receive a straight answer to a single one of them.
I repeat that on 28th March 1984 I asked whether it was the case that the submarine HMS "Conqueror" had been tracking the "Belgrano" for 30 hours before firing a torpedo. I asked further why it had been tracking the "Belgrano" for 30 hours if the "Belgrano" was a danger to the task force, instead of sinking it when it was first sighted. The noble Lord, Lord Trefgarne, answered:
"The matters which the noble Lord now puts to me are generally of a confidential, security nature and cannot therefore be revealed". —[Official Report, 28/3/84; col. 226.]
By reading Mr. Ponting's book you will see that the Government had decided that this was to be the new line on the Questions that we had been putting down in order to discover the truth: in other words, in the phrase commonly used, they had decided to "tough it out".
I ask your Lordships to note that my last quotation was from 28th March 1984. Seven days later, on 4th April 1984, the Prime Minister wrote to a member of the Shadow Cabinet, Mr. Denzil Davies, revealing a number of facts each of which supported my version in regard to the Questions that I had been asking over the previous two years. In a letter to Mr. Denzil Davies she added, as she was to add six months later in a letter to Mr. George Foulkes, also of the Shadow Cabinet—in that letter she revealed still more details on the specific Questions that had been asked in another place and that I had been asking here—this comment:
"My comments about the first contacts with the `Belgrano' group go further than we have been prepared to do hitherto".

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In other words, she was correcting the record, at last, after nearly two years. The letter continued:
"I have only felt able to do this now as, with the passage of time, those events have lost some of their original operational significance".
I submit to your Lordships that the excuse of operational significance or national security in relation to matters which are seen to be, and have been proved to be, unclassified—stated by the naval authorities to have been unclassified—is a very feeble excuse and is simply a method of blocking embarrassing Questions. Indeed, the Prime Minister, in these two letters of April and September 1984, admitted virtually all the case we have been putting, with the exception of the Peruvian peace plan, to which I have already referred. If she wanted to fall back on the defence of national security and the protection of the armed forces two years after the conflict had finished why were not these documents, these facts, included under the heading of "Classified"?
Parliament is one of the vital pillars supporting the edifice of our democratic system. Ministers' truthfulness in rendering their accountability to Parliament is essential for its proper functioning. Here I disagree with the noble Lord, Lord Wigoder, who introduced this Motion. I believe that Judge McCowan and the Attorney-General attacked the very roots of our constitution when they identified state secrets with those of politicians who happen for the moment to be Ministers. Our constitution may be flawed—I personally do not accept the present composition of this House. But it remains invaluable to the preservation of parliamentary democracy. Our only role in this House is as Members of Parliament. The constant deception of our House over the past two-and-half-years by Ministers of the Government attacks the very foundations of parliamentary democracy. The Government then misused Section 2 of the Official Secrets Act to persecute the civil servant who exposed their deceit. They should not be allowed to do so again. This section must be repealed.
4.58 p.m.
Lord Allen of Abbeydale: My Lords, to return to the Motion which is before the House, I fear that, like the noble Lord, Lord Maude of Stratford-upon-Avon, I must with considerable diffidence begin on a personal note. As a member of the Security Commission, I shall take care not to say anything which encroaches on the work of that body. I am conscious of the fact that I was a member of the Fulton Committee, whose report gave a considerable impetus to the public discussion of these issues, which has been going on ever since, and also of the fact that I was closely concerned with setting up the Franks Committee and indeed gave evidence at some considerable length and on more than one occasion to that distinguished body. We went to a great deal of trouble at the time, as did the Committee itself and, frankly, I have been disappointed at what little has been achieved as a result of the Committee's report. However, I know that that is not a unique fate for the report of a departmental committee, and I shall try not to let a note of bitterness come into that comment.
Reverting to the Franks Committee, I point out that
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I find that there has even been no change to this day in the wording of those rather quaint declarations which are frequently but quite erroneously described as "signing the Official Secrets Act", notwithstanding the fact that the committee criticised them in pretty forthright terms for being both inaccurate and misleading. Personally, I have never seen the point of them anyway.
However, the serious aspect has been the failure to do anything about Section 2 itself—that catch-all, obscurely drafted and widely criticised provision. There is certainly no need for me to repeat the criticisms which have been made of it today, although I would make the point that there has been a good deal of misunderstanding about the precise extent of its cover. I was a little sorry that the noble Lord, Lord Wigoder, in the course of his admirable speech fell into the trap of suggesting that the civil servant who described the colour of his wallpaper was technically in breach of the Act, which ignores the doctrine of implied authorisation, which the Franks Committee explained.
Certainly the section is ambiguous. Whatever its precise scope may be, it is certainly far, far too wide. Although over the years there have been comparatively few prosecutions, the very existence of the section may have helped to create an aura of secrecy. One can only speculate about that. However, I feel pretty confident in asserting that the main purpose for which the section was passed—without, as we know, a discussion in either House—is no longer valid. As the records show, the prime intention was to prevent leaks by civil servants, whether or not connected with defence or national security. I cannot think that that approach can now be justified.
The Civil Service, like other organisations, must obviously have its own disciplinary sanctions to protect itself against breaches of trust; but it seems to me that to provide criminal sanctions over and above those—sanctions which it has been pointed out are not available to ICI, Shell or what have you—can be justified only where information in the possession of Crown servants must be protected in the interests of the state itself, however difficult that may be to define. Defence is the obvious example, but there are others. In the Home Office sphere, for example, police intelligence about informants which, if it came out, would mean that there would not be any police informants, or information about prisons which could be used to facilitate escapes, represents knowledge in the possession of Crown servants which has no real parallel outside.
The experience of the Franks Committee and the various subsequent attempts at legislation, of which we have heard a good deal in the debate already, show that it is not all that easy to define the groups of information which, on this approach, call for the special protection of criminal sanctions. However, although I would not despair of being able to achieve a definition, it would require general goodwill, and so far that goodwill has not been forthcoming.
There are, perhaps, two main reasons. For one thing—and the point has already been made—it is I hope not unfair to say that the media, and indeed others, on grounds that I can well understand, see

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some risk in substituting for a vague general provision which is invoked very infrequently, the prospect of much more tightly drawn provisions which might well limit their freedom of manoeuvre.
However, secondly, and more important, protection of official secrets has become irretrievably bound up with the question of public access to Government information—the two sides of the coin, as the noble Lord, Lord Wigoder, said at the beginning of this debate. Personally, I have always felt a little doubtful whether the two march together quite as closely as all that, and even more doubtful whether the second topic is at all suitable to be dealt with in one sweeping Act of Parliament.
I have long been in favour of more public information and discussion. I must say that the use of White and Green Papers and the functioning of the PAC, the more recent Select Committees and the Croham directive, so far as the general issues are concerned, and the ombudsman and the data protection legislation, so far as individuals are concerned, and all the rest of it, have achieved quite a remarkable change from what life was like when I joined the public service. Although the noble Lord, Lord Hutchinson, rather denigrates the access of cameras to the prisons, I personally would rate that much, much higher than he does. I can imagine some of my predecessors turning in their graves at the thought of life in Strange-ways and Broadmoor being subject to quite detailed examination on the television screen.
I have no doubt that more could be done. It is probably true that Members of both Houses could do better in pressing the Government to put out yet more factual and analytical material. There is a good deal to be said for strengthening the rights of the individual, on cause shown, to have access to written records about him, provided other people's privacy is not infringed.
However, as an aside, I point out that we live in an extraordinarily secret society when the Chancellor of the Exchequer tells his own colleagues about the main instrument of the Government's economic policy only an hour or two before he announces it to the House of Commons.
Let me revert to what I was saying previously. To go further than developing the giving of public information, and to plump for a statute giving an overriding public right of access to official documents, runs, it seems to me, into great problems. Even if one excepts the types of topic excluded from public scrutiny by United States legislation, and includes in those exceptions exchanges between Ministers and civil servants and so on, to go on and give a statutory right of access to the rest, with possible recourse to judicial review in the event of dispute, seems to me, as the noble Lord the Minister said, pretty well impossible to reconcile with our tradition of ministerial responsibility to Parliament and with our concept of the role of the courts in political issues. The United States pattern may suit Australia, New Zealand and Canada, but it does not seem to me to fit here.
I would say to the noble Lord, Lord Wigoder, that, although he advances an argument that more public information should be made available to provide a basis for public discussion of policy, there is very little
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evidence that access to information in American records has been used for that purpose.
These are complicated issues to which one can hardly do justice in a speech in the time allocated to us. The noble Lord, Lord Huchinson, began to encroach on the arguments for a Bill of Rights and the declaration of human rights. I wish I could follow him down that path but I shall content myself with saying that there are views which differ from those which he expounded so eloquently to your Lordships.
I had myself prepared rather a good peroration. But, remembering what Doctor Johnson said,
"If you look at what you have written and anything strikes you as particularly fine, strike it out",
I struck it out. I shall end on a much more pedestrian note by summarising what I have been trying to say. I still hope that it will be possible to legislate broadly on the principles suggested by the Franks Committee. But I am bound to say that that hope is growing a bit faint, and, if the price to he paid were to be a freedom of information Act on American lines rather than developing the policy of giving information and opportunities for consultation, I would, I fear, rather remain as we are and trust the Attorney-General and the Lord Advocate of the day to see that Section 2, unsatisfactory and somewhat discredited as it is, is invoked only where the circumstances clearly call for it. Also, they should, if I may say so, feel free to consult their ministerial colleagues whenever they think it appropriate before they decide whether or not to prosecute.
One final word: I would just remind your Lordships that, despite what has been said in more than one speech today, there have been a number of prosecutions under Section 2 in recent times which have resulted in convictions.
5.12 p.m.
Lord Hooson: My Lords, the noble Lord, Lord Allen of Abbeydale, suggested that the Attorney-General and the Law Officers could be entrusted not to use Section 2. He was virtually suggesting that it remained on the statute book. I cannot disagree more. That section is totally discredited. There is nothing to he said for it. I do not follow his argument that it should be allowed to remain. If it remains it is a temptation for it to be used. We know so often how Attorney-Generals when they are in opposition criticise Section 2 and say that there is nothing to be said for it, yet when in power they succumb to the temptation to use it.
Lord Allen of Abbeydale: My Lords, I did not suggest that it should stay on the statute book and not be used. I said that it should stay on the statute book for lack of any acceptable alternative and be used in appropriate cases, as it has been.
Lord Hooson: My Lords, I disagree with the noble Lord even more when he suggests that it should be used occasionally, because that is exactly what will happen and Attorney-Generals will succumb to temptation. When one looks at the use made of this section one cannot avoid the conclusion that it has so often been used to avoid political embarrassment. For example, when the Labour Party were in power we

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remember the prosecution of Mr. Jonathan Aitken and his involvement with Biafra. With the Conservative Party in power we see the prosecution of Mr. Ponting. Two different sides of the political spectrum were involved. It is an open temptation, when there is a situation of political embarrassment, for the Government to resort to the use of Section 2.
I am glad to see the noble Lord, Lord Maude of Stratford-upon-Avon, in his place. In the course of his skilful defence of the status quo—because that is what his speech amounted to—he made one or two observations on which I wish to take issue. He said first that as a high Tory he was not impressed by those who emphasised their right to know. He was much more concerned with those who emphasised duty. Let me put this point to him. Has not a Member of Parliament a duty to know so that he can exercise his political judgment on the affairs of the day? Has not a responsible editor of a newspaper a duty to know? How are they to acquire the knowledge if they have not the right to know?
What we are concerned with in this Motion, and what the general debate in the country is concerned with, is the obsessive secrecy which pervades government in this country and which is entirely unnecessary—I shall give way to the noble Lord in a moment when I have dealt with his next point because this leads on to it. He also said that if we used parliamentary Question Time properly—and implied that in the other House it is not used properly—then a great deal of the information would be available.
Let me remind the noble Lord that it was the Ponting case which gave rise to the immediate debate. There was a disclosure by Ponting which was referred to at the trial and which was said not to affect national security at all which persistent questioning in the House of Commons, persistent questioning in Select Committees, had failed to reveal. That is one of the things we are concerned with. It was not that national security was involved. The fact is that we were obsessed with secrecy.
Lord Maude of Stratford-upon-Avon: My Lords, I am much obliged to the noble Lord. I simply do not understand what he means when he says that the editor of a newspaper has a duty to know something, and that a Member of Parliament has a duty to know something. Both of them may have a duty to try to find out, but this is a different matter from having a right to know.
Lord Hooson: No, my Lords; they make political judgments and they can only make sound political judgments and give political guidance on a basis of knowledge. Therefore, they not only have the duty to know; they have the right to know. The basis on which a Government make a political judgment in a vast variety and number of instances should be made public.
The late Professor Wade in his evidence to, I think, the Fulton Committee in 1971—
Lord Mishcon: The Franks Committee, my Lords.
Lord Hooson: I think it was to the Fulton Committee, but it may have been to the Franks Committee. He said:
"The law as it now stands shows a complete failure to understand that accessibility of information about the government of the country is of vital importance in a democracy. It is so crude, and so excessively severe, that it is rendered tolerable in practice only by the Attorney-General's tight control of prosecutions. It also has the insidious effect of conditioning Ministers and civil servants to believe that unauthorised disclosure of any official information ought to be a crime. It prevents officials from letting out innocuous and desirable information because they know that they are acting criminally unless they obtain express authorisation".
That particular indictment has never been improved upon, whatever anyone else has said about Section 2.
It is necessary now to change the situation. It should be dealt with in two ways. The noble and learned Lord, Lord Denning, expressed the hope that the Ponting case was the last nail in the coffin of Section 2, and he reminded me of the words of the equally great judge, Lord Devlin, in his famous Hamlyn lectures on trial by jury. He said this:
"Each jury is a little parliament. The jury sense is the parliamentary sense."
The jury in the Ponting case was pronouncing in a parliamentary sense. It was not pronouncing so much on the law—and there is an interesting chapter in that book, Law versus the Merits—it was pronouncing on the merits of this particular provision in relation to that particular individual, and really sending out a message to Parliament that we can all understand.
The section should be repealed—in fact the whole Act should be repealed—and we should be thinking in terms of a new Act which would identify the true areas where secrecy is required and where the sanction of the criminal law is needed. The second Act should be a Freedom of Information Act based on the principle that citizens are entitled as of right to information, making exceptions to protect certain information which must remain confidential, to delay access to information, and so on.
To deal with the point that has been made, of course all kinds of relationships of confidentiality exist. There is the relationship between doctor and patient, or lawyer and client; there are business secrets, and all kinds of examples where confidentiality is of extreme importance. But do they require the sanction of criminal law? Of course they do not. The law can deal with a breach of confidentiality in those circumstances; but there is a sphere in which Government and national security are involved and where there should be secrecy supported by the sanction of the criminal law. But I believe that there is a case for a creative and positive Freedom of Information Act.
Mr. Chapman Pincher, who is anything but a Left-wing radical, said in his autobiography Inside Story in 1978:
"My long experience of prising information out of Whitehall has convinced me that senior civil servants are afflicted with a pathological preoccupation with secrecy which might be called `suppressomania' and seems to be incurable. Part of the joy of being at the top is being in the charmed circle of the few 'in the know' and civil servants say that this is what they miss most when they retire. Releasing any information reduces the extent to which they are exclusively in the know".
It seems to me that knowledge is power, and, in a true democracy the more that knowledge is

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disseminated, the more is power disseminated. Surely the fewer genuine secrets the better in a democracy. People are entitled to maximum knowledge of the affairs of their country within broad limits. There obviously have to be limits, and time is an important consideration in deciding when knowledge should be released. For example, citizens have a right to know what information is held on them by Government, and to check its accuracy in most situations. To my knowledge there have been many injustices that could have been put right. Why should people not have access to this information?
The suppression of information mars people's capacity to judge a Government's economic performance. For example, we may consider all the secrecy around the development of Concorde and the judgment that was eventually reached on it. Would that judgment have been reached if the facts had been properly revealed to the public? I think there is excessive leaking at present because of the obsessive secrecy. It is not because people are lacking in morals, but because the one situation produces and creates the climate for the other.
Lord Somers: My Lords, would the noble Lord not agree that, when he says that the people should have access, in a civilisation such as ours there are perhaps many whose interests are not ours but are those of enemies of the country, and therefore they would be free to convey such information to our enemies?
Lord Hooson: My Lords, I profoundly disagree with the noble Lord. I think this country is as ethical today as it ever was. We in this country are so obsessed with the need for official secrecy that the whole thing has got out of perspective. It seems to me that when other democracies—those which stem from our roots, such as Canada, Australia and New Zealand—have developed Access to Information Acts, we could follow in their train. For example, in democracies akin to our own though stemming from a different root—the United States, Scandinavia and various countries in Europe—we find that provision is made today for sharing knowledge. This has a beneficial effect. It makes for a healthier, better-informed democratic society. Why should we in this country be afraid of it?
We then have the weight of opinion of those who have looked into our practices hitherto in this country. I did not hear the entirety of the speech of the noble Lord, Lord Elton, but he seemed in the latter part of his speech to be defending the practices of the Home Office rather than defending the Official Secrets Act. That may be very well, but when one looks more deeply one finds that the Fulton Committee in 1968 concluded that the administrative process is surrounded by too much secrecy. The public interest would be better served if there were greater openness. That was followed by the Franks Committee, the Croham directive, and so on; but nothing has changed. Because of the Ponting case and its consequences we are faced with the same debate and the same arguments. It is high time that something was done.
The Prime Minister, in a reply to Mr. Des Wilson, the director of the campaign for a Freedom of Information Bill, wrote as follows:
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"Under our constitution, Ministers are accountable to Parliament for the work of their departments, and that includes the provision of information. A statutory right of public access would remove this enormously important area of decision-making from Ministers and Parliament and transfer ultimate decisions to the courts. No matter how carefully the rights were defined and circumscribed, that would be the essential constitutional result".
I think the noble Lord, Lord Elton, put forward a similar argument today. I profoundly disagree on constitutional grounds. I do not think that in any way it would remove the area of decision-making from Parliament: quite the contrary. The area of decision-making would still be with the Government in Parliament. There would be a right of appeal to courts in certain instances, and the court would have a duty of interpretation where there was conflict; but the right of decision-making would not be changed.
There are a great many things to think about in considering the repeal of Section 2 and what to substitute in its place. More than that, there is a good deal to think about in making available to the public and to responsible representatives of the public much more information than is available today.
5.27 p.m.
Lord Beloff: My Lords, as someone who was born when Mr. Asquith was Prime Minister, I had a certain feeling of nostalgia in hearing the noble Lord, Lord Wigoder, suggest that one of the measures of that famous Liberal Government should be repealed. I cannot go along with him in his line of argument, but I would say that there are other measures that that Government enacted as to which, if he were to move their repeal, he would find me cordially with him.
The noble Lord gave us, as usual, a learned and lucid account of the reasons which lead him to the conclusions he has reached. He said in passing that these would be more acceptable to a party in opposition than to a party in Government, and I take it that the fact that almost the entire national membership of the Alliance Party is in the House this afternoon suggests that they at least do not expect in the near future to be corrupted by the temptations of Government.
Baroness Seear: My Lords, the noble Lord is apparently not aware that the total membership of the Alliance is 81.
Lord Beloff: My Lords, I am sure that any absentees have very powerful and pressing reasons.
The official Opposition is represented in a rather smaller proportion, perhaps because they have not yet abandoned the hope of one day forming another Government. I think that the noble Lord, Lord Wigoder, was a little unfortunate in some of his allies. This is liable to happen in our general debates, and I take in particular—though the argument is very different in relation to the second part of his Motion—the remarks of the noble Lord, Lord Hutchinson of Lullington, and in relation to the first part, the remarks of the noble Lord, Lord Hatch of Lusby. I am not referring to the language used—the language of hyperbole—by the noble Lord, Lord Hutchinson of Lullington, though one might have imagined that we were living not in a British constitutional monarchy but in some monstrous

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totalitarian state. I am referring rather to the argument which he thought should be brought forward in favour of a Freedom of Information Bill.
That argument essentially is that there is such a thing as a human right to know, to be embodied in some declaration of such right. I would remind the noble Lord—perhaps he does not need reminding—that the first time there was such a declaration in France in 1789 it led within four years to the tyranny of Robespierre, and in 10 years to the military rule of Napoleon. It is not surprising that a more balanced political philosopher, Jeremy Bentham, said that the language of rights is nonsense on stilts. Surely, if we are to consider the question of what information we need, and what information the public needs, we ought to begin by asking: what is it that will make our government more effective, more responsible and more useful? What is it that would help to cement our society together and not look for imaginary rights of individuals which would turn out not to be the right of the ordinary citizen, who is basically uninterested in any of these concerns, but the right as the noble Lord, Lord Maude of Stratford-upon-Avon, pointed out, which might be arrogated to themselves by members of the press and others who have specific interests to pursue. I hope therefore that if we go on to consider such legislation it will be based upon a serious assessment of where, if anywhere, we are lacking, and Parliament indeed is lacking, in the material that it needs.
The point about the Official Secrets Act is that things have changed a great deal since 1911 and therefore I would agree with the noble Lord, Lord Allen of Abbeydale, for instance, that probably some review or rewording is now desirable. They have changed, as the noble Lord, Lord Maude of Stratford-upon-Avon, pointed out in respect of the press. We certainly have today as was rare, or rarer, in 1911, organs of the press who believe that the discrediting of government is a part of their function. We have also, as has been revealed in the case of Mr. Clive Ponting and other cases, a difference of view on the part of individual civil servants of the extent of their general duties to the nation which they serve and the particular duties which they have to the Minister whose confidence they enjoy.
I find it difficult to believe that any senior civil servant in 1911 would have thought it within his remit to pass messages suggesting hostile questions to a Member of Parliament. The noble and learned Lord, Lord Denning, to whom on these matters we must always listen with great respect, drew an analogy between the jury in the eighteenth century freedom of the press cases and the jury that acquitted Mr. Ponting. I do not find that comparison altogether acceptable. I believe one of our problems today is that the juries are not parliamentary bodies in the sense in which they would have been understood in the nineteenth century. They are differently composed. They have different views and their behaviour in this particular case seems to me to be an example, though not a sole example, of this fact.
Where I would, if I may, with great respect differ even more profoundly from the noble and learned Lord, Lord Denning, is this: he said that the state and
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question of what is due to the state was at the heart of the judge's summing up in the Ponting trial, that the state is only something which each individual can measure and define for himself. I believe that if he considers this remark, he will see that this must be inapt. If anyone is allowed to say, "My conscience tells me that there is something higher than the duty I owe to my superiors in the traditions of my service", it can lead him a very long way away. For Louis XIV to say "L'Etat, c'est moi" was perhaps an exaggeration. For Mr. Clive Ponting to say it seems to me utterly deplorable.
Lord Tordoff: My Lords, if I may take the noble Lord back to what he was saying about juries, is not the difference between the jury to which he referred in the Ponting case and the one to which the noble and learned Lord, Lord Denning, referred that on this occasion the jury was actually vetted?
Lord Beloff: My Lords, whether or not the jury was vetted the jury's capacity to distinguish its role seems to me to be inadequate. That is my opinion. The noble Lord is obviously entitled to disagree.
Lord Mishcon: My Lords, before the noble Lord continues, is he advocating the disappearance of juries from this country?
Lord Beloff: No, my Lords, I am suggesting that with the juries that we have, legislation probably needs to be much more tightly drafted than it is or we shall go on getting cases where the Judge interprets the law in one way and the jury takes it upon itself to interpret the law in another way. With regard to the contribution of the noble Lord, Lord Hatch of Lusby, I am afraid that what it has done is to point up another reason why it is impossible to dispense with an Official Secrets Act of very much the kind that we have now, though better drafted. That is, that we cannot assume that even Members of Parliament of either House necessarily put the national interest first. It is all very well to say that, of course in any Freedom of Information Act we would provide for nothing touching upon national security. However, the question is: who is to decide national security? If it is left again to the conscience of individual civil servants or to individual Members of either House of Parliament, to probe and to say if they do not receive an immediate answer to their probing that the country is being deceived rather than, "We cannot know that perhaps some important security consideration" of which they are necessarily unaware "is at stake," then it seems to me we cannot do without a fairly severe Act of this kind because the noble Lord, Lord Hatch of Lusby, took the time allotted to his speech in rehearsing matters concerning the "General Belgrano".
I regret also that some of the noble Lords who were mentioned were not present to refute him point by point, but I would say that looking back on his campaign—and I sat through the Questions and the debate to which he refered and the ministerial reply—I am, after two and a half years, totally baffled as to what either Mr Dalyell in another place or the noble Lord are really after. They cannot, alas, resuscitate the Argentinian sailors who died, no doubt believing they

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were in a righteous cause. Nothing can be reversed in regard to the decision to send the Task force, or to the measures taken to defend it which most noble Lords accepted then and accept now as the proper measures to have been taken. Is there not something ghoulish about bringing up again these unfortunate drowned sailors in order to make points against the veracity of individual Ministers or the Prime Minister herself? Is it not time that the dead of the Falklands war, on both sides, were allowed to lie in peace?
Lord Mishcon: My Lords, the noble Lord really must not get away with this. Will he kindly deal with the following question? Would he not agree that all of us—and this is a British tradition—even regret the death of our foes. We want to know: could it have been avoided; should it have been avoided? And we want to know the truth. Is that fallible, is that wrong?
Lord Beloff: My Lords, I would agree that we all regret the death of our foes. They die in wars on both sides in a number of ways: sometimes intentionally; sometimes accidentally. It is the cruel result of war. But to say that on each occasion every fatality must be examined to see if it could have been avoided is obviously a counsel which no government and no Parliament could accept. Therefore one asks why this particular tragedy has been drawn out for so long and drawn out in a way which has placed a considerable burden upon Ministers who have been diverted perhaps from the much more important task of knowing where we go in respect of the Falklands by the necessity over and over again to rehearse replies to questions of this kind in both Houses of Parliament.
I think that there is a serious difficulty here in that you can have either consultation or freedom of information. I am not clear that you can have both. If you ask for everything to be revealed, then the willingness of governments to consult must by that degree be curtailed because they will be worried as to the effect of consultation upon their ability to retain in their own hands, for the time being, rightly confidential matters. I am on the whole in favour of greater participation, greater consultation. However, this can only become the case when there is a great self-restraint in what is asked of governments; and sometimes one feels in relation to the campaign for freedom of information that that self-restraint is not present to the requisite degree.
5.42 p.m.
Lord Wilson of Langside: My Lords, it is always on the whole encouraging in your Lordships' House to speak—especially at a fairly late stage in the debate, as this is—after someone like the noble Lord. Lord Beloff, who comes out of his corner fighting and ready, as it were, to swim against what I think has been up to date the tide of this debate. I say that particularly because I had thought prior to his speech that the truest words which have so far been spoken were said by my noble friend Lord Hutchinson of Lullington when he said that there is nothing more to say—meaning that it is impossible without repetition or to any purpose to add to the spate of words which has been spoken on this subject since 1911.
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Before listening to the noble Lord, Lord Beloff—and I do not disagree with everything he says; I just disagree with some of it and I disagree with his conclusion—I had felt that really, if there was nothing more to say, there was little point in going on talking. It is clear, after his speech and that of the noble Lord, Lord Allen of Abbeydale, that there is more to be said that is worth saying.
It is difficult, as has been acknowledged and recognised, to talk about the 1911 Act without mention of Mr. Clive Ponting. Some of us felt at the time that there was perhaps a danger that he might turn into something of a folk hero. That, of course, happily has not happened; because, after all, he was simply a civil servant, apparently a much respected and well regarded civil servant, who broke the rules and then resigned from the service to write all about it, no doubt thus contributing to the knowledge of his readers as to some of the curiosities that go on within Government and also recouping his consequential loss.
That is, of course, a combination which of recent decades has been much sought after by the formerly famous and the infamous alike. But he was wrong to break the rules. It is true—and we must not forget this—that the performance of responsible Ministers in their handling of the issues that were before them may have been less than impressive, and, indeed, on occasions somewhat disquieting. I can well understand why he went to Mr. Dalyell and succumbed to the temptation to pass the papers to him. Of course, as somebody said, if somebody does not yield to temptation the whole situation becomes absurd and there is all the less to talk about.
But situations of this kind can practically always be put right without breaking the rules—and I speak here from some temporary personal experience because I, myself, was sentenced to a term of five years as a civil servant after the general election of 1970. Then, not often, but from time to time, I was driven close to a mild distraction, not only by Ministers but by judges who operated in the sphere in which I was a cog—if, indeed, spheres have cogs. Judges, I found, could occasionally be just as silly as Ministers, and they resented it even more when you told them so—and very occasionally they left you with no alternative or, at least, no sensible alternative. Incidentally, I do not at all blame Mr. Ponting for wanting to write about it. I tried to do that myself after I was freed, but I could not find either a publisher to publish it or a newspaper to serialise it—and, frankly, sometimes I think that that perhaps is just as well.
Anyway, Mr. Ponting broke the rules, and he was disloyal in a job in which you owe loyalty to those who you feel have not always earned it. But although that was so, how on earth the conclusion was reached that prima facie he was also guilty of crime, and how consent to criminal proceedings was sought and obtained, remains to me a little puzzling if not, indeed, baffling. But, then, we know so little about it. We do not even know the duration of the cross-Channel telephone call about which the Attorney-General told the other place—and perhaps there is a lesson in that.
Turning to the Act itself, I think there are several reasons why we should be grateful to my noble friend Lord Wigoder for putting down this Motion. Not the

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least of these is that the history of this Act itself—its conception, its provisions, its enforcement over the years—has quite a lot to teach us about the way in which Britain is governed and about some of that way which would not be approved by all if we had the time and the inclination to study it, and not only to study it but to reflect upon it. But I do not propose to rehearse the formidable legal, historical and other arguments against it. These have been thoroughly rehearsed in the course of the debate, and will continue to be rehearsed for some little time.
There is one short point that I wish to make. For my money, one of the most damning points against it is that, culminating in the Ponting trial, it has made the law look an ass. It is not open to me here to comment on the contribution to that made by the Attorney-General and the conduct of the trial by the presiding judge. My own personal view—and I emphasise it is my personal view—is that these matters of political and public controversy arising after the trial should have been made the subject of an inquiry under the Tribunals of Inquiry (Evidence) Act 1921. That, I should have thought, would have been a more satisfactory, and certainly a more dignified, way of solving the mysteries surrounding these matters than the exchange of pleasantries indulged in by the Prime Minister and Mr. Kinnock—though these of course are not matters which are relevant to this debate.
What is surely beyond dispute is that from the whole situation it was the law which emerged with the appearance of a proper ass. It is equally surely fundamental to good government that legislation, among other things, should be so framed and constructed as to minimise the danger of the law being given that appearance when action is taken to enforce it. Legislation which does not do that is dangerous and should be repealed or amended, for socially it tends to have a kind of destabilising effect. It is inevitably damaging to the conception of freedom under the law, by which we rightly set great store, because of course it is a concept fundamental to our constitution, and it helps, too, in a practical way to boost the impact of the vociferous practitioners of demagoguery who exhort others to break the law by reference to the Tolpuddle Martyrs and the Chartists, as though the law and the political, social and industrial scene had not changed since 1834. As I think Henry V said at Agincourt, "Old men forget". I may be wrong, but I would have thought that perhaps two decades ago, if demagoguery of that kind had been resorted to it would have inspired, on the whole, raucous laughter from an educated electorate or public. But the belief of many of us that the impact of that kind of thing was negligible was surely shattered by the events of the miners' strike and the rapturous—indeed the quite ecstatic—welcome given to Mr. Arthur Scargill at the Labour Party Conference last year.
I have only one thing that I want to say before I sit down. I was wandering what my peroration was to be, and my peroration reminded me of the noble Lord, Lord Allen of Abbeydale. As I understood it, he suggested that the matter should be left in the hands of the Attorney-General and the Lord Advocate—because of course it is the Lord Advocate who operates in Scotland—and that they should discuss the matter
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with their political colleagues. Speaking for myself, I must say that I find this a startling proposition. On the one occasion on which a senior Minister attempted to influence my decision to prosecute someone—he did not of course do it directly; it was done through his private secretary and the head of my little group of civil servants—I was shocked because the decision must be left personally to the Lord Advocate or the Attorney-General. I asked the head of my civil servants to let him know that if his political master pressed on he would be liable to have a case on his hands like the Campbell case in 1924, which resulted in the fall of the then Labour Government. I have stated some reasons why I think the Motion is to be welcomed and I hope that the Government will respond to it with speed and enthusiasm.
5.57 p.m.
The Earl of Longford: My Lords, I am sorry to see the noble Lord, Lord Beloff, about to leave the Chamber because I was going to speak a little about him, but no doubt he has other pressing engagements. However, I was going to say before that the main points in favour of the Motion have been made so well by the noble Lord, Lord Wigoder, by the noble and learned Lord, Lord Elwyn-Jones, and by many speakers, including the last one—although I could not quite follow where Mr. Arthur Scargill came into this particular debate: I know he is usually relevant, but hardly today—that I can be very brief and I shall not keep the noble Lord, Lord Beloff, for very long. He seemed to be under the impression that Mr. Clive Ponting had not as much right to have a conscientious dissent as some others. He referred to him in a rather patronising way. Mr. Ponting followed a course of action which I gather was followed before the war by Lord Vansittart who, no doubt acting from the highest motives, briefed Sir Winston Churchill (then a leading critic of the Government) in a most thorough fashion—the noble Lord Lord Beloff, wishes to intervene, but may I just finish the sentence?—and I do not believe he was alone in that respect.
Lord Beloff: My Lords, would the noble Earl make a direct comparison between the role and status of Sir Winston Churchill and the role, status and actions of Mr. Tam Dalyell?
The Earl of Longford: My Lords, I am afraid that I do not distinguish, when it comes to conscience, between the status of one public man and another. I am sorry. I have finished with the noble Lord, Lord Beloff, so, if he likes, he can catch the Brighton train.
I was going to make a few remarks about leakages, although the main topic of course is the reform of the law. We politicians or ex-politicians—and I think most of us here can describe ourselves as politicians or ex-politicians—or however we may see ourselves, are rather more lenient to our colleagues in this matter than we are to civil servants. I have seen the view attributed to Mrs. Thatcher that there have been more leaks under her Government (though this was in the early days) than under any other Government. I am sure that my former revered chief, the noble Lord, Lord Wilson, would be glad to hear about that because in his time there was a good deal of talk about

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leakages. I am bound to say that after I left the Cabinet there was not so much talk, so perhaps I could be identified by MI5 as the guilty man. However, with leakages there are always questions of propriety and conscience. Sometimes one feels that they are justified and sometimes not, but in the end only the Almighty will know whether the leakage in question was justified on moral grounds.
I met Mr. Ponting, a man of obvious ability, as anybody who reads his book can discover. I join the noble Lord, Lord Hatch, in giving a small "puff" to that valuable book, and will lend it to anyone who needs it. At any rate, he seems a very able man and a man of deep sincerity. I would add only one thought about the Ponting trial. Quite a lot of us seem to agree—though the noble Lord, Lord Beloff, had a rather idiosyncratic view about the role of the jury, and when they disagreed with him they were to be deplored—that that was a mistake, and yet it may have turned out well in the end. We can say that it was like Suez. Suez was a colossal error, but in the end we could all feel better because of it. It helped to clear our minds about the role of Britain. So we like to be optimistic about this case.
But it is worth remembering—and Mr. Ponting told me this himself—that when he got up on the morning on which the verdict was to be given he expected to be going to prison for quite a long time. That was the situation at that time. So it was not quite so obvious at that time that the trial was just a formality and that it would all turn out for the best. It did turn out for the best because the jury was so sensible and indicated that they did not think much of this Act. They seemed to agree with everyone here, including the noble Lord, Lord Elton, in that respect.
The most encouraging remark of the day was when the noble Lord, Lord Elton, said that he would not resist this Motion, so I must take it that he will commit himself to trying to bring about a change. I hope that he will remain in the Home Office as Minister of State, or will go even higher, so as to be able to give effect to his word. I agree entirely with all that has been said about, and quoted from, the Franks Report. The noble Lord, Lord Franks, is a man whom I admire as much as I admire anybody in public life. I only regret that he does not come to this House more often. The Liberal Peers are a little remiss in not persuading him to join in the notable exercises in this House. At any rate, he is a marvellous man and it is a marvellous report. He was not quite so good on the Falklands. That was a bit of a whitewash; but perhaps that was exceptional. But on the question of information he did a marvellous job, and I only hope that eventually we shall give effect to his ideas.
The noble Lord, Lord Elton, told us that in recent years there has been a general liberalising of the flow of information, and he gave some examples, which he is entitled to give. Let us take the Home Office, which he represents so gracefully. I have dealt with a dozen Home Secretaries since I became involved with the extraordinary subject of penal reform, as well as many spokesmen for the Home Office in this House, and I have never known one who was more effective or more popular than the noble Lord, Lord Elton. So it is not his fault if the flow of information is not quite what we
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would wish. But I think it would be a mistake to assume that this flow of information is pouring out nowadays just because there was a television programme about Strangeways in Manchester.
I should like to talk about the Parole Board. They have never been persuaded to give reasons for their decisions, and now the situation is rather worse—at any rate, in the case of a number of prisoners—because even that function has been taken away from them by the Home Secretary, who, we are sure, will not give reasons. So when it comes to persuading the Home Secretary or the chairman of the Parole Board, under his auspices, we know how difficult it is.
There is one point which might not occur to every noble Lord but which I should like noble Lords to think about. I find it very hard, and most Members of the House and ex-Ministers find it very hard, to make contact with officials. That is the tradition. I must not identify the individual, but some years ago I asked a very high official in the Home Office whether I could talk to someone who was in charge of the Prison Department. He said that he saw no reason why it should not happen; but then he wrote to me, regretfully, and said that it was impossible because, if I did, every Tom, Dick and Harry in another place—although he did not use that expression—and all sorts of other people, would want to see him. So that permission was refused. I am sure that it was not the noble Lord, Lord Harris, who was in any way responsible for that denial, but that was the situation.
In all seriousness, I think that nothing would help us more with our functions here, and in the House of Commons, than if we were allowed to see officials with the approval of the Minister. But every time you want to obtain a bit of information you have to make an appointment with a Minister, who is a very busy man, so it may take a month, and an official has to be present. It is one of the ways in which information that is available to officials is blocked in the most unfortunate fashion.
I think that there is a bias on the part of civil servants to keep information to themselves. There is also a bias on the part of those in journalism or on television who want information spread around as much as possible. I do not know about politicians. We are betwixt and between in that argument. I would therefore try to find what Sir Winston Churchill called "a rescuing genius"—a just man who is not biased in favour of the side that I am taking. I take a former head of the Treasury, Sir Douglas Wass. He was head of the Treasury for nine years and he has now come out firmly in favour of much more freedom of information. I do not think I can begin to improve on what he said, which is available to all noble Lords. But, personally, following my own party leader, I support the Motion.
6.6 p.m.
Lord Grimond: My Lords, I agree with the noble Earl, Lord Longford, that everything that could be said in favour of this Motion has been admirably said by my noble friend Lord Wigoder. I also agree with the noble Earl and with my noble and learned friend Lord Wilson that it appears that there is a very strong tide running through this House this afternoon in favour, first, of repealing Section 2 of the Official Secrets Act; and, secondly, of the widest possible dissemination of

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information. I had rather thought that these feelings were shared by the Minister, and I should be grateful if, when he winds-up, he could make it clear that not only will he not oppose this Motion but that he shares the general feeling that (to use a phrase which originally fell from the lips of the noble and learned Lord, Lord Elwyn-Jones) Section 2 is a mess, and therefore ought to be repealed and replaced by a narrower definition; and that we must have as much information as possible. That is the first point that I want to make, and I trust that it will be confirmed by the Government.
Secondly, I agree very much that whatever legislation is passed there will be objections to it, and much will depend upon how it is administered. The noble Earl, Lord Longford, has already referred to the leakage to Sir Winston and his colleagues, which was highly approved of at the time but which led to hostile questions in the House of Commons. There was some remark about the fact that the original Act was perpetrated by the Liberals. In spite of that, it has never seemed to me that Mr. Asquith was deeply concerned about internal security. We now know that he whiled away the time during Cabinet meetings by retailing state secrets to his girl-friend. Nobody ever thought of Section 2 being brought down upon him, and I do not think that any harm came of it. But it depends upon how it is administered.
I also think that the time has come to look into the whole constitution and functioning of MI5. There is no doubt that intelligence in war, and foreign intelligence, is of the greatest importance and may be of crucial importance—for example, in connection with naval battles in the first world war and with the desert in the second world war—but the need for MI5 to investigate leaks of internal matters in this country is not to me wholly clear. I fear that they may do more harm than good, but I accept that it largely depends upon how they are controlled. But I should like to think that the Government are reviewing the whole function of MI5 as it refers to internal matters.
As to the freedom of information, the purpose for which we want more information is to achieve better Government, and to get a better informed public who therefore can bring better judgment to bear upon them. It is not to supply sensational stories to the press or even to supply one-theme lobbies with as much information as they can lay their hands on. It is to improve the system of government. I cannot believe for one moment that Government would be improved by the constant dissemination of private conversations. There is no evidence of this in all history and it would lead only to closer and tighter secrecy. Again, I think the noble Lord, Lord Maude, was quite right in saying that the result of too wide a dissemination of unnecessary information would be that secrecy would be deeper.
One of the ways in which we can achieve better Government is to have free and confidential discussions among people of differing views without the fear that it will all appear in the press the next day. I also agree with the noble Lord, Lord Maude, that a very heavy responsibility lies upon the press. What is called investigative journalism is now doing government in this country quite considerable harm. There is
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no possible excuse for some of the methods they indulge in to get information. But having said that, I thought that my noble friend Lord Wigoder gave absolutely concrete examples of the type of document and the sort of information which should be made available which is not made available and for which there is no possible reason for keeping secret.
But to my mind it is a question not only of making the relevant information available but how it is done and what sort of information is made available. In point of fact this country is flooded with information. The trouble is that a lot of it is irrelevant, a lot of it is inaccurate and a lot of it is mischievous. The kind of information that people want if they are to make a sensible judgment upon current matters is, for instance, that in the Budget spending and the raising of money should be set side by side. The presentation of the national accounts is a scandal. I speak subject to correction by such experts as the noble Lord. Lord Mishcon, but I suspect that it would land any private company in the Old Bailey. There is no distinction between capital and income, and expenditure and income are not considered together.
If one takes any strike, who knows what are the rights and wrongs, or what are the mere facts, of, for instance, the teachers' strikes? Who knows what is the real position about drugs? At the moment we are governed by a series of miscellaneous leaks and comment upon them, very often highly prejudiced comment. I think there is a case—I do not know how one would organise it—for ensuring that the basic facts of major disputes in the nation are set out.
Here I come to the Lobby system which so far as politics is concerned is very much at the heart of how information is disseminated. I personally think that it probably has worked well, but I am also inclined to think that it should now be looked at again and should be either abolished or very much widened. I think it is leading to an oligarchy, so to speak, in the press and is arousing considerable jealousy in the rest of the press which therefore goes out of its way to indulge in the sort of practices of which the noble Lord, Lord Maude, and I disapprove.
The Government spend some £30 million on advertising. I should have thought that it would not be impossible to have an impartial authority which could undertake some more useful advertising of the facts in dispute, rather than the present type of advertising indulged in by the Government. Therefore, I wholly support the proposition put forward by my noble friend, but I end by entering one caveat.
My fear is not that by passing a Freedom of Information Act, or whatever you like, you will actually detract from the power of the House of Commons. That seems to be the fear of the Government. My fear is that you would confuse the responsibilities of the House of Commons, of the House of Lords, and of the Government. We have here the separation of functions of the Government and of Parliament. This is breaking down. The traditional method of Parliament in this country was that Members were sent down to air the grievances of their constituents and their own views; not to govern the country but to stop the Government, to thwart the

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Government, to probe the Government, if you like—but not to take part in Government. This is breaking down.
I was for a time a member of one of the new specialist committees of the House of Commons. It was the Immigration Committee. After a time I began to sympathise with the Minister. He used to come and tell us his terrible problems. He supplied us with endless information so that we were kept up night and day reading documents. I found that I was beginning to sympathise with the man. I was not paid to sympathise; I was paid to make his life hell and to say, "The People of Orkney and Shetland are fed up with this Government. Now go away. Don't worry me and ask me what to do. You are the Government—do it". That is on the whole an out-of-date attitude, but still I think it is worth keeping the Government at arm's length to some extent and not to become too involved in the decision-making process.
Therefore, while I would support this Motion and I think it may be necessary reluctantly to have legislation about freedom of information, I nevertheless would say that Parliament ought to hold on to its basic business, which is to harry and thwart the Government and not to he kind to them.
6.14 p.m.
The Duke of Portland: The noble Lord, Lord Wigoder, proposes that Her Majesty's Government should introduce legislation which will repeal Section 2 of the Official Secrets Act 1911. I presume that the noble Lord, Lord Wigoder, is not proposing that this Act should be repealed before a measure to protect specific classes of information has been passed by Parliament. I fear that it may prove difficult to reach a consensus on the terms of the proposed measure to protect specified classes of information the wrongful disclosure of which would cause serious national harm. For many years the desirability of amending or replacing the Official Secrets Act 1911 has been widely recognised, but the difficulties of reaching agreement as to the scope and terms of a new Act have so far proved insuperable.
The noble Lord, Lord Wigoder, suggests that the public should possess a general right of access to official information subject only to specific exemptions, but when we come to prepare the specific exemptions I think that the list may well prove as long and as complicated as Section 2 of the Official Secrets Act 1911. The proposed general right of access by the public to official information will, I fear, lead to demands for information that may prove highly inconvenient to whatever political party may be in office.
For instance, someone may have heard or may surmise that the Government may be about to take a measure affecting a particular commodity. He or she may demand to know if this information is correct. If the official whose duty it is to reply says that he cannot comment, the inquirer may claim that he has a right to know and will threaten to apply to the courts. If he receives a reply which immediately gives him the information he requires he may then move swiftly to the nearest telephone and make profitable use of this information. I fear that the proposal of the noble Lord,
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Lord Wigoder, would place such state owned companies as may remain in the United Kingdom at a serious disadvantage compared with those that are privatised. The latter would be able to draw a veil over their activities while the former would have to conduct their business in the full glare of publicity.
I will now turn for a moment to foreign relations. One of our representatives abroad may have succeeded in reaching a position of real friendship and trust with the members of the government to which he is accredited and may be favoured with information that is not open to representatives of the media. If it is found that the reports which he forwards to London are not treated as confidential but as official information to which the public have a general right of access, then that representative's efforts will have been in vain and it will not be long before it becomes generally known abroad, worldwide, that confidential information imparted to Her Majesty's representatives will become open to the public.
So long as we have a secret intelligence service, like every other country, the work of this organisation has to be conducted in secrecy and its operations cannot be subject to a general right of access to official information. For instance, if the pre-war efforts of our secret intelligence service to get hold of the German cipher machine Enigma had failed as a result of some leak due to general access to official information, then our forces would have been grievously handicapped and many thousands of lives lost.
I fear that the proposal of the noble Lord, Lord Wigoder, is too idealistic. In my mind, it faces us with these alternatives: do we prefer a general right of access to official information or the prosperity and safety of our Realm?
6.21 p.m.
Lord Jenkins of Putney: My Lords, I venture to suggest respectfully that the choices before us are not quite so bleak and so harsh as the noble Duke has just suggested. He says that we have a free choice between, on the one hand, unrestricted information open to anybody, and, on the other, a totally secret state. As in most political matters, and whether or not we like it, we have to strike a compromise and discover a happy medium. The noble Lord, Lord Wigoder, in his very impressive opening speech, suggested that that line is drawn in the wrong place on the side of excessive secrecy. The noble Duke, the Duke of Portland, has just suggested that the position we have at the moment is ideal—but I believe he may not have considered the full implications of our excessive devotion to secrecy.
The difficulty about the Official Secrets Act is that it engenders a general flavour and essence of secrecy, and that under it other secrecies proliferate. Secrecies and greater secrecies have been growing ever since 1911. It is in the nature of things, of course, that a Government will wish to play their cards pretty close to their chest. It is also in the nature of things—in the nature of democracy, at any rate—that the public have a right to know. In drawing the line, it is always the case that the line is drawn too far on the side of secrecy.
Moving from opposition into power, a Government begin to adopt the view which is natural to Government: that they want to keep things to themselves. There is the 1911 Act—a Liberal

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measure. Subsequent endeavours to introduce freedom of information have failed on both sides. The Labour Government failed to get such a measure through, and the Conservative Government made an attempt but again failed. Governments tend to gather their supporters around them and say, "We must get our policies through and we can only do that if we keep things pretty dark". That is why we have the situation in which we now find ourselves.
We have far too much secrecy. Ours is one of the most secret countries in the world. I had a peculiar experience of that myself when I was Minister for the Arts for a couple of years (for too short a time, I thought). At the end of my term of office I decided to write a book, a copy of which I have with me now, about government and the arts—an area remote, one would have thought, from the realms of secrecy. But, like anybody else in a similar situation, I was subject to certain rules and regulations. Under the rules and regulations I had to show—because I was instructed to do so and I am always an obedient chap, so I conformed—to the authorities a copy of any extract which related to my relationships with other Ministers and with civil servants during my period of office. So, having prepared a chapter on this subject, I obediently submitted it to Sir John Hunt, as he then was, who was then Cabinet Secretary.
I do not believe that either of us imagined at that time that we would both together be Members of this House, and I regret that he is not here tonight—but I shall not be saying anything to his disadvantage. Sir John had a job to do. His job was to consider the material I was proposing to include in my book, and he did so. He wrote to me, as he had to do under the rules, saying that I was not permitted to say the things I was proposing to say. We had some correspondence which concluded in a way which I shall now describe to your Lordships, if noble Lords will bear with me.
The Radcliffe Report on Ministerial Memoirs provides, among other things, that:
"a former Minister should not reveal the opinions or attitudes of colleagues as to the Government business with which they were concerned".
Under that ruling Sir John Hunt had no alternative but to inform me that I could not write about other Ministers and civil servants—or anything else—and that I would have to omit the chapter altogether.
After some quite amicable correspondence between us I wrote to Sir John as follows:
"One of the objects of the book is to show how decisions are made and this cannot be done without demonstrating how advice is given by civil servants and quoting opinions expressed by Ministers. Nevertheless I am very ready to go along with the recommendations of the Committee of Privy Counsellors whenever I can do so without damage to the public interest. I regard such damage as being done whenever information is concealed without good reason".
"Without good reason", my Lords—that is the important point. It is quite impossible to say that there really was good reason, even if there may have been some discomfort caused to individuals, for the suppression of information about discussions between Ministers and civil servants in an area remote from national security. But such is the case all over the place, and I myself have been pestered and dogged by secrecy for a good deal of my life.
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I therefore warmly welcome the proposal of the noble Lord, Lord Wigoder, to remove Section 2 of the Official Secrets Act. But I also readily agree that we must replace it with something else. As the noble Lord, Lord Donaldson of Kingsbridge, is now in his place, I may say that when I approached him as my successor as Minister for the Arts and asked whether I could refer to the papers relating to my period of office, he raised no objection whatsoever. He was kindness itself. That may have been due to the fact that at the time we were both members of the same party. The provisions of this Act create a cloak, a practice and a custom of secrecy under which we all tend to operate, and therefore I welcome this Motion in the hope that it will bring a change of custom.
More seriously, I have run into the problem of secrecy in another context. Your Lordships belong to the vast majority of people who are neither the surveillers nor the surveilled. Perhaps I can contribute something to this debate from the point of view of the minority, the surveilled, who are a much larger minority than the surveillers. I am not sure if I am still among the surveilled, and rather suspect that I may not be.
It may be thought that I am no longer an enemy of the state. As the state now apparently embraces the Government—if we are to believe, as has been said in court, that the Government and the state are indistinguishable from each other—I hasten to say that I am no friend of the Government. I would not use the word "enemy" because it is not a word I use as freely as some people do, but it is not the case that I am in any way soft on the policies of the present Government.
My attitude to the secret services is ambivalent. For a number of years they have been of great nuisance to me. On the other hand, they have done me some services. If I tell your Lordships that my presence in this House might be regarded as one of their achievements there will be those among your Lordships who may wish to revise their views of MI5, MI6, or whatever it may be.
Those of your Lordships who have seen Miss Cathy Massiter on television—and here I want to say a word about the Campaign for Nuclear Disarmament—will agree with me at least on one thing. She is obviously an intelligent woman. I have reason to believe that that is not universal in the intelligence services. But even Miss Massiter showed no sign of political knowledge—and I think very close political knowledge is desirable—when she was asked to select a suitable person to finger among the CND leadership. I was chairman of the campaign immediately prior to the present chairman, Mrs. Ruddock. The problem could easily have been resolved by inviting a secret service person to be present at all the meetings. I would have pressed for the acceptance of such a proposal because there is nothing secret about the activities of the Campaign for Nuclear Disarmament.
I would certainly not have selected Mr. John Cox as the person to be surveilled. They would have found that he was, it is true, a member of the Communist Party. It is legal, and something which Mr. Cox has never tried to conceal. He was also, and still is as far as I know, a convinced Euro-Communist. In that role his attitude to the Soviet Union sometimes seemed to me almost as anti-Soviet as that of the Trotskyists. If you

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looked round the table of the Campaign for Nuclear Disarmament there was no one who could remotely be regarded as doing something hostile to the state.
What we are talking about here is differences of political opinion. If we are not very careful, members of Governments will begin to regard differences of political opinion as tantamount to an attack upon society as a whole. The feeling that those who disagree with one politically are, ipso facto, hostile to everything one believes in is a widespread conviction; and it is held inside this House, as your Lordships will have heard this afternoon. It is vital that we draw a distinction between what is, and what is not, permissible in our opposition, and that we do not attempt, as a measure of secrecy, to prevent the expression of legitimate political views. Neither is it right and proper for a Government in office to carry out surveillance and secrecy operations against any legitimate organisation.
One of the benefits that I look forward to from the consequences of the action which the noble Lord, Lord Wigoder, is proposing—assuming that the Government will, as they are saying and as I hope, provide an opportunity for it to be put into effect—is that we shall begin, at long last, to remove the veil of secrecy which has existed for far too long in this country; that we shall move into a freer climate in which we shall make a proper and right distinction between what is legitimate and what is illegitimate. This is essential if we are to live in a healthier climate of opinion and of political difference.
6.35 p.m.
Lord McGregor of Durris: My Lords, I shall not add directly to what has already been said about Section 2 of the 1911 Act. I wish only to comment on one aspect of the legislation proposed in the Motion of the noble Lord, Lord Wigoder.
In order to see certain English attitudes in perspective, I shall remind your Lordships of two widely reported cases. In 1971, Dr. Daniel Ellsberg purloined from the United States Department of Defense 47 volumes (7,000 pages in all) classified as "top secret" and "secret", analysing The History of United States Decision Making Process on Vietnam Policy during the period 1947 to 1967. He then handed 18 of those volumes to the New York Times. When the paper began to publish summaries and portions of the text, the United States Government sought a preliminary injunction in the District Court in New York to restain further disclosure and to impound the documents. The Government contended that possession of the information by the New York Times involved a serious breach of the security of the United States and that further publication would cause,
"irreparable injury to national defense".
The district judge denied the Government's application for an injunction. In a sentence startling to English eyes, which are accustomed to a press voluntarily collaborating with governments in an informal scheme of prior restraint upon matters deemed to be of crucial importance to national security, the judge wrote:
"nobody has been able to find a case remotely resembling this one—where a claim is made that national security permits a prior restraint on the publication of a newspaper".
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Congress had refused, in deference to the First Amendment, during the First World War, to set up a system of pre-censorship, and no action was taken on "leaks" during the next half-century.
The judge, Judge Gurfein, who had himself been a senior intelligence officer during the war, sat in camera to enable the Government to pinpoint what they believed to be vital breaches in national security of sufficient import to controvert the right of a free press. In the judge's view they failed to show actual or imminent danger and succeeded only in showing that the breach in security was embarassing and would cause, as the judge said,
"the jitters in the security agencies themselves and indeed in foreign governments who deal with us."
He concluded that,
"the security of the nation is not at the ramparts alone. Security also lies in the value of our free institutions. A cantankerous press, an obstinate press, an ubiquitous press must be suffered by those in authority in order to preserve the even greater values of freedom of expression and the right of the people to know … This has been the genius of our institutions throughout our history".
My second case involves Miss Sarah Tisdall, whose actions I do not admire. She was a 23-year-old official in the British Foreign Office who last year leaked to the Guardian newspaper short documents concerning when and where cruise missiles would arrive in Britain. These were classified by the Ministry of Defence at the second highest level of security. The Government responded in two ways. First, they obtained an injunction requiring the Guardian to yield up a main document which it had already printed. The Government wanted to get the actual document back because it has secret markings which would enable the source of the leak to be identified.
The Guardian attempted to safeguard its source by appealing against the decision on the order made by the judge of first instance, which required the return of the document. The Guardian lost its appeal. One appeal judge said:
"it is in the interests of all of us that we should have a truly effective press and … Parliament … has clearly recognised the importance that attaches to the ability of the press to protect their sources [unless] disclosure is necessary in the interests of justice or national security or for the prevention of disorder or crime … It is in my view, clearly established that it is necessary in the interests of national security that the sources from which this document came should he identified".
The Government's second step was when, as a result of the return of the document, Miss Tisdall was identified as the leaker. She was prosecuted under the Official Secrets Act and sentenced to six months in prison, even though she was a first offender and of previous good character. She appealed against sentence, but the Lord Chief Justice held that a deterrent custodial sentence had been unavoidable and appropriate, and declared that it is,
"not possible to run a government … if confidential and secret memoranda are being divulged to outside bodies by members of the staff".
It is a measure of the anxiety which this case created among the politically informed public that the then recently retired Head of the Civil Service observed in the course of writing about the case:
"we must be almost alone in the civilised world in invoking the criminal law to stop leaks irrespective of the nature of the injury or of the intentions of the leaker",
in circumstances in which the leaks, "are merely embarrassing".

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The Pentagon Papers case and those of Miss Tisdall and the Guardian raise identical issues. In each, secret material was stolen from a Government department and published in a newspaper; in each, a Government sought the return of the material; in each, a Government asserted that national security had been endangered; and, in each, the thief was prosecuted. However, it is striking that what Mr. Justice Holmes called the,
"instinctive preferences and inarticulate convictions",
of the American and English judges which emerge from a reading of their judgments are fundamentally different.
Even Chief Justice Burger, in dissenting from the opinions of the majority of his brothers in the Supreme Court, criticised the New York Times not so much for publishing the stolen documents as for failing,
"to give the Government an opportunity to review the entire collection and determine whether agreement could be reached on publication".
All the American judges started from the assumption that the New York Times had a right and a duty to print the Pentagon Papers. Some of them regarded the First Amendment as conferring an absolute right; others took the position that the courts had to strike a balance between the strongest of presumptions that the public has a right to know and the needs of national security and defence. Nevertheless, they all approached the question on the footing that only the most compelling of circumstances could qualify a newspaper's duty to publish.
In England, that assumption seems to be reversed. Here it is assumed, as the senior judge in the Court of Appeal put it, that:
"the responsibility for deciding what should and should not be published is that of the government of the day and not that of individual civil servants or editors".
That is the law, but for Governments or for editors to assert that they alone should have the power and responsibility to decide what should be published when national security is said to be involved is to endow themselves with an arrogance intolerable in a democracy.
New legislation should give clear jurisdiction to the courts to test a Government's reliance on national security as a ground for prior restraint on publication. It is to be observed that the effect of the First Amendment in the United States has not been a rash of damage to the national security, which seems, when compared with that of Britain, to have been at least as well, if not better, protected during the past 40 years. These attitudes, together with the law of defamation, of confidence, of copyright, of contempt of court, of parliamentary privilege and, importantly, of official secrets, impose such restraints upon publication that Mr. Harry Evans could write without great exaggeration of "the half-free press".
To a large extent these legal restraints stem from the deeply ingrained habit of secrecy in which British government is conducted and in which other institutions are steeped. Against such secrecy, the media are an essential protection. As one of their functions, these no doubt frail vessels disseminate much information without which the electorate could not make rational
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choices. Sometimes some of them are wildly irresponsible. Most of the time all but a small handful of them are honest, if partisan, commentators upon events and critics or supporters of Government. The more information they have, the more likely they are to be responsible. Who else will render the flow of information which new freedoms will produce available and useful to citizens at large? The media would gain much from the Motion, which I am very glad to support.
6.48 p.m.
Lord Ardwick: My Lords, I intended to speak at length in this debate from the point of view of a newspaperman, and to support this Motion. Indeed, I had set down a Motion of a very similar kind. However, I had to make an emergency trip across the Atlantic and returned only today, too late even to hear the noble Lord, Lord Wigoder, opening the debate.
I have asked to be spared a minute or two simply to deal with the point made by the noble Lord, Lord Maude. He suggested that there had been a decline in the standards even of such papers as the Guardian, the Observer and The Times, and he associated it with investigational journalism. I have no practical experience of investigational journalism, and I do not intend to deal with that; but he suggested that in the golden age of his youth, and my youth, such newspapers had higher standards.
I was working on newspapers at the same period as the noble Lord. Forty-two years ago I ceased to be news editor of the Observer. Thirty years ago I ceased to be London editor of the Guardian. My recollection is that much information about what Government and Government departments were doing reached us from a variety of non-official sources. I think it was the same quality of information as that which reaches Members of the Front Bench of an Opposition.
Our first duty, we felt, if the information seemed interesting and valid, was to check it, and then, having checked it, to publish it if we thought that it was of interest and was in the public interest. But in those days we did not quote the source of information. We did not risk our own skins or those of our informants. We did not feel it necessary to quote the source. What really mattered was to get the information to the public. The integrity of the newspaper and of the correspondent who wrote the story was considered to be a sufficient guarantee to readers of the story's authenticity.
I have often asked myself during the recent troubles of the Guardian and the Observer, "Why do newspapers today flourish the documents they have obtained?" There are, I think, several reasons. One is that many journalists want to be able to quote directly the information they now receive on Lobby terms from Government spokesmen. The other, however, is to protest at the secrecy with which the Government try to cloak so much of their activity. The very publication of the source is a form of protest. I believe that it is brave and public-spirited of newspapers to quote a source if they can do so without betraying the provider of the information.
The noble Lord, Lord Beloff, spoke of another golden age of 1911 when newspapers were not trying

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to destroy the Government. He has forgotten that those were the days of party newspapers when, as Winston Churchill put it, 50 per cent. of the press were trying to destroy the Government and 50 per cent. were trying to protect it.
6.52 p.m.
Lord Harris of Greenwich: My Lords, I should like to begin by saying how much I agree with what the noble Lord, Lord Ardwick, has just said. The noble Lord has made the point that I intended to make in reply to the noble Lord, Lord Maude of Stratford-upon-Avon. I find it a little hard to identify with quite the same degree of precision as the noble Lord that golden age of journalism which he found rather more easy to identify. When one looks at the British press of the nineteenth century, one finds a situation in which leaks were constantly made to newspapers and bribes often offered to editors of newspapers from secret service funds. I am perfectly aware of the many defects of British journalism at the moment. Some of these were discussed in the debate on the Yorkshire Ripper case in this House only a year or so ago. I believe, however, that the noble Lord over-stated this point of his argument.
We have had a remarkable debate. There have been very few defenders of Section 2 of the Official Secrets Act. It always gives me particular pain to disagree with the noble Lord, Lord Allen of Abbeydale. Since we have been Members of this House, I do not think that we have differed seriously on any issue. I am bound to say that today was the first such occasion.
Lord Allen of Abbeydale: My Lords, I must have put my points very badly to judge by the number of noble Lords who have misunderstood and have disagreed with what I did not say. I made it clear that I would like Section 2 to go and to be replaced by something on the lines of Franks. I then went on to ask whether the price for doing this might prove too high.
Lord Harris of Greenwich: My Lords, I am very glad that I was not the only one to misunderstand my noble friend, if I may so describe him. I am glad that he has made his position clear because he carries great weight, rightly, in this House, outside, and in the Civil Service.
Before entering upon what I wish to say, I should perhaps make one point. I do not wish to be discourteous either to the noble Lord, Lord Hatch, or to the noble Lord, Lord Beloff, but I do not intend to become involved in the controversy over the sinking of the "General Belgrano". This matter has been discussed at considerable length. With great respect to both noble Lords, it would be better to have that debate, if we wish to discuss the matter further, on another day rather than when we are discussing the Official Secrets Act.
As my noble friend Lord Wigoder said when he moved the Motion, this Act was hurried onto the statute book in 1911 because of the very real fear of German espionage. One case at that time had a decisive effect on the then Liberal Government. In the summer of 1910, German army lieutenant Siegfried Helm was observed sketching the harbour defences at Portsmouth. He was detained and charged with an
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offence under the Official Secrets Act 1889. As it happened, he had been seen at work by two British army officers and their evidence and that of Lieutenant Helm's notebook persuaded the jury to convict him, and that they did. But, as a result of the controversy that was touched off by that particular case, it became clear that the 1889 Act was unsatisfactory.
That Act required the prosecution to show unlawful intent which was, of course, exceedingly difficult to do. It was far too easy for an accused person to say that he was not involved in espionage but acting perhaps on behalf of a private company that required the information for entirely innocent purposes. That is why we had the 1911 Act—that and the level of German intelligence activity in this country.
The Bill was introduced, not in the House of Commons as many people tend to assume, but, in fact, in this House, by the then Secretary of State for War, Vicount Haldane. The entire proceedings occupied less than half an hour. What he said in moving the Second Reading, at column 641 on 25th July 1911, demonstrates the degree of bipartisan support that existed for the Bill.
"The Bill"—
he said—
"has been under consideration for a long time by the Defence Committee"—
he meant the Committee of Imperial Defence—
"and the Bill is their work".
At that time Members of the Opposition were closely associated with the work of that committee. Therefore, the Bill roared through both Houses of Parliament without any serious discussion. I have reread the debate that took place in this House and also that which took place in the House of Commons. It is perhaps worth reminding your Lordships of the comments of the junior Minister in charge of the Bill in the House of Commons, Colonel Seely, the Under-Secretary for War—
Lord Mottistone: Hooray!
Lord Harris of Greenwich: This is a good Alliance speech, I can assure the noble Lord. Colonel Seely's comments provide almost a classic example of how Parliament should not agree to hurry through legislation of this kind. There was, on both sides of the House, total support among Conservative Party and Liberal Party Members, the very limited number of Labour Members and, indeed, the Irish National Party. No serious dissent was expressed. Colonel Seeley said:
"I got up and proposed that the Bill be read a second time, explaining in two sentences only"—
that is actually a slight understatement—
"that it was considered desirable in the public interest that the measure should be passed. Hardly a word was said and the Bill was read a second time. The Speaker left the Chair. I then moved the Bill in Committee. This was the first critical moment. Two men got up to speak, but both were forcibly pulled down by their neighbours after they had uttered a few sentences, and the Committee stage was passed. The Speaker walked back to his chair, and said 'The question is, that I report this Bill without amendment to the House'. Again two or three people stood up; again they were pulled down by their neighbours, and the Report stage was through. The Speaker turned to me and said: 'The third reading, what day?' 'Now, sir', I replied. My heart beat fast as the Speaker said: 'The question is that

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this Bill be read a third time'. It was open to anyone of all the members of the House of Commons to get up and say that no Bill had ever yet been passed through all its stages in one day without a word of explanation from the Minister in charge … But to the eternal honour of those members, to whom I now offer, on behalf of that and all succeeding governments, my most grateful thanks, not one man seriously opposed, and in a little more time than it has taken to write these words, that formidable piece of legislation was passed".
That is why we have the horrid mess that we have been discussing today. It is a classic illustration of how Parliament should not agree to emergency legislation of this character. If we compare what happened on that occasion with the steps taken by Governments of both political parties so far as the Prevention of Terrorism Act is concerned, we see a far more reassuring example of what should be done when it is necessary to legislate with speed.
Colonel Seely's judgment that everyone would be deeply grateful to those honourable Members who remained silent in 1911 has unhappily not proved to be the case. Many succeeding Governments have had the gravest doubts about Section 2, and they have expressed them repeatedly. I should like to give two examples which are appropriate this afternoon. We have the rather important view of the present Home Secretary, Mr. Brittan. In 1978—he was at that stage in Opposition—he said:
"Section 2 is simply indefensible, yet it is still there. Why is that? It is there in spite of the Government's assurances because they have not had the courage to fight and overcome the strenuous rearguard action of Whitehall".
If one compares that sort of language with what we heard this afternoon from Mr. Brittan's close associate—if I may so describe him—the noble Lord, Lord Elton, one sees that that rather simple view of how this matter should be rectified with speed by the then Government did not appear to be exactly echoed in the speech which we heard from the noble Lord the Minister. What then was a simple matter had become a great deal more complicated. The noble Lord said it was not an easy matter. It might take a bit of time to get it right. He reminded us, very properly, of the fact that the present Government introduced a Protection of Official Information Bill in 1979. He seemed to indicate—indeed, he not only seemed to indicate; he did indicate—that progress was not made because there was an absence of widespread agreement, and in the absence of widespread agreement the Government could not go on with the measure.
I am bound to say that since 1979 there have been a few other Bills on which there has been a fair amount of disagreement. I believe that after Easter we are going to have before us the Bill to abolish the Greater London Council. I understand that there is some slight measure of disagreement on that. But that has not stopped the Government from legislating, whereas in 1979, apparently on the strength solely of a debate on the Second Reading of that Bill, the Government decided to withdraw it. Of course the reason they withdrew it was that they had managed to unite very nearly every single element in this House and outside it against a Bill that would have made the provisions of Section 2 look like an extremely liberal piece of legislation.
The other reason, which we have to remind ourselves about, is that at that stage the Blunt case had
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just exploded into public consciousness. It was pointed out that if that Bill had been on the statute book the revelations that were made about the fact that Blunt was known to be an agent of the KGB for a substantial number of years would not have been allowed to be published in any newspaper in this country without the risk that that newspaper would be prosecuted. That of course is why that Bill did not go any further on that occasion.
But unhappily, since 1979 very little has been done. Sir Michael Havers, another fierce critic of Section 2, has since been elevated to his office as Attorney-General, and, as we all know, has made a great deal more use of the Act than any of his predecessors. In doing so he has made its absurdities a great deal clearer. Let us look briefly at three cases: that of Sarah Tisdall, which has been referred to by my noble friend Lord McGregor; that of Mr. Ponting and that of Miss Massiter. First, may I make this clear. I certainly hold no brief for any official who leaks information either to a newspaper or to a Member of either House of Parliament. They deserve to be sacked, just as a private employer would sack an employee who behaved dishonourably. That is the right way to do it—not by invoking this oppressive piece of legislation.
Let us remember what Miss Tisdall did. She was a young clerical officer in the Foreign and Commonwealth Office. She leaked to the Guardian newspaper information providing details of the arrival of cruise missiles at Greenham Common. No question of national security was involved. It was a simple question of disloyal behaviour by a junior civil servant. It was a breach of trust. She was prosecuted under the Act and she went to prison for six months.
Then we had the case of Mr. Ponting. Mr. Ponting was a far more senior official; he was an assistant secretary in the Ministry of Defence. If I may say so to my noble friend Lord Hutchinson, I suspect that one of the reasons why he was prosecuted was that, given the fact that a clerical officer had been prosecuted only a few months earlier, it was extremely difficult to find a convincing reason why a more senior official should not be prosecuted under the same section. As a result of that, as we all know, the court, after a fairly prolonged trial of the case, acquitted Mr. Ponting. Like the noble and learned Lord, Lord Denning, I welcome that verdict without any hesitation at all, not because Mr. Ponting behaved admirably—he did not; certainly he did not—but because when, as in that case, it was made quite clear by the prosecution that no question of national security was involved, it was in my view wholly wrong to bring a prosecution under Section 2.
Lastly, there is the case of Miss Massiter and the makers of the Channel 4 programme, "MI 5's Official Secrets". There is not in my view the slightest doubt that some of the allegations contained in that programme raised serious questions of national security. On Monday, the Attorney-General was asked a rather good question in the House of Commons. Having decided to prosecute Mr. Ponting and Miss Tisdall in cases when national security was not involved, he was asked why he had decided not to prosecute in the case of Miss Massiter. It is, I am bound to say, extremely difficult to understand why he

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took that view. However, what he said, at col. 629 of Commons Hansard on 18th March, was this:
"As the right honourable and learned Member for Aberavon … would be the first to appreciate, if there were any prosecution, even in respect of just one interception, that would implicitly amount to confirmation of it."
I do not think that even begins to deal with the question of why it was decided not to prosecute in the Massiter case but quite right to prosecute in the other two because if he is to be taken seriously it means that any MI 5 officer or any other public servant can now leak information about telephone or mail intercepts secure in the knowledge that there will be no prosecution under Section 2 of the Official Secrets Act. However, it is even odder than that. What about all the other allegations which were made in this particular programme and in the Observer of last Sunday week? The programme and the Observer made the most detailed charges. They disclosed contacts between Ministry of Defence officials and MI 5 relating to the Campaign for Nuclear Disarmament. Those allegations suggested that there had been a cold, deliberate decision to defy the guidelines set down by Sir David Maxwell-Fyfe, which are part of the core instructions to the security service. That programme alleged that a named agent was introduced into the Campaign for Nuclear Disarmament and regularly reported to the security service on its activities.
How can the Attorney-General justify using Section 2 against a young woman junior official when, again, no issues of national security were involved, and decline to prosecute when some of the most serious issues involving the security service were brought into the light of day? I believe there has to be some rational basis for deciding whether to invoke the criminal law. As it is, all that the Attorney-General has succeeded in doing is to demonstrate that the greater the breach of security, the more sensitive the material that is published, the less likely it is that anybody is going to be prosecuted. As I have indicated, I believe that that is the height of absurdity. It brings the law of this country into contempt. Obviously that cannot be the desire of either the Attorney-General or Ministers, but that unsatisfactory situation is going to remain as long as this unwanted piece of legislation remains on the statute book.
7.10 p.m.
Lord Mishcon: My Lords, in winding up this interesting and at times intriguing debate on behalf of the Official Opposition, I should like to repeat the thanks that were accorded at the very beginning of this debate to the noble Lord, Lord Wigoder, for having put down the Motion before the House and for having made—as is usual for him—a most interesting speech. We have gone into the history of this Act. We heard just now a most amusing description of how Parliament dealt with the 1911 Bill. From these Benches I could wish that in future we had debates on our Bills which were somewhat midway between what happened on that occasion and what happens so often these days.
However, it has been a most interesting debate because of the number of people who, as is usual in this House, have spoken from their great experience in life, and in many cases specialised experience, in order
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to help us to have an informed debate. We have heard from distinguished journalists, distinguished editors, lawyers and people with other specialised experience. We even heard from a campaigner in the shape of my noble friend Lord Hatch. They have all contributed to this debate. I regret that those noble Lords who are known as the press Barons were not participators in today's debate. I wish that they could have been present, for I think that they may have had something to contribute. I hope that their absence is not due to their temerity.
The other interesting aspect is that we heard the whole history of how the Official Secrets Act came to be placed upon our statute book. There was one part of the history that was missed out and I want to tell your Lordships about it. It may prompt a smile or, for all I know, a groan from the noble Lord, Lord Hatch. I ought at once to reveal my source in the same way as every editor was called upon to do in the course of this debate. My source was the report of the Second Reading debate of the Bill that was brought forward by the then Conservative Government and which took place in your Lordships' House on 5th November 1979. One of the contributors to that debate was the noble Lord, Lord Goodman, whose absence from our deliberations, largely as a result of ill health, is so much regretted. The noble Lord had traced the origins of the Bill that came forward in 1889, and I now propose, having acknowledged my source, to tell your Lordships about it on this occasion.
There was a newspaper called The Globe, and The Globe had printed that there was a secret annexure to the Treaty of Berlin. A Question was asked in your Lordships' House of the then Foreign Secretary, Lord Salisbury, as to whether indeed there was a secret annexure to the Treaty of Berlin. The Foreign Secretary denied any such secret annexure. There was a civil servant, a junior clerk in the Foreign Office, who, having obtained a copy of the secret annexure, made a further copy of it on his own paper. That is a relevant factor in the story that I am relating to your Lordships. He then took the copy that he had made on his own paper to The Globe, and The Globe published it.
Those who advise Governments upon matters of law were then forced to do some research to see with what the junior clerk in the Foreign Office could be charged. In the genius that always pervades my profession, the answer came: "larceny of paper". He was thereupon charged with having stolen the piece of paper upon which the secret annexure was implanted. I must tell your Lordships that upon the learned counsel who appeared for him proving that the paper was his own, he was duly acquitted. It was upon that firm basis of the lacuna in the law that the first Official Secrets Act was passed by Parliament.
Having disclosed the origin, the noble Lord, Lord Harris, has given us a most amusing account, at second hand, of what really occurred upon that occasion and of the way in which the 1911 Bill was rushed through. He has also done something which is unforgiveable. I had kept the quotation from Mr. Leon Brittan hidden from all my friends so that they would not quote it. I had thought that I had kept it as an official secret from everyone else in this House. It was therefore to me, a matter of actual criminality that the

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noble Lord disclosed that all-eloquent quotation from the speech of Mr. Leon Brittan. I invoke it in aid on this occasion because it obviously made it so much easier for the noble Lord, Lord Elton, to accept this Motion, for it seems that in the Secretary of State he has a fervent supporter of the idea that legislation to repeal Section 2 ought to be with us, and that there ought to be a sensible piece of legislation to replace it.
However, in order that the noble Lord the Minister can go properly armed not only with the report of what appeared in the parliamentary columns of The Times on that occasion, I should like to help him by reminding him of what the noble and learned Lord the Lord Chancellor said in the debate on 5th November 1979 when he introduced the Second Reading of the Protection of Official Information Bill. I am reading from Hansard, col. 608 of our deliberations, of 5th November 1979. I am not going to emphasise the relevance of the date. The noble and learned Lord said:
"Unless I am mistaken it is now nine years since a judge said"—
I almost thought that those words were the origin of the opening words of the speeches of the noble Lord, Lord Wigoder, and the noble Lord, Lord Huchinson, when they traced what had happened, with no action. The noble and learned Lord said:
"Unless I am mistaken it is now nine years since a judge said, I think at the Old Bailey, that it was time that Section 2 was pensioned off, and it is more than eight years since the Franks Committee, which was set up to achieve this object, made its report".
The noble and learned Lord was then so much kinder than some of those who have spoken from the Alliance Benches and who have not had, as yet, the responsibility of Government, because he said:
"It is no criticism that successive Governments, sailing under different political colours, have failed so far to achieve this purpose".
Therefore, as a result of the debate which has been held in our House this afternoon and which has had some public exhibition—I hope meritorious exhibition—and as it appears that the Government have accepted this Motion, it is unnecessary for me to repeat what has been so well said in previous speeches, and it just remains for me to say that Section 2 ought to find itself with a decent burial at long last.
One then comes to the second part of the Motion; namely, what is to replace it? I was so interested, as were all of your Lordships, in the speech of the noble Lord, Lord Maude, and not only because we respect him so much as well as his very fine political career, but also because he spoke as somebody who has contributed a great deal to journalism in this country. I remember so well that he said that there was a conflict that ought to be resolved in this country with those who kept on demanding rights instead of appreciating that they had duties. Duties obviously involve rights. If there is a duty, as he suggested, that Governments should disclose information which is relevant to the public having the right to make up their minds on policies, equally the public have a right to be on the receiving end of information which is about them individually in Government files. This was a matter discussed so recently in the Data Protection Bill, which the Government rather reluctantly brought before Parliament as a result of being pushed towards it by EEC legislation and requirements.
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Therefore, you cannot have duties without consequential rights. It is only sensible that this cancellation, this revocation of Section 2, should be replaced by legislation which creates, as it must, a criminal offence where information is in fact wrongly imparted which hits at the very security of this country; but that must also be accompanied by legislation which deals with the duty to impart information which should, as a matter of public right, be imparted.
There are many of us who would definitely follow the line taken by the noble Lord. Lord Allen of Abbeydale, that one has to be so careful to see that what one replaces it with is not in fact a greater danger than the removal of Section 2. He made his position perfectly clear. He has to make no apology to me for not having been clear in what he said, but I am glad that that point was made very clear later in this debate.
I see no reason at all to prolong these deliberations. We have had a most interesting debate. I hope it has without any doubt meant that the Government must now act, and act speedily, at least to bring a Bill before us, or proposals before us, for discussion. I would not even mind a further White Paper, or Green Paper, in the long succession of papers, but in the knowledge that we shall act upon it. I noted, as did other noble Lords, the gracious acceptance of this Motion by the noble Lord, Lord Elton. I know that when things are accepted by him action follows. We all look forward to it on this occasion.
7.23 p.m.
Lord Elton: My Lords, I have listened with close and, indeed, at times, fascinated attention to your Lordships' discussion of the Motion which the noble Lord, Lord Wigoder, has so fruitfully put on the Table today. I am indeed grateful to him for drawing forth your Lordships' comments, as well as for the clear exposition of his own position and that of his party on this matter.
Your Lordships did not surprise me by being almost entirely against Section 2. A general criticism is that it is far too wide in its scope. It is a catch-all section that could make it an offence to reveal the most trivial of information, notwithstanding the doctrine of implied authorisation quoted by the noble Lord, Lord Allen of Abbeydale, with the authority of a former Permanent Secretary of the Home Office.
We, too, would prefer to see a narrower definition of the information protected by the law, but how is this to be achieved? Section 1 on its own will clearly not suffice. It covers the improper disclosure of confidential information for any purpose prejudicial to the safety or interests of the State where that information is likely to be useful to an enemy. But very serious damage can be done, of course, by the disclosure of official information in circumstances which fall well short of that test. For example, if an officer, without any mischievous purpose whatsoever, fails to take reasonable care of top secret information which is then released, bearing in mind the gravity of the damage which can be caused thereby, I think most people would agree that such conduct must be addressed by the criminal law.
Lord Harris of Greenwich: My Lords, I apologise for intervening so early, but may I press the noble Lord on that particular example? It will be within the recollection of a number of us that a few years ago a senior member of the Cabinet made a mistake and left highly confidential Cabinet documents in a London restaurant. I can recall no suggestion that he should be prosecuted under any section of the Official Secets Act.
Lord Elton: My Lords, the noble Lord, Lord Harris, is always skilled with his interruptions and the presentation of an almost relevant, or totally irrelevant, individual case, and I am almost as good in my footwork at dodging the issue. But on this occasion I would say that, regardless of the merits of the particular case, even the noble Lord, Lord Harris (who, having been a Minister, no doubt feels deeply for the Minister who found himself in that position), would agree that there must be a power to prosecute and that there must be an offence committed by somebody who negligently exposes sensitive material to people who could use it to damage the state. I am in no position to comment on this particular case, with which I am not familiar.
That being so, we must address ourselves to this question: if Section 2 is repealed, what must be added to Section 1 to complete the minimum necessary protection? I did not expect that there would be agreement about that, and a number of somewhat different answers have been put forward this afternoon. What we have been looking for is a reliable test to apply information to see if it is, or ought to be, protected by the section, or left outside it. Lord Wigoder's test is on the Order Paper. It is "serious national harm", which I am sure, if it is permanently adopted, will rapidly become "SNH" in the jargon of lawyers. The section, or Act, would have to contain a list of classes of information, the release of which could cause SNH and which would therefore be protected by the provisions of the Act.
We are debating a Motion of general intent and not testing the precise effect of detailed drafting. On those terms I have no quarrel with the noble Lord's wording. If he were to get to the stage of drafting a Bill, on the other hand, we would have to subject it to a much more rigorous test. It certainly then could be argued that the unqualified term "serious national harm" was defective in either of two contradictory ways. The first would be that it was so loose in meaning as seriously to weaken its value in limiting the information to be protected. The second would be that on a strict interpretation it could restrict the effect of the section to something not only narrower than the existing Section 2 but very much narrower even than what was recommended by the Franks Committee, by the last Labour Government, and by our own Protection of Official Information Bill. Each of these made provision, after all, for the protection, among other things, of confidences of the citizen and for safeguarding law and order.
It is possible to argue—and noble Lords have argued—that these more general protections should consist merely of an absence of an absolute right of access and be provided by some other means such as that suggested, but not described, in the second part of
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the Motion. Our view is that these matters ought not to be left out of the legislation which protects official information.
We then come to the nature and extent of that legislation. A further question which would need to be addressed is: who should decide whether information fell within those categories which were to be protected once we had decided? The Protection of Official Information Bill, for example, proposed that a certificate by the Secretary of State should be conclusive evidence that the disclosure of information in the defence or international relations categories would have been likely to cause serious injury to the interests of the nation or endanger the safety of a United Kingdom citizen. This attracted a good deal of criticism. Your Lordships heard the noble and learned Lord, Lord Elwyn-Jones, repeat it most forcefully this afternoon.
An alternative remedy which is sometimes proposed is to leave the degree of harm to be demonstrated to the jury as a necessary part of the prosecution case. I think that that was in effect what the noble and learned Lord, Lord Elwyn-Jones, was enjoining us to do. There may also have been shades of such a suggestion in what the noble and learned Lord, Lord Denning said when he congratulated the jury in the Ponting case. But I wonder whether that is entirely wise, for it would not leave the individual in any more certain or safe position than he now is.
Precisely what information should be protected and who should decide what information might, to use the words of the Motion "cause serious national harm", are familiar questions. Those were the twin rocks on which the Protection of Information Bill foundered and which lie in the path of any fresh attempt. Experience suggests that it is far from easy to find a passage between these two hazards which is wide enough to allow a sufficient body of opinion, including that of the Government, to remain on board. We shall certainly wish to consider carefully whether any of the various solutions suggested by your Lordships might provide the basis for a further attempt at legislation.
Remembering that we had the courage to take on what my right honourable friend the present Home Secretary described as the strenuous rearguard action of Whitehall (and, I would remind the noble Lord, Lord Harris of Greenwich, we overcame it), it was the strenuous resistance of people like the noble Lord himself and others closer to our own point of view that brought us to a halt in this progress.
The noble Lord, Lord Hams, will not dispute that Section 2 of the Official Secrets Act is imperfect, and nor do I, but I am not certain that the general principle which he sought to adduce from it—that the greater the breach of security the less likely is a prosecution—necessarily flows from its shortcomings or can easily be avoided. It is simply an inescapable fact that one cannot prove that the unauthorised disclosure of information has taken place without also revealing whether the information is genuine, whether it is true or whether it is simply an invention. This in itself can be extremely valuable information to others. This is an awkward and an unwelcome point, but I think your Lordships' House may prefer the illness to the remedy in this case. That is the sort of difficulty with which we have to deal in coming to a conclusion on this matter.

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As I think we should turn to some general issues, I shall mention some of the queries and criticisms raised in this debate. I listened most carefully to what my noble friend Lord Maude of Stratford-upon-Avon said about the decline in journalistic standards. I noted also the interests of the noble Lord, Lord Grimond, in this matter. I am afraid that it may be the case that if governments cannot trust civil servants to respect their confidences, if journalists cannot be trusted to behave professionally, we may be driven to less open rather than the more open government to which we are moving at the moment. But I believe that the Civil Service generally has high professional and ethical standards. I do not think the threat from that quarter is as serious as some may think.
The noble Lords, Lord Hutchinson of Lullington and Lord Hooson, suggested that my noble friend's analysis of what happened was wrong; that it is, on the contrary, excessive secrecy that breeds leaks and not leaks that breed secrecy. It appears, therefore, that I apparently have not done enough to display the considerable increase in openness of Government that we have brought about since 1979.
I am genuinely surprised that the noble Lord, Lord Hooson, can still suggest that this is an obsessively secretive Government. If we were really trying to be secretive one would only have to look at the pages of Hansard to see that we are failing dismally, more dismally than any preceding Government, in our objective of being secretive. Did this Government not help to set up the powerful new departmental Select Committee of another place? Their terms of reference are to examine the expenditure, administration and policy of the principal Government departments and associated public bodies and they are now examining a wider range of Government activities in greater detail and drawing out a wider range of Government information than at any previous time. If the noble Lord, Lord Hutchinson of Lullington, can describe that as a "thin trickle of information on the mountainside of secrecy" I wonder whether he has read the voluminous products of those committees. I should perhaps add in this context that it is well understood that civil servants who give evidence to these committees do so on behalf of their Ministers. Ministers are ultimately responsible for deciding what information should be given to Parliament and its Select Committees and for defending their decisions as necessary. That has nothing to do with Section 2 of the Official Secrets Act. It has to do with the relationship between civil servants, Ministers and Parliament. If Section 2 disappeared tomorrow that would still be the position.
It is for Ministers to decide what information should be released, but we have promised that time will be found for a debate on the Floor of the House of Commons should there be evidence of widespread concern over disagreement between a Minister and a Select Committee on what should be revealed. With these committees and this undertaking, we have given the House of Commons a heavy procedural stick with which to beat the Government if they clam up on disclosable issues. My experience of private Members of both Houses, I have to say to my noble friend Lord Maude of Stratford-upon-Avon, is not that they are
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reluctant to complain about a letter. If I write a letter that is a shade less good than it should be I get something back pretty sharply. I do not wish others of your Lordships to copy this behaviour because my post is more than I like already.
We have naturally heard a good deal during the course of the debate this afternoon about the cases of Mr. Ponting, Miss Massiter and Miss Tisdall. It would not be right for me to comment on the Attorney-General's decision to prosecute and the noble Lord, Lord Harris, has already quoted my right honourable and learned friend. Nor can I follow the noble and learned Lord, Lord Denning, in expressing an opinion on the verdict of the jury. The essential question today is: what general conclusion can be drawn from the case for the shape of any future Act? Obviously Parliament would have to face such questions as whether the sort of information which Ponting revealed should be within the scope of any revised Section 2, whether there should be anything in the nature of public interest defence and who should determine what information fell within the categories and where the accused's duty lay? No doubt, by the time Parliament addresses these issues there will, regrettably, have been other cases, so I think I should do better to address the general issues rather than the particular cases.
That brings me to the noble and learned Lord, Lord Elwyn-Jones, who referred to the experience in the United States with its Freedom of Information Act. Others of your Lordships have referred to the Freedom of Information Acts of other countries. I am constantly being reminded in this House at this Box that even the laws of Scotland differ so much from those of England that I must not in any circumstances argue from their experience for the purposes of our legislation. I say that to noble Lords who made this point to me. That argument must surely apply with even greater force in the case of other countries. The noble and learned Lord, Lord Elwyn-Jones, quoted the American experience with enthusiasm. However, I shall read his comments with interest but with some skepticism, for, even if we could argue from that experience, I should have to remind your Lordships that the American system appears to cost about £60 million a year to run and that legislation in the Commonwealth countries has been in place for far too short a time for us to draw any sound conclusions from it.
The noble Lord, Lord Wigoder, in his closing paragraph cited a number of matters in which he felt official information was needlessly withheld. He referred to the environment. We have made clear that we want to see much greater openness in environmental matters. There are, as your Lordships will recognise, genuine dilemmas and practical problems in providing for complete openness. I doubt whether a requirement of complete openness could really protect the public because there would be far too great an incentive amongst the polluters to conceal; but, as we announced in our reply to the Tenth Report of the Royal Commission on Environmental Pollution, we are setting up a working party to see how a presumption in favour of openness in this area can be made to work more effectively, so we are with the noble Lord there.
I did not follow the noble Lord's interest in library

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books in prisons. There is no secret about that. They
are provided by the local authority under an arrangement by which we reimburse them on a cost-plus basis. There is a turnover of stock and I am sure any library committee of a local authority would be pleased to tell the noble Lord what books they were putting in.
My noble friend, Lord Maude of Stratford-upon-Avon, speaking with considerable authority, having been at the spearhead of the move to more open government when we came to office, has said that rights and duties should balance each other; and the noble Lord, Lord Mishcon, supported him in this philosophy. To put it more precisely, my noble friend suggested that we should tackle the need for more information not by giving a general right to know, but by putting a duty on Ministers to reveal a great deal more information; and he suggested that we might consider a code of practice.
My noble friend will be aware from my opening speech that we are under this duty. I am sure he remembers the duty being laid on us in 1979 by the Prime Minister. We have the same Prime Minister and we now have a great deal more public information; but he has suggested a code of practice and of course I shall take that to my right honourable friend for consideration as a constructive suggestion.
I said most of what I wanted to say to the noble Lord, Lord Hatch of Lusby, in the 30 seconds or so of my intervention during his speech. He has used this debate to make serious allegations. I shall pass them on, with a longish pair of tongs, to those at whom he directed them and who, I repeat, had no opportunity to reply to them in a debate which I shall not assist him in turning into a debate about his obsessive interest in one set of recent events. He may, however, find it helpful to know that my right honourable friend the Secretary of State for Defence has personally given evidence to the Select Committee on Foreign Affairs, again a Select Committee, an instrument of discovery. The Government have answered all the Committee's question and have given the Committee access also to the highly classified chronology prepared by Mr. Ponting now known as "the crown jewels".
However, this is not a debate about the "General Belgrano": it is a debate about Lord Wigoder's Motion and that consideration also incidentally prevents me responding to a good deal of what was said by the noble Lord, Lord Jenkins of Putney, or what was said by the noble Lord, Lord Harris of Greenwich, who I believe at one point followed him in discussing the way in which the security services carry out their duties.
I would wish to comment on the reference—this is the point at which I wish to rope in the noble Lord, Lord Harris of Greenwich—to the 20/20 Vision television programme. To that I feel I should say first that the Independent Broadcasting Authority requested Channel 4 to withdraw the programme after being advised by counsel that to broadcast it could be a criminal offence under Section 2 of the Act. As the authority has explained, it took the decision on grounds that, as a statutory body responsible to Parliament, it would be improper of it knowingly to commit an offence. Decisions on matters of
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programme content and accessibility are for the broadcasting authorities alone with due regard to their formal responsibilities; and the Government do not seek to interfere in or influence such decisions. As to the content, in case noble Lords also do not know that, I will say that the noble Lord, Lord Briggs, the judicial monitor of interception arrangements, has conducted, at the request of the Prime Minister, a full and detailed inquiry into the allegation made in the programme that authority for interception was improperly sought and given in relation to the persons named in the programme. The report, which was made public on 6th March, completely refutes these allegations.
The noble Lord, Lord Grimond, addressed himself amonst other matters, to the Lobby system. Successive governments have used that system as one means of communication about what Government are doing. It is not the only means and indeed it is not the most important means; but I believe both governments and the press have found it useful to have this kind of briefing from time to time. Of course, no editor or journalist is under any obligation to attend the Lobby if he does not want to. The Lobby works under clearly understood conventions. It puts no one outside either the law or the bounds of normally acceptable behaviour. The noble Lord, Lord McGregor of Durris, the noble Lord, Lord Ardwick, and some other supporters of the press are right. Of course they are right to say that the press must find out as much information as possible and put it before their readers; but that does not put them above the law, and journalists under law must, of course, be subject to the same laws as the rest of us and have a code of ethics.
Lord Jenkins of Putney: Will the noble Lord give way?
Lord Elton: No, I think not, my Lords.
Noble Lords: Order!
Lord Elton: My Lords, we are of a timed debate.
Noble Lords: Order!
Lord Elton: My Lords, I intend no discourtesy to the noble Lord, but it is the convention of this debate that one has one's say from either side. We are also on a strict timing. I have three minutes left of my ration and the noble Lord will forgive me—and I am sure the noble Lord will correspond with me. If I find before he writes to me that I have misinterpreted what he said, I shall write to him before he writes to me.
The noble and learned Lord, Lord Wilson of Langside, reminded us very kindly that we must not confuse disciplinary and criminal aspects of breaches of confidence by civil servants, but some criminal sanction must surely be available. We accept that there are deficiencies in Section 2 of the Act. It provides a catch-all offence, which means heavy reliance upon selectivity in its use. We had a shot at putting it right in our Protection of Information Bill but there was not enough agreement with our proposals for the Bill to get through. Our mind is not closed and we can accept the first part of the Motion, not as a commitment to legislate, as I think the noble Lord, Lord Mishcon, sought to tempt me to say, but as a commitment first to take careful note of the views which have been

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expressed both in this Chamber and elsewhere and then to consider whether there appears to be any measure of agreement in which the Government could join in the light of their own particular responsibilities and which might form the basis for a further attempt at legislation.
What we cannot do, as both the noble Lords, Lord Allen of Abbeydale, and my noble friend Lord Beloff, with all the vigour of a clear-eyed patriot, have pointed out, is to scrap the section until we have something to put in its place; and it is an essential point because the Act is an essential protection, as perhaps nobody could have pointed out with more authority than my noble friend the Duke of Portland, who spoke with the authority of an ex-Chairman of the Joint Intelligence Sub-Committee of the Chiefs of Staff—a post which I believe he held throughout the whole of the last war. He understands these matters.
We do not favour legislation, either, to introduce a general right of access to Government information. That does not mean that we are not in favour of greater access to information where this makes sense. Again, we shall consider what your Lordships have said with very great care. If there are ways of improving our system, then we will certainly consider them. I believe I have left the noble Lord, Lord Wigoder, just a sliver of time in which to conclude.
7.50 p.m.
Lord Wigoder: My Lords, by my calculation I have some 16 minutes at my disposal but your Lordships need not be too disturbed. I do not propose to occupy all of them by a very long way. When this debate began, I said that I hoped that in the course of it a consensus might develop. I believe it has. I believe that the overwhelming majority of the speakers have, some with their reservations, some with their modifications, supported the general principles laid down in this Motion.
I am grateful to those noble Lords who expressed their support in that way. That does not mean that I am not also grateful to those who have had more serious reservations, and particularly for the doubts expressed so constructively by the noble Lords, Lord Maude of Stratford-upon-Avon and Lord Allen of Abbeydale. I appreciate, too, the points made by the noble Duke opposite. I sympathise with those and I blame myself for not making the position clear when this debate began. May I assure the noble Duke that none of us who advocates in a responsible way greater access by the public to official information is suggesting for one moment that that should include information which might prejudice the safety of the Realm.
I listened, too, with interest of course, to the pungent speech of the noble Lord, Lord Beloff. I gather that his next book is apparently to be entitled, "The Effect of the Increase in Access to Official Information on the Progress of the French Revolution". And I have no doubt that it will be a best-seller.
I am grateful, finally, to the noble Lord the Minister for the way in which he has responded to this debate. He made it clear when the debate began that on behalf of the Government he was not resisting this Motion.
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For that, too, I am grateful. He has raised a number of points and it would be quite wrong at this stage to reopen the debate and deal with them in turn.
Perhaps I may mention two of them very briefly. One is that he mentioned the fact that the words "serious national harm" are used in this Motion. They are used there only as a sort of shorthand. It is not intended that they should be a blueprint for legislation. I would hope that the Government, in order to consider the appropriate legislation, might think of going back to the Franks Committee Report and looking at it in a spirit of generosity rather than a spirit of increased repression, which I think marked their last attempt in October 1979.
The other matter he raised was how it was to be determined whether documents were properly classified or not. There is a problem in letting the Minister be the final authority on that, as he will realise; there is a problem in letting the courts be the final authority on that, as also he will realise. I doubt whether it is really a justiciable issue. May I merely put into the pool the possibility that that matter should be considered by a Joint Select Committee of both Houses of Parliament, which would help I think to increase parliamentary accountability of the operation and would very much assist therefore in that respect.
The noble Lord the Minister having said that he would not resist this Motion, I propose nevertheless to move it. I propose to move it because I believe that to pass it would be worthwhile. It would be appropriate that it should be recorded as the view of your Lordships' House and it will then stand on the record as a constant reminder to the Government of the need for pressing action. In those circumstances, I beg to move.
On Question, Motion agreed to.

Road Traffic (Eyesight Requirements for Drivers) Bill [H.L.]
7.53 p.m.
Lord Mottistone: My Lords, I beg to move that this Bill be now read a second time.
I think that perhaps the subject matter is somewhat different from what we have just been hearing, but, just before he leaves the Chamber, I must thank the noble Lord, Lord Harris of Greenwich, for mentioning my noble father in his speech.
One might wonder why I have introduced this particular Bill. Its history relates to my own personal optician who supplies me with spectacles saying to me last summer that when he started to operate as an independent optician in the Isle of Wight he was not sure whether he would have sufficient income from his activities; so he took the precaution of getting himself qualified as a driving instructor, so that in the event that he found he was not getting enough trade as an optician he would have something to fall back upon. This meant that he had the skills that were necessary to understand the sort of subject that we are debating today. That is the origin of it.
Having got that start, I said to him, "Why is it that you think there is a need for a Bill like this?" He replied, "From my practical experience I have found

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that the 25-yards number test is inadequate in testing the suitability and the unsuitability of persons taking the driving test". I then sought assistance from the Association of Optical Practitioners, who said that other members had raised the matter, and they agreed to provide me with the necessary technical advice. I give this introduction to make it quite clear that this Bill is not a ploy by the opticians to get extra business. They expect very little change from their present business.
It is 50 years since the present means of assessing drivers' vision was laid down by statute. In those 50 years, no change has been made in the standards of vision which is required by motorists during that period of time. But driving has changed beyond all recognition. The speeds at which vehicles now travel, the types of road that are in use, the density of traffic, combine to produce little doubt that driver vision and perception have a key role in the driver/vehicle road system. There are many facets to driver vision and perception; and establishing their relative importance in the driving task has proved to be difficult and often contentious.
Put simply, there is a lack of up-to-date research of a good standard which objectively examines all the facets of vision and their relationship to driving. However, it remains true that Britain, in company with Hong Kong, Cyprus and Mauritius, out of all the developed countries in the world, has the lowest visual standards for driving. No doubt it can be argued that there are priorities in road safety other than improving vision standards. There are, however, many examples of public concern in this area. Some of the examples indicate less than specific remedies, but all would support a sensible and rational approach to reviewing the requirements for drivers' vision such as is envisaged by this Bill.
I could prove at length that modern standards, as I
shall call them, have been adopted by all the EEC countries and most others. For those that are concerned, there is a colour test by five of the EEC countries, by Japan and by 42 of the states of the United States and by Queensland. Against that, some people in this country can be legally blind but pass the United Kindom test; some people also who are up to the standards of the more modern tests are prevented from driving by not passing the United Kingdom test. So it is a two-way affair. It is not just a question of making sure that there are some drivers who should not drive who need more accurate testing to prevent them from driving. It is also a matter of allowing some people to drive who are otherwise prevented from doing so.
As a final view to back that up, in a MORI survey conducted in October last it was shown, among other things, that in answer to the question,
"Do you think it should be compulsory for people who drive to have an eye test once every two years or not?"
74 per cent. of all those questioned said, "Yes". Only 23 per cent. said, "No". There are other factors which could well be called in aid, but I do not want to keep your Lordships for too long.
My honourable friend Mrs. Lynda Chalker, in reply to a Written Question at col. 132 of Hansard for 16th January '1985, said words to the effect that the present
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number plate test constituted a perfectly satisfactory standard of eyesight for driving; but she said that she would study carefully recommendations made by the Select Committee on Transport in this connection. The Select Committee on Transport of the other place, in its first report of the 1984–85 Session, said in paragraph 45;
"The evidence we have received from the FOCB and the AOP leads us to the view that there are strong grounds for doubting whether the existing eyesight test meets these objectives. We recommend that the department should consider re-specifying the minimum visual requirements for a driving licence along the lines suggested. We also believe that the department should give further consideration to the case for introducing regular eyesight checks for all motorists, though we accept that the decision on this should be based on whether the cost of such checks could be justified by the potential reduction in road accidents."
If we take that a step further, the point that is emerging is there has not been enough research into the degree to which inadequate eyesight contributes to accidents. There has yet to be a comprehensive programme of research which sets out to assess in statistically valid ways the relationship between poor vision and accidents, or indeed a programme which sets out to research the links between poor vision and driving abilities in general. Mr. Brownhills of the Transport Road Research Laboratory, writing in Perception in 1980, said:
"Numerous physical and psycho-physical restrictions on visibility could lead to the look-but-fail-to-see type of acccident; but their relative importance requires evaluation. There does not appear to have been any recent attempt to evaluate that type of accident."
Johnson and Keltner in California in 1983 discovered that 3 per cent. of people between the ages of 16 and 60 had visual field defects, and incidents rose to a startling 13 per cent. among those older than 65. More than half of those people were previously unaware of any problem with their peripheral vision. Drivers who had field loss in both eyes had accident rates twice as high as those with normal visual fields. There was also some indication in this study (though it was not pointed in that direction) that possibly between 0.5 per cent. and 2 per cent. of accidents might be due to eyesight inadequacy.
If we now turn to the accidents (and I am quoting from the 1983 report on Great Britain, published by the Department of Transport and the Welsh and Scottish Offices), we find that in that year there were 5,445 deaths and 75,000 fatal and serious accidents. I suggest to your Lordships that if the reduction of accidents was 0.5 per cent., as I have just mentioned, that would save 375 serious accidents, of which 27 would be deaths, and if it were as high as 2 per cent., it would save some 1,500 serious accidents, of which 100 would be deaths. I think that is something which should be taken at least with a degree of seriousness which perhaps it has not so far received.
Thus, even though it is generally agreed that there is at present a lack of scientifically conducted evidence that not having a modern test of eyesight is a significant cause of accidents (and I would suggest that this certainly needs to be rectified without delay), the fact that practically all other Western countries have such a modern test, that the House of Commons Select Committee recommends that such a modern test should be considered, and that a recent MORI poll shows that the public agrees with them, gives me the encouragement to present this Bill to your Lordships.

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I should perhaps add that since introducing it, I have incidentally had support from the Guild of Experienced Motorists and from certain individuals writing personally.
To turn now to the Bill, Clause 1 makes provision for the Secretary of State to lay an order prescribing revised and scientifically-based visual standards for an applicant for a driving licence. Those standards would be determined by the use of a vision screener, as in most other Western countries. Screening can be
undertaken by people with no special training. It is a short procedure and can be made available to drivers and potential drivers in all sorts of situations: for example, in driving schools, driving test centres, health centres and at opticians' practices. In addition, the screening machines are sufficiently portable for their use by police. Indeed, I understand that every one of the United Kingdom county police forces already has at least one of these instruments. The type concerned tests not only for distance visual acuity but also for ocular vision, depth perception, colour vision and side-field of vision.
Your Lordships may wonder what will be the effect of this Bill, if it becomes an Act, on existing drivers. Various estimates have been made of the number of people currently driving who might fail to meet the existing numberplate test. Nothing in the proposals contained in this Bill would cause any but a small number of motorists to lose their licences. Most would be able, by seeking professional advice, to have their vision corrected to a safe standard for driving. Some—a much smaller number—would have their driving hours restricted in a way that appeared appropriate to their disability.
For all drivers, an emphasis on the importance of driver vision and perception can only lead to a greater awareness of the need to use their sight to help them towards safer driving. Not the least benefit of changes in defining standards of assessment of driver-vision would be to stimulate education in vision and road safety. I suggest to your Lordships that this would meet a point made by my honourable friend Mrs. Chalker in evidence to the Select Commitee:
"There is a much more immediate and difficult problem: namely, those people who have perfectly good eyes but fail to use them properly when they are driving a vehicle on the road".
The order would also prescribe the conditions under which certain persons would have their licences endorsed to show restrictions and requirements. This is a common practice in other countries, including most of the states in the United States of America. I have a copy of my son-in-law's licence, issued in Georgia, with a provision for it to be so marked. Examples of this are: "vision lens correction required", which is marked with a "V"; and "daylight hours only motoring", marked with an "F". So it is not strange.
To go on with the Bill, Clause 2 makes provision for persons with their licences so endorsed to take an eye test with a doctor or an optometrist every five years. To remind your Lordships, this eye test does not cost the person anything. If he requires changed spectacles for motoring, he probably requires them for watching television, as I do. Clause 2 also makes provision for all persons reaching the age of 45 to have an eye test by
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a doctor or an optometrist. My own experience showed that necessity, anyhow, for reading, and the test that I had in my mid-forties gave me reading spectacles, but showed quite clearly that I did not require spectacles for anything else. But at a later stage I needed spectacles like the ones I am wearing, which are bifocal.
The Bill goes on to say that thereafter, having had the test at 45, further tests will be required at five-year intervals. I expect that most of your Lordships who have reached the age of 45 have had the experience of requiring new spectacles, so there is nothing very strange about that. Clauses 3, 4 and 5 make consequential amendments to the Road Traffic Act 1972 and I shall not bother your Lordships with the details. However, I shall be happy to make any comments on them, if they are raised during the course of the debate.
If I may now turn to possible costs, we always find these mentioned in Government Bills but this being a nice, simple Private Member's Bill they are not mentioned. So I shall give your Lordships the benefit of saying that nothing in this Bill is likely to stimulate to any great extent the use of the NHS eye test. Most of the driver vision screening that is
envisaged can be done by unqualified personnel, using relatively inexpensive screening devices. Further it is anticipated that such screening devices would, in any case, become available in other areas, such as driving schools and doctors' and opticians' premises. Clearly, driving test centres would initially have to be equipped with machines of this type, but it appears that a relatively inexpensive device could be developed specially for this purpose. A vision screener currently in use by police forces and others costs about £1,200, but this cost would be substantially reduced if there were quantity orders.
To conclude, as was said by the Select Committee of another place, there is reason to doubt the efficacy of the 50 year-old 25-yard test for determining visual suitability to drive. The eyesight tests for heavy goods vehicle drivers, which have recently been revised, require the sort of standard that would be proposed in an order under Clause 1 of this Bill. Though a heavy goods vehicle is potentially very dangerous if not driven well, any car, especially when driven fast, is also a potentially lethal weapon of a tonne or more in weight, and I suggest to your Lordships that size does not make much difference to the threat to life. Therefore, if the heavy goods vehicle driver requires a more modern test, why should that not apply in this very modified way that we propose to other drivers, who could be a similar, or possibly even a greater, threat? Even if accidents were reduced by only 1 per cent. as a result of modern eyesight testing, 50 lives and 700 serious accidents might be saved. My Lords, I beg to move.
Moved, That the Bill be now read a second time.—(Lord Mottistone.)
8.14 p.m.
Lord Carmichael of Kelvingrove: My Lords, I am sure that everyone who has listened to the noble Lord, Lord Mottistone, and who wishes to take part in the debate, and all those who are interested in the field of road safety, will fully appreciate the motives behind

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the introduction of this Bill. We are continually looking for ways of reducing the appalling toll of death, injury and material damage which occurs daily on our roads. But most people are also concerned that such measures as the Government take to improve road safety should show quite quickly that the proposed measures are the next step in terms of effectiveness towards reaching complete road safety. Those are our thoughts on this subject.
In the last 20 years or so, with the very great increase in the motoring population, it has been the practice of successive Governments to introduce measures aimed at making our roads safer. With each new restriction on the freedom of the motorist, there was an acceptance by the public at large, and by the motoring public in particular, that the restrictions were due. There are always exceptions, and there will always be some people who want no restrictions at all, but among most motorists there has always been a feeling that although the new laws were inconvenient they were also necessary.
For example, there were a great many arguments about the MOT test and there still are. But at least it shows every year that a vehicle is roadworthy. It may not be everything, and perhaps we should have it more often, but it means that at least once a year the old dangerous "bangers" are taken off the road, and people have begun to accept that that is reasonable.
Then there was the test of tyres, under which there must always be tread on the tyre and no cuts on the side. This, again, was something that had become due and, with the higher speeds of cars, people accepted it. It can be very annoying when the garage always finds a cut or something else that is wrong, which means that one has to buy a new tyre, but the examination gives a feeling of safety and most people have accepted it.
I think that the law on drinking and driving is now generally accepted, though I believe it would be better if it were even more strict than it is at the present time. Then there was great early opposition to seat belts. I introduced a Bill in the other place which was lost through time, but I was very pleased that your Lordships' House managed to get an amendment into the Road Traffic Act which introduced compulsory seat belts. I do not think there is now much objection to seat belts and everyone has accepted them. All these laws were restrictions on the individual, but they have been accepted.
Above all, there was the driving test introduced in the early 1930s. Here I have a certain sympathy with the noble Lord, Lord Mottistone, who said that the eyesight test had not improved in 50 years. Perhaps we are still not taking the matter seriously enough, when we think that reading a number plate at 25 yards is good enough and that we do not need to do any more. Perhaps that test could be improved. There are criticisms about the test. For instance, I have heard the criticism that there is no test on a motorway and no night driving test. Nevertheless, the driving test was the first big step forward towards giving some instruction, and a feeling of responsibility and achievement to people who managed to pass it. But I do not think it is comprehensive enough and it could be improved.
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All those were logical steps towards a better and safer use of our roads, and they were seen as much by most people. Unfortunately, while I fully support the sentiment and praise the motive behind the noble Lord's Bill, I cannot agree that it falls into the same category as the road safety measures that I have just mentioned. There was clear evidence before the introduction of those other measures that lives, personal injury and property could be saved on quite a large scale. That evidence was statistically demonstrable and the outturn was not far off the expectation when the laws were originally introduced.
All the evidence that I have seen concerning eye testing suggests that eyesight tests such as those prescribed in this Bill would have little effect on the rate of accidents. For instance, the major group for accidents is the under-25s, and most people of this age would pass the prescribed test with great ease. I should like to say at this point that I am grateful to both the motoring organisations, the Automobile Association and the Royal Automobile Club, for the analysis they have sent me to bolster my own thoughts and prejudices, as the noble Lord, Lord Mottistone, would probably think, because in motoring we all have our prejudices very much to the fore for most of the time. I am sure that the Minister, when he speaks, will correct and amplify the points that I am trying to make, since I know he has a large department behind him to help with these matters.
Would there be real cost-effective benefits if millions of motorists were put to the expense of the proposed tests? Here I would ask the noble Lord, Lord Mottistone, to clarify this point when he winds up. I was slightly surprised when he suggested that the tests did not require expert and qualified people to conduct them. As I read the Bill it is quite clear that it must be for a registered medical practitioner or a registered ophthalmic optician (an optometrist) to carry out the test. I think the House would be interested if the noble Lord, Lord Mottistone, could clear up this point.
I understand that every year about 1.5 million people take out a first provisional licence. The Minister may be able to give an estimate of the load that would be placed on the Driver and Vehicle Licensing Centre at Swansea. According to the Bill all drivers over the age of 45 would be required to have a test every five years whether or not they had had any eye trouble in the preceding year. Again, I have been given an estimate that there are about 12 million drivers in that category. That means that about 2 million drivers a year would need to have their eyes tested; but between the ages of 17 and 44 there would be no necessity for a test. So for 25, 26 or 27 years people would be able to drive without having a test, and then suddenly there would be a need for a test.
The noble Lord, Lord Mottistone, has very fairly read out the statement that was made by the Transport Select Committee. It recommended that,
"consideration should be given to re-specifying the minimum visual requirements for a driving test".
I think that possibly the whole House would accept that a look should be taken at the minimum specification. I think that the noble Lord perhaps overlarded the cake a little by asking that we bring

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forward the tests that he suggests. The noble Lord again put it fairly when reading the last part of paragraph 45 of the report, which states that,
"the decision should be based on whether the cost of such tests could be justified by the potential reduction in road accidents".
It should be remembered, and it probably needs to be emphasised more, that it is the personal duty of everyone who holds a driving licence to notify the issuing authority if any deterioration in health, including eyesight, occurs which would impair a person's ability to drive. I am sure that we are all careless about that, but it is something of which we should be reminded. Our medical practitioners or our ophthalmologists should remind us when we go for any health check at all—a normal physical check or an eye test—that if we are really far out we should go and discuss it with the licensing authority.
I believe that few among us discover the need for visual aids or the deterioration in our eyesight initially because of our driving capability. Much more likely and more commonly, difficulties are first observed in reading, or perhaps in watching TV. Perhaps this should be the trigger to make us think about whether we are safe on the roads. This is the point at which we should each ask ourselves and our specialists whether our driving ability has been impaired.
The noble Lord, Lord Mottistone, quoted earlier the
reply of the Minister of State to one of the questions of the Select Committee. The Minister of State said that there is a much more immediate and difficult problem; namely, those people who have perfectly good eyes but who fail to use them properly when they are driving a vehicle on the road. Here I believe that if we could get to the bottom of this—people's attitude on the road—it would do a great deal more than all the tests and all the restrictions we put on people. I cannot but agree with the Minister of State, and I repeat that, although I welcome very much the opportunity that the Bill gives to discuss the vital subject of road safety, I feel that in the Bill's present form it is not possible for me to give to the noble Lord the support that I should very much like to give.
8.26 p.m.
Baroness Macleod of Borve: My Lords, I shall try to be very brief because it seems that we are going to be here for some time yet again tonight. I support the principle of this Bill. I think that some of the figures may have to be changed during the course of the Bill, but I should like to congratulate my noble friend Lord Mottistone on bringing it forward to this House.
I call it an important Bill, and I am now going to tell your Lordships briefly why. I have been guilty, I think, of a grave error—not, I hope, of judgment; nor of misconduct; but certainly an error—over the past 30 years in adjudicating in my courts upon cases, of which there have probably been at least three per day, where people have gone against the road traffic laws. I do not mean just speeding, but causing accidents and breaking our laws. The extraordinary thing is that when I was thinking about it last night I realised that not once (I think my memory is good enough) during the past 30 years that I have been adjudicating have I
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or the defendant or the defendant's representative ever called into question whether the defendant's eyesight was effective.
It seemed to me that this was absolutely fundamental, and so I have taken time today to telephone a few of my colleagues on the Bench to ask them if in their experience they have ever asked whether a defendant's eyesight was correct. They all said "No", and that it had not occurred to them. If one does not have good sight, one cannot measure distances. If one does not have good sight, one cannot measure speed. If one does not have good sight, in my view, one's reflexes are not as quick as they should be. Therefore, accidents can be caused fundamentally by bad eyesight.
I am sure that some noble Lords will say that it is too expensive. What is the cost of life? What is the cost of accidents? I do not think that anything is too expensive to prevent accidents and perhaps save lives. I have been reading, as many other noble Lords will have done, a document which has been sent to me by the Royal Automobile Club. The first point the document makes is:
"There is no statistical evidence to show that defective eyesight contributes significantly to the incidence of road accidents. Therefore there is no proven road safety requirement for the proposals".
We are not told that there has been any statistical evidence asked for, because they have given no figures of whether there has or has not been.
I should also like to quote from the RAC's sixth observation—which I think is quite remarkable coming from an organisation that is known all over the country. They say:
"The existing eyesight test requirement incorporated in the driving test"—
which we all know is usually taken at about the age of 18 or so—
"has the advantage of being a completely natural test which is only carried out in good light conditions when the number plates of the target car are clean and clearly visible. Most drivers with everyday practical experience would agree that the test is perfectly adequate".
It is not a question of seeing in gorgeous daylight when a car's number plate, or whatever, is clean. It is a question of seeing at night. or in muddy conditions, or in the snow and the fog. That is when one's eyesight comes into it. I submit that that document is hardly worth the paper it is printed on.
I believe that all noble Lords would agree with my view, with the exception of my two young noble friends on the Front Bench, who will find that their eyesight will, in the course of time, change—as is evident from looking around this Chamber.
I maintain that there are many people driving today who do not know that their eyesight has changed. They are short sighted and cannot judge distances, which, as I have said, is an absolutely vital ability. That is because they have not been required to have their eyesight tested, and that is where the Bill comes in.
I believe that it should be compulsory for such people to have their eyes tested. My noble friend says that it should be done after 45 years of age. That is up to him. I would go along with that proposal, although I do not have any statistics to prove that that is the

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right age. But I certainly feel that everybody who drives any motor vehicle on the roads of this country should after that age be subject to mandatory eye testing. I am certain that in that way accidents would be avoided; and if accidents are avoided, then lives will be saved. I support this Bill.
8.32 p.m.
Lord Rugby: My Lords, the Bill before your Lordships' House is based upon a proposition that there are a sufficient number of road/car accidents caused by failing or inadequate visual acuity of car drivers to warrant what is tantamount to a universal eye test. In so far as the whole subject of motorists and accidents is concerned, it would seem somewhat superficial to bring before your Lordships' House one narrowly-circumscribed Bill on which we are expected to draw one narrowly-circumscribed conclusion—yet ignoring the vast complexity of contributory causes which go to make up the mass of divergent reasons to which accidents are attributable generally and specifically.
The noble Lord, Lord Mottistone, has introduced a private Member's Bill which I suppose might be in the nature of a kite-flying exercise. There must surely be some statistical evidence which has escaped not only the press but the public also, and there must be sufficient universal alarm to require parliamentary notice and legislation. If there is such concern, then how many of us know about it? I have never heard about it. However, assuming that such concern does exist, the kind of legislation envisaged by the Bill would be so massively intrusive into individual rights that we are surely entitled here and now to ask this question: what startling revelations have manifested themselves to justify what is really a draconian piece of statutory law?
Being somewhat of an inquiring nature—as the noble Lord may remember, because I undertook a fairly massive inquiry into the manner in which the Opticians Act came into being—I simply inquire once more: what is in it, and for whom? Perhaps the noble Lord already answered that question when he referred to his own optician, who has performed what I consider to be a highly commendable act. He has vertically integrated his business so that he tests drivers and prescribes spectacles. I cannot blame him for that. At the same time, I see no reason why people who test the public for driving should not equally sell spectacles.
If there is, as I suspect, a commercial link, then, if at any time now or in the future a committee is to be set up in order to sift evidence and report, very careful screening for their total impartiality will be imperative. At this stage of the Second Reading of this Bill, I will simply go on record as stating that there is so much evidence available, and from so many excellent sources, that such a committee, after careful study of what has been done in this particular field of research, would be bound to accept those findings. I dare say that there are something like 90 to 100 documented researches into just this subject.
However, if they do set up their own investigation, where would they draw the line? What would be the
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parameters of the test which would be required? There are already static tests, and these have not been complained about too much so far. There are dynamic test, which I suppose are the tests in motion. There are the Japanese kinetic tests, which have some meaning relevant to this particular Bill. There are also the simulators, which would be very expensive to use.
Lighting has a very large bearing on all tests, since our eyes react differently to light. For instance, perhaps we should have to be tested in twilight and on how we react to darkness, in fog, and to occluded windscreens—and for certain motorists, on how to drive with the sight of only one eye. I have been driven frequently by a man who drives excellently with the sight of only one eye. We also need to recognise specific road surface conditions, which is a matter of experience rather more than eyesight. So it is an immense subject.
That is why conclusions so far have failed to point the finger at any causal relationship between motor accidents and visual acuity.
My own reasoning suggests that although visual acuity decreases to a greater or lesser extent according to age and individual metabolism, so does one drive with greater care according to one's own perceptual limitations; or in other words, according to one's acquired road sense. When one is younger, and possessing possibly, among other attributes, a higher degree of visual acuity, that nevertheless has to be balanced against conflicting factors such as experience—or the lack of it—and, possibly, hormonal tendencies which err on the aggressive side.
At the present time, research indicates that accidents caused by deterioration of visual acuity have not made any statistically significant mark on road accidents. Should the noble Lord, Lord Mottistone, go ahead with his Bill, I believe that he will need to provide far more evidence before Parliament should be asked to set up what is certain to be a most costly and possibly totally sterile exercise.
8.39 p.m.
Lord Orr-Ewing: My Lords, I should like to congratulate my noble friend Lord Mottistone, who has been a dear friend of mine for many years, on the very moderate way in which he moved this Bill. He was very moderate and very persuasive, as is usual in his speeches. If I believed that the Bill would make an impact, as he suggested, on reducing injuries and accidents, I would thoroughly support it. I supported the introduction of seat belts. Many of us did, although there was valid statistical evidence to show that if we wore seatbelts we would be less severely injured in a smash. In fact, all the statistics which have so far emerged have proved that to be right.
I say exactly the same about this Bill. If some hard statistical facts were available I would support it. But no correlation has been produced linking less than perfect eyesight and accidents. A great deal of research has been done, as was mentioned by the noble Lord, Lord Rugby. I have a list which comes from a paper prepared by Mr. P. A. Davison, who works for the Road Research Laboratory, which is part of the Department of the Environment. It was presented on

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8th March 1978. It gives two solid tables covering 40 different investigations which have been carried out into eyesight and road accidents. No great conclusion is drawn. A tight correlation cannot be found.
I should like to quote one conclusion. In one test 3,000 people were tested. The conclusion was that 519 out of 529 drivers who were involved in accidents would not have been refused licences on the visual requirements which exist in the United States, which is where the test was undertaken. My noble friend drew attention to the fact that he believed it it be a more rigorous test than is undertaken here. That means that only 10 drivers would have been saved from accident involvement from the 3,000 tested. On the other hand, it could be argued that 2,408 drivers were needlesly screened because there was nothing wrong, at considerable inconvenience to themselves and at a cost, either directly or indirectly, to the taxpayers.
My noble friend went on to quote from the Select Committee. I should like to point out that the Select Committee took evidence from two optician associations but not from eye surgeons or any people with a special knowledge of eyes. If they were doing a study in depth, why not? Opticians can be relatively lightly educated in eye testing, but an eye surgeon will have spent the whole of his life studying eyesight and the effect of less than perfect eyesight. They were not asked to give evidence, and it seems, therefore, as the noble Lord, Lord Rugby, said, that there might have been some commercial connections.
My noble friend says that the opticians are not seeking extra business., I find that hard to believe. We have been told—and I agree with the figures—that 1.5 million youngsters would need to be tested every year and roughly 12 million people every five years, which means another 2 million a year on average. Therefore, 3.5 million people would have to be tested every year. My noble friend said that it would be done by unqualified people. How right the Opposition were to draw attention to the fact that the Bill specifically states in Clause 2 that it should be,
"by a registered medical practitioner or a registered ophthalmic optician (optometrist) not less than every five years from the date of the last such eye test."
That is specifically laid down in the Bill.
Therefore, my noble friend's estimates on cost are not quite right because, presumably, qualified persons would charge something for that test. I am sure that if I was trying to promote business for the opticians, and was a marketing man, I would love to have 3.5 million people a year coming into my shop for an eye test. Would the youngsters not tend to go to the same shop again?
Lord Mottistone; My Lords, I shall not make a speech now, but perhaps my noble friend would hesitate before pursuing that line. The noble Lord, Lord Carmichael, raised the same point. So far everybody has got wrong the amount of testing to be done by opticians. I shall explain that when I wind up. I did not explain this in my original speech because I had to be careful not to speak for too long and to try to keep within 20 minutes. The concept that all these millions of people are to be tested every year is absolutely wrong, and I shall explain why when the time comes.
Lord Orr-Ewing: My Lords, I am advised by the motoring authorities, the RAC and other authorities, that this is so. It is certainly written into the Bill
Lord Mottistone: No, my Lords.
Lord Orr-Ewing: My Lords, I am sorry, but here it is. Am I reading the wrong Bill? I shall quote from it. Clause 2(1) states:
"The holder of a motor vehicle licence endorsed with conditions under section 1(1)(ii) of this Act shall submit himself to an eye test relating to such requirements as are required under section 1(1)(i) by a registered medical practitioner or a registered ophthalmic optician".
That is what the Bill states. It does not refer to unqualified people. My noble friend may want to change it at Committee stage if the Bill is given a Second Reading, but perhaps he will explain it.
I come back to my original point. If I had to promote business I would love to have everyone aged 45—roughly two million a year—coming into my shop, because that is exactly the moment (not for the driving of vehicles, because on the whole long sight lasts much longer than short sight) that we first feel the pressure on our eyes when reading small print, maps and so on. I would love such people aged 45 to come into my shop, and they would be well hooked. "'Come into my parlour', said the spider to the fly". I cannot help reflecting that, however good, honest and professional they are, they must be people who have to meet their overheads and nothing would be better than to have 3·5 million people compelled to have a test.
I should like to go ahead with this Bill, but only after some thorough research has been carried out. No modern research has found it necessary. If the Government feel from what the Select Committee has said and from what my noble friend and others have said that there is some advantage to be gained in the reduction of the number of accidents, then let us found it on solid experience and statistical detail, as at today, on the roads in different lights, in different fog conditions and in all conditions for different ages. Let us found the Bill on statistical testing. It is said that our present test is not good enough. I found the conclusion of the Road Research Laboratory which stated:
"The study has shown that a better standard of vision … is required to pass the numberplate test than had previously been thought. The results suggest that it is slightly more difficult than the 6/12 acuity level required in a number of countries".
It seems from that research that our present system is not only simple but cheap and effective. Until something new comes along, I must oppose the Bill.
8.48 p.m.
Lord Cullen of Ashbourne: My Lords, I should like to congratulate my noble friend Lord Mottistone on introducing this Bill, particularly at a time just after the Transport Committee on Road Safety has reported, to which my noble friend referred.
What has surprised me in the debate so far has been the fact that people seem to require solid proof that eyesight is an important matter in so far as accidents are concerned. I should have thought that this was so obvious that there was no point in arguing the matter. If there is any doubt about it, why is there an eye test at all in obtaining a driving licence? All that my noble

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friend has suggested is that the eye test which has now been going on for 50 years is no longer adequate with the colossal amount of traffic today, its speed, and so on. I am entirely with him on this matter. We should certainly look very carefully, as the Transport Committee on Road Safety suggested, at this eye test.
Some years ago an eyesight screening test of Hampshire police showed that 69 of its officers had vision faults. The chief constable reported:
"the amount of unsuspected eyesight deficiencies in the Force (a body of men as fit or fitter than ordinary members of the public) is surprising and is, perhaps, an indication of a need for members of the public driving motor vehicles to pay more attention to the possibility of their driving standards being impaired by defective vision".
That was the police.
Last October I attended an optical conference in Brighton, where I saw vision screening equipment being displayed and operated by the police. I am informed that vision screening checks carried out both by the Optical Information Council and other bodies consistently turn up a significant number of motorists with an uncorrected sight defect for distance vision. I should like to urge that the Department of Transport should organise regular and co-ordinated vision screening programmes to be carried out by the police. I would also go on to suggest that the existing system of accident reporting should be thoroughly reviewed in order to ensure that defective vision as a factor in accident causation is fully investigated and reported. If that were done, it may well be that my noble friend Lord Orr-Ewing would find that evidence was produced which would make him come along with us, although he does not always agree with me on these matters.
As a chief constable said some years ago:
"I think there can be no doubt that faulty sight is a cause of road accidents, but the way in which accidents are investigated at present does not reveal the extent of this and involved parties do not reveal any defects they may have in this respect".
The noble Lord, Lord Carmichael, was saying that it is the business of somebody who is driving a vehicle to inform if there is anything wrong with his sight or if he has any other impairment, but it is not always that one knows if one's sight is not quite as good as it was a year or two before. This is quite an important matter. It applies particularly in the case of glaucoma which comes upon one without one's knowing it and has the effect of absolutely damaging peripheral vision, and it is peripheral vision which is very important in driving a car, with things coming at you from all sorts of directions.
If the evidence about this whole matter is unclear, let us ask the Road Research Laboratory and the police to carry out a detailed and thorough study of the part played by defective vision in accident causation. Some work has already been done. What we now need is a comprehensive and conclusive study, as my noble friend Lord On-Ewing suggested just now.
In the meantime, the House might like to know that, according to a study carried out in West Germany by the Bavarian Technical Supervisory Agency, drivers who see poorly are involved in accidents four times as frequently as their normally sighted counterparts. Professor Von Hebenstreit summarises his findings as follows:
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"Among those drivers causing accidents later in life, ten times as many exhibit considerable vision deficiencies as those drivers involved in beginners' accidents! Even more dangerous is deficient visual function at night on dark streets. Regardless of age, about one of two professional drivers suffers from some form of night blindness or enhanced susceptibility to dazzle. The alarming thing, and where the real concern begins, is that these results can be applied to nonprofessional drivers as well".
According to this study, every fifth motorist who has been driving for 20 years or more must be considered a higher risk driver due to inadequate eye function.
I hope that I have given some indication that in other places this matter has been looked at and there is considerable doubt as to whether we take sufficient care in this country on the subject of defective vision for drivers. I am pleased to lend my support to my noble friend Lord Mottistone. I think that it might have been better had the Bill been introduced by a noble Lord known for his interest in road safety rather than by my noble friend, who has so valiantly spoken up for opticians in the past.
Optics has been a pretty controversial subject in recent years, and it came as no surprise to me that the noble Lord, Lord Rugby, and my noble friend Lord Orr-Ewing seemed to think that this Bill was some sort of racket for the good of the opticians. It would be very wrong if your Lordships were persuaded by such arguments to ignore what seem to me the obvious dangers of numerous people with defective vision driving anything so lethal as a motor-car, let alone anything larger.
Seeing the decline in the number of accidents since the introduction of seat belts, I acknowledge that I was wrong to vote against the adoption of the legislation, and I voted several times. Many drivers and their passengers undoubtedly owe their lives to seat belts, and I wonder how many others, and how many pedestrians, children and dogs, have forfeited their lives in the past because of drivers who cannot see properly. If we are really concerned with road safety—which we obviously must be—I believe that we should be just as interested in the aspect of drivers' vision as in that of wearing seats belts.
In conclusion, I hope that the Bill will have the sympathy and support of the Government. But if the Government are not able to support the Bill, I hope and trust that further inquiry will be made in order to establish the extent to which defective eyesight is a contributory factor in road accidents.
8.57 p.m.
Lord Brougham and Vaux: My Lords, I should like to congratulate my noble friend Lord Mottistone on introducing the Bill so clearly this evening, but I am afraid that I find myself in some difficulty. Having spoken to him earlier this week and said that I would support him tonight on the Bill, I find that, having read it, taken advice and listened to your Lordships tonight, I am more opposed to it than for it, although it has merits for road safety, of which I am all in favour. But if there were a Division, I think that I should abstain from voting. I shall wait to see what my noble friend the Minister has to say.
I should just like to correct something that my noble friend Lady Macleod said. I think that it was I who put

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her wrong. The RAC is a club and not an association. The association is somewhere down in Basingstoke, I believe.
At this late hour I do not intend to keep your Lordships long. As nearly all that I intended to say has already been covered, there are only a few points that I should like to mention or re-emphasise for and against this Bill. Having said that, like a lot of others, I have to wear glasses for reading, but this does not affect my long vision in any way. If I had any doubt about that, I should wear glasses, as I like to see where I am going and, more important, what the other motorist is doing or where he is going.
My main reason for giving this Bill some support is that there are, to my mind, a lot of people on the road who do not really know where they are going. Whether that is because they are lost or they have bad eyesight is hard to say, but I think that it is the latter, because one sees drivers squinting at road signs with their noses almost on the windscreen, trying to see which way they should go, and therefore making sudden changes in direction, causing other drivers and pedestrians to take evasive action, which can be dangerous.
My second point in giving this Bill some support is—and I am afraid that I have not taken any soundings on this, so I have no proof—that it may give one a better insurance rating with one's insurance company, in the same way as, I believe, a driver who has passed the advanced driving test.
Having said that, my main objection to the Bill and why I oppose it is the probable further financial burden on motorists. In the Budget yesterday, regrettably, the Chancellor of the Exchequer added about £25 a year to the average motorist's driving bill. I know that it does not sound a lot, but £2 a month is £2. This measure, as with doctors' charges for seat belt exemptions, could add £19 or so to the bill. And who knows what is in store for the motorist later this year or even next year?
I am also against the Bill because it is unnecessary for all of us to have eye tests. These can be carried out free, I believe, under the National Health Service. The best eye test of all is the television set. If you cannot see your favourite programme—it may be Coronation Street—because you get headaches, then you need glasses. And you should also wear them for driving. As the House will know, I am all for road safety. The safer the driver, the fewer accidents there are. This saves lives. But there comes a time when the cost of such checks outweighs the potential reduction in road safety.
9.1 p.m.
Lord Brabazon of Tara: My Lords, as this debate has shown, there has been a good deal of interest recently in eyesight standards for driving. Part of that interest has stemmed from the report on road safety prepared by the Transport Committee in another place which recommended that the Government should consider respecifying the minimum visual standards for a driving licence along the lines suggested by the Federation of Optical Corporate Bodies and the Association of Optical Practitioners, and that in
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addition the case for regular vision screening for motorists should be re-examined. The Government are considering these points very carefully and will be responding to them and all the other recommendations as soon as possible. Nevertheless, I welcome the opportunity that my noble friend's Bill has provided for debating this important subject although, of course, what I say this evening is entirely without prejudice to our response to the Transport Committee.
As my noble friend has explained, the main purposes of his Bill are to introduce new and scientifically-based visual standards for drivers to replace the present number plate test; to restrict people who cannot meet the visual standard to driving under certain controlled conditions; and to make compulsory the re-testing of drivers' eyesight every five years for those who have to use spectacles or contact lenses, and for all drivers over the age of 45.
I should say straight away that I welcome any effort to improve road safety. I am afraid that I rather doubt whether the measures which my noble friend has in mind would have any significant effect in reducing the number of accidents on our roads.
Let me deal first with the actual procedure for assessing the visual acuity of drivers. The present number plate test requires a person to read in good daylight—with the aid of glasses, if worn—a registration mark fixed to a motor vehicle at a distance of 75 feet, if letters and figures are 3½ inches high, or at a distance of 67 feet, if letters and figures are 3½ inches high. My Lords, does this provide a reliable assessment of visual acuity? To answer this question clearly involves entering a highly technical area; but, in brief, the evidence we have, derived from ophthalmic research and extensive accident studies suggests convincingly that the number-plate test does institute a perfectly satisfactory standard for safe driving.
Furthermore, it has the distinct advantage in that any driver can undertake the test for himself and it can be easily administered at the time of the driving test by driving examiners or when necessary by the police. Replacing this easy and cheap method with the sophisticated equipment my noble friend proposes would clearly not only be very costly indeed but would also involve sacrificing the advantages of simplicity and convenience that the current procedure involves.
I turn now to whether there is a case for requiring periodic vision tests for drivers. All holders of driving licences have a statutory responsibility to ensure that their eyesight meets the required standard. How far is this requirement being met? A survey conducted by the Transport and Road Research Laboratory in 1980 presented a fairly reassuring picture in this respect. The results suggested that only around 1 to 3 per cent. of the driving population as a whole would fail the number plate test at any given time.
Research aimed at assessing the extent to which poor eyesight is actually a contributory factor in accidents also provides a generally encouraging picture. A study by the Transport and Road Research Laboratory, based on data from the USA, failed to identify any direct relationship between poor visual performance and high accident rate for drivers in the young and middle-age category. There was,

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admittedly, a slight suggestion of a link between poor vision and rate of accident for older drivers—in this case those over 54 —but the evidence was far from clear. The fact is that older drivers still remain less accident-prone than drivers overall and certainly less so than the under-25 age group. Older drivers do appear able to adapt to their perceptual limitations—including any visual defects—unless they are impaired to a rare degree.
A system of regular compulsory eyesight checks for drivers throughout their driving careers would doubtless be very complicated for the Department of Transport to administer and the costs would be very substantial indeed. These could of course be passed on to the drivers themselves in part or in full but this would inevitably cause widespread resentment. The noble Lord, Lord Carmichael, asked if I could give any estimates of the likely costs. I am a little nervous about giving him an estimate for the cost of the regular five-year inspection as I am not quite clear, until my noble friend explains, whether this test will be conducted by optometrists or not. However, so far as the driving test goes, for people taking it for the first time, there are 400 driving test centres in the country. If each had to have a screener, my noble friend mentioned a figure of £1,200. Maybe that could be reduced a little. In any case, it would be a lot of money. We also estimate that the driving test would take about quarter of an hour longer than at present. This would require a further 400 driving examiners. There is also the question of accommodation in the test centre. There is simply not the accommodation available at the moment in all of them, and they might have to re-locate. This would be expensive. It is difficult, I am afraid, to give an actual figure.
Quite apart from the financial penalty, there would be a clear implication that people were not considered capable of ensuring that their eyesight met the standard required. And on the basis of the evidence available—that only 1 to 3 per cent. do not meet the requirement—it would be hard to answer criticism of such a measure.
It goes without saying that good eyesight is of vital importance for safe driving. But I believe that any proposal to devote additional resources to this aspect of road safety must be viewed against the background of the evidence available to us which indicates, first, that the vast majority of drivers are able to satisfy the existing eyesight standards; and, secondly, that visual defects cannot be regarded as a significant factor in road accidents. A much more immediate and difficult problem seems to be that people just fail to make proper use of the perfectly adequate eyesight that they actually have. That is not something which can readily be solved by legislation of the kind we have before us—or indeed any other kind.
My noble friend Lady Macleod mentioned prosecutions and the fact that she never appeared to find anyone prosecuted when she was sitting on the Bench. It is true that there are very few prosecutions. But the police do have the powers. Under Section 91(2) of the Road Traffic Act 1972 the police may require a person to take the number plate test using no other means of correction than he used at the time of driving if they have reason to suspect that his eyesight
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is not up to the required standard. Driving with uncorrected defective eyesight is an offence under Section 91(1) of the Road Traffic Act 1972. The penalty is a fine of up to £400 and the imposition of two penalty points on the driving licence.
The Government are looking carefully once again at all the evidence in the light of the recommendations of the Transport Committee. We shall also want to take note of all that has been said by noble Lords in the course of this very useful debate this evening. But our initial reaction to my noble friend's Bill must be to say that it is very far from certain that the measures he is proposing would produce road safety benefits that were anything like commensurate with the very substantial costs that would be involved.
9.9 p.m.
Lord Mottistone: My Lords, I should like to thank every noble Lord who has taken part in the debate, even those who have clearly misconceived what the whole thing is all about. I think it will be easier if I deal first with one or two of the peripheral points and then, at the end of what I have to say, come to the main issue of how I see these tests being carried out and what the burden would be on official bodies generally.
I welcomed what the noble Lord, Lord Carmichael, said about the fact that things which seem irksome to begin with become acceptable. He quoted the MOT test, drinking and driving, and seat belts. I like to think that this might turn out to be the same. After all, the seat belts took five years to get through both Houses of Parliament. Though I should like to think, for the benefit of the people who otherwise are going to die—I mean that—that we could do it a little faster this time, that is the sort of comparison I make. The other main point that the noble Lord, Lord Carmichael, made comes under the general heading: how would it work? Perhaps we may come to that later.
I welcome very much what my noble friend Lady Macleod had to say. I think this is terribly important. All noble Lords who spoke, including my noble friend Lord Orr-Ewing, agreed that the statistics are not good enough. My noble friend the Minister mentioned that the Transport and Road Research Laboratory had said it had studied this and that and had come to the conclusion that there was no correlation between accidents and inadequate eyesight. Thanks to my noble friend the Minister—I must thank him for it—I went to visit the research laboratory. We went through all the evidence it presented to us; some of it we had already. I think it is fair to say that at that time we agreed that evidence was very scarce. One of the reasons it was very scarce was that, to start with, people had not tackled the problem from the right end.
That comes back to what my noble friend Lady Macleod said. The police are not putting in evidence because nobody has triggered them off to do it, and the magistrates are not thinking about it. I think that if we could get things going on that front, even if it is shown that there is not a correlation at least we should have something positive to go on, which is really what the Select Committee of another place was also saying. Above all else, the immediate need is for this evidence. I think that what my noble friend Lady Macleod said was probably the most important contribution to the

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whole debate, because it is the one thing that people had not really thought of before.
I should now like to turn to what was said by the noble Lord, Lord Rugby, who has come up with his usual rather bitter approach—I hate to put it that way—to the opticians. If your Lordships wonder why I call it a bitter approach, I would call your Lordships' attention to cols. 159 and 160 of Hansard of 12th March 1985, where there is a Question by the noble Lord, Lord Rugby, for Written Answer. It is effectively refuted by my noble friend Lord Glenarthur. It is not a very pleasant approach to the problem.
When he mentioned my friend the optician who said he had trained himself as a driving instructor as well as being a qualified optician he jumped at once to the conclusion that he was doing the two things together. In point of fact, I am happy to say to him that he found that he could make a satisfactory living as an optician, and therefore he has never actually had to practise as a driving instructor; so his deduction was not right, but it is typical of his approach to the whole problem. As my noble friend Lord Cullen said, it would be very much better if I had been one of these dedicated road accident people instead of a fellow who is interested in optics. Then perhaps we should not have had this slant, which I do not think has helped the debate.
The noble Lord, Lord Rugby, made various comments about the enormous amount of research that has taken place. I have not discovered it, but I was very interested to learn that the noble Lord has done so. If the noble Lord has that research, perhaps he will send it to me, and I can see what it is like. He mentioned that these provisions would be massively intrusive into individual life and that they would be draconian. I shall deal with those points when I summarise the misconceptions. I am sorry about the misconceptions, and I should perhaps have dealt with them earlier.
I was delighted when my noble friend Lord Orr-Ewing said that he would support the Bill if he believed it. He also said that he agreed with research. However, apart from that and a slight misconception about one of the reports which he had read—and it is easy to be selective as regards reports—his main points were matters with which I shall deal in a minute. I should like to thank my noble friend Lord Cullen very much for his support, for the points that he made and for the other interesting factors that he mentioned. I trust that my noble friend the Minister will take note of what my noble friend Lord Cullen had to say.
I liked the support which I received from my noble friend Lord Brougham. I am sorry that he was biased away from support because again he got the wrong end of the stick thanks to it being given to him indirectly from briefs obviously produced by the AA and the RAC. I am intrigued that the AA never sent me a copy of their brief; I am a member of that association and so I think that that is an insult. I hope that the AA get to hear about that because I might consider switching to something else. However, I think that the RAC were even beastlier, so I am not sure that that would be a good swap.
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Let me explain how I see the picture. Let us take the young chap who is aged approximately 18 and who takes a driving test. When he takes his test he also has an eye test using the screening apparatus that I have outlined to your Lordships. That would throw up a great many more things than just the visual distance acuity, which I have also recounted to your Lordships and which I could recount again if you so wish. In particular, such a screening will spot defects as regards colour and, more important, tunnel vision, which is one of the great worries. As I understand it, this is not a 15-minute exercise, or anything like that. Therefore, I think that perhaps my noble friend the Minister has been misinformed in that respect. The equipment does not cost very much and it will cost very much less if used widely enough. Indeed, if the need were found for it it would be possible to devise a piece of equipment which was even more relevant to the task and which would be cheaper still.
Anyway, the young fellow takes the test. In over 90 per cent. of cases it will say, "You are okay" and therefore he will get his licence and drive away. He will not bother about what we are talking about today until he is 45, and I shall come to that matter in a minute. As regards the 7 or 8 per cent.—I do not have an accurate figure but it is certainly under 9 per cent.—who have to have visual aids, most will already have them because they would have discovered the need for them when they were children. Therefore, they will already have spectacles and they will pass the test.
We shall then be left with a relatively small number of people who do not realise that they need spectacles. The screening will tell them that they do need them. I should be very surprised if there were very many of them, and I say that for one very important reason. I have found that I need the type of spectacles that I have now, which are good for driving, in order to look at the television. That point was mentioned by my noble friend Lord Brougham. Therefore, it is very possible that most of the people who would have failed the test if they did not have spectacles for driving, will already have them for watching the television. Therefore, it will not add to the cost because they will already have spectacles.
There will be a very small number of people who have been avoiding wearing spectacles, who have not had them, who want a driving licence and who therefore have to take the test. Having taken the first test, they will then be told by the driving examiner, "Before I can give you your certificate to get your driving licence, you must have your eyes tested by an optician and he will have to prescribe spectacles for you". They will have probably reached the stage where they need to have spectacles anyway. However, as I have already said, we are talking about a relatively very small number of people. There are not millions of them; they comprise a very small percentage of the total. Most people either have spectacles or they do not need them.
Let us move on to the age 45. I do not want to waste your Lordships' time, but I cannot resist telling you a funny story which is relevant to this matter. My noble friend Lord On-Ewing may say that the Select Committee did not hear from the eye surgeons and

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that therefore they did not hear from the people who really knew about the matter. Opticians know a great deal. They may not know everything and they do not know how to undertake eye surgery, but that is not what we are talking about. They have a great deal of knowledge and experience. When I was about 45 I first had to have spectacles for reading. I was in Canada and a friend of mine, a Canadian admiral who was about my age, discovered that he had left his spectacles at his home when he arrived for work. He was working at headquarters in Canada as a senior naval officer. He has to borrow his secretary's spectacles for immediate reading. This was in the mid-1960 when secretaries had ornate specs which went up at the corners. He was sent for by the Minister, because he was working close to the Minister, and he could not use these spectacles because he would be too ashamed of them.
He rang up the surgeon rear admiral and said, "I want a pair of specs". The surgeon rear admiral said, "Certainly" and sent them across. He went into the meeting; that went very well, and when he got back he thought, "Why on earth did the doctor know what specs I wanted?" He rang him up. The doctor said, "Well, all naval officers of your age automatically require specs of a certain size for reading", and so he gave them to him.
That is why 45 is the right sort of age to have this sort of test. It happens to the vast majority of the public. You are a driver with a driving licence, and at 45 you get yourself checked. The Bill says that you should be checked by an optician. I do not think that that is really necessary, and I would be prepared to amend it there. You can be checked by this instrument we have been talking about which might make it simpler, but it would be just as simple if you were checked by the optician and it would not involve much time. For 95 per cent. of us it would probably say that we require reading glasses, as I did and many of us do at that age. One does not need them for driving but does for reading. I found at that sort of age that my arms were getting too short, and I expect that any person concerned would be finding that, too. He will need glasses for reading but not for anything else.
Having got his spectacles at 45 for reading he would probably go back to the optician—I certainly did, and I think most people do so—even without this pressure, to have his eyes tested again when he was about 50, or even a little earlier. It is not adding a great burden of millions of people having to be tested at great expense and extra work, with extra money for the opticians. It is going to make a marginal difference to the relatively few people who, for one reason or another, are not getting spectacles when they should do.
I understand that mostly when that is so it is because of vanity on the part of women who try to put off having specs as long as they can. There is the situation. There is not a great enormous cost such as my noble friend the Minister was saying. I am surprised that he was advised to say that. It is nothing in the area my noble friends Lord Rugby and Lord Orr-Ewing were talking about. It involves a relatively marginal number of extra spectacles which should have the effect of making sure that more people read better.
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I have one final point, because I have spoken for three minutes too long. Since I introduced this Bill I have felt that it would be dreadful if I had an accident and was found not to be wearing specs, when this Bill was coming before your Lordships' House. I have therefore been applying to myself—and this is important—the same discipline as I apply to myself in the case of seatbelts. I go to my car, put my seatbelt on, and make sure that I have my specs on because I know from practical experience that I need them to drive. Going from here to my flat in London I often did not bother, because it only takes five minutes; but that is the sort of time when it ought to matter, that is when you have the trouble.
Coming back to what the noble Lord, Lord Carmichael, said, the relevance of the seatbelt legislation is strong. This Bill, or something like it—and I am willing to amend it to suit the detail which might be necessary—will not affect 99 per cent. of drivers at all, because the ones who need specs have them and the only ones who will be affected are those who for some reason or another have not got specs and should have them. But because there will be legislation it will encourage the ones who need to do so to put their specs on to drive. That will make them not only better at seeing things but also more aware of looking.
That is where my honourable friend the Minister in another place, Mrs. Lynda Chalker, comes in, because she says that we must have the people who have the eyes to look. I quite agree; but this tiny piece of legislation, similar to the seatbelt legislation, which makes one wear a seatbelt when one might otherwise leave it off, will hopefully do the same for spectacles, I have no hesitation in pressing the Motion that this Bill be now read a second time.
9.26 p.m.
On Question, Whether the Bill shall now be read a second time?
Their Lordships divided:

DIVISION NO. 1

CONTENTS

Cullen of Ashbourne, L. [Teller.]

Mottistone, L. [Teller.]

Raglan, L.

Macleod of Borve, B.

Saltoun, Ly.

NON-CONTENTS

Monson, L.

Rugby, L. [Teller.]

Orr-Ewing, L. [Teller.]

9.34 p.m.
The Deputy Speaker (Lord Airedale): My Lords, as it appears that fewer than 30 Lords have voted, in accordance with Standing Order No. 55 I declare that the Question is not decided and the debate thereon therefore stands adjourned.

London Docklands Railway (No. 2) Bill
The Queen's Consent signified; Bill reported from the Unopposed Bill Committee with amendments.
House adjourned at twenty-five minutes before ten o'clock.

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