Sitting of 7 May 1985

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

PRIVATE BUSINESS
ROYAL HOLLOWAY AND BEDFORD NEW COLLEGE BILL [Lords]
Order for Second Reading read.
To be read a Second time tomorrow.
GLENSANDA HARBOUR ORDER CONFIRMATION BILL
Considered; to be read the Third time.

Oral Answers to Questions
  EMPLOYMENT

    Wages Councils
    Mr. Robert Hughesasked the Secretary of State for Employment what representations he has now received in response to the consultative paper on wages councils.
    Mr. Thurnhamasked the Secretary of State for Employment what recent representations he has had about the possible abolition of wages councils.
    The Secretary of State for Employment (Mr. Tom King): I have received a number of representations this year on the future of the wages councils system, the majority advocating either abolition or major reform.
    Mr. Hughes: Has the Secretary of State seen the survey published yesterday in Manchester, which shows that 43 per cent. of companies visited by wages inspectors were illegally underpaying some or all of their workers? Does the right hon. Gentleman recollect the statement by Winston Churchill when wages councils were first set up, pointing out the benefits of a wages protection system, and saying:
    "without such a system the good employer would be undercut by the bad and the bad employer would be undercut by the worst"?
    Does not that statement still hold good today? In view of the evidence about the need to strengthen wages councils, will the Secretary of State therefore abandon all plans to abolish them?
    Mr. King: The hon. Gentleman knows that I have invited responses to the consultation paper that I issued. I take that to be his response, and I shall take it into account together with the other representations on the matter.
    Mr. Thurnham: Does my right hon. Friend agree that when people are put out of work by the activities of wages councils, that is difficult to defend?
    Mr. King: There is evidence of jobs being lost through the operation of wages councils, but the other important point is that is it generally agreed that the abolition of wages councils could lead to the creation of a significant number of jobs. That is the advice of the economic adviser to the Leader of the Opposition. He puts a lower figure on it than some, but concedes that it is likely to lead to more jobs.
    Mr. Meadowcroft: Are not the conditions for the low paid even more difficult now than they were 70 years ago when the regulations were first introduced? Surely, where there is a large amount of unemployment, the pressures on people at the lower end of the market will be ever more difficult to cope with. Is it not important to maintain some protection to make sure that people are not exploited by the high amount of unemployment?
    Mr. King: I note the hon. Gentleman's comments, precisely because I wish to expose all the arguments for and against the existence and reform of wages councils in relation to the consultation paper that I issued. I shall take careful note of the representations that I receive.
    Mr. Colvin: Does my right hon. Friend agree that it could be most unwise to abolish wages councils if the unemployed could draw more money on the dole than they were likely to earn if pay were deregulated? Will he therefore give an undertaking to the House, before abolishing wages councils, that he will do something about the so-called "Why work?" syndrome, which at the moment detracts discourages people from trying to earn low pay?
    Mr. King: I accept my hon. Friend's point that in certain circumstances the present system acts as a disincentive to employment. It is precisely for that reason that we sought, for example, to tackle the problem of national insurance contributions and make changes in that respect, as well as in tax thresholds, which can help in those areas. However, my hon. Friend will know that that is one other illustration of the way in which the circumstances are substantially different from what they were in 1909.
    Mr. Leighton: As the Secretary of State knows, his Department has commissioned some major research from a group of Cambridge economists and researchers. One of its main conclusions was that the wages councils had had no significant effect on employment. Why has the Department not published that major report? When will it be published to inform the present public debate?
    Mr. King: I am surprised that the hon. Gentleman asks that question, because the report was made available to him and to other members of the Select Committee some time ago and it is about to be published generally. We intend that the document will be published, if not this week, next week.
    Mr. Brandon-Bravo: In considering this most important matter, will my right hon. Friend pay particular attention to redefining the term "adult skill", to open up the market to young adults?
    Mr. King: I understand my hon. Friend's point. One of the distinctions that is it interesting to draw is between the more simple form in which the wages councils were set up under the initial concept and the more complex way in which they are formed now. That is one of the many reasons why so many people support reform.
    Miss Boothroyed: Is not aiming their guns at the poorest paid in the country a sign of the abject poverty of the Government's approach to reducing the total of 4 million unemployed?
    Mr. King: Differing figures are put on the possible increase in employment as a result of such a move, but they could not be ignored by any responsible Government determined to use every effective approach to help solve the biggest problem that we face.
    Mr. John Townend: I draw the attention of my right hon. Friend to early-day motion 580 calling for the abolition of the wages councils. Is he aware that it is sponsored by the chairmen of the major Back Bench committees on finance, employment, trade and industry, small businesses and European affairs?
    Mr. King: I am aware of my hon. Friend's close interest in this matter and of the early-day motion. We are in the consultation period at the moment, which will close at the end of the month. We shall then give the earliest possible announcement of our decision.
    Mr. Evans: Will the Secretary of State acknowledge that the attitude of most Tory Members who call for the abolition of wages councils, particularly those such as his hon. Friend the Member for Bridlington (Mr. Townend), results from the expectation that wages in those sectors will fall, even though the people covered by wages councils' awards are among the lowest paid in the country? Does that not sum up the present mean and savage attitude of the Tory party towards ordinary hard-working people?
    Mr. King: There is a much more fundamental problem, which the hon. Gentleman must be prepared to address. In certain instances it can be demonstrated that wages councils keep down rather than put up wages, and I shall be happy to explain that point to the hon. Gentleman. In other sectors there is no doubt that it has led to the loss of jobs and job opportunities. The House must consider carefully whether it can stand aside from reform or abolition if that would lead to a substantial increase in jobs.

    Labour Statistics
    Mr. John Fraserasked the Secretary of State for Employment how many people, including school leavers, are now unemployed in Lambeth; and how many of them are black.
    The Parliamentary Under-Secretary of State for Employment (Mr. Alan Clark): On 11 April 1985 the number of unemployed claimants, including school leavers, in the London borough of Lambeth was 25,986. A breakdown of unemployment by ethnic origin at local level is not available.
    Mr. Fraser: That figure, which is an increase on last month's, is disgraceful. Can the Under-Secretary recall the Minister telling us last month that one of the reasons for the loss of job opportunities in Lambeth was high rates? Bearing in mind that rate capping will lead to the loss of 1,500 to 2,000 jobs, is he calculating that there will be a net gain in jobs as a result of rate capping?
    Mr. Clark: The hon. Gentleman represents a constituency in which the council has doubled the rates over the past two years, so he would do better to stay off
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    that subject. As he knows, over the past year both vacancies and placings have risen by as much as 18 per cent. in his constituency.
    Mr. Rowe: Is my hon. Friend aware that in Lambeth during the past 10 years the number of members of the chamber of commerce has fallen by more than half, in direct proportion to the increase in rates?
    Mr. Clark: My hon. Friend's figures show the decline in the number of small businesses and the fact that employment now depends on the public corporate sector and on the service industries.
    Ms. Clare Shortasked the Secretary of State for Employment what are the current numbers of people who have been unemployed for over 12 months.
    Miss Maynardasked the Secretary of State for Employment what are the numbers of people under the age of 25 years who have been unemployed for over 12 months.
    Mr. Alan Clark: On 10 January 1985 a total of 1,316,000 claimants had been unemployed for more than one year in the United Kingdom. The number of claimants under 25 years of age who had been unemployed for more than one year was 365,000.
    Ms. Short: Does the Minister understand, or care, that those 1·3 million people are suffering the most brutal effects of the Government's deliberate high unemployment policy? They suffer real poverty, because the Government insist that they should live on short-term benefits and will not pay the long-term rate of supplementary benefit. We know from studies that they suffer a high incidence of family break-up, mental illness and suicide. Do the Government suggest that their recent paltry expansion of the community programme is an adequate response to their needs, when it will offer part-time, temporary work at low wages, and then throw the vast bulk of those people back into unemployment? They want real, permanent jobs.
    Mr. Clark: The considerable expansion of the community programme by 100,000 places has been widely welcomed. The hon. Lady must face the fact that our policy is to match needs and resources. The proportion by which that is done is a matter for debate, but the Government's approach to the problem was recently endorsed by our partners at the economic summit. Their unemployment is increasing faster than ours.
    Mr. Forman: Since a disturbing proportion of the long-term unemployed have been out of work for more than three years—the estimate is about 430,000 do my hon. Friend and the Department intend to make special new efforts to direct programmes to their needs, especially is the area of training and re-training?
    Mr. Clark: We shall consider all possibilities. My hon. Friend published an interesting pamphlet on the subject. However, it is impossible to escape the fact-that resources are limited and that the Government already spend £2 billion on training and employment measures. If my hon. Friend believes that that total should be increased, he has only to make representations to us.
    Miss Maynard: Does the Minister agree that one of the worst scandals is the number of young people who are long-term unemployed? Is he aware that 1·3 million 18 to

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    25-year-olds are on the scrap heap, that a quarter of those have been unemployed for 12 months, and that nearly half of them have not had jobs since they left school? When will the Government change their policy and give youngsters some hope and the opportunity of making a positive contribution to society by having real jobs?
    Mr. Clark: I understand the hon. Lady's indignation, but I must tell her that the figures from her constituency show that the overall percentage of young unemployed has fallen during the past year, as has the number of youngsters aged under 18 in long-term unemployment.
    Mr. Lyell: Is not one of the significant aspects of the community programme and other cost-effective programmes, such as the voluntary projects programme, that once people get into work in such programmes their chances of moving to mainstream employment are much better? Therefore, will my hon. Friend encourage further programmes of work in the community, such as helping the frail elderly, so that people may move from such useful employment back into mainstream work?
    Mr. Clark: My hon. and learned Friend is entirely right. The scope and complexity of the schemes are being expanded. More than 61 per cent. of participants are aged under 25, and 34 per cent. are aged under 21.
    Mr. Kennedy: Given that the Government are fond of claiming that part of the problem of increasing unemployment is people pricing themselves out of work, will the Minister comment on a recent inquiry, sponsored by the Highlands and Islands Development Board, which showed that average earnings in my part of Scotland were between 5 and 10 per cent. below the national average? As unemployment has more than doubled there, where does that leave the Government's economic theory?
    Mr. Clark: It is natural that wages should vary from one region to another. The Government have no responsibility for regional variations in wage levels.
    Mr. Roger King: Does my hon. Friend agree that one way not to help the unemployed is to indulge in knocking our own products? Will my hon. Friend join me in condemning the Opposition's attitude of throwing into doubt BL's future as a result of scurrilous rumour-mongering that 5,000 jobs in my constituency are at risk, simply because BL will not receive the money for which it has not actually asked?
    Mr. Clark: My hon. Friend has highlighted the key factor in reducing the total number of unemployed, which is that British goods should be of the right quality and at the right price to expand production.
    Mr. Allan Roberts: Will the Under-Secretary of State come to Bootle to meet the long-term unemployed? Bearing in mind that 30 per cent. of active males in Bootle are unemployed, will he explain to them why, in an area where wages are lower than anywhere else in Britain, and where the metropolitan district council has set the lowest rates in the country, unemployment is still increasing?
    Mr. Clark: The reasons have been highlighted in earlier questions. Real jobs will not exist if British manufacturers do not produce the goods to fill their order books.

    Training Workshops (Genesis Programme)
    Mr. Nicholas Bakerasked the Secretary of State for Employment if he will make a statement about the Genesis programme for training workshops launched by the Manpower Services Commission.
    The Minister of State, Department of Employment (Mr. Peter Morrison): The Genesis programme seeks to explore the potential for job creation and revenue generation in training workshops and information technology centres.
    Mr. Baker: Does my hon. Friend agree that giving training workshops a more commercial approach in this way has great implications for YTS generally? Will he attend the launch of this scheme today? Will he also expand funding for it in the future, because that would be a great way of producing new jobs?
    Mr. Morrison: I agree with my hon. Friend that this is precisely the enterprise ethic that we want to encourage in both information technology centres and training workshops. My hon. Friend will be glad to hear that I shall attend the launch later today.
    Mr. Campbell-Savours: Does Genesis receive support from the European Community social fund? In the light of the most recent changes in the allocation rules and the fact that Britian will lose, will the Minister come forward with additional moneys from other sources to compensate for the loss of individual schemes?
    Mr. Morrison: As the hon. Gentleman will realise, the premise of his question is incorrect. We are pointing out to the European Community social fund that its rules have not changed and neither have ours. Therefore, there is no loss at this stage on which the hon. Gentleman can base his premise. The Genesis programme is funded by YTS money and, therefore, it does not receive money from the European Community social fund on the margin.

    Trade Unions (Ballots)
    Mr. Nichollsasked the Secretary of State for Employment if he will introduce legislation to require that elections for trade union officers take place only by independently supervised ballots.
    The Parliamentary Under-Secretary of State for Employment (Mr. Peter Bottomley): The provisions of part 1 of the Trade Union Act 1984 on trade union elections come into effect on 1 October 1985. The legislation will for the first time introduce stringent safeguards concerning, for example, secrecy, freedom from intimidation and malpractice.
    Mr. Nicholls: If, as with the Transport and General Workers Union affair, it becomes clear—even within the largest trade unions—that the trade union movement cannot be trusted to conduct fair and independent elections, will my hon. Friend concede that our legislation might have to go further? Will he ensure that those elections take place under independent supervision?
    Mr. Bottomley: I think my hon. Friend will accept that independent supervision would virtually rule out workplace ballots, which have a record of far higher participation than postal ballots. I think that every hon. Member would agree that it is up to the trade unions to

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    ensure that their election procedures develop the trust and confidence that their members expect and that trade union leaders need if they are to carry any credibility.
    Mr. Haynes: Is not this response in relation to ballots for trade union officers a bit thick, coming as it does from the Tory Benches? Is the Under-Secretary of State aware that a fair amount of fiddling in the election of Conservative university students has gone on, especially at Durham, not many years ago?
    Mr. Bottomley: The answer to the hon. Gentleman's first question is no. I do not have enough information to comment on his second question.
    Mr. Leigh: Would my hon. Friend be somewhat worried if people voting in workplace ballots were being handed so-called branch recommendations telling them to vote for candidates which did not mention the fact that they were all members of the Communist party, as has been happening this week in the Civil and Public Services Association elections? Does that not prove the need for independently supervised secret postal ballots?
    Mr. Bottomley: It demonstrates the need for moderates to get themselves organised and put up for election. The interesting point about the election to which my hon. Friend referred is that there were three slates of candidates. It will be interesting to see who won.
    Mr. Nellist: Given the Minister's and his party's touching, if bogus, concern for democracy, when will he legislate for or promote the introduction of democracy into the Tory party for the election of its chairman or leader, or for the election of newspaper editors?
    Mr. Speaker: Order. The question relates to trade union officers. I do not believe that any of the people mentioned by the hon. Member are trade union officers.
    Mr. Robert Atkins: Does my hon. Friend recall that the statement made by the hon. Member——
    Mr. Nellist rose——
    Mr. Speaker: Order. The hon. Member for Coventry, South-East (Mr. Nellist) has been here long enough and is ingenious enough to get his question in order. None of the officers whom he mentioned has anything to do with trade unions.
    Mr. Nellist: Consider the——
    Mr. Speaker: Order.
    Mr. Atkins: Is my hon. Friend aware that the legislation which comes into force on 1 October is some of the legislation that the hon. Member for St. Helens, North (Mr. Evans), supported by the deputy leader of the Labour party, said would be repealed following the election of a Labour Government? Does he not think that that is a ridiculous state of affairs?
    Mr. Bottomley: Yes, Sir. The Opposition are likely to discover that they will have to change their tune. The evidence shows that almost without exception trade union members want the chance to take part in free and fair elections held without malpractice and intimidation, and with a fair choice of candidates.
    Mr. Penhaligon: Does the Minister believe in mass ballots, or, If they take place without independent supervision and scrutiny, that they can ever be above suspicion?
    Mr. Bottomley: The hon. Gentleman might consult some of the other members of the alliance, who cheerfully voted against such proposals when they were first put forward. We need to strike the right balance between improved participation and ensuring that election procedures are not just fiddle-proof but incompetence-proof.
    Mr. Greenway: Is my hon. Friend aware that I have seen the membership cards of many members of the Transport and General Workers Union in my constituency which were stamped "GS" last June to show that they had voted in the ballot for a new general secretary, although they had never seen a ballot paper or signed or voted? That is something that must be tackled. Will my hon. Friend throw the matter straight back to those members of the Labour party who ask "Where is the evidence"?
    Mr. Prescott: The hon. Gentleman should take it to the TGWU if that is his attitude.
    Mr. Greenway: I have done that.
    Mr. Bottomley: If I may answer, rather than the hon. Member for Kingston upon Hull, East (Mr. Prescott), it is because of such queries that the TGWU has decided to re-run the ballot. My hon. Friend should advise his constituents to take up the matter with TGWU headquarters. I know that Moss Evans wants to investigate any such complaints.
    Mr. Skinner: Does the Minister understand that the next Labour Government will have every justification for repealing the laws on trade union ballots and bringing them into line with doctors, lawyers and those sponsored members of the Liberal party and the SDP who are backed by £188,000 from the British School of Motoring?
    Mr. Bottomley: No, Sir. It is important to ask ordinary trade union members their views and the procedures that they want. Those unions which have procedures which are above reproach are those which have the greatest support of their members.

    Labour Statistics
    Mr. Blairasked the Secretary of State for Employment what are the present numbers of people unemployed; and what were the figures for the same month in 1979.
    Mr. Nellistasked the Secretary of State for Employment what are the current numbers of people unemployed; and if he will make a statement.
    Mr. Tom King: On April 1985 the total number of unemployed claimants in the United Kingdom was 3,273,000. The estimate for the same month in 1979 was 1,261,000.
    Mr. Blair: Do not those record jobless figures make a mockery of the Government's claim that the economy is recovering? Is the Minister aware that youth unemployment in parts of my constituency is now over 50 per cent.? When will he realise that words about caring, without action to back them up, merely add the insult of insincerity to the injury of mass unemployment?
    Mr. King: The hon. Gentleman will note that the figures appear the very day after the best forecast from the CBI for many years. There is a startling improvement in

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    optimism in industry, an indication that the loss of jobs in manufacturing may be coming to an end, and there are encouraging figures for the creation of new jobs. We still face very real difficulties, especially in areas such as that represented by the hon. Gentleman. However, we need to see both the employment and the unemployment figures in perspective.
    Mr. Nellist: Does the Secretary of State not realise that we cannot feed unemployed families on forecasts? They need money from a job. As the figures which the Secretary of State has announced today show a trebling of unemployment during the past six years, does he still hold to the assertion that we are in the fifth successive year of economic growth? What effect on the long-term unemployed does he expect from the proposal to abolish the wages councils? How does lowering the wages of women and youths in hairdressing and other retail trades—wages of £60 or £70 a week—help the nearly 5 million people who cannot get a job in this country?
    Mr. King: On the latter point, the hon. Gentleman will have heard the exchanges and will know that there is general agreement that abolition or reform of wages councils could lead to the creation of a significant number of new jobs. The issue that must be decided is whether that is an appropriate way to proceed, which is why we are holding consultations on that matter.
    Growth is the vital component if we are to make a real impact on the level of unemployment. I welcome the current forecast that this year we shall have the fastest growth rate in employment of any country in western Europe. In addition, we now have more investment in manufacturing industry as well as in service industries. Obviously, that needs to proceed faster if there is to be a real impact on employment.
    Mr. Adley: While accepting that the sneers of the Opposition at the number of new jobs being created are inevitable and predictable, may I ask whether my right hon. Friend has noted that they appear to be running a campaign implying that part-time employment is not only undesirable but anti-social? Does my right hon. Friend agree that, in a modern family, part-time jobs fulfil many people's aspirations? Will he do his best to ensure that, at least in his Department, part-time employment is regarded as a thoroughly proper, sensible and normal attribution of the figures and the information that he provides to the House?
    Mr. King: I certainly accept my hon. Friend's comment. It is true that there have been 600,000 more jobs during the past two years, a significant number of which are part-time. However, that conceals and overlooks the fact that there has also been a substantial increase in self-employment. It is clear that there has been an increase in full-time jobs for men as well as for women.
    Mr. Wilson: How does the Secretary of State explain the April unemployment figures running at record levels and in defiance of seasonal trends? Does he not know that 40 years after the ending of the second world war, certainly for most people in Scotland, it would be far better if the initials VE stood for victory in employment rather than victory in Europe?
    Mr. King: I do not think that there is one hon. Member who does not wish to see a significant improvement in the unemployment problem at the earliest possible moment.
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    We are doing better in that respect than, for example, the Socialist Governments of France and Italy, and I hear that in mind when I hear the easy solutions put forward by the Opposition. I accept that we must do better. All our efforts and some of the changes announced in the Budget are directed precisely towards trying to improve the position.
    Mr. Holt: Does my right hon. Friend realise that last week there were 1,000 advertised vacancies in the Thames Valley jobcentre, yet in my constituency there were only 18? What is he doing to improve the flow of information between jobcentres throughout the country, and then to assist people to relocate?
    Mr. King: I recognise that there are undoubtedly parts of the country where the greatest problems now are skill shortages and the number of vacancies, whereas in other parts, such as my hon. Friend's constituency, the position is far from that. We are taking steps to improve the information flow so that people have the best opportunity of going where there is employment. However, we obviously want to see an improvement in employment throughout the country, which is the real solution to the problem.
    Mr. Tom Clarke: Is the right hon. Gentleman aware that 25 per cent. of those unemployed in Coatbridge, in my constituency, have been without work for two or more years and are desperately seeking jobs? Will he discourage his colleagues from referring to the "Why work?" syndrome and accept that that phrase is grossly offensive and adds insult to injury?
    Mr. King: That is apposite to what I said when replying to the supplementary question asked by my hon. Friend the Member for Langbaurgh (Mr. Holt), that there are considerable variations in the employment situation in different parts of the country. It is fair to point out that the greatest number of long-term unemployed in Britain are in London and the south-east. That raises problems, bearing in mind the number of vacancies that exist in the area, about whether there are real disincentives to work involved in the "Why work?" syndrome.
    Mr. Phillip Oppenheim: Will my right hon. Friend remind Opposition Members of the increase in the number of people of working age in the last five years and the significant contribution that that increase has made to the unemployment problem?
    Mr. King: My hon. Friend is correct to cite that point. Something under 1 million has been the increase in the population of working age. It is clear from the figures that in the last year alone the increase in the labour force was 480,000. We created about 340,000 more jobs, but because the figure for the increase in working population was greater, we continued to have the rise in unemployment.
    Mr. Janner: Is the right hon. Gentleman aware that the question asked by my hon. Friend the Member for Sedgefield (Mr. Blair) was not how many claimants there were for unemployment benefit but how many people were unemployed? When will the right hon. Gentleman admit that there are about 4 million people now looking for jobs?
    Mr. King: The hon. and learned Gentleman knows—because we have discussed this subject in another forum—that the latest academic study of which l am aware demonstrates that one can, on a perfectly sound

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    basis, argue that the present level of unemployment is between 1·7 million and 4·1 million, depending on what assumptions one uses. If the hon. and learned Gentleman is saying that unemployment is too high, he need not waste his breath, because I agree with him, and all our efforts are directed towards its reduction.
    Mr. Spencer: Does my right hon. Friend agree that in 1979 we inherited rampant inflation and rampant trade unionism, that only by conquering those twin evils have we created an additional 600,000 jobs and that if we were to surrender to those evils, as the Labour party would wish, the results would be disastrous for employment?
    Mr. King: Successive industries during the 1960s and 1970s completely lost their competitive edge because they were over-manned and unable to compete in world markets. It has been a major challenge to fight back from that situation. The latest forecast—I make no apology for quoting again the CBI survey—is the most optimistic for a decade in many important respects.
    Mr. Prescott: In the pursuit of truth, will the Minister recognise that the figure that he has announced from the Dispatch Box is the highest recorded level of unemployment for 40 years, and even for this century? Does he accept the estimate made by the unemployment unit under Professor Sinfield, that the figures, because of the new way in which they are collated, underestimate the real total by 400,000? In view of the massive unemployment that six years of Tory policies have created, will the right hon. Gentleman consider joining the Secretary of State for Energy in asking for a change in Government policies?
    Mr. King: My answer to the first part of the hon. Gentleman's supplementary question, dealing with the figures, is the same as that which I gave to his hon. and learned Friend the Member for Leicester, West (Mr. Janner)—[Interruption.]—in deciding whether they should or should not be plus 400,000. Far more important than arguing about the precise statistic is to accept that it is too high.
    Mr. Prescott: Is it a record——
    Mr. King: If the hon. Gentleman keeps shouting his first question when I am trying to answer his second, he is not likely to get answers to either.
    The answer to his first question is yes, in April. I have no doubt that the situation is the same in France, Germany and Italy.
    Mr. Prescott: Is it a record? Twister.

    Community Programme
    Mr. Knoxasked the Secretary of State for Employment how many people are in community programme places in Staffordshire.
    Mr. Peter Morrison: On 29 March, the latest date for which figures are available, there were 2,550 people working on the community programme in Staffordshire.
    Mr. Knox: Does my hon. Friend agree that although community programme places are very welcome, they are no substitute for real jobs? When does he expect an upsurge of real jobs in Staffordshire?
    Mr. Morrison: I am glad that my hon. Friend believes that the community programme is worth while, and I am
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    sure that he welcomes the near doubling of the number of places to be made available in Staffordshire. He will also be aware that about 100,000 people were placed in jobs in Staffordshire during the past year. That is an increase of 8 per cent., which cannot be bad.

    Labour Statistics
    Ms. Harmanasked the Secretary of State for Employment what are the current numbers of women registered unemployed; and what were the numbers for April 1979.
    Mr. Alan Clark: On 11 April 1985 the number of women claiming unemployment benefit was 1,002,000 compared with an estimated total of 328,000 in April 1979.
    Ms. Harman: Will the hon. Gentleman tell the House whether he believes that women have absolutely the same right to work as men, including women who have small children and are married to men who are in work? Do women also have an absolute equal right to join training schemes in the bogus Government programmes?
    Mr. Clark: Yes, of course I agree with the hon. Lady. Women account for 40 per cent. of the civilian work force, but on a majority of our training schemes, inluding YTS and TVEI, they represent over 40 per cent. of the participants.
    Mr. Stokes: While considering the number of women who are unemployed, will my hon. Friend also consider the number of women who are employed today, and especially the vast increase in the number of married women who are employed?
    Mr. Clark: My hon. Friend is entirely right. During the six years around which the hon. Lady couched her question, the number of women in employment has stayed steady at well over 9 million. In the past year the number of women in full-time jobs increased by 14,000 and of those in part-time work by nearly 200,000.
    Mr. Ashton: Is the Minister aware that in my constituency employment among women has trebled? Is he also aware that at the last general election there was a Labour majority in the constituency of 3,500, whereas on last Thursday's results it would have been 11,500? Does that trend not show that massive unemployment is pending for Conservative Members? What will the Minister do about that?
    Mr. Clark: Doubtless the hon. Gentleman will use that question in whichever column he is currently writing for the national newspapers. Whatever it may be in the hon. Gentleman's constituency, the national unemployment rate for women is some 2·5 per cent. below that for men.
    Mr. Currie: Does my hon. Friend agree that it is a matter not of rights but of obligations? These days, when Mrs. Average takes her son to get a job, it is she who gets the job rather than him. Does not that situation reflect a lack of flexibility and of skill, and the high cost of employing young people today?
    Mr. Clark: Certainly there are many occupations in which the special skills and dedication that they can contribute make women preferable as employees.
    Ms. Richardson: Does the Minister not understand that women who are seeking work as of right are being

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    pushed into part-time jobs because only part-time jobs are available? In changing the rules for the community programme, which virtually exclude women, and in cutting the number of public sector jobs, which also affects women, are not the Government reducing women's chances of employment? Is it not a disgrace that, of all the women unemployed in Europe, 40 per cent. live in this country?
    Mr. Clark: I do not think that the hon. Lady is right about part-time employment. Many women prefer part-time employment and contribute to a valuable sector in the economy. As for benefit entitlement on the community programme, the hon. Lady knows that the decision was based on proper priorities. Places should be restricted to those receiving benefit.

    Long-term Unemployed Persons
    Mr. Terry Davisasked the Secretary of State for Employment if he will make a statement on the Government's programme for the retraining and employment of the long-term unemployed.
    Mr. Peter Morrison: The opportunities for all long-term unemployed people are set out in the White Paper "Employment-The Challenge for the Nation". More than 375,000 long-term unemployed people a year will be helped by our expanded community programme and the other employment and training measures.
    Mr. Davis: Did the Minister not hear the admission by his hon. Friend the Under-Secretary of State for Employment earlier that more than 1,300,000 people have been unemployed for more than 12 months? Will not the community programme cater for less than a third of those people, and will not full-time training decline as a result of the closure of skillcentres such as those at Castle Bromwich and Redditch? Are not the Government unable to cope with unemployment and skill shortages on the scale that they have created?
    Mr. Morrison: I am sure the hon. Gentleman realises that the number of adults being trained will be doubled and that the number of long-term unemployed on the community programme will be virtually doubled. That is a positive response, which I hope he welcomes.

  PRIME MINISTER

    Engagements
    Mr. Altonasked the Prime Minister if she will list her official engagements for Tuesday 7 May.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.
    Mr. Alton: What explanation has the Prime Minister for last Thursday's unemployment figures, for the speech of her right hon. Friend the Secretary of State for Energy and for the massive thumbs down given to her by alliance voters? Will she again be offering the excuse that she was out of the country?
    The Prime Minister: I notice that the alliance party does not seek a majority; it seeks to hold a balance, so that it has a veto—hardly a democratic course of action, if I
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    might say so. I notice also that the hon. Gentleman referred to the speech of my right hon. Friend the Secretary of State for Energy. With regard to unemployment, my right hon. Friend said:
    "To obtain growth, we must obtain the right relationship between pay and investment and productivity. An inflationary wage round unlinked with productivity would do immense damage to Britain's economic opportunity."
    I wholly agree.
    Sir Edward Gardner: In the light of my right hon. Friend's recently expressed concern, shared by the President of the United States, about the alarming growth of international drug traffic, will she assure the House that she will give the highest priority to means of defeating the threat of having diverted to this country and other European countries a flood of cocaine from a saturated American market?
    The Prime Minister: I am grateful to my hon. and learned Friend. When we had that discussion on drugs, it was clear that almost every country was deeply concerned about the effects on young people and deeply concerned to ensure that we could do more to trap drug traffickers and to dissuade young people from taking drugs. We all agreed to set up an expert committee to see what further could be done. My right hon. and learned Friend the Home Secretary, my right hon. Friend the Secretary of State for Social Services and the Treasury are all concerned. We are determined to do as much as we can to rid this country and others in Europe of this vicious trade.
    Mr. Kinnock: As someone who told us on Sunday that she wants to get rid of class divisions, is the Prime Minister aware that there are 2,054,000 more people unemployed, 2·1 million more people on supplementary benefit and 140,000 more people having to claim family income supplement than there were on the day when she became Prime Minister six years ago? In view of that, can the right hon. Lady tell us what independence she thinks those millions of people enjoy while she dreams her idle dreams of a classless society?
    The Prime Minister: May I also point out that there are 1·8 million more owner-occupiers since 1979, a policy which was fought tooth and nail by the Labour party? There has been a dramatic extension of share ownership, as shown by the 1·7 million people who now hold shares in British Telecom. There has been a dramatic increase in the number of employee share schemes, an increase in the number of assisted places in schools, and we have dramatically extended the rights of trade union members to a secret ballot, which not only would the right hon. Gentleman never have insisted upon, but which he did everything to fight.
    Mr. Kinnock: I hear what the Prime Minister says about share ownership and much else. Does she agree with the view expressed by the Secretary of State for Energy last Friday that people are more than consumers, and on that basis will she now, even at this late hour, reverse her policies of change in the welfare state, which will so greatly disadvantage so many people? Why does she not actively work, if she is interested in independence, to stop unemployment policies which have brought more people into state dependence in six years than ever before?
    The Prime Minister: I am glad that the right hon. Gentleman referred to the speech of my right hon. Friend the Secretary of State for Energy. I notice that my right hon. Friend said:
    "The Labour party, whilst frequently interested in the economic discontentment, appear to be totally unwilling to give the worker the higher status and the higher privilege he seeks."
    He continued:
    "They are against workers in council houses becoming owner-occupiers, they are against workers having freedom of choice for their children in education. To them it appears that workers are but fragments of a block vote at a Labour party conference and not people whose responsibility and freedoms need to be in their own hands rather than in the hands of a socialist politician or the bureaucrat."
    Thank you very much, Mr. Speaker. I am grateful to the right hon. Gentleman for letting me quote from my right hon. Friend's speech.
    Mr. Andrew MacKayasked the Prime Minister if she will list her official engagements for Tuesday 7 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. MacKay: If, during her busy day, my right hon. Friend can find a moment to look at last week's county council elections, will she reflect on the fact that in Berkshire, where we had experienced a hung council, which led to a Lib-Lab pact and a rate increase of over 27 per cent., there was a major swing to the Conservatives and we regained control?
    The Prime Minister: I am grateful to my hon. Friend for pointing out that when there is a Lib-Lab pact there are high rates, high tax and high spending policies. I think that that fact augurs well for the next local elections.
    Mr. Dubsasked the Prime Minister if she will list her official engagements for Friday 7 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Dubs: Is the Prime Minister aware that, of the world's leading 11 advanced industrial countries, eight have a lower rate of unemployment than we have, and that every one of these 11 countries is showing lower increases in inflation than we are? Indeed, we are the only one that has an increase, whereas the others are going down. Does this not add up to the fact that her ex-Cabinet Ministers, her Cabinet Ministers, her Back Benchers and the electorate are saying no to her economic policies because Britain is not working?
    The Prime Minister: Some of those countries—all of them, I think, apart from United States and Japan—are afflicted with unemployment; some of them, as the hon. Gentleman has indicated, higher than we have. Some of the others have learnt some of the lessons, in that their unit labour costs are going down just at a time when unit labour costs are rising in this country. That has its effect on unemployment. I might point out to the hon. Gentleman that the proportion of the population of working age in work is higher here—66 per cent.—than in West Germany, higher than in France, higher than in Italy and equal to that in the United States.
    Mr. Spellerasked the Prime Minister if she will list her official engagements for Tuesday 7 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Speller: Is my right hon. Friend aware that the May day holiday is a total flop in terms of British tourism? Will she consider helping our most successful industry by amalgamating the Spring bank holiday and the May day bank holiday to make one worthwhile west country break?
    The Prime Minister: We went out to consultations on just such a scheme in 1982 but opinion was very divided and there was clearly no case at that moment for changing the present arrangements.
    Dr. Owen: Does the Prime Minister agree that one of the lessons of last Thursday's elections was that people do not like absolute power exercised—[Interruption.]
    Mr. Speaker: Order. I am trying to help Back Benchers to get to their questions.
    Dr. Owen: Does the Prime Minister recognise that one of the lessons of last Thursday was that people do not like absolute power exercised by minorities, that they do not like ideology and dogmatism and that they are becoming increasingly fed up with the the Prime Minister's own hectoring style? Far from—[Interruption.] If we always have to make ourselves heard above a hubbub [Interruption.]
    Mr. Speaker: Order. All Members have to make themselves heard.
    Dr. Owen: Does the Prime Minister realise that, having lost 750,000 votes at the last election, she now exercises power with the support of a minority of the population of this country?
    The Prime Minister: As for the right hon. Gentleman's comments about a hectoring style, he has become the arch example of that very thing. I can think of no better description of the style that he has adopted. As for seeking power, the right hon. Gentleman is seeking almost absolute power on a smaller minority.
    Mr. Patrick Thompson: Will my right hon. Friend take time today to consider the fact that in the past few days there has been hard evidence that industry and employment in Norwich have been adversely affected by the long drawn-out and futile miners' strike? Does she agree that in those circumstances it is hyprocisy for the Opposition to pose as the protectors of jobs?
    The Prime Minister: I am grateful to my hon. Friend. Yes, employment was adversely affected, not only in the mining industry but among all the suppliers to the industry and many people are now out of a job as a result of that strike when they would otherwise have been in a job today. My hon. Friend is right. Strikes destroy jobs.
    Mr. Freeson: Is the Prime Minister aware that the Foreign Office has been keeping files on Klaus Barbie and Dr. Mengele and has refused to release those files? In this week of VE celebrations, does the right hon. Lady agree that it would be appropriate to instruct the Foreign Office to release those files? What is it hiding?
    The Prime Minister: As the right hon. Gentleman knows, we release files whenever we can to assist either in trials or in commissions of inquiry. That would be our policy, but there are occasions when for very good reasons we cannot do so.
    Mr. Doverasked the Prime Minister if she will list her official engagements for Tuesday 7 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Dover: Following the events of last Friday, what assurance can my right hon. Friend give the House that the Government will allow enough time for the passage of the Unborn Children (Protection) Bill promoted by the right hon. Member for South Down (Mr. Powell)?
    The Prime Minister: I understand my hon. Friend's concern about that Bill. I know that the Bill arouses strong feelings in the House, and I also feel strongly about it, but it has been the practice that the Government do not give Government time for private Members' Bills. Therefore, I cannot offer my hon. Friend any great comfort. My hon. Friend will doubtless also consult my right hon. Friend the Lord Privy Seal, but I cannot give him any hope that he will get a different answer.
    Mr. Merlyn Rees: Will the Prime Minister tell the House whether there would he a place for Tory wets in her version of a classless society?
    The Prime Minister: For a good climate one needs drys and wets.
    Mr. Gerald Howarthasked the Prime Minister if she will list her official engagements for Tuesday 7 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Howarth: Is my right hon. Friend aware that there will be great disappointment that the early negotiations to reduce trade barriers were blocked last week by the French? Will she assure British industry that she will continue to press on our major trading partners the urgent need to deal with this grave problem, which was highlighted by the visit to Japan of our right hon. Friend the Secretary of State for Trade and Industry?
    The Prime Minister: The only one difference of opinion on trade between France and the other countries was not that France was anxious to keep protectionism—she agrees that we must do everything possible to reduce protectionism—but that she was not prepared to put her name to fixing a date for a new round of GATT. The rest of us felt that we should give a lead. France put her name to all other aspects of the communiqué about reducing protectionism.

Economic Summit (Bonn)
3.31 pm
The Prime Minister (Mrs. Margaret Thatcher): With permission, Mr. Speaker, I shall make a statement about the economic summit which I attended in Bonn, accompanied by my right hon. and hon. Friend the Secretary of State for Foreign and Commonwealth Affairs and my right hon. Friend the Chancellor of the Exchequer.
Heads of State or Government of the United States, France, West Germany, Italy, Canada and Japan were present, accompanied by their Foreign and Finance or Economic Ministers, together with the President of the European Commission.
I have placed in the Library of the House copies of the economic declaration and of the political declaration to mark the 40th anniversary of the end of the Second World War.
I shall deal first with the political issues. As countries which once fought each other bitterly, we recalled the benefits of reconciliation and of 40 years of co-operation, and pledged ourselves to their continuance. We welcomed the opening of negotiations in Geneva on the reduction of nuclear arms, expressed our appreciation of the positive proposals of the United States, and urged the Soviet Union to act positively and constructively to achieve significant agreements.
Foreign Ministers discussed the middle east, southern Africa and central America. They condemned the continuing, brutal occupation of Afghanistan by Soviet troops, and of Cambodia by Vietnam.
On Britain's initiative we had a discussion of the growing problems posed by drugs, and we agreed to set in hand work on further co-operative measures to combat the vicious trade, which is the cause of so much human suffering. We also reaffirmed our determination to strengthen further the co-operation against terrorism agreed at the London summit last year.
On economic matters, the discussion and the communiqué reflected the similarity between the approaches and policies of all seven Governments. We recognised the further progress since our last meeting in keeping down inflation and strengthening the basis for economic growth. We also welcomed the fact that the recovery has begun to spread to the developing world.
Nevertheless, we recognised that our countries still face important challenges. Among other things we need to strengthen the ability of our economies to respond to new developments; to increase job opportunities; to combat protectionism; and to improve the stability of the world monetary system.
To sustain non-inflationary growth and to create higher employment, we agreed, first, to consolidate and enhance the progress made in bringing down inflation; and, secondly, to follow prudent and, where necessary, strengthened monetary and budgetary policies with a view to stable prices, lower interest rates and more productive investment. Each of our countries will exercise firm control over public spending in order to reduce budget deficits when excessive, and, where necessary, reduce the share of public spending in gross national product.
Thirdly, we agreed to work to remove obstacles to growth and encourage initiative and enterprise so as to release the creative energies of our peoples, while maintaining appropriate social policies for those in need.
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Fourthly, we agreed to promote greater adaptability and responsiveness in all markets, particularly for the labour market.
Fifthly, we agree to encourage training to improve occupational skills, particularly for the young.
Building on those common policies, each country indicated its specific priorities. For example, President Reagan emphasised his determination to achieve a substantial reduction in the United States' budget deficit. The Japanese Prime Minister undertook that his Government would make further progress in deregulating financial markets, promoting the international role of the yen, facilitating access to markets, and encouraging growth in imports. The United Kingdom will continue to work to reduce inflation, keep public spending under control, promote the development of small business and advanced technological industries, and encourage initiative and enterprise in the creation of new job opportunities.
On international trade, we agreed that protectionism does not solve problems, it creates them; that further progress in relaxing and dismantling trade restrictions is essential; that a new round of multilateral trade negotiations should begin as soon as possible, with the broadest possible participation; and that the preparations for the new round should begin with a meeting of GATT officials before the end of the summer. With the exception of France, we were agreed that the new GATT round should start in 1986. France was not prepared to commit herself to a date.
The discussions on international monetary questions, which began after the Williamsburg summit, will be completed next month, when the Group of Ten meets in Tokyo. It will put forward proposals for discussion in the interim committee of the IMF at its October meeting. We endorsed the case-by-case approach to the debt problems of the developing countries set out at the London summit.
We expressed our particular concern for the plight of African peoples suffering from famine and drought. While acknowledging the very substantial assistance provided not only by Governments but by private organisations and individual citizens, we instructed experts to report to the Foreign Ministers of the Seven at the end of September with proposals for further measures which might be necessary.
Particular concern was voiced about the practical distribution of food aid which has been so generously given, and the need for long-term polices of good husbandry to avoid creating more desert land. We also called on the Soviet Union and other Communist countries to assume their responsibilities in helping to relieve the suffering caused by famine and drought.
What was impressive in the summit discussions was the conviction of all represented there that lasting job opportunities can be created only if we maintain sound financial policies and open markets and remove disincentives and unhelpful regulations to foster a climate of more vigorous enterprise and initiative.
As the communiqué said,
"By pursuing these policies we will not only address our domestic problems, but at the same time contribute to an enduring growth of the world economy and a more balanced expansion of international trade."
Mr. Neil Kinnock: First, I warmly commend the collective pledge made by the powers at Bonn actively

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to continue the reconciliation and co-operation which have benefited all countries in the past 40 years, whether they were former allies or former enemies.
Secondly, I support the Prime Minister in her continuing efforts to encourage international co-operation to combat drug trafficking and terrorism.
Thirdly, I warmly endorse the decision of the Prime Minister and five of her colleagues not to join President Reagan in his vindictive and dangerous policy of imposing a complete economic embargo on Nicaragua.
Fourthly, I must record deep disappointment that on economic issues the Bonn summit turned into yet another sit-tight summit. How many times will the Prime Minister register the need for monetary reform, the reduction of social inequality, the promotion of growth and trade, helping the poorest countries, and much else, and then, having recorded those challenges, dodge away from doing anything effective in any of those areas?
Specifically, does the Prime Minister recall that after the London summit, she told us that the summit seven, including Britain, would
"encourage multi-yearly rescheduling"
of the debts of poor countries, and that they would
"seek to maintain and wherever possible increase the flow of official aid to developing countries, particularly the poorest"?
Against that background, why is it that in the ensuing 12 months the Governments of the summit countries have left rescheduling almost entirely to commercial institutions and have borne hardly any of the responsibilities themselves? Why is it that in that 12 months the British Government, under the right hon. Lady's leadership has, far from maintaining or increasing the flow of aid, cut the flow of official aid to the poorest countries in developing parts of the world?
The Prime Minister has told us that President Reagan emphasised his determination to achieve a substantial reduction in the United States' budget deficit. As the condition of the United States economy has been responsible for half of the growth rate in European economies in the past year, what effect does the right hon. Lady think the rapid reduction of the United States' budget deficit will have on our economy if there is no simultaneous compensating expansion of European economies, especially our own?
We have had another do-nothing summit this year. Will the right hon. Lady give us yet another do-nothing year when it comes to fighting unemployment at home and poverty and starvation abroad?
The Prime Minister: I note the strictures of the right hon. Gentleman on all Heads of State or Government, including those who share his political views and not mine. When they are in power, however, they pursue the same economic policies. The difference between them and the Socialists on the Opposition Benches is that a British Socialist Government promise everything, which takes them to the International Monetary Fund, while other Socialist parties, when in power, pursue much more conservative policies, both with a small c and a capital C. They do so because they are realistic. The right hon. Gentleman is extremely critical of his fellow Socialists who are Heads of State and of Socialist Governments.
I am glad that the right hon. Gentleman has welcomed the political statement and the statement on drug trafficking.
We were not asked to join the United States in imposing sanctions on Nicaragua.
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The right hon. Gentleman has talked of a sit-tight summit, but I have said that all Heads of State or Government are convinced that the policies that are being followed are the right ones. They will keep down inflation, and unless we try to do that we shall be doing great harm to employment prospects. Over the past year we have introduced the policies that were outlined in the Budget on training and for an increased community programme. These policies have not yet worked through, but they should provide more help to those who would otherwise be unemployed. About 600,000 more jobs have been created in the past six months. Britain is one of the few European countries that is creating more jobs.
There has been one agreement on multi-yearly rescheduling. There have not been more because such agreements require, first, the accord of the IMF. Normally, commercial banks do not lend unless there is agreement with the IMF to change policies, or a good prospect of it. That is the only proven policy to follow when one is lending through the banks other people's money.
We are one of the countries that gives aid priority to the poorest countries, even though these are not always the countries that will give us more jobs at home. Other countries do not always give such high priority in their total aid budgets to the poorer countries.
The right hon. Gentleman referred to the reduction in the United States' budget deficit. As a percentage of gross national product, that deficit is not nearly as high as some think. The net deficit is 4¼ per cent., taking into account the surpluses that are produced by the separate states. We must consider the deficit in terms of the savings ratio. It would be far more advantageous to the world if we all brought down interest rates. That would give us far more sustained expansion than the policy that is now being pursued. We hope that that will be the result of the United States reducing its deficit to something more in tune with its lower savings ratio.
Sir John Osborn: Is my right hon. Friend aware that the sixth parliamentary and scientific conference run by the Council of Europe will take place in Japan at the end of the month? To what extent will Japanese markets be opened up to other countries?
Secondly, what would be the impact of protectionism on our own economy? About 50 per cent. of Britain's GDP lies in imports and exports and a move towards protectionism would not be in our interests nor those of the western world generally.
The Prime Minister: I agree with my hon. Friend that it is much better for countries which rely on exports to try to open up the world's markets than to go for a policy of protectionism. Each and every one of us has some protectionist policies, but most of us felt that it would be far better to take them all to the next round of GATT and to bargain away some of our protectionism for a reduction in other people's protectionism. They would not all go at once, but that would be much better for those of us who depend on world trade. That applies to most developing countries, too.
With regard to the Japanese market, I think that Mr. Nakasone has realised far more than previous Prime Ministers the need to open up Japanese markets. I hope that we shall pursue the point vigorously through the European Economic Community. Some members of the

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Community have much tougher limits on the import of, for example, Japanese cars than others. It is quite clear that we cannot go on keeping our markets open unless other countries keep theirs equally open.
Mr. Roy Jenkins: Why does the Prime Minister, who used to be most sceptical and impatient about the value of summits, now appear to be satisfied with one that has almost certainly produced the most flatulent and platitudinous communiqué of the 11 in the series? Can the Prime Minister tell us of one beneficial and constructive thing which she thinks will happen as a result of the summit and which would not otherwise have taken place?
The Prime Minister: I think that this is the first summit in which each country pledged itself to take specific action. I cannot remember a previous communiqué in which each country set out separately what——
Mr. Jenkins: The 1978 summit.
The Prime Minister: The 1978 summit in Bonn was disastrous because it reflated and led to the higher unemployment and some of the higher inflation which followed. I think that the right hon. Gentleman will find that Germany would never follow that course of action. I note that the right hon. Gentleman said that the summit was platitudinous. Platitudes are platitudes because they are true. Therefore, he believes that the economic policy that we set out is true. I am grateful for his support.
Mr. Charles Morrison: Was further aid for population control in African countries considered at the summit? Was reference made to the unhelpful attitude of the American Administration, and was that Administration encouraged to become less dogmatic and more realistic in that regard?
The Prime Minister: We are considering further what best to do about aid to those countries. Particular concern was voiced about it not always being easy to distribute the amount of aid that is given, whether in food or other items such as medicines. We must look further into that. We were also anxious not only to give emergency food aid but to help those countries to develop their agricultural economies so that they might produce better aid for themselves. We are also anxious to help them to get grains which are suitable for dry zone areas and generally to help them in husbandry.
As for the United States, I remember that, at the recent United Nations summit in Geneva on help to the African countries, the United States was extremely generous in her allocation of aid to Ethiopia and Sudan.
Mr. Robert Sheldon: Is the Prime Minister aware that few people expected much from the summit as summits increasingly resemble the futility of the inter-war economic conferences? Will she say more about Japan's trade practices? Is she aware that they increasingly look like economic domination, as they did in 1941, rather than economic co-operation? Should she not have resisted that even more strongly?
The Prime Minister: It was not possible to be stronger than I was on certain aspects of Japanese trade, nor is it possible to be stronger. The right hon. Gentleman is aware
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that we have to pursue our trading arrangements with the outside world through the Community. I believe that M. Delors, the President of the Commission, will continue to pursue this matter as vigorously as we would wish.
Mr. Tim Rathbone: My right hon. Friend referred to the discussion about drug trafficking and the misuse of drugs. Will she elaborate further on that subject? Will there be room, on a pan-European and worldwide basis, to have joint activity in the same way that the Government have set up joint activity between Ministeries in this country? Does my right hon. Friend come back from the summit with an awareness of the need for even greater spending, particularly on the education of young people about the threat of this horrible drug trafficking menace?
The Prime Minister: As my hon. Friend knows, there is already some co-operation, between countries, but I believe that it can be stepped up. It is particularly urgent now that there appear to be more supplies of cocaine, and sometimes success in one country in discovering cocaine and destroying it can mean that the cocaine is then directed to a different country. Therefore, we in Europe have to be very wary of what is happening, and do all that we can to stop it coming in.
As my hon. Friend knows, my right hon. and learned Friend the Home Secretary has issued a statement on what we are doing about reducing drug trafficking. He has also made it clear that he expects to introduce legislation to confiscate the assets of those who are convicted of drug trafficking so that, having suffered a prison sentence, they shall not nevertheless still be in possession of the enormous sums that are involved. My right hon. and learned Friend the Home Secretary and the several Departments will co-operate with other countries in doing everything that we can, and if it means more expenditure, we shall have to undertake it.
Mr. A. E. P. Duffy: Is the Prime Minister satisfied that the approach of the summit to economic recovery was sufficiently urgent? Does she recall the recent reminder by Paul Volcker, chairman of the Federal Reserve Board, that over the past two years American expansion and the impact of higher imports were responsible for 70 per cent. of growth against only 40 per cent. of OECD output for the same reasons? Does not the right hon. Lady accept that that era is now ended, for there is unmistakable evidence of slowdown in the United States? Does she not agree with my right hon. Friend the Leader of the Opposition that the most urgent requirement of the summit was to come forward with a set of appropriate and compensating measures?
The Prime Minister: I tried to answer that in part in my reply to a previous question. Certainly last year there was a 9 per cent. increase in world trade. Half of it was attributable to more imports into the United States. As the hon. Gentleman said, that policy could not be sustained. The policy that led to the high dollar and double deficit could not be sustained, which is why, I believe, the President of the United States and Congress will have to take action to reduce the deficit. It would be of more benefit to the world if action were taken to reduce that deficit because of the expected impact on interest rates. It would be more profitable to world expansion to get lower interest rates all round because that is the way to get more

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construction and more small businesses developing. If that policy were pursued, it would give a boost to growth. Hitherto, during the past year, there was an unsustained boost through the imports into the United States.
Mr. Patrick Cormack: In view of the fact that welcome reconciliation has presumably led to a much greater increase in mutual trust between nations, does my right hon. Friend think that it is time that Japan was made to bear the proper burden for its own defence? Would not that go a long way towards solving the problems that trouble us all?
The Prime Minister: We have to tackle Japan on an open trading basis. I do not think that it is right for one country to expect others to be open, make enormous profits from their openness, use those profits to undercut them in other markets, and still not take steps either to have home markets open or to redress the balance of trade by making major procurement purchases, which a Government can do, in aircraft and other such things from other countries overseas. My hon. Friend raises another matter—the defence of Japan—which would have considerable political implications. I would be slow to jump to the conclusion that he has reached, although I accept that Japan must take more responsibility for the defence of her maritime coast.
Mr. Tom Clarke: In her statement, the Prime Minister referred to the discussions between Foreign Ministers about the middle east, southern Africa, and central America. Was any progress made in stopping the flow of arms to those regions as well as on human rights?
The Prime Minister: I do not know whether they discussed that subject, but I expect that it came up in relation to one of those countries. As the hon. Gentleman is aware, it is not easy to stop the flow of arms to these regions, and some of the previous efforts have not been successful.
Viscount Cranborne: Apart from a ritual condemnation of the Soviet invasion of Afghanistan, did my right hon. Friend persuade her fellow summiteers of the value of a constructive policy to do something about the problem of that tragic country, particularly as she knows that there is a coherent policy available to her fellow Prime Ministers?
The Prime Minister: As my hon. Friend is aware, the United Nations has been making strenuous efforts to make arrangements that would ultimately result in the withdrawal of Soviet troops from Afghanistan. I am not very optimistic that that prospect will be achieved.
Mr. James Lamond: If the Prime Minister has returned determined to redouble her efforts to make us more efficient, to shake out even more people from the labour market, to cut back on our social services and to try to catch a bigger share of the international market, and all the other leaders have decided to do the same, will we not all be running very fast to stand still in the same place?
The Prime Minister: We have not been quite as successful as some other countries, such as Germany, in securing extra export markets. One of the reasons is that Germany's unit labour costs are below ours and, although it is a high-wage economy, it is also a low-cost economy.
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In any event, we are not on a zero sum. There is a good prospect for us to improve our own performance, which can only be done through management and the work force. We are not doing it at the expense of other people, except perhaps at the expense of those who have an enormous trade balance, such as Japan. We have to compete with Germany, France and Japan, and if the hon. Gentleman is not willing to compete, there is no hope for him and his party.
Mr. Michael Fallon: I thank my hon. Friend for raising with the Japanese delegation the disgraceful predatory pricing on the second Bosphorus bridge. Can she reassure me that we shall preserve bridge-building technology in the United Kingdom, and the hundreds of jobs in Darlington that depend upon it? Will she also assure me that everything possible will be done before the contract is signed to persuade the Japanese and Turkish Governments that it is in everybody's interest to ensure that at least the bridge section of this contract can be subcontracted to a British firm?
The Prime Minister: I know that my hon. Friend is as concerned as I am because he, with another of my hon. Friends, came to see me some time ago about the Bosphorus bridge. As he is aware, we were prepared to match the Japanese offer on the bridge, but we could not do it on the roads leading to the bridge. That led to the allocation of the contract to the Japanese. If there is arty hope of our having the subcontracted bridge, I am sure that it will be pursued vigorously.
Mr. Russell Johnston: The Prime Minister said that the middle east was discussed. Was there any sign of a new initiative from the United States? Does she agree that there is an urgent need for new initiatives if the situation in the middle east is not to deteriorate further?
The Prime Minister: As the hon. Gentleman will be aware, Ambassador Murphy has been in Jordan discussing with King Hussein the possibility of setting up a team of Palestinians to negotiate with King Hussein, directly with Israel. He has made one visit and I believe another is in the offing. There is no initiative beyond that because a great deal will depend on the success of what he is doing there.
Mr. John Browne: Is my right hon. Friend aware of the assertion that much of the United States' economic growth has been financed by Government borrowing, so far without any apparent inflation? Does she accept that much of this money was effectively siphoned off from investment funds from the non-United States economies, has raised world interest rates and has resulted in serious potential inflation inside the United States economy? Will she assure the House that she will not resort to any cosmetic, irresponsible and inflationary borrowing here at home?
The Prime Minister: No, and that was one conclusion of the summit: that we must not resort to inflationary borrowing, which would be highly damaging not only to the control of inflation but to the prospects of getting more jobs later. I agree with my hon. Friend's premise that, although much investment in the private sector has been financed from within the United States, that has left very little of a savings ratio to finance the deficit, which has been financed by drawing in capital from the world over.

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That has kept interest rates artificially high. The greatest thing that could happen in the effort to obtain world expansion would be the lowering of interest rates, which I believe will follow if there is a sufficient reduction in the United States deficit.
Mr. Eric S. Heifer: In addition to the nonsense that the Prime Minister has been talking about Japan, is she aware that on radio the other day, when she gave her first report of the summit meeting to the nation—I believe the programme is called "The World This Weekend"—she talked more nonsense when she suggested that the British people could solve their problems by creating their own businesses? How will the 4 million unemployed living on social security benefits be able to create their own businesses? Will the people who are now going bankrupt because of her Government's policies create their own businesses? Is it not time that she came into the real world and understood that the only way to deal with unemployment in a serious manner is by state and Government intervention?
The Prime Minister: Unless more small businesses are formed, we will not get more jobs. The alternative—this is what the hon. Gentleman proposes—would be to halve jobs and wages or split them proportionately. All that we could do under his proposal would be to shuffle round the amount we have and try to get more employment with it. He will know from the success of Japan and the United States, and from living in the real world, that new jobs come from the formation of new businesses. My right hon. Friend the Secretary of State for Employment, who answered questions today before I did, said that Britain has 100,000 more new businesses today than it had in 1979. That is good, but it is not sufficient. If the hon. Gentleman is giving up all hope of an increase in new business and small business formation, he is giving up all hope of creating more jobs.
Mr. Anthony Beaumont-Dark: Does my right hon. Friend accept that many of us were much heartened and warmed by the fact that she had come to an understanding with Mr. Nakasone of Japan? Does she also accept that, five years ago to the month, I was promised that we had come to a gentleman's agreement with Japan on trade, but that since then the deficit with Japan has increased by more than £20,000 million? has not the time come to say clearly that gentleman's agreements must between gentleman, and that unless the Japanese come to a copper-bottomed agreement in the very near future we shall have to protect our industries as they have protected theirs? This country cannot continue selling its industry down the river to the Japanese.
The Prime Minister: Whatever the Japanese have done so far to try to secure more imports, they have not succeeded. They have not purchased abroad, at any rate not from Britain and some other countries, as many goods, such as aeroplanes, as they could, therefore, we were anxious to fix a date for a new round of GATT so that we could deal with such matters together in a much more effective forum than any other. Apart from that, we must pursue a policy through the European Community. Mr. Nakasone now knows how strongly not only Europe but the United States feels about it.
Mr. Frank Cook: I have listened with interest to the Prime Minister's comments on the views of Mr. Nakasone, and I was interested to hear her reply to the hon. Member for Darlington (Mr. Fallon). Will she reflect on her statement on BBC radio this morning, when she deplored the failure of Cleveland Bridge to acquire the contract for the Bosphorus bridge, not on the grounds that the offer was bad and the technology inadequate, but on the grounds of a last-minute injection of investment as a subsidy from the Japanese Government? During her reflection, will she also consider the fact that that nation gives similar subsidies to its shipbuilding, steelmaking, communications and transport industries? If, as she says now, new industries in Britain must do it without state intervention or aid, how does she expect Britain to compete with countries that do it all the time?
The Prime Minister: I deplore the fact that we did not get the Bosphorus bridge contract for two reasons. First, on the bridge itself, our bid was the lowest and, therefore, I believed that we should get it. When it came to matching an offer that anyone else made, we were prepared to do so for the bridge. However the contract was for the roads as well, and we could not match the Japanese offer there. The second reason why I deplored it was that it will cause the loss of jobs in an area where we could have done with jobs.
As to subsidies, may I point out to the hon. Gentleman that we give subsidies to shipbuilding—considerable subsidies. We give subsidies to steel—considerable subsidies. We give subsidies to railways—considerable subsidies. We give subsidies to coal mining—considerable subsidies. The Japanese are not the only people at it.
Mr. Richard Hickmet: In relation to the Bosphorus bridge contract, does my right hon. Friend agree that although she and her colleagues at the summit agreed that they did not wish to embark on a trade war, that is what the Japanese have done by their predatory pricing methods and by the way in which they dumped credit to secure the contract? The fact that they have offered $206 million over five years at 5 per cent. interest means that they are buying into our markets, jobs and industries and driving up our unemployment. Has not the time come, despite Mr. Nakasone's smiling protestations, to say, "This must stop or your car imports to Britain will be reduced by 10 per cent."? Will she ask the Japanese to subcontract the bridge to Cleveland Bridge?
The Prime Minister: I understand why my hon. Friend feels even more strongly than the rest of us, because he also came to see me about the Bosphorus bridge contract, which will affect employment in his constituency. As I said, we did everything asked of us as a Government to help the company to obtain that contract. I know how strongly he feels about the Japanese, and I share his feelings. But I must make one point: we must be as efficient and as good in design as are the Japanese. We certainly were in relation to the bridge. If we were in relation to everything else, we should have had the video trade here which we did not have. We must be as good at design and efficiency as they are, and in addition we must have free and fair trading. Trading cannot be free unless it is fair.
Several Hon. Members rose——
Mr. Speaker: Order. I must protect the rest of the business. There are two other statements and a Ten-minute Bill. I shall allow questions to continue until 4.15. I hope that all hon. Members who have been rising will be called to speak before then, provided everyone puts questions briefly.
Mr. Derek Foster: The Prime Minister must be aware that the Japanese have been promising to open their markets and increase their imports for many years. However, despite formidable pressure from international forces for long a time, there has been no progress. Why does not the right hon. Lady fight for British industry as effectively as the Japanese fight for theirs? If she had done so, the Bosphorus bridge contract would be ours.
The Prime Minister: We had the lowest tender on the bridge, which was due to the company, and the Government matched the Japanese offer on the bridge. We could not match it on the roads. We had hoped to get the bridge contract. The company did the job, and we did the job. We did not get the contract for the bridge because of the roads aspect.
I agree with the hon. Gentleman that, despite the strictures not only of Britain but of other countries, we have not yet made inroads into the Japanese market. In some cases, the Japanese have had better-designed and more efficient goods than we have. As the hon. Gentleman knows, we must pursue this matter, either through those who make the voluntary agreements on a industry-to-industry basis, or through the European Community. The Government will pursue it through the Community.
Mr. Nicholas Budgen: As my right hon. Friend and the leaders of the principal European nations penned their splendid general denunciation of protectionism in other countries, did my right hon. Friend reflect that it was rather ironic that the farm Ministers did not even agree on a tiny reduction in cereal prices which had been decided upon a year ago?
The Prime Minister: As I said earlier, almost every country practises some aspects of protectionism. The common agricultural policy is certainly protectionist, but so are some aspects of America's trade and farming. These aspects must be discussed at the GATT meeting. We have had six working parties within GATT, one of which has been concerned with trying to free trade in agricultural products. Six of the seven leaders at Bonn wanted to set a date for the GATT conference, believing that that was the way in which we could all discuss protectionism and how to get rid of it and could bargain one aspect against another. Six of us were ready to set our names to a date; one was not. Nevertheless, I believe that there probably will be such a conference during 1986.
Mr. John Fraser: Despite the fact that we were not directly involved, did the Prime Minister point out to President Reagan the diplomatic folly, petulance and contradiction within the general tenor of the communiqué imposing a trade embargo against Nicaragua? Is it correct that the right hon. Lady has agreed to celebrate the 40th anniversary of Dr. Goebbels' downfall by telling us that she does not have the faintest idea when unemployment will be reduced?
The Prime Minister: The hon. Gentleman's second question was rather grotesque in the circumstances. I am surprised at the hon. Gentleman and some of his right hon. and hon. Friends. There is only one way to increase the numbers employed, and that is to increase the number of customers who are prepared to buy British goods. They will buy British goods when they are the best.
On Nicaragua, President Reagan had his own reasons for taking that action. The hon. Gentleman will recall that, during the Congress debate, there was a message and declaration from Nicaragua that, should help for the Contras stop, Nicaragua would be prepared to follow a genuinely plural political policy and to release documents from censorship. That can only mean that she had not done either until that proposal was made.
Mr. Nigel Forman: As we in Britain have one of the strongest national interests in maintaining an effective open trading system, will my right hon. Friend bear in mind between now and the next GATT round the vital importance of proceeding on a multilateral basis, since it is precisely because of the stitching up of the various bilateral agreements and understandings that we have arrived at so many of our present trading problems?
The Prime Minister: I totally agree, and that is why there are so many piecemeal aspects of protectionism. That is why six of the seven of us wanted to fix a new date for the GATT meeting. All we have done so far is to agree that there should be a preparatory meeting of officials to sort out the agenda and the modalities. We have agreed that that preparatory meeting should take place before the end of the summer. That is at least a step forward to securing the conference that most of us want.
Mr. D. N. Campbell-Savours: Does the Prime Minister believe that the summit will lead to a reduction or to an increase in demands from American Congressmen and Senators for protectionist measures, especially the 20 per cent. import surcharge?
The Prime Minister: If we had all agreed to give L lead on a date in 1986—we could merely give a lead, because Britain is only one of the GATT countries—that would have been a good defence to the demands that would come from some parts of Congress. If the United States becomes more protectionist, it will not be the United States' problem; it will be our problem, Europe's problem and the problem of the developing countries. That was why we took the line we did. I regret that we were not successful in all seven of us agreeing, but at least six of us gave a firm clear lead because we wanted more open markets.
Mr. Harry Greenway: Was the latest Japanese trade deficit of £38 billion discussed round the table by the Heads of State? If so, what conclusions were drawn? What did the Japanese Prime Minister say about it?
The Prime Minister: As I said in my statement, the Japanese have said that they will do all that they can to open up their markets and get the value of the yen to a 'level more appropriate to Japan's excellent trading balance. I still think that the best way of achieving this is not only by discussion with the Japanese but by a GATT ministerial meeting.
Mr. Peter Hardy: A little while ago, spokesmen for the Japanese Government in Strasbourg complained that it was easier for Europe to sell to Japan than for Japan to sell within the Community. That might cause incredulity on both sides of the House, but as far as some member states of the Community are concerned that is true. How does that happen? Is it not clear that, while the Government are in power, Britain's commercial prospects have as much chance as a whale in Tokyo bay?
The Prime Minister: On selling to Europe, different systems apply in Europe—for example, the arrangements in place before the European Economic Community agreement was signed in 1956 have remained in place. That helps Italy especially because it had a small Japanese car quota and, therefore, still has a small quota of, I think, about 2,000. Our car quota with the japanese is arranged between the motor industries. The arrangements in Germany, France and Britain differ because they are voluntary arrangements entered into between the car industries in each of our countries and the car industry in Japan. That is the only basis for them. Apart from that, we have to negotiate through the EEC. The Community states with low quotas are not exactly anxious to negotiate with the rest of us, because it might mean higher imports for them.
Mr. Edward Leigh: During the economic summit, did my right hon. Friend have a chance to discuss with President Mitterrand what happened when, as the brand new Socialist President of France in 1981, he attempted to do precisely what the Leader of the Opposition suggested earlier and, within two years, saw the French economy brought to its knees? Will my right hon. Friend suggest to President Mitterrand that he give a little teaching to his Socialist cousin just in case
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the Leader of the Opposition is more interested in economic reality rather than fourth-form abuse wrapped up in a third-form perspective of history?
The Prime Minister: In view of the experiences which my hon. Friend enumerated, I believe that President Mitterrand would be a very good teacher. Unfortunately, I do not think that he would have a very good pupil in the Leader of the Opposition.
Mr. Dennis Skinner: Bearing in mind what has happened at previous summits, and especially this one, does the Prime Minister wish that she had kept to the strictures that she used to admonish a former Prime Minister when she said that these summits were a waste of time? Is she aware that, every time she has returned empty handed, unemployment has increased? Is it not a sad irony that, in this summit, 40 years after the building of the bridge over the River Kwai, the super Japanese, with an economy that the Prime Minister has idolised, have pinched the Bosphorus bridge project from underneath her nose by giving state aid? What an irony.
The Prime Minister: I do not think that the hon. Gentleman could have been listening to what I said, because otherwise he would have heard——
Mr. Skinner: I heard the right hon. Lady this morning.
The Prime Minister: I am delighted. It might by this time have penetrated the hon. Gentleman's mind. After all, we were both at grammar school, so we should both have equal understanding. May I therefore explain in words of one syllable, although the hon. Gentleman could cope with words of three or four syllables if only he would admit it, that the amount of aid which would have been given by this Government to the Bosphorus bridge project was equal to the amount given by the Japanese. I hope that the hon. Gentleman agrees that that was a very good thing to do.

Gas Industry
4.19 pm
The Secretary of State for Energy (Mr. Peter Walker): With permission, Mr. Speaker, I should like to make a statement about the future of the British gas industry.
Major progress has been made with the Government's privatisation programme. Management and enterprise have been freed from bureaucratic intervention in industries as diverse as aerospace, the ports and cross-Channel services, the oil industry and British Telecom.
The Government have decided that the time has come for a further major step in the transfer of state industry to the private sector. I propose to introduce legislation at the earliest opportunity to provide for the transfer to a new private sector company of all the assets of the British Gas Corporation, and for appropriate regulation of monopoly aspects of the gas supply business. Following that legislation, the Government intend that the shares in the new company should be sold to those employed in the industry and to the public.
This change, like the earlier ones, will remove state intervention and substitute realistic tests of performance for bureaucratic or political ones. It will create a real ownership by the public and employees in place of the nominal public ownership of the nationalisation statute. It will place new emphasis on efficiency for the benefit of consumers and give employees a new stake in the business.
The legislation will protect the consumer by establishing regulatory arrangements to oversee gas prices to the consumer and terms and conditions of supply. The new company will have an appropriate obligation to supply consumers, as has been the case with the British Gas Corporation. The legislation will protect consumers against discrimination and will contain necessary safety provisions, including the obligation on the new company to maintain the emergency services.
The opportunities for greater competition opened up by the Oil and Gas (Enterprise) Act 1982 will be maintained and kept under review. In particular, it is the Government's intention that competitors should be able to supply not only large industrial consumers but smaller domestic and commercial consumers in areas not already supplied by BGC, with suitable safeguards for safety.
Outside the areas of gas supply, the new company will be able to develop other areas of its business in a competitive environment, subject like any other company to the general framework of competition legislation.
I intend to provide special opportunities to gas consumers and other small investors to purchase shares, in line with our policy on wider share ownership. All gas consumers will benefit from the emphasis on efficiency which will be built into the regulatory system and from a staightforward system of gas pricing related directly to achieved commercial performance.
As with previous privatisation measures, I propose to make generous provision to enable all who work in the industry to acquire shares and thus to take a new stake in the company's performance and success. There will be new opportunities, as well as new challenges, for management and employees in the new company.
The British gas industry is now nearly two centuries old. It has spent nearly 40 years as a nationalised industry,
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but was developed for a century and a half in the private sector. It has undergone great change in the past two decades with the transition to natural gas, which has linked it to the great expansion of British industry into the North sea. I believe that today's announcement will mark a new and long period of successful development into which the management and all who work in the industry can bring their present talents and link them with new freedoms in the interests of the nation.
Mr. Stanley Orme: The Government's proposal to privatise British Gas will create a massive new private monopoly out of publicly developed assets. For what purpose, and to what end? Will there be any greater choice for gas consumers? Will it introduce competition, which is so vaunted by the Government? The right hon. Gentleman mentioned the Oil and Gas (Enterprise) Act 1982. How many applications and approvals have there been under that Act? What a flop that Act has been. Will the measure bring the consumer any new benefits? Will it produce lower gas prices? There is not a shred of evidence to suggest that customers will be better off.
The Secretary of State has boasted that gas consumers will be offered a special opportunity to buy shares. The majority of gas consumers have enough to do to pay their present gas bills, which are deliberately inflated by Government policy. Does the Secretary of State recall that it was his Government who imposed a gas price increase of 10 per cent. above the rate of inflation for three years on the run—an additional national gas bill of £4 billion—and a £1·5 billion gas levy? The consumer, not the Government, has financed the development of the gas industry.
The Secretary of State boasts about the so-called wider share ownership. The privatisation record shows an ever-increasing concentration of shares in fewer and fewer hands. Is he aware that less than 5 per cent. of British Telecom's shares are now in the hands of its employees? The same story can be told about British Aerospace and Cable and Wireless.
I remind the Secretary of State that the British Gas Corporation has an outstanding safety record. If his proposals should have the misfortune to get through. there will be widespread anxiety that a private monopoly might cut corners on safety.
In his Cambridge speech last week the Secretary of State made a great point about employment and the creation of jobs. What new jobs will these measures create? What effect will they have, not just on the people who work in the industry, but on the tens of thousands who supply the industry?
Is the Secretary of State aware of growing public disquiet about the financial proprietry of the privatisation programme, which disquiet was rightly highlighted in today's TUC report? Huge fees are obtained by a limited number of City and financial companies. We want a full public and parliamentary inquiry into those issues before any further privatisation.
There will be equally widespread anxiety about the future ownership of the shares. Does the Secretary of State intend to have safeguards, such as the so-called "special" or "golden" share? What time scale does he envisage for these measures? How much does he expect to receive from the sale of these national assets? The sale will involve billions of pounds, but he has not today put a figure on what the Goverment propose.

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We all know why the Government are selling this industry—it is to pay for the Chancellor's pre-election handouts. There is no national energy case for the proposals. The British Gas Corporation, as a public corporation, has served the country well. It is one of the success stories of the past 20 years. There is every argument for maintaining a national corporation serving the nation and answerable to the House through the Secretary of State. There is no case for the creation of a monster private monopoly, serving limited interests, apparently to be controlled and regulated by a new Government quango. That is why the Opposition will oppose the proposals and any Bill that follows.
Mr. Walker: In the comments that the right hon. Member for Salford, East (Mr. Orme) made about the interests of the consumer he said that the Government had increased gas prices, against the consumers' interests. Does he not remember the year when the right hon. Member for Leeds, East (Mr. Healey) was Chancellor and the British Gas Corporation announced an increase of 12·3 per cent. in its prices for the following year, and that six months later, at the Chancellor's request, they were increased by a further 9·6 per cent.? Was that looking after the consumer, or was it a politician interfering, as politicians have constantly interfered, in nationalised industries—almost always against the consumers' interests?
It will be in the consumers' interests to have an organisation that is interested in improving efficiency and its competitiveness with other forms of fuel. As to the monopoly position, alas, since 1847 there has been a monopoly in the supply of gas. There was a monopoly when gas was nationalised, because it is unlikely that each house had two or three sources of supply. We recognise that. It is far better to have an organisation that will be judged on its commercial success and efficiency than to have the constant bureucratic control from which every other nationalised industry suffers.
The gas industry's safety record has been good. Plainly, it is in the interests of the new company to maintain the highest safety standards. It will have to follow all the statutory obligations.
I have read the reports of the TUC with a great deal of interest, but I think that its latest report was one of the most superficial and unenlightened that I have seen for a long time.
The "golden" share will have to be considered when we prepare legislation. It is important that the company remains under British control. That has always been the position.
On the question of timing, we hope to get this industry into the private sector as speedily as possible. As to the suggestion that it is an attempt to boost our electoral prospects, the only boost will be if the Opposition are foolish enough to promise that they will nationalise the industry again.
Mr. T. H. H. Skeet: I congratulate my right hon. Friend on his proposals, but may I ask him to bear in mind three crucial matters: the operation of pipelines—I hope that there will be common carriers—future oil discoveries and the export and import of natural gas?
Mr. Walker: These matters will be considered before any issue of shares. The common carrier proposals in the present legislation will continue to operate.
Mr. Bruce Milian: The right hon. Gentleman mentioned efficiency. Is it not a fact that British Gas has been outstandingly efficient, and would have been even more efficient had it not been for the dogmatic intereference of the right hon. Gentleman; for example, over its oil interests and the gas levy?
What possible justification can there be for converting a public monopoly into what will be virtually a private monopoly, unless it is the Government's obsession with short-term financial gain because of their long-standing obsession with the public sector borrowing requirement?
Mr. Walker: If the management and employees of British Gas pursue matters efficiently and effectively, is it not right that they should be given a personal stake in that success? Is it not good that management and all those employed in the corporation should have some direct benefit and result from their improved efficiency and an incentive to apply it to the full?
The right hon. Gentleman accused the Government of interfering in a way that damaged the corporation's efficiency. I could cite many examples from 1974 to 1979 when the Government of which he was a member had all sorts of interventionist pranks with the BGC. That is the horror of nationalisation.
Mr. David Heathcoat-Amory: I congratulate my right hon. Friend on his proposals, which will provide an opportunity to increase the number of shareholders in British Gas from one to many hundreds of thousands, thus creating a genuine measure of public ownership. Can he confirm that gas consumers in the south-west of England will continue to have access to gas supplies after denationalisation? Will the price in that area continue to be roughly the same as in the remainder of the country?
Mr. Walker: Yes, I can confirm both points, and the legislation will ensure that that remains the position. For the south-west and elsewhere in the country, the current positions for supply and pricing will continue to operate.
I agree with my hon. Friend about the spread of ownership. The reality of the hopes and aspirations of nationalisation in 1945—of there being a genuine sense of ownership for those employed in the industry—has proved a failure, and the ownership has always been in the hands of politicians and civil servants.
Mr. Ian Wrigglesworth: Will the Secretary of State tell the House how the commercial success and efficiency of the new company can be judged if there is to be no real market for its goods and no real competition? Who will carry out the regulation of prices and of the monopoly? Will another bureaucratic quango do that? How will the consumer benefit if the monopoly still exists?
Mr. Walker: There are plenty of examples throughout the world of privately owned utilities in which there is a regulatory price system having fine performances in efficiency. Efficiency brings rewards to the managers of a company and also to the consumers. A great deal of competition will remain, as there has been for a long time, between gas and electricity.

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If the hon. Gentleman is saying that the alliance is in favour of continuing nationalisation, I shall look at that with considerable interest.
Mr. Albert McQuarrie: I congratulate my right hon. Friend on his statement. I am glad that British Gas is finally to be denationalised. Contrary to the view of the right hon. Member for Glasgow, Govan (Mr. Millan), British Gas has been an inefficient organisation in Scotland. I hope that the legislation will ensure that the smaller towns can enjoy gas—something which they cannot do now. What steps does my right hon. Friend propose to take on the question of the many showrooms in towns and cities that will be affected by privatisation?
Mr. Walker: British Gas has recently reduced the number of showrooms as a result of a commercial decision. The Government took action to ensure that the accounts of the showrooms should be shown separately. I think that the corporation will take decisions to improve effectiveness. For example, in a number of recent cases British Gas has undertaken joint ventures with the private sector in retailing and providing services. I guess that under privatisation that will be an increasing trend.
Mr. Dick Douglas: What is the criteria against which the right hon. Gentleman judges the efficiency of an organisation, and will he measure them against the performance of British Gas in return on assets, profitability, safety and customer satisfaction? Can any private concern in the United Kingdom measure up to the performance of British Gas since it was created? How does he propose—if he proposes at all—to restrict incursions by oil companies into the ownership of the company that he will create? The Oil and Gas (Enterprise) Act restricted the incursions of British Gas into the oil industry. Will he give an assurance that the so-called golden share will operate?
Mr. Walker: On the hon. Gentleman's latter point, I believe that, in common with other privatisations, the golden share will operate. On the issue of the North sea, the privatised BGC will have all the freedoms of any other corporation or company, which will be a further advantage.
On the question of criteria, many other companies could probably show that they have done better on return of capital——
Mr. Douglas: Name one.
Mr. Walker: There are plenty. The BGC, like any other corporation, has had its mistakes and its successes. If the management is as good as the hon. Gentleman suggests, it will at last have a system where that is recognised.
Mr. Peter Rost: Does my right hon. Friend accept that there might have to be some changes in the tax regime if the Government are to retain their economic rent, bearing in mind that the shareholders, whom we welcome, rather than the Treasury, will be collecting the dividend?
Mr. Walker: The taxation proposals that will apply to the industry will have to be made clear by the Government prior to any issue, and I am sure that that will be done.
Mr. Malcolm Bruce: Does the Secretary of State acknowledge that this is a further extension of the Tory party's clause 4? It is an ideological privatisation, not
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to benefit the industry, but to create current spending out of state-owned capital. Does he not realise that a flotation of this size will distort the stock market, to the disbenefit of the smaller businesses needing venture capital? Does he not recognise that at the end of the day British Gas will still be a monopoly? If it must be regulated, why cannot that regulation and competition be introduced within the public sector?
Mr. Walker: There are substantial resources in the pension funds which represent the interests of those who work in industry. There is a substantial supply of money available to such an enterprise. It will be an attractive and good investment.
There is a general argument that it is rather nice to keep all this in the public sector. By chance, at some time during my political life I happen to have had Cabinet responsibility for virtually every nationalised industry, with the exception of the Post Office—and I am not volunteering for that. All I can say, in no doctrinaire way, is that under all Governments the Treasury and appropriate Departments have crawled over every project and plan and interfered on a considerable scale, which is a great disadvantage to these industries.
Mr. Rob Hayward: I welcome my right hon. Friend's announcement. Did he consider setting up regional bodies rather than a national body, as that would have provided a degree of comparison of operation from different part of the country?
Mr. Walker: Yes, I gave careful consideration to that, but, for a range of reasons, concluded that it was not a positive or practical idea. The reorganisation—which was carried out prior to my time at the Department—to make one network showed savings of probably £1 billion a year. To set up new organisations for each region, to follow that by a period of time within which they all had an opportunity to settle in, and to have considerable price differentials hitting some regions of the country far more than others would, in totality, have created no advantage, particularly when, at the end of it all, one must remember that gas is a product which, whether on a regional or national basis, will not have house-to-house competition.
Dr. Jeremy Bray: Does the Secretary of State expect the Gas Corporation to have 10 pay higher charges for any capital that it raises after privatisation? If not, what assurances can he give about future changes in the tax regime to people who may be considering buying shares? Does he think that the present chairman of the Gas Corporation will be more committed to the gas industry if he has a private holding in it?
Mr. Walker: The present chairman will, of course, decide what he considers to be the advantages or disadvanages, but I should have thought that for any chairman, having all of his employees and members of management being able directly to participate in the firm must be an advantage of outstanding importance. The answer to that part of the hon. Gentleman's question about borrowing is that the cost of borrowing, as he knows, varies depending on the success and quality of the management. The cost of borrowing for highly assessed, quality managements is even cheaper than borrowing from the Government.
Mr. John Watts: I welcome my right hon. Friend's announcement of this further substantial

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extension of genuine public ownership. Will he pay particular attention to the need to break the effective monopoly which is enjoyed by the Gas Corporation through its control of the pipelines, which, in spite of the common user provisions, prevents the competitive supply of gas direct from producers to consumers? Will he ensure that, within the new arrangements, there is an opportunity for real price competition between suppliers?
Mr. Walker: I must tell my hon. Friend, having studied the worldwide scene, that he should not overestimate the areas in which there will be two suppliers in competition. I have looked at operations throughout the United States, in the whole of North America, in Australia and in other parts of the world, and it is a myth to pretend that by some wave of the legislative wand there will be massive competition. We had a private sector gas industry in Britain for more than 100 years. From 1847 onwards there has been little competition of the nature described by my hon. Friend.
The provisions of the 1982 legislation are important. I have made it clear that for industrial users and those in areas which at present do not have gas supplies, if competition wishes to come in and supply them that opportunity will be available, and I hope that advantage will be taken of that. I have also said that we will keep the 1982 legislation under review. However, it would be wrong to give the impression that anywhere in the Western world was there lots of competition in gas.
Mr. Gordon Wilson: One is bound to wonder what the Government will do for cash after they have flogged off and squandered the nation's assets. Will a gas levy be imposed on the private company, and will that company be able to import Sleipner or other gas from the Norwegian sector should it wish to do so and the Government disagreed?
Mr. Walker: Decisions on import and export policies and the future of taxation will have to be announced by the Government before any prospectus is issued.
Mr. Tom Sackville: Does my right hon. Friend agree that there is no reason for any diminution of safety standards as a result of this measure? Does he further agree that any concern that arises will principally be the result of a scare campaign by the Labour party?
Mr. Walker: I agree with my hon. Friend, and it would be a grotesque insult to the existing management of the British Gas Corporation to suggest otherwise.
Mr. Peter Hardy: The Secretary of State suggested that many other substantial companies had done better than British Gas. Will he name one substantial public company which has equalled the record of British Gas over the last decade? Does he really believe that when these assets have been sold off the profits which will accrue to the shareholders rather than to the Treasury will directly serve the national interest?
Mr. Walker: When the shareholders happen to be the management and employees, and those who administer pension funds, all taking an interest in improving efficiency, and when one removes from British Gas the
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massive interference of politicians and civil servants that has taken place, there will be advantage to the nation as a whole.
Mr. Tim Yeo: In view of the massive success of the British Telecom share sale in attracting the participation of a high proportion of employees, against the advice of their trade union, and introducing an unprecedented number of individuals to the experience of share ownership, may I ask my right hon. Friend to assure the House that the same careful attention will be given to marketing the British Gas issue when the time comes?
Mr. Walker: Yes, I assure my hon. Friend of that. One of the most important aspects is that employees and managers will be able to have a substantial share in their corporation. That will be good, and, as my hon. Friend says, it was a great success with British Telecom. I see no proposals in today's TUC statement suggesting that the workers of British Telecom should have those advantages taken from them. I am sure that those employed in the gas industry will welcome this opportunity to participate in their future success.
Mr. Ken Eastham: Is the right hon. Gentleman aware that prior to the establishment of British Gas many major British towns and cities successfully ran their own gas authorities? Should an authority desire, in the interests of its ratepayers, to make a bid, will he place any obstacle in the way of that being done? In other words, will it be left to the finance houses to take part in this wholesale looting of taxpayers' assets?
Mr. Walker: If the hon. Gentleman feels that way, he should have opposed nationalisation when it first took place.
Sir John Osborn: May I, as one who made his maiden speech on the subject of gas, add my congratulations to my right hon. Friend for his statement today? Since making that maiden speech, whereas oil has been international, natural gas has been too national, particularly in Europe. Will my right hon. Friend consider the possibility of common carrier obligations extending to a European gas grid, with the possibility of domestic and industrial users consuming gas from Norway, the middle east and perhaps even from Siberia?
Mr. Walker: The future export and import policy will have to be carefully considered before the transfer of ownership is made, and a statement issued. We must recognise the importance of seeing that the development of the North sea continues and that there is security of gas supplies to this country. Decisions will be made in that context.
Mr. Max Madden: Does the chairman of the British Gas Corporation support the transfer of the gas industry from public to private hands? If he does not, will the right hon. Gentleman give an assurance that he will not attempt to gag the chairman in defending his industry remaining in public hands?
Mr. Walker: I do not know of anybody who has succeeded in gagging Sir Denis Rooke.
Mr. Peter Bruinvels: I congratulate my right hon. Friend on his announcement. Will he do everything in his power to allay the fears of employees of both British Gas and East Midlands Gas and assure them

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that they have nothing to be frightened about, but, rather, that they should be encouraged to buy shares because they will be good value? The one problem that I envisage relates to the tariff structure. What will be done about tariffs to ensure that there can be genuine comparison of efficiency after the change comes about?
Mr. Walker: The regulatory authority will lay down criteria which eventually will be examined by the House, and I believe that that will be clearly seen to encourage efficiency, to the benefit of consumers and shareholders in the business. I welcome my hon. Friend's comments about the employees. I am certain that what is proposed will be beneficial to the employees, though doubtless there will be the usual scares about their pension rights and so on. All of those rights will be protected and they will continue, and the employees will know that the business is freed from the sort of Government interference that has not done the industry much good in the past. In addition, they will be able to share in their own success. Any sensible and rational employee in the gas industry should strongly welcome the statement.
Mr. James Lamond: Has the Cabinet taken account of the overall impact of the policy which has just been outlined in relation to British Gas, already carried out in the case of British Telecom, and expected to be carried out in the case of British Aerospace and, possibly, the British Airports Authority? There are to be massive share issues and, apparently, an attempt to attract the small savers. That must be detrimental to the inflow of funds to organisations such as the building societies. They may have to increase their interest rates to the lenders, and that will have grave implications for those with mortgages. Has the Cabinet taken that into account?
Mr. Walker: If the hon. Gentleman takes that view, he should calculate the effect of large Government borrowings on the same movements and deplore them too.
Mr. Frank Haynes: I do not intend to congratulate the Secretary of State. While the right hon. Gentleman was prancing around in the Ministry of Agriculture, Fisheries and Food a few years ago, like a bull in a china shop, and looking after the interests of the farmers on the Benches behind him, another Minister suggested at the Dispatch Box that a certain sector of the gas industry should be sold off. However, because of the ensuing row in the House of Commons, and the invasion of the House of Commons by thousands of employees from the industry, the Government backed off. If the employees in the industry make it clear to the Secretary of State that they are not interested in privatisation and have already demonstrated against it, will he back off? If not, why not?
Mr. Walker: Provided that the hon. Gentleman, having made the same remarks about British Telecom, will back off now that all the shares have been bought.
Mr. Haynes rose——
Mr. Speaker: Order. We all hear things here that we do not like.
Mr. Orme: May we take it from the Secretary of State's answers that there is to be a golden share and that the industry will be protected from overseas takeover? That should be made quite clear.
Secondly, if a private monopoly is allowed to have oil interests, but a public monopoly, which is successful and is investing, is prevented from having the same interests, is there not a contradiction in the Conservative approach?
Mr. Walker: No, I think that it is a very good Conservative approach, and I fully support it.
Mr. Haynes: On a point of order, Mr. Speaker.
Mr. Speaker: I shall take the point of order. However, as no doubt the hon. Gentleman was seeking to discomfit the Secretary of State, I hope that he is not being too thin-skinned about the matter.
Mr. Haynes: Perhaps I should not raise the point of order.
Mr. Walker: If the hon. Gentleman made no criticism of British Telecom and did not consider that the workers were against the change, of course I withdraw. How wise the hon. Gentleman was.
I assure the right hon. Member for Salford, East (Mr. Orme) that there will be appropriate legislation to ensure that there can be no foreign takeover.
Mr. Haynes: On a point of order, Mr. Speaker. The right hon. Gentleman made an accusation that is not true. If he had said "The Labour party", I would not have protested, but he referred specifically to me. What he said was not true and I ask him to withdraw it.
Mr. Walker: Of course I withdraw it. I congratulate the hon. Gentleman on not being associated with the Labour party.
Mr. Haynes: Further to that point of order, Mr. Speaker. The right hon. Gentleman is answering in the same vein, and that is not being honest at all. That is being crooked.
Mr. Speaker: Order. No, it is not being crooked. The hon. Gentleman must not make that accusation. I think that, on reflection, he will withdraw that word.
Mr. Haynes: I withdraw it. I should have said "deceitful".

Legionnaire's Disease (Stafford)
4.53 pm
The Minister for Health (Mr. Kenneth Clarke): I will, with permission, Mr. Speaker, make a statement about the outbreak of Legionnaire's disease in the Stafford area.
From mid-April onwards the Mid-Staffordshire health authority has had a series of admissions to its hospitals of mainly male and mainly elderly patients with acute respiratory illness. The combination of pneumonic and other symptoms suggested that one of the organisms responsible could be legionnella pneumophila. Investigations also showed cases of influenza B. Legionnaire's disease is difficult to diagnose with certainty at the beginning of an outbreak because blood tests on living patients do not provide confirmatory evidence until two to four weeks after the onset of the illness. It was not until 3 May that the first positive evidence of Legionnaire's disease was obtained and a positive diagnosis of the disease was then made in 12 cases.
On 29 April the health authority contacted the communicable disease surveillance centre at Colindale which is the national centre of expertise in this field. The following day two doctors from Colindale began their investigation in Stafford. They were asked to support the health authority in the efforts that it was already making to diagnose and trace the source of the disease. After 3 May, the team from Colindale was increased and intensified its efforts to identify possible sources of the outbreak in the community. These investigations are still continuing. One probable source that has been identified is the water in the cooling towers of the Stafford district general hospital's own air conditioning system. This and all water supplies at the hospital have therefore been tested and heavily chlorinated. The hospital has now been declared safe by the Colindale team and the Health and Safety Executive.
By 10 am this morning, a total of 30 people showing the symptoms of acute respiratory illness have died since the beginning of the outbreak. Of these, six are confirmed cases of Legionnaire's disease. A total of 130 people have been admitted to hospital with the symptoms. Seventy-four are still in hospital, of whom two are in intensive care. The indications are, however, that the outbreak is now under control. Seven patients have been admitted or transferred to Stafford general hospital during the last 24 hours. Sixteen patients have recovered sufficiently to have been discharged.
I have spoken to the chairman of the Mid-Staffordshire health authority and I am confident that the authority is doing everything necessary. I should like to pay tribute to all the authority's employees, and in particular to the nursing and medical staff, who have worked throughout the period to treat the patients and keep the Stafford hospital open.
The first priority so far has been to deal efficiently with the outbreak and positively to identify the source of the infection. Once we are completely satisfied that this has been done, we will need to inquire into the outbreak in detail, and to consider what lessons can be learnt from it. The exact form, composition and terms of reference of the inquiry can most sensibly be settled when the immediate task is complete. The patients, their families and the public
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will wish to have the full history of the outbreak. We and health authorities will want to know what further steps might be taken to minimise the risk of any similar occurrence anywhere in the future. I expect, therefore, to make a further detailed announcement about the inquiry as soon as possible.
I am sure that the whole House will join me in expressing sympathy with the families of the victims of this tragic outbreak of disease in Stafford.
Mr. Frank Dobson: I am sure that all hon. Members will wish to join the Minister in expressing sympathy for the victims of the outbreak, and their families, and in paying tribute to the NHS staff who have worked so hard to try to save the lives of those affected.
It is also right that people should concentrate for the moment on combating the outbreak. However, people in the Staffordshire area, and perhaps further afield, will not be really reassured until there has been a thorough-going and independent inquiry into the outbreak. People will not be satisfied with a local internal inquiry conducted by the health authority or an inquiry conducted by the regional health authority.
I should like to ask a number of specific questions. The Minister may not be able to answer all of them today, but the inquiry will need to consider them. What was the cause of the outbreak, and how did it spread? When did the health authority first suspect that the outbreak was not influenza? If the health authority had suspicions before 29 April, when it first contacted the communicable disease surveillance centre, why was there delay in contacting the centre? Have the tests on the cooling tower water provided positive proof of an infection in the water system? Is the health authority's own pathology laboratory sufficiently well equipped and staffed to cope with the outbreak? Did the Stafford general hospital follow the DHSS guidelines for keeping the cooling towers clean? In any case, are those guidelines adequate? Have checks been made at other hospitals of a similar design, of which there are a substantial number? Are checks to be made on other forms of cooling towers and cooling systems, whether commercial or industrial?
Until those questions have been answered, people in Stafford and others interested in the outbreak are not likely to be satisfied.
Mr. Clarke: The hon. Gentleman accepted that a number of his questions anticipate the outcome of the inquiry, so I shall not go into detail on those matters. I have discussed the issue with my hon. Friend the Member for Stafford (Mr. Cash) and we have talked about the form of any inquiry. It turns out that the hon. Member for Holborn and St. Pancras (Mr. Dobson) agrees with me and my hon. Friend that the inquiry must be independent, which almost certainly means that members will not be drawn from the regional or the district health authority.
The only matters about which I wish to delay are the composition and terms of the reference of the inquiry. Only after the whole thing has been dealt with at Stafford shall we be certain of the sort of expertise that we shall require on the inquiry team. We shall then know to what extent they will be considering health matters or engineering matters and so on, and we shall be able to get the right people together.
Questions about the cause of the outbreak and steps taken to identify and diagnose the disease will have to be

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addressed by the inquiry. The hon. Member for Holborn and St. Pancras will appreciate that the people of Stafford were taking steps from the moment they began to realise that there was an upsurge in numbers, and he will appreciate the difficulties in positively identifying and diagnosing Legionnaire's disease and distinguishing it from other forms of apparent pneumonia. The details mentioned by the hon. Gentleman will be addressed by the inquiry.
We do not yet have the results of the tests on the water in the cooling towers, but no doubt we shall receive the results soon and find out whether they are positive and whether they confirm the identification of the cooling towers as the probable source of the infection. The epidemiological evidence is compelling and makes it almost certain that the cooling towers were the source.
There are departmental guidelines, and they were circulated to all authorities after an outbreak in Kingston upon Thames in 1980. As far as I am aware, the guidelines have been complied with, but, again, the inquiry will look into that. One result of the tragic outbreak may be that we shall have another opportunity to assess the adequacy of the guidelines and to update, strengthen or adapt them, as proves necessary.
Purely as a precaution—and one that the hon. Member seemed to be urging—we intend in the next day or two to write to the managers of every district health authority drawing attention yet again to the guidelines and making sure that the necessary inspections, tests and chlorination are being carried out on cooling towers of the type at Stafford.
Whether it will be necessary to look again at the design of new hospitals, cooling towers and air conditioning systems in a wide range of modern buildings will be discovered only in the fullness of time when there has been the most exhaustive inquiry into the outbreak.
Mr. William Cash: I am grateful to my right hon. and learned Friend for making a statement and for agreeing to the independent inquiry for which I have called over the past week. I am also grateful for the effective and immediate advice tendered to the district health authority by the Government and their officials. Has my right hon. and learned Friend any idea when the inquiry is likely to take place?
Mr. Clarke: I am grateful to my hon. Friend, particularly for his tribute to the assistance given by the people from Colindale in the most valuable scientific and medical support that the Department was able to give to the people struggling with problems in Stafford.
We do not want a great delay before the inquiry is held, because we do not want memories to fade or details to be lost. I expect to be able to make the further announcement to which I referred—about the form and terms of reference of the inquiry—within the next week or two, assuming that we are able to clear up the remaining doubts about the outbreak and its resolution over the next day or two. After that, it will be a matter of logistics to get the inquiry under way as soon as possible.
Mr. Michael Meadowcroft: I associate my right hon. and hon. Friends with the Minister's expressions of sympathy.
The institution of an inquiry must be sensitively timed, though I accept what the Minister said about the need for some speed. Will he consider making the inquiry's terms
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of reference sufficiently wide to take into account the possibility that this disease, like others, may have originated in non-industrialised countries? Increased mobility, let alone altruism, perhaps necessitates preventive measures and effective health care being looked at globally rather than in our country alone. Might not some of the new health problems that we are experiencing be coming from abroad and should we not consider carefully whether action needs to be taken beyond our shores?
Mr. Clarke: The disease has been positively identified only in fairly recent times, but it appears to be a particular problem in modern buildings, with modern air conditioning systems and showers. I have no doubt that everything learnt from such outbreaks in this country and in other countries has to be used on a worldwide basis. It is only from such occurrences that we learn how to protect ourselves against them. My hon. Friend the Parliamentary Under-Secretary of State for Health and Social Security is attending the World Health Assembly in Geneva this week, and no doubt he will take the opportunity at the margins of the meeting to discuss experience of Legionnaire's disease throughout the world.
Mr. Patrick Cormack: I associate myself with the expressions of sympathy that my right hon. and learned Friend has properly uttered. Is he aware that for many years my constituents and others in Staffordshire were waiting for the hospital, that many thousands of them are grateful for the extraordinarily fine care that they have received as inpatients and outpatients since it opened, but that they are deeply worried about what appears to be a terrible problem emanating from the most modern of buildings?
I thank my right hon. and learned Friend for saying that the inquiry will be independent, but I urge him to ensure that it is thoroughly independent and that someone such as a High Court judge is asked to preside over it.
Mr. Clarke: There is a tragic irony here. We have a magnificent new hospital and there is a strong probability that one feature of it has proved to be a cause of disease. I reassure my hon. Friend's constituents that the water systems for the tanks have been drained, refilled and heavily chlorinated; the whole water system has been chlorinated; and the temperature in the hot water system was raised to a level that killed off the organisms that cause the disease. The system has been declared safe by everybody, including the national experts from Colindale. There is no continuing risk to health.
I entirely agree with what my hon. Friend said about the independence of the inquiry, and I shall comply with his request.
Mr. Jack Ashley: I associate myself with the Minister's expressions of sympathy.
Is it not ironic that people going into hospital for a cure contract a disease instead? Is the Minister aware that that is happening frequently and that, according to a letter sent to me by the Secretary of State 18 months ago, 10 per cent. of patients in British hospitals acquire infection on entering hospital? Will the Minister take the advantage of this opportunity to deal with the major problem of hospital-induced disease and try to make hospitals safer for patients?
Mr. Clarke: The right hon. Gentleman is correct in saying that there is a problem of infection in hospitals.

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Everybody in the NHS is aware of that and devotes considerable attention to reducing the infection incurred by patients.
I know that the right hon. Gentleman does not wish to cause needless alarm. He knows, though some members of the public may not, that some of the infection that makes up the near 10 per cent. figure is trivial and minor. Nevertheless, I would not minimise any of it. As Legionnaire's disease is a newly discovered and particularly difficult infection, we must make sure, in the light of the Stafford tragedy, that we reduce the risk to a minimum in future.
Mr. John Heddle: On behalf of my constituents in Stone and Rugeley in particular, many of whom work in the hospital and a number of whom have been bereaved, I should like to associate myself with my right hon. and learned Friend's remarks.
According to national press reports, the problem may have arisen from the air conditioning system, as my right hon. and learned Friend said, but that system was investigated and serviced as recently as January this year. Will the inquiry therefore establish that that investigation was thorough and proper rather than simply cursory and of a general nature? Secondly, will he take account of the fact that within easy reach of the hospital there are two power stations, Rugeley and Meaford, both in my constituency, and therefore that there might still be a possible risk of some atmospheric conditions emanating from the cooling towers there, and will he ensure that this wide-ranging inquiry considers that aspect also?
Mr. Clarke: On the available statistics, there is a strong probability that the cooling towers at the hospital were the source of the infection. Until we have the results of the tests, we cannot be absolutely certain. But, of course, we will not eliminate the continuing search for other possible sources of infection.
There are guidelines about the inspection and chlorination of water systems in hospitals. We will want to make sure, first, that they were complied with, and, secondly, that they are adequate, although, of course, one can never guarantee that an infection will not arise a day after a thorough inspection has been carried out. Any lessons that are drawn from this incident may well have wider application to buildings other than hospitals, because the problems with most air conditioning systems and large accumulations of water, as in cooling towers at power stations, can all give rise to Legionnaire's disease in some circumstances.
Mr. Mark Fisher: Is the Minister able to say over what period of time the cooling ponds and towers may have been defective? Is he able to identify the number of people visiting the hospital who may have been at risk in that period, and so reassure people, certainly in my constituency and in neighbouring health authorities, that the problem will not spread?
Mr. Clarke: I am not able to give absolutely positive answers to those questions, because they are no doubt matters that the inquiry will examine.
The health authority became aware of this upsurge of people with pneumonic symptoms in mid-April. It peaked towards the end of April, and it is now falling. away again.
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None of the staff appears to have contacted any problems of this kind, and many other people who obviously went to the outpatients' department have had no problem.
One of the features of Legionnaire's disease is that only particular sections of the population appear to be at risk. The young and the fit by and large are often quite unaware of the fact that they have had anything other than a mild dose of flu. Therefore, it may well be that no one will ever be able to give completely positive answers to the questions that the hon. Gentleman has asked.
Mr. Gerald Howarth: A number of my constituents in Cannock have been affected by this terrible disease. I have been asked by some of them to express to the staff involved the tremendous appreciation of those who have been bereaved at the efforts made by the hospital staff in difficult circumstances.
I very much welcome what I took to be an indication by my right hon. and learned Friend that there will be an independent inquiry. I am sure that bringing minds to bear on this problem from outside the Health Service could well be advantageous and help to root out the cause of this baffling disease. Will my right hon. and learned Friend look particularly at the air conditioning systems not only in the public sector but in the private sector? Lastly, once the causes have been discovered, could we perhaps have an action programme circulated to every hospital and general practitioner in the country, so that the disease can be identified at an early stage?
Mr. Clarke: I am sure that my hon. Friend's praise for the staff of the hospital will be much appreciated.
There is no doubt that we will have an independent inquiry. All that I am reserving today are the names of the members, the exact form of the inquiry and its terms of reference. I appreciate my hon. Friend's concern. As I said a moment ago, anything that we discover as a result of this outbreak almost certainly will have some relevance and application to those responsible for modern hotels or office blocks, and probably other premises.
Mr. Laurie Pavitt: In the light of the increased knowledge that we now have of the whole question of pathology and respiratory diseases and the extra work at Colindale that the Minister has mentioned, can we rest assured that, in the cuts being applied to the Medical Research Council, research in this sector will not be cut back? Secondly, in the light of an answer that the Minister gave to one of his hon. Friends, as the family practitioner committee is no longer part of the district health authority and as more people die from respiratory disease not in but outside institutions, can we be reassured that the same kind of coverage and information will be made available to general practitioners as will be made available to hospital doctors?
Mr. Clarke: This is not the occasion on which to enter into arguments about whether cuts are taking place in the budget of the Medical Research Council. Since 1981 research has been commissioned into aspects of this disease. The results of the studies carried out are now being analysed. We hope to have the results of valuable work following that research by the autumn this year.
On the last point, we have obviously had to make sure that no division of responsibility leads to any division of knowledge or access to knowledge. In fact, the Stafford

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district health authority took steps to notify its general practitioners, warning them to watch out for certain symptoms and to inform the health authority the moment that Legionnaire's disease was positively diagnosed. I quite accept that people in the community will be affected as much as those who have been admitted to hospital.
Mr. Edwina Currie: Does my right hon. and learned Friend agree that this outbreak is a tragedy not only for the people who died and for their families but for the dedicated staff of the hospital who must be deeply upset at the thought that the hospital itself could be the culprit? Perhaps all that it shows is that we know precious little yet about the epidemiology of this disease. Does he further agree that one of the lessons that are bound to be drawn is that spending on the maintenance of hospitals, new and old, is not optional but of the utmost importance, and that maintenance budgets at which no one ever looks and about which no one ever boasts are not in conflict with acute care but an essential part of it?
Mr. Clarke: I agree with both parts of my h on. Friend's question. First, I think that the staff would share her views entirely. Secondly, certain elements of maintenance are essential for safety. All authorities should resist the temptation to make cuts in maintenance which are easier to make than changes elsewhere. As far as I am aware, in this case there is no background of cuts in maintenance or anything else in Stafford. Indeed, Stafford is an authority with a brand new hospital, the hospital which we are discussing, and it has £500,000 more revenue spend this year than it had last year.
Mr. Tim Smith: Is my right hon. and learned Friend aware that a company in my constituency, Housemans Burnham Limited, claims to have a product, Hatacide LP5, which is highly successful in controlling the legionella pneumophila bacteria in industrial cooling sytems? Will he see whether this could be used to prevent outbreaks elsewhere?
Mr. Clarke: I hate to say anything for good or ill about my hon. Friend's constituents, but the fact is that none of these biocides has the approval of my Department, although we have considered a number of them. All the advice that I have is that chlorine is the most effective way of dealing with Legionnaire's disease and the organism that causes it, and chlorine is the only product at present recommended by my Department.
Mr. Peter Bruinvels: Will my right hon. and learned Friend do everything in his power to speed up the decision and judgment of the inquiry because of the fear felt, perhaps unnaturally in certain other parts of the country, by people who may be deterred from going into a new hospital? We all know that hospitals are there to cure. We need the report of the inquiry as soon as possible.
Mr. Clarke: As I said earlier, as a precaution we will write to the general managers of all districts reminding them of the existence of the circular which sets out the frequency with which water systems should be tested and chlorine added. I am sure that we will find that every district is already following those recommendations. Any that are not will be doing so in double quick time and will not wait for the inquiry.
Mr. Dobson: Assuming, as we must for the time being, that the water system and the water towers are the source of the infection, will the Minister give us a clear commitment that he will get in touch immediately with those authorities which have hospitals of a design similar to that of this hospital to make sure that this does not occur in other places?
Mr. Clarke: I will. All that the letter to which I have referred awaits is the necessary typing and postal distribution. We will, as soon as possible, be writing to all health authorities pointing out that they should be examining their sytems every six months and chlorinating them to the recommended level.

Mr. Speaker's Ruling (Written Answers)
5.18 pm
Mr. Speaker: The hon. Member for Sedgefield (Mr. Blair) raised a point of order last Friday, when Mr. Deputy Speaker was in the Chair, about the substitution by the Treasury at about 7 o'clock last Thursday of a new text of a written reply after what purported to be the original reply had been lodged at the proper time, that is, at 3.30 pm. I understand that the facts are not in dispute.
Nevertheless, I have to rule that, in the words of "Erskine May" on page 345,
"any alteration"
—to a written answer—
"must be made orally in the House by the Minister".
The Treasury should not have sought to substitute a new answer by sending it to the hon. Member for Sedgefield at 7 o'clock. I note that the Financial Secretary offered his apologies when the matter was first raised last Friday.
Furthermore, the revised answers should not have been accepted and printed by the Official Report. I therefore direct that the original answers should now be printed and should appear in the Bound Volume.
I also understand that the hon. Member for Sedgefield was concerned about the interference with his mail once it had been placed on the Letter Board. No doubt the staff on duty at the Letter Board were seeking to be helpful, but I have to say that they should not have allowed the mail of the hon. Member to be opened in the way in which it apparently was.
Mr. Tony Blair: I am grateful for your ruling, Mr. Speaker, and I am content to leave these aspects of the matter at that.

Mr. Speaker's Ruling (Written Answers)

  CORRIGENDUM
  Official Report, 2 May 1985, Written Answers, columns 245 and 246, delete all under the heading "Johnson Matthey Bankers" and insert instead thereof:
  Mr. Blairasked the Chancellor of the Exchequer if, pursuant to the answer of the Economic Secretary on 25 April, Official Report, column 974, he will list the lending of Johnson Matthey which was there described as extremely unwise and imprudent lending; and if he will make a statement.
  Mr. Ian Stewart: No. It would not be proper for me to reveal details of the affairs of JMB's customers.
  Mr. Blairasked the Chancellor of the Exchequer whether the inquiries by the Bank of England into Johnson Matthey Bankers have revealed departures from normal prudent banking practice.
  Mr. Ian Stewart: Yes.
  Mr. Blairasked the Chancellor of the Exchequer (1) what action the Bank of England took prior to the collapse of Johnson Matthey Bankers in pursuance of its duty to supervise the banking system;
  (2) whether the review of the arrangements for banking supervision will comment on the justification of the Bank of England's takeover of Johnson Matthey Bankers; and if he will make a statement;
  (3) whether the review of banking supervision will deal with the monitoring by the Bank of England's banking supervision department of Johnson Matthey prior to its collapse and the steps it took prior to the collapse to identify and seek to correct Johnson Matthey Banker's difficulties.
  Mr. Ian Stewart[pursuant to his reply, 29 April 1985, c. 65]: My right hon. Friend will make a full statement when he has received and considered the report of the review of banking supervision and has nothing further to add at this stage.

Personal Statement
5.20 pm
Mr. Dafydd Wigley: With permission, Mr. Speaker, I should like to make a brief personal statement.
On Friday afternoon, following some heated exchanges, I was in the process of making representations to Mr. Deputy Speaker, during the course of which I accidently dislodged the hinged wing of Mr. Speaker's chair. That was certainly not intentional, but I wish to apologise to you, Mr. Speaker, and to the House for any discourtesy which may have been attributed to the incident and to give my undertaking that I shall be more careful with the furniture of the House in future.

VE Day—40th Anniversary
5.21 pm
Mr. David Winnick: On a point of order, Mr. Speaker. I appreciate that you are not responsible for the business of the House, but I seek your advice because of the shortage of time.
I understand that there is not to be a statement in the House tomorrow to mark the 40th anniversary of the ending of the war. It seems strange to me, and no doubt to other hon. Members, that there will be no opportunity for brief exchanges and that an event of such historical importance is to pass without any kind of statement.
I understand that there is to be a service, but, in view of the shortage of time, I hope that the Leader of the House will be prepared to explain why there is not to be a statement. Indeed, I hope that even at this late stage there will be a change of mind on this very important topic.
Mr. Speaker: The hon. Gentleman has information that has not been given to me. Normally I do not know about these matters until 12 o'clock on the day in question.
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): I am almost all that stands between the House and the Committee stage of the Finance Bill, so my remarks will not be protracted.
I accept at once that the concern expressed by the hon. Member for Walsall, North (Mr. Winnick) is widely felt throughout the House. The hon. Gentleman will see from the record of what happened 40 years ago, however, that on that occasion the House adjourned for a church service. In many ways, therefore, it seems appropriate that we should repeat that.
Nevertheless, as the hon. Gentleman has raised the matter, I shall look at it again.

Abolition of Forth and Tay Road Bridge Tolls
5.22 pm
Mr. Gordon Brown: I beg to move,
That leave be given to bring in a Bill to abolish tolls on the Forth and Tay Road Bridges.
The Bill is designed to rectify a long-standing injustice whereby Fife is the only county in Britain in which people have to pay tolls on the south as they enter and also on the north as they leave the bridge. Secondly, it is designed to end one of the early, expensive and unfortunate experiments in privatisation, as a result of which motorists crossing have to pay for the bridge four times over—as taxpayers, as ratepayers, as road tax payers and as toll payers. Thirdly, it is designed to remove one of the many Government-imposed barriers to the creation of jobs in Fife, where unemployment is rising faster than in almost any other part of the country.
The Bill also provides an opportunity for Conservative Members to fulfil at least one of their election promises to the people of Scotland. With broken promises on pensions and on rates high in their minds, Ministers may care to consider that more than 10 years ago, at exactly the same time as they promised to abolish domestic rates, the Conservatives gave a specific manifesto undertaking to abolish tolls on the Forth, Tay and Erskine bridges. Since their return to office in 1979, with tolls, as with rates, the Government's response to their long-standing commitment has been not to abolish the tolls but to double them, and then to attempt to raise them again—ignoring all respectable advice, including that of their own appointed officials, that the present system of charging tolls is unfair, inconsistent, inexplicable and economically unsound.
Tolls are unfair because some bridges, such as the Forth and Tay, are subject to tolls, while others, such as Kessock and Ballachulish in Scotland, and many more in England, are not. Tolls are inexplicable because the Government cannot satisfactorily explain to anyone the criteria whereby tolls are selectively imposed. Tolls are also illogical. Their only public justification is that there are exceptional benefits to users, but Ministers have never been able to define those benefits, because they are not definable.
The charging of tolls on the Forth and Tay bridges in particular is unfair, inconsistent and illogical because the roads involved, which the Government say offer exceptional benefits, are essential elements of our national road system. Eleven million vehicles cross the Forth bridge every year. It is indisputably an indispensable part of the British motorway system and it is listed as part of the European system of major roads. It is also the main northerly route for Britain's North sea oil-related traffic. What possible justification can the Government have for continuing to classify the Forth road bridge merely as a private road and accepting no responsibility for its debt, running and repair costs?
When the bridge was first conceived 40 years ago, the then Labour Government offered to pay £4⅔ million, which was 75 per cent. of the projected cost of building the bridge. By the time the bridge was completed, that contribution represented only one quarter of the final cost. If the Government were prepared to pay most of the cost in the 1940s when the economic benefits were perhaps

659
speculative, what explanation can the Government now give for their refusal even to reconsider the finances of a bridge which is clearly an essential element of our road system?
The toll system on the Forth is unsound for yet another reason. Uniquely, users of the Forth bridge contribute tolls not just to pay off the £13 million cost of the bridge but to pay off £6 million of debt accumulated in building 8 miles of motorway approach road—a stipulation which the Secretary of State's most recent investigator found extraordinary, unfair and unreasonable. As a result of all this, the Forth bridge, which cost £19 million to build 21 years ago, now has a larger debt than it had when it was completed. Even after 170 million cars have crossed it, paying £34 million in tolls, the debt continues to rise and there is no sign that this trend can ever be reversed.
The only legal constraint upon the Secretary of State when he seeks to push up tolls on the Tay bridge, as well as on the Forth, is the ritual public inquiry, which has become a circular exercise in self-justification. The Secretary of State recommends an increase, he appoints his own reporter to examine the recommendation, he receives the reporter's report and then accepts his original recommendation and raises the tolls.
These bridge tolls should be abolished because they are a tax not only on cars and on travel but on jobs and industry in Scotland. Last week, a monthly rise of exactly 5,000 was reported in the British unemployment figures and half of that increase was in Scotland. More serious than that, 14 per cent. of the overall increase was attributable to three constituencies close to the Forth bridge, including my own constituency, which make up only 0·5 per cent. of the British population.
For the first time ever, there are officially more than 20,000 unemployed in Fife, and I believe that the real figure is nearly 30,000. In the past six years, 12,500 jobs have been lost and as many jobs again are at risk as a result of the threat to Rosyth dockyard and to the mining industry in Fife. The Government's response to this record and rising level of unemployment has been to take from Fife £20 million in regional development grants over the next five years. The Secretary of State, in proposing toll increases, will be taking an additional £1 million in tax from the county of Fife and from bridge users.
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The Government's only response to my plea for emergency help for areas in my constituency with 40 per cent. male unemployment was a letter saying that the unemployment figures did not justify a major initiative by the Government. How much higher must unemployment rise before the Government are moved to take action, whether by removing bridge tolls or through direct funding of job creation projects in Fife?
The Government's record on election promises in Scotland is appalling, as the Secretary of State and his Ministers know. The Secretary of State's reputation in London, as he well knows, is that not of Scotland's Minister in the Cabinet, but of a district commissioner for an economically derelict, electorally dispensable northern outpost. If it is within his power to make a small exception to the Government's disastrous record in Scotland, the Bill offers him that chance.
The Bill will bring an end to the expensive privatisation experiment on the Forth and Tay, which has gone so badly wrong, and provide for the future employment security of those who work on the bridge. The cost of abolishing tolls will be small, but the economic benefit in uninterrupted flow of traffic, cheaper fuel bills, reduced administrative overheads and in the encouragement of industry north of the Forth will be substantial.
Perhaps the journey of Conservative Ministers to meet their diminishing band of supporters at the Scottish conference in Perth will be a little easier if they can tell the conference that they will support the Bill, and that, although they cannot fulfil their most recent election promises to the Scottish people, they will at least honour the long-standing one to abolish tolls.
Question put and agreed to.
Bill ordered to be brought in by Mr. Gordon Brown, Mr. Dick Douglas, Mr. Willie W. Hamilton, Mr. Harry Gourlay, Mr. Alexander Eadie, Mr. Tam Dalyell, Mr. Dennis Canavan, Mr. William McKelvey, Mr. John Maxton, Mr. David Marshall, Mr. Robert Hughes and Mr. Ernie Ross.

Abolition of Forth and Tay Road Bridge Tolls
  ABOLITION OF FORTH AND TAY ROAD BRIDGE TOLLS
  Mr. Gordon Brown accordingly presented a Bill to abolish tolls on the Forth and Tay Road Bridges: And the same was read the First time; and ordered to be read a Second time upon Friday 10 May and to be printed. [Bill 143.]
Orders of the Day

  Finance Bill
  (Clauses Nos. 3, 10, 35, 40, 54, 64 and 87 and Schedules 12, 16 and 22)
  Considered in Committee
  [MR. HAROLD WALKER in the Chair]
  Ordered,
  That the order in which proceedings in Committee of the whole House on the Finance Bill are to be taken shall be Clause 3, Clause 10, Clause 35, Clause 40, Clause 54, Schedule 12, Clause 64, Schedule 16, Clause 87 and Schedule 22.—[Mr. Peter Rees.]

  Finance Bill
    Clause 3

      HYDROCARBON OIL
      Motion made, and Question proposed, That the clause stand part of the Bill.
      5.32 pm
      Mr. Terry Davis: I wish to oppose the clause.
      In his Budget speech on 19 March, the Chancellor of the Exchequer announced an increase of 4p per gallon in the tax on petrol and 3½p in the tax on derv. The clause puts those increases into effect.
      At the time of his announcement the Chancellor explained that the increase in the tax on petrol and derv was in line with inflation. On such occasions, the Chancellor usually describes that as "indexing." He always uses that word as if it settled all argument and as if indexation were a mysterious fiscal force with which we interfere at our peril. If his argument is accepted at face value, it means that the relationships between one tax and another, between taxes and price levels, and between a tax and a commodity on which it is levied, are fixed, immutable and impossible to change. My hon. Friends and I do not agree.
      We believe that it is important for the House to review such taxes from time to time and to consider whether the tax on a particular commodity or activity has been established at the right level. It is time for the House to take a hard look at the taxes on petrol and derv.
      We must consider the taxes against the background of the statement of the Chancellor's predecessor, who said that petrol tax is "a selective expenditure tax".
      We must also consider the taxes against what has happened since the Conservative Government took office in 1979. At that time the motorist paid about 88p for a gallon of petrol, and the tax was 40p. During the previous five years, both the price of petrol and the tax on petrol increased, but the tax was increased by less than the net price for a gallon of petrol—the price before tax—both in absolute terms and proportionately so that the tax accounted for 44 per cent. of the price at the pump. That was the position at the end of the Labour Government's term of office.
      Since then we have had six years of Conservative Government. The pump price of a gallon of petrol has
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      continued to increase. Indeed, it has more than doubled. It has increased from 88p to more than £2. Conservative Chancellors have increased the tax even more sharply. The tax on a gallon of petrol has risen from 40p to £1·07. Under the Conservative Government, the tax on petrol has risen, again in absolute terms and proportionately, by more than the general rate of inflation. Most of the increase in the price of petrol has occurred as a direct result of those tax increases. Taxes now account for 54 per cent. of the price paid by the motorist compared with 44 per cent. six years ago. That is why we now pay £2 for a gallon of petrol.
      Mr. D. N. Campbell-Savours: Does my hon. Friend agree that the wider nature of the deception that has taken place is that, on the one hand, Conservative Ministers talk on television about having reduced income tax while, on the other, they conveniently avoid referring to this draconian increase in tax, which affects the great majority of the population? Is that not a deception?
      Mr. Davis: I agree with the thrust of my hon. Friend's intervention. It is a deception for the Chancellor and Treasury Ministers to appear on television and talk about reductions in taxes when they increase a tax which bears heavily on those with the lowest wages.
      As a result of six years of Conservative Government. the price of a gallon of petrol is £2. The movement in prices and taxes on derv has been similar. Together, those taxes, as a proportion of the Government's revenue from all taxes, have risen from about 5·5 per cent. to more than 6 per cent.
      The fact is that the Government are prejudiced against the private motorist. They are not interested in people who buy their own cars, drive their own cars and pay for their own petrol. They are interested only in people who have cars provided for them, not as a tool of their trade but as a perk of their position.
      The Government's record on petrol tax is wholly indefensible. I am not surprised that Ministers are reluctant to come to the Dispatch Box today to explain why they are again increasing the price of petrol. They have already increased the price by more than they should have done, and there is no way that they can use what has happened in the past six years to justify the increase this year.
      Nor can Ministers justify this year's increase by pointing to what has happened since they increased the tax a year ago. In recent months, we have seen a massive increase in the price of petrol at the pump, thanks to price increases by all the major oil companies. When we debated the issue in Committee a year ago, the motorist paid about £1.70 a gallon. Now he pays £2 without the Chancellor's tax increase, and with it he pays £2.04. Even without the Chancellor's help, the price of a gallon of petrol has risen by 18 per cent. during the past year—more than three times the general level of inflation. In those circumstances, it is not unreasonable to expect the Chancellor of the Exchequer to forgo any further increase in tax, for this year at least.
      Surely we all accept that increases in the prices of petrol and den, are a direct cause of inflation? At a time when inflation is beginning to creep up again, it is common sense for the Chancellor to do everything he can to avoid making it worse. If he is serious about achieving zero inflation, even Ire must understand that it will never be achieved if he increases taxes for the coming year in line with inflation during the past year.

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      The impact of the tax is selective. It was the Chancellor's predecessor, the right hon. and learned Member for Surrey, East (Sir G. Howe), who described it as a selective tax,
      "deliberately biased against those living in rural areas"
      and
      "deliberately biased against those who have no option about the method by which they travel to work".—[Official Report, 9 May 1977; Vol. 931, c. 937.]
      The Government's record in the past six years shows that they, too, are biased against people who have no option about the method by which they travel to work and against people living in rural areas.
      It is not only the people living in rural areas who are affected by the tax on petrol, but it is true that they are affected even more than people living elsewhere. For many people in rural areas there is no alternative to using a car. That is why some of the areas with the lowest average incomes have the highest levels of car ownership. I thought that the Chancellor was claiming in his Budget that he wanted to help people on low wages. What is the point of reducing their national insurance contribution with one hand if with the other hand he insists on increasing the cost of getting to work? Where is the incentive in that? Indeed, why work? But it is not only a matter of getting to work. Children have to be taken to school, people have to get to the shops, to the post office and to the chemist. For people in rural areas, the car is not a luxury; it is an absolute necessity for getting anywhere.
      The car is also increasingly becoming a necessity for many people living in urban areas and the suburbs, not least as a result of the Government's attack on bus services through the "Abolition of Public Transport Bill." In short, the Chancellor and the Government do not seem to understand that driving is not in the same category as drinking, smoking and gambling. Taxes on petrol and derv should not be increased automatically—almost casually—by the Chancellor, without thought, without any regard for inflation and without any regard for those people for whom a car is a necessity. That is why we want to delete the clause from the Bill.
      Mr. Austin Mitchell: I support the extremely perceptive and effective attack on the clause by my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis). We shall be voting against it for several reasons.
      The Government's position on the measure seems to be to pass it off as the normal kind of adjustment for inflation, and nothing to bother about—a simple updating of the figures. They are trying to pass it off as something which need not excite any interest or attention. If the Conservative party were in opposition and a similar increase had been proposed by a Labour Government, the Conservative Benches would have been crammed; instead, they are almost empty, giving the impression that there is nothing abnormal about the clause.
      The increase in the duty on petrol comes on top of the massive jump in petrol prices which, as my hon. Friend said, has occurred this year. The oil companies seem to get it both ways. When the dollar goes up, they increase the price of petrol at the pump to allow for the increase in the dollar. When the dollar comes down—and it will almost
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      certainly come down even further—there is no corresponding reduction in the price of petrol. The ratchet works only upwards and in favour of the oil companies.
      5.45 pm
      The dramatic price increase this year has brought us to the £2 gallon of petrol; indeed, in Grimsby, it is over £2. In Grimsby, petrol prices at the pump are substantially higher than in other parts of the country because of the nature of the distribution system. We have within a few miles of Grimsby a major refinery, and our petrol comes from that refinery, but it is still dearer to buy in Grimsby than in areas that are more remote from that refinery.
      A gallon of petrol at the Texaco pump in Grimsby costs 204·6p; at the Total pump it costs 203·7p. That is substantially higher than the price that motorists have to pay in the major conurbations; therefore, a grievance will be exacerbated by the increase. The grievance will be felt even more strongly with the elimination of public transport as a result of the Transport Bill.
      Public transport has to be cost-subsidised in an age when more and more people have cars. There will be an increasing need for cars as the major carriers, exposed to the pressures of unreasonable competition as a result of the Transport Bill, are forced to increase their prices. The clause has to be smuggled through, as it were, before the disastrous effects of the Transport Bill are felt.
      Had the increase been proposed by a Labour Government, there would have been substantial howls of outrage from Conservative Members. The Labour Government's record in increasing taxation on petrol, although it aroused massive outcries from the Conservative party, then in opposition, was far better than that of the Conservative Government. The Labour Government's approach was far more sensible and far more moderate and did not involve the massive increases in petrol taxation which have been carried through by the present Government.
      The previous Chancellor of the Exchequer pleaded that he was simply bringing our petrol prices into line with those in other parts of Europe. Since then, prices in Britain have increased to the point where they are ahead of those in several European countries. In the last quarter of last year, the average petrol price at the then prevailing exchange rate, for 4-star or equivalent petrol, was 42p per litre in the United Kingdom. The price has increased substantially since then. In Grimsby it is now 45p per litre. That compares with 36p per litre in Luxembourg and 39·2p per litre in West Germany.
      Thanks to the efforts of the Conservative Government, we now have expensive petrol in Britain, and the Government seem to regard the car as a luxury. In places such as Grimsby and in the surrounding country, the car is an absolute necessity for getting to work and for getting around. It is necessary even to get the children to school, given the running down of rural bus services.
      Mr. Richard Wainwright: The hon. Gentleman is making a powerful plea for market forces to be allowed to have their way. He has just praised, by inference, European countries where market forces rule. Does it not enter his mind that where a commodity is accepted as being both essential and strictly finite in the quantity available there might just be a case for introducing some planning and, through the tax system, some measure of Government interference?
      Mr. Mitchell: The Liberal party now seems to be arguing for higher duties on petrol, whereas in 1977 it used its participation in the Lib-Lab pact to argue for lower duties. It is an example of the intellectual equivocation in which the Liberal party indulges from time to time. There is a case for adjusting the duties in the light of the heavy increase in petrol prices that has occurred in the past year. The hon. Member for Colne Valley (Mr. Wainwright) described petrol as a finite resource. He should read the article by Professor Odell in the latest Lloyd's Bank Review. Professor Odell tells us that petrol reserves increase year by year. The cry that we should tax a finite resource to discourage use is one which I cannot accept. It runs exactly contrary to my argument.
      The increase in total tax on petrol, including VAT, has been 67p in the Government's lifetime. The tax take, including VAT, that they inherited from the previous Labour Government was 39·9p per gallon in May 1979 and it is now 106·7p. That is a ludicrous level of tax, including VAT, when we consider that the £2 gallon is with us.
      We must vote against the clause as a protest on behalf of the average motorist. The business user will not be hit by the Government's proposals; he is the friend of the Government and he is heavily subsidised by them. He will not feel the effects of the increase in price. The Opposition speak for the average motorist, many of whom have older cars and live in areas where there is inadequate public transport. For many such motorists their car is a daily necessity of life and they are finding the costs of motoring an increasingly difficult burden to bear, especially in the light of the petrol price increases which have been sanctioned by the Government and which are now to be supplemented and heightened by the proposals in the clause.
      Mr. Campbell-Savours: The intervention of the hon. Member for Colne Valley (Mr. Wainwright) was fascinating. It revealed current thinking in the Liberal party on what its position should be on items that are scarce. Apparently the hon. Gentleman thinks that taxation of a finite resource is a way of dealing with price and supply. That is exactly the argument that would be deployed for charging higher prices in times of food famine. I find it hard to believe that the Liberal party would wish to subscribe to such a crude use of market forces in the curtailment of demand. However, the hon. Gentleman's intervention is on the record, and unless he seeks to intervene in the debate we must take it that that is his finite position. Indeed, it will so be pressed at the time of the next general election.
      The price of diesel has strong regional industrial cost implications. When the Minister replies he should address himself to the argument that I am about to advance, which is advanced also by many in industry, especially in manufacturing industry, who are not within our central conurbations. I understand from the excellent presentation of my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) that 47½ per cent. of the price of diesel is tax and that the tax take has risen from 41·9p in 1979 to 93·4p in 1985, which is substantially more than double.
      Who is affected by the increased tax take? We know that a small minority of the population has diesel cars. The greatest consumer of diesel or derv is industry. The larger the capacity of a heavy vehicle and the further that that vehicle has to travel to deliver the goods which it carries
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      from the point of manufacture or distribution to the point of receipt—for example, the retailer or central wholesaler—the greater are the costs that fall upon industry. If a bed manufacturer in Slough, for example, sends a container of beds to London, he will pay far less for the distributiion of the beds than a similar manufacturer in Cumbria, the north of Scotland or Wales, because the distance travelled by the lorry will be further when it leaves the manufacturer in Cumbria, the north of Scotland or Wales.
      When we impose higher taxes on diesel, we are increasing disproportionately the costs that fall on the industries which exist far from the centres of population and our central markets. Inbuilt in the price of diesel should be a form of regional consideration which takes into account the special problems within manufacturing industry in the regions.
      I took the example of a bed manfacturer for a particular reason. The bulkier the goods, the more aggravated becomes the condition. Almost invariably the bulkier the goods, the lower the price of the load. That means that the cost of transporting the load from a major plant in the regions back to the central area is proportionately greater. That must apply when it is transported to our main conurbations and our principal markets. These are considerations which Governments should take into account when formulating policy on the price of diesel.
      The inbuilt regional disincentive is aggravated further by the tax increase which has been imposed on heavy vehicles. It is so large that it will lead to an increase in costs for manufacturing industry that will be disproportionate in the outer regions. The calculations which were undertaken by a newspaper—I hope that they are accurate—show that the tax increases imposed on the operators of heavy lorries have been between 9 per cent. and 29 per cent. For a 15 to 17-tonne lorry, the rate of duty will increase from £850 to £1,330, a 21·1 per cent. increase. For a three-axle, 23 to 25-tonne lorry, duty will be increased from £1,250 to £1,610, a 28·8 per cent. increase. For a 29 to 31-tonne vehicle with four axles, duty will be increased from £2,100 to £2,420, a 15·2 per cent. increase.
      These figures have a direct bearing on the clause because collectively they operate to the disadvantage of producers in the regions who have to carry higher and higher costs. To go on and on about environmental damage and the need for hauliers to pay for the environmental damage that they inflict is entirely to ignore the impact upon hauliers of the new regime of taxation. It might seem that I am taking a minority position and that hauliers, with their large trucks, might be unpopular environmentally. However, they are extremely popular in areas where their work is essential in servicing the infrastructure of manufacturing industry, which are invariably areas of high unemployment.
      When introducing his Budget the Chancellor of the Exchequer said that his proposals for heavy lorries would deal with the environmental damage that they cause. However, I hope that the Minister who replies will take into account the arguments that I have endeavoured to advance, which will be echoed by hauliers throughout the regions of the United Kingdom, and certainly in my constituency.
      One of the most remarkable features of the past few years has been the public's complete lack of response to the substantial increases of tax levied on petrol. It has

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      increased from 39·9p to 106·7p a gallon, or 167 per cent. That is substantially greater than the rate of inflation during the same period. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) mentioned the differential of 1p in the price of petrol at garages in his part of the country.
      Mr. Austin Mitchell: My point chimes in with what my hon. Friend said about derv. The increase in the tax on petrol and derv is an especially heavy burden on parts of the country such as we represent as we depend heavily on transport. In my part of the country, motorists already pay substantially more on average for petrol, even at discount garages, than do motorists in metropolitan areas.
      6 pm
      Mr. Campbell-Savours: I am not convinced that we are paying substantially more. I remember when we were paying substantially more. I can remember differentials of 10p or even 15p a gallon between parts of Scotland, the north-east, Cumbria, the midlands and the south. The differentials still exist, but they are small—only 1p or 2p. Why are there no longer large differentials? Is an unofficial cartel in operation in the market? Have petroleum producers agreed to ensure that competition is not so strong that their margins are interfered with?
      I have read reports today that petrol companies are beginning to get back into profitability. Will that have a bearing on prices paid by consumers? If there is an unofficial agreement between petroleum manufacturers and distributors, that may constitute an anticompetitive practice under the terms of the Competition Act 1980. That Act provided that, when it could be established by the Director General of Fair Trading that an anticompetitive practice existed, the Secretary of State could act to stop it.
      Will the Minister consider whether there is scope for a reference under the 1980 Act to establish whether an anticompetitive practice is being run? If there is, the public must be informed. It would not be in the public interest to retain it. The only person who can know whether there is such a cartel is the Minister as he has privileged access to information. Britain does not have a monitoring programme to ensure that the public interest is protected. In the present conditions of reducing competition, the Government should seriously consider such a programme to protect the public.
      We should consider the effect of increased taxation on rural dwellers. Many of them travel substantially more than the 9,500 miles a year which motoring organisations regard as average. Those who cannot afford to use cars must use buses. They are now required to bear the brunt of a succession of Government initiatives on bus policy.
      We had the cut in bus grant in 1981, which damaged the ability of municipal undertakings and bus operators to buy buses, and there has been a cut in transport supplementary grant, which has an effect on revenue support for buses in rural areas. The buses Bill is in Committee and also affects rural areas. We should bear in mind all of those measures when considering the Budget.
      This is one year when the Government could have forsaken tax increases such as these to safeguard regional industry and the interests of the travelling public. They have failed to do so, and the public will now have to decide what to do about it.
      Mr. Stuart Randall: I should like to speak as a Socialist who represents a deprived part of the country where male unemployment is about 20·6 per cent. and where there is unusually low car usage. I know from my constituents that the Government's imposition of tax on petrol, which has led to a £2 gallon, has hit them hard, especially the less well off and those who live on unemployment benefit.
      It now costs £16 or £18 to fill the tank of a small family car. For people earning perhaps £60 a week, that is a substantial proportion of their income. As my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) said, a car is no longer a luxury. It is a necessity, especially for people who live in rural areas. Bus services have been reduced in many rural areas. Many people, especially the elderly and those on pensions, face difficulties when they have to go to the chemist to collect a prescription. The increase in petrol prices has hit them pretty hard.
      People who live on family income supplement simply cannot afford to fill up the petrol tank after having paid the other bills associated with owning a necessary car. The Government have increased taxation far more quickly than did the Labour Administration.
      Let me examine Government revenue, using 1975 prices. In 1974–75, Government revenue from taxation on petrol and derv was just over £1·5 billion. When the Labour Government left office in 1978–79, the figure had dropped to about £1·4 billion. Now, in 1985–86, with the increases referred to in the Bill, the revenue has gone up to £2 billion. At constant 1975 prices, that is an increase of about 43 per cent. I believe that people in my constituency are pretty unhappy about that increase.
      In west Hull we also have industries. Hull is a pretty entrepreneurial place. It always had a fairly wide base of industries. We all know that these days we have to keep costs down to be able to employ people and make profits. The increases in fuel costs which the Government have created through higher taxation mean that our industries are less able to compete with countries in Europe and with the United States. Those who have been in the United States will realise how low the cost of fuel is there compared with this country.
      In the Bill, the Government do not encourage the use of derv. At the moment the Government are not showing discrimination in favour of a fuel which is basically very economical. There is now an increase in the number of private cars using diesel. There is the disadvantage of the diesel knock and lower performance than one gets with a car using petrol, but I should like the Government to take steps to encourage the use of diesel cars. The gap that one saw even as recently as a year ago is being eroded. That is very sad, because there are strong environmental arguments, which I shall not develop now, but which are important, for using diesel fuel.
      The point touched on by my hon. Friend the Member for Workington (Mr. Campbell-Savours) is also important. At the moment the regions could be helped, particularly when one takes into account the way in which industry has moved to the south and the way in which the regeneration of industry seems to be taking place in the south rather than in the north.
      If one looks at the total tax on petrol and derv, including VAT, one can see that from May 1979 to May 1985, in pence terms, the increase in petrol has been 67p, and the

      669
      increase in derv 52p. I ask the Minister to consider widening that gap so that there is greater discrimination in favour of diesel vehicles, for the reasons that I have given.
      Mr. Campbell-Savours: Is my hon. Friend aware that another system is used by the Icelanders, and by people in some other countries, too, whereby a substantially greater cost is attributed to the tax disc, and the price at which diesel is made available is the heating oil price? The effect is that high user vehicles are invariably diesel and there is an incentive for manufacturers to ensure that their representatives are provided with diesel vehicles, with the consequent effect on the environment.
      Mr. Randall: I am grateful for my hon. Friend's intervention. With a diesel vehicle, one has a higher capital cost and supposedly a low running cost. What seems to be happening is that the running costs are becoming closer to those of petrol vehicles, so that it takes longer to write off the higher capital cost. I see that as a disincentive for people to use diesel vehicles. The essence of a diesel vehicle is that it is more economical over longer distances.
      6.15 pm
      The Government have claimed that the increases that we have had have been essentially to match inflation. I understand that the tax increase in petrol and diesel alone amounts to only about £250 million. Bearing in mind the large increases in petrol and oil costs, I would have hoped that this time the Government would help people and industry, and encourage the improvement of the environment, by using the revenues in a way that would not cause people hardship, would not be a disincentive to using diesel, and would not impose high costs on industry.
      Mr. Mark Fisher: It is suitable that we are starting our consideration of the Committee stage of the Finance Bill with clause 3, because in this one clause we see the Government raising taxes, particularly indirect taxes, which will hit hardest the lowest paid and people on low incomes in our communities, hindering rather than helping small business, in spite of what the Prime Minister professed in her statement this weekend, and also hindering and hitting rural areas. Those are all things about which we shall continually hear throughout our deliberations in Committee. Therefore, it is suitable that we start with a clause which exemplifies so many of the things that are wrong with the Finance Bill. After that opening statement, the House will not be surprised to learn that the Opposition will oppose the clause, as we shall oppose the Bill all the way through.
      I am sure that it has not escaped your notice, Mr. Crouch, that the Government Benches are not packed with hon. Members who are anxious to speak in favour of the clause. Indeed, we have been debating it for more than an hour, and not a single argument has been voiced in support of increasing oil taxes. I suspect that the Minister will be the only person who can rustle up even half an argument in favour of the Government's proposals in the clause. He will lose the argument on this debate and this part of the Bill, although he may hope to carry his hon. Friends with him in the Lobby afterwards.
      It is suitable that we are starting with this clause not only because it exemplifies so much that is wrong but because it is about oil. The whole of the Chancellor's
      670
      Budget, and, indeed, his whole financial strategy, is totally dependent this year, more than any year. on oil. The extreme windfall of the weakness of the pound has increased the money available to the Chancellor from an estimated £9½ billion to £12½ billion. Credit is not due to the Government for that windfall; it was not created by their economic management. It is a windfall of £2½ billion or £3½ billion depending on the level of the pound against the dollar on any day. But for that, the Government would be revealed in the Finance Bill and the Budget as not having an economic strategy, and their failure would be even more obvious and blatant.
      The clause is appropriate also because oil has been, apart from the Government's biggest windfall, their biggest failure. Their inability to harness the benefits of that oil to the advantage of the people and manufacturing industry will be the thing most remembered about them in the years to come. In the past six years—many Conservative Members know this, have recognised it and have spoken about it, particularly outside the House, although occasionally they have had the courage to do so inside—the Government have squandered every penny earned from North sea oil. No matter how much they put up the taxes, it will be to the discredit and detriment of manufacturing industry that the Government have maintained such a policy.
      The Government have chosen to use oil as a weapon against inflation and to control the supply of money. They have not chosen to invest in infrastructure, and in the manufacturing infrastructure in particular. Every sane Member, on either side of the House, knows what the Government should have done with the oil wealth. The hon. Member for Fareham (Mr. Lloyd) does not seem to believe that that is true, but as a Whip he should know more than anybody else what Conservative Back Benchers feel. He must know that they recognise the desperate and tragic waste of oil revenue over which the Government have presided.
      The increase in petrol tax levied by the clause brings the increase in petrol tax for the past six years to 167 per cent. Members of the public may be interested to know that when they buy their petrol at around £2 a gallon, £1·06 goes to the Government. As they do that every day and see over 50 per cent. of the cost of their petrol going to the Government, they might ask themselves what the Government are doing with those taxes and to what extent industry is benefiting from the use of those taxes by the Government.
      I am anxious to hear what the Minister will say in defence of this provision. In particular, when he comes to defend this sad but mercifully brief clause in a long Bill, will he explain what research his civil servants have done on the transport costs to manufacturing industry? Will he own up to the fact that there will be knock-on effects for small businesses and for businesses located in rural areas? What will be the impact on transport costs, and therefore on unit costs?
      In addition, will the Minister speculate on how far he thinks he can go in milking this sector of tax? The Government are searching for tax revenue, but are reluctant to face the issue of direct taxation. Therefore, will we see the £2.25 per gallon in the lifetime of this Government, or will it cost even more?
      I say this more in hope than expectation. The Committee should vote against the clause because it shows that the Government are committed to being the party of

      671
      higher taxation. It puts up tax, and does not help industry or the small businesses which the Prime Minister has said she wishes to help. She must know that, by putting up petrol costs, and therefore transport and distribution costs, for the small businesses which she hypocritically claims she wishes to see get off the ground, she is making it more difficult, not easier, for them to prosper. I hope that we shall see the end of the clause, and I look forward to seeing how the Minister can possibly defend his party—the party of high taxation.
      The Minister of State, Treasury (Mr. Barney Hayhoe): I welcome you, Mr. Crouch, to the Chair during our considerations on the Finance Bill. I trust that you do not have to occupy it for quite as long as some of your predecessors did last year.
      The hon. Member for Stoke-on-Trent, Central (Mr. Fisher) said that it was appropriate to begin our discussions with this clause. I do not dissent from what he said in that regard, although I do not accept many of the exaggerated and rather absurd arguments that he then deployed.
      It was interesting to see the hon. Member go through the ritualistic assertions always made by the Opposition—certainly made by my hon. Friends when we were in opposition—that the Government are rather short of supporters in these debates, and the Opposition are providing most of the content of the debate. I have heard this ritualistic charge made before. I hope that I shall continue hearing it made by Labour Members on Opposition Benches to Conservative Members on Government Benches for many years to come.
      As the hon. Member for Birmingham, Hodge Hill (Mr. Davis) acknowledged, the increases imposed by this clause maintain the real value of the yield from oil duties. As my right hon. Friend the Chancellor said in his Budget speech, they do no more than keep pace with inflation. I can confirm to the hon. Member for Kingston upon Hull, West (Mr. Randall) that the increases are expected to increase revenue in a full year by £250 million, although I would not agree with his comment that it was "only" £250 million. It is a sizeable sum, of which petrol will yield £200 million and derv £50 million.
      The immediate effect of the duty increases on the retail price index is about one tenth of 1 per cent. This is solely due to the petrol increase because derv is not represented in the RPI, although there is an indirect effect which is difficult to quantify and depends on the extent to which, and how rapidly, businesses pass on the increased fuel costs to their customers.
      The increases on petrol and derv are no more than are required to revalorise the duty, having regard to the RPI movement during the past year. The oil duty is a significant revenue raiser, the total estimated yield being nearly £6·5 billion in 1985–86. It would be difficult to raise an equivalent amount of revenue elsewhere, and successive Governments have always seen oil as a source of considerable revenue.
      In view of the comments that have been made, I shall compare what happened here to what happened in Europe. The advice that I have received is that, as a result of the increases in this Budget, the total tax burden—that is duty plus VAT—remains in real terms below the peak reached in 1975, under the last Labour Government. My hon. Friends who have been listening to the debate will be
      672
      rather surprised, in view of the comments that have been made, to hear that, despite the significant increases that I accept have been made, in real terms we have not returned to the peak achieved at the end of 1974 and early 1975.
      I never like to use statistics unfairly. We can all trade statistics, and I wish only to get the matter into perspective. I accept that there was a sharp peak, from which the price came down.
      Mr. Campbell-Savours: That is not true.
      Mr. Hayhoe: I would be prepared to produce the figures that I have been given on this by the officials who have worked them out. In real terms, taking the duty at 1985–86 prices, the typical total tax burden per litre is 23·80p at present and was 24·47p at the end of 1974 and the beginning of 1975. In 1970–71, it was a little higher at 25p.
      Mr. Terry Davis: When the Minister asks his officials to produce those figures, will he also ask them to reconcile their figures with those contained in the 75th annual report of the Customs and Excise, which show that total net receipts for all hydrocarbon oil duties in 1974, at 1975 prices, were £1,549 million? In 1975, the figure was £1,227 million and in 1985 it will be £1,945 million. I do not expect the Minister to answer my point now, but perhaps he will ask his officials to explain those conflicting figures in the public document.
      6.30 pm
      Mr. Hayhoe: On consideration, the hon. Gentleman will realise that there is no discrepancy in what we are saying. He is giving total annual figures whereas I was giving a peak figure, which arose when VAT was increased to 25 per cent. at the end of 1974. For a short time, that created an extremely high figure for the total burden. I said that, in comparison, the peak figure attained under the Labour Government was marginally higher than the present figure.
      The European comparison, which is also important, was mentioned by the hon. Member for Great Grimsby (Mr. Mitchell) and others. Britain is still fairly low in the European league table. If we consider the retail price of petrol sold at the pump, the price in Britain is below that of Belgium, Denmark, France, Ireland and Italy. If we consider tax as a percentage of the retail selling price, Britain is below the Netherlands, Italy, Ireland, France and Denmark, and just above Belgium.
      I have little doubt that, by an ingenious use of the figures, those who would wish to make such a comparison will find that, in some aspects, Britain is higher in the table.
      Mr. Campbell-Savours: What about the duty on derv?
      Mr. Hayhoe: I am talking now about petrol. The figures for derv are different. One is often aware of the points that the hon. Gentleman will raise before he makes them, and I shall say something about derv in a moment.
      Mr. Fisher: I am grateful to the Minister for mentioning tax as a percentage of retail price. Although I am sure that his European comparisons are correct, does he accept that a comparison of the percentage when his Government came to power in 1979 and now is not flattering to the Government? I estimate that the present percentage is about 52 or 53 per cent. of the retail price, whereas in 1979 it was about 39 per cent.
      Mr. Hayhoe: It was not 39 per cent. but about 49 per cent. of the retail price in 1978–79. In 1979–80, it was 47 per cent., and then it increased, as the hon. Gentleman said, to the present figure of 53 per cent. However, if he puts down a question, I will gladly confirm those figures or make any necessary corrections. They are the figures that I have in front of me today.
      The hon. Members for Workington (Mr. Campbell-Savours) and for Kingston upon Hull, West mentioned the derv-petrol duty differential. The duty differential in favour of derv has been widened marginally from 14p a gallon to 14·6p a gallon, including VAT, which leaves it unchanged in real terms. Therefore, it has not narrowed, as the hon. Member for Kingston upon Hull, West alleged. The differential takes account of the continued need to limit the impact of duty increases on business and distribution costs. However, derv must continue to make a considerable contribution, in the Chancellor's judgment, to the overall yield from motoring taxes. Erosion of the revenue must be contained, and industrial as well as private consumers must be encouraged to use oil efficiently.
      To take the point that the hon. Member for Workington had in mind, it is true that the duty on derv in the United Kingdom is almost the highest in the Community. However, we must consider such matters in the round. Several EC countries with low derv duties have higher rates of VAT than does the United Kingdom, and they incorporate provisions in their VAT regimes which prevent VAT from being recoverable as input tax. The block on reclaiming VAT paid on derv applies in several European countries. That complicates the comparison, because, as the hon. Gentleman will know, in Britain it is possible for the VAT paid on derv or on petrol that is used for business to be reclaimed.
      The total tax burden on derv is about 93·4p a gallon, but the duty only is 68·9p. The difference of about 24p a gallon is the VAT charge, which is reclaimable.
      Mr. Campbell-Savours: Is it not fair and reasonable that, after those considerations have been taken into account, British manufacturing industry should not have to pay a higher net price for diesel than do our European Community partners? Is it not true that, after one has taken into account the complications to which the Minister referred, British firms still pay a higher price for diesel than do firms in other Community countries?
      Mr. Hayhoe: I shall have to check that——
      Mr. Campbell-Savours: The Minister should know.
      Mr. Hayhoe: I do not have the details in front of me, and I wish, as always, to give precise figures to the hon. Gentleman. I can tell him that, in some European countries, the rates for vehicle excise duty—the disc to which the hon. Gentleman referred—on diesel-engined vehicles is higher than those for petrol-engined vehicles. The comparisons are complicated. If the hon. Gentleman tables a question, I should be happy to set this out in tabular form to try to get all the factors together.
      Mr. Campbell-Savours: Is not the Minister misleading the Committee? As though to excuse the regime in the United Kingdom, he referred to one group of vehicles, but he did not say that those vehicles were motor cars. We are not discussing motor cars; we are discussing commercial vehicles, and in that sector his argument does not hold water.
      Mr. Hayhoe: I am not trying to excuse the position in the United Kingdom. If I wanted to make party points, I would say that, in 1977, instead of there being a reverse differential on duty in favour of derv, there was a reverse differential of 5p a gallon, in the money terms of the day—it was a considerable difference—against derv. The hon. Member for Workington should look at all these aspects in the round. If he seeks to be fair—I know that he often does—he will see—[Interruption.] I hope that I do not do the hon. Gentleman a great disservice by saying that, even occasionally, he seeks to be fair. I shall withdraw that expression instantly if the hon. Gentleman is worried. I thought that he had been reselected.
      The debate has been extremely useful, and I am grateful to the hon. Member for Hodge Hill for initiating it. This aspect is an important part of our taxation regime, and it was right to have a short debate on it. I commend clause 3 to hon. Members, and I hope that it will be carried by a substantial majority.
      Mr. Terry Davis: I, too, welcome you to the Chair, Mr. Crouch.
      As the Minister has said, we have had a short debate on this issue. Let us hope that all our debates will be as short. If other Treasury Ministers conduct themselves with as much good humour and equanimity as the Minister of State, I am sure that the whole debate will be brief.
      I disagree fundamentally with the Minister of State. The hon. Gentleman said that the Chancellor was "required" to increase these taxes. The Chancellor is not required to increase them. He is not required to revalorise them. There is nothing inexorable about these increases. It is a political decision. It is a decision about priorities. We are not talking about the abolition of petrol tax, as the Minister seemed to imply, but we oppose this particular increase.
      I agree that it is a considerable sum—£250 million for petrol, and £50 million for derv. Those significant sums should not be raised in this way. The Minister said that my hon. Friend the Member for Workington (Mr. Campbell-Savours) had a habit of putting points that could always be anticipated. I must admit that I expected the Minister to ask me how we would pay for the abolition of this increase this year, and I will now tell him. We would not ease capital gains tax for those who make a profit of £6,000 or more a year at a cost of £150 million. We would not abolish development land tax for those who make a profit of £75,000 a year from property development at a cost of £50 million. Those sums alone amount to the sum that the Chancellor will obtain from increasing the price of petrol without any regard for those on low wages in rural, urban and suburban areas who have no alternative but to use private cars. This is a political decision. It is a choice of priorities by the Chancellor to increase the tax on petrol, reduce the tax take from capital gains and abolish development land tax.
      The Minister made comparisons with Europe. When Conservative Treasury Ministers make comparisions with Europe instead of with their predecessors—the Labour Government—I know that we have won the argument. Therefore, I and my hon. Friends will vote against the clause.
      Question put, That the clause stand part of the Bill:—
      The Committee divided: Ayes 220, Noes 119.

      Division No. 198]

      [6.43 pm

      AYES

      Alexander, Richard

      Hawkins, Sir Paul (SW N'folk)

      Alison, Rt Hon Michael

      Hayes, J.

      Ancram, Michael

      Hayhoe, Barney

      Arnold, Tom

      Hayward, Robert

      Ashby, David

      Heddle, John

      Aspinwall, Jack

      Henderson, Barry

      Atkins, Rt Hon Sir H.

      Hickmet, Richard

      Atkins, Robert (South Ribble)

      Higgins, Rt Hon Terence L.

      Baker, Nicholas (N Dorset)

      Hind, Kenneth

      Banks, Robert (Harrogate)

      Hirst, Michael

      Batiste, Spencer

      Holt, Richard

      Beaumont-Dark, Anthony

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

      Benyon, William

      Howarth, Gerald (Cannock)

      Best, Keith

      Howell, Ralph (N Norfolk)

      Blackburn, John

      Hunt, David (Wirral)

      Body, Richard

      Irving, Charles

      Boscawen, Hon Robert

      Jackson, Robert

      Bottomley, Peter

      Jessel, Toby

      Bottomley, Mrs Virginia

      Johnson Smith, Sir Geoffrey

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

      Jones, Gwilym (Cardiff N)

      Bowden, Gerald (Dulwich)

      Jones, Robert (W Herts)

      Braine, Rt Hon Sir Bernard

      King, Roger (B'ham N'field)

      Brandon-Bravo, Martin

      Knight, Mrs Jill (Edgbaston)

      Bright, Graham

      Lamont, Norman

      Brinton, Tim

      Lang, Ian

      Brown, M. (Brigg & Cl'thpes)

      Lawrence, Ivan

      Browne, John

      Lee, John (Pendle)

      Bruinvels, Peter

      Leigh, Edward (Gainsbor'gh)

      Bryan, Sir Paul

      Lennox-Boyd, Hon Mark

      Buck, Sir Antony

      Lester, Jim

      Budgen, Nick

      Lewis, Sir Kenneth (Stamf'd)

      Bulmer, Esmond

      Lilley, Peter

      Burt, Alistair

      Lloyd, Ian (Havant)

      Carlisle, John (N Luton)

      Lloyd, Peter, (Fareham)

      Carlisle, Kenneth (Lincoln)

      Lord, Michael

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

      Luce, Richard

      Carttiss, Michael

      Lyell, Nicholas

      Cash, William

      McCurley, Mrs Anna

      Chalker, Mrs Lynda

      Macfarlane, Neil

      Chope, Christopher

      Maclean, David John

      Clark, Dr Michael (Rochford)

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

      Clarke, Rt Hon K. (Rushcliffe)

      Major, John

      Cockeram, Eric

      Malins, Humfrey

      Coombs, Simon

      Malone, Gerald

      Cope, John

      Marlow, Antony

      Cormack, Patrick

      Mates, Michael

      Couchman, James

      Mather, Carol

      Critchley, Julian

      Mawhinney, Dr Brian

      Currie, Mrs Edwina

      May hew, Sir Patrick

      Dickens, Geoffrey

      Merchant, Piers

      Dorrell, Stephen

      Miller, Hal (B'grove)

      Douglas-Hamilton, Lord J.

      Mills, lain (Meriden)

      Dover, Den

      Mills, Sir Peter (West Devon)

      Dunn, Robert

      Mitchell, David (NW Hants)

      Dykes, Hugh

      Montgomery, Sir Fergus

      Evennett, David

      Moore, John

      Eyre, Sir Reginald

      Morris, M. (N'hampton, S)

      Fallon, Michael

      Morrison, Hon C. (Devizes)

      Favell, Anthony

      Moynihan, Hon C.

      Fletcher, Alexander

      Nelson, Anthony

      Forman, Nigel

      Newton, Tony

      Forth, Eric

      Nicholls, Patrick

      Fowler, Rt Hon Norman

      Norris, Steven

      Fox, Marcus

      Oppenheim, Phillip

      Gale, Roger

      Oppenheim, Rt Hon Mrs S.

      Galley, Roy

      Osborn, Sir John

      Garel-Jones, Tristan

      Ottaway, Richard

      Goodhart, Sir Philip

      Page, Sir John (Harrow W)

      Gower, Sir Raymond

      Parkinson, Rt Hon Cecil

      Greenway, Harry

      Parris, Matthew

      Griffiths, E. (B'y St Edm'ds)

      Percival, Rt Hon Sir Ian

      Grylls, Michael

      Pollock, Alexander

      Hamilton, Hon A. (Epsom)

      Portillo, Michael

      Hannam, John

      Powell, William (Corby)

      Hargreaves, Kenneth

      Powley, John

      Harris, David

      Prentice, Rt Hon Reg

      Harvey, Robert

      Price, Sir David

      Haselhurst, Alan

      Pym, Rt Hon Francis

      676

      Raffan, Keith

      Thomas, Rt Hon Peter

      Raison, Rt Hon Timothy

      Thompson, Donald (Calder V)

      Rees, Rt Hon Peter (Dover)

      Thompson, Patrick (N'ich N)

      Rhodes James, Robert

      Thorne, Neil (llford S)

      Ridsdale, Sir Julian

      Thornton, Malcolm

      Rippon, Rt Hon Geoffrey

      Thurnham, Peter

      Roberts, Wyn (Conwy)

      Townend, John (Bridlington)

      Robinson, Mark (N'port W)

      Tracey, Richard

      Roe, Mrs Marion

      Twinn, Dr Ian

      Rowe, Andrew

      van Straubenzee, Sir W.

      Ryder, Richard

      Viggers, Peter

      Sackville, Hon Thomas

      Waddington, David

      Sayeed, Jonathan

      Wakeham, Rt Hon John

      Shaw, Giles (Pudsey)

      Waller, Gary

      Shaw, Sir Michael (Scarb')

      Ward, John

      Shelton, William (Streatham)

      Wardle, C. (Bexhill)

      Shepherd, Colin (Hereford)

      Watson, John

      Shepherd, Richard (Aldridge)

      Watts, John

      Silvester, Fred

      Wells, Bowen (Hertford)

      Sims, Roger

      Wells, Sir John (Maidstone)

      Skeet, T. H. H.

      Wheeler, John

      Smith, Tim (Beaconsfield)

      Whitfield, John

      Soames, Hon Nicholas

      Whitney, Raymond

      Speller, Tony

      Wiggin, Jerry

      Spencer, Derek

      Winterton, Mrs Ann

      Spicer, Michael (S Worcs)

      Winterton, Nicholas

      Stanbrook, Ivor

      Wolfson, Mark

      Steen, Anthony

      Wood, Timothy

      Stern, Michael

      Yeo, Tim

      Stevens, Lewis (Nuneaton)

      Young, Sir George (Acton)

      Stewart, Andrew (Sherwood)

      Stradling Thomas, J.

      Tellers for the Ayes

      Taylor, John (Solihull)

      Mr. Tony Durant and

      Terlezki, Stefan

      Mr. Michael Neubert.

      Question accordingly agreed to.
      Clause 3 ordered to stand part of the Bill.

    Clause 10

      NEWSPAPER ADVERTISEMENTS
      Mr. Tony Blair: I beg to move amendment No. 2, in page 5, line 16, at beginning insert
      'Save in so far as Schedule 5 to the Principal Act applies to the classified advertisements concerning births, marriages and deaths.'.
      Failure to accept the amendment will mean that old-age pensioners and families who wish to record death will have to pay 15 per cent. in addition to the price of advertisements. Those who wish to announce or record the happy event of a marriage or birth will also have to pay an extra 15 per cent. As usual, the hardest hit will be those who are least able to pay.
      The Government's policy has at least the merit of consistency. They are consistently against the interests of the poor and consistently in favour of the interests of the rich. The imposition of VAT on newspapers will raise a measly £50 million. We should contrast that with the thousands of millions of pounds that have been given to the top 5 per cent. of wage earners to see how inequitable the Government's proposal is.
      It is as well to set the amendment in the context of the importance of advertising to our national, local and regional newspapers. In 1983, it was estimated that classified advertisements were worth £584 million to national newspapers and some £817 million to local and regional newspapers. That £817 million breaks down into £430 million for the daily local and regional newspapers, £207 million for weekly newspapers and £180 million for free newspapers. In the regions, 80 per cent. of newspaper revenue comes from advertisements. Figures show that in 1984 there was an increase of about 29 per cent. in advertising revenue for regional and local newspapers.
      It is estimated that 20 per cent. of advertisements are private classified advertisements.
      Although it is not possible to break down births, deaths and marriages as a percentage of private classified advertisements, they must represent a considerable proportion.
      An independent report on regional and local newspapers has estimated that there will be a drop of 5 per cent. in advertising from private individuals and a loss of revenue of about £5 million as a result of the imposition of VAT.
      678
      Some 25 per cent. of the staff of regional and local newspapers work in the advertising section. The most dramatic effect of the imposition of VAT will be in ordinary individuals, because births, deaths and marriages are, by their nature, personal and individual.
      The state death grant has been disgracefully low for some time, which means that the poorer individuals have to meet a great amount of the cost of funerals. This extra 15 per cent. will impose an additional burden on them. They will not be selling anything VAT-able. Not being businesses or corporations, they cannot offset the VAT against sales. The imposition of VAT on newspaper advertisements must be treated as a direct 15 per cent. tax that must be passed on by the newspaper.
      7 pm
      We have always had all-party agreement on VAT—which I hope still exists—that we should attempt to exempt or zero-rate items of necessity. That is why there is no VAT on food, despite the mistaken wish of some people. Certainly the Labour party intends to maintain that policy. The same considerations apply to advertisements for births, marriages and deaths. They may not be necessities in the strict sense, but people wish to place such advertisements because of circumstances that plainly make it equitable and fair that special treatment should be given to them.
      It is mean and petty to visit this increase upon private individuals. We do not know Government estimates for the revenue from VAT on classified advertisements, but, when discussing the imposition of additional tax, we must balance the revenue with the consequences to the individuals concerned.
      I hope that the Minister will deal specifically with the role of the EEC—especially the reasoned opinion of the Commission—in the Government's decision to introduce clause 10. In October 1984, the Commission gave a reasoned opinion that zero rating on certain United Kingdom items should cease. Of course, EEC countries can claim exemption for social reasons or benefit to the consumer. Although the Commission said that newspaper advertisements did not fit within those categories, and should cease to be zero rated, the Government disagreed at that time. If they felt then that they should be zero rated because of social reasons or benefit to the consumer, why have those same considerations not motivated the Government in deciding whether to accept the amendment?
      Mr. Robert Sheldon: If the Government wish to counter any action by the Commission, that is the easiest thing in the world to do. The derogation remains, and we can contest any action as much as we wish. The problem arises because the Government agree with the Commission and are helping it to bring to an end some of the exemptions and zero ratings that is wants abolished.
      Mr. Blair: My right hon. Friend is absolutely correct. He will no doubt be aware that the Treasury and Civil Service Select Committee, in its report, said that zero rating should remain. I agree that the Government are assisting the EEC in its work. Yet when the Commission first gave its reasoned opinion, because of pressure from, among others, their Back Benchers, the Government said that they would not bow to the EEC. That is an about-turn. It shows that the Government will not pay attention to the

      679
      report of the Select Committee and do not accept that for social reasons and benefit to the consumer zero rating should remain.
      Mr. Austin Mitchell: Not only are the Government not taking any notice of the Select Committee, they are not taking any notice of their own officials who, in reference to the Commission's reasoned opinion, said:
      "We rely on the belief that our zero-rates are for clearly defined social reasons and for the benefit of the final consumer."
      Mr. Blair: I am grateful to my hon. Friend, who confirms my point.
      When the Commission first gave its reasoned opinion, the Government were keen to allay the fears of their Back Benchers and not to appear to bow to EC pressure. They were keen to say that the Commission had it wrong and that there were social reasons and benefit to the consumer why zero rating should remain. Therefore, what possible justification can there be for the Government to reverse their position? Either they have changed their mind and no longer accept that there are social reasons or benefit to the consumer, or they believe that, even though there are such reasons, they intend that zero rating should cease.
      It is difficult to understand why, when these matters were first published in 1977, there was no objection from the Commission. I understand that my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) was concerned with those matters at that time. The Minister must tell the House the extent of EC pressure on the Government. Do they now believe that there are no longer social reasons or benefit to the consumer, or do they believe that there are still those reasons but they will impose the tax anyway?
      The Finance Bill in many ways has crimes of omission in terms of what it should be doing for British industry and the British people which are much greater than its crimes of commission. It is a nothing Budget on the broad scale, but at this level it could have a serious effect on private individuals, many of whom are least able to withstand the economic pressures of our time.
      Given the small revenue, the serious effect on the newspaper industry and on consumers, the social reasons why newspapers should remain zero rated, the Government's attitude and the attitude of their officials before the Select Committee, I submit that very good justification must be given by the Minister if he asks the House not to accept the amendment. I wait with interest to hear his reasons.
      Mr. William O'Brien: I support the amendment because the imposition of VAT on advertising will hit many organisations. Charitable organisations will be greatly affected because they must advise people of their activities, and advertising in newspapers is frequently the means that they use. When, for example, a charity runs a street collection, it must advertise the result of the event. Imposing VAT on newspaper advertising is bound to place an additional cost on charities.
      I received a letter dated 22 April on the subject. It said:
      "The Government does, of course, recognise the immensely valuable role which charities play in this country."
      If the Government take that view, they should help such organisations, not place further financial burdens on them. The letter went on:
      "The relief would cost many tens of millions of pounds, which would have to be made good from elsewhere."
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      That referred to relieving charities from this imposition of VAT. If the Government are sincere in wishing to help such organisations———
      The Temporary Chairman (Mr. David Crouch): Order. The amendment deals with applying VAT to certain categories of advertisements concerning births, marriages and deaths. We shall come later to the question of the application of VAT to charities.
      Mr. O'Brien: I appreciate that, Mr. Crouch. I quoted from the letter—which was sent to me by the Minister—to show that VAT on newspaper advertising will hit many people in addition to those who wish to notify their families and friends of births, marriages and deaths. The imposition of VAT on small advertisements will place an additional financial burden on those who live in urban and rural areas. I trust that the Minister will comment on that aspect as well as on the more general points made by my hon. Friend the Member for Sedgefield (Mr. Blair).
      7.15 pm
      Mr. Randall: I, too, support the amendment. I will, during my remarks, use the expression "classified advertisements" to represent small advertisements relating to births, marriages and deaths.
      If adopted, the amendment would save the newspaper industry millions of pounds. We are discussing what is essentially a tax on the ordinary person. As my hon. Friend the Member for Sedgefield (Mr. Blair) pointed out, it was suggested in the pre-Budget briefing by Price Waterhouse and Company that the loss of revenue to newspapers as a result of the imposition of VAT on classified advertisements would be about £5 million a year, and that must have a great effect on local and regional newspapers.
      It would greatly harm those who are establishing small businesses. In Hull, which, as I have mentioned previously, is an area of entrepreneurs, we are proud of the number of new businesses that are being established. In many instances, new companies are not initially registered for VAT. In any event, when they are first established, they must advertise considerably.
      Although the amendment is concerned with advertisements relating to births, marriages and deaths, it is valid to refer to other small advertisements, especially as the Government claim to wish to encourage small businesses. Those establishing small firms will be badly affected by this VAT change.
      What effect will this form of VAT have on the newspaper industry? Many newspapers are today embarking on the introduction of expensive high tech equipment. The reduction in profits that will result from this imposition of VAT is bound to have an adverse effect on that form of investment.
      This loss of revenue through VAT being imposed on classified advertisements could result in cuts being made in editorial space and, indeed, in the size of newspapers. My principal worry is the effect that it will have on regional papers, particularly those that run on tight margins.
      Before coming to speak to the amendment I telephoned the editor of my local paper, the Hull Daily Mail, which is a good newspaper of which I am proud. I am happy to say that it publishes everything that I provide.
      The Hull Daily Mail has a circulation of about 115,000 copies a day. It is a daily evening paper, and part of the

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      Northcliffe group, which I believe includes 13 newspapers and many periodicals. The editor of the paper intends, if the provision becomes law, to pass the increase on to the customer, initially at any rate, although the newspaper is fairly profitable. The editor deals with these forms of advertising from day to day, and he intends to pass on the increase. The ordinary person will have to carry the can. The Government are imposing yet another level of taxation.
      The papers most affected by this tax will be the small weeklies and the free papers. The editor of the Hull Daily Mail said that the paid-for papers were being discriminated against because they carried a high proportion of private advertising whereas a number of the free papers tended to deal with commercial advertising. I hope that the Minister will take that into account.
      It is important to realise that there has been a phenomenal growth in free papers. I believe that about 700 papers are now produced, employing about 14,000 people full time and about 96,000 part time. The industry is growing rapidly. I hope that the introduction of VAT on advertising will not hamper that growth and destroy the employment opportunities that it provides. I am sure that other hon. Members, like me, find that a new free paper seems to be pushed through their letter boxes every week.
      The example that I have quoted suggests that the 15 per cent. VAT is unlikely to be absorbed. Certainly the less profitable papers will not be able to absorb it. They will pass it on.
      What about the customers themselves—the people who place the advertisements? There are different categories of classified advertisements, but the area that arouses the strongest feeling is that of births, deaths and marriages. The people who wish to place such advertisements may be on low incomes for whom an extra 15 per cent. will be a serious matter.
      A significant number of people live on low incomes. The programme "Breadline Britain" suggested that 7 million or 8 million people are living in poverty. Such people often wish to advertise births, marriages and deaths.
      I found out in discussion with the editor of the Hull Daily Mail that there is a tradition in Hull of using classified advertisements when a local personality dies. On the day following the death, there is a queue in the department that deals with classified advertisements to put in column inches about the personality concerned. That is a great tradition in west Hull, and the introduction of VAT on this form of advertising will spoil it.
      In Hull, the older people like to commemorate silver and golden weddings, for instance. They like events to be recorded for posterity in the newspaper. This form of tax will end that tradition.
      For all those reasons, I support the amendment.
      Mr. Austin Mitchell: What amendment No. 2 seeks to prevent is a tax on grief and joy, and also a tax on announcements of marriage—an event that arouses emotions somewhere between the two. Effectively it is a tax on feelings, and, as my hon. Friend the Member for Kingston upon Hull, West (Mr. Randall) pointed out in his moving speech, a tax on the expression of those feelings. It would tax the commemoration of the death of a loved one who has passed on—a husband, wife or member of the family. Some people like to commemorate such events every year, others at five-yearly intervals, in the "In
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      Memoriam" columns. My hon. Friend's emphasis of that point suggested that he might be composing his own epic poem—"Lines on the failure to be reselected to Kingston upon Hull, West". There are some joys, confined to these Benches, that the Government would certainly be willing to tax.
      The tax will not raise a large sum of money. It will tax real feelings. It is unreasonable and unnecessary.
      We seek, through amendment No. 2, to reduce the scope of the tax, but we must consider the Government's general proposition. It would be reasonable on two grounds to oppose the tax altogether. It is a concession to European pressure that should never have been made, because it invalidates the Government's proclaimed opposition to wider aspects of that pressure. The Government said that they would resist that pressure, but they are now making a concession, in the form of this extension of VAT to advertising, that will be absolutely irreversible and will weaken the defence of zero rating in general.
      The tax is harmful to charities—they are the subject of a later amendment—and to consumers. It is especially harmful, too, to an essential element of local democracy and society and of our way of life—the local newspapers. Local newspapers have many faults. In politics and in their general attitudes, they are too conservative. They have been made slothful by monopoly. However, they are an essential part of local life and democracy and they are in a difficult financial situation. They face fierce competition from the multiplicity of media, especially the local free sheets. A tax on their advertising will make their situation worse.
      The erosion of our zero-rating system is unnecessary. The system works well and has been tried and tested. It has been supported by Governments of both parties over the years. It was introduced by the Conservative Government who negotiated our entry into the Common Market. They were particularly proud of the zero-rating system and the social purposes that it served. That view was backed by the succeeding Labour Government.
      7.30 pm
      The European Commission does not like the zero-rating system. It would rather people saw what they were paying for, and paid a tax directly to the EEC. The Commission thinks that VAT should be seen as such a tax. I doubt whether that will enhance the popularity of the Common Market.
      The Commission likes harmonisation for harmonisation's sake, and advertisements in newspapers are taxed in every other EEC country except Greece. The tax is 14 per cent. in Germany, 19 per cent. in Belgium, and 22 per cent. in Denmark. The Commission would like to see that tax system extended to this country I do not understand why the Commission takes that view. Taxing advertisements would not enhance the working of the internal market, and classified advertisements of births, marriages and deaths are not an exportable commodity.
      It could not be said that our system gives advantage no a competitor—although if birth announcements are not taxed that might be an incentive to have children! I am not sure about the logic of the Commission's position. Does it want a 15 per cent. tax on birth announcements to keep down the British birth rate and make us a less effective

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      competitor? In terms of the internal market and customs union, there is no reason why advertisements should be taxed.
      The concession maintained by the amendment is obviously for the benefit of the final consumer, which the Commission says is a legitimate reason for zero rating. Of course, if the final consumer is the subject of a death announcement, the concession benefits his family.
      More important, our concession is legal. All Governments have maintained and defended full control of our internal tax regime. After the 1975 renegotiation, the document put to the British people by the Labour Government emphasised that we had maintained full control of our internal tax regime and that there would be no pressure and no need for us to reduce the scope of zero rating. That scope was never questioned in the negotiations that led up to the sixth directive.
      As my hon. Friend the Member for Sedgefield (Mr. Blair) stressed, the Government would not have accepted the sixth directive had questions been raised about the zero rating of any of the items mentioned in the so-called reasoned opinion of the Commission. We accepted the directive on the basis that it sanctified, maintained and sustained our system of zero rating. But the Government are selling that down the river.
      The sixth directive allows zero rating for a transitional period for clearly defined social reasons. In this case, the valid social reasons are to keep in existence a healthy, financially viable local press, and the benefit of the final consumer, which, presumably, is covered by births, marriages and deaths advertisements. The transitional period continues until the Commission decides unanimously to end it. So why are we rushing along in this ill-considered fashion?
      Illogically, and with only murmured warnings, the Commission came out in October 1984, after a long delay, with a reasoned opinion of our zero rates on live animals, sewerage services and water supply for business, newspaper advertisements and news services, protective boots, clothing for industrial use and other items.
      The Select Committee on the Treasury and Civil Service felt that the opinion was prompted by the Commission's legalistic obsession with harmonisation. The Government opposed the Commission views and were right to do so. Treasury officials told the Select Committee—they were speaking generally, but newspaper advertisements are part of the generality—that the Commission's interest in harmonisation was
      "greater than the circumstances of the UK really require".
      The officials pointed out that the Commission's action was understandable, but they regarded it as "legalistic". They were "surprised" by the objections made to zero rating.
      The Select Committee argued:
      "VAT is a tax on consumers and…any reduction in the amount of VAT payable must be of direct benefit to the consumer…Registered traders net off their input VAT before remitting the balance to the exchequer, so that the result of zero rating is always to benefit the consumer, whether directly or indirectly."
      It is curious that the Government, having expressed their opposition to the reasoned opinion and defended zero rating, should undercut their arguments, abandon their case and close their options by this clause. Once imposed, the VAT cannot be taken off. That would be contrary to
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      article 28(2) of the sixth directive because abolition and reintroduction do not amount to the maintenance of zero rating, which is sanctioned by the directive.
      Why has one aspect of the reasoned opinion been singled out? What is the logic of the Government's position? What is the point of all this? The exemption served a valuable social purpose because it helped to maintain the viability of our press, particularly the local press.
      It is worth emphasising that newspapers in other countries have benefits that our newspapers do not enjoy. Zero rating of advertisements was a partial benefit for our newspapers, but was no substitute for the substantial benefits received by newspapers in other EEC countries. Now even that partial benefit is being knocked away by the Government.
      In France and Belgium, newspapers enjoy tax concessions. They enjoy subsidies in Belgium, France, Italy, Luxembourg, and most famously—though outside the EEC—in Sweden, where subsidies can be provided to support a competing local press in localities where a monopoly would otherwise result. Newspapers enjoy cheap loans in Denmark and postal concessions in all countries of the EEC. They enjoy telecommunications concessions in Belgium, France and Ireland, and rail concessions in Belgium, France, and Italy. The concession which has been swept away by the Government was a small substitute to help the press to maintain its financial viability.
      The tax revenues arising from the change are small, £52 million in a full year, according to the Newspaper Society, and £50 million according to the Treasury. This loss to newspapers comes at a time when local newspapers particularly are in a difficult competitive situation. Competition is particularly intense from the free sheets, and such competition might drive other established local papers in the free sheet direction. Advertising is crucial because 80 per cent. of the revenue of local newspapers comes from advertising and only 20 per cent. from sales.
      An estimate is given in the report of the Select Committee on the Treasury and Civil Service of the contribution of the different sections of advertising which have been taxed under the clause. Classified advertising for local and regional newspaper produced £464 million in revenue for those newspapers in 1983, of which recruitment accounted for £88 million, property £108 million, motors £110 million, and other categories £157 million, with which we are concerned in the amendment. Therefore, advertising is crucial to local newspapers, yet under the clause it is being taxed. It is estimated that there will be a drop in volume of advertising of about 5 per cent. as a result.
      The category which we seek to defend in the amendment is the most unacceptable one to tax because it is a tax on feelings, and its consequences to newspapers are directly harmful. Therefore, we should support the amendment so that the feelings and emotions of our constituents may be expressed tax free, we should support the local press, which is in a difficult financial situation, and we should oppose the Government's concession to the EEC, which undermines the validity of the Government's opposition when they come to defend the rest of our zero-rating system.
      7.45 pm
      Mr. Fisher: I am grateful to my right hon. and hon. Friends for having tabled the amendment, which recognises, in a way that the Government have been unable to recognise, the effect that this short clause will have on individuals.
      I suspect that the Government did not really think through what they were doing. They where so keen to extend the range of indirect taxation by extending VAT, and they were so put off and perturbed by the active campaign on behalf of books, publishing and the cover price of newspapers, that they were distracted by political pressures. Even they did not have the nerve, correctly. to put VAT on children's shoes, because they recognised the emotive nature of so doing.
      No doubt the Government felt that this extension of VAT was an easy option. Because it affects small advertisements and announcements of births, deaths and marriages, involving small sums, no doubt they told themselves that no one would object, that people had to put in such advertisments anyway, and therefore that they would be able to get away with it. I suspect that Minister's, if they had thought at all along those lines, did not really recognise what the impact on people would be.
      I do not know whether the Minister's local paper has a births, deaths and marriages column. I am sure that it does, because these columns appear in every newspaper. I do not know whether the Minister's local paper has an in memoriam column, or whether this is another example of the north-south divide so that it is more common in the midlands and in the north of the country. In Stoke-on-Trent, it is an important element of our local paper.
      On Tuesday last, 30 April, which was the last day before the tax come into effect, our local paper in Stoke-on-Trent, the Evening Sentinel, reported eight births, four comings of age, 49 deaths and 66 in memoriams, which is not a particularly large figure. At weekends there are probably more than 100 in memoriam advertisements. The Minister, just for a second, might listen to one of them and recognise who he is taxing and why. It says:
      "78 today. Another birthday we cannot share,
      my birthday gift must be a prayer.
      The years we spent together …are never really gone,
      they leave behind special memories for looking back upon.
      You suffered much in silence, your spirit did not bend,
      you fought for life with courage, until the very end.
      Each leaf and flower may wither, each evening the sun may set,
      but those who are thinking of you today are …those who do not forget.
      God bless—your loving wife".
      Lower down in the same column, the Evening Sentinel published a small advertisement of its own:
      "VAT ON ADVERTISING. Government Regulations introduced in the recent Budget mean that VAT at the current rate of 15 per cent. must be added to all advertisements published from May 1st, 1985".
      That is the sort of advertisement that the Government are taxing. The Minister cannot be proud of or pleased with that. Did he and the Government, in introducing this provision, intend that a woman like that who wishes to commemorate the passing of her husband and what he meant to her should have to pay 15 per cent. tax on registering her love and her grief at the passing of her
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      husband? I cannot believe that the Government or the Minister intend that. The Minister really ought to accept the amendment.
      Mr. Hayhoe: The amendment seeks to continue zero rating for classified advertisements in newspapers and magazines concerning births, marriages and deaths. Before I respond to the detail of the amendment, it may be sensible for me to say a word about the general effect of the clause and, indeed, to respond to the invitation extended to me by the hon. Member for Sedgefield (Mr. Blair).
      The reason for the change that animated my right hon. Friend the Chancellor was that it removes an anomaly. Advertisements in all other media are already taxed—television, radio, hoardings, billboards, leaflets and promotional material. Only advertisements in newspapers and magazines were not taxed. In fact, advertisement in books were taxed—not that they occur all that frequently.
      Mr. Martin J. O'Neill: What similarity is there between the substance of classified advertising and the kind of advertising that takes place on television and on the radio? I do not know whether the Minister listens to commercial radio, but there is not the kind of classified advertising there to which my hon. Friends have referred.
      Mr. Hayhoe: But I have listened to the debate and to what the hon. Member for Sedgefield said when he asked what animated the Government to bring forward the clause. The hon. Gentleman did that as a background to dealing with the amendment which refers to classified advertising. I shall come to that in a moment.
      As to the reasons for the tax, first, it removes an anomaly. It is one thing to relieve newspapers and magazines from VAT, which had been forecast before the election, but quite another to extend that same relief to those who advertise in them. Because the Chancellor decided not to extend VAT to the cover price of magazines and newspapers but believed that it was right to make all advertisements taxable, he took this step. As has been acknowledged, it provides some useful revenue, and it is a further step in the direction of a shift in the burden of taxation from earnings to expenditure.
      I confirm that the increase in revenue will be £30 million in 1985–86 and £50 million in a full year. Those figures take account of the fact that net revenue will accrue only from those traders and private individuals unable to reclaim the tax. It does not affect the VAT position in relation to the cover price of books and magazines.
      Mr. Campbell-Savours: Has the Minister not learnt anything from last year's proceedings? The imposition of VAT on building improvements was regarded as a monstrous bungle by his Department and substnatial unemployment was forecast as a result. The imposition of VAT on fish and chips also led to forecasts from HOTAG of massive redundancies, which have indeed taken place. Has the Minister learnt nothing from those mistakes? Does he not think that the case put by people now forecasting unemployment in the newspaper industry should be heard? In the light of his two previous bungles, should he not take those views into account, especially in view of the employment implications?
      Mr. Hayhoe: I do not know why the hon. Gentleman intervened to make those observations, which he could

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      have made in the general debate. I was responding to the invitation to explain the reasons for the tax. I appreciate that there are differing views in the Committee. That is partly why we debate these matters. If the Opposition did not disagree with the Government on this, they would presumably not have chosen to debate it.
      A great deal has been said about the EEC, first by the hon. Member for Sedgefield, when he opened the debate, and later by the hon. Member for Great Grimsby (Mr. Mitchell) who referred several times to the Select Committee on the Treasury and Civil Service and to the wider European Community considerations. I confirm that the EEC challenged our zero rating of newspaper advertising and news services as being contrary to the sixth directive. Incidentally, the reasoned opinion did not challenge the zero rating of books, newspapers and magazines; it concentrated on advertisements and news services. The British Government rejected the Commission's reasoned opinion and that position is fully maintained in respect of all the items challenged by the Commission.
      Paragraph 46 of the Select Committee report sets out the position extremely fairly. It states:
      "The argument that the British Government is its own master in matters of taxation also allows that the Chancellor may wish to reduce the extent of VAT zero rating"—
      in other words, to extend the VAT base—
      "in order to pursue his declared aims of widening the tax base and shifting the weight of taxation from direct to indirect taxes. This decision is his prerogative"—
      and, of course, Parliament's—
      "and is a political one which is not central to this report."
      The Select Committee continued, endorsed by the hon. Member for Great Grimsby and others, that the change to extend zero rating,
      "if it is made, would be solely for domestic reasons. The decision is a political one on which we make no judgment. It has not been part of our inquiry. A British Chancellor can make his own decisions for his own reasons."
      Mr. Blair: As I anticipated, the Minister has denied that the EEC had anything to do with the decision. The basis of the Government's rejection of the Commission's reasoned opinion, however, was that there were social reasons and that benefits to the consumer were involved. Do the Government still take that view? If so, what possible explanation is there for the imposition of the tax?
      Mr. Hayhoe: I have just given the explanation. My right hon. Friend the Chancellor thought it desirable. But the decision in no way undercuts our position in relation to the EEC, and the Opposition do a disservice to our national interest by suggesting otherwise. The explanation given by the Select Committee is accurate, because the Select Committee understood that these are matters for the British Government, the British Chancellor and the British Parliament to decide. If Parliament and the Government so decide, it is not a matter for the Community. The decision can be made quite separately without in any way undercutting or weakening our position with regard to the Community.
      Mr. Fisher: My reading of the Select Committee report is rather different. The report rightly emphasises that if the Government go ahead with this, it will be the Chancellor's own political choice. The Minister has confirmed that both in his reference to the report and in
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      his gestures of assent. He is saying that the Chancellor's political choice is to tax classified advertising in the same way as all other forms of advertising and, of his own free will and volition, to impose this tax on the grieving and the recently bereaved. The amendment deals specifically with that form of advertising. Is it really the Chancellor's personal political wish to tax those people? Will the Minister also tell us how much will be raised from the tax on classified advertising? In other words, what price has the Chancellor put on taxing these people?
      Mr. Hayhoe: Perhaps the hon. Gentleman will contain himself. He knows me well enough to know that I shall deal with the amendment and respond to what has been said. He is wasting the Committee's time by intervening in that way. I was responding to the invitation from the Opposition Front Bench to explain the background to the measure and the European Community aspect, to which the hon. Member for Great Grimsby devoted a large part of his contribution, but the hon. Member for Stoke-on-Trent, Central (Mr. Fisher) chose to jump up in a fury while I was doing so. I shall come to his points in due course, although what I have to say may not convince or appeal to him. I know from last year's debates what a Herculean task that would be. Nevertheless, I shall explain the Government's view.
      I wish to emphasise an important point that the hon. Member for Sedgefield picked up once again. I assure the Committee that the change has been made for reasons of domestic taxation policy.
      Mr. Fisher: Shame!
      Mr. Hayhoe: This is a perfectly proper subject for debate and disagreement, but I hope that no suggestion will be made which will weaken the British Government's position in relation to other challenges from the European Commission. On other zero-rated items we may be challenged in the European Court. We shall fight our corner on behalf of the British interest as we see it, and I hope that nothing that is said today will seek to undercut our position in that respect.
      Mr. Robert Sheldon: Does the hon. Gentleman foresee any difficulty from the Commission if a future Government wished to reverse the present decision?
      Mr. Hayhoe: My next note is to confirm what the hon. Member for Great Grimsby said—that departing from zero rating was a one-way journey and irreversible. I acknowledge that. That is known widely, and the Select Committee refers to it in its report. If the Committee endorses the Chancellor's decision, the decision cannot be reversed at a future stage within the rules of the Community as they now exist.
      8 pm
      I shall speak fairly generally about the different classes of advertisers who will be affected. Registered traders who deal in taxable goods and services will be able to reclaim the tax under the normal mechanism. Traders in the exempt sector, such as finance, insurance, education and health, will either be unable to reclaim any tax or have the tax recovery restricted to the extent to which they make taxable supplies.
      The hon. Member for Kingston upon Hull, West (Mr. Randall) referred to small traders. Small traders who are not registered for VAT—their annual turnover would have to be below £19,500—would not be able to

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      reclaim the VAT and, therefore, VAT would stick on them. It would also stick on private individuals who would also be unable to reclaim the tax.
      The hon. Member for Normanton (Mr. O'Brien) mentioned charities, but I shall not deal with that point now because there is an amendment specifically about that, which we shall discuss later.
      Obviously, the impact on the newspaper and magazine industry will vary for each publication, depending on the balance of its income between cover price and advertising, and on the extent of the advertising that it receives from the exempt sector—mainly financial—small unregistered traders, and private individuals unable to reclaim the tax. I acknowledge immediately that the burden will be greatest on the regional and local press, which depend most heavily on advertising revenue, and perhaps on that proportion of advertising revenue where the charge is not reclaimable and where it will stick. That applies particularly to free newspapers which depend entirely on advertising revenue, although the rates that they charge are generally lower than those of their competitors, where there is a cover price.
      The quality national newspapers will be harder hit than the tabloids because of their greater dependence on advertising revenue and because they carry more classified and financial advertisements. Other publications which depend on a high volume of classified advertisements and those with a high number of financial advertisements may suffer a higher proportional loss of revenue.
      No detailed study has been made of the effects of the tax on advertising alone. The study completed by the trade associations considered the combined effect of a tax on both advertisements and cover price. The best estimate by Price Waterhouse was a 3 per cent. volume reduction for regional newspapers. That was, however, an average figure, and obviously there will be a considerable range. The effect will depend on the extent to which advertisement rates fully reflect the tax and the extent to which advertisers who are unable to reclaim the tax are prepared to increase their expenditure. Although the effect may be significant for some specialist publications, the reduction is expected to be small overall because VAT is likely to stick on less than about one fifth of total press advertising.
      I shall now turn to the particular points of the amendment.
      Mr. Campbell-Savours: The Minister said that in some cases the figure would be more than 3 per cent. Will he confirm that that could lead to job losses?
      Mr. Hayhoe: From the information available at present, the chances of a loss of jobs are small.
      Mr. Campbell-Savours: That is what was said about the impact of VAT on fish and chip shops.
      Mr. Hayhoe: Many of the representations that we have received have argued that the change will reduce employment because publications will close or expansion will be curtailed. I think that that is the sort of point that the hon. Gentleman has in mind. It is difficult to isolate the effect of this tax change from the many other factors that influence employment prospects. Our best estimate of the net effect of the measure on employment is that it should be marginal across the whole range of the press and magazines.
      I shall now deal with our debate about classified advertisements for births, marriages and deaths. It is hard
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      to quantify the costs. The best estimate of the loss of revenue is between £5 million and £10 million in a full year, if the amendment is agreed to. Obviously, that is especially relevant to private advertisers, as they place most classified advertisements. That means that little of the tax will be recoverable from such advertisements. The simple consequence is a tax on final consumer expenditure. The same is true of the other private classified advertisements—for example, the sale of household goods, motor vehicles, houses and so on. Hon. Gentlemen have already given the figures for the breakdown of overall classified expenditure.
      The hon. Member for Stoke-on-Trent, Central pointed out that announcements of births, marriages and deaths are of special social significance and should be singled out for continued relief. I am not persuaded by his arguments. The arguments are most forceful for death announcements. Obviously, grieving relatives wish to let others know of a death as quickly and efficiently as possible. Announcements about births and marriages are a form of discretionary spending, and there is insufficient justification for continuing VAT relief on them, as VAT is to be imposed on press advertisements generally. If VAT relief were continued on them, there would soon be pressure to extend that relief to other commemorative or congratulatory messages, such as engagements and wedding anniversaries. The hon. Member for Kingston upon Hull, West mentioned the importance of classified advertisements for golden weddings. Pressure may even be extended to the Valentine classified advertisements, which have become a growth industry in recent years. It is difficult to see where relief would end if we took that avenue.
      Although I accept the case is strong for death announcements, it would be extremely difficult to devise and administer a relief for that category of advertising alone. It would place an extra adminitrative burden on newspapers, because they would have to make special accounting arrangements to identify and deal with the one or two types of advertisements which would continue to be zero rated.
      The hon. Member for Sedgefield spoke about the impact on pensioners. I recognise his anxiety, that poorer old-age pensioners will have particular difficulty in meeting the additional cost of VAT on death notices. Happily, such an event occurs fairly infrequently in most families. The additional VAT charge on such advertisements in regional or local newspapers throughout the country will probably be about 50p or £1 for the whole advertisement. It is to be hoped that such an advertisement would be only rarely inserted by a particular family.
      It would be very difficult to allow a concession such as that requested in the amendment. If such a concession were to be made, pressures would immediately build up to extend the relief to other worthy causes. I have little doubt that the inventive minds of hon. Members in all parts of the Committee would quickly bring forward suitable candidates for further concessions.
      VAT is a broadly based tax on consumer expenditure. Once it has been extended to cover a formerly zero-rated area, I think it would be wrong to grant special relief other than in the most exceptional circumstances, and I do not regard the amendment as covering such wholly exceptional circumstances. Therefore, I hope that the Committee will not accept it.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 111, Noes 202.

      Division No. 198]

      [6.43 pm

      AYES

      Alexander, Richard

      Hawkins, Sir Paul (SW N'folk)

      Alison, Rt Hon Michael

      Hayes, J.

      Ancram, Michael

      Hayhoe, Barney

      Arnold, Tom

      Hayward, Robert

      Ashby, David

      Heddle, John

      Aspinwall, Jack

      Henderson, Barry

      Atkins, Rt Hon Sir H.

      Hickmet, Richard

      Atkins, Robert (South Ribble)

      Higgins, Rt Hon Terence L.

      Baker, Nicholas (N Dorset)

      Hind, Kenneth

      Banks, Robert (Harrogate)

      Hirst, Michael

      Batiste, Spencer

      Holt, Richard

      Beaumont-Dark, Anthony

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

      Benyon, William

      Howarth, Gerald (Cannock)

      Best, Keith

      Howell, Ralph (N Norfolk)

      Blackburn, John

      Hunt, David (Wirral)

      Body, Richard

      Irving, Charles

      Boscawen, Hon Robert

      Jackson, Robert

      Bottomley, Peter

      Jessel, Toby

      Bottomley, Mrs Virginia

      Johnson Smith, Sir Geoffrey

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

      Jones, Gwilym (Cardiff N)

      Bowden, Gerald (Dulwich)

      Jones, Robert (W Herts)

      Braine, Rt Hon Sir Bernard

      King, Roger (B'ham N'field)

      Brandon-Bravo, Martin

      Knight, Mrs Jill (Edgbaston)

      Bright, Graham

      Lamont, Norman

      Brinton, Tim

      Lang, Ian

      Brown, M. (Brigg & Cl'thpes)

      Lawrence, Ivan

      Browne, John

      Lee, John (Pendle)

      Bruinvels, Peter

      Leigh, Edward (Gainsbor'gh)

      Bryan, Sir Paul

      Lennox-Boyd, Hon Mark

      Buck, Sir Antony

      Lester, Jim

      Budgen, Nick

      Lewis, Sir Kenneth (Stamf'd)

      Bulmer, Esmond

      Lilley, Peter

      Burt, Alistair

      Lloyd, Ian (Havant)

      Carlisle, John (N Luton)

      Lloyd, Peter, (Fareham)

      Carlisle, Kenneth (Lincoln)

      Lord, Michael

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

      Luce, Richard

      Carttiss, Michael

      Lyell, Nicholas

      Cash, William

      McCurley, Mrs Anna

      Chalker, Mrs Lynda

      Macfarlane, Neil

      Chope, Christopher

      Maclean, David John

      Clark, Dr Michael (Rochford)

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

      Clarke, Rt Hon K. (Rushcliffe)

      Major, John

      Cockeram, Eric

      Malins, Humfrey

      Coombs, Simon

      Malone, Gerald

      Cope, John

      Marlow, Antony

      Cormack, Patrick

      Mates, Michael

      Couchman, James

      Mather, Carol

      Critchley, Julian

      Mawhinney, Dr Brian

      Currie, Mrs Edwina

      May hew, Sir Patrick

      Dickens, Geoffrey

      Merchant, Piers

      Dorrell, Stephen

      Miller, Hal (B'grove)

      Douglas-Hamilton, Lord J.

      Mills, lain (Meriden)

      Dover, Den

      Mills, Sir Peter (West Devon)

      Dunn, Robert

      Mitchell, David (NW Hants)

      Dykes, Hugh

      Montgomery, Sir Fergus

      Evennett, David

      Moore, John

      Eyre, Sir Reginald

      Morris, M. (N'hampton, S)

      Fallon, Michael

      Morrison, Hon C. (Devizes)

      Favell, Anthony

      Moynihan, Hon C.

      Fletcher, Alexander

      Nelson, Anthony

      Forman, Nigel

      Newton, Tony

      Forth, Eric

      Nicholls, Patrick

      Fowler, Rt Hon Norman

      Norris, Steven

      Fox, Marcus

      Oppenheim, Phillip

      Gale, Roger

      Oppenheim, Rt Hon Mrs S.

      Galley, Roy

      Osborn, Sir John

      Garel-Jones, Tristan

      Ottaway, Richard

      Goodhart, Sir Philip

      Page, Sir John (Harrow W)

      Gower, Sir Raymond

      Parkinson, Rt Hon Cecil

      Greenway, Harry

      Parris, Matthew

      Griffiths, E. (B'y St Edm'ds)

      Percival, Rt Hon Sir Ian

      Grylls, Michael

      Pollock, Alexander

      Hamilton, Hon A. (Epsom)

      Portillo, Michael

      Hannam, John

      Powell, William (Corby)

      Hargreaves, Kenneth

      Powley, John

      Harris, David

      Prentice, Rt Hon Reg

      Harvey, Robert

      Price, Sir David

      Haselhurst, Alan

      Pym, Rt Hon Francis

      676

      Raffan, Keith

      Thomas, Rt Hon Peter

      Raison, Rt Hon Timothy

      Thompson, Donald (Calder V)

      Rees, Rt Hon Peter (Dover)

      Thompson, Patrick (N'ich N)

      Rhodes James, Robert

      Thorne, Neil (llford S)

      Ridsdale, Sir Julian

      Thornton, Malcolm

      Rippon, Rt Hon Geoffrey

      Thurnham, Peter

      Roberts, Wyn (Conwy)

      Townend, John (Bridlington)

      Robinson, Mark (N'port W)

      Tracey, Richard

      Roe, Mrs Marion

      Twinn, Dr Ian

      Rowe, Andrew

      van Straubenzee, Sir W.

      Ryder, Richard

      Viggers, Peter

      Sackville, Hon Thomas

      Waddington, David

      Sayeed, Jonathan

      Wakeham, Rt Hon John

      Shaw, Giles (Pudsey)

      Waller, Gary

      Shaw, Sir Michael (Scarb')

      Ward, John

      Shelton, William (Streatham)

      Wardle, C. (Bexhill)

      Shepherd, Colin (Hereford)

      Watson, John

      Shepherd, Richard (Aldridge)

      Watts, John

      Silvester, Fred

      Wells, Bowen (Hertford)

      Sims, Roger

      Wells, Sir John (Maidstone)

      Skeet, T. H. H.

      Wheeler, John

      Smith, Tim (Beaconsfield)

      Whitfield, John

      Soames, Hon Nicholas

      Whitney, Raymond

      Speller, Tony

      Wiggin, Jerry

      Spencer, Derek

      Winterton, Mrs Ann

      Spicer, Michael (S Worcs)

      Winterton, Nicholas

      Stanbrook, Ivor

      Wolfson, Mark

      Steen, Anthony

      Wood, Timothy

      Stern, Michael

      Yeo, Tim

      Stevens, Lewis (Nuneaton)

      Young, Sir George (Acton)

      Stewart, Andrew (Sherwood)

      Stradling Thomas, J.

      Tellers for the Ayes

      Taylor, John (Solihull)

      Mr. Tony Durant and

      Terlezki, Stefan

      Mr. Michael Neubert.

      NOES

      Abse, Leo

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

      Adams, Allen (Paisley N)

      Evans, John (St. Helens N)

      Archer, Rt Hon Peter

      Fatchett, Derek

      Ashton, Joe

      Fields, T. (L'pool Broad Gn)

      Atkinson, N. (Tottenham)

      Fisher, Mark

      Bagier, Gordon A. T.

      Foster, Derek

      Barnett, Guy

      Foulkes, George

      Benn, Tony

      Freeson, Rt Hon Reginald

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

      George, Bruce

      Bermingham, Gerald

      Gilbert, Rt Hon Dr John

      Bidwell, Sydney

      Godman, Dr Norman

      Blair, Anthony

      Gould, Bryan

      Boyes, Roland

      Gourlay, Harry

      Bray, Dr Jeremy

      Hamilton, James (M'well N)

      Brown, Gordon (D'f'mline E)

      Hamilton, W. W. (Central Fife)

      Brown, Hugh D. (Provan)

      Hardy, Peter

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

      Harrison, Rt Hon Walter

      Buchan, Norman

      Hogg, N. (C'nauld & Kilsyth)

      Caborn, Richard

      Hughes, Robert (Aberdeen N)

      Callaghan, Jim (Heyw'd & M)

      Hughes, Sean (Knowsley S)

      Campbell-Savours, Dale

      Janner, Hon Greville

      Canavan, Dennis

      Jones, Barry (Alyn & Deeside)

      Clark, Dr David (S Shields)

      Kinnock, Rt Hon Neil

      Clarke, Thomas

      Lamond, James

      Clay, Robert

      Lewis, Ron (Carlisle)

      Clwyd, Mrs Ann

      Lewis, Terence (Worsley)

      Cocks, Rt Hon M. (Bristol S.)

      Lloyd, Tony (Stratford)

      Concannon, Rt Hon J. D.

      McDonald, Dr Oonagh

      Cook, Frank (Stockton North)

      McKay, Allen (Penistone)

      Cook, Robin F. (Livingston)

      MacKenzie, Rt Hon Gregor

      Corbyn, Jeremy

      McNamara, Kevin

      Cowans, Harry

      McWilliam, John

      Craigen, J. M.

      Madden, Max

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

      Marek, Dr John

      Deakins, Eric

      Mason, Rt Hon Roy

      Dewar, Donald

      Maynard, Miss Joan

      Dixon, Donald

      Michie, William

      Dormand, Jack

      Mikardo, Ian

      Douglas, Dick

      Millan, Rt Hon Bruce

      Dubs, Alfred

      Mitchell, Austin (G't Grimsby)

      Duffy, A. E. P.

      Morris, Rt Hon J. (Aberavon)

      Dunwoody, Hon Mrs G.

      Oakes, Rt Hon Gordon

      Eadie, Alex

      O'Brien, William

      Eastham, Ken

      O'Neill, Martin

      677

      Orme, Rt Hon Stanley

      Stott, Roger

      Pike, Peter

      Strang, Gavin

      Powell, Raymond (Ogmore)

      Thomas, Dr R. (Carmarthen)

      Prescott, John

      Thompson, J. (Wansbeck)

      Randall, Stuart

      Thorne, Stan (Preston)

      Rees, Rt Hon M. (Leeds S)

      Tinn, James

      Richardson, Ms Jo

      Wardell, Gareth (Gower)

      Roberts, Ernest (Hackney N)

      Wareing, Robert

      Sheerman, Barry

      Wigley, Dafydd

      Sheldon, Rt Hon R.

      Williams, Rt Hon A.

      Shore, Rt Hon Peter

      Wilson, Gordon

      Short, Ms Clare (Ladywood)

      Winnick, David

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

      Woodall, Alec

      Skinner, Dennis

      Snape, Peter

      Tellers for the Noes:

      Soley, Clive

      Mr. Frank Haynes and

      Spearing, Nigel

      Mr. John Maxton.

      Stewart, Rt Hon D. (W Isles)

      Division No. 199]

      [8.10 pm

      AYES

      Adams, Allen (Paisley N)

      Hughes, Robert (Aberdeen N)

      Atkinson, N. (Tottenham)

      Hughes, Sean (Knowsley S)

      Bagier, Gordon A. T.

      Janner, Hon Greville

      Barnett, Guy

      Jones, Barry (Alyn & Deeside)

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

      Kilroy-Silk, Robert

      Bermingham, Gerald

      Lamond, James

      Blair, Anthony

      Lewis, Ron (Carlisle)

      Boyes, Roland

      Lewis, Terence (Worsley)

      Bray, Dr Jeremy

      Litherland, Robert

      Brown, Gordon (D'f'mline E)

      Lloyd, Tony (Stretford)

      Brown, Hugh D. (Provan)

      McDonald, Dr Oonagh

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

      McKelvey, William

      Buchan, Norman

      McNamara, Kevin

      Caborn, Richard

      McTaggart, Robert

      Callaghan, Jim (Heyw'd & M)

      McWilliam, John

      Campbell-Savours, Dale

      Madden, Max

      Canavan, Dennis

      Marek, Dr John

      Clark, Dr David (S Shields)

      Mason, Rt Hon Roy

      Clarke, Thomas

      Maxton, John

      Clay, Robert

      Maynard, Miss Joan

      Cocks, Rt Hon M. (Bristol S.)

      Michie, William

      Concannon, Rt Hon J. D.

      Millan, Rt Hon Bruce

      Cook, Frank (Stockton North)

      Mitchell, Austin (G't Grimsby)

      Cook, Robin F. (Livingston)

      Morris, Rt Hon A. (W'shawe)

      Corbett, Robin

      Oakes, Rt Hon Gordon

      Corbyn, Jeremy

      O'Brien, William

      Cowans, Harry

      O'Neill, Martin

      Craigen, J. M.

      Orme, Rt Hon Stanley

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

      Pike, Peter

      Deakins, Eric

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

      Dewar, Donald

      Powell, Raymond (Ogmore)

      Dixon, Donald

      Prescott, John

      Dormand, Jack

      Randall, Stuart

      Douglas, Dick

      Redmond, M.

      Dubs, Alfred

      Rees, Rt Hon M. (Leeds S)

      Duffy, A. E. P.

      Richardson, Ms Jo

      Dunwoody, Hon Mrs G.

      Sheldon, Rt Hon R.

      Eadie, Alex

      Short, Ms Clare (Ladywood)

      Eastham, Ken

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

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

      Skinner, Dennis

      Evans, John (St. Helens N)

      Soley, Clive

      Fatchett, Derek

      Spearing, Nigel

      Field, Frank (Birkenhead)

      Stewart, Rt Hon D. (W Isles)

      Fields, T. (L'pool Broad Gn)

      Stott, Roger

      Fisher, Mark

      Strang, Gavin

      Foster, Derek

      Thomas, Dr R. (Carmarthen)

      Foulkes, George

      Thorne, Stan (Preston)

      Garrett, W. E.

      Tinn, James

      George, Bruce

      Wardell, Gareth (Gower)

      Gilbert, Rt Hon Dr John

      Wigley, Dafydd

      Golding, John

      Wilson, Gordon

      Gould, Bryan

      Winnick, David

      Gourlay, Harry

      Woodall, Alec

      Hamilton, James (M'well N)

      Hardy, Peter

      Tellers for the Ayes:

      Harrison, Rt Hon Walter

      Mr. Frank Haynes and

      Hogg, N. (C'nauld & Kilsyth)

      Mr. Allen McKay.

      Howells, Geraint

      NOES

      Adley, Robert

      Best, Keith

      Alexander, Richard

      Bevan, David Gilroy

      Ancram, Michael

      Blackburn, John

      Arnold, Tom

      Body, Richard

      Ashby, David

      Boscawen, Hon Robert

      Atkins, Robert (South Ribble)

      Bottomley, Peter

      Baker, Nicholas (N Dorset)

      Bottomley, Mrs Virginia

      Baldry, Tony

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

      Banks, Robert (Harrogate)

      Bowden, Gerald (Dulwich)

      Batiste, Spencer

      Brandon-Bravo, Martin

      Beaumont-Dark, Anthony

      Bright, Graham

      Bellingham, Henry

      Brinton, Tim

      Benyon, William

      Brooke, Hon Peter

      692

      Brown, M. (Brigg & Cl'thpes)

      McQuarrie, Albert

      Bruinvels, Peter

      Major, John

      Bryan, Sir Paul

      Malins, Humfrey

      Budgen, Nick

      Malone, Gerald

      Bulmer, Esmond

      Maples, John

      Burt, Alistair

      Marland, Paul

      Butcher, John

      Marlow, Antony

      Butterfill, John

      Mates, Michael

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

      Mather, Carol

      Carttiss, Michael

      Mayhew, Sir Patrick

      Cash, William

      Mellor, David

      Chalker, Mrs Lynda

      Merchant, Piers

      Chope, Christopher

      Meyer, Sir Anthony

      Clark, Dr Michael (Rochford)

      Mills, lain (Meriden)

      Clarke, Rt Hon K. (Rushcliffe)

      Mills, Sir Peter (West Devon)

      Cockeram, Eric

      Mitchell, David (NW Hants)

      Coombs, Simon

      Moate, Roger

      Cope, John

      Montgomery, Sir Fergus

      Cormack, Patrick

      Moore, John

      Couchman, James

      Morris, M. (N'hampton, S)

      Cranborne, Viscount

      Morrison, Hon C. (Devizes)

      Critchley, Julian

      Morrison, Hon P. (Chester)

      Currie, Mrs Edwina

      Moynihan, Hon C.

      Dickens, Geoffrey

      Nelson, Anthony

      Dorrell, Stephen

      Neubert, Michael

      Douglas-Hamilton, Lord J.

      Newton, Tony

      Dover, Den

      Nicholls, Patrick

      Dunn, Robert

      Osborn, Sir John

      Durant, Tony

      Ottaway, Richard

      Dykes, Hugh

      Page, Sir John (Harrow W)

      Evennett, David

      Page, Richard (Herts SW)

      Eyre, Sir Reginald

      Parkinson, Rt Hon Cecil

      Fallon, Michael

      Parris, Matthew

      Farr, Sir John

      Peacock, Mrs Elizabeth

      Favell, Anthony

      Pollock, Alexander

      Fenner, Mrs Peggy

      Portillo, Michael

      Fletcher, Alexander

      Powell, William (Corby)

      Forman, Nigel

      Powley, John

      Forth, Eric

      Prentice, Rt Hon Reg

      Fowler, Rt Hon Norman

      Price, Sir David

      Gale, Roger

      Proctor, K. Harvey

      Galley, Roy

      Raffan, Keith

      Garel-Jones, Tristan

      Rathbone, Tim

      Gower, Sir Raymond

      Rees, Rt Hon Peter (Dover)

      Greenway, Harry

      Rhodes James, Robert

      Gregory, Conal

      Ridsdale, Sir Julian

      Hamilton, Hon A. (Epsom)

      Roberts, Wyn (Conwy)

      Hannam, John

      Robinson, Mark (N'port W)

      Hargreaves, Kenneth

      Roe, Mrs Marion

      Harvey, Robert

      Rossi, Sir Hugh

      Hawkins, Sir Paul (SW N'folk)

      Rowe, Andrew

      Hayes, J.

      Sackville, Hon Thomas

      Hayhoe, Barney

      Sayeed, Jonathan

      Heddle, John

      Shaw, Giles (Pudsey)

      Henderson, Barry

      Shaw, Sir Michael (Scarb')

      Hickmet, Richard

      Shelton, William (Streatham)

      Hind, Kenneth

      Shepherd, Colin (Hereford)

      Hogg, Hon Douglas (Gr'th'm)

      Silvester, Fred

      Howarth, Gerald (Cannock)

      Sims, Roger

      Howell, Ralph (N Norfolk)

      Skeet, T. H. H.

      Jessel, Toby

      Smith, Tim (Beaconsfield)

      Jones, Gwilym (Cardiff N)

      Soames, Hon Nicholas

      Jones, Robert (W Herts)

      Speller, Tony

      King, Roger (B'ham N'field)

      Spencer, Derek

      Lamont, Norman

      Stanbrook, Ivor

      Lang, Ian

      Stern, Michael

      Lawrence, Ivan

      Stevens, Lewis (Nuneaton)

      Lee, John (Pendle)

      Stradling Thomas, J.

      Leigh, Edward (Gainsbor'gh)

      Taylor, John (Solihull)

      Lennox-Boyd, Hon Mark

      Terlezki, Stefan

      Lester, Jim

      Thomas, Rt Hon Peter

      Lewis, Sir Kenneth (Stamf'd)

      Thompson, Patrick (N'ich N)

      Lilley, Peter

      Thorne, Neil (Ilford S)

      Lloyd, Ian (Havant)

      Thurnham, Peter

      Lord, Michael

      Townend, John (Bridlington)

      Luce, Richard

      Tracey, Richard

      McCurley, Mrs Anna

      Trotter, Neville

      MacGregor, John

      Twinn, Dr Ian

      Maclean, David John

      van Straubenzee, Sir W.

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

      Viggers, Peter

      693

      Waddington, David

      Winterton, Mrs Ann

      Wakeham, Rt Hon John

      Winterton, Nicholas

      Waller, Gary

      Wolfson, Mark

      Ward, John

      Wood, Timothy

      Wardle, C. (Bexhill)

      Yeo, Tim

      Watts, John

      Young, Sir George (Acton)

      Wheeler, John

      Whitfield, John

      Tellers for the Noes:

      Whitney, Raymond

      Mr. Peter Lloyd and

      Wiggin, Jerry

      Mr. Tim Sainsbury.

      Question accordingly negatived.
      Mr. Blair: I beg to move amendment No. 3, in clause 10, page 5, line 16, at beginning insert
      'Save where advertisements concern employment.'.
      It is fitting that we are debating the amendment on a day which has included employment questions. In answer to a question which I had tabled, the Secretary of State for Employment told the House that there were 3,273,000 unemployed claimants in April 1985. That is a staggering figure, but it is a gross understatement of the true level of unemployment. The real total is much closer to 4 million.
      We argue about the policies that are best to reduce unemployment and about those that produce the present level of unemployment. However, it should be common ground that no obstacle should be placed in the way of further employment prospects. It is surprising and disappointing that the Government are not prepared to concede without hesitation an amendment that would exempt from VAT newspaper advertisements for employment. If a company advertises job prospects in a newspaper, whether it is a national, regional or local journal, it will pay VAT at 15 per cent. That is a true tax on jobs.
      The position is even worse for smaller companies or firms which have only recently been formed and which are paying VAT because their annual turnover is less than £19,500. They will advertise jobs, pay VAT on the advertisements and will be unable to set that off against any VAT that they charge on sales. The VAT that they pay in addition to the price of the advertisement will go straight on to the costs of the firm and will reduce the money that is available for employment. The VAT that is charged on advertisements is a tax upon employment and will hinder greatly the prospects of those seeking jobs. It will discourage employers from advertising jobs widely.
      Many people find jobs through their local newspapers. Those who are seeking work will go to the job centre and they will read their local newspapers. In any reasonable local newspaper there is usually a column of job advertisements. It is obvious that they are important so that those seeking work may learn where employment prospects lie. We should oppose any tax that prevents or hinders the individual's ability to seek work.
      I hope that the Government will think again and will acknowledge that job advertisements should not be taxed. If the amendment is accepted, there is a much better chance that employers will be encouraged to advertise jobs and consequently a much better chance of individuals finding work through their local newspapers and other sources of job advertisements.
      Mr. Hayhoe: The purpose of the amendment is to continue the zero rating of employment advertisements in newspapers and magazines. In effect, all recruitment advertisements would continue to be zero rated. The cost of the amendment would be less than £5 million. It would
      694
      be low because the vast bulk of recruitment advertising is placed by commercial concerns rather than private individuals. Most advertisers will be able to recover the VAT charged under the normal mechanism of the tax, as it can be claimed back as input tax.
      Those affected adversely will be small traders—the hon. Member for Sedgefield (Mr. Blair) referred to them specifically—who are not registered for VAT. Included in this category will be those with a turnover of less than £19,500 and traders who deal in exempt or non-business supplies. The latter category is much more substantial than the others and includes, for example, Government Departments. However, there is a certain circularity about extra tax charges that are paid with one hand and collected with the other. I should make it clear that local authorities would not be affected because they do not come within clause 20. Some parts of the finance, insurance, health and education sectors will be affected as well as some charities. We shall be dealing with advertisements by charities when we reach amendments Nos. 4 and 5.
      As the cost of recruitment advertisements will not increase for the majority of employers, there will be no reason for them to reduce their recruitment advertising on account of VAT. In areas where not all the VAT will be recoverable, it is possible that there will be some reduction in the amount of recruitment advertising which is placed. A few representations to that effect have been received by the Treasury from the financial sector. I expect the effect of such reductions to be pretty small. To the extent that a reduction occurs, it is likely to be in the frequency or size of advertisements. It is improbable that an employer wishing to recruit staff will not advertise because of the VAT charge. I strongly doubt whether the extension of VAT will have a noticeable effect on the level of employment.
      The amendment suggests that there should be special relief for recruitment advertisements. The revenue cost of allowing the relief would be relatively small—under £5 million—but the case for it has not been made out fully. The effect on employment would be minimal and the effect on advertising would be small. That is probably common ground because the vast majority of recruitment advertisements will be placed by people with whom the VAT charge will not stick.
      If relief were allowed, it would be difficult to refuse other worthy causes. Indeed, it would make something of a nonsense of the Division on amendment No. 2. Reliefs such as this would significantly complicate the administration of the tax and put an additional administrative burden on newspapers and magazines, as they would have to deal with some zero rated advertisements and some taxed ones. VAT is intended as a broad-based tax on consumer expenditure. Once it has been extended, it is wrong in principle to select items for continued special relief. I hope that the amendment will be withdrawn or, if not, that the Committee will reject it.
      Amendment negatived.
      8.30 pm
      Mr. Blair: I beg to move amendment No. 4, in page 5, line 16, at beginning insert
      'Save in so far as Schedule 5 of the Principal Act concerns value-added-tax on advertisements by charities'.
      The Temporary Chairman: With this it will be convenient to take amendment No. 5, in page 5, line 16, at beginning insert

      695
      'Save in so far as Schedule 5 of the Principal Act concerns value-added-tax on advertisements by registered charities'.
      Mr. Blair: Amendment No. 4 has drawn support from a broad range of people. Perhaps the most strongly argued debate on the Bill will be about VAT on advertisements by charities. The amendment exempts charities from VAT on advertisements. I expect the Government will argue that to accept the amendment would be to accept an anomaly. They have argued that it is wrong to distinguish between different types of advertisement. There will be no anomaly if the amendment is accepted. Indeed, an anomaly will arise if it is not accepted.
      The basis of charities' operations is that their income is not taxed. They raise their income primarily from donations. Therefore, clause 10 means that, although charities' income is not taxed, the primary means by which they raise that income—advertising—will be taxed. Their ability to raise money will be hampered and their costs will be increased. Moreover, charities have no VAT in respect of sales to set off against the tax that they pay on advertisements. I cannot believe that the Government want to hinder charities and to subject them to a tax that will greatly hamper their fund-raising activities. The change comes especially ill from a Government who maintain—the Prime Minister has said this often—that the more charities do, the better. They believe that more should be done privately to lessen the burden on the Exchequer.
      Mr. Campbell-Savours: When the Prime Minister suggests that charities should not be zero rated, perhaps she regards them as revenue raisers on her behalf.
      Mr. Blair: I take my hon. Friend's point. The Government regard charities as a substitute for state action. The whole House agrees that charities perform a useful function which should be encouraged. If, therefore, charitable income is so socially desirable that it is exempted from tax, so should be the conduit by which the money is raised.
      Charities need advertising for donations, to exchange information about their services and for staff recruitment. There is a strong move afoot to exempt charities from VAT, and the Charities VAT Reform Group has been established for that purpose. The argument to exempt charities' advertisements from VAT can be made logically and without having to accept the case for general exemption. The reform group did a survey of the top 200 charities and received 110 replies which showed that they would have to pay an extra £1·2 million a year in VAT for advertising space. That sum will come directly from funds which would otherwise be used to do charitable work. Only the Exchequer will benefit. The Treasury estimates that there are between 70,000 and 100,000 charities in Britain, so the total burden will be considerably higher. It is therefore surprising that the Government have estimated that the cost will be only £1 million.
      I hope that the Minister will deal with this matter. That figure of £1 million is hotly disputed by the charities. I shall be grateful if the Minister will say whether my information is right or wrong. It is that the Government's figure of £1 million is based on the Advertising Association's estimate of agency-placed advertising. In
      696
      other words, that £1 million represents the amount of agency-placed advertising by charities. However, much charitable advertising is not done through agency placing. Therefore, perhaps the Government's figures are based on that misunderstanding.
      The charities feel particularly strongly about this matter, partly because of the way in which the Budget has been sold for charities. It has been said by Ministers and by the Chancellor himself that, overall, the Budget is helpful to charities. That view is not shared by charitable organisations to which I have spoken.
      The Government say that they have helped charities in two ways. It is worth outlining them so that we can set in context what we are talking about in the amendment. First, the Government say that they have raised the limit on relief from higher rate tax from £5,000 to £10,000. They say that that will be of assistance to charities when they receive greater donations. The Exchequer estimates that the cost of that to the Exchequer will be £1 million. I hope, again, that the Minister will specifically say whether my information is right. It is that few covenants reach £5,000, never mind £10,000. Therefore, the notion that the £5,000 limit to relief from higher rate tax is a barrier to higher covenants is not borne out when one examines the amounts of covenants.
      Mr. Campbell-Savours: Is it not also noticeable that there is a certain profile which one can identify in relation to those contributions, which is that certain charities attract higher contributions, while others attract none? Therefore, the help to which my hon. Friend has referred is specific in so far as it will go only to a few, and a great number of charities will not benefit in any way, but will just lose.
      Mr. Blair: I am grateful to my hon. Friend. That is absolutely right.
      I have looked into these covenants. For example, not a single covenant of £5,000 is received by the Muscular Dystrophy Group of Great Britain. The steering committee of the Charities VAT Reform Group receives about £543,000 in total covenanted income. That includes some major charities such as Dr. Barnardo's, Help the Aged, International Christian Relief, MENCAP, and so on. Therefore, the total covenanted income of many of the large charities is not that large. I should like to know whether the Minister accepts that few covenants reach £5,000 and where on earth he gets his £1 million from. The charities dispute it strongly.
      The second piece of mitigation put forward by the Government as to why VAT on newspaper advertisements will not affect charities too adversely when compared with the other things that the Government are doing in the Budget is that they have extended relief from VAT to computers purchased for medical research. The Government pray that in aid for what they are doing for charities. Again the Treasury comes out with some fairly extraordinary figures as to what charities will be saved through that extension of VAT relief. It says that about £5 million will be saved. That is an extraordinary figure. If it is grossed up, it comes to about £33 million. I cannot conceive the scale on which charities will have to purchase computers so that there is a £5 million saving as a result of VAT relief.
      8.45 pm
      I have made inquiries of two charities which one would expect to be at the forefront of computers for medical

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      research—the Cancer Research Campaign and the Marie Curie Memorial Foundation. Neither believes that that relief from VAT on computers purchased for medical research will make any difference to its expenditure problems. I should be grateful if the Minister would give us chapter and verse on those figures.
      When we are talking about anomalies, there is also another matter to consider. I understand that the Government have said in certain quarters that it is impossible to distinguish between socially useful charities and charities with a less socially useful function. With respect, that distinction is present in the reliefs which charities are already given. There is no reason to think that that distinction is any greater in relation to VAT relief for newspaper advertisements than in relation to any other type of tax relief.
      The charities' concern is real about this matter. As amendment No. 5 shows, there is cross-party concern at the effects of VAT on advertisements by charities. Because of the way in which charities operate, they have a particular need to advertise their services and to advertise for donations. They have a particular need which is way above that of ordinary corporations, businesses or other individuals. Given that charities perform a service in our society which we all wish to see both encouraged and heightened, I cannot believe that the Government, having listened to the argument, and taking account of the proper concern of charities, will persist in rejecting the amendment.
      The amendment is crucial because it is about the type of society that we wish to see. The type of society which the Opposition wish to see, and which I hope many others in the Conservative party wish to see, is one where those who go about the difficult business of raising money for charity have no hindrances put in their way, but are helped and encouraged. One certain way for the Government to make credible their promise to assist charities is to support the amendment.
      Mr. John Hannam: I speak in strong support of amendments Nos. 4 and 5 which relieve charities of the further crushing VAT burden that is imposed in the Bill. For several years I have been involved in the parliamentary campaign to try to secure VAT relief for charities. It is sad for me to acknowledge that, despite all our efforts in recent years, the Government are now substantially increasing the charities' VAT burden.
      It is hard to believe that it was a VAT working party set up by the present Foreign Secretary, when he was Opposition Treasury spokesman in 1976, which came out strongly in favour of relieving charities from the VAT burden. He said that it should be a priority. That was when VAT was about half what it is today. Since then, despite massive opposition from hon. Members on both sides of the Committee and from all organisations outside, that VAT imposition has been increased substantially. That, as the hon. Member for Sedgefield (Mr. Blair) has pointed out, runs counter to the Government's declared policy of support for voluntary bodies, and for the very ones to which we look to provide social services and the health care and welfare advice that is needed.
      It is a sad story. In 1979 VAT was nearly doubled. Last year, VAT was imposed on building alterations, and leading charities providing residential services faced substantially increased VAT bills. The Imperial Cancer Research Fund, since last year's imposition of VAT on
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      building alterations and extensions, has faced an increased bill of £330,000, the National Children's Home an increase of £200,000, the Spastics Society £120,000, Help the Aged £150,000 and the Royal National Institute for the Blind £95,000. Those are just a few examples of the burdens that such charities are having to face.
      Subsequently, my right hon. Friend the Chancellor announced small concessions on building alterations for disabled people and these figures have been slightly reduced, but the potential burdens still remain. The total non-recoverable VAT for members of the Charities VAT Reform Group, which has been doing all the spadework in obtaining the necessary details, and which includes the majority of the top 200 charities, is about £10 million a year.
      Many of these charities are trying to meet the increasing demands on their services resulting from the squeeze on local authority spending. Local authorities are able to recover their VAT on the same services as those provided by the charities, yet the charities are not able to recover their VAT. The result of my right hon. Friend the Chancellor's action on building alterations is that many community care projects are being cut. This cannot be a sensible policy, especially in view of the cost effectiveness of the charities' operations.
      There is now the added VAT cost on advertising which, for the 18 charities on the steering committee of the Charities VAT Reform Group, will add £387,000 to their advertising budget of £2·5 million. A few weeks ago, the director of the Multiple Sclerosis Society came to the House of Commons to talk to the all-party disablement group. The main point in what he had to say was the importance of advertising as his charity's major fund raiser for research into multiple sclerosis. That society now, faces an increased cost of £50,000 a year. That sum could fund three years of vital research into multiple sclerosis in a small unit. The Spastics Society put its extra cost at £30,000, and its overall bill for the year is now up to £530,000.
      My right hon. Friend the Chancellor has said that he expects to raise about £50 million a year from this measure, and he estimates that, of that, the charities will bring in less than £1 million. That is a substantially lower figure than the one produced by the Charities VAT Reform Group, whose figures are based on factual information. As the hon. Member for Sedgefield pointed out, 110 of the top 200 charities will spend £1·2 million extra this year for VAT on advertising, so the Treasury figure, like so many of the forecasts that we have to view these days, is a tailored guesstimate. The Budget concessions on convenants, which raise the limit on higher tax relief from £5,000 to £10,000, will not counterbalance the extra VAT cost. Few charities receive covenants of this size—mainly charities such as the National Trust. The 18 steering committee charities received a total of only £1·3 million last year. They will he paying almost half that amount back in extra VAT this year.
      The other concession in the Budget is the relief from VAT for computers purchased for medical research. That, again, is regarded as a negligible concession by the charities group. Even the medical research charities, such as the Cancer Research Campaign and the Marie Curie Memorial Foundation, do not believe that it will be of particular assistance. Again, we have a Treasury guesstimate that this concession will cost £5 million a year. If that is true, it would involve an expenditure by

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      charities of £33 million a year on computers for medical research. We can rightly ask how this Treasury assessment has been arrived at. Perhaps my hon. Friend the Minister will tell us.
      I hope that the Committee will recognise the contradictions inherent in the charities taking on the increased burden of providing extra services that the Government are asking them to carry out, while clobbering the same voluntary organisations with huge added VAT costs. I know the old Treasury argument that is trotted out every time that we trudge along to the "no" room in the Treasury. It is that, while giving VAT relief to charities may be desirable, it has to think of all the administrative difficulties that will result from across-the-board VAT relief or repayment.
      We point out that covenants are done on that basis, but the answer is that these are covenants to charities that must have a certain amount of voluntary support before they get donations. That is a weak argument, and experts from the charities have frequently offered to help the Customs and Excise to overcome any administrative problems. Overdue reform of charity law should not be used by the Treasury as an argument against granting a particular concession.
      I know that the Government make large sums of money available in the form of grants to worthy bodies, and I commend them for the support that they are giving. However, many organisations, such as the Multiple Sclerosis Society, do not depend on any state aid whatever; they rely entirely for their income on the success of promotional and fund raising activities.
      My right hon. Friend the Chancellor could give relief that would be of most benefit in two particular sectors. First, any service undertaken by a charity, such as providing residential care facilities of a similar nature to those provided by a local authority or central Government, or any other service purchased from a charity by a local authority, should be relieved of VAT under section 20 of the 1983 Act. Secondly, there should be immediate relief from VAT on building work, including extensions, alterations, repair and maintenance, undertaken by a charity, on properties on which they receive mandatory rate relief, plus relief from professional fees on such work.
      The amendments should be supported. In Treasury terms, they do not involve a large sum of money, but in terms of their effect on our valuable voluntary organisations, including bodies such as Oxfam, War on Want and others engaged in relief operations, they would be invaluable. Their acceptance by the Government would help restore morale among all those working in our charities and reassure me that the Government recognise the impact of the VAT charges on the handicapped and disabled. I support the amendments and am prepared to support them in the Lobby.
      Mr. Wainwright: It is pleasant, at long last this evening, to have an amendment from the Labour segment of the Opposition which the alliance can support, out of the bizarre menu that Labour Members have presented to the Committee for today's and tomorrow's debates. I am glad that, on this occasion, we can be united. I am especially glad that the spokesman for the Labour party, the hon. Member for Sedgefield (Mr. Blair), made it clear that he is not using this amendment as a Trojan horse in an attempt to exempt charities from VAT generally. Until
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      we have seen a scheme for that wholesale exemption which can actually work, the alliance will be unable to support such a proposal.
      I am sure that the alliance is not alone in the Committee in saying that any VAT exemption for registered charities must be an exemption for all registered charities. It would be intolerable, although it is sometimes suggested, to say that to economise in administration a general exemption from VAT should be given to some types of charity only or some sizes of charity only. It is a matter for rejoicing that Britain has a pluralist doctrine of charities. People of religions that may seem to some to be a little out of the way are fully entitled to register as charities, and people dispensing education in institutions of which some of us may not approve are equally entitled to the benefit of our charity laws, which date back to good Queen Elizabeth I. Therefore, any attempt to discriminate between one registered charity and another in tax privileges would be resisted by the alliance.
      9 pm
      Mr. Tim Yeo: I wish to clarify, if possible, the Liberal party's view on this matter. Is the hon. Gentleman saying that the Liberal party would support a general relief for charities? If he is saying that he could not support that because of a technical difficulty, why could not charities be included in the same section of the Act as local authorities, which enables them to recover their VAT?
      Mr. Wainwright: I do not say either of those things. I hoped that I had made it clear that as soon as someone—it does not matter who—produces a workable scheme that will grant the exemption to every registered charity, regardless of its size, location, aims or administration, the Liberal party, no doubt with other parties, will be glad to consider it. But no such scheme has been produced, and anything that I have seen has been discriminatory and limited to the sorts of charity that are alleged to have the organisation to cope with the VAT problems.
      Mr. Gerald Bermingham: Does the hon. Gentleman agree that a scheme whereby a charity could produce its VAT payments quarterly, together with its certificate of incorporation as a charity, and thus obtain recompense, would be perfectly simple to administer and operate?
      Mr. Wainwright: If that were the case, we should have heard of it before now. But that is not what is suggested. It is clear that an exemption which enabled the official of a religious body or a school to draw up at the petrol pump or to visit the paint shop, buy either petrol or paint and say, "This is for a charity, so give me a special chit," would be a recipe for chaos. It would be extremely difficult, if not impossible, to police and for the trader to operate. I return to the point that the charities should face: such a scheme could apply only to some sorts of charity. If it is to be discriminatory, we want no part of it.
      This debate is pleasing to us because, fortunately, in this matter there need be no discrimination, and the administration and reasonable policing should be relatively straightforward. After all, what is more public than an advertisement? If one buys an advertisement, one declares to the world the transaction in which one is engaged. One cannot buy an advertisement for one's private enjoyment or benefit and pretend that it is a

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      charitable advertisement, because it is there in the newspaper for everyone to see. In addition, newspaper administration is usually much more sophisticated than administration at a small store selling other articles which some people wish to be exempted from VAT for charitable purposes.
      The argument about local authorities does not stand up for a moment. I do not wish to usurp the role of the Government spokesman, but I am sure that he will say that, whereas there are only several hundred local authorities—all public bodies whose minutes are published and where nearly everything is available for inspection—the number of charities runs into six figures. Included in that number are some unusual bodies whose administration does not conform to a general pattern. There is a world of difference—indeed, a Pacific ocean of difference—between local authorities and the great mass of British charities. There is no analogy between them.
      Since this exemption would be tolerably easy to administer, could be administered fairly, and would come to the relief of many local charities, such as churches, chapels and other assemblies, because local funds could be used to relieve local needs—the high cost of press advertising bears heavily on bodies with small resources—and because the amendment would relieve all charities without discrimination, we shall be happy to support it.
      Mr. Yeo: I speak in strong support of the amendment. I have a long-standing interest in VAT in relation to charities. I was, in fact, the founder chairman of the Charities VAT Reform Group. I am grateful to the hon. Member for Sedgefield (Mr. Blair) for giving that group such favourable publicity.
      The main objective of the Charities VAT Reform Group is to secure complete relief for charities from VAT. The group represents most of the major national charities and many of the smaller ones. I must correct a point made by the hon. Member for Colne Valley (Mr. Wainwright). At no stage has the group done other than campaign for complete relief from VAT. We do not suggest that there should be discrimination between charities. If the Government felt that some charities were less deserving than others and chose to make that distinction, that would be a matter for the Government and we would examine their suggestion. The group's objective has always been to secure complete relief. I am sorry that the Liberal party seems to be confused about that point.
      To say that VAT relief should be denied to an organisation such as the Spastics Society because VAT relief cannot, apparently, be extended to the Moonies is an extraordinary and convoluted argument. To say that one organisation which is probably universally regarded as deserving will not receive this benefit, because it cannot be given to an organisation which is not universally regarded as deserving is extraordinarily illogical even by Liberal standards.
      Mr. Wainwright: Which of the two quite contradictory arguments is the hon. Gentleman putting before the Committee? A few minutes ago, he was saying, "Far be it from the Charities VAT Reform Group to exclude any charity from the scope of its intentions," and that the group had no desire to be discriminatory. Within seconds, he went on to say that it was absurd to put the Spastics Society
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      on the same level as the Moonies. The hon. Gentleman cannot have it both ways. He should tell hon. Members whether he wants an exemption for all registered charities, whatever the defects in our charity laws, or whether he wants the exemption to be limited to certain types of charity.
      Mr. Yeo: I do not want to detain the Committee unnecessarily. That is exactly what I did say. I believe that universal relief should be granted, but if the Government choose to be selective about it I should be happy to look at their selection.
      I believe that this relief is justified because of the valuable work done by charities. It is recognised by hon. Members and the public that charities do valuable work. This relief is justified also because of the accepted principle that tax concessions for charities are justified. In fact, charities are exempt from income tax and capital gains, corporation and capital transfer taxes—almost any type of tax one can think of, except VAT.
      It is important to be clear about the fact that what we are seeking for charities in terms of VAT is not a concession; it is merely equality of treatment with local authorities, which already recover VAT. When I was running the Spastics Society and it ran a handicapped school for spastic children, that operation looked remarkably similar to those operations run by local authorities. The only difference between the two was that, when I repaired the roof of one of the Spastics Society schools, I paid 15 per cent. more than the local authority. There is great similarity between the two operations. For that reason, it is all the more unacceptable that the position of charities in relation to VAT should remain significantly worse than the position of local authorities or commercial companies. I do not believe that any hon. Member or anyone outside the Chamber wants that to persist.
      The Government's arguments are well known. They say that, if they were to grant relief, it would be indiscriminate. That is a most extraordinary argument. That has never deterred the Government from making other concessions, of which in some cases they are justifiably proud,, for example, on legacies and covenants. In those cases no distinction has been drawn between the charities that can benefit from them.
      When we ask for VAT relief we are suddenly told that charities are not be entitled to the special relief although they benefit from the other concesions because in the Government's eyes some charities are not deserving. The argument cannot logically be repeated. I hope that my hon. Friend will not repeat it tonight.
      It is also argued—I have seen letters from Treasury Ministers about this—that VAT relief cannot be granted because it is only of value to those who pay VAT. That is an extraordinary argument. Of course it is valuable to them only because they suffer from the heavy VAT burden. It is of no benefit to someone who does not pay VAT.
      The Royal National Institute for the Blind pays £300,000 a year and the Royal British Legion pays £250,000 a year in VAT. Such sums are paid by many similar organisations. That money could be far better used on behalf of blind people, ex-service men and others.
      The argument of lost revenue is put forward, but the benefit to the community of allowing greater resources to remain in the hands of the charities, and the multiplier

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      effect that that would have, is considerable. That argument does not stand up especially from a Government who are interested in obtaining value for money.
      The administrative objections are greatly exaggerated, as my hon. Friend the Member for Exeter (Mr. Hannam) has said. I am disappointed to find that within the past few weeks letters have been sent from the Treasury saying that the relief would have to be granted to as many as 100,000 organisations. I hoped that we had passed that point in the argument. I had hoped that the detailed submissions made over the years by the Charities VAT Reform Group had reduced that figure to a maximum of 20,000 organisations. If, because of its anxiety over administrative costs, the Treasury wished to reduce the numbers still further, it could place a financial limit below which it would not consider individual cases. The numbers could then be reduced to a few hundred.
      If my hon. Friend needs further confirmation of the fact that only a few charities have a turnover of more than a few thousand pounds he has only to study the report made last year by a Select Committee in another place in connection with a private Member's Bill which dealt with the reform of local charities.
      I have no doubt that if the Government are interested in boosting the voluntary sector the best thing that they could do would be to grant charities a general relief from VAT. I regret that the hon. Member for Sedgefield did not feel able to give the Labour party's unequivocal support for a general relief.
      I was deeply disappointed by the Budget this year which contained so little for charities after the submission from the Charities VAT Reform Group to the Treasury. It includes a shopping list of possible reliefs. Limited reliefs could be confined to specific areas—for example, the extra VAT cost of altering buildings as required by fire officers. Such relief could have met with the Treasury's favour. It was a source of great regret to charities that it did not do so.
      Newspaper advertisements are a highly sensitive matter for charities. Charities use newspaper advertisements to a great extent for fund raising. Charities are debarred from advertising on television. They can advertise only in newspapers, and that is now to bear this additional cost. The figures have already been quoted. The 110 charities that have been surveyed spent £1·2 million on newspaper advertising. That is not a guess; it is an analysis of the amount of advertising last year which would have borne the extra cost of VAT. If all charities had been included, the figure would have been much higher.
      The advertising bill must inevitably result in some curtailment of the charitable work carried out by those organisations. The latest extension of VAT will affect many organisations which have not previously been burdened with it. Oxfam, whose work is done mainly outside this country, has not had the problem before, but it will be brought into the net. Any hon. Member who is worried about the adequacy of our overseas aid programme should support the amendment, because the resources that organisations such as Oxfam have available for helping the Third world will be reduced.
      If the Government accept the amendment, they can be confident that they will not be bestowing huge benefits on what they may regard as dubious charities because they are
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      not large users of advertising space. The proposal will effect such organisations as Actionaid, Dr. Barnardo's and Help the Aged. They will be penalised.
      9.15 pm
      The Opposition have also tabled an amendment which contrasts with a slightly equivocal alliance position. At the time of the Band Aid record before Christmas, when there was a tremendous outcry in the country about the famine, the right hon. Member for Plymouth, Devonport (Dr. Owen)—in characteristic headline-grabbing form—jumped on the bandwagon and said how much he opposed the collecting of VAT on the Band Aid record. I look in vain for any alliance representative tonight. The right hon. Gentleman is not here, nor is any alliance Member. I shall look carefully at the Division lists to see whether any alliance Member has supported the amendment. If not, we must ensure that we publicise that fact. When there is a bandwagon, we all know who will be the first to jump on it—the right hon. Member for Devonport. But when there is an opportunity to right a wrong, he is not here. I deplore the fact that there is no alliance Member here to support the amendment, and I urge hon. Members to vote for it.
      Mr. Alfred Morris: Mine will be a brief intervention in what is a most important debate. I shall speak briefly out of respect for the many other hon. Members who wish to participate. The hon. Member for Exeter (Mr. Hannam) has played a distinguished part in the long campaign against the onerous new burden imposed on charities by the doubling of VAT. I honour the hon. Gentleman and the all-party disablement group, of which he is an officer, for both the strength and the excellence of their advocacy over the years.
      As the hon. Gentleman said, the Multiple Sclerosis Society is severely disadvantaged by VAT. It has to pay a large amount of money which could be used for much better purposes. Other victims are the Spastics Society, the Royal National Institute for the Blind and the Royal National Institute for the Deaf. Many others are also badly hit.
      I wish to quote from a letter that I received today from Sir John Cox, the director of the Spastics Society. He said:
      "The Spastics Society was not only disappointed that VAT relief was not given in the budget but we were dealt a double blow when the Chancellor extended VAT to newspaper advertising. The Society will now have to find £30,000 to cover this new VAT bill in addition to the estimated £700,000 it will already have to pay in unrecoverable VAT in 1985–86 alone."
      Why mug the good Samaritan in that way? Not only will VAT on advertising restrict the Spastics Society's ability to raise money; it will affect educational advertising that is designed to promote greater understanding of disability and of the problems and needs of disabled people.
      Brian Rix, speaking on behalf of Mencap, has said to me:
      "For running a charity, we are being clobbered."
      Is the Minister happy with that comment on the Government's approach? I hope he will think again, as he should, on the basis of the compelling evidence that has been put to him in this debate. Other Governments have found a way around this problem. The Irish Government have a list of charities to which repayment of VAT is made. What stops this Government from returning VAT to the charities whose work is, by common consent, for

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      the public good? If other Governments can do so, why do the Government here argue that it would be administratively impossible to exclude particular charities? I strongly urge the Minister to listen to Sir John Cox, Brian Rix and all those in the voluntary sector who fervently want him tonight to agree that enough is enough and that this totally unacceptable burden on charities must now cease.
      Mr. Dafydd Wigley: I join the voices that have come from all parts of the Committee in support of this series of amendments. I appeal to hon. Members of the Liberal party and others who may feel that we should be arguing about the finer print to concentrate on the main argument. That argument has been put year after year by those who work hard in the sphere which we are discussing.
      On the Government Benches I see the hon. Members for Exeter (Mr. Hannam) and for Suffolk, South (Mr. Yeo), who have worked hard for a number of years on behalf of the cause that we are discussing. They must be feeling extremely frustrated that the Goverment have failed so far to respond to the pleas that have been made and are rapidly painting themselves in the public mind as an Administration who are anti-charity.
      I find this diffucult to understand, because the Government have on numerous occasions emphasised the important role of the voluntary sector. Time and again we have heard—in connection, for example, with disablement—that the voluntary sector should be doing more and should be filling some of the gaps which inevitably have arisen because of cuts in Government expenditure. Yet the very means of raising money for the voluntary sector—advertisements for charities—is being penalised by the Budget. I feel a sense of despair about the way in which the Government have yet again savaged charities.
      As we have heard, there are answers to the technical problems that arise. In any event, those problems must be overcome, because there is a real danger that we shall find ourselves on a downward spiral. Many charities advertise to raise money, and part of that money is recycled to raise more money, and so on. If we go into the cycle the other way round, taking out of the equation money which would be used to raise more money for worthwhile work, less will be available to promote and project charities, and less will come in.
      Hon. Members in all parts of the Committee have responded individually when charities have needed urgently to project an issue. We have been asked to chip in £10 or £20, taking perhaps a half-page advertisement in a publication, for a worthy cause. VAT will add 15 per cent. to the cost of that—an imposition that could be avoided.
      We have seen how some charities have been able to respond quickly, as with the famine crisis in recent months. Following dramatic pictures being shown on television, advertisements in the press on behalf of some charities hit home at a critical time. VAT on advertising will penalise people doing that excellent work.
      I shall not repeat figures which have already been presented to the Committee by other hon. Members. Excellent work has been done by the all-party Charities VAT Reform Group. It is high time that the Government took notice and stopped using the perennial "No" to the pleas that are made on behalf of charities.
      Dr. John Marek: I support the amendments, though not unreservedly, because charities must tidy up their own shop. While I support most charities, and contribute to some, there are two types about which I am not happy.
      Reference has been made to dubious charities, and there are many of them. The total number of charities runs into six figures. There must be hundreds, perhaps thousands, of charities of a dubious or questionable nature, and if VAT relief were granted on their advertising, that would be taxpayers' money going astray. I support the amendments, but it is clear that a review of charity law, how charities register, and what type of charities may register, is long overdue.
      There is another type of charity about which some of my hon. Friends worry. I refer to the public schools. The average person is not aware that they are charities. Those who send their children to public schools are, by and large, wealthy enough to be able to opt out of the public sector. Everyone pays rates and taxes that contribute towards public sector schooling, but some people can opt out of that schooling and have their offspring educated at their own cost. I do not really object to that. I object to the privilege that is enjoyed by those who have been to public schools, but I do not mind that the public schools enjoy charitable status and do not have to pay VAT. Such charities, in any case, rarely advertise in the press. The dubious charities may advertise in the local and national press. The local press will be hit quite hard, certainly over classfied advertising.
      Overall, I support the amendments. There may be administrative complications, but I do not really think that the Minister can rely on that answer. My hon. Friend the Member for St. Helens, South (Mr. Bermingham) has suggested a possible solution. Charities could be given relief by means of a cut-off point or some other method. The will should be there. Mencap and Oxfam, for instance, are bona fide, worthwhile charities, and it is immoral to tax such bodies.
      I have some reservations. Charity law needs to be tidied up. However, I hope that the Minister will be able to suggest something on Report which will embody the spirit of the amendments in the Finance Bill.
      Mr. O'Brien: Among the amendments to the provision about VAT on newspaper advertising, amendment No. 4 has created the greatest concern among all parties in the Committee. I hope that the Minister will take note of the concern expressed in all sections of the Committee on this important and emotive subject.
      The charities have been hard done by in the past. When VAT was doubled, they were hit hard. The imposition of VAT on improvements to accommodation and new building hit charities in many areas, particularly those engaged in the relief of poverty. I hope that the Minister will consider the points made tonight about the relief of VAT on advertising by charities.
      A letter that I have received from the Minister of State says:
      "The Government does of course recognise the immensely valuable role which charities play in this country, not least in taking the pressure off health and local authorities."
      That is a truism, and I hope that the Minister will accept it this evening. However, I am sure that when he replies to the debate he will use the following passage from the same letter:

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      "VAT reliefs for charities on specialised goods needed for their work have been significantly extended since 1979 to include ambulances …welfare vehicles"
      and other aids for the handicapped.
      I accept that, but a number of hon. Members have mentioned the number of charities that will have to pay VAT on advertising. A prime example is the Royal British Legion, which has to advertise—sometimes even with full-page advertisements—to get help. The legion will be hit hard. It pays £250,000 in VAT each year and that burden will rise. The legion does sterling work to relieve poverty and does not receive covenants of £10,000 and so on, so it will not benefit much from other changes in the Budget.
      I hope that the Minister of State will accept the points made by hon. Members on both sides of the Committee. I urge Conservative Members to mobilise their forces, because no Opposition Member will oppose the amendment. However, it would be preferable if the Minister agreed to accept it.
      9.30 pm
      Mr. Bermingham: I am always puzzled when people say that tasks are administratively difficult. Where there is a will, there is a way.
      Every charity has a registered number. A group cannot become a charity without being registered. Therefore, every charity has a number. Even the Treasury should be able to understand that.
      All that we need to do is to persuade the Treasury to agree that every charity that advertises should receive from the company to which it pays the money a receipt showing the number and name of the charity and a sum of money plus VAT. Like all registered traders, the charity could take its receipts to the Customs and Excise every quarter and claim tax back.
      Numerous traders make such claims every quarter and the number of charities that will advertise is tiny. The Treasury does not seem to understand that the vast bulk of the 100,000 charities are organisations such as the South Malden Registered Tree Preservation Society—I have made up that example—with assets of £150, virtually no income each year and no activity. It would be eminently easy for charities to get the money back.
      Compassion is supposed to rule in our world. The Government keep telling us that these are stringent times and there must be self-help and private sector involvement in helping the elderly, the young, the sick, the disabled and everybody else. But only an uncompassionate Government could say to those whom they are asking to help ohers, "Terribly sorry. In order to raise funds, we shall take a little more from you."
      The Government say that the change will cost about £1 million. I do not care about the sum involved, because a greater principle is involved, which is whether we have a compassionate, caring society that recognises the value of work done by charities.
      Charities need to advertise to raise funds. Our national budget is over £120 billion and £1 million is a relatively infinitesimal sum. Any administrative difficulties could be overcome by the simple method that I have recommended. I know from experience that the Treasury does not like anything that is simple or straightforward or that seeks to exempt. Charities nowadays, it would seem, are as much for squeezing as anybody else.
      708
      I saw the Prime Minister on the 6 o'clock television news tonight attending a party in the House today for handicapped children. When asked whether she would rather be at Prime Minister's Question Time or at the party, she rightly said at the party, and how much she admired the character of the children. I wonder whether the Prime Minister would take a little time this evening to extend that flicker of human kindness and pass it on to the Chancellor of the Exchequer. She might suggest that, if the Government are to have a compassionate face, they could start by telling Treasury officials not to worry about the complexity, and that the hon. Member for St. Helens, South had offered a simple solution to how charities could get back the money, so Ministers could be instructed to withdraw the VAT on advertisements placed in newspapers by charities.
      It would be not a bad start to the second quarter of 1985 if the Government would show just a little compassion and let the charities keep all the money that they raise through advertising. After all, the charities need it far more than the Government do.
      Mr. Hayhoe: The debate has ranged much wider than the amendment. I make no complaint about that, because I know that the subject excites a great deal of genuine and sincerely held interest and deep passion throughout the House.
      First, I pay tribute to the all-party Charities VAT Reform Group, which was started by my hon. Friend the Member for Suffolk, South (Mr. Yeo). Although I have had disagreements with representatives of the group when I have met them, I fully support the work of the group. It helps Parliament and the country better to understand the problems. As discussions proceed, I hope that an even deeper understanding of many of the problems involved will develop between us.
      I deal first with the cost of the amendment. Although I am advised that the cost will be approximately £1 million, I acknowledge, as has been said by the hon. Member for Sedgefield (Mr. Blair) and other hon. Members, that the Charities VAT Reform Group, in a survey of a limited number of charities, has already estimated that the cost would be £1·2 million. Indeed, as I said to my hon. Friend the Member for Suffolk, South two or three weeks ago, I should like to put my officials in touch with those responsible for the survey. We ought to be able to agree on the factual realities of the matters under discussion. We may differ about how we treat them, but at least we should attempt to achieve a better understanding. I am concerned at these apparently substantial differences between the estimate that the hon. Member for Sedgefield gave, supported by some of my hon. Friends, and the estimate that I have been given. That offer remains open. I hope that discussion will take place and that we can clarify the position.
      Mr. Blair: I support the Minister in his statement. He said that he would like to verify the figure of £1·2 million. If the figure is verified, will that make a difference to his position on the amendment?
      Mr. Hayhoe: No, it will not, as the hon. Gentleman will discover. However, I think that as far as possible on this and many other issues we should try to achieve at least a common acceptance of the facts because that is a prelude to reaching decisions which are better informed, and that surely is desirable.

      709
      I am advised that the £5 million estimate is based on present expenditure on medical computers by bodies which will be eligible for the relief, including charities providing care and treatment for the handicapped and research institutions, many of which are charitable bodies. For example, universities and health authorities will qualify for the relief. The estimate is not precise and the value of the relief is expected to increase as the use of computers increases. Nevertheless, it is the best estimate available and it goes much wider than the charities that have been canvassed because under the old regime universities and research institutions had to pay VAT, whereas they will now benefit from the relief announced by my right hon. Friend the Chancellor.
      Mr. Blair: If the £5 million estimate is based not primarily on charities but on other bodies which will secure relief on computers for medical research, does the Minister accept the charities' view that the relief will have a neglible effect on their costings?
      Mr. Hayhoe: I do not wish to dispute the specific replies given to the hon. Gentleman by specific charities. I am simply saying that the relief must be seen in a wider context, in which, I am advised, a benefit of some £5 million will flow from my right hon. Friend's proposal.
      The hon. Member for Sedgefield said that he intended to support amendment No. 5 which deals with registered charities, but he may not fully appreciate the effect of that qualification. Not all charities are required by law to register with the Charity Commission and that qualification would exclude the churches as well as charities in Scotland and Northern Ireland. It is estimated that about 40 per cent. of the charities in the United Kingdom are not among the 150,000 or so registered with the Charity Commission.
      The hon. Member for St. Helens, South (Mr. Bermingham) also referred to registration, but this is a very complicated area. My hon. Friend the Member for Suffolk, South, with whose group we have discussed these matters, will recognise that complexity, as did the hon. Member for Colne Valley (Mr. Wainwright)
      Mr. Bermingham: I think that the Minister has misunderstood my point. The only charities known to the law are the registered charities, each of which has a number, so all that one needs to do is to have that number put on the invoice to the charity.
      Mr. Hayhoe: If the hon. Gentleman reads my explanation in Hansard, he will realise that that would exclude about 40 per cent. of the bodies which are seen as charities and benefit as charities within the United Kingdom. That illustrates the complexity of the matter.
      I have naturally considered carefully the possibility of special relief for charities in this context, as I did when VAT was extended to building alterations last year. Such relief, however, would be indiscriminate in that it would not be restricted to those providing vital welfare services and enjoying wide public support but would extend to thousands of far more controversial and restrictive organisations—religious sects, historical and antiquarian societies, musical and brass band societies, theatres and art galleries, and so on. An immensely broad group of organisations qualify for charity status in that sense.
      I well understand those who have called with feeling for a review of charity law. However, that is wider than the
      710
      scope of the amendment and my responsibilities within the Treasury. For many years I have considered the matter, and I echo the sentiment that there is considerable merit in seeking a rationalisation of the law on charities. However, tonight I must deal with the amendment and what has been said in the context of the present position.
      9.45 pm
      The way in which we now operate would lead to a lack of discrimination between charities about relief. I am speaking about more than just relief on advertisements. At least half of the interventions were about general charity relief. Most of both speeches of my hon. Friends related to the need for general relief, and the majority of hon. Members who participated in the debate wanted general VAT relief for charities. Their speeches went wider than the amendment, but every hon. Member who spoke supported the narrower relief for press advertising.
      Mr. Alfred Morris: I have been following the Minister carefully. He was rightly worried about the veracity of figures. I can assure him of the accuracy of the figures given to me by Sir John Cox, the director of the Spastics Society. How can the Minister justify the imposition of £730,000 in unrecoverable VAT on the Spastics Society in the present tax year? Is the Minister saying that that is justified?
      Mr. Hayhoe: That is the result of the law as it exists. When the right hon. Gentleman was in government, his Government did not opt for general VAT relief for charities. I acknowledge that the increase in the general rate of VAT from 8 per cent. to 15 per cent., the extension of VAT to alterations, and this year's extensions increase that burden. Many of the interventions dealt with the principle involved, but the Labour Government did not believe that they could justify giving general VAT relief. I could quote what the then Chancellor of the Exchequer said, but I shall not weary the Committee with that.
      Reference has been made to the additional cost imposed by press and magazine advertisements being VAT-able for charities. The extra reliefs that have been given apply within the entire charitable area, although not to the same people, and exceed the new imposition. Most of the debate has been about the argument for general relief. If this modest relief—modest in terms of money because only a million or two are involved—were conceded, it would inevitably lead to the more expensive claims for general VAT relief. A significant number of hon. Members who have spoken have made that clear. Because of the difficulties that we rehearsed last year in a similar debate about VAT on alterations, in which larger sums were involved, I regret that I cannot advise the Committee to support the amendment. It must be seen in the general context. The Government have given direct tax concessions worth about £400 million a year, which have been substantially extended since 1979. Tribute was rightly paid to the substantial increase in grants from the Government to charitable bodies.
      Looking at the question in the round, while recognising the deep feelings of those who believe that charities should be excluded from the extension of VAT to their advertising, for the wider considerations that I have described, I must recommend the rejection of the amendment.
      Mr. Blair: The fault of the Minister is not that he has made a bad speech but that he has a bad case. The tragedy

      711
      of a debate such as this is that it has been won conclusively by speakers from each side of the House, yet one fears for the conclusion of the vote.
      The Minister says that there is an anomaly in giving VAT relief to charities on their newspaper advertisements. Charities have a series of reliefs from tax. There is no greater anomaly in adding the proposed relief than in allowing charities relief from capital transfer tax, corporation tax, or any of the other taxes.
      If it is said that the administrative difficulties in giving VAT relief on newspaper advertisements are too great, my reply is that we should never accept an argument from a Minister about the simple cost of administration until it is given great scrutiny. One such line from a Minister in a debate of this sort is a wholly insufficient basis for rejecting the amendment.
      The Minister's argument was even worse when he dealt with the costings. The Minister had no proper reply to any of the points concerning costings. I asked the Minister whether, should he discover that the charities were right about the additional costs, that would change his mind. He said that it would not, yet he says that the facts are necessary in order to make a proper decision. It seems that the Minister makes a decision first and inquires into the facts afterwards. That is a cackhanded method of administration.
      It is not right to say that one must accept the general case for VAT relief for charities in order to support the amendment. I purposely said that at the beginning because I wanted to maximise support, and I do want to get drawn into that broader argument. The case for VAT relief on newspaper advertisements is a particular one, because the way that charities raise money is through advertising. That puts them in a totally separate category. The Minister's attempts to resist the amendment do not reflect credit on him. It is time that the Government's reality matched their rhetoric. It is time that they supported amendments which do precisely what they want to do and encourage charities in our society.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 119, Noes 220.

      Division No. 200]

      [9.54 pm

      AYES

      Adams, Allen (Paisley N)

      Cook, Frank (Stockton North)

      Ashdown, Paddy

      Cook, Robin F. (Livingston)

      Ashton, Joe

      Corbett, Robin

      Atkinson, N. (Tottenham)

      Corbyn, Jeremy

      Bagier, Gordon A. T.

      Cowans, Harry

      Beith, A. J.

      Craigen, J. M.

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

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

      Bermingham, Gerald

      Deakins, Eric

      Blair, Anthony

      Dewar, Donald

      Boyes, Roland

      Dickens, Geoffrey

      Bray, Dr Jeremy

      Dixon, Donald

      Brown, Gordon (D'f'mline E)

      Dormand, Jack

      Brown, Hugh D. (Provan)

      Douglas, Dick

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

      Dubs, Alfred

      Bruce, Malcolm

      Duffy, A. E. P.

      Buchan, Norman

      Dunwoody, Hon Mrs G.

      Caborn, Richard

      Eadie, Alex

      Callaghan, Jim (Heyw'd & M)

      Eastham, Ken

      Campbell-Savours, Dale

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

      Clark, Dr David (S Shields)

      Evans, John (St. Helens N)

      Clarke, Thomas

      Fatchett, Derek

      Clay, Robert

      Field, Frank (Birkenhead)

      Cocks, Rt Hon M. (Bristol S.)

      Fields, T. (L'pool Broad Gn)

      Concannon, Rt Hon J. D.

      Fisher, Mark

      712

      Foster, Derek

      O'Neill, Martin

      Foulkes, George

      Pendry, Tom

      Garrett, W. E.

      Penhaligon, David

      George, Bruce

      Pike, Peter

      Gilbert, Rt Hon Dr John

      Powell, Raymond (Ogmore)

      Godman, Dr Norman

      Prescott, John

      Golding, John

      Randall, Stuart

      Gould, Bryan

      Redmond, M.

      Hamilton, James (M'well N)

      Rees, Rt Hon M. (Leeds S)

      Hannam, John

      Richardson, Ms Jo

      Hardy, Peter

      Sheldon, Rt Hon R.

      Hogg, N. (C'nauld & Kilsyth)

      Short, Ms Clare (Ladywood)

      Howells, Geraint

      Short, Mrs R.(Whampt'n NE)

      Hughes, Robert (Aberdeen N)

      Skinner, Dennis

      Hughes, Sean (Knowsley S)

      Soley, Clive

      Janner, Hon Greville

      Spearing, Nigel

      Jones, Barry (Alyn & Deeside)

      Stewart, Rt Hon D. (W Isles)

      Kennedy, Charles

      Stott, Roger

      Kirkwood, Archy

      Strang, Gavin

      Lamond, James

      Thomas, Dr R. (Carmarthen)

      Lewis, Ron (Carlisle)

      Thompson, J. (Wansbeck)

      Lewis, Terence (Worsley)

      Thorne, Stan (Preston)

      Litherland, Robert

      Tinn, James

      Lloyd, Tony (Stretford)

      Wainwright, R.

      McDonald, Dr Oonagh

      Wardell, Gareth (Gower)

      McKelvey, William

      Wareing, Robert

      McNamara, Kevin

      Welsh, Michael

      McTaggart, Robert

      Wigley, Dafydd

      McWilliam, John

      Winnick, David

      Madden, Max

      Winterton, Mrs Ann

      Marek, Dr John

      Woodall, Alec

      Maxton, John

      Wrigglesworth, Ian

      Meadowcroft, Michael

      Yeo, Tim

      Michie, William

      Millan, Rt Hon Bruce

      Tellers for the Ayes:

      Mitchell, Austin (G't Grimsby)

      Mr. Frank Haynes and

      Morris, Rt Hon A. (W'shawe)

      Mr. Allen McKay.

      O'Brien, William

      NOES

      Adley, Robert

      Chalker, Mrs Lynda

      Alexander, Richard

      Chope, Christopher

      Ancram, Michael

      Clark, Dr Michael (Rochford)

      Arnold, Tom

      Clarke, Rt Hon K. (Rushcliffe)

      Ashby, David

      Cockeram, Eric

      Aspinwall, Jack

      Conway, Derek

      Atkins, Robert (South Ribble)

      Coombs, Simon

      Baker, Nicholas (N Dorset)

      Cope, John

      Baldry, Tony

      Cormack, Patrick

      Banks, Robert (Harrogate)

      Couchman, James

      Batiste, Spencer

      Cranborne, Viscount

      Beaumont-Dark, Anthony

      Currle, Mrs Edwina

      Bellingham, Henry

      Dorrell, Stephen

      Benyon, William

      Douglas-Hamilton, Lord J.

      Best, Keith

      Dover, Den

      Bevan, David Gilroy

      Dunn, Robert

      Blackburn, John

      Durant, Tony

      Body, Richard

      Dykes, Hugh

      Boscawen, Hon Robert

      Evennett, David

      Bottomley, Peter

      Eyre, Sir Reginald

      Bottomley, Mrs Virginia

      Fallon, Michael

      Bowden, Gerald (Dulwich)

      Farr, Sir John

      Brandon-Bravo, Martin

      Favell, Anthony

      Bright, Graham

      Fenner, Mrs Peggy

      Brinton, Tim

      Fletcher, Alexander

      Brooke, Hon Peter

      Forman, Nigel

      Brown, M. (Brigg & Cl'thpes)

      Forth, Eric

      Bruinvels Peter

      Fox, Marcus

      Bryan, Sir Paul

      Gale, Roger

      Buck, Sir Antony

      Gower, Sir Raymond

      Budgen, Nick

      Gregory, Conal

      Bulmer, Esmond

      Griffiths, E. (B'y St Edm'ds)

      Burt, Alistair

      Hamilton, Hon A. (Epsom)

      Butcher, John

      Hampson, Dr Keith

      Butterfill, John

      Hargreaves, Kenneth

      Carlisle, John (N Luton)

      Harris, David

      Carlisle, Kenneth (Lincoln)

      Harvey, Robert

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

      Hawkins, Sir Paul (SW N'folk)

      Carttiss, Michael

      Hayes, J.

      Cash, William

      Hayhoe, Barney

      713

      Heathcoat-Amory, David

      Price, Sir David

      Heddle, John

      Raffan, Keith

      Henderson, Barry

      Raison, Rt Hon Timothy

      Hickmet, Richard

      Rathbone, Tim

      Hind, Kenneth

      Rees, Rt Hon Peter (Dover)

      Hirst, Michael

      Renton, Tim

      Howell, Ralph (N Norfolk)

      Rhodes James, Robert

      Jessel, Toby

      Rhys Williams, Sir Brandon

      Jones, Gwilym (Cardiff N)

      Ridsdale, Sir Julian

      Jones, Robert (W Herts)

      Roberts, Wyn (Conwy)

      Jopling, Rt Hon Michael

      Robinson, Mark (N'port W)

      Kilfedder, James A.

      Roe, Mrs Marion

      King, Roger (B'ham N'field)

      Rossi, Sir Hugh

      Lamont, Norman

      Rowe, Andrew

      Lang, Ian

      Ryder, Richard

      Lawrence, Ivan

      Sackville, Hon Thomas

      Leigh, Edward (Gainsbor'gh)

      Sainsbury, Hon Timothy

      Lennox-Boyd, Hon Mark

      St, John-Stevas, Rt Hon N.

      Lester, Jim

      Sayeed, Jonathan

      Lewis, Sir Kenneth (Stamf'd)

      Shaw, Giles (Pudsey)

      Lightbown, David

      Shaw, Sir Michael (Scarb')

      Lilley, Peter

      Shelton, William (Streatham)

      Lloyd, lan (Havant)

      Shepherd, Colin (Hereford)

      Lloyd, Peter, (Fareham)

      Shersby, Michael

      Lord, Michael

      Silvester, Fred

      Luce, Richard

      Sims, Roger

      McCurley, Mrs Anna

      Skeet, T. H. H.

      Macfarlane, Neil

      Smith, Tim (Beaconsfield)

      MacGregor, John

      Soames, Hon Nicholas

      Maclean, David John

      Speller, Tony

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

      Spencer, Derek

      Major, John

      Stanbrook, Ivor

      Malins, Humfrey

      Steen, Anthony

      Malone, Gerald

      Stern, Michael

      Maples, John

      Stevens, Lewis (Nuneaton)

      Marland, Paul

      Stewart, Andrew (Sherwood)

      Marlow, Antony

      Stradling Thomas, J.

      Mates, Michael

      Taylor, John (Solihull)

      Mather, Carol

      Taylor, Teddy (S'end E)

      Mayhew, Sir Patrick

      Terlezki, Stefan

      Mellor, David

      Thomas, Rt Hon Peter

      Merchant, Piers

      Thompson, Donald (Calder V)

      Meyer, Sir Anthony

      Thompson, Patrick (N'ich N)

      Miller, Hai (B'grove)

      Thorne, Neil (Ilford S)

      Mills, lain (Menden)

      Thornton, Malcolm

      Mills, Sir Peter (West Devon)

      Thurnham, Peter

      Miscampbell, Norman

      Townend, John (Bridlington)

      Mitchell, David (NW Hants)

      Tracey, Richard

      Moate, Roger

      Trotter, Neville

      Montgomery, Sir Fergus

      Twinn, Dr lan

      Moore, John

      van Straubenzee, Sir W.

      Morris, M. (N'hampton, S)

      Viggers, Peter

      Morrison, Hon C. (Devizes)

      Waddington, David

      Morrison, Hon P. (Chester)

      Wakeham, Rt Hon John

      Moynihan, Hon C.

      Waldegrave, Hon William

      Neale, Gerrard

      Walden, George

      Nelson, Anthony

      Waller, Gary

      Newton, Tony

      Ward, John

      Nicholls, Patrick

      Wardle, C. (Bexhill)

      Norris, Steven

      Watson, John

      Osborn, Sir John

      Watts, John

      Ottaway, Richard

      Wheeler, John

      Page, Sir John (Harrow W)

      Whitfield, John

      Page, Richard (Herts SW)

      Whitney, Raymond

      Parkinson, Rt Hon Cecil

      Wiggin, Jerry

      Parris, Matthew

      Winterton, Nicholas

      Peacock, Mrs Elizabeth

      Wolfson, Mark

      Pollock, Alexander

      Wood, Timothy

      Portillo, Michael

      Powell, William (Corby)

      Tellers for the Noes:

      Powley, John

      Mr. Tristan Garel-Jones and

      Prentice, Rt Hon Reg

      Mr. Michael Neubert.

      Question accordingly negatived.
      Question proposed, That the clause stand part of the Bill.
      Mr. Norman Buchan: We all know what agitation there has been during the past year at the
      714
      Government's intention to do the unspeakable arid the unthinkable—to tax publications, books and newspapers. The campaign was vigorous, accurate and eventually successful. However, there is no doubt that the possibility was large, and the likelihood was that it would have happened had the campaign not been mounted.
      I recall that the last time such a proposition was mooted was in 1940, at the very time when we were fighting with our backs to the wall and being exhorted by Churchill to fight on the beaches. The Battle of Britain was being fought overhead, yet the Parliament of 1940 decided, against the will of the Chancellor, Kingsley-Wood, that there should be no such tax. A. P. Herbert said that if there were a tax on the Bible, it would be the first time that the word of God had been taxed. The thing was blown out of the water in a burst of laughter. This year's campaign has prevented a similar contemptuous end, because I believe that there are enough Conservative Members who have voted against such a proposition if it had been put forward.
      We are therefore left with this mean-minded fag end of a proposition to bring in the same sort of taxation on newspapers and publications, with the tax on advertisements. I am no friend of such a tax. By definition, a value added tax is always unjust and can cease to be unjust only when it is highly selective, and when it is highly selective it can make all sorts of errors in application. We all know that. VAT is an unfair and unjust tax, so I am no friend of it. I am also no friend of the institution that brought it into being—the Common Market.
      However, there is a case for looking at the expenditure of big business on advertising. As the arguments over the past two or three hours have shown, certain issue have at least been recognised by some Conservative Members; for example, in relation to job advertisements. There has been cross-party sympathy, although not necessarily expressed by a high vote.
      We are left with the principle of the issue and also with other areas that are affected adversely. I shall refer to only one where I thought that the Government would show some consideration. It is the arts, first, because the arts already pay VAT. It is nonsensical that the theatre, music and cinema are subsidised by the state on the one hand, and on the other pay VAT, which immediately reduces the level of what is a mean and insufficient subsidy. The arts are in peril because of what they have to pay in VAT. It is nonsense.
      Secondly, the arts sell their wares in a particular way—by newspaper advertising. The problem is that they have to advertise not once or twice, but continuously. Unless they advertise, day in, day out and night in, night out, they cannot sell their wares. A large-scale single advertisment does not do, because people need to know what is happening on a particular night. For instance, at the end of the week there will be a swapping over of "Henry V" and "Richard III" by the Royal Shakespeare Company. People need to know the dates on which the plays will be on. Therefore, there has to be continuous and expensive advertising.
      In the Standard, three or four pages are taken up night in, night out by necessary large-scale advertising. It is costly to the major companies. It is costly to music establishments which have a run of concerts throughout the week. The programmes have to be made known. It is expensive for the theatres, and above all for the small theatres—the small visiting theatre or local theatre

      715
      which must have continual advertising. I assure the Minister that the level of taxation on such small theatres will be heavy and continuous.
      That would not be too bad if the Government were continuing their support for the arts, but over the past few years they have, and in the forthcoming two or three years they will, savagely cut support for the arts. Next year, support for the arts will be cut in real terms by 8 per cent. When we add to that rate-capping on local authorities, it will be seen that many of the arts will be in extreme danger. Even that monetarist Rees-Mogg, the chairman of the Arts Council, has referred to the number of clients that will be put in jeopardy because of the Government's subsidy policies, which will result in a cut this year and every future year. On top of that comes a thing which may topple many of them, the imposition of VAT on the very sector in which they should be expanding to draw in more box office returns to replace the lost subsidy—advertising.
      The Committee must oppose the clause. I hope that we can build up a campaign to get some sense into the Government and some understanding that if they are to impose this tax, although I hope that they will not and will concede the case at a later stage, they must at least make it understood to the Minister for the Arts and the Chancellor that the forecast level of subsidy must be increased. Some measures must be taken to stop the parlous crisis facing the arts and provide proper support to them.
      Mr. O'Neill: Much of what I was to say has already been covered and I have already alluded to this subject, in a debate on the Consolidated Fund Bill some weeks ago. I am sponsored by the National Graphical Association. It has to be made clear that the impact of this imposition on employment in the newspaper and print industry generally will be severe. It is not just the 35,000 jobs in the national newspapers, the 68,000 jobs in the regional newspapers or the 19,000 jobs in magazines that will be affected, but the 14,000 jobs in distribution. In all, some 136,000 people are engaged in the production of newsprint and magazines. We shall have to wait to see how true is the Minister's claim in an earlier debate that the impact on employment will be only marginal.
      John Le Page of the Newspaper Publishers Association has said that he has fears about the future of two titles. The Newspaper Society has said that this may have a serious impact on the provincial press. It would be dangerous to quote figures about the impact but it will be more than marginal. I say that for several reasons. The provincial press is now of such a flexible character that we are talking not just about the publication of one or two weekly titles. Often, there are big print centres involving several newspapers that, because of the technology, have to be [Interruption.] Is it necessary for me to speak above a chorus of gabble from Conservative Benches?
      The First Deputy Chairman of Ways and Means (Mr. Ernest Armstrong): Order.
      Mr. O'Neill: Thank you, Mr. Armstrong.
      The local newspapers on which many of our constituents depend for information are printed on presses that produce a variety of other products and that bring about the viability of the printing firms that produce the
      716
      papers. They do not exist only to produce local newspapers, but if the crutch of the local newspaper is removed, the fragile financial basis of those firms will be put in considerable danger.
      We are not talking about jobs exclusively in the newspaper industry. The impact of the imposition of VAT on advertising could be such that some local titles will be endangered. It will certainly be a considerable burden on free sheets, which are often produced in the periods during which local machinery is lying idle. It would be a drain on the business if those machines were not employed.
      10.15 pm
      It is also fair to say that much of the new machinery which is being used in the provinces, unfortunately to a much greater extent than in other areas of the print industry, is expensive equipment whose use depends upon agreements being reached between the unions and management as to its maximum utilisation. For that to be achieved requires delicate and often painful negotiations by both sides, and in some aspects of the newspaper industry in the provinces, that painful stage has been reached, and discussion is continuing about the final stage in the implementation of the new technology. There is no point in print houses anticipating the maximum utilisation of their machinery if they discover that some of their titles or magazines will be withdrawn from production because they are no longer viable after the imposition of VAT.
      The Minister suggested that the imposition of VAT will tidy up media advertising so that the press is treated similarly to radio and television. We heard earlier this evening about classified advertising. In terms of the technology and the numbers of people who can be contacted through the press—the viability of the print industry in general is not healthy, despite the many millions of pounds that have been poured into new equipment and techniques—too much of the attractive and expensive business that should go to British printers is going abroad. We are not talking about areas that have big problems with trade unions, but about the production of the brochures used by Thomson Holidays and some mail order firm catalogues, much of whose work is being done in print shops in Italy and West Germany. We are talking about sustaining a British industry that is fighting manfully to embrace new technology and take advantage of the improvements available to it. But it is being denied the encouragement and support that it deserves from the Government.
      For the Government to say that simply because VAT is imposed on independent radio and television it must be imposed on the press, too, is nonsense. The same sort of tidy mindedness is clear when one reflects that, in last year's Budget, VAT was inposed on fish and chips, while this year it will be imposed on the newspapers in which they are wrapped.
      This is a sad day for Britain, but it is not as sad as it could have been. We know that VAT could have been imposed on books and newspapers, and we are thankful that it has not been. But, since they have gone this far, we do not know how much further the Government will be encouraged to go. I recognise that we must allow this clause to go through. The two earlier amendments related to two special areas of the debate and did not take account of the industry which produces the product that is being taxed, although I believe that we should have taken

      717
      account of that. I should have thought that the Minister could have found a better target from which to raise that much-needed £50 million.
      Mr. Austin Mitchell: The extension of the positive rate of VAT to newspaper advertising is unnecessary, fiddling, provocative and prejudiced—in other words, it is fairly typical of the Government's policies and strategies. First, it is part of that strategy on which the Government have embarked of taxing everything on which they can lay their hands—not only fish and chips but hamburgers, matches and lighters. It is the "we need the money" syndrome of spreading the tax burden to create the pretence that they are reducing the burden of direct taxation when all they are really doing is shifting the burden on to any item that will bear it. This is part of the typical strategy of tax duplicity on which the Government have embarked.
      Secondly, we object to this measure because it will adversely affect newspapers. My particular concern is with the provincial press. The sins of Fleet street are visited on the provincial press, even to the seventh edition. All too often the provincial press is in financial difficulties. It is facing increasing competition from Fleet street newspapers which seem, in many cases, to have fallen off the back of the advertising industry. Those Fleet street journals often bear as much resemblance to newspapers as this Government's policies bear to conservatism. They are driving the provincial press into difficulties.
      It is vital to our democratic way of life to preserve the provincial press. Unfortunately, all too often, the maintenance of good objective standards and good journalism depend not on the stimulus of real competition but on a monopoly's good will and conscience. Many of the evening newspapers are part of a monopoly. Some papers—the Grimsby Evening Telegraph is one, as I am sure the hon. Member for Brigg and Cleethorpes (Mr. Brown) will agree—maintain the honourable standards of journalism, albeit in the face of increasing difficulties. The financial constraints imposed upon them will be heightened by this measure which will affect newspaper revenue. About 80 per cent. of provincial press revenue comes not from the cover price but from advertising.
      Thirdly, this is a retrograde measure because it is truckling to the EEC Commission. My impression is that if one gives such a commission an inch, it will take a kilometre. This attempt to end our zero-rated system of VAT is illegal, irresponsible and unnecessary. It is certainly not justified by the circumstances. Clearly the Government feel a need, for some strange reason, to bow in the EEC's direction. The Government are not able to tackle certain other aspects. They certainly would not wish to extend VAT to safety clothing for industrial purposes, but they have hit the newspapers.
      I hope that the newspapers will retaliate by treating this Government and the Conservative party with the same impartiality, courtesy, objectivity and factual accuracy with which they have treated the Labour party over the years. The newspapers must accept that this measure is a direct consequence of the type of policies supported by them—increasing the tax burden by increasing unemployment and deferring to the EEC which, all too often, the newspapers support and back.
      Fourthly, this is a retrograde measure because it hits especially severely at those who cannot pass on the VAT burden, including small business and small advertisers. It
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      hits the small classified advertisements of ordinary people announcing events of joy or sorrow—births, marriages and deaths. Such advertisements commemorate the passing of loved ones in terms that may appear fusty and homespun to the sophisticated minds on the Government side but they are deeply sincere. These advertisements should certainly not be the objective of a tax.
      Newspapers are working in an increasingly competitive advertising market. There is intense competition. I want to ask the Minister of State a question that affects the other participants involved in this competition. Is the competition on an equal footing? I am interested in the competition from pirate radio. Pirate radio is illegal. There has been an enormous increase in the number of pirate radio stations. In an answer earlier this year, the Parliamentary Under-Secretary of State for Trade and Industry said:
      "my Department has monitored 74 unlicensed broadcasters on radio".-[Official Report, 8 February 1985; Vol. 72, c. 747.]
      A list is included which unfortunately does not contain Radio Arthur which was broadcasting for the NUM during the pit stoppage. The Department took action on 124 occasions in 1984 and so far this year it has taken action against about 15. That does not have the effect of closing them because generally the radio stations continue to broadcast.
      Those radio stations broadcast on the basis of advertising revenue which is taken from the pool of advertising revenue which clause 10 proposes to tax. I understood that it was an offence to advertise on pirate radio. It turns out that in their wisdom the Labour Government made it an offence under the Marine, &c., Broadcasting (Offences) Act 1967 to advertise on stations transmitting from outside territorial waters. The stations, like the Government, have to be at sea before they commit an offence relating to advertising. The two stations which broadcast at sea deny that they take advertising revenue from this country. We do not have to believe them, but they deny it.
      It is not possible to stop advertising. Although the Department of Trade and Industry has written and made threatening noises to 300 companies which have been advertising on pirate radio, it is not possible to deal with them unless they are charged with aiding and abetting. That means that the principal offender—the pirate radio—must be found guilty.
      The rates for advertising on pirate radio vary enormously. A 30-second slot on Capital Radio costs £705 whereas on Radio Jackie, in south-west London, it costs £5. That may not be enormous amount, but it is taken from the pool of advertising revenue. I have to confess to an illegality by listening to Skyline Radio on the way home at night. It is quoted in The Guardian that advertising on Skyline Radio costs between £50 and £225. Payment is strictly in advance. Advertising brings that station about £600 a week. It exceeds the basic running costs of £400. It is, therefore, possible to make money out of pirate radio stations. Are those pirate radio stations registered for VAT? One of them boasts of being registered for VAT. Are the 74 registered for VAT? If they are illegal, how can they be registered?
      I have heard car hire firms, hotels, discos, garages and a whole series of businesses advertising on pirate radio. Is the VAT payable on those advertisements allowable

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      against tax? Is the advertising of those firms tax deductible? The matter plainly raises a moral issue and it is perhaps a little unfair to spring it on the Minister.
      If the VAT on advertising or the advertising on pirate radio are tax allowable, why are not the hiring of call girls, prostitution or any other form of illegal activity allowable? That opens fascinating vistas that I hope the Minister will deal with. Those questions must be answered in the light of the competition that these stations now provide for legitimate advertising on commercial radio, which already pays VAT, and for newspapers, which will pay VAT under these proposals.
      10.30 pm
      Mr. Peter Pike: I wish briefly to support my hon. Friends who oppose the clause. The proposal to impose VAT on newspaper advertising is a retrograde step. Although the Government may not have actually spread the rumour prior to the Budget that VAT might be imposed on both books and newspapers, they welcomed the publicity, because it made the proposal in the Budget appear small fry compared with what people feared.
      The Government are moving in the wrong direction, and having taken this first step I fear that they will be encouraged to move further down that road. Although VAT has not been imposed on books in this Budget, they may move in that direction in future. Therefore, we must oppose the clause. I hope that the Government have second thoughts because we are talking about a small and insignificant part of the overall Budget.
      I am concerned about the implications for the provincial press. During recent years a large number of local and regional newspapers have closed. They have been under threat from the free newspapers and other sources going for the limited budgets of advertisers. The local and provincial press are dependent on advertising from people who cannot claim back the VAT—those advertising births, marriages, personal classified advertisements and so on. That is a substantial part of their advertising.
      If the Government continue in this direction, many more local papers will be under threat. While I often differ with what they print, I believe that they have a right to print it. It would be a bad day if more of them closed. I accept that the free press has a part to play, but it is no substitute for a weekly or daily regional newspaper. I do not dispute its right to exist, but the amount of editorial material, when compared with a traditional paper, is small. Many free newspapers have few reporters and depend almost entirely on advertising revenue. The local press also depend on that advertising revenue to survive. Any pressure put on them will cause more of them to close, which would be a bad day for local news.
      I hope that this is not the foot in the door to putting VAT on to newspaper cover costs and books. As I have been serving on the Transport Bill Committee, I have not heard the earlier debates, so I do not know if the Minister has already answered my point. I hope that the Government will assure us that they will not move in that direction and that, even at this late stage, they will have second thoughts about imposing VAT on newspaper advertising.
      Mr. Mark Fisher: I apologise for not being present for all the clause stand part debate.
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      My hon. Friend the Member for Burnley (Mr. Pike) said that the free press was no substitute for a professional provincial press. In some areas free newspapers have become a valuable addition to journalism in Britain, but they are threatened in a dangerous way by the clause.
      As my hon. Friend said, the quality of the free press is variable. Some rely almost entirely on advertisements and make no attempt at journalism. What little copy they carry is syndicated. But some, such as the North Staffordshire News and Advertiser, make a distinct effort at journalism. Indeed, because of their limited journalistic resources, they have found a mode of journalism that matches those resources. They cannot cover the whole range of local activities, so adopt a more campaigning role, and they have added a positive and distinct element to journalism.
      As my hon. Friend the Member for Sedgefield (Mr. Blair) said, there are now 700 of them and they are a force to be reckoned with. By threatening them, the clause is threatening an embryo movement in journalism which may become insignificant and unimportant, but which could, as I hope will, develop into an interesting part of the media, particularly in the local and provincial sphere.
      The clause affects them in a number of ways, some of which the Minister may not totally have taken into account. He may not have appreciated that the whole revenue of free newspapers now bears VAT, a move that is more radical than that which we were discussing in previous amendments in connection with VAT on charities.
      This will add considerably to the costs of these newspapers. For example, a local newspaper in north Staffordshire, I was informed last week, has had to employ an extra member of staff simply to deal with the more complex type of invoicing. For a small business run with few staff, that has been a considerable extra cost.
      About a third of that newspaper's advertising is placed by clients who will not be able to reclaim VAT. The paper carries 12 pages of advertising, four of which, it is estimated, are from small traders such as people in insurance and finance and from charities. The revenue of such newspapers is affected in an even more radical way than I suspect the Chancellor realised when he introduced the measure.
      As I pointed out, it is to be hoped that the free press becomes a significant and valuable addition to journalism. Ironically, this VAT proposal will not only squeeze them as small businesses—and the Government claim that they see small firms as providing the main source of employment in the coming years—but will squeeze their editoral quality. If their revenue is squeezed, their attempts to become serious, albeit limited, journalistic vehicles will be equally restricted.
      The Government will force them back into a laager of advertising and syndication, with no attempt being made at even the present embryonic movement into local campaigning journalism which could make them valuable. Instead, the Government will condemn them to being rather limited advertising rags. That cannot be what the Government intend. It would not be to the benefit of local communities, and in strangling these small areas of innovative journalism, the Government will also be strangling some of the small businesses that they claim to want to help.
      Mr. Blair: We have already debated the effect on consumers of the imposition of VAT on newspaper advertisements, and it is right that we should also consider the effect on the newspaper industry.
      Most of the relevant points have been extremely well made by my hon. Friends the Members for Clackmannan (Mr. O'Neill). for Paisley, South (Mr. Buchan), for Great Grimsby (Mr. Mitchell), for Burnley (Mr. Pike) and for Stoke-on-Trent, Central (Mr. Fisher). The House is, therefore, in the fortunate position that it will not have to listen to me for long. [HON. MEMBERS: "Shame."] I am always open to persuasion.
      The Minister of State accepted the estimate of a 3 per cent. drop in revenue resulting from the imposition of VAT on newspaper advertisements. That is a high figure, considering the margins on which some papers operate.
      I concur with what my hon. Friend the Member for Stoke-on-Trent, Central said about free newspapers. It is often not realised how many people are employed by those papers. It is estimated that there could be as many as 13,800 full-time employees and almost 96,000 part-time employees. All the revenue comes from advertising. The growth in the number of free newspapers has been enormous and it is clear that it will continue if it is allowed to do so. The employment effects are as important as anything else.
      We have said throughout our debates that the Minister should be particular in his estimate of the employment effects of introducing VAT on newspaper advertisements. The Government's record in predicting the employment effects of VAT is extremely poor. Last year, VAT was imposed on takeaway foods and we were assured by the Chief Secretary to the Treasury that the employment effects of that would be minimal. However, the Hot Takeaway Action Group, which has carried out a large survey, estimates the effects to have been devastating and it is suggested that 20,000 people have been made redundant as a result of that imposition of VAT.
      I hope that the Minister of State will give us specific predictions of the employment effects of the imposition of VAT on newspaper advertisements. We fear that it will drive many newspapers at the margin to make a considerable number of people redundant and that it may even put some papers out of business.
      Mr. Hayhoe: The hon. Members for Paisley, South (Mr. Buchan) and for Burnley (Mr. Pike) referred to press speculation that the Government might put VAT on newspapers and books. I assure both hon. Members that that was speculation and that the Government had no hand in it.
      The hon. Member for Burnley asked whether the imposition of VAT on press and magazine advertising is an hors d'oeuvre to VAT being imposed more widely on the printed word. I refer him to what my right hon. Friend the Chancellor said in his Budget speech. He announced that while the Government accepted that this was an area in which European Community law had to be reckoned with, and where we were bound by treaty obligations, he did not intend to make any further extensions of the VAT base during the lifetime of this Parliament. That is an absolute assurance along the lines for which the hon. Gentleman asked.
      10.45 pm
      The hon. Member for Paisley, South referred to advertising for the arts—concerts, theatre and the like—
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      and was concerned that the imposition of VAT on advertising would be an additional burden upon tie arts which would have adverse effects. In fact, theatres, concert organisations and the like are registered for VAT. If they have a turnover in the year of over £19,500, they are registered and charged VAT on their ticket sales and, therefore, can reclaim the VAT that they pay on their press advertising as they now reclaim other VAT charges that they have to meet. In those circumstances, I think the generality must be that the worries of the hon. Gentleman will not be reflected in practice. Indeed, I know of no representations from the arts world on this issue, because these organisations are well aware that they can reclaim any additional input tax that they have to pay on their advertisements.
      The hon. Gentleman made some general comments about Government support for the arts. This is not the occasion to reply to them, and I do not intend to do so. However, for the record, I do not accept his critical comments.
      The hon. Member for Clackmannan (Mr. O'Neill) referred to the effect of VAT on advertisements in the press and magazines and was concerned about whether this might result in some job losses. As he knows, and, indeed, referred to, we had been talking along these lines on earlier amendments. I do not intend to repeat what I said then. The estimates that I have indicate that the job effect will be very small.
      What I can be certain of, however, is that if job losses occur in the press and magazines, the VAT charge on advertisements will be blamed for everything. Last year, when VAT was imposed on hot takeaway food and that coincided with a record rise in the price of potatoes, fish and vegetable oil, it was never suggested that the difficulties which the industry encountered had any thing to do with the price of raw materials—it was all blamed on VAT. Anybody who is involved in tax affairs of any kind knows that one attracts that kind of comment.
      I met representatives of the Hot Takeaway Action Group recently and asked them whether, on the basis of group's latest surveys, they could differentiate between the various effects. The surveys were not scientifically carried out, as the representatives acknowledged. The surveys were limited, and it was perhaps a somewhat partial sample that was taken. Therefore, even the representatives of the group do not contend that the surveys give a proper view over the whole of the hot takeaway food area, and they had to acknowledge—and did so quite freely and openly—that they could not differentiate between the various effects.
      As to Government forecasts—and reference was made to my right hon. and learned Friend the Chief Secretary—the first time that we shall have evidence is later this year when we receive the family expenditure survey data for 1984, which will give us a pretty clear indication of spending on hot takeaway food. We shall have to wait until later this year to have some scientifically produced estimates in the expenditure survey, after which we will be better placed to make a judgment.
      To return to the question of jobs in the printing industry generally, if management in the printing industry were offered a choice between a much more realistic and co-operative attitude by the trade unions that operate in that industry and the imposition of VAT on its press advertising, I am sure which it would choose.

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      I share the concern that has been expressed about the loss of printing in the country and the fact that so much printing has moved abroad over a long period of years. I am delighted that some of it is coming back to the country. That is because management is now being allowed better to manage and use the new technology. I welcome the helpful and constructive comments that have been made on this matter. If those attitudes are reflected more widely I hope that British printing, which had a fine reputation in the past, will be able to recover much of the ground that has been lost.
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      The hon. Member for Great Grimsby (Mr. Mitchell) referred to the VAT position of pirate radio. As he recognised, that is going a little wide of the clause. It may be out of the same pool, but so are a great many other things. The hon. Gentleman thought that he would be lucky to get an answer from me today, and he was right. Nevertheless, I shall look into the matter and write to him about it.
      I commend the clause to the Committee.
      Question put and agreed to.
      Clause 10 ordered to stand part of the Bill.

    Clause 35

      PERSONAL RELIEFS
      Dr. Oonagh McDonald: I beg to move amendment No. 7, in page 34, line 2, leave out '£4,255' and insert '£4,475'.
      The Second Deputy Chairman of Ways and Means (Sir Paul Dean): With this it will be convenient to take amendment No. 8, in page 34, line 3, leave out '£2,690' and insert '£2,830'.
      Dr. McDonald: The purpose of the amendment becomes clear when one considers the careful way in which the Chancellor presented his statement about age allowances. He said in his Budget statement:
      "I propose to increase the age allowances this year by the same cash amount as the corresponding basic allowances. Thus the single age allowance will rise by £200 and the married age allowance will go up by £300."—[Official Report, 19 March 1985; Vol. 75. c. 801.]
      On the face of it, that seemed perfectly fair. In fact, however, it was a continuation of what the Government did last year when they widened the gap between the age allowances and the ordinary personal allowances. Until then the gap had never been more than 1 per cent. but it suddenly widened to 7 per cent., working against the over-65s. This was because last year the Government more than indexed the ordinary allowances but merely indexed the age allowances. As a result. 2·4 million pensioners over the age of 65 had to pay an extra £130 million in income tax, although the Government looked after the better off pensioners—those with investment income—through the abolition of the investment income surcharge.
      Having read carefully virtually every word of the Minister's response to a similar Opposition amendment last year, I find that the Government produced no good reason whatever for their treatment of pensioners. There is absolutely no justification for making a distinction between increases in personal allowances to pensioners over the age of 65 and increases in ordinary personal allowances—unless there is an implicit justification which the Government would prefer not to state out loud. As the Government choose to believe that unemployment is due at least partly to the unemployment trap, they may regard it as more important to raise the allowances of people in work to ensure that they continue to work and do not chicken out and take unemployment benefit or social security benefit instead. The consequence of following that argument through is that pensioners' tax allowances do not matter much and that it is sufficient to index them. If one failed to do that, pensions would be cut, in so far as they are subject to tax.
      This year the Chancellor of the Exchequer tried to cover the Government's tracks by announcing the same cash amount, yet on examination that is not as fair as it seems. This year's Budget increases the single age allowance by 8 per cent., and the married age allowance by 7·6 per cent. Both are higher than the present rate of inflation, but who knows what will happen to inflation by the end of the financial year?
      The real point of comparison is between the single person's allowance or the married woman's allowance, which increases by 10 per cent., and the married man's allowance which increases by 9·5 per cent. The
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      Government have raised the age allowances by a little more than the present rate of inflation but not as much as the ordinary allowances. The reason for that is not clear, unless it is, as I suggested earlier, that pensioners do not matter much because they do not affect the unemployment figures. Perhaps the Chief Secretary can suggest a reason for distinguishing between the age allowances in that way—a distinction which was introduced last year and which continues this year, although not to the same extent.
      We are suggesting higher amounts than the Government have done in order to go some way towards rectifying the damage done to pensioners in last year's Finance Act. Our amendment seeks to raise the single person's allowance to £2,830 and the married age allowance to £4,475. I am sure that the Chief Secretary will have done his sums carefully, but, before he produces them, I can tell the House that the cost of our proposal is £57 for a married age allowance and £45 for a single age allowance. Those figures are based on the tax ready reckoner statement in the autumn statement 1984. Those are modest costs. In the clause that we shall debate tomorrow, the costs for a full year will be £155 million, which will go to the better off. Today we have made a modest proposal which costs about £1 million, and which will do a little to help pensioners and to make up for last year's bad treatment.
      We have a substantial number of pensioners in mind. In the last tax year, 1·25 million single pensioners over the age of 65 and 1·30 million married couples, of whom one of the partners was over 65, paid tax. Forty per cent. of pensioners are affected by taxation and, therefore, our changes would affect a large number of them. We want the Government to be more generous to them than they are disposed to be.
      Last year the Government introduced the gap between the two amounts of allowance, and this year they have widened the gap between the age allowances and the ordinary tax allowances. Having introduced this sort of discrimination last year, the Government—although it does not appear so until one begins to examine the implications of the Chancellor of the Exchequer's statement—have widened the gap between pensioners and the rest, and one wonders why. No explanation has been given and we are dying to hear the Chief Secretary's justification for it. Perhaps it is all part of a general attitude which the Government seem to have been developing towards pensioners ever since they came into office.
      I have mentioned changes, not directly related to taxation, which show what the Government's attitude to pensioners seems to be. For example, the Government changed the basis on which the state pension was assessed, so that it was no longer related to earnings. If that earnings rule had not been changed, a married couple would be getting £62 a week instead of the current £57 a week. A single pensioner would be getting £38·90 a week instead of the current £35·80. So the Government have already attacked pensioners once by changing the basis on which the state pension increases should be assessed each year.
      11 pm
      Then there is the threat of the abolition of the state earnings-related pension scheme. We know that the Cabinet has yet to come to a decision about that, and I can understand why there is much in-fighting going on in the Cabinet. After all, on the 1983 figures, at least a million pensioners will be affected. If the Government decided to

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      abolish the SERP scheme straight away, so that nobody benefited from the scheme any more, a million pensioners would be affected and they would lose on average about £2.30 a week.
      Therefore, from the Government's past behaviour—the tax changes what were made last year, which are continued in this year's Budget, and all the talk about the abolition of the SERP scheme—we can see that the group about whom the Government care least are the pensioners. The Government would do well to remember that they are large in number, and that many can ill afford the kind of damage that the Government seem to be determined to do to their income.
      When we looked at the kinds of thing that the Government might do, on the basis of the estimates of the development of the economy, the level of PSBR and so on that the Government provided, we could see that with better planning and with better intentions the Government could afford to raise the single person's pension by £5 a week and the married person's pension by £8 a week. We have yet to hear what proposals the Government have for pensions this year.
      From the Budget statement and the Finance Bill, we can see that the Government plainly do not care about the lot of the pensioners and are determined to enlarge the distinctions between the tax treatment of pensioners and the tax treatment of the rest of the Community. The Finance Bill is designed to continue the damage that the Government started to do to the incomes of pensioners last year. That is why we are seeking to amend the Bill in this way.
      Mr. Austin Mitchell: I support my hon. Friend the Member for Thurrock (Dr. McDonald) in the points that she so tellingly made. Her speech placed its main emphasis—as it should, coming from the Opposition—on proper provision for the aged. The amendment proposes to increase the age allowance to compensate for the Chancellor of the Exchequer's vicious treatment of pensioners last year. While, as my hon. Friend said, the married man's allowance has increased from 1979 up to this year by 125 per cent., and the single person's allowance has increased by 124 per cent., the single person's age allowance has increased by only 107 per cent. and the married person's by only 105 per cent. That is not good enough. Special problems and responsibilities fall upon the aged and it has always been considered right that the tax system should provide special help through tax allowances for them. That is provision which we back strongly. We are concerned about the Government's niggardly cheese-paring attitude, which hits those most vulnerable by failing to increase the allowances in the way that is proposed in the amendment.
      The Government's attitude prompts the question, "What do the Government have against the aged?" They have ended the dual link that the Labour Government established between pensions, prices and wages, whichever increased the more, and now we have a bubbling, seething morass of rumours about the treatment of the earnings-related element in the pension. However, the Government never have the courage to implement their prejudices and they will draw back ultimately. It should be recognised that the rumours are causing much uncertainty among the elderly and those who are
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      approaching retirement age. We remember the rumours which the Chancellor of the Exchequer eventually had to scotch in the Budget statement about the Government's treatment of the pension funds. Against this background, it is only to be expected that we should ask ourselves what the Government have against the pensioners.
      The explanation that enters my head is that the deliberate campaign against pensioners is one way of distracting attention from the fact that on 15 October the Prime Minister will become a pensioner. We shall have then the spectacle of a grey-haired couple in the evening of their lives—a little out of touch with reality but only by 100 years—who have become gentler, all their passion spent. They have nothing else to do apart from wrecking the national economy and plaguing those less well off than themselves. That will be characteristic of their policy up the retirement, which is designed to distract attention from the historic event of pension day for the Prime Minister. That is why the Government have embarked on a deliberate campaign against pensioners.
      The Labour party sees it as its responsibility when in office to reverse the Government's policies. The Labour party is the party which provides for pensioners. It has always done so and it will continue to do so. When it takes office it will reverse what the Government have been doing by cheese-paring benefits and tax allowances to which pensioners are entitled as of right in according with social justice and human decency, which are concepts foreign to the Government but sacred to the Opposition.
      The Chief Secretary to the Treasury (Mr. Peter Rees): We have had a brief but interesting debate, which is to a degree a continuation of our debates last year on this subject. I make no complaint about that. It is right that we should return to these important issues. Perhaps the hon. Members for Thurrock (Dr. McDonald) and for Great Grimsby (Mr. Mitchell) drew the wrong conclusions from the facts. They may feel on reflection that some of their remarks were rather highly charged, especially when we go back a little in time.
      The hon. Member for Thurrock explained clearly the basis of the amendment. It seeks to index on the basis of the amendment which was introduced on 1 May last year by the hon. Member for Birmingham, Perry Barr (Mr. Rooker). Last year the Government proposed full price protection for the age allowance for the elderly. This year we propose full price protection and more. We are saying that there should be some cash in addition, which is £300 for the married age allowance and £200 for the single age allowance. In cash terms, that will keep them level this year with the ordinary basic allowance but, I concede, not quite in percentage terms.
      The hon. Member for Thurrock asked about the theme of the Budget and quoted, not a little selectively, from the speech of my right hon. Friend the Chancellor, who said that the emphasis of the Budget was on jobs and people of working age. That does not mean that we intend to discriminate against other groups. That point was made last year, when my hon. Friend the Minister of State said that positive discrimination in favour of people of working age did not imply discrimination against any other groups.
      Lest such a conclusion be drawn, we should examine the facts. Since 1978–79 there has been a £2,180 increase in the married age allowance, compared with a £1,920 increase in the basic married man's allowance. The single age allowance has increased by £1,390, compared with a

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      £1,220 increase in the basic one. I hope that the Committee will not think that that shows discrimination against the elderly. The married age allowance is at its highest point since the war and the single age allowance is at its highest since 1974. That does not show sustained discrimination by the Government against the elderly.
      Clause 35 should take 60 per cent. of the over-65s out of charge for tax. I know that the hon. Member for Birmingham Hodge Hill (Mr. Davis) deprecates my giving the figures of people taken out of charge for tax. I know too, that he is a keen student of these matters, but I shall not take up what he said on Second Reading. Clause 35 should ensure that 260,000 of our elderly compatriots are taken out of charge for tax. I do not think that that indicates discrimination or that we have no care for that group.
      Mr. Terry Davis: The right hon. and learned Gentleman and I share an interest in these matters. How many of those 260,000 people were taken out of tax last year by the increase in age allowance and are therefore being double counted?
      Mr. Rees: I cannot give a precise figure. If it can be ascertained during the debate, I shall give the hon. Gentleman the answer. If not, I shall write to him. I am sure that he will add it to his store of knowledge on this important, if slightly arcane, subject.
      There is no obvious reason why the elderly should retain a constant percentage premium over the younger taxpayer. Perhaps I might draw the attention of the hon. Member for Thurrock to the fact that there was no constant figure under Labour. I could take her through successive years to show that the proportion that the age allowance bore to the basic allowance was reduced steadily under Labour. Having winced under the hon. Lady's harsh criticisms about clause 35, I was reassured to find that, in 1976, the basic and age allowances were increased by the same cash sum. All of the strictures which the hon. Lady has advanced against us might, if well founded, be advanced against the Labour Government. I am sure that that point must have escaped her attention, otherwise she would not have developed that theme.
      11.15 pm
      Mr. Austin Mitchell: Surely the gap was never widened to this extent. The ratio was always more closely maintained under that Government. Even if there was a slight widening, it was never a widening of this degree. The difference between an increase of 107 per cent. in the single person's age allowance and 125 per cent. in the married man's allowance since 1979 is quite considerable.
      Mr. Rees: I know that the hon. Gentleman has great enthusiasm for these matters, but let us look at the problem in its true context. My hon. Friend the Member for Braintree (Mr. Newton) moved a similar amendment to that moved by the hon. Member for Thurrock (Dr. McDonald) on that occasion. It is curious that those themes run through our debates. He said that there was no clear water between the basic old-age pension and the age allowance. There is considerable clear water on this occasion—about £23 a week for the married man's age allowance and £15 a week for the single man's age allowance. Further, on that occasion, when the Labour Government were in power, the basic rate was 35 per cent., and now it is 30 per cent. Therefore, if the hon. Gentleman reflects closely, he will see that we have a
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      slightly better record than the previous Administration. However, I do not want to enter into a competitive battle on that point. I only want what we have proposed to be viewed in its true context.
      I hope that when Committee members reflect on the extent to which we are proposing that the married and single age allowance should be put up, on the number who will be taken out of charge for tax altogether, and on the fact that this is the highest level for an elderly married man since the war, and for an elderly single person since 1973–74, they will see that all the strictures that have been advanced by the hon. Members for Thurrock and for Great Grimsby are not well founded. I know that the hon. Lady is fair-minded. I hope that now she has had a chance to reflect on my remarks, she will not feel disposed to push her amendment to a Division.
      Dr. McDonald: As I listened to what the Chief Secretary had to say, and as he referred back to the Minister of State's speech last year, I found that there was still no answer. To give different percentage increases for the age allowance as opposed to the ordinary allowance is unequal treatment. Such inequality has to be justified. No justification whatsoever has emerged from what the right hon. and learned Gentleman said.
      The differences between the age and ordinary allowances have been moving on apace under the Government, particularly since their re-election in 1983. For example, in 1983–84, the figure for the single age allowance as a percentage of the single person's allowance was 132 per cent. As proposed in the 1985 Budget, the figure is 122 per cent. That is a 10 per cent. drop in two years, which is pretty much of a change, and at a pretty fast rate. The married person's allowance is slightly bigger than that. If we take the married age allowance as a percentage of the married person's allowance, in 1983–84, it was 134 per cent. In this Budget, it will be 123 per cent. That enormous change is being made in the value of the age allowance, although it has been raised a little bit above the rate of inflation in the current financial year.
      That is unequal treatment. It is a steady and fast rate of change. The Chief Secretary has still not provided any justification for that whatsoever, although the Government declare that they are particularly committed to reducing the burden of taxation, a matter that we can discuss further on clause stand part. Frankly, the right hon. and learned Gentleman has not justified what has been done in this year's Budget. It is still unequal treatment, and will leave many pensioners worse off than they might have been if the Government had chosen to treat ordinary taxpayers and pensioner taxpayers in the same way.
      Amendment negatived.
      Question proposed, That the clause stand part of the Bill.
      Dr. McDonald: In clause 35, the Government appear to be generous in the way in which they have raised the married persons' and single allowances above the rate of inflation—10 per cent. and 9·5 per cent. respectively. The Chief Secretary has said that these allowances now stand at the highest point since world war 2. At first sight it seems as though the Government are being very generous and fair in the tax treatment that they have meted out. However, once again, everything is not as it appears.
      For example, up to the Budget, and even in the course of the Budget speech, Ministers made great play of the

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      point that raising the allowances would deal with the poverty and unemployment traps, and that this is the best and most efficient way of treating this problem, and a way designed to help those on average and below average earnings. The Government continue to put up that case, in spite of the fact that it has come under fire and justified criticism.
      I shall focus not on the unemployment trap but on the poverty trap, because I want to examine the burden of taxation and how it is distributed. Last December, the latest figures available gave the figure of 270,000 families caught in the poverty trap. That is a five-fold increase since 1979. The various efforts that the Government claim to have made to relieve the poverty trap have made it worse.
      Some of the families caught in the poverty trap pay marginal tax rates of between 75 and 100 per cent., and some—a small proportion—pay marginal tax rates of over 100 per cent. Recently, when the Daily Mail, with its usual factual basis, claimed that the Labour party might bring in tax changes that would impose marginal tax rates of 98 per cent. on certain people, there was a great outcry from the Conservative Benches. However, I hardly ever hear any Tory Member complaining about the number of families caught in the poverty trap and few voices complaining about the numbers paying marginal tax rates of 75 per cent. and above. They seem only to begin complaining when those who might face high marginal tax rates because of changes are the very rich. The complaints do not come when we deal with the 270,000 families who, in the nature of the case, because they are able to claim family income supplement, are extremely poor. About such cases there is hardly a peep from the Tory Benches about the poverty trap. Nor is there a serious attempt to get people out of the poverty trap.
      Indeed, with the national insurance contribution changes introduced in the Budget, the Government have casually introduced another three poverty traps, although admittedly they do not give rise to marginal tax rates such as the ones that I have just mentioned. However, they mean that many people will pay more tax, or they encourage employers to hold down wages so that their employees are not caught in the poverty trap through increases in taxation because their wages are increased from, say, £55 to £58 a week. The Government have done nothing in this Budget, as in previous Budgets, to reduce the number of families caught in such traps, nor have they seriously considered the problem.
      The Government claim that they have assisted people on average and below average earnings, and that they have reduced the amount of tax and national insurance contributions that they must pay. Yet if we take that as a proportion of earnings in 1985–86 as compared with 1978–79, we discover that those on half average earnings, two thirds of average earnings or just on average earnings—I am talking about married couples with part-time working spouses, or married couples with two children and part-time working spouses—for all the Government's alleged efforts, are paying roughly the same tax as a proportion of their earnings as they paid in 1978–79. For all the steam, noise and effort that the Government have allegedly engaged in, the tax changes will make little difference to their tax burden.
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      In contrast, high-paid households—those on five times average earnings—have enjoyed an average reduction in their tax bills of 14 per cent., while those on 10 time average earnings have enjoyed an increase of 22 per cent. compared with 1978–79.
      I listened with great interest to the speech of the Financial Secretary to the Treasury on Monday 29 April, and I came to the conclusion that he either had little grasp of the statistics—I am sure that that is completely unfair—or that he was trying to pull a fast one. He said that the Government were more concerned with the genuine quality of life than were the Opposition, and then went on to say that what really mattered was the increase in real take-home pay, or real wealth, under this Government compared with under the Labour Government. Of course, he is correct to say that take-home pay has been increased for some groups, because gross earnings have been increasing at a much faster rate under this Government—I understand to their dismay—than they did under the Labour Government.
      I say that the hon. Gentleman was trying to pull a fast one because he suggested that we should focus only on the real take-home pay of those groups, instead of on the Budget and the Finance Bill, which are designed to deal with the distribution of the tax burden of those income groups. To suggest that all that matters is that people's real take-home pay is increasing—the Opposition certainly do not object to that—is not the point. The distribution of the tax burden is the point. To say that real take-home pay has increased for this, that or the other group is neither here nor there. The Financial Secretary gave the game away by comparing the increasess in real take-home pay for those on twice or five times male average earnings under the Conservative Government, with the increases under the Labour Government. According to a survey of personal earnings in 1982–83, we are talking about 44,000 people earning five times average earnings and 1·5 million people earning twice average earnings.
      11.30 pm
      The Financial Secretary referred to enormous increases—14 per cent. in the last five or six years for those on twice male average earnings and 28 per cent. under the Conservatives for those on five times male average earnings—for a tiny proportion of the 22 million incomes.
      The Financial Secretary to the Treasury (Mr. John Moore): Knowing that the hon. Lady is as fair as she is statistically accurate, I am sure that she will remind the Committee that I gave the precise comparisons for average earnings, and half average earnings as well as for twice and five times average earnings. In all those cases, including half average earnings, those people have done better.
      Dr. McDonald: Exactly. I made that point. I said that the Financial Secretary was leading us up the garden path a little by trying to make us focus on the notion that what mattered was the increase in real take-home pay. Certainly there have been increases for all the income groups to which the hon. Gentleman referred. I do not dispute the figures, but they are not the point. The point is that the increases have been unequally distributed under this Government far more than under the last Labour Government.
      A Finance Bill is concerned with the distribution of the tax burden, not simply with recording the increases in real

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      take-home pay for various groups. It is insufficient to say of the increase in real take-home pay for families on low incomes, "They are fine; they are definitely better off." The real take-home pay to which the Financial Secretary referred excluded VAT and other charges which hit such families harder than families on average and above average incomes. Even the net tax cuts of £1·73 for a married couple and £1·15 for a single person will mean that those in receipt of below average earnings will receive less in their wage packets or salary cheques. In fact, the benefits have already started to disappear because prescription and water charges have increased and excise duties and VAT on various items have been imposed or increased. That hits low-income families much harder than families on twice or five times average earnings.
      One could say that the Financial Secretary—I am sure that it was unintentional—was also trying to pull the wool over our eyes by merely referring to the increase in real take-home pay. The hon. Gentleman knows that that excludes VAT and the other duties to which I have referred. The Government have hit the living standards of the low paid far harder than they have hit those of other people.
      National insurance contributions are not part of the Finance Bill, but they are part of the Budget and therefore I shall deal with them. We are now all coming to the view that tax and national insurance contributions must be taken together.
      The much vaunted reductions in national insurance contributions do not help much. A wages council worker earning £69·85 a week—the rate for bar staff—and receiving the full benefit of the reduced 7 per cent. rate will pay 18·8 per cent. of his earnings in tax and national insurance as a single person after October 1985 compared with 17·4 per cent. of the equivalent wage in 1978–79. Some people do not benefit from any of the changes. I am indebted to the Low Pay Unit for that example. It illustrates once again that the changes do little to help the low paid, that the rich continue to benefit from this kind of Budget, and that there has been no change in the Government's policy.
      Taxes have risen in real terms by £26 billion, at 1984–85 prices, between 1978–79 and 1985–86. The only people to have benefited by about £3 billion a year are those with well above average earnings. When we first consider the clause, from the point of view of the Opposition and the public, it seems that the Government are being generous. Allowances are being raised well above the rate of inflation, and they are accompanied by changes in the national insurance contributions. It seems that those with below average earnings will benefit. A closer examination shows that once again nothing has been done to relieve the poverty trap. Those on below average earnings are still paying about the same amount of tax and national insurance contributions as they paid in the last year of the Labour Government, and yet the Government continue to condemn the Labour Government for grossly increasing the tax burden.
      Before the Government took office, they said that they would cut taxes and everyone would benefit. That is partly why people voted for them in 1979. Since then, people have begun to understand that when the Government talk about tax cuts that means tax cuts not for everyone, but only if one belongs to that small minority whose wages are double or more than double average male earnings. That is the focus of the Government's attention. They might
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      choose to justify it by saying that if they give incentives to that group of people it will revitalise the economy because they are the innovators who will create jobs. The Government have been up to that kind of trick for the past six years. We are still waiting for those rich innovators to invest, innovate and create more jobs. That justification has gone straight out of the window.
      The Government have increased the tax burden. Whatever the Financial Secretary chose to say last week, the tax burden has been even more unfairly distributed than it was before. The only beneficiaries are the better off. The low paid are as badly off as ever, despite the apparent initial glories of the clause. When we look at it, it fades away like fairies' gold. It is nothing in the hands of the low paid.
      Mr. Austin Mitchell: My hon. Friend the Member for Thurrock (Dr. McDonald) made a telling and powerful argument against the Government on social priorities. As she said, the whole of the Government's strategy was based on the trickle-down theory of economics—if more money is given to the wealthy it trickles down to the poor. As Galbraith put it, if we feed more hay to the horse it trickles down to the road to be eaten by the birds, so the more hay we feed to the horse the better the birds are fed. All that has trickled down from this Government is excuses, distorted statistics and sermons from the Prime Minister. The benefits that have been showered on the wealthy—to the tune of £3,000 million every year to the top 5 per cent. of income earners—have not stimulated economic activity or trickled down to the poor. They have not provided the dynamism that was originally envisaged.
      It is interesting that tonight we are debating certain clauses because of a conflict of pressures. We want to debate those clauses to which we take the greatest exception; the Government want to debate clauses on which they wish to congratulate themselves. This clause is one of those on which the Government wish to pat themselves on the back. It is a difficult anatomical feat, but not as difficult as some of the other anatomical feats performed by Government, especially under this Prime Minister. Yet that is hardly reasonable given the social priorities embodied in the proposal on personal allowances. There is an argument whether this is the best use of the limited amount of money that the Government felt able to give away in the Budget. I do not regard an increase in personal allowances as the best use, but it is a personal choice. This Government have placed the burdens of the depression that they have created on the shoulders of those least able to bear them—the poor, the aged and the unemployed. It is about time that they were recompensed for what the Government have done to them, as victims of Thatcherism, by some increase through the tax system so that money is channelled directly to them.
      I believe that that is best done through child benefit, which has not been increased to the same degree as allowances. It is likely to increase only in line with inflation. I believe that child benefit is the most effective way of channelling money to those who most need it—the poor and those with large families. That should be the priority. If there was a massive increase in that benefit, it could be combined with a tax of the benefit. There should be a massive increase to allow that money to be used where it is most effective. It would deal more effectively with

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      poverty and the real social problems that the Government have created than the increases in personal allowances. Invevitably such increases give less to the low paid and the less well off. That is implicit in the system. But the Government have been giving more to the better off all along.
      Under the Budget a Cabinet Minister earning £827 a week—one wonders why they are paid so much given the extent of the devastation that they have caused in the economy—will receive a weekly reduction in tax and national insurance of £8·87. Congratulations to Cabinet Ministers. The mass of the people, and certainly the less well off, have peanuts and penury.
      The very myth that taxes are being reduced is punctured by the telling figures provided in answer to parliamentary questions by the Low Pay Unit. Anyone on a half or two thirds of average earnings, or even on average earnings, is still paying a higher proportion of his income in direct tax and national insurance than he paid in 1978–79. I want to quote the figures to puncture the myth once and for all. After five years of saying that they are reducing the tax burden, the person on average earnings is still paying a higher proportion of his income in direct taxes than he paid in 1978–79.
      11.45 pm
      In 1978–79, a single person on average earnings paid 31·7 per cent. of income in direct taxes. In 1985–86 the percentage is 32·5. A married couple on half average earnings in 1978–79 paid 16·4 per cent. of income in direct taxes. In 1985–86, they are paying 18·7 per cent., an increase of 14 per cent. The social priorities of the Government involve taking from the poor to give to the rich, sanctifying it with cant and rhetoric about stimulating an economy which visibly they have depressed and ruined. A married couple with two children on two thirds of average earnings in 1978–79 paid 12 per cent. of their income in direct taxes, whereas in 1985–86 they are paying 13·2 per cent. in direct taxes.
      Those social priorities, which are absolutely wrong, which the clause does nothing to alleviate and which characterise the Government, have brought the economy to the present pass of a country stale in decline, larded with the vainglorious platitudes of a Prime Minister of a Government who are viciously placing the sacrifices of that decline on the poor and those least able to carry the burden. Those are the priorities represented by the Government.
      Mr. Peter Rees: We have had two wide-ranging contributions from the hon. Members for Thurrock (Dr. McDonald) and for Great Grimsby (Mr. Mitchell). They were long on rhetoric and short on facts. Indeed, at times I wondered whether we had been taking part in the same debates and had been looking at the same tax system. However, as the evenings go by in Committee Room 10 upstairs, our views may come together and we may realise that we are focused on the same problems.
      The hon. Member for Great Grimsby, with his usual panache——
      Mr. Terry Davis: Now answer the debate.
      Mr. Rees: That was intended as a compliment. The hon. Member for Birmingham, Hodge Hill (Mr. Davis) should not be so sensitive. He knows that I am prone to
      736
      distribute my compliments even-handedly between both sides of the Committee. I said that Labour Members had made engaging contributions, but I wondered whether the facts justified their remarks and whether they really had been considering what had happened to the tax system during the period between 1974 and 1979 and between 1979 and the present day.
      This clause was chosen for debate. Indeed, it would have been odd had we not chosen to debate on the Floor one of the principal income tax provisions. We should have been subject to criticism by the main mass of hon. Members who will not be privileged to sit upstairs in Committee Room 10 and maybe by the world outside——
      Mr. Terry Davis: There are not many sitting here.
      Mr. Rees: I am sure that the hon. Gentleman would prefer not to open up that point. I was not proposing to do so, but if he would like a record kept hour by hour. day by day, of those who attend our debates, I am sure that the Clerks would oblige.
      I was pointing out that it was right that during our debates on the Floor, when any hon. Member is free to contribute, at least one of the income tax provisions should have been singled out for debate.
      I hoped that we might find common ground. I hoped that the hon. Member for Thurrock, with her sharp and informed view, and the hon. Member for Great Grimsby would recognise that the Government have been concentrating considerable resources on raising the basic personal allowances. The advantages of that are plain.
      I am sure that the hon. Lady will be reassured to hear that my right hon. Friend the Chancellor of the Exchequer will be devoting £1·5 billion of resources to raising thresholds in 1985–86. In a full year, the cost will be £1·87 billion—a fairly considerable diversion of resources to what I thought were the common objectives of taking as many as possible of our fellow countrymen out of tax and concentrating particularly on the less well-off sectors.
      The Opposition say that child benefits have advantages, but they have disadvantages, too. First, they do nothing for the elderly. Very few elderly couples are likely to be able to claim child benefit. We had an interesting debate about concentrating more resources on the elderly, but the Opposition now advance a contrary case and say that we should have concentrated resources on child benefit and not on basic allowances. Child benefits do nothing for single people or for the childless.
      We could have an interesting debate on how to tackle these various problems, but I hope that the Committee will recognise the Government's sincerity and determination to concentrate resources where it is felt that the need is greatest.
      Mr. Austin Mitchell: On the better off.
      Mr. Rees: The hon. Gentleman makes that spurious point and I concede that the rates of tax that we inherited—98 per cent. on investment income and 83 per cent. on earned income—have been considerably alleviated. If one has a steeply progressive system, to the point of lunacy and near confiscation, and one dismantles the structure, considerable advantages will go to those who have been paying confiscatory rates.
      However, if one looks fairly and dispassionately at what has happened, one sees that considerable advantages

      737
      have been concentrated at the other end. I should like the Committee to concentrate on take-home real pay. The Opposition make the extraordinary proposition that that is not what counts. In my excursions round the country I have found that that is precisely what agitates most of our fellow countrymen.
      The hon. Member for Great Grimsby singled out a husband on half national earnings, with a wife and two children. The hon. Member looks alarmed, as well he might, but perhaps he will agree that he was carried away by his own rhetoric and ignored what has really happened. Under the Labour Government, the take-home income of that family increased by 4·3 per cent. Let us consider that same family in the period since the 1979 election until this year. Its net income has increased by 12 per cent. By any test that I can formulate, that family has been better off under a Conservative Government than it has been under the Government that the hon. Gentleman supported.
      Let us take the same family of a married couple with two children on average earnings and consider how its net income improved under the last Labour Government. It improved by 1 per cent. I do not scorn that; it shows an improvement. Let us consider how that family has done under this Government. Its net income has increased by 13 per cent. I know that the hon. Member for Great Grimsby is a fair person, and I now look forward to his informed comment.
      Mr. Austin Mitchell: The statistics that the Opposition were giving are the important ones. The Government who stated that they would reduce the burden of taxation have increased the burden of direct taxation on those with average earnings. That is the only point that we make. It is surely hypocritical to bring in other factors to try to compensate for the real increase in the burden of taxation that has taken place.
      Secondly, what the Chief Secretary is saying is directly opposite to what the Chancellor has said. The Chancellor said that earnings are going up too much and that it is our responsibility to pay ourselves less, to be less grasping about take-home pay and to price ourselves back into jobs. Is the Chief Secretary therefore telling the Chancellor of the Exchequer that he is wrong about this?
      Mr. Rees: The hon. Gentleman is tempting me to go into a wider field than I think is justified by the clause. I would be delighted to talk about the workings of the labour market, but 1 suspect that, were Ito do so, I would be in some difficulties in staying within the rules of order.
      The hon. Gentleman explains what has been happening. Of course real earnings have been going up. Let us take the more general point that he and his hon. Friend the Member for Thurrock made, that the burden of taxation has gone up. But, of course, they have not looked at the composition. They have not realised that two fifths of the increase is due to North sea oil, two fifths to indirect taxes and one fifth perhaps to a degree to national insurance contribution and to rates. We are endeavouring to cap rates, and I therefore hope we shall command the support of the hon. Gentleman in our endeavours. Neither the hon. Gentleman nor his hon. Friend the Member for Thurrock has recommended or even recognised what we have endeavoured to do at the lower end of the national insurance contributions for the employee, again something that I should have thought would command their wholehearted support.
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      Wherever one turns, therefore, one sees that the Government have been devoting considerable resources to ameliorating the direct tax burden of the less well off members of the community.
      The hon. Member for Thurrock went on to say that that ignores VAT. I would only cite, as I often do, but perhaps the Committee will forgive me if I recite it, what a distinguished Minister in this field used to say. I refer. of course, to Lord Barnett. He said—and I commend this again to the Committee—that VAT is nothing like as regressive as we thought. The hon. Member for Hodge Hill, who I know does his homework thoroughly, will recall it, so he would not inflict that point on us because he knows that it is not soundly based. He knows that the range of exemptions and the range of zero rating that were built into the system by Lord Barnett when he introduced VAT in 1972–73 were designed to ensure that there would not be undue burdens on the less well off members of society.
      Test it as one will, I assert with utter confidence that the Government's record in relation to the less well off members of the community in respect of direct taxation bears the closest possible scrutiny and, by any test, comes out much better, I am afraid to say, than that of the previous Labour Administration. It may be that in Committee or, indeed, outside Parliament, we shall be told in some detail what a Labour Administration would propose in this regard so that we can compare the kinds of measure that we have introduced and what a Labour Administration would introduce and, to be fair, how they would support them. I do not suggest that the Opposition do that tonight. We shall then be able to take the debate further. Today, however, I am simply concerned to commend clause 35 to the Committee and I am genuinely sorry that there is not more common ground in this area.
      12 midnight
      I conclude by summarising the reasons why I suggest that the clause should find favour with the whole Committee. First, it crowns what the Government have done since 1979. If the clause commends itself to the Committee today and to the House on Third Reading the basic allowances will have been increased by 20 per cent. in real terms in that period. Set against some difficult economic years, that is a remarkable achievement. Again, as I pointed out in relation to the age allowance, it means that we shall have the highest married man's allowance since the war and the highest single person's allowance since 1973–74. Moreover, I should point out to the hon. Member for Hodge Hill that the increases since 1978–79 will have taken 1¼ million of our fellow countrymen out of charge to tax.
      The hon. Member for Thurrock said that there had not been a peep out of the Government about the poverty trap and problems of that kind, but surely taking all those people out of tax altogether is a most significant contribution. The hon. Lady may have other suggestions as to how we can make further advances, but to underpin any further advances we shall expect massive support from the hon. Lady and her right hon. and hon. Friends for our efforts to restrain public expenditure because only then shall we be able to make the kind of advances in this area that will command the hon. Lady's support.
      We have concentrated massive resources on increasing the allowances because this takes people out of charge to tax, because it concentrates the greatest proportionate

      739
      benefit on the lowest sector of taxpayers and, finally, because it takes people out of the poverty trap, although perhaps not so fast as the hon. Member for Thurrock would like.
      For all those reasons, whatever other reservations and differences we may have tonight and possibly even on succeeding nights, I hope that we shall find common ground in supporting clause 35 and on that basis I commend it to the Committee.
      Dr. McDonald: I do not think that the Chief Secretary has managed to say anything that would encourage us to regard clause 35 as the solution to the problems that I have outlined today and which the Labour party has outlined on many occasions. In some ways, I hardly know where to begin with the right hon. and learned Gentleman's speech. I do not wish to be unkind, but to me it seemed more like a dialogue of the deaf than anything else.
      I will begin with the poverty trap. At best, the changes in the Budget will take between 5,000 and 10,000 families out of the poverty trap. Between 1979 and December 1984, the latest date for which figures are available, the number of families in the poverty trap increased fivefold to 250,000, so the effect of the Government's changes in tax allowances and their failure to keep their promises on child benefit has been to increase enormously the number of families in the poverty trap compared with the number caught in the trap under the Labour Government.
      The mere fact that only 5,000 to 10,000 families will be taken out of the poverty trap even with clause 35 shows clearly that raising the basic personal allowances is not the way to deal with the problem. If the Chancellor had kept the promises made by his predecessor to raise child benefit in line with increases in personal allowances, far fewer families might now be caught in the poverty trap. If the Chancellor of the Exchequer or the Secretary of State for Social Services announced an enormous increase in child benefit, the number of families caught in the poverty trap would begin to decline sharply. I could say a great deal more on that point in answer to the Chief Secretary's arguments.
      I shall instead turn to a further point made by the Chief Secretary. He said that our amendment and comments about clause 35 were contradictory, but they are not. He said that on the one hand we argue for an increase in the age allowance so that pensioners are treated in the same way as those in receipt of ordinary allowances, and on the other we want an increase in child benefit. Obviously, an increase in child benefit would benefit few pensioners, but it would help a small proportion of married couples—there are only 6 million families with dependent children out of 20 million married couples. Therefore, the figure is less than 50 per cent.
      We have focused so much attention on child benefit because poverty has affected families with children far more seriously, especially since 1978–79, than families without children or pensioners. That is not to say that there are no poor people to be found in those two groups. However, families with dependent children face the most severe problems of poverty.
      If the Government are to concentrate on dealing with poverty, child benefit should be an important part of their programme. During the run-up to the budget and since then we have said that the attack on poverty should take
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      three forms. The Government should increase pensions, increase child benefit, and put the long-term unemployed on the proper rate of supplementary benefit. The latter would cost a small sum—about the size of the sum that we shall debate tomorrow. There are more than 1 million long-term unemployed, that is, those who have been unemployed for more than 12 months. Our attack would, therefore, be three pronged. We refer to child benefit frequently because we know that families with dependent children face the most severe problems of poverty.
      Yet, Conservative Members worry about those who, according to the Daily Mail, may face a marginal tax rate of 98 per cent. My hon. Friend the Member for Great Grimsby said that whoever pays that amount of taxation is a high income earner. Such people are few and far between and, probably, pay such a high marginal rate of taxation because they manage their tax affairs incompetently. Whoever pays 98p has an extremely high income.
      When we talk about families caught in the poverty trap we are referring to families on extremely low incomes, for whom a further 50p or £1 a week is a matter of importance, and makes the difference between a tin of baked beans and a loaf of bread to feed the kids or nothing. We are not talking about extremely high wage earners who might suddenly find that they are losing 98p on the nth pound. That is why we are shocked and upset when we hear shouts from the Conservative Benches about such a possibility and we do not hear the same horror and disgust being expressed at the notion of families on such low incomes being faced with marginal tax rates of 75 per cent. or more. The number of families faced with those burdens has increased throughout the six years of the Government's period of office. Clause 35 will not do much to alter that position. Increasing child benefit substantially would certainly help to rescue many families from the poverty trap, and that is why we so constantly insist on the importance of that point.
      The Chief Secretary, understandably, made some play with my references to VAT and so on. The Chief Secretary—as the Financial Secretary had done the week before—compared the increases in real take-home pay under the present Goverment with those under the last Labour Government, and I did not contradict the statistics which were given in the Financial Secretary's speech last week. What I said was that simply to refer to real take-home pay is not the whole point. It is, of course, entirely to the point if one is talking about the increase in the basic tax allowances. But simply to talk about the increase in the real take-home pay for lower income families is misleading, because it leaves out the other costs which low income families face and which bear more heavily on them. We are, of course, referring to 15 per cent. VAT and not to 8 per cent. Inevitably, the almost doubling of VAT bore heavily on low income families.
      I described as a misleading statistical exercise the other charges and alterations in the social security system, such as housing benefit, which make a comparison of real take-home pay in an effort to describe the changes in the living standards of those with below-average earnings under the present Government and those with below-average earnings under the Labour Government. I can understand the Chief Secretary playing little games and referring, in the course of so doing, to Lord Barnett. Nevertheless, the Chief Secretary must face the fact that the bare comparison of the increases in real take-home pay under the two

      741
      Governments is entirely misleading if one wants to use it to describe the changes in living standards. That is why I referred to that point, although I understand that it does not, of course, fall within clause 35.
      None of us wants to oppose the increase in personal tax allowances, but the point that we have to make again and again is that it benefits the better off more than the low paid. It is part of the continuing distortions in the tax system which have occurred since 1979, and which have led to a lightening of the burden of taxation for the better off and little improvement in the burden of taxation on those who are worse off.
      We have discussed many statistical examples and I do not want to delay the House, but let us consider the married couple, where there is a part-time working spouse and no dependent children. In 1978–79 their combined tax and national insurance contributions were 15·9 per cent. of their earnings. In 1985–86, following the application of clause 36, they will be 16 per cent.
      With 10 times average earnings for the same couple, 65 per cent. of their income would have been taken in 1978–79, and 50·9 per cent. of their income would be taken in tax and national insurance contributions after 1985–86.
      That is the inequality and the discrepancy which concerns the Opposition, along with the poverty to which I have referred. We consider the Government's measures entirely insufficient to deal with the unfairness and with the poverty which exists in Britain.
      Question put and agreed to.
      Clause 35 ordered to stand part of the Bill.

    Clause 40

      RELIEF FOR CLASS 4 CONTRIBUTIONS
      Question proposed, That the clause stand part of the Bill.
      12.15 am
      Mr. Terry Davis: I shall be grateful if the Financial Secretary to the Treasury will take this opportunity to reply to the point which I put to him on Second Reading and which he overlooked when he replied to that debate.
      Mr. Moore: I shall address myself to the clause and endeavour to deal with the specific matter which the hon. Member for Birmingham, Hodge Hill (Mr. Davis) raised on Second Reading. As most Ministers deal with many issues when replying to a debate, I cannot remember the specific one that he raised. I have no doubt that the hon. Gentleman will seek to intervene again in the debate to remind me what it was. If he does so, I shall endeavour to reply. If I cannot do so adequately tonight, I shall seek later to convey the information to him.
      I realise that we must be considering the Finance Bill and that it must be May, because we are still at it, as it were, at 15 minutes past midnight. I have no doubt that we are all quite comfortable in Committee terms.
      Clause 40 seeks to provide tax relief for the self-employed on one half of their class 4 national insurance contributions. The relief will be given as a deduction in computing total income. This means that it will be allowed after the profits on which class 4 contributions are based are worked out, and so will not in turn affect the amount of the contribution. The Committee will be interested to
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      know that about 1·1 million self-employed will benefit from the relief. It will be given at the taxpayer's marginal rate so that, where he is liable at higher rates, relief will be given at his highest rate. For someone liable for the maximum class 4 contribution for 1985–86 of £607, and paying tax at 60 per cent., the benefit will be £182. I have details of particular examples which the hon. Member for Hodge Hill used on a previous occasion, but he may prefer me not to go into them in detail as they prove his points and mine as well. However, I should be only too happy to go into details if he wished me to do so.
      The change will provide a substantial boost to the self-employed and underlines the importance which the Government attach to this part of the economy. The majority of our smallest businesses are in the self-employed sector and it is from here that we see an increasing proportion of lasting jobs. The number of self-employed has increased by nearly one third since 1979.
      This is but one of many measures which the Government have taken to help small businesses. Apart from the changes in national insurance contributions in the Budget, the income tax thresholds have been increased and capital gains tax retirement relief is being extended. We shall probably be discussing later the extension of that relief. Most recently, the report entitled "Burdens on Businesses" identified the priority areas for reducing the burden of regulation. The report is being followed up urgently.
      Previously, the self-employed have not been entitled to set any part of their national insurance contributions against tax. In law these contributions count as a personal, not a business, expense. This contrasts with the position on class 1 contributions, where the employer's share of the contributions payable in respect of his employees has always been tax deductible as a business expense. The self-employed have long argued to both sides of the House of Commons that part of their contributions should be similarly allowable. The Government are persuaded of the rightness of their case and the clause remedies what many of us see as a long-held grievance. I trust that both sides of the Committee will support the clause.
      Mr. Terry Davis: I had hoped that we might make rapid progress and, therefore, I made only a brief opening contribution. It is clear that the Minister has missed the point that I made on Second Reading. I shall repeat it, because I am sure that he will try to reply to it this evening rather than engage in correspondence, if only to save us debating the clause again on Report.
      As the Minister has noted, the benefit of the arrangement is much more for someone on very high earnings. For someone who receives more than £45,000 a year, the benefit of tax relief on class 4 contributions amounts to £182 a year. However, the benefit for someone at the top end of the band earning £13,780 is only £91 a year. The Financial Secretary has used those figures.
      On Second Reading, I asked the Government why they had chosen to reduce the classable contributions paid by the self-employed as they have done. There are two ways in which they can be reduced. The Government have chosen to allow tax relief on half of the contributions. On Second Reading, I told the Financial Secretary that the same effect could be achieved for most self-employed people by reducing the amount of the contribution from 6·3 to 5·3 per cent. That would provide exactly the same amount of money to a self-employed person earning

      743
      between £4,150 and £13,780 a year and mean that someone who earned £45,000 a year would still benefit to the tune of only £91 a year from the reduction in class 4 contributions.
      We see no justification for giving tax relief on class 4 national insurance contributions, thus providing twice as much money for the person who earns £45,000 a year as for the person who earns £14,000 a year. that is not soley a matter of equity; cost is also involved. the Government's choice involves more paperwork for the self-employed person, because that person must claim tax relief in the tax return. It also involves more work for the Inland Revenue. The Financial Secretary is nodding, so I must be right.
      The Treasury has admitted in a press release that the Government's preferred method will involve a significant increase in the number of people employed by the Inland Revenue. I thought that the Government wanted to reduce the number of civil servants, but they have chosen a method that is inequitable and involves the employment of more people at tax offices—they will employ more people to be unfair.
      I have heard somewhere that what the Government describe as a significant increase in staff in the Inland Revenue will come to about 50. They are to be employed, not to collect extra revenue, but to distribute this largesse to the self-employed. That is strange behaviour for the Government, especially when we are told that they have had to shelve plans to mount an assault on the so-called black economy by employing people to counter tax evasion, which would involve the creation of 42 new posts. The Government say that they cannot afford 42 people to deal with some of the most serious aspects of tax evasion, and yet they can employ more than 50 people to ensure that people who receive more than £45,000 a year get an extra £182 as compared with £91 for those who earn just less than £14,000. I had hoped that the Financial Secretary would be able to justify the cost of that inequity. I hope that he will do so now.
      Mr. Moore: When he wound up the debate on Second Reading the hon. Member for Hodge Hill made many points, and I was not sure to which matter he was referring. As I did not want to delay us I did not want to go into detail, but I am delighted to do so now. So that I can be complete in my coverage, I shall try to cover all the points that he made.
      I refer, first, to the principle. I see the hon. Gentleman's point. However, with respect, in this instance there is a confusion in the arguments that he is advancing because we are seeking to give the self-employed a similar tax relief to that which the employer has in relation to a part of his contribution. Simply reducing the rate of class 4 instead of giving tax relief would not bring the tax treatment on to a fairer basis. A cut in the class 4 rate would be at odds with the contributory principle under which the self-employed must broadly pay their way for the benefits they receive.
      We are not in dispute about the facts. The hon. Gentleman is right about the extent to which those on a higher income will benefit more than those on a lower income, but there is a ceiling. The maximum benefit is about £182, against the £607 potential maximum total contribution, compared with a benefit of only £90 in the case that he illustrated.
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      On Second Reading the hon. Gentleman went into considerable detail about a person with profits of only £100 a week. I would not challenge any of the facts. He rightly suggested that that person would save only 19p per week. It is important to view that in relation to the saving against the amount of his class 4 contribution as well, because it is the combined package that someone in that category will see is he is considering his position of self-employment. As the hon. Gentleman knows, class 4 is calculated on an annual basis. On profits of £5,200—£100 a week—the figure comes out at £1·27 per week, and 19p represents a 15 per cent. reduction. If the contribution is small, the tax savings must also be small, by definition. The saving is much more significant if the reduction in class 2 of £1·25 is included. On the combined class 2—class 4, the person might now pay £6·02 per week. Under the proposals in the clause and the class 2 national insurance changes, he would pay £4·58 per week, a reduction of £1·44, or approximately 24 per cent. I accept that it is not a massive reduction in money terms, but it is significant in proportionate terms.
      On Second Reading the hon. Gentleman went into detail on the potential additional paperwork, and referred to cash flow implications. I shall refer to that too, for completeness. There will be next to no extra work for small business men. As the hon. Gentleman was right to say, it is the inspector who calculates the class 4 contributions by reference to the business profits. It is he who will calculate and allow the class 4 tax relief. There will not be a cash flow effect. Class 4 is charged on the income tax assessment on the profits of the business, and is payable in two bites, in January and July, along with the tax on those profits. In the vast majority of cases the class 4 relief will be given in that tax assessment. Thus, by the time the business man pays his tax and class 4, his tax bill will have been reduced to reflect the class 4 relief. The reduction in class 4 itself would not come through earlier.
      The hon. Gentleman was right to say that there would be additional staff. One should put it in proportion, but he is right, and it is an important point. The additional Inland Revenue manpower cost of administering the relief is estimated at 60 to 70 units.
      I apologise if I did not cover all the points initially. I trust that I have done so now.
      Mr. Terry Davis: I readily accept the Financial Secretary's most courteous correction of my point about cash flow. Since our debate on Second Reading I have done some more homework and realised that I exaggerated the argument.
      With regard to the benefit to a self-employed person paying class 4 contributions, I stand by what I said.
      The Financial Secretary referred to the point that I made on Second Reading about 19p a week, but that was a separate issue. I was commenting on the progressive nature of these contributions—a point covered by the Chief Secretary in that and other debates. He said that it was inevitable in any increase in allowances. We disagree with the Government about increases in tax allowance being a way to deal with the poverty trap, because it benefits people on the highest marginal rates of tax.
      12.30 am
      I shall concentrate on the inequity of giving £182 to the self-employed person who receives £45,000 a year, but only £91 to the person who receives £14,000 a year. To do that, the Inland Revenue proposes to employ between

      745
      60 and 70 extra staff. I am delighted to receive the Financial Secretary's assurance that there will not be any extra paperwork for the taxpayer, but it is bad news for the taxpayer that he will have to pay more for the extra staff to calculate this tax relief, when it could be done without any extra staff, if only the Financial Secretary would agree to reduce the rate of contribution from 6·3 to 5·3 per cent., and concede the Labour party's point about equity at the same time, because that would be the inevitable consequence of doing it in the way that we have suggested.
      The Financial Secretary was himself mistaken at one point, when he said that it is important to maintain the contribution at 6·4 per cent. for class 4 contributions because of the benefits to which the self-employed person is entitled. I was not present when class 4 contributions were introduced by the Labour Government, but I know that they brought no increased entitlement to the self-employed. They were a method of ensuring that the self-employed person paid a fair proportion of the cost of social security. His rights and entitlements were not extended. Those entitlements all depend on class 2 contributions, so the Financial Secretary needs to do a little more homework on this subject.
      The Opposition stand by what we said. The Government cannot afford to employ 30 people to counter the most serious aspects of tax evasion, but they can employ more than 60 people to ensure that people of very high incomes receive larger amounts than they would from the reduction in class 4 contributions.
      Question put and agreed to.
      Clause 40 ordered to stand part of the Bill.

    Clause 54

      ELECTION FOR CERTAIN MACHINERY OR PLANT TO BE TREATED AS SHORT-LIFE ASSETS
      Mr. Wainwright: I beg to move amendment No. 9, in page 51, line 19, leave out 'fourth' and insert 'fifth'.
      The Second Deputy Chairman: With this it will be convenient to take amendment No. 10, in page 51, line 23, leave out 'fourth' and insert 'fifth' and amendment No. 11, page 51, line 34, leave out `fourth' and insert 'fifth'.
      Mr. Wainwright: At this exhilarating hour of the morning, I offer the House a respite from the feeble ritual of the cracked Tory pot calling the leaky Labour kettle black, a dreary procedure that reminds me every year of the occasion when a far eastern ambassador judged the beauty finals at Skegness. After surveying the two girls, each of whose charms had great supporters in the town, he announced to a breathless crowd, "Both are worse." That describes what the Liberal party and the SDP have to contemplate every time that the Finance Bill is debated.
      This amendment relates to what the Treasury chooses to think are short-life assets. In addition to the three amendments, we shall also have to amend similarly lines 8 and 12 in page 52. This matter began last year in reaction to the rather sweeping and ill-considered reform of the capital allowances for business taxation introduced in the Finance Act 1984.
      In Committee on that Bill, my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) tabled an amendment to improve greatly and make much more realistic the capital allowances. That is what we seek to
      746
      do in these amendments. We returned to the matter on Report, by which stage we had the welcome support of the hon. Member for Croydon, South (Sir W. Clark), the well-known chairman of the Tory finance committee. He explained to me that he was unable to attend our debates today or tomorrow, but he did not explain why so few members of that committee would be attending the debates, although perhaps that was not altogether within his power.
      Last year, our amendments had the united support of the various branches of the accountancy profession, although some of the best-known business organisations were rather slow to appreciate the threat which the Chancellor had implemented in the Bill and came round to our point of view only in the late summer or early autumn, by which time it was too late for last year's Bill.
      The nub of our case, last year and this, is that the Government still have not taken on board the proposition which, in the view of the alliance, should be fundamental to all taxes on the profits of going concerns. It is that taxes on business profits should fall only on the true profits, no less and no more, which means profits computed on accepted accounting conventions, not on rackety ideas of depreciation used for special purposes by the Inland Revenue. The accountancy profession today does not accept the medieval reducing balance method of calculating depreciation. It disappeared with the Ark, and the statutes up to the early 1950s gave the taxpayer the option to use straight line depreciation, which people used in their own accounts. Therefore, we have gone backwards in recent years.
      Where the basic proposition that taxes on profits should fall only on the true profits is flouted, gross unfairness is inflicted between one business and another, some trades are crippled, and some are even extinguished. On this matter of taxing true profits, not spurious ones, the Government start, as previous Governments have started, with two great minuses. First, they fail to distinguish between incorporated and non-incorporated businesses. Last year, the story that such injustices over capital allowances were as dust in the balance compared with the promised reduction in corporation tax took no account of the fact that many traders—the very traders whom the Prime Minister so frequently purports to support, including new and small businesses—do not pay corporation tax. They are assessed under schedule D, and they do not receive a penny benefit from the proposed reduction in corporation tax.
      The second minus is the glaringly obvious one that the Government, like all their unfortunate predecessors, make no allowances for the ravages of inflation. However, almost a generation ago—years ago—our neighbours across the channel in France and Belgium started to allow their tax-paying businesses to index their assets for depreciation purposes. They caught on to that obvious intellectual approach to the problems of continuing inflation, while we still pretend for revenue purposes that inflation does not exist, let alone, as at present, increasing.
      It is important that the tax statutes should provide honest and realistic allowances. That was done at one time, when the Committee was rather wiser than it seems to be now. Until the late 1940s, there were separate schedules of depreciation allowance for different sorts of machinery. In those golden days, the Inland Revenue thoroughly and conscientiously met the various trade associations for different industries, discussed the type of

      747
      machinery that those industries were using and negotiated a rate of depreciation for it. The schedules were long, but they were meticulously drafted. They ensured that some type of justice impregnated the tax statutes. The Inland Revenue not only tailor-made the allowances but gave the company the option of choosing the straight-line method. All that was lost on the Chancellor when last year he hit upon this crude idea of imposing the 25 per cent. reducing balance on all traders.
      Before this year's Budget, the London Chamber of Commerce expressed its concern about this injustice, saying that the new allowances
      "have already hit machinery-intensive firms very hard …in the light of the pace of technological change, capital expenditure should be written off for tax purposes by straight-line allowances over four years.
      The CBI virtually echoed the warnings of the London Chamber of Commerce. Since the Budget, and in the light of the Finance Bill, the Association of Independent Businesses, one of the leading organisations of new and independent business, has offered its support. It has said:
      "This Association would support your amendment to alter clause 54 of the Finance Bill to read 'fifth anniversary'."
      The association went on to give its reasons.
      An interested body, the British Precast Concrete Federation Ltd., whose members employ 23,000 people, also supports this change. It estimates that, taking favourable and unfavourable factors into account, under the system of depreciation introduced last year,
      "the industry will be worse off by about £6·3 million a year."
      That is a large deprivation. It is a ravage caused by the tax system to an important part of the hard-hit building industry.
      A distinguished accountant who is the head of taxation for one of the clearing banks and a member of the "One hundred" group of chartered accountants, so-called because they are the finance directors or the taxation managers of the 100 largest companies in the kingdom, wrote to me saying:
      "I would …wish to generally support the thrust of your proposed revision which appears to give a more realistic interpretation of short-life assets used in industry and commerce …it must be right to tailor the relief given as closely as possible to circumstances in economic life."
      That is just what our amendments intend.
      In brief, the amendments have a different definition of short-life assets from that of the Government. We believe that short-life assets are much better described and treated as those assets that are expected to have a life of up to six years. The Government choose to take a more restricted view. For the most part, the clause as drafted would apply only to computers and allied equipment and to some highly experimental high technology equipment. That is all very well and splendid. Our amendment would include not only equipment that has a high risk of obsolescence but a good deal of equipment that is the victim of wear and tear through being knocked about and heavy work in the earth shifting sector. Many of the tools used in the building trade and tractors which are used in rough country are quickly bashed to pieces. In other words, the clause should include a much more earthy range of plant and equipment than the somewhat esoteric and sophisticated equipment which will probably obtain relief under the clause as drafted.
      I come to the human side of the matter. The people who we believe need the more realistic definition are those who run new and small businesses. They are dependent upon
      748
      ploughed-back profits to keep going, let alone to expand. With today's news that lower interest rates will be deferred owing to the money supply getting out of control, the message from small businesses, whether they are incorporated or unincorporated, is that unless they are allowed to keep a reasonable proportion of their profits we can say goodbye to much growth in that sector, because the Government's regime has made borrowing intolerably expensive for small and new businesses.
      There are several other serious defects in the clause, and it would not surprise us if the Government were to table some fairly substantial amendments at a later stage. I do not believe that they have considered the enormous administrative burden that their system of requiring irrevocable elections, item by item, will mean. When they have second thoughts, they may come a little closer to our view.
      12.45 am
      I warn the Committee, if "warn" is the right term, that we do not intend to let this matter go. Unless the Government see sense, we envisage returning to the subject in a big way on Report. In the meantime, we hope that the Government will realise the importance of giving a signal of hope to manufacturers by taking on board our amendments and adopting a much more realistic definition of a short life asset.
      Mr. Moore: I am not sure to what extent I should cover all the ground that the hon. Member for Colne Valley (Mr. Wainwright) covered. I am fascinated by his description of some aspects of our accountancy scheme as medieval reducing balances. I do not profess to be an accountant. I am not blessed with that expertise. During my 20 months in the Treasury I have heard that large chunks of British industry have benefited in the past from the pooling system which plainly requires the benefits of reducing balances. At some stage we can have a longer debate. I see the hon. Member for Birmingham, Hodge Hill (Mr. Davis) nodding. He is a former auditor and professional accountant.
      I understand the point that the hon. Member for Colne Valley is making. The second part of his speech was more an expression of his frustration at the nature of parts of last year's corporation tax changes, and the extent to which the clause and the amendments relating to it go from that base. I understand the points that he is making, but I do not accept them.
      I hoped that the hon. Gentleman could have started with a general welcome for the way in which we recognised the point which he and hon. Members on both sides of the House, although they did not like the system honourably made about what they saw as one of the flaws in it.
      Mr. Wainwright: The Financial Secretary may recall that I presented that bouquet on Second Reading. I am anxious not to bore the Committee with repetition.
      Mr. Moore: I assure the hon. Gentleman that flattery and compliments can never bore Treasury Ministers. I am only too happy to receive such plaudits again and again. The hon. Gentleman is correct. He mentioned the point on Second Reading.
      It might be helpful if I spoke a little wider than the amendments, as the hon. Gentleman legitimately did. The amendments relate to a refinement of the capital allowances code which has been welcomed by both sides

      749
      of the House—the hon. Gentleman confirmed that welcome—and industry since my right hon. Friend the Chancellor announced it on Budget day.
      Hon. Members will recall that one feature of the fundamental changes to the system of business taxation launched by my right hon. Friend in his 1984 Budget was the reduction in the rates of corporation tax. I can discuss unincorporated busninesses, but it would not be the moment as we have just had a debate which covered them. I hope that at some stage I shall be able to put on the record the other benefits that the Government believe they have added to unincorporated sector. He was right to say that the small company rate was reduced to 30 per cent.—obviously of benefit to the unincorporated—and the main rate is being reduced by a third over three years.
      Another benefit is the gradual phasing out of the 100 per cent. first year allowances on business machinery and plant. The effect will be to encourage business investment, which is expected to be commercially worth while and profitable and to discourage investment which is made only because of the tax incentive. When first year allowances are phased out on 31 March 1986, machinery and plant will generally attract an annual writing-down allowance of 25 per cent. calculated on a pooling basis. I have explained why that has some advantages. The cost of plant goes into the pool, the proceeds from sales are deducted from it and the annual allowance is given on the balance.
      The pooling of expenditure and disposal proceeds in this way means that balancing adjustments are not made when individual assets are sold or scrapped. Separate records and tax computations for each and every asset are not therefore needed. These are many of the advantages that exist under the WDA system. That saves work for the business, its accountants and for the Inland Revenue.
      A 25 per cent. writing-down allowance on a reducing balance basis enables 90 per cent. of the cost of a business asset to be written-off for tax over eight years. This is, on average, more than adequate for the machinery and plant of many businesses, but we recognise that for some assets—especially, but by no means exclusively, those commonly referred to as high tech—it does not adequately reflect the rapid depreciation which they experience whether through technical absolescence or exceptionally heavy use. The definition goes way beyond high tech into many other items—for example, for some items in the heavy contracting industry there is usually a two to three year life rather than the eight year average life.
      It might be useful if I write to the hon. Gentleman and circulate the letter to illustrate the categories of assets that we could identify, which might be helpful. The new scheme represented by clause 54 together with schedule 12 will enable the tax allowances for assets of this type to be brought into line with actual depreciation when they are sold or scrapped.
      The new scheme will inevitably complicate the system introduced last year. That is an unavoidable price to be paid. It has been designed with simplicity very much in mind in order to keep to a minimum the additional compliance burden on businesses.
      I ask hon. Members to understand that the kind of administrative detail required is required anyway within a business organisation. I do not think that it will much extend that work, but it will complicate matters. It is a relief to help businesses, and to that extent it must add complications to an otherwise simple pooling system.
      750
      Traders will be able to elect to have the capital allowances on business assets of their choosing—that is a critical phrase—calculated separately from the main business pool for a period of up to five years—that is, depooled. It is this period which the movers of the amendment seek to extend by a further year.
      If the asset is sold or scrapped in this time, a balancing adjustment will be made so that the tax allowances over the business lifetime of the asset are equal to its commercial depreciation. That means that if an asset is scrapped altogether, a balancing allowance will ensure that the cost is fully written-off for tax. On the other hand, if the asset is sold in the five-year period for more than its tax written-down value, a balancing charge will be made to recover the excess allowances given.
      If the asset is not sold or scrapped within the five year period, its tax written-down value at the end of that time will be transferred to the main machinery and plant pool. Thereafter, it will be dealt with for capital allowance purposes as if it had never been depooled.
      Traders will have two years—a substantial amount of time—from the end of the year in which they bought the asset to make a depooling election. That time limit means that about a half of the five-year depooled period will have passed before an irrevocable choice has to be made. Traders will therefore be able to elect—
      Mr. Michael Stern: While accepting that two years is a long period, does my hon. Friend agree that in many cases the logical time to make an election will be when a business, whether incorporated or unincorporated, is submitting its tax computations to the Inland Revenue, in conjunction with, but often frequently later than, its accounts? There may be cases when accounts have been submitted on time but the detailed computations cannot be sorted out within the two-year period. That has been found in applications for stock relief, which are also within the two-year period. In that case, will my hon. Friend consider whether a rigid time limit on such an election is necessary or whether, given that this is a relieving provision for tax purposes, it would be more appropriate to leave it at the discretion of the Inland Revenue?
      Mr. Moore: We considered the issue with care and took on board the point that my hon. Friend makes. One of the most important features was to try not to increase the Inland Revenue activity; we do not want, as the hon. Member for Hodge Hill earlier pointed out, to add to the already heavy burdens that the Inland Revenue bears. Although we looked with care at the timing, I will look at the point that my hon. Friend raises, but I cannot say that I am attracted to it at first blush.
      I was saying before my hon. Friend intervened that if the asset is not sold or scrapped within the five-year period, its tax written down value at the end of that time will be transferred to the main machinery and plant pool. Thereafter, it will be dealt with for capital purposes as if it had never been de-pooled. As I pointed out, traders have two years from the end of the year in which they bought the asset to make a de-pooling election.
      This time limit means that half of the five-year de-pooled period will have passed before an irrevocable choice has to be made. Traders will, therefore, be able to elect selectively knowing which of their assets have already been sold or scrapped and which are likely to be during the rest of the de-pooled period.

      751
      The new arrangement in clause 54 and schedule 12 has the twin advantages of enabling assets the working life of which, based on the knowledge and experience of the trader, is 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.
      The scheme as proposed in the Bill requires the transfer of unrelieved expenditure on an asset to the main business pool at the end of the fourth year following the year of acquisition, if the asset has not been sold in this time. These four years, together with the year of acquisition, make up the five-year period of separate treatment.
      The amendment seeks to extend this period to six years by requiring the transfer to the main pool to be made at the end of the fifth year, following the year of acquisition, if the asset has not been sold. It is a matter of judgment and analysis. We believe that that would be going too far for a scheme deliberately aimed at short-life assets; and, in any case, we do not believe that it is necessary.
      On any test, a five-year de-pooled period embraces the genuine short-life asset. It is not, therefore, immediately obvious that other and deserving categories of machinery and plant would be brought into the new scheme by a one-year extension, or, alternatively, are being kept out by the period proposed in the Bill.
      I am sure that the hon. Member for Colne Valley has done the calculation, but it is relevant to note that after six years, more than 80 per cent. of the cost, under the WDA system, of the plant dealt with in the main pool has been written off for tax. To accept the amendment would add to the compliance costs of business and to the administraive costs of the Revenue, both of which we want to minimise. The amendment would not, therefore, improve the proposals as drafted but could introduce some additional and unnecessary costs, and on that basis we could not commend it to the Committee.
      Mr. Wainwright: I regret the fact that the Financial Secretary did not give some indication of the different classes of asset which he claims will be helped substantially by the Bill as drafted. Until I have seen his list and had an opportunity of testing it with industrial organisations, I remain profoundly sceptical.
      There are limits to what an individual hon. Member can do under the present arrangements in Parliament, but I did some investigation into what short-life assets really consist of, and that satisfied me that the period in the Bill is narrow and will leave out a good deal of plant which is heavily knocked about in the course of construction and other operations and for which about six years is a reasonable life.
      1 am
      I am sorry to differ from the Financial Secretary on a matter of the simplest third form arithmetic, but it is misleading to suggest that, on the reducing balance system, the asset is virtually written off by the eighth year. Even at this hour of the morning, we must not get our arithmetic so wrong.
      I have been provided with an example from the files of a firm of distinguished city accountants. It involves a small, hard-working businessman who set up as a small haulage contractor. His capital equipment cost him
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      £12,800 and consisted of a tractor and two trailers—a fairly classic example of someone trying to get a living in the harsh economic climate that has been thrust upon us.
      Suppose that man elected for depooling, on the honest basis that he thought that the tractor would shake to bits in about five years, but he found in the fifth year that not only was the tractor miraculously just surviving, but he had no money to renew it and could not afford a bank loan for the purpose. The accountants have worked out that by the end of year five, out of the initial expenditure of £12,800, he would still have £3,037 not written off.
      It is wrong that small traders, struggling to establish themselves, should be taxed on profits that do not exist and are merely imaginary. The claim that the asset is virtually written off by the eighth year is not true.
      I shall spare the Committee a long dissertation on pooling, but the Financial Secretary is trying to have it three ways at once. He extols the virtues of pooling, but also extols the virtues of the clause, which is a depooling measure and will mean that all the individual items that he professes to regard as so burdensome to business and the Inland Revenue will all appear. A vast number of businesses will make the election, just to be on the safe side.
      What is the objection to the proper, diligent method of recording each asset? Any self-respecting company keeps a plant register. It does not have an amorphous mass called "machinery"; it has a register of assets, who made them, their cost and their estimated life on installation. As most businesses use the straight line method of depreciation, they keep detailed individual depreciation records. It is bad management to have a vast, unspecified collection of assets with no identification.
      If the Financial Secretary believes that the Inland Revenue will object to the record keeping, let him say so. It is inaccurate for him to claim that business does not want to keep the records. It keeps them, anyway. I am not convinced by the hon. Gentleman's reply, but at this hour it would not be wise to press the amendment to a Division. Therefore, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Question proposed, That the clause stand part of the Bill.
      Mr. Blair: As has become apparent from the speeches on the amendment moved by the hon. Member for Colne Valley (Mr. Wainwright), in many ways clause 54 is a belated attempt to recover from some of the disasters of the 1984 Budget changes in capital allowances. The distorting effects of those changes can be seen in the capital investment figures for 1984 and the projections for 1985. There was a considerable rise in the amount of capital investment in 1984, dropping away in 1985. This bulge seems largely to be a result of companies bringing forward their purchases before the capital allowances changes fully take effect.
      It is worth mentioning as a matter of background that the CBI survey, which is fairly heavily relied upon by the Government, says that many companies expect capital investment to fall quite sharply. Secondly, capital consumption as a whole in the United Kingdom has exceeded investment by some £1·6 billion since the end of 1981. Without going in detail into what occurred before 1984, that system of capital allowances seems to me to have had three major commercial advantages. First, it

      753
      allowed a first year allowance of 100 per cent. on the purchase of plant and machinery. That obviously gave a tremendous advantage to companies that were purchasing plant and machinery at the time because they could set off the entirety of the purchase price. Secondly, the pre-1984 system looked at the matter in terms of the purchase of assets, not the sale of assets. I am uncertain whether the clause, based as it is upon the sale of assets rather than the purchase of assets, will create as many problems as it seeks to solve.
      Thirdly, under the pre-1984 system, there was no distinction between short and long life assets and thus none of the problems of what we will call depooling were brought into operation by the pre-1984 system. All the assets being in the same pool meant that, for example, in year one, if a company decided not to take the full 100 per cent. of its first year allowance, in year two it could set off any outstanding balance against the proceeds of sale in the same pool of assets.
      The purpose of clause 54 is that the company could elect to treat an asset as a short life asset and, provided it is disposed of within the four years after acquisition, the balance of the loss could be set off against taxable profits.
      It is right to acknowledge the problem of short life assets, particularly in relation to difficulties arising from obsolete technology. Under the 1984 Budget, prior to the clause 54 change coming into effect, the 25 per cent. could be claimed only in the first year of acquisition, and then 25 per cent. of the writing down allowance was claimed in the recurring years. If, for example, an asset was brought and disposed of in year two and sold at a loss, although that loss arose in year two, 25 per cent. of the writing down allowance has recurred over the years and therefore the loss can be spread only over a period of years.
      I wish to put four specific points to the Minister in relation to the way in which the clause operates. It is quite difficult to judge what the precise effects of the clause will be. It is a matter of concern to me that the clause may have hidden problems that have been given inadequate consideration by the Government in introducing it in its present form.
      First, I appreciate that any sensible company will have a register of its plant and machinery. In simply identifying a piece of plant and machinery, therefore, the clause is not placing any greater burdens on it in an administrative way. However, the election that will be made under the clause is an election on an individual basis for each item of machinery. Those items of machinery will then have to be shown separately as those that are depooled and treated as short life assets and those that are not. Has any consideration been given to the administrative and accounting problems involved in keeping a proper check to ensure that the assets sold as short life assets are the same assets that were purchased?
      Secondly, will the Minister confirm that, if an asset treated as a short life asset is not disposed of within the five-year period, it simply goes back into the ordinary pool of assets? If an asset is not appreciating or certainly if it is depreciating by at least 25 per cent. per year, it would surely be in the interests of any sensible company to treat virtually any asset as a short life asset; because if the company decides not to sell it within the five-year period the asset will simply be treated in the usual way, but if it is sold the company will obtain the benefit of the short life asset provision.
      754
      Thirdly, the ability to set the balance against taxable profits arises on the sale of the machinery, not on the purchase as it did under the pre-1984 system. Has any consideration been given to the difficulties of companies in predicting when they are likely to sell? If allowances are given at the time of purchase, capital expenditure decisions are much easier to calculate. The time of sale is more difficult to judge, especially with new technology which may become obsolete at a time which is virtually unpredictable.
      Finally, although I am a lawyer by training, I am not used to reading Finance Bills in great detail, and I am uncertain as to the mechanism which triggers the ability to set off the balance against taxable profits within the four-year period after the year of acquisition. What brings into being the ability to claim the benefit of clause 54 on short life assets? Is it the disposal as such, or is it what the clause describes as the discontinuance of the notional trade?
      As I understand the clause, once the election is made the asset is treated as part of the notional trade separate from the actual trade and continues to be treated in that way until such time as
      "the notional trade is permanently discontinued"
      which is
      "when the short life asset begins to be used wholly or partly for purposes other than those of the actual trade",
      at which point discontinuance arises and the ability to claim under clause 54 ceases. If that is so, could not discontinuance of the notional trade be artificially brought about by the company starting to use the asset wholly or partly for purposes other than those of the actual trade, at which point discontinuance would arise and the triggering mechanism of clause 54 would come into operation? I put that point to the Minister because it is important for the practicality of the clause.
      We do not propose to vote against clause. However, detailed consideration of it may show that it creates as many problems as it solves.
      Mr. Moore: I commend the hon. Member for Sedgefield (Mr. Blair) for saying that he was not an accountant. As a lawyer he has a far better grasp of the details than I have as a non-lawyer, let alone as an accountant. The hon. Gentleman raised some legitimate detailed points, but he started with some general points. I shall start with the general issues because it is sometimes difficult to find time to discuss them. It will also ensure that my officials advise me accurately about the hon. Gentleman's detailed questions.
      1.15 am
      The hon. Gentleman was a little unfair to go over the old ground of last year. It would be hard for me to go into great detail about the basic rationale behind the Government's corporation tax changes. The Government considered the investment achievement in the United Kingdom. Most people recognise that in the 100 per cent. first year allowances we probably had the most generous allowances in the Western world. I assume that the presumption would have been that they served one of two purposes—either they produced a greater quantum of investment and or at least as good, if not better, quality of investment. Otherwise why should valuable tax reliefs be given to encourage investment? There were many debates in Committee and on the Floor of the House last year including one about the long-term nature of jobs and

      755
      investments. The basic assumption from the OECD data, as opposed to the Government data, was—I have no figures to confirm the points that I made last year, buy my membory is reasonably good on this—that the overall quantum record was no better, and probably a little worse than the OECD average. Our supposed generosity, therefore, of first year full 100 per cent. allowances did not seem advantageous in that sense.
      The second feature of the OECD figures suggested that, when one examined in detail the quality of investment, in all cases our rate of return on investment was below the unit return on capital employed. The country did not seem to benefit from the supposedly generous 100 per cent. first year allowances according to those two basic criteria. I shall explain why in a moment.
      Mr. Wainwright: The Minister said that the OECD figures suggested that the British quantum of investment was no better than the other OECD countries, despite our admittedly generous allowances. Could the explanation not be quite different? Could it not be that to overcome the enormous political handicap of the continuous stop-go rhythm in the United Kingdom since the end of the war, British industry had to be given super-incentives to invest, otherwise there would have been no investment?
      Mr. Moore: We could debate the matter for a long time. I accept that many other factors are involved. An analyst who looked at the nature of our 100 per cent. first year allowances would have been surprised to find that the two theoretical main advantages that might have flowed from them had not. The analysis that many people drew was that most people were consciously concerned with the post-tax, not the pre-tax, rate of return, that that had changed people's attitude prior to investment, and that to that extent we did not have the quality investment that might have flowed from a commercial analysis of investment potential as opposed to a fiscal or tax analysis. That was the basic pattern behind the very substantive changes. Having said that, we acknowledged, in the debates upstairs, that those were substantive changes in the whole of our system.
      I accept that change does not necessarily run in line with the basic concept of pooling, but to the extent to which we saw a specific problem relating to short life
      756
      assets—the fundamental problem that we think we are tackling in the clause—we have sought to retain the basic advantages in the major system, together with the additional advantages that we offer for de-pooling.
      The hon. Member for Sedgefield asked four specific questions, and I am happy to answer them specifically.
      First, the companies will keep records and the inspectors will monitor claims.
      The hon. Member asked about the blanket election proposals. He is right in the point that he made. The legislation will not prevent traders from making blanket elections, since the choice of which plant is to be treated as a short life asset is deliberately left to them. It is unlikely that they will do so, however, since they would then be at risk of balancing charges which would not arise were the plant to be kept in the main machinery and plant pool. A blanket approach would also require businesses—a point that the hon. Member also recognised—to keep separate records and make separate capital allowance computations for five years for each and every item of their business plant. It is much more likely that businesses will elect selectively so that the new arrangements will apply only to assets which they believe to have shorter than average working lives.
      In thinking about how we could best help the business community in this area, our purpose was to try to allow the business community to seek to make their selective decisions themselves. Of course, we shall have to watch the particular point that the hon. Member rightly raised.
      There is a clear two-year period for election which I think gives reasonable time, although my hon. Friend the Member for Bristol, North-West (Mr. Stern) has already intervened to question that point. I said that I would consider it with considerable care.
      Finally, the disposal will normally trigger the balancing adjustment. There are some protections within the clause. I will look again at the last point that the hon. Member for Sedgefield made, and if I feel that there is any need to deal with it I shall do so before Report.
      Question put and agreed to.
      Clause 54 ordered to stand part of the Bill.
      Schedule 12 agreed to.
      To report progress and ask leave to sit again.—[Mr. Moore.]
      Committee report progress; to sit again today.

PETITION

  Transport Bill
  1.24 am
  Mr. Tony Blair: It gives me great pleasure to present a petition to this House from Durham county council asking for the rejection of the Transport Bill and any legislation seeking to implement the proposals contained in the White Paper on buses. It gives me great pleasure to associate myself with this petition against a particularly misguided but not untypical piece of legislation from this Government.
  To lie upon the Table.

  South Manchester Health District
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lennox-Boyd.]
  1.24 am
  Mr. Tony Lloyd: The Minister has an advantage tonight because he is accustomed now to late-night Adjournment debates, operating as he does as the Government's rear gunner on such occasions.
  It is stated in the Order Paper that I propose to raise the subject of the
  "financial position of South Manchester Health District".
  There has been a change from what I wrote originally, but I make no complaint about that. I described the debate as one on "The crisis in the South Manchester Health District". Perhaps the Clerks have news that the Minister is about to make a major announcement. The Minister shakes his head, which causes me to revert to my original cynicism. The Government face all crises by refusing to recognise their existence.
  There is a real problem of finance in south Manchester. When my right hon. Friend the Member for Manchester. Wythenshawe (Mr. Morris), the hon. Member for Manchester, Withington (Mr. Silvester) and I went with a delegation to meet the Minister for Health, the Minister responded in writing some time afterwards and claimed that there was no evidence of suffering within the south Manchester area. My right hon. Friend has given me a letter from one of his constituents, who was an experienced senior nurse at the Wythenshawe hospital. She was admitted recently to one of that hospital's wards for treatment. She had heard that the Minister for Health had claimed that there was no undue hardship caused by staff shortages in the Wythenshawe chest wards. She wrote:
  "I beg to differ. I saw in one evening shift one sister and two auxilliaries with 29 acute patients in cubicles, not an open ward. Four-hourly treatment had to be done by SRN only."
  She referred to a number of examples of things going wrong with patient care. As I have said, she was an experienced nurse. The letter is revealing about the state of play within south Manchester and I am grateful to my right hon. Friend for allowing me access to this piece of information.
  Mr. Alfred Morris: I am grateful to my hon. Friend for quoting my constituent's letter, which I allowed him to see for the purposes of the debate. As my hon. Friend has said, Mrs. Staniforth is a former senior nurse at the Wythenshawe hospital. She was the nursing sister who was in charge of the first cardiac clinic at the hospital. She wrote:
  "I see in the not too distant future a tragedy happening, as staff are human beings and are asked to do the impossible."
  That is a voice of long experience to which the Minister must respond tonight.
  Mr. Lloyd: In quoting his constituent, my right hon. Friend is entirely accurate about the real position that is facing south Manchester. That position is recognised by the many consultants I have spoken to recently as well as by those involved in the nursing side and in other sectors throughout the health authority. The Minister for Health claimed that south Manchester is better funded than ever before. That might be so in terms of pound notes, and the chairman of the health authority accepts that more money is going into the authority, but the chairman has observed

  759
  that in real terms south Manchester has seen a 9 per cent. increase in the number of patients treated and, in effect, a static amount of money going into the services that existed two years ago. There has been growth money for cardiac surgery, for dialysis and for adult leukaemia, but it is not adequate to say that services are getting better when clearly they are not. What the chairman of the North Western regional health authority described as an overspend in south Manchester is more accurately described by the chairman of the South Manchester health authority as a shortfall that has been caused by underfunding.
  It was claimed that south Manchester was heading towards a £2·8 million overspend. The region has been required to achieve efficiency savings of well over £500,000. There was no overspend. Salary increments for the staff within south Manchester amount to nearly £1 million. We are saying, in effect, that there is an overspend when the staff in a particular area under a particular authority become more experienced and more skilled and when they remain in post for more years. The salary structure of the NHS requires the staff to be given larger salaries to reflect its experience, skill and service, and that causes overspending. Every authority with a stable work force will therefore overspend eventually. That is nonsense. Of the £2·8 million, less than £500,000 can accurately be described as overspend. To some extent, south Manchester is penalised for its own success. The shortfall has had dramatic results, as the health authority has had to make some extremely unpalatable decisions which some people have described as butchery. Ony the regional chairman has been kind enough to call it a serious cut.
  The authority has failed to maintain its property and it has decided, yet again, to cut capital spending and maintenance. That is an insane decision. For how many years can we fail to maintain hospitals? More serious is the decision to cut out 100 skilled and trained nurses, not as a result of rational planning of the nursing load but because they cannot be afforded under the mechanistic rubric put forward by the Government to the region. Another 200 jobs are to go in the service. The authority chairman has said:
  "The loss of 100 nursing posts cannot be sustained if the present number of wards remains open. We have, therefore, decided that a number of wards must be combined or closed in order to allow the nurse reduction to take place."
  The lunacy is that ward closures are being dictated not by health need but by the need to reduce the number of employees on financial grounds. There is no health logic but a crisis management approach which bears no relation to the needs of people in the area.
  I recently discussed this matter with consultants at the chest wards at Wythenshawe hospital. They are extremely angry because they are witnessing the dismantling of what has taken many years to build and because no logic underlies the decisions. They see no lack of demand for their services. Indeed, surrounding districts will not be able to cope with the increased demand once the 30 beds at Wythenshawe have gone.
  When the cuts were announced, a spokesman for the authority said that patients from outside the area would no longer be able to come to south Manchester for treatment. The stupidity of it all is that that is not true. My
  760
  constituency forms part of two other health authorities, and it is clear that doctors in Trafford or central Manchester will continue to refer to south Manchester because there is no mechanism in the NHS by which south Manchester can refuse. That being so, there will be increased waiting lists, and patients from south Manchester will be refused treatment in their own hospital. Indeed, they will be told to refer themselves to other authorities.
  With geriatric beds, we are told that the closure is temporary as the beds will eventually be called upon to serve south Trafford. In a recent Adjournment debate, the Minister was at pains to tell the hon. Member for Altrincham and Sale (Sir F. Montgomery) that no decision had been made about south Trafford hospital. One thing is certain—until a decision is made, it would be the height of foolishness to take beds out of operation.
  The authority says that the policy is to support patients in the community, for example through the community geriatric nursing team, yet anyone who talks to those who operate in the community—such as the district nurses and community psychiatric nurses—knows very well that although south Manchester has tried to increase those community services, it has not increased them anything like adequately enough to cope with the increase that will come from the closure of those geriatric beds at Withington, and the general demand for community services. The reality is that community services have been under more strain. That is not my view, but the view of virtually every district nurse——
  The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten) indicated dissent.
  Mr. Lloyd: The Minister shakes his head, but I invite him to come to south Manchester. He need not listen to me or Members of Parliament representing the area. He should go there instead. He need not listen to the regional chairman or the authority chairman. Let him talk to the consultants, the midwives, the nurses and the district nurses, and ask them whether they think that there has been an increase in community care and in the quality of services within the wards. They will tell him that there has been a deterioration and that they are working under greater pressure in that area, particularly in the community services on which we are now supposed to rely.
  We are also told about the temporary closure of 21 surgical beds, and that they may be needed in future to help out in south Trafford. We are told that there will be an increase in the waiting lists because of such decisions and that general practitioners will be sent details saying where patients can be referred, in areas where waiting times are shortest. What a nonsense that GPs will operate on that basis. That concept is totally unknown in the NHS.
  In his letter, the chairman of the regional health authority told me that there will be no great impact on patient care, which is a saving grace. Apart from those in the Government, the chairman is the only person who does not think that there will be a serious impact on patient care. He goes on to say:
  "Closures and changes of use are of course subject to public consultation."
  That is not true. For example, the proposed transfer of the paediatric plastic surgery unit from Withington hospital to the Duchess of York hospital is not open to consultation because it is a transfer and not a closure, yet it is opposed

  761
  by every plastic surgeon in that unit. It is no use offering consultation on the closure of the geriatric unit simply because that unit is now closed already, in effect locking the stable door once the horse has gone. The other wards will not close until the end of June, but once again it is meaningless to offer consultation there because there is not sufficient time for adequate consultation. Such a consultation would be bogus and have no impact.
  Morale is now very poor in south Manchester. It was poor already at the recent round of talks. Many people have expressed the real fear to me that the amount of cuts being asked for this time round will not be enough to save the £2·8 million. Around October, the authority might have to look for further cuts. The fact that those rumours and fears are abroad means that morale continues to shrink. We are seeing the dissipation of the one thing that makes our Health Service tower above that of many other countries—the great dedication of those working in it. It is desperately important that that is recognised, and that the Minister recognises that I am not simply making a political point; it would be made by all those people.
  Therefore, I appeal to the Minister, if he does not believe what I say, to come to south Manchester and talk to those most involved because we have gone beyond the point of the matter being a simple political shuttlecock. We have reached the point where I need to appeal, on behalf of my constituents, to the Minister and the Government to take seriously the impact of the present round of cuts upon that authority.
  1.39 am
  The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): I am glad that the hon. Member for Stretford (Mr. Lloyd) has raised this important question. He has been supported by the right hon. Member for Manchester, Wythenshawe (Mr. Morris) and the hon. Member for Burnley (Mr. Pike). He characterised my role at the end of the parliamentary day as that of a tail gunner, who was the most lonely member of an air crew during the second world war. Happily, my loneliness is assuaged by the presence of my hon. Friend the Member for Manchester, Withington (Mr. Silvester), who has come to listen to the debate.
  Health authority finance is a legitimate and important matter for public debate. The Government are responsible for the way in which the considerable and rising sums of money being spent in the NHS are distributed to different parts of the country. We have difficult decisions to make about the apportionment of funds between the different health authorities. We are ultimately responsible, and I do not dispute the fact that we should be discussing the important points that the hon. Gentleman has made. However, in any organisation as large as the NHS, spending so much money—a record £14·5 billion this year, which is more than 20 per cent. ahead of the rise in prices since 1979—regional and local determination must play some role. We cannot second guess from the Elephant and Castle every spending decision taken by a regional or district health authority.
  However, regional and district health authorities should live within their means and their cash limits. Cash limits are not some new, draconian and Conservative introduction into the running of the NHS. They were rightly part of the last Labour Administration's way of running things. Health authorities must manage within the
  762
  sums of money that they have, but there is always room for legitimate debate about whether the sums of money are large enough, given the health care needs of the district.
  Resources are not limitless, but demands are. The hon. Member for Stretford and I probably agree that the demands on the NHS are almost infinite and that they could grow way beyond the capacity of this or any other country to fund. One of the main reasons for this is the very success of modern medicine, together with the much wider range and scope of treatment that modern medicine can offer.
  In south Manchester, about which the hon. Gentleman painted an unnecessarily gloomy picture—although he pointed briefly to one or two sectors where he thought that things were going well—the district health authority is treating many patients who, only a few short years ago, had no hope. That is putting additional pressure on the system, to which the Government have responded by massive investment in the district. While I appreciate the hon. Gentleman's strength of feeling, and his care and concern for his constituents, there is no way in which south Manchester could be described as an area of deprivation and need compared with the rest of the north. It is one of the best funded districts in the whole of northern England.
  In the NHS, the process of redistribution of resources to where the patients are is continuing. There is broadly a bipartisan agreement across the Floor of the House on this. We might disagree about the rate and the pace of redistribution, and say that it is going too fast relative to the sums of money in the NHS—those are matters for debate—but most of us realise that it makes common sense to put the money where the patients are. Money should follow patients, beds should be where patients are, and we need to redistribute money between the relatively well off and the poor areas.
  That process was started by the Labour Government, and we are aware that the historically deprived—I do not blame any previous Administration for this—northwestern region needs our special attention. It is with that in mind that the total additional revenue allocation for the region this year alone is £43 million, which is a 5·5 per cent. increase in the cash available for 1984–85. That is a formidable real increase in revenue.
  The north-west's capital allocation is, for the second year running, the second highest in England. The capital moneys are intended to make up the historic deprivation of the north-west, in terms of capital stock. The pressing need to rebuild older hospitals and units has been recognised by this increased capital allocation. The region is moving quickly, under the Government's policies, towards its revenue target, and this financial year it will be only 1·8 per cent. below that target. That compares with a figure of about 11 per cent. below target just six years ago.
  Whatever else has happened in the region, vis-à-vis the rest of the country it has been brought pretty close to its revenue target quickly during the past six years.
  Mr. Alfred Morris: Will the Minister give way?
  Mr. Patten: I do not have much time, and I must reply to the hon. Member for Stretford. I intend no discourtesy to the right hon. Gentleman.
  Mr. Morris: My constituency is involved.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. If the Minister does not give way, the right hon. Gentleman knows that he cannot intervene.
  Mr. Patten: The right hon. Gentleman knows that I intend no discourtesy. It would be a greater discourtesy if I were unable, because of the lack of time available to me, to reply in full to the points of the hon. Member for Stretford. I shall certainly write to the right hon. Member for Wythenshawe in reply to any points that he wishes to raise.
  How has south Manchester benefited from all this? First, it has benefited through the district's development of teaching, which has continued apace. Secondly, during the past two years, nearly £5 million worth of capital spending has occurred in the district, which is a substantial sum. Thirdly, there is a new day unit for the elderly mentally infirm. Fourthly, £1·25 million has been spent on cardiac services and on kidney dialysis and associated renal services, which the hon. Member for Stretford was good enough to mention as improvements in his district. Fifthly, it is an incontrovertible fact that the district is one of the best funded in the region; it is the highest funded per head of population of the north-west's three teaching districts. That is reflected in the fact that, in relation to where it should be according to the calculations of the regional allocation working party, the district is expected to be about 12 per cent. above target this year. That is as far above target as, for example, a deprived district such as Bolton is below target.
  I recently visited Bolton, at the invitation of two of my hon. Friends and one Labour Member, to see the problems there. I was with them for some time that day, and I saw the problems of a district such as Bolton, which is so much below target. I shall certainly consider the hon. Gentleman's invitation to pay a similar visit to his constituency.
  One of the best yardsticks by which levels of service can be judged is the access to hospital inpatient facilities for bread-and-butter health services. In south Manchester at present, it is considerably easier to obtain hospital treatment quickly than it is in other districts, such as Bolton.
  What are south Manchester's problems? We have had a mixture of fact and anecdote from the hon. Member for Stretford. I do not think that anyone can seriously argue that the district is under-funded. I do not agree with the hon. Gentleman. South Manchester's financial problems stem from overspending in previous years and from accumulated overspending. The hon. Member for Stretford referred to my shaking my head in disagreement; I see that he is now shaking his head in disagreement with me. We shall have to disagree. The district is facing accumulated overspending of £2·8 million. It would be surprising if a component of that overspending were not attributable to the cost of staff. The cost of staff in the NHS accounts for more than 70 per cent. of total revenue expenditure. Of course, staff costs will always be part of that overspending.
  The district is facing this accumulated deficit. We cannot simply wipe the slate clean. How would we explain that to patients in Wigan, Bolton and other deprived districts in the north-west? I have to speak for them as well. All Governments, including Labour, have required
  764
  health authorities to live within their budgets. This Government's intention is to continue to ask them to do so.
  The health authority, under its excellent chairman, Sir John Page, is working the district trying to find ways of reducing the accumulated overspend while continuing to provide the current excellent service. Until that is achieved, it will put in jeopardy all the progress that south Manchester has made, undermining the foundations of the district's development in the future as a centre of lifesaving surgery.
  South Manchester is certainly a responsible health authority. It has set a budget for 1985–86 which it thinks can be contained within its cash limits. It is considering making a number of service changes to make all that possible. The regional health authority has agreed to some of those changes and has asked for others to be re-examined. All this consultation is a critical part of the process. The hon. Member for Stretford is not being fair to the way in which the consultation process is carried out. If he really feels that consultation is not being carried out according to the rules, it is important that he should write to me or to my right hon. and learned Friend the Minister for Health to point out exactly where and how the procedures are not being followed.
  Mr. Tony Lloyd: Once a ward is closed—as with the geriatric ward at Withington hospital—what meaningful purpose can consultation have, even if it is carried out with the best will in the world? We all know that it will not reopen the ward.
  Mr. Patten: It is not always the case that wards closed under the emergency procedures are thereafter closed permanently. There are a number of examples where wards have been closed temporarily by health authorities pending the consultation process. After consultation, because of the view of the health authority or of the Minister to whom the matter has gone on appeal, the decision has gone the other way and the wards have been reopened. The consultation process is extremely important, and I hope that people will take part in it wholeheartedly, where there have been short-term or temporary closures.
  A number of changes in the district will be beneficial to patient care. Some of the suggested changes will mean, if approved by the region and followed by the district health authority, that people will receive treatment much closer to home. If people receive closer to their homes the care that they need, this is a change for the better. Neither my right hon. and learned Friend the Minister for Health nor myself approves the wholesale shipping of patients over substantial distances when they can be treated closer to their homes.
  There are a number of beneficial effects in the proposals. The district treats a high proportion of elderly patients in hospital—much higher than the national average. I do not think that that accords necessarily with good, modern practice. It is sensible that the district wants to shift resources to treat those who do not genuinely need to be in hospital. I do not think that community care is a cheap option or that the transfer from hospital to community care is an easy transfer to make. We are living in a period of change, and community services are adopting and adapting practices. Of course, there will be problems in south Manchester, as in other areas of the country—
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned accordingly at six minutes to Two 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 Norwich.
The Marquess of Aberdeen and Temair—Sat first in Parliament after the death of his brother.

Tobacco Promotion
Baroness Ewart-Biggs: 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 view of the British Medical Association's proposal for a ban on all forms of tobacco promotion.
The Earl of Caithness: My Lords, this Government, like their predecessors, have chosen to regulate tobacco promotion mainly by way of voluntary agreements. When the time comes to review the present agreements we shall take account of all the relevant circumstances, including the views of the medical profession.
Baroness Ewart-Biggs: But, my Lords, will the Minister not agree that more is now necessary? Does he recollect that in the first place the tobacco companies failed in their voluntary agreement not to advertise on television before 9 p.m.—an agreement which was designed to protect children? Is he aware that since the 1965 Act, banning tobacco advertising on television, they have tried to circumvent this law by sponsoring sports events, which is designed to make children associate sports such as car racing and snooker and adventure holidays with smoking? Thus would the noble Earl not agree that in order adequately to protect our children from a product which kills one in four of its consumers, we should perhaps now follow the example of Norway and Finland and ban the promotion of cigarettes?
The Earl of Caithness: My Lords, the noble Baroness said that the 1965 Act banned tobacco advertising. Perhaps I may just correct her: it was cigarette advertising on television that was banned. No, my Lords; I think that the voluntary agreements which have been in effect since 1971 have been beneficial. Cigarette sales, which stood at 137 billion in 1973, are reported as being 98 billion in 1984, while the proportion of adult smokers in the population has fallen from 47 per cent. in 1972 to 35 per cent. in 1982. That is not a bad record.
Lord Orr-Ewing: My Lords, is it not desirable, when possible, to use voluntary agreements rather than legislation? Are they not more flexible, so that one can adjust to any arrangements that are necessary in the interests of public health? Is it not true that the tobacco industry is spending something like £8 million in sponsoring sport and recreation? Is it not true that
524
both that and the £4 million being ploughed into the arts is very valuable for the well being of many people who like their recreation and their art?
The Earl of Caithness: My Lords, I totally agree with my noble friend Lord Orr-Ewing that voluntary agreement is the best. I think that there is benefit from sponsorship of the arts, provided that it does not encourage particularly young people to smoke.
Lord Mackie of Benshie: My Lords, will the Minister care to put the figure of £8 million spent on sponsorship of sport against the cost to our hospital service of treating patients?
The Earl of Caithness: My Lords, I am afraid that I cannot confirm the figure of £8 million because that matter involves a private agreement with the Department of the Environment.
Lord Kinnaird: My Lords, is the noble Earl aware that the content of this Question reminds me of the plight of little Tommy, whose interfering mother said, "Find out what little Tommy is doing now and, whatever it is, tell him not to do it"?
Lord Ennals: My Lords, has not the noble Lord put a very relevant question? Is not one of the great problems that more and more youngsters are taking up what we know to be a seriously addictive habit? I am talking about cigarette smoking. Can the noble Earl say when the present voluntary agreement is to end? Will he also seek to draw a distinction between the very severe dangers of cigarette smoking and the very much less severe dangers of tobacco smoking and cigar smoking?
The Earl of Caithness: Yes, my Lords, I agree with the noble Lord, Lord Ennals, that there is a very great difference between cigarette smoking and cigar smoking. Cigarette smoking is reported to be much worse, though I would not know because I do neither. I think in a free society such as ours we must be cautious about banning an activity by legislation unless there is firm evidence to support such action—and there is no such evidence at the moment.
Lord Shinwell: My Lords, may I ask the noble Earl the Minister whether he is aware of any Member of your Lordships' House having been sponsored by any of the tobacco firms? Is he aware of anything of that kind going on? Is he aware that I have been smoking for ever so long as I can remember, since I was aged 13, and that I still indulge in an occasional whiff when it suits me? I do not ask permission from anybody, whoever they happen to be and however prominent they think they are. I have never been sponsored by a tobacco firm, but perhaps they would like to start it now. My stock of tobacco has run short. I do not mind. After all, there is nothing really seriously wrong with smoking; there is no corruption about it. If there was any corruption, I should have nothing to do with it; I assure even my noble friend Lady Ewart-Biggs that I would have nothing to do with it. I cannot understand why she raises this Question. I should have thought that she was the kind of person who occasionally indulges in a cigar.
The Earl of Caithness: My Lords, I am not aware of any noble Lord being sponsored by a tobacco company, but I am sure that the companies will now be carefully looking at the noble Lord for the next 100 years.
Viscount St. Davids: My Lords, will the noble Earl comment on the fact that one of the most serious ways in which tobacco smoking is encouraged happens when sch000lmasters and youth leaders do it? Is it not most important that we should discourage these people from smoking, although, I must admit, they are not paid for doing so by anyone? They do not seem to be very highly paid at all.
The Earl of Caithness: My Lords, it is, I think, the policy of this Government as of all Governments in the recent past that we should get across the message of good health to everyone.
Viscount Simon: My Lords, will the noble Earl answer the question put by the noble Lord, Lord Ennals, as to when the present agreement runs out? The noble Earl said that it would be renewed when it ran out.
The Earl of Caithness: Yes, my Lords. I am sorry if I missed that point. One agreement on sports sponsorship runs out on 31st December this year. One on tobacco products advertising and promotion and health warnings expires on 31st March next year.
Lord Rea: My Lords, is the noble Earl aware that before the last war, when we did not know the harmful effect of smoking cigarettes, 20 cigarettes a day took 7 per cent. of average earnings, whereas today, when we are fully aware of the harm that cigarette smoking does, it takes around 6 per cent. of average earnings? Mindful of this, would he not agree that a useful method of reducing cigarette smoking would be to increase the excise duty on cigarettes by a percentage above the inflation rate a year? This would have the effect not only of discouraging smoking but also of keeping the very useful Exchequer revenue from it at the same level.
The Earl of Caithness: My Lords, I am sure that the noble Lord, Lord Rea, noticed that my right honourable friend the Chancellor of the Exchequer increased the tax by about twice the rate of inflation in the last Budget.
Lord Kennet: My Lords, is it the Government's intention to reduce tobacco-induced mortality and disease in this country? If so, are the Government satisfied that they are doing everything within their power to achieve that intention?
The Earl of Caithness: My Lords, we believe that we are doing everything that is justified at the moment on a voluntary basis, which is the most effective way of proceeding.
Baroness Ewart-Biggs: My Lords, is the Minister not concerned—I am sure he is—that Great Britain has one of the highest rates in the world of lung cancer among women? Does this not make him feel that every
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kind of measure should be taken to dissuade small children, including small girls, from starting to smoke?
The Earl of Caithness: My Lords I agree that we should make every effort. We have had one of the largest reductions in smoking in the last 10 years. There is, I believe, more good news to come on that front.

Clam Farming: Exe Estuary
2.46 p.m.
Baroness Nicol: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will confirm that the manila clam (venerupis semidecussata) has been introduced into the Exe estuary for fish farming.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, I understand that private shellfish cultivators have laid relatively small quantities of manila clams in trial plots in the Exe estuary. I am informed that these shellfish are held in captivity under mesh or in containers, on private layings.
Baroness Nicol: My Lords, I am grateful to the Minister for that reply. Can he confirm that the cages in which the clams are held will prevent the larvae escaping? Is he aware that if that happened it would be in contravention of Section 14 of the Wildlife and Countryside Act? Can he assure the House that there is no chance that these clams can establish themselves in the wild?
Lord Belstead: My Lords, I cannot quite give the assurance for which the noble Baroness asks. Water can come into the containers, they can feed on plankton and the larvae can go out. I am advised, however, that it would require exceptionally high water temperatures for manila clams to breed successfully in our waters. For that reason, we do not believe that there is a breach of Section 14 of the Wildlife and Countryside Act.
The Earl of Radnor: My Lords, is my noble friend aware that there was an accidental release of clams in the Solent from the "Queen Mary" coming back from America; that they have multiplied greatly and that they have been of tremendous commercial value to the area? Is he further aware that these unpronounceable clams now in the Exe estuary stand the chance of being killed by tin based anti-fouling paint from the keels of yachts?
Lord Belstead: My Lords, let us keep off yachts for today. All that I can say is that if the clams off the "Queen Mary" bred, they were very remarkable. It really needs a succession of highly unlikely events, one following another. I am advised that it would take exceptionally high water temperatures for manila clams to breed successfully. If they did breed, development would be exceptionally slow. They

527
would be subject more than usually to predators. For the clams then to become established as a colony, the process would have to be followed through all over again. This leads me to say on behalf of the Government that we believe that there is no contravention of the Wildlife and Countryside Act.
Lord Melchett: My Lords, the noble Lord will be aware that it is not unusual in the natural world for a succession of unlikely events to take place. Did the Government ask advice from their statutory advisers, the Nature Conservancy Council, about the introduction of the clams? Secondly, is he able to assure the House that information about alien species of this sort, which may introduce serious damage to commercial and other fisheries and other interests in the countryside, is made readily available to those who are interested?
Lord Belstead: My Lords, we have not asked the NCC for its advice. We have told it what our view is. The council has not informed us that it disagrees with our view.
Lord Melchett: My Lords, will the noble Lord be able to answer the second part of my question?
Lord Belstead: My Lords, I have to admit to the noble Lord that I did not really listen to the second question because I am only listening to one question at a time.
Lord Melchett: My Lords, in that case, may I ask the noble Lord a second question? I was trying to save time. Is it possible for the noble Lord to assure the House that information about the release of alien species of this sort, which may be damaging to sport fishing and other interests, is made readily available to those with interests in the subject?
Lord Belstead: My Lords, with the greatest of respect to the noble Lord, this exchange of information about manila clams has been very useful. If the noble Lord has other species of fish in mind and cares to put down a Question, I shall endeavour to answer it.
Lord Beswick: My Lords, may I ask the Leader of the House whether this a new rule? If a question has two parts, is it the case that the Minister has been instructed not to answer the second part?
The Lord President of the Council (Viscount Whitelaw): My Lords, it is not a new rule. However, the noble Lord, who is very assiduous in these matters, will have noticed that the Procedure Committee said that, on the whole, one question should be answered and Ministers should not be obliged to answer more. Indeed, Ministers were criticised by the Procedure Committee previously for answering too many questions. To that extent it is new. However, of course it is a matter for the discretion of Ministers. If the question is both new and goes outside the original Question, then I think that it is reasonable not to answer it.

USSR-United Kingdom Trade
2.50 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will consider sending a trade, commercial or industrial mission to the USSR in response to that country's expressed desire to improve trade with the United Kingdom.
Lord Brabazon of Tara: My Lords, Her Majesty's Government have already considered this matter. A trade mission organised by the Scottish Council, Development and Industry intends to visit the Soviet Union from 15th to 19th September this year. My right honourable friend the Secretary of State for Scotland plans to lead the mission together with the President of the Council, the noble Lord, Lord Clydesmuir. Approximately 10 company representatives are being invited to participate in the mission.
Lord Molloy: My Lords, is the noble Lord aware that he has given in part a very happy reply to my Question? However, bearing in mind that this is a momentous week which acknowledges the mighty achievements of the Americans, the British and the Russian people, would it not be a rather remarkable and perhaps superb idea for our present Government, despite the fact that they are a bit short on imagination, to initiate a new mission to go to Russia to acknowledge the Russian people, similar to the one which we sent to China? May not such a course be the beginning of a new approach and an entirely new aspect of international life between the three great nations that did so much to save mankind 40 years ago?
Lord Brabazon of Tara: My Lords, we are actively trying to promote trade with Russia. Indeed, the visit by Mr. Gorbachev in December indicated that he would like to see trade with Russia increased by 40 to 50 per cent. The possibility of a visit to the Soviet Union during 1985 by my right honourable friend the Secretary of State for Trade and Industry or my right honourable friend the Minister for Trade is under consideration. However, the timing of such a visit will need careful consideration in the light of the visit by my right honourable friend the Secretary of State for Scotland and other ministerial visits in both directions this year.
Lord Bruce of Donington: My Lords, is the noble Lord aware that this country was in trade deficit with the Soviet Union in 1984 to the tune of £119 million and that the average per annum over the last five years is a minus of £137 million per annum? Does he not think that in all the circumstances it might be wise if a delegation from England and perhaps Wales went over at the same time as a delegation from Scotland in order that the trade between our two countries may be considerably increased on the lines proposed by President Gorbachev?
Lord Brabazon of Tara: My Lords, I am aware of the balance of trade but, as I have said, we cannot send everybody at once. However, there are other things happening. My right honourable friend the Minister for Trade has invited the Soviet Minister for the Coal Industry, Mr. Bratchenko, to visit this country, and he has indicated that he wishes to take up this invitation in June. An invitation has also been extended to the Minister for the Chemical Industry, Mr. Listov, and we hope that he will take up that invitation very soon. Of course, there is also the thirteenth session of the British-Soviet Joint Mission which will be held in London in the first week of June.
Lord Jenkins of Putney: My Lords, will the noble Lord the Minister recognise that cultural exchanges and trade exchanges are closely linked, and will he do his utmost to encourage both of them?
Lord Brabazon of Tara: My Lords, the cultural aspect is rather outside the Question and is something about which I know very little. However, as I have said, I hope that we shall do all we can on the trade side.
Lord Bottomley: My Lords, would it not be preferable for the Secretary of State for Trade and Industry himself to lead a trade delegation to the Soviet Union?
Lord Brabazon of Tara: My Lords, I think that I said that the possibility of a visit during this year is under consideration. However, there are a number of other missions both ways taking place and we must take them into consideration.
Lord Molloy: My Lords, is the noble Lord aware that the Russian people and their Government have already stated that they would welcome such a move on our part? Therefore, bearing in mind that the noble Lord has said that the Government have this matter on their agenda, would it not be possible for perhaps the noble Viscount the Leader of the House to see to it that this matter is put a little higher on the Cabinet's agenda so that it becomes a reality in this particular year?
Lord Brabazon of Tara: My Lords, from the answers which I have given so far, I had hoped to show that it was pretty high on our agenda. We must wish all the British companies who take part in these missions—both ways—the utmost success in securing business.

Deer: Slaughter of Farmed Animals
2.56 p.m.
Viscount Massereene and Ferrard: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make it obligatory for farmed deer to be killed on the farm from which they come and not slaughtered in public abattoirs.
Lord Belstead: My Lords, the Government are looking into the question of the slaughter of deer as part of their consideration of the Farm Animal Welfare Council's report on the welfare of farmed deer. The council recommended that, subject to specified safeguards, the slaughter of farmed deer should be permitted in slaughterhouses licensed for that purpose. The report also contains a note by four members of the council who disagreed with this recommendation. The report is currently the subject of consultation with interested parties. When this is completed the Government will decide what action should be taken in response to the recommendations.
Viscount Massereene and Ferrard: My Lords, I thank my noble friend the Minister for that Answer. However, is he aware that the red deer is our largest indigenous mammal? It is a very highly strung animal, with acute senses. It can scent a man on the hills from a mile away. We cannot compare red deer with sheep or cattle which have been domesticated in this country certainly since the days of the Romans. Would my noble friend agree that to subject these highly sensitive animals to a journey in a lorry amid the roar of traffic and to the smells and bustle of the slaughterhouse is extremely cruel? Would he agree that the kindest thing to do would be to shoot them in the neck with a rifle on the farm, and that preferably the rifle should be fitted with a silencer? That would be by far the kindest method.
Lord Belstead: My Lords, I give my noble friend an assurance that the Government will take very serious note of what my noble friend has said in his supplementary question, as, indeed, we shall take serious note of what is said in answer to the very extensive consultations which are taking place at present. I also give my noble friend an assurance that in forming their own view the Government will carefully consider how the welfare of deer can be satisfactorily protected.
Lord Beswick: My Lords, may I ask the noble Lord the Leader of the House whether the rule about more than one part to a question applies in this case?
Viscount Whitelaw: My Lords, I thought that my noble friend's answer to the question was immaculate. So far as I could see, he answered one question out of four.

Business
2.58 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the Bonn Economic Summit. That will be followed by my noble friend Lord Gray of Contin who, again with the leave of the House, will repeat a Statement on the gas industry.

Housing Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to introduce a Bill to consolidate the Housing Acts except those provisions consolidated in the Housing Associations Act 1985 and the Landlord and Tenant Act 1985 and certain related provisions, with amendments, to give effect to recommendations of the Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)
On Question, Bill read a first time, and to be printed.

Housing Associations Bill [H.L.]
3 p.m.
The Lord Chancellor: My Lords, I beg to introduce a Bill to consolidate certain provisions of the Housing Acts relating to housing associations, with amendments, to give effect to the recommendations of the Law Commission and of the Scottish Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor. )
On Question, Bill read a first time, and to be printed.

Landlord and Tenant Bill [H.L.]
The Lord Chancellor: My Lords, I beg to introduce a Bill to consolidate certain provisions of the law of landlord and tenant formerly found in the Housing Acts together with the Landlord and Tenant Act 1962, with amendments, to give effect to recommendations of the Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)
On Question, Bill read a first time, and to be printed.

Housing (Consequential Provisions) Bill [H.L.]
The Lord Chancellor: My Lords, I beg to introduce a Bill to make provision for repeals, consequential amendments, transitional matters and savings in connection with the consolidation of the enactments in the Housing Act 1985, the Housing Associations Act 1985, and the Landlord and Tenant Act 1985. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)
On Question, Bill read a first time, and to be printed.

Road Traffic (Production of Documents) Bill
Brought from the Commons; read a first time, and to be printed.

Local Government Bill
3.2 p.m.
The Minister of State, Department of the Environment (Lord Elton): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Elton.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 6 [National Parks and countryside functions]:
Lord Chelwood Lord Chelwood moved Amendment No. 55:
[Printed 2/5/85; col. 456.]
The noble Lord said: I beg to move Amendment No. 55. We can no doubt, by agreement, discuss this together with Amendment No. 58, as we did on Thursday night.
[Printed 2/5/85; col. 456.]
The adjournment at eleven o'clock on Thursday night cut short our discussion of these two amendments, which went with Amendment No. 54, to which we may have to return on Report. All three amendments were strongly supported on both sides of the Committee, but it was late, the Committee was thin, so may I briefly summarise my arguments.
The purpose of these amendments is to establish schemes in Greater London and the metropolitan counties so that ecological advice will continue to be available as an essential part of the planning processes. The suggested mechanism is through a lead authority, nominated with its consent, in precisely the same way as in the Government draft of Clause 47—that is a new clause—which allows for similar schemes for making grants for voluntary organisations.
I think that I showed convincingly that it was now accepted practice, enshrined in numerous statutes and not only in the 1981 Wildlife and Countryside Act, that ecological and nature conservation evidence is now a material consideration in formulating structure and local plans, hence the "shall" in these three amendments. They do not, in my view, and after most careful consideration, create any new functions but merely formalise the present position. The latest example of this is Clause 6 of the Wildlife and Countryside (Amendment) Bill which has passed through another place and which will be coming to us on 17th May, which puts a duty, using the word "shall", on the Forestry Commission with regard to nature conservation.
I went on to give high praise—praise that I know the Government share—to the ecological work of the GLC in particular and the metropolitan counties, among which I singled out for special mention the Greater Manchester Council and the West Midlands County Council for their far-reaching practical work. I described this work as cost-effective, good value for money and thoroughly professional. I went on to suggest that it would be costly, inefficient and

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irresponsible not to ensure that this work continued without interruption on a centralised basis exactly as it is at present, or broadly as it is at present, and as indeed it is in all the shire counties.
To leave it simply to the whim of boroughs and districts would, I think, be ecologically and socially damaging because some of them would be bound to contract out of this work, for obvious reasons. I stressed the outright and enthusiastic support for these three amendments given by all the significant voluntary organisations nationally and focally, and I asked my noble friend to be good enough, when he came to reply to these amendments, to tell the Committee what advice the Government have had from the Nature Conservancy Council. I was a council member for six years, so I have some idea of the thinking on this subject, though I have no idea what advice they have given, but I felt sure that their advice would favour these proposals.
Finally, I reminded the Government that the Bill ignores this question altogether and makes no mention of it, and that the onus must surely therefore be on the Government themselves to make sure that the necessary funding is continued and that the small staffs are transferred to the new schemes, together of course with the existing data systems, and so on. I was encouraged over the weekend—and this is my final word—when I re-read the speech made by my noble friend Lord Whitelaw, the Leader of the House, in winding up the Second Reading debate. He was referring to the Science and Technology Committee's report, chaired by my noble friend Lord Cranbrook, which we have all read with so much interest, when he said that the Government
"agree that valuable expertise should not and must not be lost".—[Official Report, 15/4/84; col. 587.]
I feel therefore that I am pressing at an open door and that I am doing the right thing, with my noble friend, to put down this amendment. I look to the Government to either accept these amendments or to suggest a better way of achieving the same object. I beg to move.
Lord Elton: The matters raised by my noble friend Lord Chelwood on his Amendment No. 54 last week, and spoken to by many noble Lords opposite, and which are touched on again in this amendment, may be small in geographical area but they clearly bulk large in your Lordships' concern. In fact the degree of your Lordships' interest was borne in on me as I listened to Thursday's debate. Your Lordships had far from finished all that you wanted to say on the subject, and that is why we agreed to continue with the same debate today on my noble friend's next amendment and others associated with it. I am most grateful to my noble friend for allowing this to happen.
My noble friend Lord Skelmersdale did not have the opportunity before we adjourned to comment on the amendment which my noble friend withdrew. Since it touches also on matters that we are about to discuss, it may be appropriate if I start by saying a little about that. First, we share my noble friend's view of consultation. We believe that the Nature Conservancy Council and the Countryside Commission are important centres of expertise, that their influence and
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help should be brought to bear wherever possible and appropriate, and that the resources of other specialist bodies should not be left untapped.
That is not only our view; it has been the official view for a long time and it is embodied in statute. My noble friend referred in particular to certain consultation requirements imposed on planning authorities under the town and country legislation and on water authorities under both the Wildlife and Countryside Act 1981 and the Water Act 1973.
Paragraphs 3 and 4 of Schedule 1 to this Bill transfer planning authority powers and duties to the borough and district councils. Water authority powers and duties are of course not transferred by this Bill. The GLC's and the MCC's existing functions in relations to national parks and the countryside are transferred, as they stand, in Schedule 3. Moreover, the most important powers to which my noble friend specifically referred are those in Section 71 of the London Government Act 1963. It is under this provision that the GLC now collects ecological information and carries out research into the natural environment. The G1,C's existing powers are effectively transferred to the London borough councils under Clause 86. I can assure my noble friend that he did not withdraw his amendment prematurely. All the existing consultation requirements, and the powers under which the GLC operates its ecology unit, will be covered in this Bill.
May I refer briefly to Lord Melchett's points when he raised Amendment No. 53B. Again I am conscious that we are looking backwards in debate, which one does not normally do, but this is an unusual occasion, in that we agreed at the end of the last debate that this is what we would do.
In moving that amendment the noble Lord sought details of the arrangements for the continued management of a number of areas within the GLC area following abolition. We were in a little difficulty over this in that while I think the noble Lord was talking of successor bodies, our difficult} is in establishing what is already being done. Before we can identify any specific problems in individual areas or undertake consultations on them, we are dependent on the information provided by the GLC, which now has the responsibility and is discharging it. We have asked for this information on properties, parks, open spaces, including details of ownership, management, application of local acts, covenants, trusts, et cetera; and we have had to do so, I regret to tell your Lordships, under the powers in the paving Act, since the information was not forthcoming voluntarily. But to date no information has yet been forthcoming. I do not doubt that the GLC will comply with the request as it has a statutory force, and when we get the information we can deal better with the points that the noble Lord, Lord Melchett, raised.
Your Lordships will have much more to say on all these amendments and I will leave further points for reply by my noble friend. I return to where I started by saying that I have been much impressed by the closeness and degree of your Lordships' interest in these matters. We shall have that very much in mind between now and Report, when we consider the transactions this afternoon.
Lord Melchett: It might also be convenient if with this group of amendments we also discuss my Amendment No. 58ZA, which covers very much the same ground. It would save our having separate debates on that later.
Amendment No. 58ZA: After Clause 6, insert the following new clause:
("Countryside and Nature Conservation Authority.
.—(1) If it appears to the Secretary of State in the case of Greater London or of any metropolitan county, necessary or expedient for the effective discharge of functions to which this Act relates, he may, after consulting the constituent councils concerned, by order establish for that area a body corporate to be known by the name of the London Countryside and Nature Conservation Authority or by the name of the county with the addition of the words "Countryside and Nature Conservation Authority", as the case may be.
(2) Each authority shall consist of members of the constituent councils appointed by them to be members of the authority.
(3) The constituent councils in relation to the London Countryside and Nature Conservation Authority shall be the London borough councils and the Common Council.
(4) The constituent councils in relation to a metropolitan Countryside and Nature Conservation Authority shall be the councils for the metropolitan districts comprised in that county.
(5) An authority established in pursuance of this section shall provide an ecological service in the area of the authority.
(6) In subsection (5) above, the provision of an ecological service shall include the employment of staff engaged in and the provision of facilities for ecological research and development, including data handling, or the application of ecological knowledge in the management of country parks, nature reserves and other land of natural character; the rehabilitation and management of derelict land; the application of ecological knowledge in support of any function of the London boroughs or metropolitan district councils, or in support of any function of an authority established under this Part of this Act; and in London the management of land within the green belt owned by the Greater London Council.
(7) An order under this section may contain such supplementary and transitional provisions as the Secretary of State thinks necessary or expedient, including provisions for the transfer of property, staff, rights and liabilities and provisions amending any enactments or any instrument made under any enactment.")
I am grateful to the noble Lord, Lord Elton, for what he said about the amendments that we discussed on Thursday night. I now appreciate that we were involved in a misunderstanding on that occasion. I had hoped that my amendment would have served to give the Government some information about the areas of national wildlife importance, which I and other Members of your Lordships' House are concerned about, if abolition of the GLC goes ahead. In any event, I caution the noble Lord that the GLC is not the only source of advice and information on Sites of Special Scientific Interest. These are declared, not by the GLC or any other local autthority, but by the Nature Conservancy Council, the Government's advisers. So far as I know, the NCC and the Government are talking readily and I should have thought that it would have been possible for the Government to go to the NCC to ask about Sites of Special Scientific Interest in the GLC area and to discuss their future with the NCC. I had hoped that my amendment might have encouraged the Government to do that and if, at the end of the debate, the noble Lord, Lord Skelmersdale, can confirm that, it would be a step forward.
3.15 p.m.
My Amendment No. 58ZA goes a little wider than the amendment in the name of the noble Lord, Lord
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Chelwood, and others. I think a problem on which it would be worth spending a brief moment is that it will be difficult to draw a line between the various subjects we shall be discussing today and those we discussed on Thursday; namely, the nature conservation and ecology aspects of the GLC and the metropolitan counties; secondly, the farmland which they own and which will be discussed under an amendment tabled by the noble Lord, Lord Stanley; and thirdly, the parks which we discussed at some length in respect of Holland Park, also on Thursday.
I shall give an example of why I believe that these three things should be taken together. It is always worth looking on the ground when discussing the countryside, nature conservation and farming, to see what happens there rather than what may be thought to happen in theory. In the Denham-Harefield area in the Colne Valley Park the GLC owns a large amount of land. Some of this land is let to tenant farmers and provides an important area of agricultural activity in a part of the GLC which is under intense pressure from development. It is near Heathrow airport and it is extremely important that that area should continue to be farmed as it has been under GLC ownership. But that estate also includes an historic house which the GLC has been doing-up with a view to making it part of the countryside management and countryside interpretation of the estate. It includes one of the Sites of Special Scientific Interest, which we discussed on Thursday, Frays Farm Meadows at Hillingdon; and also some land which the GLC has restored using a revolutionary new technique, so I am informed, which involves earthworms. That does not sound all that revolutionary or new to me, but I think it is in the context in which the GLC has been restoring land in this way. It includes an area where intensive management has been used to restore and improve the environment. It also includes a farm interpretation centre at Park Lodge Farm, where farming is interpreted and explained to the general public and to many thousands of school children every year.
There is a whole range of activities from parkland and farmland to interpretation, countryside management, improvement and scientific nature conservation on one site, and also maintenance of an historic building and finding a purpose for that building. I do not see how it will be possible to manage that site effectively without a single body carrying out all those functions; being the landlord to the tenant farmers, having the ecological expertise to manage Sites of Special Scientific Interest and so on. That may be one of the larger examples, but there are others. Hampstead Heath has a Site of Special Scientific Interest; it has Kenwood House, an historic building; it has a large area of parkland and semi-natural habitation and also an area where the GLC has been attempting greatly to improve the environment by re-seeding a meadow with native wild flowers, cutting it for hay and restoring and improving wildlife habitats. A whole range of activities takes place just on that site; and there are many others in London which I will not go into at this stage.
It seems to me that in considering the future of ecological work in London we may need to take it with the countryside management work, with the role of the GLC as landlord to farmers and with the role of

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interpreting and giving advice on the countryside. There are a number of other aspects of the work that the GLC and the metropolitan counties are involved in apart from the land that they own and manage themselves. There is the strategic planning role where ecology, the Importance of farming and a number of factors need to be taken together. There is the grant aid function, which we shall come to later in the Bill. There is the giving of advice to district councils, to statutory undertakers, to voluntary bodies and to many other organisations. It has been helpful in the GLC to have not only the ecological and the nature conservation expertise but the expertise that resides in the parks department and so on. There is education and countryside management in which the metropolitan counties particularly have been involved with other organisations, in such matters as Operation Groundwork.
My amendment was aimed to see whether the Government saw some merit in this argument, that if we are considering the countryside—there is much very important countryside, much of it very beautiful, rich in wildlife, very intensively used for recreation—it is important that we continue to see much of it farmed as it has been. In protecting those acres by continuing to manage them it would be good if a number of functions were brought together under a single body. For that reason, I put down this amendment and I hope that the Government will see merit in my arguments.
Baroness Nicol: I will try not to cover any of the ground that has already been covered because I know that there is pressure on time today. I am reminded of the justices' clerk's advice to his magistrates on the way into court, "Be just if you can, be merciful if you must, but, for Heaven's sake, finish your list". We did not finish our list on Thursday and therefore we are under a little pressure today. I will not be too specific about the issues which have been nobly covered by the noble Lord, Lord Chelwood, and by my noble friend Lord Melchett, in giving some excellent illustrations of the need for a county-wide planning body.
The Minister gave a very good answer to the debate that took place on Thursday night, having had the weekend to reflect on it. But the fact still remains that without the impetus of a county-wide planning authority we are likely to lose sight of many of the issues now being dealt with because they become fragmented among the various bodies, each perhaps feeling that it is not their responsibility to cover it. Some of the work done is of national importance, and not simply of local importance. We have heard of a number of small specific local sites and of some larger ones.
In order to give your Lordships' Committee some idea of the background to what we are talking about I shall briefly mention some of the projects that have been undertaken, first of all, in the areas of the metropolitan counties. Nearly 20 million trees have been planted since 1974, under the direct responsibility of the county councils; 6,000 hectares of derelict land have been reclaimed by the county councils, much of it in urban areas. In Greater Manchester the county council has taken a leading role
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in improving the river valleys of the county. Obviously, this covers very much more than one area. It has been instrumental in the provision of a very long list of new footpaths, cycle tracks and bridleways.
On Merseyside the Sefton Coastal Management Scheme has protected the ecological value of the dune coast line, and dunes have been stabilised and nature reserves established. In South Yorkshire the Rother Valley Park Scheme, a major recreational facility covering 700 acres, has been attempted and is succeeding. The Tyne and Wear Urban Fringe Area Management Scheme was launched covering 35 square miles to improve landscape, woodlands and hedgerows.
I am cutting down the list dramatically; but there are many, many examples more on it. In the West Midlands there is the Beacon Regional Park. In West Yorkshire there have been a number of canal restorations and improvement works, covering a wide area. These are just a few of the kind of schemes which in future are likely not to be initiated. This is the problem. I think that under the new proposals smaller schemes may be thought up by local authorities, but these bigger schemes will not, and even with the provisions of the new Amendment No. 58, if it is accepted, or Amendment No. 58ZA, if that is accepted, we shall be left without the initiative which has to be taken.
The other very dangerous aspect of what is happening is that the expertise which has been so painfully assembled over the years in these authorities—in the GLC, in particular, and, to a lesser extent perhaps, in the metropolitan counties—will be dissipated. It is unlikely that, even if they want to, these smaller authorities will be able to afford to employ the necessary team of experts to run any one of these projects, because it is not a one-man job, or even a two-man job. You need a wide range of expertise in order to see that they succeed.
In Amendment No. 58 we are suggesting that a body be set up between three borough councils or more which will require a two-thirds majority before it can go ahead. Having had some experience of cross-boundary attempts to implement parts of a structure plan, I know how difficult it is to get a simple majority, let alone a two-thirds majority. My very informed guess is that it will not come off and that nothing will happen.
We have turned down on earlier amendments the idea of a strategic planning body which would have given us the necessary control over these projects. We have even turned down the idea of an inquiry which would have given the experts who are presently concerned with these projects, as well as experts on the outside who know about it, a chance to tell us what kind of scheme would have worked and still have met the Government's plan. We have not had the benefit of that advice.
I think that we are taking another step in the dark on what is a very important aspect of public life. More and more people are concerned about conservation and about the protection of our urban environment, particularly. It is not any longer a lunatic fringe, if it ever was, and young people particularly are concerned. I think that to show the kind of disregard

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for planning which the Government have shown so far—and I hope that they are going to withdraw from that position—is not acceptable. I hope that at least some of these amendments, or something which does the job which these amendments want to do, will be acceptable to the Government before the end of this Bill.
The Earl of Onslow: As somebody who has his name to this amendment, I was very encouraged by the noises which came from my noble friend Lord Elton. What I should very much like to do is to underline, if I can, what the noble Baroness, Lady Nicol, has just been saying on the importance of not losing expertise. The very small ecology unit of the GLC has done some very special work, at very low cost indeed. If we allow it to be dissipated or provide that it should become the duty of each borough to provide something for itself, each borough itself will provide something at a quarter of the cost, if it can; and in regard to the 32 boroughs it will end up at eight times the cost and about a quarter as effective as keeping in being the things which already exist.
One must underline also the little things that the unit does. For instance, it ensures that the hay on Hampstead Heath is cut once a year, and the hay is then fed to police horses. This may sound a rather naïve thing to do. The unit also preserves the flowers on Hampstead Heath. What it does not do is what has been done in Richmond Park, which has been to put sewage sludge on to Richmond Park to increase the grass for the deer. Consequently, the grass has become too rich and the wild flowers have been swamped by grass. It is in regard to all these little things that an ecology unit of sensitivity and intelligence can contribute towards making sure that matters do not go wrong. Furthermore, if the ecology unit remains in existence, its educational value will I think be so important. People are now more conscious of ecology and more conscious of conservation in the truest and best sense than ever before. For that, we must all be very thankful. To make sure that that small unit stays in being is very important.
Furthermore, it is important that during the hiatus of dissolution of the GLC the unit knows what its future is going to be. If it does not, it will become demoralised and then things will slip through its fingers and it will be interested solely in internal politics and in finding out what its next job is going to be, and so on. We will then have destroyed something of very great value. I am not asking for the Government to spend any money. I am asking the Government actually to save ratepayers' money. I am not asking them to be anything other than I know they can be, which is intelligent and sensitive Ministers. They are represented on the Front Bench now and I am sure they will not let me down.
Lord Winstanley: I, too, was most grateful to the noble Lord, Lord Elton, for the reply he gave to those of us who spoke on these amendments last week. I was reassured up to a point, but I hope the noble Lord will accept that I was not, let us say, sufficiently reassured to feel that we can allow this subject to go without further words from the Government or perhaps without certain further assurances.
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I think that my present anxiety is whether the Government really understand what it is we are worried about. So often when we talk about this Bill in its various forms, people seem to think that all that we are worried about is money. Indeed, quite often noble Lords opposite seem to worry only about money. But in terms of resources so far as countryside and conservation is concerned, we are nothing like so worried about money as we are worried about expertise and experience in the highly trained and very dedicated staffs of the metropolitan counties, the GLC and all the others who have been doing all this work for a very long time. The noble Baroness, Lady Nicol, has outlined some of the things that have been done in the different metropolitan areas, and so on. I accept that it has been argued that it is not really a statutory function. But it has been done, and nobody is suggesting that what the counties have done was ultra vires in any way; it certainly was not.
The noble Lord, Lord Elton, in his reply just now, talked about the transfer of powers to the districts. I am a little more interested in obligations. If they understood that by having the powers there was an expectation that they would use those powers, that I think would perhaps be slightly different. What I am particularly anxious to receive is some assurance that the expertise which has grown over the years in the county councils among staff dedicated to this kind of work, with a great deal of experience and ability, will continue to be available to whoever goes on doing this work.
3.30 p.m.
I accept that as and when the Bill goes through the counties will have disappeared, but those people will not have disappeared. Of course, there would perhaps be a greater expectation that they could be recruited to continue the work they have been doing over the years if there had been some kind of overall successor body to take over these various functions, rather than their being taken over individually by different districts. I think we shall need some kind of assurance on that point.
My worry, I repeat, is not so much about whether the districts will have the resources in terms of money to do this kind of work or whether they will realise that there is an implied obligation to do it. It goes along with the transfer of the powers. What I am particularly worried about is: will they have the expertise and ability which is at present contained in the employees who have been doing the work for years in different counties? In saying that, I do not for a moment wish to belittle the quite excellent work which I know has been done already and is being done by many of the metropolitan districts, both in London and in different parts of the country. They have done excellent work. It has been of a slightly different order, but from my own personal experience in this field I have found in a number of the areas that the major contribution has come from the counties and the staff in the counties. It is not a matter of money; it is the input in terms of staff resources.
I think that is what we want to hear a little more about—what kind of machinery will exist after this Bill has been enacted which will be able to attract to its ranks the people who have been doing this work for

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years in the counties. Or will they merely be lost and shall we just hope that somebody else who is already in the districts will develop the same kind of ability? It would be a tragedy if all that experience and expertise were lost now. I am quite sure there are ways of ensuring that it is not lost, and I hope that before we leave these various amendments we will receive assurances on that point from Ministers opposite.
Lord Sandford: I share the view of those who have been speaking on this group of amendments that it is important that the countryside in the metropolitan areas and on the fringes of the metropolitan areas is properly and comprehensively managed and that the flora and fauna in them are looked after carefully and well.
However, I do not share all the misgivings that have been expressed about the inability or unwillingness of the metropolitan boroughs to discharge these functions adequately. They have not been doing so up to now because the metropolitan counties have been there to do it for them. But noble Lords who were listening to this debate last Thursday heard the noble Lord, Lord Winstanley, say that, for example, in the Operation Groundwork project in Merseyside the initiative and a lot of the drive came from the metropolitan boroughs of Knowsley and St. Helens. There are plenty of other districts up and down the country—urban areas—with resources far less than those of a metropolitan borough, who are discharging these functions of countryside management as skilfully as anybody else.
However, it is a fact—and this is a concern I share—that there is now available in these metropolitan counties a body of expertise which ought not to be lost. I should like to suggest one solution to my noble friend Lord Chelwood. When my noble friend on the Front Bench, Lord Elton, and I are discussing the way in which an amendment similar to the one I tabled as No. 19 is tabled by the Government, as I hope it will be, at the Report stage, both in respect of London and of the metropolitan counties, we should consider ways and means (I hope the Government will do some preliminary work on this) in which the agenda of this matter—which is to say, how to supply the expertise to the metropolitan boroughs which will be discharging countryside management functions—can be made available from the strategic planning conferences. I hope it is the Government's intention to set up these conferences and put them on a firm basis. This is just another way of handling the matter if that solution of a lead metropolitan authority does not seem in every case to be the most suitable way forward.
Lord Birkett: I shall not detain your Lordships more than a moment, but I cannot resist adding my voice to these small comments, from my privileged position of being Director of Recreation and Parks at the GLC, where I have responsibility for so much of London's open space.
I should just like to add my voice to those of many noble Lords who have expressed worries about the continuation of expertise, experience and, above all, dedication. I do so because many of these areas come
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within my own personal control within the GLC. There are many examples, though I will not go through too long a list. For instance, there is the whole question of landscape architecture. Within my department comes probably the biggest group of landscape architects in the world—certainly in Europe. They are a very expert and dedicated body. Also within my control comes a whole team of itinerant tree pruners. That may seem a small and slightly irrelevant issue, but it is in fact an economic way of going about the business of conserving London's trees, and it works exceedingly well. They are in themselves very expert.
There are teams of play leaders who look after the one o'clock clubs, the adventure playgrounds and all the extras to the parks of London. There is the entertainment division which looks after all the entertainments, not simply the great big ones which one hears a lot about but little entertainments for children in the parks every afternoon all through the summer. There are countless bodies of experience, expertise and dedication that one fears will not survive, not because anybody would wish them anything but well but simply because the borough structure is not capable of looking after them.
I echo what the noble Lord, Lord Sandford, said on this subject. It is not a matter of will but a matter of capability. It is indeed possible that everybody would make their contribution either by employing a little bit of such expertise or by joining in with some wider expert body. I do not see the structure at the moment for doing this. I fear that either a ramshackle edifice will be put together at twice the expense or nothing will happen. In between, which is exactly where it is at the moment, I do not see it happening.
I hope your Lordships will forgive me for a rather circuitous exercise. Funnily enough, within my department the one thing that does not happen is exactly what we are debating this afternoon. I do not look after the ecology unit, but I admire it and work very closely with it. It co-operates with my landscape architects, park managers and everyone else. It would be a tragedy if that body of expertise were to be lost.
I am sorry not to have been here earlier in the debate to hear what were described as the most encouraging words from the noble Lord the Minister. I hope he will make even more encouraging noises at the end of the debate.
Lord Elton: If the noble Lord will forgive me, I was not intending to wind up. I was most interested in what the noble Lord, Lord Birkett, had to say. Our sources of information in the GLC are not very generous and I just hope he might prevail upon his friend who is responsible for the ecological unit to be similarly forthcoming, if his employers would permit it.
Lord Birkett: I am most interested in and even embarrassed at what the noble Lord has to say.
Lord Campbell of Alloway: Very briefly, I support the spirit of the amendments moved by my noble friend Lord Chelwood. I understand that his intention is that both amendments should enter the Bill and supplement each other. I totally accept that expertise should not be lost—the point made by my noble friend

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Lord Sandford—but I rise to distinguish between advice and consultation on ecology, which is the hallmark of Amendments Nos. 55 and 58, and the creation of a formalised body with executive functions, with ecological service and staff, under subsection (6) of Amendment No. 58ZA. I support the spirit of the former, but not that of the latter, to which the noble Lord, Lord Melchett, has spoken.
The Earl of Onslow: I should like briefly to comment on something the noble Lord, Lord Birkett, said. It seems to me that there is a difference between people who are there to advise on ecology and conservation which is quintessentially non-money making and cannot, under any circumstances, go to the private sector, whereas it would be perfectly reasonable to employ outside private landscape architects. Repton and Capability Brown did not work for the GLC. One of them worked for my forebear.
What one is talking about here is the very important part which I think can be played only by some form of Government body or quasi-Government body like the Nature Conservancy Council, which is concerned with conserving and looking after something and which is essentially non-financially productive.
Lord Shinwell: May I, without any knowledge of the subject at all—I make my confession to begin with—add my word to some of the speeches to which we have listened this afternoon and to some of the speeches we heard last week? As this debate has proceeded—I have listened to most of it, and what I have failed to listen to I have read in the reports that are available to us almost every day—I have come to the conclusion that there is a general desire which applies to every Member of your Lordships' Chamber that something should emerge as a result of our debates which is devoid of anything in the nature of bias, prejudice or distasteful features that exist in our minds because of what has been happening for some years now under the GLC. Occasionally there has been a kind of arrogance—I would not put it higher than that—on the part of those associated with the GLC in their advertisements and in the manner in which they have availed themselves of their finances, and so on, about which some of us, perhaps because of a lack of knowledge or expertise of the subject, have felt there is something wrong and that something ought to be done to correct the situation and remove the defects which appear to be obvious.
As the debate proceeds, I find that submissions and presentations of the case are being made which are very much more intelligent as the days go on, and also, if I may say so, that there is on the part of members of the Government an endeavour to change their approach, to some extent, to the submissions made by Members of your Lordships' Committee, who at the beginning appeared to be, in the language of some people (although I think it was mistaken), indulging in wrecking amendments. I do not believe there was any intention on the part of anybody on any side of the Committee to indulge in anything of that sort. After all, an election has taken place in a democratic fashion and we have to accept the consequences of that election; otherwise, we cannot claim to be democrats. Whether or not we like it, there it is. It is a decision
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taken by the general public, by the electors, and also by what may be regarded as a referendum. That is the position as I see it.
Therefore, it would seem to me that we are now approaching a stage when, because of some of the speeches we have listened to and which appear to have been taken notice of by members of the Government, and also because of the reassuring statements made by members of the Government, it is possible that something creative may emerge which will be to the advantage of London and to all those who have been associated with this problem. That is how I see it, and I would therefore recommend that we proceed along those lines.
There is one further thing I should like to say. I am concerned about how your Lordships' Chamber works. I have often thought that it could work much better to the advantage of the nation and rather less in the interests of certain bodies, who appear to use our Chamber to their own advantage, who have a self-interest and who are self-opinionated about it. For example, we have had to listen for some time now to speeches made on certain amendments, only to discover immediately after the arguments have been presented and briefs have been furnished to those who have addressed your Lordships that the amendments are withdrawn one after the other. We have had amendments moved and amendments withdrawn. It seems to me to be all wrong. Amendments should not be produced at all if there is the slightest thought in the minds of those associated with the amendments that there are some defects in them. They should not be presented to your Lordships; and there have been far too many of these amendments.
3.45 p.m.
I should also like to see rather more Members of the official Opposition taking part in the debates. After all, very largely they have been left in the hands of just a few Members of your Lordships' Committee; and although I have no doubt that they have all the expertise that is necessary about matters of this sort—perhaps more expertise than anybody else, and certainly more expertise than I have—it nevertheless worries me a bit. They go on talking and talking and talking, and withdrawing and withdrawing and withdrawing. What is it all about? I am sick and tired of it.
That is why the other day I ventured to intervene as I did, and I got the impression that my intervention might have been of some value—not because I happen to be who I am, but rather because I said something that many others of your Lordships would like to have said but did not dare to say because they might be accused of seeking to wreck the Government's proposals. Certainly that is not my intention. I want to see your Lordships' Chamber making a good job of this, in the interests of London and in the interests of all those associated with local government. Local government is of the highest importance. It is democratic; it is not something we can afford to lose. We have to develop it and make it more effective, and if that were being done I would support it 100 per cent.
I hope that your Lordships do not mind my speaking in this fashion, but I do it because I have a great conviction about the ability that exists in your

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Lordships' Chamber and about what we are capable of doing if only we use our resources perhaps a little more wisely and more correctively than we do at times. There are so many things I should like to see done in the interests of the nation, and which are so necessary for the nation's future. Anything I have said is intended in that direction, and in that direction alone.
Noble Lords: Hear, hear!
Lord Skelmersdale: I am not sure that I can answer the major part of the intervention of the noble Lord, Lord Shinwell; I do not think that is for me. But what I can do is attempt to answer the various speeches that have been made on this very important series of amendments.
I should like to preface my remarks by saying that, having reading Hansard this morning, I think that in my efforts to answer the debate on Amendment No. 53B at our last sitting I over-pruned the points that I wished to make. Listening to what the Committee had to say both last Thursday and today, I detect that there are two separate but related issues contained in the amendments we have been discussing. The first concerns the future ownership of specific sites and the second concerns the maintenance of specialist expertise available to assist in the management of each site.
On the former point, I hope I made clear that all the existing sites named in the amendment would continue in being and would remain subject to exactly the same statutory controls as now, albeit under different ownership. The noble Lord, Lord Melchett, just now mentioned Frays Farm Meadows, and that is of course a case in point. It is currently owned partly by the GLC and partly by the local authority, and it is managed by a tenant farmer under the CLC. This management of the land will continue, no matter who holds the (shall I say?) head lease, or whoever owns the land. Both he and the owner, as I have just said, will be just as bound by statute as he and the previous owner were. However, it is to the latter point—the maintenance of specialist expertise to assist in the management of sites, with proper regard to conservation and ecological factors—that this second group of amendments is addressed and on which I shall concentrate my remarks.
The speech of my noble friend the Leader of the House, to which my noble friend Lord Chelwood made reference, has not been overtaken by events and we stand by it. The noble Baroness, Lady Nicol, drew our attention to the fact that, first, the subject covers more than the GLC area and extends to the metropolitan areas. Secondly, she and my noble friend Lord Onslow drew attention, as did the noble Lord Lord Birkett, to ecology units as a centre of expertise. This is not in doubt.
However, the first point on which we need to be clear is the powers; about which the noble Lord, Lord Winstanley talked, under which ecological work is carried out. It is under Section 71 of the Local Government Act 1963 that the GLC has collected ecological information and carried out research into the natural environment. We have already provided in Clause 86 of the Bill, and we have tabled an
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amendment to strengthen it, that the London borough councils should have virtually the same powers as the GLC now has under Section 71 of the 1963 Act to collect research and information. Indeed, one can readily see that the wording of Clause 86 has quite deliberately been very closely modelled on the existing wording of Section 71 of the 1963 Act.
I agree that Clause 86 does not mention ecological information specifically, but then neither does Section 71. In fact, both provisions are drawn in the widest possible terms and refer to "any matters". I should be reluctant to try to write into Clause 86 specific reference to ecology, because if we did so, we should risk narrowing the scope of the powers which it now provides. I hope therefore that my noble friend will recognise that we are giving the successor authorities—the London boroughs and the metropolitan districts—all the powers that they need to carry on the sort of work that the GLC and the metropolitan county councils have done in the field of ecology.
My noble friend's Amendment No. 58 goes further in seeking to place a new duty on the boroughs and districts to draw up a collective scheme for urban nature conservation. The wording of his amendment is very closely modelled on that of Clause 47 of the Bill and the improved version of Clause 86 which we have tabled as an amendment for later discussion. As I have explained, Clause 86 does not specifically mention ecology, but that is because it has been deliberately drawn very much wider.
We could, of course, attempt to draw up a specific list of things which we all agree should be covered, but in doing that we should run the serious risk of narrowing the scope of the provision and unintentionally ruling out desirable things that we had failed to think of when we drew up our list. We are quite satisfied that the words "any matters" include ecological work. I can therefore assure noble Lords that our revised Clause 86 will enable the boroughs and districts to set up such a collective scheme where a majority agree and to fund expenditure approved by two-thirds of them. Such a scheme could provide for a lead borough or district to employ a specialist unit providing expertise to all.
The Committee clearly feels that there is a problem in ensuring that existing specialist units are kept together. The Government appreciate that concern. So what are we doing about it? My noble friend Lord Chelwood addressed to me a direct point which was: have we been in discussion with the Nature Conservancy Council? The answer is that Ministers have been, and are still, in discussion with the NCC on these matters. The chairman of the NCC has expressed concern on the need for boroughs and districts to have appropriate strategies for ecology. The NCC itself considers that it can help best by providing encouragement and advice to locally employed ecologists. We have assured the Nature Conservancy Council that the Government are keenly aware of their concern and welcome their constructive approach.
Further than this, I can offer the Committee a simple assurance; that is, that the residuary bodies will be able to provide such units with a temporary home if permanent arrangements cannot be made by the abolition date. This prevents out and out and

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immediate disaster. After that, we would have breathing space in which we would seek to operate a new Clause 86 solution or something similar to it, but I should point out that this can be decided only by the successor authorities themselves. Like my noble friend Lord Sandford, I am confident that the boroughs will be able to make such arrangements in due course.
It should not be thought that effective conservation management is the sole province of the GLC and the metropolitan counties. At present there are, indeed, some very good examples of sites well managed by boroughs and districts. For example, the London Borough of Hillingdon already manages the largest ancient woodland in London, Ruislip Woods, and, in the West Midlands, Dudley Metropolitan Borough Council owns and manages Saltwells local nature reserve, which is an important geological SSSI.
Further to that, my noble friend and I have listened very carefully to what has been said today and I hope that what we have been able to say to the Committee will have provided some reassurance. I believe that the provisions we are making in the Bill itself, and what I have said about the use of the residuary body, will enable a satisfactory resolution to be devised.
However, I accept that the Committee has made important points and it may be that the Bill's provisions need strengthening in some respects to ensure that the objective, which we all share, can be achieved. We shall look very carefully at this in the light of the points made in what I think everybody will agree has been a quite excellent and brief discussion on these amendments. If on further examination we find that some improvement can be made to the Bill, my noble friend and I undertake to come back to this at Report. I hope that in the light of those very concrete assurances that I have given to the Committee noble Lords will not seek to press these amendments.
Baroness Fisher of Rednal: I listened very patiently to what the noble Lord has just said, but I did not hear him say anything about derelict land sites, though most of the metropolitan counties have quite a large acreage of these at the present moment. If we are to have restoration in the metropolitan counties, something must be done about derelict sites. Those are the sites which have old industrial buildings on them, and if we are to attract industry to the metropolitan areas, we must compete with the green-field sites. The metropolitan counties have, to a great extent, been getting rid of derelict land sites. So will the noble Lord explain how the districts will be able to do this in the future, when many of them will be very much smaller than towns in the shire counties?
Lord Skelmersdale: I am grateful to the noble Baroness, Lady Fisher, for directing our minds to that point. In the speech which I have just made I assumed that the expertise of these ecology units would go on, and I said that I thought that their expertise was directly relevant to the problems, as has been expressed from all corners of the Committee. As regards derelict land sites in inner city areas, they may very well have—and, indeed, already have—an input into the consideration of what that land should finally be used for. For example, there are very often
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temporary nature reserves set up, and that is an idea which the ecology units would obviously pursue with the various councils. But the other point, which is slightly away from what we are discussing at the moment, is that the urban development grant, with which money so many of these sites have been reclaimed in the past, will go on.
Baroness White: I do not wish to delay the Committee, but will the Minister enlighten us? He has been making great play with Clause 86 which, as I understand it, refers exclusively to research and collection of information, whereas Amendment No. 58, which we are considering, refers to services and schemes. Those are not entirely the same. I am absolutely in favour of collecting information and undertaking research, but I understood Amendment No. 58 to refer to something implementing some of the advice given. Am I in error in this?
4 p.m.
Lord Skelmersdale: No, not in total. The point is, I think, that you cannot have the one without the other. Basically anybody can do the job if they are once told what to do. I suggest that at this moment we should concentrate our minds on the centres of expertise which can provide basic back-up and basic knowledge for the carrying out of the work on the ground, which, incidentally, need not necessarily, and already is not necessarily, done by employees of any local authority. One knows, for example, of the inestimable value of the work being done by the British Trust for Conservation Volunteers, to name but one.
Lord Winstanley: Since we are on that particular point, the noble Lord, Lord Skelmersdale, in reply to the noble Baroness, said that we could not have the one without the other. Are we to assume from that that if we do have the one, we will inevitably and ipso facto have the other as well?
Lord Skelmersdale: No, exactly the opposite. If we do not have the one, we will not have the other. That is the point I am seeking to address to the Committee.
Lord Harmar-Nicholls: Since my noble friend has said that in the light of the debate he is going to look at this again to see which words will figure at Report stage, I cross swords with the noble Baroness, Lady Fisher of Rednal, when she suggests that district councils and, indeed, the smaller authorities generally are not capable of dealing with the re-establishment of derelict land—
Baroness Fisher of Rednal: I did not say that they were not capable of re-establishing derelict land, but that it was financially impossible.
Lord Harmar-Nicholls: There is nothing new in this. They were perfectly capable of doing this before we had the metropolitan boroughs; they did it and we have much evidence that they did. My noble friend ought to bear in mind that we must not have bigger, extra tiers to carry out something that was done most effectively and satisfactorily by the smaller authorities before the bigger one was put in their place.
Lord Melchett: As I will not be moving Amendment No. 58ZA, perhaps I may make one or two remarks before the noble Lord, Lord Chelwood, withdraws this amendment. All of us will be grateful for the positive way that the noble Lord looked at the future of the ecology unit. I did not say anything about that in my own speech because it was touched on by others. All of us very greatly admire the expertise built up in the Greater London Council ecology unit and the magnificent work done in practice not only in giving advice, but also in many other ways. Indeed, I believe that the noble Lord mentioned the British Trust for Conservation Volunteers, a recipient of grant aid from the GLC, whose work in London will be decimated if that grant aid does not continue. That is something we will have a chance of debating later in the Bill.
The noble Lord drew a distinction between "duties" and "powers" in the earlier part of his speech. We are all concerned about reality; we are concerned not as to whether it happens to be the duty or the power of some successor body, but whether or not the excellent work done now actually continues and, if so, who will do it.
The noble Lord went some way to say that we will make sure that somebody does this work, but for my part before the Bill leaves this House I want to see something more definite on that. It is too important for it simply to be left to saying, "Someone will do it and we will work out what later". The noble Lord said he will look at that, too, and we will come back to it on Report.
The noble Lord, Lord Sandford, raised the question of borough councils and their abilities. Nobody will deny that borough councils in many parts of the country have been able, on the nature conservation side, to own and manage nature reserves, but it is fair to say that their record is not as good overall as that of the metropolitan counties and the Greater London Council. They have not done as much or have not done it as quickly in recent years as the metropolitan authorities.
I was lucky enough this morning to be at Camley Street, a GLC site created into a nature reserve just north of King's Cross. That was done jointly by a voluntary body, the London Wildlife Trust, the borough council, Camden Council, and the GLC. Camden Council made it clear, as did the London Wildlife Trust, that they would not have been able to do this without the support of the GLC, not just from the point of view of the expertise drawn from the ecology unit, which was vital, but also in terms of the financial support, the provision of the site itself and support in the planning process which enabled the site to be rescued from being a lorry park and turned into a wildlife park. I believe that the input from the metropolitan county and at GLC level has been very important. It is not just the advice which has been given which has been so important; there are many other factors as well.
Finally, it was fascinating at Camley Street to see the large number of schoolchildren from London; incidentally, from all over London. This site will not serve people from Camden borough area only, which is why a wider view is necessary, and it was fascinating to see the pleasure those children were getting from dipping in the water, looking at the birds, and enjoying the wildlife. It is something of great importance to
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people living in urban areas and I hope that when we come to Report stage the Government will give this matter further consideration than they have done today, welcome though that is.
Lord Chelwood: I am very much encouraged by the intervention of my noble friend Lord Elton. What he said was extremely helpful and I am grateful to him for his intervention in our discussion. We have had a good debate. I cannot help feeling that what the noble Lord, Lord Skelmersdale, said was rather vague, to put it no higher. It was not very positive. It showed the Government have an open mind on this question—and we all welcome that—but surely we need ecological advice and advice on nature conservation to be part of the planning process, which it really is at present. The mere collation of data under Clause 86 is not the same as giving advice for planning, and no one can say that it is. We need to be sure, too, that the cost-effective teams continue. They are multi-disciplinary. It is true that some of the boroughs and districts have done excellent work in this sphere and will continue so to do; but it is equally true that some are not interested, and that others who will be under severe financial stringency simply will not be able to afford to do it in a cost-effective way.
So I am not completely reassured by what was said by my noble friend Lord Skelmersdale. I shall want to study his words—and the speeches of those who have put their names to the amendment, and others who have spoken—with very great care indeed, in particular his suggestion that if a permanent solution cannot be found to keep the teams in being, perhaps the residuary body might be used as a temporary holding place. However, despite what I have said about the noble Lord's words being somewhat vague, I feel reasonably confident that between now and Report stage a sensible way can be found to keep the ecological advisory expertise in being on a Greater London Council and county-wide basis. It is for those reasons that I think the right thing to do is to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Skelmersdale: This is a suitable moment to adjourn the Committee, and therefore I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Economic Summit Meeting, Bonn
4.8 p.m.
Viscount Whitelaw: My Lords, with the leave of the House, I shall now repeat a Statement about the Bonn Economic Summit being made by my right honourable friend the Prime Minister. The Statement is as follows:
"With permission, Mr. Speaker, I shall make a Statement about the Economic Summit which I attended in Bonn, accompanied by my right honourable friends the Foreign and Commonwealth Secretary and the Chancellor of the Exchequer.
"Heads of State or Government of the United States, France, West Germany, Italy, Canada and Japan were present, accompanied by their Foreign

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and Finance or Economic Ministers, together with the President of the European Commission.
"I have placed in the Library of the House copies of the Economic Declaration and of the Political Declaration to mark the 40th anniversary of the end of the Second World War.
"I shall deal first with the political issues. As countries which once fought each other bitterly, we recalled the benefits of reconciliation and of 40 years of co-operation, and pledged ourselves to their continuance.
"We welcomed the opening of negotiations in Geneva on the reduction of nuclear arms, expressed our appreciation of the positive proposals of the United States and urged the Soviet Union to act positively and constructively in order to achieve significant agreements.
"Foreign Ministers discussed the Middle East, Southern Africa and Central America. They condemned the continuing brutal occupation of Afghanistan by Soviet troops and of Cambodia by Vietnam.
"On Britain's initiative we had a discussion of the growing problems posed by drugs and we agreed to set in hand work on further co-operative measures to combat the vicious trade which is the cause of so much human suffering. We also reaffirmed our determination to strengthen further the co-operation against terrorism agreed at the London Summit last year.
"On economic matters the discussion and the Communiqué reflected the similarity between the approaches and policies of all seven governments. We recognised the further progress since our last meeting in keeping down inflation and strengthening the basis for economic growth. We also welcomed the fact that the recovery has begun to spread to the developing world. Nevertheless, we recognised that our countries still face important challenges. Among other things we need to strengthen the ability of our economies to respond to new developments, to increase job opportunities, to combat protectionism and to improve the stability of the world monetary system.
"In order to sustain non-inflationary growth and to create higher employment, we agreed that we will consolidate and enhance the progress made in bringing down inflation. We will follow prudent and, where necessary, strengthened monetary and budgetary policies with a view to stable prices, lower interest rates and more productive investment. Each of our countries will exercise firm control over public spending in order to reduce budget deficits when excessive, and, where necessary, reduce the share of public spending in gross national product. We will work to remove obstacles to growth and encourage initiative and enterprise so as to release the creative energies of our peoples, while maintaining appropriate social policies for those in need. We will promote greater adaptability and responsiveness in all markets, particularly the labour market. We will encourage training to improve occupational skills, particularly for the young.
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"Building on those common policies, each country indicated its specific priorities: for example, President Reagan emphasised his determination to achieve a substantial reduction in the United States' budget deficit; the Japanese Prime Minister undertook that his Government would make further progress in deregulating financial markets, promoting the international role of the yen, facilitating access to markets, and encouraging growth in imports; the United Kingdom will continue to work to reduce inflation, keep public spending under control, promote the development of small business and advanced technological industries, and encourage initiative and enterprise in the creation of new job opportunities.
"On international trade we agreed that protectionism does not solve problems, it creates them; that further progress in relaxing and dismantling trade restrictions is essential; that a new round of multilateral trade negotiations should begin as soon as possible, with the broadest possible participation; that the preparations for the new round should begin with a meeting of GATT officials before the end of the summer. With the exception of France, we were agreed that the new GATT round should start in 1986. France was not prepared to commit herself to a date.
"The discussions on international monetary questions which began after the Williamsburg Summit will be completed next month when the Group of Ten meets in Tokyo. They will put forward proposals for discussion in the Interim Committee of the IMF at its October meeting. We endorsed the case by case approach to the debt problems of the developing countries set out at the London Summit.
"We expressed our particular concern for the plight of African peoples suffering from famine and drought. While acknowledging the very substantial assistance provided not only by governments but by private organisations and individual citizens, we instructed experts to report to the Foreign Ministers of the Seven at the end of September with proposals for further measures which might be necessary. Particular concern was voiced about the practical distribution of food aid which has been so generously given, and the need for long-term policies of good husbandry to avoid creating more desert land. We also called on the Soviet Union and other Communist countries to assume their responsibilities in helping to relieve the suffering caused by famine and drought.
"Mr. Speaker, what was impressive in the Summit discussions was the conviction of all represented there that lasting job opportunities can be created only if we maintain sound financial policies and open markets and remove disincentives and unhelpful regulations to foster a climate of more vigorous enterprise and initiative.
"As the Communiqué said:
'By pursuing these policies we will not only address our domestic problems, but at the same time contribute to an enduring growth of the world economy and a more balanced expansion of international trade'."
My Lords, that concludes the Statement.
4.17 p.m.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Viscount for repeating that long Statement. It covers several important matters and refers to the key points in the Communique. I shall seek to make two or three short points.
The objectives in the Statement are obviously acceptable, especially the urgent need for talks to avert the protectionist trade war, although we must regret that the Communiqué was not unanimously supported. I am sure that the noble Viscount agrees that the failure to secure unanimous agreement on a firm date for talks is disappointing and regrettable.
The Statement says that officials will prepare for the new round of multilateral negotiations this summer and that the talks will commence,
"as soon as possible".
This is obviously disappointing. But can the noble Viscount say whether the new GATT round now scheduled to start in 1986 could in fact take place without France? This seems to me to be the implication of the words of the Statement. Obviously French participation is eminently desirable, but are talks without them a possibility? If I may read from pages 10 and 11 of the Statement:
"With the exception of France, we were agreed that the new GATT round should start in 1986. France was not prepared to commit herself to a date".
There is there some slight implication that talks without France are a possibility.
We warmly welcome the reference in the Communique to the need to increase job opportunities and to reduce social inequalities. Can the noble Viscount say how this is to be achieved in this country? We note that Mr. Shultz did not rule out a mild measure of reflation. Can the noble Viscount say whether the Government have this in mind, and what other initiatives are now proposed by the Government in the light of the Bonn talks?
On the issue of Japan, can the noble Viscount say whether there was any specific proposal by the Japanese Government to take action to adjust their trading balances with us, they being grotesquely out of proportion? Is it true that while the United Kingdom bid for the second Bosphorus bridge was highly competitive, the Japanese bid, while less competitive, involved excessive aid and subsidy to Turkey? If that is true, it is a deplorable state of affairs.
We welcome the references in the Statement to the plight of the African people suffering from famine and drought and to the setting up of the expert group to prepare follow-up measures. We warmly support what was said about the necessity for constructive work at the Geneva talks, and also the initiative, which we understand was taken by the Prime Minister, to take action against drug traffic.
While it is clear that many useful initiatives were taken at the summit, will the noble Viscount answer this question: if fiscal tightness and the pursuit of an ever-lower rate of inflation are to take priority over all economic goals, where is the stimulus for a world economic recovery to come from under those circumstances? Can the noble Viscount be confident that, by the time of the next economic summit, world
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poverty will be reduced, if only marginally? Or does the noble Viscount subscribe to the theory that the world economy defies any kind of international planning?
Lord Diamond: My Lords, we on these Benches are also very grateful to the Leader of the House for being good enough to repeat this important Statement. It was a long Statement but not very full of substantial content. I will start by selecting those matters on which we should like to support the Government fully in what they have been saying in this Statement.
The first matter is the fight against protectionism. All countries have a modicum of protectionism inbuilt in their trading policies. The United Kingdom is no exception to that. That illustrates how difficult it is to keep protectionism out of our trading pattern, whereas all of us know that what is in the prime interest of a great commercial and trading country such as ours is the absence of protectionism. We therefore assure the Government of our fullest possible support in maintaining and improving the fight against protectionism. We are grateful for the steps that were decided upon. Although we can understand France's attitude for the time being, we are sorry that France found it inopportune to share in fixing an early date. We repeat our assurance of total support in this battle.
We welcome also what the Government said about the fight against drugs. Indeed, the House will recollect that we on these Benches devoted one of our very few available days to debating this important topic. At the end of that day a vote was taken and the Motion was unanimously agreed to. I am therefore bound to ask the Leader of the House what is meant by the words,
"to set in hand work on further co-operative measures to combat the vicious trade"?
Can the noble Viscount tell us what steps have keen taken by the Government following upon the unanimous vote of your Lordships' House?
As to the rest of the Statement, I am bound to say that I regard this summit conference as a conference of missed opportunities. I want to illustrate that by referring to the two most important opportunities. One of the major opportunities that was missed is referred to in the Statement, when it makes mention of the need,
"to improve the stability of the world monetary system".
Why were the Government unwilling to start on that by improving the stability of the European Monetary System, and why do they insist on being the one man outside the group who are sharing in this system and so helping with this very desirable end?
The second great opportunity that was missed was in failing to do something tangible about increased job opportunities. We on these Benches rate that as Priority No. 1 and not Priority No. 3, as the Statement makes clear. The Statement makes as the first priority reducing inflation and the second as enabling our economies to respond to new developments—whatever that may mean. It cannot mean unemployment in this country because that is an existing development. The Statement gives third priority to increasing job opportunities.

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We regret immensely that no action was taken to persuade particularly the European countries to do something to reflate their economies so as to provide an increase in economic activity and an increase in job opportunities as a result of that. We totally disagree with the statement that there was:
"similarity between the approaches and policies of all seven governments".
Of those seven governments there are two at the top of the ladder and the rest are broadly at the bottom of the ladder. If one is at the top of the ladder, it is not surprising that one is happy to go along with suggestions that no reflation should take place in the economies of those at the bottom of the ladder but that everything should be left as it is: "I am perfectly happy here, Jack", if I may use that expression.
It is astonishing to me that the Government should attempt to assert that the policies of the United States and Japan are quite similar to our policies, their financial policies being the total reverse. Of course they sold us the original monetary policy on which the Government have been hooked ever since they first came to power, but they very quickly departed from it. As we all know, they have run up a huge deficit, as a result of which they have increased their employment, have maintained low inflation rates, and have done very well indeed, thank you.
In the case of Japanese domestic policies, their social and labour relations policies are totally, but totally, dissimilar from our own. It is not surprising that those two nations, with their totally separate policies in the areas which matter, have risen to the top of the ladder whereas the rest of us have remained at the bottom of it. I therefore say that it was a missed great opportunity to help in restoring the economies—especially those of the European countries—so that we could start to climb up that very ladder and hold our own with these other countries.
This summit conference was so unproductive that it raises the question of whether summit conferences are worthwhile. Every government knows that summit conferences have to be most carefully prepared. We do not share the view that summit conferences are not worthwhile. We congratulate the Government on having held a summit conference and trust that they will continue to do so. But it is extremely regrettable that this conference produced so little.
4.27 p.m.
Viscount Whitelaw: My Lords, I am grateful to the noble Lords, Lord Cledwyn and Lord Diamond, for their reactions to the Statement. In view of the many comments they both properly made, it will be easiest for me to reply to them separately. I will do that simply because, through my own inadequacies, I would find it difficult to combine my replies to their comments.
First, the noble Lord, Lord Cledwyn, raised the question of the talks on protectionism. He said that those talks were good so far as they went. I agree with him that it was extremely important that those talks took place. I also entirely agree with the noble Lord that they need to be followed up by action. The noble Lord also questioned whether the new GATT round in 1986 could take place without France. Without having heard the discussions, I would have thought that it was
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very desirable indeed that the French should participate and that every effort should be made to ensure that they do. Without one of the major countries, clearly any such talks would be that much less effective.
On the question of increasing job opportunities, of course it is fair to say to the noble Lord that indeed all the countries concerned (and I shall return to that aspect when I come to answer the noble Lord, Lord Diamond) believed that job opportunities were best found, provided that inflation was kept under control in all these countries. The noble Lord said that Mr. Shultz spoke of a mild measure of reflation. I believe it is fair to point out to the noble Lord and to the House that it cannot, I think, be said—in view of the many measures the Government are taking at the present time in this country for the improvement of the infrastructure, when one looks at roads, housing and many other factors—that a great deal of work is not being done. I would challenge those who say that, and look at the facts of what is actually happening.
On the question of Japan, the trading balances and the bid for the Bosphorus bridge, I think it would be unwise for me to comment any further on that particular deal. Obviously, I know something of the details, but at this moment in time it would be better for me not to make a comment on something which, certainly from our point of view, has been a sad position.
As far as constructive work for the Africans and for the famine in Africa is concerned, I am grateful for the noble Lord's support, and, indeed, for his support on the question of drugs. On the noble Lord's last point, I believe he asked: if fiscal tightness is to continue, how will there be recovery? I believe it is felt by all the countries concerned that a measure of fiscal tightness and a determination not to allow inflation to start again is a necessary prerequisite of the recovery which we all want to see.
Perhaps I may now turn to the noble Lord, Lord Diamond. He welcomed the fight against protection and he welcomed the fight against drugs. He welcomed the idea of further co-operative measures. He raised the question of the debate initiated by his party in this House on the question of drugs, and asked what measures had been taken by the Government. I believe that over a period of years considerable measures have been taken by the Government. Perhaps I am entitled to say from a previous incarnation (which is always difficult) that a great deal was done in seeking to stop drugs coming into this country, and a great deal is being done today both through the customs and the police. I hope that this House will realise—and I make no apologies for this "plug" for something that may be happening in this House in the near future—that intelligence work on this matter is crucially important, and that those who would seek to deny any form of intelligence that can be gained by those who are fighting against drugs would be very unwise if they really want to stop drugs coming into this country.
The noble Lord regarded it as a missed opportunity that the United Kingdom Government had not joined the EMS. I appreciate the noble Lord's point on this. I have to say that the Government's position has not been changed. Economic spokesmen far more able than me have explained all the reasons why the

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Government have not decided to join the EMS, and I do not think I will add to them any more this afternoon. As far as inflation and increased job opportunities are concerned, the Government firmly believe that the efforts to reduce inflation are absolutely crucial if we are to provide increased job opportunities; and I can only report, in relation to the Statement, that that was the view of all the other countries who were engaged at the summit conference. Those who wish to disagree have to disagree with all the seven Governments.
The noble Lord says that the seven Governments were agreed, but some of them on different propositions. In reply, I can only say that if we look at the countries concerned it is perhaps inevitable. Nevertherless, they were all agreed that low inflation rates were crucial, and it would be a very unwise country, therefore, which decided that, whatever their circumstances, they would go back on that and give up the determined struggle to keep inflation as low as possible.
Lord Shinwell: My Lords, will the noble Viscount the Leader of the House agree—
Lord Harmar-Nicholls: My Lords, I think it is the turn of this side of the House.
Lord Shinwell: My Lords, I merely want to ask a question.
Lord Harmar-Nicholls: My Lords, I think it is.
Lord Shinwell: Very well, my Lords; go ahead.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that he did not completely answer the noble Lord, Lord Cledwyn, when he said that we are having a meeting of the officials of GATT? Of course, everyone hopes that France will eventually join; but are we to understand that if they do not join, if they remain adamant, the talks will go on, or will they not? If they are not to go on, there is no point in the officials meeting. Could I remind my noble friend that there is some significance, which should bring satisfaction to this country and to this Government, in the fact that all the other Governments seem to have accepted a basis of improvement in the world's problems founded upon the lines already being taken by our Government; and that the implied criticism from the Front Bench opposite and the SDP Bench does not fit in with the acceptance of all the other nations that our line of approach to overcome the world's problems seems to be the right one.
Viscount Whitelaw: My Lords, I am grateful to my noble friend. He has expressed more trenchantly than I did what I had sought to put before your Lordships' House. On his first point, one must say that so long as the question of France attending is a possibility, every effort must be made to ensure that France does attend, and if the meeting of officials works to that end that surely is something which we would all wish to see.
Lord Shinwell: My Lords, does the noble Viscount the Leader of the House agree that if the noble Lord speaking for the Liberals can occupy our attention for nearly 20 minutes in a speech, one might from this side of the House ask a simple question arising from the Statement that he was kind enough to make—that is, about the attitude of France? We learn from the press that for some reason (though so far as I know nothing has been discovered as to the cause) the French did not support the otherwise unanimous decision of the summit conference. Can we understand the reason for that? If there is to be another conference and France may be asked to change its mind, how is that to be brought about? Can the noble Viscount the Leader of the House explain this attitude of France, and why it is adopting this attitude? There must be some reason for it.
Are we taking any measures to correct it; and, if so, what are those measures? For example, a very prominent member of the Government recently visited Czechoslovakia and East Germany. Would it not be advisable for somebody to meet President Mitterrand and discover the reason for France's refusal to join the summit conference in coming to a unanimous decision? There is a very great deal of doubt about it, and from the press we discover very little. I wonder whether the noble Viscount the header of the House could answer that question.
Viscount Whitelaw: My Lords, I am indeed grateful to the noble Lord, Lord Shinwell, all the more because, of course, however long any other noble Lord might take in saying things, the noble Lord will still be able to ask his question and most certainly will do so. The answer, I believe, as far as the French are concerned, is bound up particularly with the case of French agriculture, and especially with the common agricultural policy in the Community. As the noble Lord, will probably appreciate, there are still discussions (alas! not so far leading to agreement) on the agricultural settlement within the common agricultural policy for the next year, and the French, not necessarily in that regard but certainly as far as French agriculture is concerned, are very dubious as to whether they can take part in the GATT discussions for that reason. It is French agriculture that is at the root of the problem, and added to that is the problem of the common agricultural policy.
Lord Hatch of Lusby: My Lords, the noble Viscount will recall that at last year's summit agreement was reached that all the industrial countries should increase in real terms their aid to the developing countries, and by doing so should assist in increasing their purchasing power. Nothing has been said in the communiqué this year as to whether or not that was achieved. This year's communiqué refers to the tragedy of the drought in Africa and sets up some kind of official committee. Can the noble Viscount tell us whether the British Government have fulfilled their obligations to last year's communiqué, and in the ensuing 12 months have increased their overseas aid to developing countries in real terms, and whether they intend to increase in real terms the resources that they make available to offset the tragedies of the drought in Africa?
Viscount Whitelaw: My Lords, I am grateful to the noble Lord and, if he will understand, I shall be very cautious in the exact terms of the response I give at this present moment because I would not wish to prove him right and myself wrong on some answer that I may give. Therefore, I would say that I could not give him a specific answer, but I will certainly seek to do so on exactly what the Government have achieved in real terms in relation to meeting the communiqué on the last occasion. I believe we have made a substantial contribution in general in line with that communiqué. I would say, too, that we have made a very considerable contribution to famine relief in the African countries. I know it can always be argued that it is possible to do more but it would be very unfair to this country not to recognise the very considerable contribution, both from the Government and from private individuals, that has been made to famine relief in Africa. I am sure that that should be recognised.
Lord Gladwyn: My Lords, while agreeing with my noble friend Lord Diamond that there are certain features in the Statement which we welcome, I also agree with him and indeed, with the entire press that the results are almost entirely negative and consist largely of a number of pious platitudes and hopes. I shall only ask one or two questions. The Statement says:
"We welcomed the opening of negotiations in Geneva … expressed our appreciation of the positive proposals of the United States".
I do not know what exactly is meant by the "positive proposals of the United States". They have I believe been discussed in the Council of Ministers but I am not sure that they have been revealed in their entirety to the general public. In any case, would not the Government agree that unless the American Government can meet what I believe are the legitimate anxieties of the Soviet Government about the Star Wars proposals—at any rate, to some extent—and agree to have a truce, so to speak, on anti-satellite activities, which is equally important, the negotiations are likely to fail, which would be a disaster for us all?
Secondly, in regard to economic matters, the Statement says that,
"the recovery has begun to spread to the developing world."
What evidence do the Government have that that is so? I have not seen anything in the financial press to that effect. Once again, it is merely a statement of unjustified optimism. The whole question is dominated by the debt, which is also referred to and said to be coped with by bilateral means, whatever that means. But not much progress has been made in that direction either and unless there is I am afraid we must fear the worst.
Finally, I think the Statement says that Ministers are entirely in favour of lower interest rates. What has the United States Government actually done to lower interest rates? These are still unacceptably high and the Chancellor of the Exchequer has already said, I think, that they are almost intolerable. What is to be done about it? It is no good saying that we are in principle in favour of reducing interest rates; that is not an answer at all. Equally, as regards the United States deficit, it is said that President Reagan is going to do
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his best to reduce it. What has he done? Nothing at all. At the moment he is quarrelling with Congress. The real reason it is not being reduced is the enormous expenditure that he is proposing to make on largely useless nuclear armaments. Cannot something be done to convince him of the folly of this attitude? Did Mrs. Thatcher say anything at the conference in that respect?
Viscount Whitelaw: My Lords, I am grateful to the noble Lord. I am sure that with his great experience he, in his time, has attended many summit meetings of one kind or another which expressed hopes for the future and did not necessarily produce results at that moment.
He asked me what will be the results of the various agreements at the summit. All I can say is that surely the agreements as a start are worthwhile. I cannot prove to him that they will be followed up, as he asked me to prove, and neither can he; but we must both hope that they will be followed through, both on the economic front and as regards lower interest rates.
On the Council of Ministers and negotiations between the American and Soviet Governments, I do not have anything further to say, so I think it would be better that I do not seek to pursue the matter further.
4.45 p.m.
Lord Cledwyn of Penrhos: My Lords, I apologise to the House but there is one brief question of importance that I wish to put to the noble Viscount. Can he confirm that French officials will be among those officials who take part in the preliminary GATT talks?
Viscount Whitelaw: My Lords, subject to any correction, I believe that to be so. I am not absolutely certain and if I am wrong I will, of course, immediately let the noble Lord know.
Lord Kaldor: My Lords, did Her Majesty's Government disagree with what is evidently the French view, that trade questions and trade agreements cannot be considered in isolation from currency and monetary matters and exchange rates? Evidently any concession made in the field of tariffs could be offset by changes in relative exchange rates. Therefore, to follow the American attitude, which demands far-reaching agreements concerning trade and at the same time be quite unwilling to consider a new system of exchange rates, is illogical.
Viscount Whitelaw: My Lords, I am grateful to the noble Lord. I think he is enticing me almost into a further debate on economic subjects in which he would do much better than I would. Therefore, I do not think I wish to proceed further.
Baroness Vickers: My Lords, may I ask the noble Viscount whether there is a committee of experts, Africans, apparently, to discuss the question of agriculture? After all, they have been using the same methods of agriculture for over 100 years and it will be difficult to get them to change without further co-operation.
Viscount Whitelaw: My Lords, I am grateful to my noble friend. I am sure she is right in what she says. I cannot confirm exactly what efforts will be made by the countries of the summit to that end, but I will certainly look into it and let her know.
Baroness Masham of Ilton: My Lords, is the Leader of the House aware that many people throughout the country will be pleased that the subject of drug abuse was discussed at the summit? Was there any positive suggestion of legislation to confiscate the gains made by traffickers? Is he aware that if other countries have this legislation, and we do not, this may make this country an even more attractive place in which to push drugs?
Viscount Whitelaw: My Lords, I am grateful to the noble Baroness for what she has said. I am sure there are many people who think that, with the great drug menace that affects the whole world and which it would be very unwise to imagine is not likely to get worse rather than better in the immediate future, it was right that the subject should be discussed.
As regards the laws of different countries, no doubt there was an exchange of views but laws are a matter for each individual country. As regards this country, I note what the noble Baroness said, but at this moment I do not have anything further to add about our proposals.
Lord Pitt of Hampstead: My Lords, I am unhappy that the noble Viscount the Leader of the House did not answer the question put by the noble Lord, Lord Gladwyn, about the evidence which suggests that the conditions of the under-developed world have improved. I am quite worried about that. The noble Lord may not have the answer, and if that is so will he undertake to write to me with the evidence because I should like to have that?
Viscount Whitelaw: My Lords, in answer to the noble Lord I will say that that was the view of the countries at the summit. I was dutifully reporting the views of the countries of the summit. It is their consideration and I have nothing further to add to the views of the great experts who were all there.

Gas Industry
4.48 p.m.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, by leave I shall repeat a Statement made in another place by my right honourable friend the Secretary of State for Energy. The Statement is as follows:
"With permission, Mr. Speaker, I would like to make a Statement about the future of the British gas industry.
"Major progress has been made with the Government's privatisation programme. Management and enterprise have been freed from bureaucratic intervention in industries as diverse as aerospace, the ports and cross-Channel services, the oil industry and British Telecom.
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"The Government have decided that the time has come for a further major step in the transfer of state industry to the private sector. I propose to introduce legislation at the earliest opportunity to provide for the transfer to a new private sector company of all the assets of the British Gas Corporation, and for appropriate regulation of monopoly aspects of the gas supply business. Following that legislation the Government intend that the shares in the new company should be sold to those employed in the industry and to the public.
"This change, like the earlier ones, will remove state intervention and substitute realistic tests of performance for bureaucratic or political ones. It will create a real ownership by the public and employees in place of the nominal public ownership of the nationalisation statute. It will place new emphasis on efficiency for the benefit of consumers and give employees a new stake in the business.
"The legislation will protect the consumer by establishing regulatory arrangements to oversee gas prices to the consumer and terms and conditions of supply. The new company will have an appropriate obligation to supply consumers, as has been the case with the British Gas Corporation. The legislation will protect consumers against discrimination and will contain necessary safety provisions, including the obligation on the new company to maintain the emergency services.
"The opportunities for greater competition opened up by the Oil and Gas (Enterprise) Act will be maintained and kept under review. In particular it is the Government's intention that competitors should be able to supply not only large industrial consumers but also smaller domestic and commercial consumers in areas not already supplied by the British Gas Corporation with suitable safeguards for safety.
"Outside the areas of gas supply, the new company will be able to develop other areas of its business in a competitive environment, subject like any other company to the general framework of competition legislation.
"I intend to provide special opportunities to gas consumers and other small investors to purchase shares, in line with our policy on wider share ownership. All gas consumers will benefit from the emphasis on efficiency which will be built into the regulatory system and from a straightforward system of gas pricing related directly to achieved commercial performance.
"As with previous privatisation measures I propose to make generous provision to enable all who work in the industry to acquire shares and thus to take a new stake in the company's performance and success. There will be new opportunities, as well as new challenges, for management and employees in the new company.
"The British gas industry is now nearly two centuries old. It has spent nearly 40 years as a nationalised industry but was developed for a century and a half in the private sector. It has undergone great change in the last two decades with the transition to natural gas, which has linked it to the great expansion of British industry into the

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North Sea. I believe that today's announcement will mark a new and long period of successful development into which the management and all who work in the industry can bring their present talents and link them with new freedoms in the interests of the nation".
That concludes the Statement.
Lord Stoddart of Swindon: My Lords, perhaps I may first of all thank the noble Lord for repeating in this House the Statement that was made in another place. Is the noble Lord aware that this Statement has come as a very unwelcome surprise, indeed shock, to the Opposition, the gas industry and the general public? It proves yet again that this Government are prepared to squander the nation's long-term assets for short-term political gain. Will not the Government's proposals create a new private monopoly at the expense of the public? Can the noble Lord say for what purpose and to what end it is being done? Will it introduce new competition into the gas industry? What benefits will there be for consumers? For example, will gas prices be lower and will service to customers improve? So far as I can see, there is no evidence that customers will be better off; indeed, quite the reverse.
The Statement boasts that gas consumers will be offered special opportunities to buy the shares. However, is the noble Lord not aware—indeed he must be aware—that the huge majority of consumers have difficulty enough in paying their gas bills, inflated by Government action in imposing price increases 10 per cent. above the rate of inflation for three years running, plus the gas levy which has imposed a further £1·5 billion on consumers, let alone buying shares? Very few of them will be able to afford to buy shares under those circumstances.
May I ask the noble Lord about safety? As he particularly knows, the British Gas Corporation has an outstanding safety record. Is there not a danger that a private monopoly might cut corners on safety to inflate profits? What additional safeguards are planned against the possibility of lower safety standards?
Can the noble Lord tell me about employment? The Secretary of State for Energy made a great issue of job creation in his Cambridge speech last week. How many new jobs will this measure create? Can the noble Lord give an assurance that there will be no redundancies in the gas industry as a result of this privatisation measure? Can he say what the effect will be on the thousands of people who supply the industry?
The Statement makes no mention of the percentage of capital to be privatised. Can the noble Lord say what percentage of shares are to be sold and how much the Government expect to realise from this sale? What price will be put on them? Will it be a similar price to the British Telecom issue, where people have made 200 per cent. profit at the public's expense over the last three or four months? Is the noble Lord further aware that there is no national energy case for these proposals? Does he not understand that it is not far short of criminal to be selling off BGC, which has been one of the great success stories over the past 20 years? Can he not accept that there is every reason to maintain the British Gas Corporation in its present form in the national interest?
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Finally, I have to tell the noble Lord that the Opposition are diametrically opposed to these proposals and believe they stem from the disreputable motive of finding money to pay for a Tory pre-election tax bonanza. We shall oppose the proposals and shall contest any Bill at every stage.
Lord Ezra: My Lords, I, too, am grateful for the Statement which the noble Lord has repeated in this House. I should like to ask three questions. First, it is difficult to see, in all the circumstances, the industrial logic for this proposal. The British gas industry has been one of the success stories of British industry in recent years. I was associated with the gas industry in my previous occupation in the 'fifties. That was an industry in the doldrums. By remarkable achievement and great technological advances, it has turned out to be one of the most successful industries in Britain, with a turnover in excess of £6 billion and profits of £1 billion. It seems remarkable that anything should be done to interfere with this success. In view of the fact that, as the Statement has said, many of the safeguards and other qualifications to protect the consumer in the existing Act will be introduced in the new Act, it becomes even more difficult to understand why this transfer is being made. That is the first point I should like to put to the noble Lord.
Secondly, I should like to ask him about the financial implications of this transaction. It is rumoured in the financial press that £8 billion will be realised as a result of this. That means that £8 billion of private money will be transferred into the public purse. That £8 billion could otherwise have been used for investment in wealth creating activities. Thus my question is: what are the Government going to do with the £8 billion? Are they going to improve our road system? Are they going to improve the quality of housing? Are they going to look at the water supply, sewage systems and all the other things which we on this side of the House have been saying should be done? Or will this £8 billion just disappear into the coffers of the Treasury, never to be seen again by man?
The third question is about the cost of the operation. An £8 billion transfer of funds from the private to the public sector will require an enormous amount of underwriting. Great cost will be involved in the prospectus and in working out how the shareholding shall be undertaken. In addition to that, there is the cost of the regulatory body to do all the things which existing legislation does to safeguard the interests of the consumer. I should like to ask the noble Lord whether he can give us some indication of what this massive cost will be and whether he thinks it will be justified.
4.59 p.m.
Lord Gray of Contin: My Lords, I am grateful to the noble Lord, Lord Stoddart, and to the noble Lord, Lord Ezra, for their comments on the Statement which I have just repeated. I am surprised that the noble Lord, Lord Stoddart, should say that the Opposition feel shocked by this decision. I think that only reveals the fact that the Opposition are still totally wedded to their old Clause 4 of nationalisation, and any movement away from that is repulsive to them; that is, just as any movement away from it, as far as this side

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of the House is concerned, is in line with our belief that the less Government involvement in industry the better.
I am rather surprised that the noble Lord, Lord Ezra, also should have gone down that road. I had always understood that his party stood up for the right of those employed in industry to have a share in that industry. This is precisely what we are doing, or will be doing, in the legislation. We are ensuring that those who are employed in the industry will have a right to participate in the shareholding of it.
The noble Lord, Lord Stoddart, made particular running on the question of prices. He asked what this would do for gas prices. Let me say that I believe that privatisation will achieve three things. It will give a clear and straightforward system of gas pricing based on a company's costs and achieved commercial performance. It will put pressure on the company through the regulatory system to reduce the onshore costs which are directly within its control. It will engender the new commercial spirit and entrepreneurial drive that the changes can be expected to unlock. That is what it will do for prices.
The noble Lord asked about safety. There is already wide-ranging safety legislation both under gas legislation and the health and safety Acts. There may be a need for some reinforcement. Officials are examining this urgently with the Health and Safety Executive which has day-to-day responsibility for the safety regime. I agree entirely with the noble Lord that the industry has a good safety record. It has an excellent safety record. We believe that the new utility will want to maintain the high standards set by the British Gas Corporation in this area. We see no reason whatever why it should not.
The noble Lord mentioned capital, as did the noble Lord. Lord Ezra. At this stage, obviously, it is impossible to assess the value. But it is fair to say that we are talking about a flotation getting on towards the British Telecom flotation. We are talking about a quite major flotation. The noble Lord mentioned the gas levy. Of course, when the company is privatised, it will be in the same position as any other company and will be subject to the taxation laws of the land. The gas levy may form part of that. That is a matter for the future.
The question of Government participation has been mentioned. I would not call it Government participation. I would call it Government interference. Some of the matters that were worrying the noble Lord, and may be worrying some of his noble friends, will not exist when the Government are no longer directly involved in a nationalised industry. The industry will no longer be nationalised; therefore, it will not be subject to the constraints and interference of Government and Ministers. For those, among a great many other reasons that I shall hope to deploy during the Second Reading, the Committee stage and the Report stage of the Bill, I believe that the Statement indicates a significant change and a change for the better for the gas industry.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that some of us, unlike him, were not at all surprised at the predictable reaction of the noble Lord,
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Lord Stoddart of Swindon? Is he equally aware that many of us are very glad indeed to see that the impetus of the Government in moving industries from the public to the private sector is being fully maintained? Can my noble friend, however, clarify two points? He talked of a large flotation. Is it intended, at the first stage, to put the whole 100 per cent. of the shares of the new set-up on the market or only, as happened to begin with in the case of one or two other industries, a proportion? If the latter, what is that proportion? Secondly, will this change, when it has taken effect, inhibit the steps taken by the Government a little time ago—some of us were very critical of them—to force up gas prices for general economic reasons?
Lord Gray of Contin: My Lords, I am grateful to my noble friend for his comments. I can tell him that it is the intention to place the British Gas Corporation firmly in the private sector. I cannot at this stage tell him what percentage of shares it is intended to offer. I think that I have partially answered already the second point that my noble friend raised. I said that when the company is removed from the constraints and controls of Government, it will be free to exercise its rights as it sees fit.
The Earl of Lauderdale: My Lords, will my noble friend not agree that, thanks to this Government's progressive policy in the last few years, there is now a bonanza in North Sea gas with some 46 wells being drilled last year against 26 the year before, with nine annexed fields for gas exploration now under study at the department and with an upgrading of probable and crude reserves of 15 per cent. over the past year? Will he not agree that all these are beneficial results of the Government's general approach to freeing the exploration industry? Does he not also agree that it would be logical, in the light of that, if the Government proceeded to consider seriously the possibility of allowing the export of gas found on the United Kingdom Continental Shelf, as there is likely to be a surplus?
Lord Gray of Contin: My Lords, I thank my noble friend for his comments. I answer him by saying, yes, I agree that there is a potential bonanza at present, particularly in the southern basin of the North Sea. The action taken by the Government in recent legislation has made that possible. My noble friend is absolutely correct in saying that. Many jobs will be created as a result.
As to his second point, concerning the export of gas, 1 have to remind him that at present our licences insist that gas shall be landed in this country unless special dispensation is given otherwise. At the moment, the Government have no intention of changing that rule.
Lord Monson: My Lords, will the noble Lord give an assurance that the new company to be privatised will be subject to substantially greater competition than the nationalised British Gas Corporation has faced, in order to keep prices down and generally to help the consumer?
Lord Gray of Contin: My Lords, the whole intention of removing the British Gas Corporation from the constraints of Government is to try to ensure that its

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entrepreneurial spirit will be developed. This should lead to what the noble Lord wishes.
Lord Bruce-Gardyne: My Lords, is not the answer to the point raised by the noble Lord, Lord Ezra, about where the money is to come from, that most of it is likely to come from money that otherwise would be invested in gilts and would therefore go to the Treasury in any case? However, is my noble friend aware that some reservations about the wisdom of passing a monopoly into the private sector may not be held exclusively on the opposite side of the Chamber? Am I not right in thinking that the Government, at the election, promised the electorate that competition would be injected into the gas industry and that this was over and above the provisions of the Oil and Gas (Enterprise) Act? What has happened about that commitment?
Lord Gray of Contin: My Lords, I am grateful to my noble friend. What he probably has in mind is the question of gas showrooms—
Noble Lords: Oh!
Lord Gray of Contin: I shall come to the other things that he may have in mind in a moment. To deal with that point first, I would remind my noble friend that considerable progress has already been made. Where showrooms have not been paying their way a number have been closed down. It will be entirely for the new company to decide how to proceed on this matter.
The other point that my noble friend had, I think, in mind was the breaking up of the British Gas Corporation into small units. I would remind my noble friend that the Government considered this possibility. It is not, however, realistic for a distribution system such as that which has been built up over the years to be completely broken down again, with the possibility of competitive distribution systems being introduced and all the environmental hazards that this would create. The course upon which the Government have decided is far and away the most satisfactory.
Finally, my noble friend referred to the estimate, I think, of the noble Lord, Lord Ezra, of about £8 billion. Obviously, I shall not comment on the accuracy of that estimate, because we do not know. That will come much nearer the time when the British Gas Corporation is actually floated off. However, my noble friend is absolutely correct about from where the money will come. The money will come from the private sector, and that is from where it should come.
Lord Stoddart of Swindon: My Lords, I hope that noble Lords will forgive me if I ask a couple of short questions. The noble Lord has not told us from where, in the absence of competition—because this will be a private monopoly—and bearing in mind that Sir Denis Rooke has brought all the entrepreneurial drive and spirit that can be brought, this is all coming under the new set-up. As the noble Lord has criticised the noble Lord, Lord Ezra, as regards employee share ownership, will he say how many employees of British Telecom still hold shares in the undertaking?
Lord Gray of Contin: My Lords, perhaps I may deal with the last point first. I find it difficult enough to master the brief on an involved Statement such as I have given this afternoon, without diverting my attention to British Telecom just at this moment, but I have no doubt that the noble Lord will have his own way in which to ascertain the figure. However, I would say that anybody who has sold shares in British Telecom has probably sold them to his own satisfaction. Therefore, that justifies the principle involved.
The point which I have to make to the noble Lord is, I am afraid, one which he will find very difficult to accept because it is a difference in philosophy. I am referring to removing from the nationalised sector an industry which has been successful but with which there is very little to compare it. We believe that such an industry can be very much more successful in the private sector. I pay tribute to Sir Denis Rooke who was mentioned by the noble Lord. He has been a very successful chairman and, as an engineer, there are few who can compare with him. I am quite sure that Sir Denis will do all that he can to ensure the easy transition of the British Gas Corporation from the public to the private sector. I am sure that when it is privatised and thriving in the private sector, the noble Lord will, along with others, recognise the wisdom of the move which we are making.

Local Government Bill
5.12 p.m.
House again in Committee on Clause 6.
Baroness Stedman Baroness Stedman moved Amendment No. 56:
Page 3, line 38, at end insert—
"( )The Secretary of State shall before the abolition date lay before Parliament a report on the steps he will take to secure the full adoption by metropolitan district councils and the London borough councils of those facilities, services, and responsibilities for the protection and enjoyment of the countryside which serve the continuing needs of the wider country areas and neighbouring populations.")
The noble Baroness said: We are now back again to the conservation of the countryside batch of amendments which are designed to safeguard the quality of life in the country and they also deal with the planning and environmental issues. I understand that we are also dealing with Amendment No. 58.
I should like to confine myself to Amendment No. 56. The Greater London Council and the metropolitan counties have been very active in conservation and in the promotion of the countryside. A great deal of work and investment has been put into making attractive countryside accessible to the public from these large conurbations. Under the Bill, all the work of this nature is to become the responsibility of the district councils with no county-wide body to guide and maintain the work over the whole area.
The effective development of the open land in the countryside for recreation needs an authority which can take an overall view and not be constrained by purely administrative boundaries. Despoiled landscapes and derelict sites have been made into pleasant and attractive areas as major projects undertaken by the county councils, often in partner

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ship with other local authorities and with statutory undertakers and the voluntary organisations. The Countryside Commission, like the National Farmers' Union, believes that without special support the successor districts and the boroughs will not be able to continue the valuable work of the metropolitan counties and the GLC in improving and enhancing the countryside environment; in promoting and encouraging the environmental education (about which the noble Lord, Lord Melchett, was speaking earlier); and in providing recreational facilities.
A recent MORI opinion poll showed that attractive countryside came second only to safety on the streets in contributing' towards the quality of people's lives. The Countryside Commission carried out its own survey in 1984, and that also showed that 60 per cent. of all visits to the countryside were to places within six miles of urban areas. The metropolitan counties at the moment are spending £10 million a year on land reclamation and another £2 million a year on other environmental schemes. That is exclusive of the revenue expenditure on management and maintenance. Many of the metropolitan county country parks receive up to a quarter of a million visitors a year. Surely those places are at least as important to the people of the counties as a whole as are certain arts and sports facilities for which special arrangements via the Arts and the Sports Councils have already been conceded. A great deal of good work now stands at risk unless similar arrangements are made for the countryside and for conservation.
The Countryside Commission has advised on grant-aided work by the metropolitan counties and the GLC, recognising its importance to their counties and indeed to their regions. These recreational sites serve a very wide catchment area and they often extend beyond the boundaries of any single district. The countryside management schemes for environmental improvement work protect the vulnerable and quite often farmed countryside on the urban edge between urban settlements. These schemes have brought great benefits to the population of the entire urban area and to those in adjoining shire counties. Encouragement and additional financial support must be given to ensure, as the metropolitan counties and the GLC have done, that the boroughs and the districts continue to take a wider than local view.
It is important to ensure that the public and private investment is not wasted and that major developments are located to give the maximum benefit to the whole of the area. It is important that we have an assurance now that the Government will underwrite the £3¼ million which the Countryside Commission estimates that it will need to continue its existing work until the boroughs have agreed to take on the responsibilities.
My noble friend Lord Hunt is not here this afternoon, but he has asked me to make one point on his behalf about the national parks with which he has been so closely associated over many years. He says that the area which this amendment covers would require Parliament to scrutinise and to approve. These parks have a most important national as well as local importance because they are enjoyed by people from a far wider area than the fringes of the GLC and the metropolitan areas.
My noble friend takes as a particularly good example the Peak National Park, parts of which lie in
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the Greater Manchester, the West Yorkshire and the South Yorkshire metropolitan counties. Under the terms of Clause 6(b) the six county councillors who sit on the Peak Park board, two from each of the metropolitan county councils, will be replaced by the district councillors in whose district lie parts of the national park, and they may, indeed, number more than the present six because I understand that there are 19 districts in the three metropolitan counties involved.
My noble friend makes the point that the wider county-wide perspective is likely to be lost when the county councillors have to stand down and perhaps a narrower and a more parochial focus might take their place on the park board's deliberations. He thinks it extremely important that we try to get an assurance that, until agreement is reached by the boroughs, and until the boroughs have given the Government a firm agreement that they will take on these responsibilities, the Government will be underwriting the situation.
If we are not to have a county-wide body concerned with the protection and the enjoyment of the countryside, to provide the services and the facilities which are necessary for the continuing needs of the wider county areas and the neighbouring populations, then we have a right to know now how the Secretary of State will secure a full adoption of these schemes and their maintenance. If the boroughs and districts cannot cope financially with their additional responsibilities, what plans has the Secretary of State for ensuring, and assuring, that the Countryside Commission have the necessary increase in their finances to be able to encourage the specialist staff to be employed, and our natural countryside to be preserved for all to enjoy?
The Minister will no doubt tell us that the boroughs and the districts will receive a higher level of RSG and that their GREA will reflect their new responsibilities. But many of these councils are already hard pressed and there can be no assumption that they would be willing, or able, to divert scarce financial resources to this sort of countryside work. Therefore, what we are asking in this amendment is that the Secretary of State should consider, and should bring before Parliament, measures which will encourage, and will enable, the districts and the boroughs to cope with the heavier financial burden and the additional responsibilities which this Bill seeks to place upon them. I beg to move.
Lord Stanley of Alderley: This really is the other side of the coin to Amendment No. 34 moved by my noble friend Lord Molson. His amendment dealt with the long-term problems and this amendment deals with the short-term, immediate problem of what happens when the metropolitan counties get disbanded next April. It is politically minor, but to those of us involved in the countryside—the National Farmers' Union; the Countryside Commission; and indeed the National Trust (and I have an apology from the noble Lord, Lord Gibson, who has had to leave)—it is important and it is constructive, allowing us to plan forward, which is so essential in all country matters.
I hope that my noble friend Lord Skelmersdale will be able to accept this amendment. Before he sat where

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he does he often chided me for being an avaricious farmer, caring not one jot for the needs of others, particularly those living in towns. I know that he still feels that way. Therefore, I just hope that he is not going to be forced to give your Lordships some contrary dogma, if I may call it that.
The noble Baroness, Lady Stedman, put the case, as I knew she would, so well that I am left to deal with only one aspect of this amendment. Needless to say, that is the agricultural one. My points have really been taken away by the noble Lord, Lord Melchett, in the last amendment. He explained many of the problems in dealing with agricultural land that I was going to explain.
The metropolitan counties and the GLC have managed their agricultural land quite exceptionally well—keeping the green sites green, which was mentioned by the noble Baroness, Lady Fisher—and it is a large acreage that they have. They have gone further than anyone to solve the problems of farming on the urban fringe, of rights of way, of access to farmland for recreation, and of relaxation in the country, which, I suggest, are so much better to relieve our stress than Valium or some of the drugs we were talking about a few moments ago.
Apart from the fact that the Bill concentrates in my opinion overmuch on the GLC—my noble friend Lord Sandford had a constructive amendment, Amendment No. 19, but it really only dealt with London and SERPLAN, whereas the other metropolitan counties matter just as much—so far as I can see, there is no provision or information to satisfy me that this countryside work, and the work mentioned by the noble Baroness, will be continued.
The amendment asks the Government to tell us what is going to happen, particularly to projects in hand, when the metropolitan counties and the GLC are disbanded in April. We ask them, are they going to let these schemes collapse? Nature does not stand still just because the politicians wish it to. We must know what is going to happen in the countryside now, because we have to plan ahead.
I therefore beg my noble friend on the Front Bench to accept this amendment, even if he feels that he may have to come back at Report and modify it. I believe that it is time the Committee did something positive rather than waiting all the time for jam—and the jam, it seems to me, that we are being promised has not got a lot of sugar in it anyhow.
Lord Campbell of Alloway: May I be permitted a brief word in opposition to this amendment, which seems to have within it a double-barrelled mandatory provision. The first provides that the Secretary of State shall lay a report, and the choke refers to,
"the steps he will take to secure the full adoption".
This surely savours of an over-centralisation of power which, in view of the assurance given earlier today by my noble friend Lord Elton on Amendments No. 55 and 58, appears not to be necessary.
I take the point that Clause 86 will require substantial amendment to accommodate the assurances. As has been said by my noble friend Lord Stanley of
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Alderley, this is the short-term obverse of the amendment of my noble friend Lord Molson. But, to refer to Amendment No. 19, as I understand the position, my noble friend the Minister has taken this back with a view to enlarging it to take in the other amendment, whose number I have now forgotten, which deals with the metropolitan district councils. Therefore for my part I should prefer to wait and see how those assurances are reflected in an amended Clause 86, and to stay my hand for the moment.
The Earl of Radnor: I put my name to this amendment because I felt that of this clutch of amendments dealing with the parks and the countryside, it was the best. I thought for a start that it did not put the Government to a great deal of trouble. It is merely asking them to tell your Lordships' House and another place what my noble friend Lord Stanley has just said; what precisely they mean to do. By implication that means that I at least am not too happy about what they say they are going to do in Clause 6 and Schedule 3, because two matters seem to be left hanging.
I put them in what I think is the order of importance. The first is money, and the second is the compatibility of these councils which succeed to power and through which boundaries of national parks, and those kind of things, can run. They then have to form boards and they have to agree what they are going to do. I do not believe that they will in fact form good, cohesive, progressive policies as have been formed in the past by the metropolitan counties and by the GLC.
Having said that, perhaps in fairness one ought to go into a little detail. The noble Baroness, who put the case so well, referred to the sum of£34¼ million as being mentioned by the Countryside Commission. I myself have said that I think there will be not perhaps a squabble but a difference in priorities in this body drawn from two other bodies when they come to consider these matters.
5.30 p.m.
The suggestion that came to my mind is that one needs an independent vehicle to deal with this money from wherever it may come. I hope it will come from somewhere. My understanding is that that sort of money is needed to keep the national parks going as they are now; that is, not needing any initiative to make them better or to improve them. In my naïveté, perhaps, it appeared to me that the vehicle was there in the form of the Countryside Commission. This is a fair-minded, well-run and well-led body, with the interests of people, not just the country, at heart. It is people we are considering—the accessible areas where people who live in conurbations can get out to breathe. Many of us like myself are lucky enough to be born, bred and live in the country, and we can only imagine how much other people look forward to visiting the countryside.
What we need in the period before 1st April 1986 is to hear from the Government something a little more detailed and positive which we can discuss again. I do not in my mind muddle this amendment with Amendment No. 58; it seems to me to be a different amendment. I sincerely hope that my noble friend on the Front Bench will find it acceptable.
Baroness Nicol: I wish briefly to support the amendment from these Benches. We give it our full support. I allow myself a little wry amusement at the intervention of the noble Lord, Lord Campbell of Alloway, who strains at the gnat of this tiny bit of intervention and has swallowed a hundred or so camels throughout the rest of the Bill.
The Earl of Onslow: Lord Camel or Lord Campbell?
Baroness Nicol: It is a biblical reference, which I am sure is familiar to your Lordships. We are concerned not with the powers of local authorities—we are all satisfied that they have the powers; it is the duty that we want to lay on them to take those powers. The only way to do that and to persuade them that they can allocate some of their money—many of them are hard pressed, as we know; they must be persuaded that some of that money must be allocated for this purpose—is to have an undertaking from the Minister that he means business. To ask for this report is entirely reasonable. It will be helpful not only to us and to those who care about conservation, but also to the authorities themselves, for it will give some idea of what is expected of them. We fully support the amendment.
Lord Molson: I hesitate to intervene, but shall do so briefly in order to raise two points. If this is not the right amendment on which to raise these matters, I do not apologise because this is a complicated Bill. All the amendments dealing with these matters tend to overlap. They are trying to deal with much the same subject, but they offer different alternatives. I open with what might more appropriately be my last sentence. I hope that if the Government are not prepared to accept these amendments at the present time, they will indicate that these are substantial problems which we are trying to raise and that we might have discussions between now and the Report stage with a view to the solution of these problems being reached with agreement.
The first point I want to make is that, though I may have misunderstood, I was under the impression that the High Peak National Park would not be broken up by this Bill. It would be tragic if it were broken up. The High Peak, which I represented for 22 years in another place, is one of the most successful of the national parks. One half of the inhabitants of England live within 60 miles of Buxton. It is of immense importance to the rural dwellers in the whole of the industrial Midlands of England that the High Peak should be preserved as a single unit. I had thought that that would be the effect because, as your Lordships may not be aware, although there are six or seven national parks, there is a joint board only in the case of the High Peak and the Peak District. It would be tragic if the effect of the Bill would be to break up what have been two planning authorities set up in 1947 or 1948 which have been extremely successful and which are considered by a large proportion of the urban inhabitants of this country as being involved with areas which should be preserved, planned and treated as a single whole.
I do not intend to develop my other point at any length, but it, too, raises a general issue. As I have
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mentioned before, the Department of the Environment withdrew the first two circulars it issued, one dealing with housing and the other with green belts. They were replaced by two circulars which were almost entirely acceptable to the amenity societies with which I have been associated. There was an undertaking by the Government that the whole principle of the green belts should be preserved. I said previously that while I had not the slightest doubt that the Government would carry out in the spirit and the letter the undertakings implicitly given in those circulars, I was not clear whether the machinery provided under the Bill would enable them efficiently to carry out the policy to which they are committed.
It is possible that on some later amendment we may be able to discuss the whole question of the green belts more appropriately than on this amendment, but I should like guidance and advice from the Government as to whether this is the right time to raise that matter. I raise it only on the broad principles of whether the machinery is effective for giving effect to undertakings which Government have given in those two circulars to the country as a whole and whether they are satisfied that the present machinery will not result in the eating into of the green belts and, in the case of the High Peak, the fragmentation of an extremely successful national park.
Lord Melchett: I want to say a word on one aspect of this that concerns the GLC land holdings in the green belt. Noble Lords who have spoken so far have tended to underestimate the scale and the urgency of the problem. There was an article in Farmers' Weekly recently which made a number of points. The first was that the boroughs that will take over the land currently owned by the GLC and let to tenant farmers have no experience in managing agricultural holdings. They have no staff, no land agents and so on, whereas the GLC has an experienced and much respected team. It is unusual to hear tenant farmers praising the landlord in quite the terms in which tenant farmers praise the GLC. In considering the political complexion of the GLC and the likely politics of many of the tenant farmers it becomes all the more remarkable, but the tenant farmers have been unstinting in their praise of GLC management.
As the noble Lord, Lord Stanley, said, those areas have been farmed very well and a great deal of effort, expertise and money—and money is important on the urban fringe—has been put into reconciling the conflicting demands of agriculture, access and recreation in areas all over the country and particularly around London where those pressures are greater than anywhere else; and it has been done very successfully.
The Farmers' Weekly reports that already farmers are suffering. Investment in buildings and repairs is declining because of the uncertainty caused by abolition, according to the tenant farmers actually involved. And there is a real fear—and I shall be interested to know what the noble Lord who is going to reply will say about this—among tenant farmers, which must be a sensible one, that when the land is transferred to London boroughs or to county councils they will find themselves, in the current climate, short of cash and they will sell the land. That seems to me to be a real threat for the future of a large tenanted sector.

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As I understand it, on all sides of the Committee we are keen to see the tenanted sector in agriculture continue, but if this land is sold to other landlords or to the farmers themselves, then, in the long run, it seems to me inevitable that it will leave the tenanted sector of agriculture and that must be bad for the industry as a whole. What is even clearer and immediate is that the resources which have been put in by the metropolitan councils and the GLC to managing the land, to keeping it at a high standard, to keeping it farmed (which is very difficult on the urban fringe) will go as soon as the land is sold. We will then see the spread of what is called "horseyculture", the tin shacks, the dereliction which spreads out so easily around cities as real farming is pushed away into the countryside; and the blight that occurs around cities all too easily follows.
That seems to me as inevitably going to happen if this land is sold by local councils. I cannot see London boroughs which are rate capped or desperately trying to maintain services and which are picking up the tab for things which the GLC were paying for, not taking the opportunity of realising the cash by selling the land. So this is going to lead to immediate, serious problems not only for the farmers but for all the people of London who enjoy these areas for recreation. It seems to me that this amendment does not go nearly far enough in tackling what is a very urgent and serious issue for everyone concerned, for the countryside in general and for the farmers involved in particular.
The Earl of Onslow: I should like to underline some things that were said by the noble Lord, Lord Melchett. I was about to call him "my noble friend Lord Melchett". He is so in some ways, but I do not always have to say that. He spoke of the terrible damage that can be done in the urban fringe. One has only to look around Staines, Slough and London Airport to see the most ghastly mixture of town and country which is neither town nor country. It is squalid, there is no character to anything and it has neither the benefit of the town nor the benefit of the countryside. Unless we are very careful, that particular form of urban fringe can spread.
I come up in the train quite frequently on what is genteelly called the New Guildford Line—it was built in 1876. It goes from Oxshott to Wimbledon and Surbiton. Right up to Surbiton there is some really pleasant farmed countryside with nice hedges and nice oakwoods. I do not know who it belongs to, but it is exactly how one wants the border of town and countryside to be. I would assume that they have the problems of access, the problems of plastic bags and the problems suffered by anybody who farms and lives near a built-up area. But the urban fringe has been avoided. If my noble friend's amendment can show what the Government intend to do about that in the transition stage, he will have achieved a very great deal. We must be careful on the problem of urban fringe.
Lord Davies of Leek: Very briefly, there is an angle on this which is omitted. It is this. What happens in the case of the continuity of a meandering stream, brooklet or rivulet in regard to the responsibility all along the line of that system of water flow, which is
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important to the entire theory of land drainage. It should be stated somewhere that the policy and control would overlap district areas, borough areas and local council areas so as to get a continuous policy for meandering streams, rivulets or brooklets. Otherwise an intelligent system of land drainage cannot be worked out.
I have started the point. There is no need to develop it further, I think that what I have said is axiomatic that there needs to be a policy along the whole line of the flowing of water so that control is administered all along the line of any rivulets or water flow. Otherwise agriculture, land drainage, hedging, ditching—the whole lot—can be ruined from the point of view of a constructive drainage policy. I have said enough. I hope that note is taken of that point when we come to the end of this Bill.
5.45 p.m.
Lord Walston: I support this amendment but I share the reservations of the noble Lord, Lord Melchett, that it does not go far enough, that it is almost too gentle in its phraseology. I hope that that may be overcome by the Minister when he replies; because when, as I hope he will, he accepts this amendment, I hope that he will spell out very clearly that he agrees with those who have already spoken on what is implied in this amendment as to the three criteria which must be observed in this body which is to be created to look after these rural spaces.
First of all, as the noble Lord, Lord Molson, rightly said, they must be planned as a single whole and the body that is set up to look after them should have very wide parameters in which to operate; it should not be fragmented. Secondly, the body should consist of people who will look after the interests of those who are going to enjoy these open spaces as well as those who are actually cultivating them, as has been mentioned by more recent speakers. Those people may come from very great distances but their interests nonetheless are great that these open spaces should be properly looked after. They must not be looked after solely by representatives drawn from the areas themselves, the rural district councils, the local councils, in which the land happens to be situated.
Thirdly, and I suppose in some ways most importantly, this body should either have powers to raise adequate finance for its own purposes—and nobody but that body will know how much money it needs to do its job properly—or, if it cannot have those powers, then it should have powers to demand adequate finance either from the constituent local authorities or from central Government. Unless the money is there, unless it has the right to that money, then, however good it is, however good its intentions, it will fail in achieving the purpose.
Lord Boyd-Carpenter: I hope that your Lordships will not hold it against my noble friend Lord Onslow if I confess to your Lordships that my intervention in this debate is solely the result of his speech. My noble friend unwittingly, I think, touched on a rather curious aspect of this matter. He referred (in terms which the late Sir John Betjeman could hardly have bettered or worsened) to Slough, to Staines and to the Heathrow area. But your Lordships, while not necessarily being

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enthused by the aesthetic and amenity aspects of those areas will, I think, have in mind that they are almost certainly the most economically efficient, employment productive and prosperous sections of our community today.
Heathrow Airport itself generates a very large proportion of our overseas earnings. It provides a great deal of extremely well paid employment for a great many thousands of people; and the same is true, although in lesser degree, of Slough (which in fact is an extremely well run town) and of Staines, with which I also happen to be familiar. Therefore, if these are to be held up as awful warnings which it is the object of this amendment to prevent, then that would dispose me, I think, to be very critical of this amendment.
Lord Melchett: If the noble Lord would not mind giving way, I do not think anybody was trying to plant trees in the middle of Heathrow Airport, desirable though some of the local residents may feel that is. It is where the countryside meets those developments that all ofus feel we want to keep it countryside, we want to keep it green. I cannot believe the noble Lord really thinks that a whole load of tin shacks and bedsteads and a few horses grazing in a field are particularly productive to this country or to anyone else.
Lord Boyd-Carpenter: With his habitual adroitness, the noble Lord has neatly sidestepped my noble friend Lord Onslow's point and put it not on Heathrow, not on Slough nor Staines, but on the areas adjoining, where the case is quite different.
The Earl of Onslow: May I interrupt my noble friend? I am sorry, is this a private fight or can anyone join in? I really think that for once I should refer my noble friend Lord Boyd-Carpenter to the noble Lord, Lord Melchett, who has expressed my views 100 per cent. accurately. I am talking about the "rurban fringe" on the edges of Staines, on the edges of Slough and on the edges of Heathrow Airport. That is what I am complaining about and that is what nobody should take credit for. It is what I want to avoid in the future, to make sure it does not happen outside Oxshott.
Lord Boyd-Carpenter: I am much obliged to my noble friend for those observations, although if they had already been expressed by the noble Lord, Lord Melchett, it would appear to be perhaps a trifle superfluous to repeat them. If he would consult Hansard, he will see that he named these three areas which happen to be economically among the most valuable aspects of this country and for those of us who care about the provision of employment, they are of very real significance. He referred to them and not to their adjoining areas.
But I will pass on from that to the terms of the amendment itself which I would have thought, even from the point of view of my noble friend Lord Onslow, go too far. They refer to the statement having to be made by the Secretary of State. This is an easy sort of amendment to put down, but of course it ignores the fact that, whether it is carried into law or not, it is perfectly possible for noble Lords or Members in another place to ask questions of the Secretary of State on these points.
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I myself am always rather doubtful about multiplying the number of formal statements by Ministers who are, of course, anyhow, without any such amendment, answerable to each House of Parliament. Your Lordships' House has certainly not demonstrated, particularly in the last few weeks, any lack of determination or willingness to ask quest ions of Ministers.
The second point on the amendment is that it refers to the full adoption by the metropolitan councils and borough councils of these facilities, services and responsibilities. That, as I read it—and I am subject to correction by the authors of the amendment—means that we are being committed to the precise pattern of support of the activities to which the GLC and the metropolitan councils have committed themselves. I certainly would not be prepared to give a blank cheque and say that all the activities either of the GLC or of the metropolitan councils were such that they had to be backed by a parliamentary provision that their full adoption must be carried on by the successor authorities.
If the amendment had been framed in more general terms—and I can see the point of it—I think it would have been more acceptable. But to try to nail the Government to securing the carrying out of every activity of this kind which these authorities which are to be abolished have undertaken, would, I think, be a very rash, foolish and unjustifiable thing to do,
Baroness White: If I may spring to the defence of the noble Earl, Lord Onslow, I am afraid that Lord Boyd-Carpenter is not familiar with the jargon of those of us concerned with countryside protection. I think I correctly heard the noble Earl use the phrase "rurban fringe", it is jargon, it is not very elegant, but it is expressive. He used it, and therefore his version of what he said was correct and that of the noble Lod, Lord Boyd-Carpenter, was not, I am afraid.
Lord Boyd-Carpenter: I do not want to waste the time of the noble Baroness, although it is always a pleasure to address her. But the noble Lord quoted, as examples of the urban fringe which he deprecated, these three specific locations. If the noble Baroness will contain her impatience until Hansard is available, Hansard, I think, will confirm that.
Baroness White: Unfortunately, the noble Lord is still incorrect. The term "rurban"—inelegant though it may be—refers to the land surrounding the areas which he rightly described as of economic importance. It is not the areas themselves. The noble Earl, Lord Onslow, was entirely correct.
Lord Boyd-Carpenter: I would suggest to the noble Baroness that she should read Hansard, if she feels able to.
The Earl of Onslow: May I suggest that this argument should come to an end?
Lord Skelmersdale: I am grateful to my noble friend Lord Onslow. I was about to suggest that I might be allowed to reply to the amendment. The provision of facilities for recreation in the countryside is primarily

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the responsibility of local authorities. The Secretary of State has no direct role in these matters. Countryside management, as the Committee will appreciate, is generally best left in the hands of the owners and occupiers of the land.
However, to the extent to which public authorities must intervene, this too is a function of local planning authorities. The provisions of the National Parks and Access to the Countryside Act 1949 and the Countryside Act 1968, which confer these functions on local authorities, are couched in terms of what the local authorities may do, not what they must do.
Local authorities, therefore, have the freedom to provide whatever facilities they see fit. I should be very surprised if your Lordships wished to take away from them that discretion which is implicit in the amendment and in the words of the noble Baroness, Lady Nicol, but the amendment does not do this.
The role of the Secretary of State in these matters is an enabling one. In Clause 6 we have already provided by Schedule 3 for the transfer of responsibility and the continuing operation of those matters concerning national parks, by-laws and public rights of way for which amendment to existing legislation is necessary.
While I am on this matter, perhaps I might respond to various points which have been made about national parks and even perhaps a little later on urban fringes. The noble Baroness, Lady Stedman, in moving this amendment, referred to the views of her, unfortunately absent, noble friend Lord Hunt and his concern about the county-wide discussion on membership of the national park boards.
In the case of the Peak Planning Board, the only national park whose membership is affected by abolition, it is the case that the metropolitan county seats which are six in number will be redistributed to the districts who will be able to bring detailed local knowledge.
The noble Baroness then no doubt will say, "But what about a national overview?" This can and will be expressed by the one-third of the members of the board who are ministerial appointees and are there for that reason. Over and above this, there are ten national parks.
As far as the Peak Park is concerned, abolition in no way breaks up the Peak Planning Board, which will remain totally. That is my answer to my noble friend Lord Molson. It will remain moreover as a unitary authority, though with the necessary changes in membership to which I have just referred.
We now come to the point which my noble friend Lord Molson made about the green belt. Yes, I certainly accept on behalf of the Government that the two circulars, namely, the one on the green belt and land for housing to which he made reference in his speech, were not as well received as the Government anticipated they would be. But the Committee well knows the story here: the two circulars were withdrawn and have been replaced. Since their replacement, I have not heard the sort of outcry on the original circulars to which my noble friend properly drew attention.
580
Further than this, obligations on successor authorities in regard to green belt and housing will remain exactly the same as under that replaced circular. Just as we are not imposing new duties, equally we are not taking away existing ones, nor are we taking away obligations. Belts will become no less green because of this Bill.
The Earl of Onslow: Before my noble friend leaves the subject, am I to understand that instead of green belts they become green chunks round the metropolitan counties?
6 p.m.
Lord Skelmersdale: Green belts are as currently defined in the circular. The process of abolition does not change them. My noble friend very properly asks: are they likely to be broken up because we have smaller conurbations? But we do not have smaller conurbations. What we do have are district councils rather than metropolitan county councils; but the areas will remain.
Lord Molson: May I interrupt my noble friend to ask for elucidation? It is difficult to take in precise words about these rather complicated matters. It is very difficult to see how the green belts can be efficiently administered if different planning authorities are going to be responsible for different parts of them. It has been the great advantage of the intermediate tier that they have, first, in the case of all the municipal county councils, exercised a general strategic control over the lower-tier planning authorities. That, I understand, was removed by the Act of 1981, I think. In the case of the Greater London Council, however, it was preserved. I ask the Government, if they are to give full effect to the policies they have themselves laid down in the two circulars to which my noble friend referred, to consider between now and Report stage whether it is not really essential to have some supervising authority. Perhaps my noble friend will tell me that the strategic guidance which we were discussing rather fully the other day, and which is in the hands of the Secretary of State, will be used for that purpose. Of course it will be difficult to do, but if I have an assurance that the Government really intend that it shall be effective, I have no doubt that they will see to it that it is effective.
Lord Skelmersdale: Rather than be drawn into the green belt question at this stage, I shall say that what I have already said—that the green belt will not become green chunks, in the sense that there will be white or black chunks in between—is absolutely correct. That was one of the points put to me by my noble friend Lord Onslow.
The green belt does not rely for its protection on the ownership of the land. It is planning controls which protect the green belt. The acquisition of the London and Home Counties green belt land under the 1938 Act pre-dated general legislation on the green belt. The new owners of the 1938 Act land will be subject to all the controls applied to that land by the Act. That of course includes the overriding view, to which my noble friend Lord Elton referred on, I think, the first day of our Committee stage, of the Secretary of State. To that extent my noble friend Lord Molson is absolutely correct.
Lord Campbell of Alloway: Will my noble friend forgive me for one moment? I am only trying to assist. Is this not a classic example of the need for coordination between the different authorities in charge of the green belt, to which my noble friend Lord Colville of Culross referred?
Lord Skelmersdale; Yes; and that is yet another reason why the unitary development plans, which we have discussed at some length on previous days, have been drawn up in the way they have. Part I has to have the approval of my right honourable friend and, equally, any one district or borough council has to have consultations with a neighbouring one if its unitary development plan concerns its activities. But, with the greatest respect, I think that it is better to try to go forwards rather than backwards.
Lord Harmar-Nicholls: I absolutely agree with that; but in order to avoid any misinterpretation of what he has said, can my noble friend not give a categorical answer to my noble friend Lord Molson? I would have thought that we have given the reserve povvers to the Minister because, in the last resort, he is in a position to put right any perverse result that may flow from smaller authorities having taken different decisions. There has been so much criticism of the powers given to the Minister that I would have thought we should advertise and show some pride in one of the things that he could do, in order to overcome some of the feelings that have arisen on this subject.
Lord Skelmersdale: Yes; we have here two voices with but a single thought. My noble friend is absolutely correct. I am not sure whether this would be an appropriate moment to turn to the comments made by the noble Lord, Lord Davies of Leek, about the water authorities. The Government are well seized of the unified river basin management, which has been the subject of discussion in so many debates in your Lordships' Chamber over the last two years. The Government have no present plans to change it, and of course that will be relevant when we come to discuss amendments, for example, on land drainage and the sorts of things which the Thames Water Authority may or may not get up to as a result of the passage of this Bill.
The noble Lord, Lord Melchett, expressed fear that the inheriting boroughs will sell land and thus put off such tenant farmers as they have on that land at present. I am not sure that that is really viable as a proposition because the successor authority will inherit the land subject to existing tenancies, and the rights of those tenants against their new landowner will be exactly the same then as they are now against the GLC or the metropolitan county councils. The change of ownership will not affect a tenant's legal rights or obligations.
Perhaps I may now—
Lord Melchett: If the noble Lord is going to leave that point, may I just ask him two questions, because he did not deal with the matter of land which falls vacant, as tenanted farm land inevitably does over the passage of time? I wonder whether the categorical answer he gave to the noble Lord, Lord Harmar-
582
Nicholls, about the Secretary of State using his power would apply in this case, so that the Secretary of State would stop tenanted agricultural land being sold by a successor authority and insist on its being kept in the tenanted sector, which the Government are so keen to protect and, indeed, to expand. That is my first point.
Secondly, the noble Lord did not say anything in response to what I said about resources. Farming in this area is a very difficult business and it takes a lot of expertise and money to keep agricultural land in good heart, given the pressures which are inevitably there on such land, being on the fringe of very large urban areas. The GLC, for example, has a very good reputation for keeping agricultural land in good heart, because they have had the expertise and have been prepared to spend the money. Will that continue?
Lord Skelmersdale: I shall return to the noble Lord's point as regards tenanted land in a moment, but so far as resources are concerned, I was just about to deal with that very point, before he spoke. The question of how existing projects funded by the GLC and the metropolitan county councils will be handled after abolition is of course of vital importance. Under our abolition proposals, as I sought to reassure your Lordships' Committee on Thursday, the matters of finances are more or less as the noble Baroness, Lady Stedman, described them. At present the cash for these and other functions of the GLC and the metropolitan councils comes from the ratepayers. It is taken from them by precepts which are levied via the boroughs and the districts. It goes without saying that those precepts will go now not from the GLC and the metropolitan counties and can be used, certainly in part, where they are not needed for other successor bodies (which we will come on to a little later) by the successor local authorities for their own purposes. The functions will now be transferred to the boroughs and districts, which can have recourse to exactly the same ratepayers direct. The GREAs, and consequently their grants, will be adjusted to take account of the transfer of those responsibilities—
Lord Melchett: May I intervene?
Lord Skelmersdale: May I just finish the point? I see no financial reason, therefore, why the boroughs and districts should not co-operate in providing facilities which service a wider than local area. Now I give way.
Lord Melchett: I am very grateful to the noble Lord. I am sorry to prolong this discussion, but I understand that, for example, so far as the GLC's land in the green belt is concerned, most of it lies outside the GLC's own area and it will revert to neighbouring county councils. Surely the financial argument which the noble Lord has just used does not apply in those cases?
Lord Skelmersdale: If, for example, land which is owned by the GLC is situated in Buckinghamshire and it therefore goes to Buckinghamshire under the Bill's proposals, what I am saying is that the GREAs will be altered to take account of those responsibilities. Certainly, on the point about precepting the noble Lord is absolutely right. Yes, that would not involve a shire county.

583
However, the main point about this amendment, it seems to me, was in regard to the Countryside Commission and its attitude to all that is going on. As the noble Baroness, Lady Stedman, has said, the Countryside Commission contend that between £3¼ million and £4 million is currently spent by the GLC and the metropolitan counties on country parks, countryside management schemes and facilities for recreation, which would be at risk if transitional arrangements were not made. I have already described some of the transitional financial arrangements which are to be made under the existing scheme of things.
Incidentally, although I am trying to compress what I want to say because I seem to be making rather a long speech, let no one misunderstand me. The work that is being done in this connection is extremely good—not, though I should love to say it, in 100 per cent. of the cases, as I do not know 100 per cent. of the cases, but may we settle for somewhere in excess of 95 per cent. of the cases for the sake of argument? The commission's view is that the situation might be helped if its grant in aid were increased and if it then offered increased levels of grant-in-aid to local authorities.
The Countryside Commission is the Government's statutory adviser on matters pertaining to countryside conservation and of course we take its advice extremely seriously. My honourable friend the Parliamentary Under-Secretary of State will meet the chairman of the Countryside Commission, who is an ardent campaigner for the cause of countryside conservation and recreation, on 11 th June. This has already been arranged. They will discuss the commission's plans, including the question of a change in the level of funding for the commission in the light of abolition, as well as the commission's other proposal for future work.
Obviously, I cannot pre-empt the results of those discussions, but I would say to my noble friends Lord Campbell of Alloway and Lord Boyd-Carpenter that I agree with them that this is an excellent reason for waiting to discover what goes on in those discussions. Therefore, I do not think that it would be appropriate to take a final decision on this matter this evening.
Having said that, whatever the outcome of those discussions, I am convinced that it would be wrong to enforce by legislation the continuation of all GLC and metropolitan county council schemes. They might, for example, not be appropriate, in view of unitary development plans. Some of these schemes are, as we all know, temporary; and noble Lords will be able to think of their own examples where it just might not be appropriate for these schemes to continue.
Moveover, the amendment calls for a report and I really feel that that is not a matter for the Government. It would sit much more naturally with the successor authorities themselves. The Government's, the Countryside Commission's and the Nature Conservancy Council's role is to enable successor authorities to carry out such schemes and to ensure that they have the best possible advice. Furthermore, this amendment appears to rob the successor authorities of the freedom by which all local authorities, whether in metropolitan or other areas, exercise their priorities.
584
As I have said, I am extremely sensible of the points made by my noble friends Lord Molson, Lord Campbell of Alloway and, indeed, Lord Boyd-Carpenter, on how to take the matter from here. But what I can assure the Committee is that the matter is being taken extremely seriously and that we are moving forward in a spirit of inquiry and wanting to get the job done. Unfortunately, I am in the cleft stick of not being able to report instant success to your Lordships this afternoon. On those grounds, I hope that the noble Baroness and my noble friend will feel that it would be reasonable not to pursue this amendment any further at this stage.
6.15 p.m.
Lord Winstanley: For two reasons I did not intervene before the Minister replied to this amendment: first, because I thought that the speeches I had made on earlier amendments would have made it crystal clear that I supported this amendment; and, secondly, because I thought that we would have a much more reassuring reply from the Government. But not having had that reply, I feel bound to say one or two words.
In essence, the noble Lord Lord Stanley of Alderley, at the end of his speech, was asking the Government to tell us what is to happen in regard to urban fringe countryside after abolition. In essence, the noble Lord, Lord Skelmersdale, has said in reply that we must wait and see what happens after abolition and then he will be able to tell us what will happen to urban fringe countryside after abolition. That is not good enough.
I also have to object on two other grounds. First, I think that in his reply the noble Lord dwelt rather too much on the financial provisions—I accept that they are important—and where the money is to come from. But we all know that money for urban fringe countryside comes from many sources. It comes on certain occasions from derelict land grant, which is sometimes used to restore land to beneficial use, perhaps as countryside; it comes as grants from the Countryside Commission, from Community Task Force and from all sorts of places. Never mind the money. As we said on an earlier amendment, what matters is the very important work which has been done hitherto by personnel in the county councils, the GLC and the other metropolitan councils and that work will, in the end, disappear.
The noble Lord the Minister said in his reply, quite rightly, that the statutory adviser to the Government on matters of the preservation of the countryside and access to the countryside for recreational purposes is the Countryside Commission. There is a difficulty there. The Countryside Commission's duties are enshrined in statute and it is made utterly clear that the one thing it is barred from doing is work in urban centres.
This is one of the reasons why the Countryside Commission has found it necessary now, in connection with the groundwork movement, to establish the Groundwork Foundation, because some of the work being done by the groundwork movement is dealing with greenways extending right into the centre of urban areas and it could be argued that to grant-aid some of this work might be regarded as ultra

585
vires if it were done by the Countryside Commission. That is perhaps in part, why the Countryside Commission has found it necessary to devise some alternative method where that is required.
The crucial point is that the work which has been done is of immense importance not just for recreational purposes, which is of great benefit to local residents, but for production as well. The noble Lord, Lord Boyd-Carpenter, who said so much about what is important in regard to certain land is making money and providing jobs, must remember that much of the work which has been done by the metropolitan counties in urban fringes has been to restore the countryside by the simple method of restoring productive agriculture in areas where, in a sense, it had disappeared under the pressures of trespass, litter and vandalism. The big problem has been to resolve the conflicts between urban fringe farmers and people who live in urban areas, and the metropolitan counties have done admirable work in that respect. The point is that by restoring productive farming to some of those areas, as has already been done, we are not only providing better countryside for the enjoyment of people, but actually making money and producing food which would not otherwise be there, and providing opportunities for employment.
I really do ask the noble Lord the Minister to give us a better reply, and to address himself in particular to the whole question of expertise. I shall not be long on this, but I am chairman of the Groundwork Trust, a partnership between the Countryside Commission, St. Helens and Knowsley Borough Councils and the Merseyside Metropolitan Council. The input of the Merseyside Metropolitan Council to the work we have done there is by no means only a question of money, although it has been money; much of it has been by way of highly skilled expert work from people who work for the metropolitan county. We want to hear clearly what is going to happen to them, what structure is going to be created to make sure that they continue doing that work, and that their expertise is not lost from these areas. Of course, the noble Lord can say that the district councils may take them on; they may indeed. But merely to say that this is enabling legislation, that districts will take over the same powers and have the right to continue to do the same things, and we must wait to see if they do, is not good enough. I hope we can have a better reply. If, not, I hope the noble Lord will press the amendment to a vote.
Lord Elton: Has the noble Lord, Lord Winstanley, been entirely fair to my noble friend? The amendment we are discussing is fairly clear in what it proposes. It proposes that there shall be a report, and on that noble Lords have hung a great many interests. The noble Lord knows this is not a Bill to create new powers or duties. This is a Bill to transfer existing powers and duties.
My noble friend said quite properly that that is precisely what the Bill will do. It is not proper to expect him to create out of the air a new duty on local authorities to perform something which before has been done voluntarily. He said that resources would be voluntarily available from the same people who
586
provide them now. At present, the Greater London and metropolitan county councils' precept to do these things falls upon the ratepayers of the borough and district councils. The borough and district councils who inherit the opportunity but not the duty to perform those functions which the Greater London Council and the MCCs performed as an opportunity and not as a duty, will be able to go to the same ratepayers and ask for the resources therefor. They will have transferred to their GREAs—Grant Related Expenditure Assessment—the allowance for the functions that were performed as an option by the preceding authority. My noble friend adequately described that as well.
The noble Lord, Lord Winstanley, wants a cast iron undertaking that every single person engaged in these functions and every single operation will be continued, but that is to remove from the Bill its essential feature of perpetuating what we already have. Noble Lords have spent a great deal of time saying how good is what we already have. It does not fit very well with their argument now to say we should change all that and apply compulsion where at present there is merely the opportunity. So I think my noble friend is absolutely right in that regard.
The only gloss I would add is that derelict land grant from the department will continue to be available to the districts and boroughs, which will be of great personal interest to the noble Lord. In sitting down, I would say how we appreciate—it will not alter what he will do or say—the work he has done.
The Earl of Onslow: I am sorry to intervene again, but there is something I do not quite understand. If we have a policy for the countryside all the way round the metropolitan areas, we do not want to go back to the situation before the war, when Middlesex County Council went full steam ahead and developed all of Middlesex and consequently it vanished. Surrey County County decided not to develop. I am talking of two contiguous counties here. Consequently the Surrey County Council bit goes much further into London and the old Middlesex County Council is much further out of London.
I would say this to my noble friend, that I do not think his amendment is a good one. I see the point very clearly behind what he is getting at (and I actually could vote for it) in wanting to get some answers from the Government. What several of us are worried about is: how is the actual policy for the whole round outside metropolitan areas going to be co-ordinated so that we do not get a Middlesex and Surrey situation, such as we had before the war?
Lord Elton: I do not wish to take on this debate, but if I can say so to my noble friend, Lord Onslow, we are back on the ground we were discussing on unitary planning. I sought to describe the system there as a patchwork quilt in which the patchwork was provided by the unitary plans of the unitary planning authorities, the local development plan authorities, and it was held together as a quilt by two things; one was my right honourable friend's strategic guidance—and he will not always be my right honourable friend, by which I mean the Secretary of State; he will not always have the strategic guidance of

587
the Secretary of State. The other thing is the power to call in any of these plans if they appear to the Secretary of State either not to be congruent with their neighbours, or if their neighbours think they are not congruent; so there is every means of producing a coherent national strategy, which is what my noble friend wanted to ask.
Lord Harmar-Nicholls: This seems to be a move towards pushing this to a vote, but I wonder whether, from our point of view, if ought to be done. It is not for me to give advice to the sponsors of this amendment, but this is the sort of thing which ought to be brought up on Report. We have a large part of the Bill still to go. We can get many indications as to Government thinking in this particular line of country. If this is pushed to a vote now, we inhibit ourselves in the sort of thing we can put on the Order Paper on Report. My advice—if I can give advice to the sponsors of the amendment—would be: do not put it to a vote now but keep yourselves clear to do something about it later.
A noble Lord: Where is the noble Lord, Lord Shinwell?
Baroness Stedman: The noble Lord, Lord Harmar-Nicholls, was my Member of Parliament for 25 years and I did not take much notice of him in all that time!
Noble Lords who have spoken today, including the noble Lord, Lord Boyd-Carpenter, have said we have every opportunity in this House to ask questions of the Minister as to what is happening. But it is not questions we want to ask. We want answers now, before the Bill becomes operative, so that we know exactly where we are going. We have been told that the amendment could be framed in more general terms and we have been told that it does not go far enough. Perhaps we have not gone far enough, but that is something we can put right at a later stage or, if the Government feel so inclined, they can stiffen it up at a later stage.
I am sorry if I misled the noble Lord, Lord Molson, into thinking that the Peak District National Park was going to be fragmented. What my noble friend Lord Hunt asked me to intimate was that the membership of the Peak planning board will be altered and instead of having the county people who take an overview of the area it will be broken down into representatives of the districts. There is a danger they may take a rather more parochial view. I am not completely convinced by the suggestion of the Minister that one-third of the nominees are the appointees of the Minister and therefore would have some guidance on it. There are six others who are not.
Lord Skelmersdale: If I may correct the noble Baroness in that impression, what I said was that one-third of the members of the Peak Park National Planning Board are ministerial appointments and one of their roles is to give an overview as to what is happening nationally; whereas the job of district council members obviously is to represent their own districts. So although the noble Baroness did not quite understand, I hope I have now made myself clear.
Baroness Stedman: The mistake is mine. I am sure the noble Lord, Lord Skelmersdale, was quite clear and that it was I who lacked comprehension at that time.
The obvious queries we have had surrounding green belts underlines our concern about planning procedures which we expressed earlier and which no doubt we shall come back to. The noble Lord referred to reserve powers; but they are the last resort and do not help us to know what is happening on 1st April 1986. We want to know what is happening now and whether the money will be available to service the tenanted land so ably referred to by the noble Lord, Lord Melchett. The noble Lord has said that the precepts that were levied by the counties will still be available to the districts, but we still have no guarantee that they will use them for this purpose. The noble Lord, Lord Elton, chided me the other night because he did not want to get drawn into local government finance. But when we start talking about GREAs we have also to talk about targets. I come from a shire county whose target is less than its GREA and therefore GREA does not help us. We go into penalty.
I think that this Bill came to us with a good many unanswered questions. A good deal of time was spent on it in the other House. We have not really had answers to very many of our questions so far as the Bill has been going through this Chamber. I think that the noble Lord, Lord Skelmersdale, has been batting on a very sticky wicket. He has said that our views are going to be taken seriously and that we are moving forward. But quite frankly I do not think that is good enough, and I should like to test the feeling of the Committee.
6.31 p.m.
On Question, Whether the said amendment (No. 56) shall be agreed to?
Their Lordships divided: Contents, 152; Not-Contents, 135.

DIVISION NO. 1

CONTENTS

Airedale, L.

Darling of Hillsborough, L.

Allenby of Megiddo, V.

David, B.

Amherst, E.

Davies of Leek, L.

Ardwick, L.

Davies of Penrhys, L.

Attlee, E.

Dean of Beswick, L.

Avebury, L.

Delacourt-Smith of Alteryn, B.

Aylestone, L.

Banks, L.

Denington, B.

Beaumont of Whitley, L.

Diamond, L.

Bernstein, L.

Elwyn-Jones, L.

Beswick, L.

Ennals, L.

Birk, B.

Evans of Claughton, L.

Blease, L.

Ewart-Biggs, B.

Blyton, L.

Ezra, L.

Boothby, L.

Falkender, B.

Boston of Faversham, L.

Falkland, V.

Bottomley, L.

Fisher of Rednal, B.

Brockway, L.

Foot, L.

Brooks of Tremorfa, L.

Gaitskell, B.

Bruce of Donington, L.

Gallacher, L.

Buckmaster, V.

Galpern, L.

Burton of Coventry, B.

Gifford, L.

Carmichael of Kelvingrove, L.

Gladwyn, L.

Chandos, V.

Glenamara, L.

Chitnis, L.

Glenconner, L.

Cledwyn of Penrhos, L.

Graham of Edmonton, L.

Collison, L.

Greenway, L.

Croham, L.

Grey, E.

589

Grimond, L.

Ogmore, L.

Hampden, V.

Oram, L.

Hampton, L.

Peart, L.

Hanworth, V.

Phillips, B.

Harris of Greenwich, L.

Pitt of Hampstead, L.

Hatch of Lusby, L.

Plummer of St. Marylebone, L.

Hayter, L.

Heycock, L.

Ponsonby of Shulbrede, L.

Hooson, L.

Radnor, E.

Houghton of Sowerby, L.

Rathcreedan, L.

Howie of Troon, L.

Rea, L.

Ilchester, E.

Roberthall, L.

Ingleby, V.

Robson of Kiddington, B.

Irving of Dartford, L.

Rochester, L.

Jacobson, L.

Ross of Marnock, L.

Jacques, L.

Sainsbury, L.

Jeger, B.

Scanlon, L.

Jenkins of Putney, L.

Seear, B.

John-Mackie, L.

Serota, B.

Kaldor, L.

Shackleton, L.

Kennet, L.

Shepherd, L.

Kilbracken, L.

Simon, V.

Kilmarnock, L.

Somers, L.

Kinloss, Ly.

Stallard, L.

Kirkhill, L.

Stamp, L.

Kirkwood, L.

Stanley of Alderley, L. [Teller.]

Kissin, L.

Lawrence, L.

Stedman, B. [Teller.]

Listowel, E.

Stewart of Fulham, L.

Liverpool, Bp.

Stoddart of Swindon, L.

Lloyd of Kilgerran, L.

Stone, L.

Lockwood, B.

Strabolgi, L.

Longford, E.

Tanlaw, L.

Lovell-Davis, L.

Taylor of Blackburn, L.

McIntosh of Haringey, L.

Taylor of Mansfield, L.

MacLeod of Fuinary, L.

Terrington, L.

McNair, L.

Thurlow, L.

Mar, C.

Tordoff, L.

Masham of Ilton, B.

Tryon, L.

Melchett, L.

Wallace of Coslany, L.

Meston, L.

Walston, L.

Milford, L.

Wedderburn of Charlton, L.

Mishcon, L.

Wells-Pestell, L.

Molloy, L.

Whaddon, L.

Monk Bretton, L.

White, B.

Monkswell, L.

Wigoder, L.

Monson, L.

Wilson of Langside, L.

Mountevans, L.

Winchilsea and Nottingham, E.

Mulley, L.

Nicol, B.

Winstanley, L.

NOT-CONTENTS

Airey of Abingdon, B.

Croft, L.

Allerton, L.

Cullen of Ashbourne, L.

Arran, E.

Davidson, V.

Auckland, L.

De La Warr, E.

Belhaven and Stenton, L.

Denham, L.

Bellwin, L.

Digby, L.

Beloff, L.

Dilhorne, V.

Belstead, L.

Dormer, L.

Bessborough, E.

Drumalbyn, L.

Bolton, L.

Eden of Winton, L.

Boyd-Carpenter, L.

Ellenborough, L.

Brabazon of Tara, L.

Elliot of Harwood, B.

Brookes, L.

Elton, L.

Brougham and Vaux, L.

Enniskillen, E.

Broxbourne, L.

Faithfull, B.

Bruce-Gardyne, L.

Fanshawe of Richmond, L.

Caithness, E.

Ferrier, L.

Campbell of Alloway, L.

Fortescue, E.

Campbell of Croy, L.

Fraser of Kilmorack, L.

Carnegy of Lour, B.

Gibson-Watt, L.

Cathcart, E.

Glanusk, L.

Clitheroe, L.

Glenarthur, L.

Coleraine, L.

Gowrie, E.

Colwyn, L.

Gridley, L.

Constantine of Stanmore, L.

Haig, E.

Cork and Orrery, E.

Hailsham of Saint Marylebone, L.

Cottesloe, L.

Cox, B.

Halsbury, E.

Craigavon, V.

Harmar-Nicholls, L.

590

Hood, V.

Portland, D.

Hornsby-Smith, B.

Rankeillour, L.

Hylton-Foster, B.

Rawlinson of Ewell, L.

Ingrow, L.

Redesdale, L.

Kaberry of Adel, L.

Rcigate, L.

Killearn, L.

Renton, L.

Kilmany, L.

Renwick, L.

Kinnaird, L.

Rodney, L.

Lane-Fox, B.

Romney, E.

Layton, L.

St. Aldwyn, E.

Loch, L.

St. Davids, V.

Long, V. [Teller.]

Sandford, L.

Lothian, M.

Shannon, E.

Lucas of Chilworth, L.

Sharples, B.

Lyell, L.

Skelmersdale, L.

McAlpine of West Green, L.

Southborough, L.

Macleod of Borve, B.

Stockton, E.

Malmesbury, E.

Stodart of Leaston, L.

Margadale, L.

Strathcarron, L.

Marley, L.

Strathcona and Mount Royal, L.

Marshall of Leeds, L.

Massereene and Ferrard, V.

Strathspey, L.

Maude of Stratford-upon-Avon, L.

Sudeley, L.

Swinfen, L.

Merrivale, L.

Swinton, E. [Teller.]

Minto, E.

Teynham, L.

Molson, L.

Thomas of Swynnerton, L.

Mottistone, L.

Todd, L.

Mowbray and Stourton, L.

Tranmire, L.

Munster, E.

Trenchard, V.

Murton of Lindisfarne, L.

Trumpington, B.

Newall, L.

Vaux of Harrowden, L.

Norfolk, D.

Vestey, L.

Norwich, Bp.

Vickers, B.

Nugent of Guildford, L.

Vivian, L.

Onslow, E.

Ward of Witley, V.

Orkney, E.

Whitelaw, V.

Orr-Ewing, L.

Windlesham, L.

Peyton of Yeovil, L.

Young, B.

Polwarth, L.

Young of Graffham, L.

Resolved in the affirmative, and amendment agreed to accordingly.
6.40 p.m.
[Amendments Nos. 57, 58 and 58ZA not moved.]
Clause 6, as amended, agreed to.
Schedule 3 [National Parks and countryside functions]:
[Amendment No. 58A had been withdrawn from the Marshalled List.]
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran had given notice of his intention to move Amendment No. 58B:
[Printed 30/4/85; col. 424.]
The noble Lord said: The object of this amendment, relating to Holland Park, about which I have spoken at great length in the past, was to persuade the Government, if I could, that Holland Park ought to be dealt with on the lines of a Royal Park, and therefore should be looked after by the Department of the Environment. At the last meeting of this Committee the noble Lord the Minister agreed to see me about the position of Holland Park. In these circumstances, and as I have already spoken partly to this amendment, I do not propose to detain the Committee any longer. I will raise this matter with the Minister when he is good enough to see me.
[Amendment No. 58B not moved.]
Schedule 3 agreed to.
Lord Carmichael Lord Carmichael of Kelvingrove moved Amendment No. 58C:
Before Clause 7, insert the following new clause:
(" Highway and Road Traffic functions.
. The Secretary of State shall by order taking effect on the abolition date make provision for the London Residuary Body to exercise the following functions relating to highways and road traffic in London to the extent and in the manner that such order shall provide—

(a) that the Body shall have a duty to prepare, in consultation with the borough councils, plans relating to highways and traffic in Greater London and the Body and borough councils shall have regard to such plans when exercising their statutory functions;

(b) that it shall be a duty of the Body to establish and maintain an organisation for the purpose of assembling, disseminating and keeping up to date, information on road traffic and other transport in Greater London and that the Body may commission such research and carry out such surveys as they think fit in fulfilment of this duty;

(c) that the Body shall have the functions of the highway authority under the Highways Act 1980 in relation to metropolitan roads;

(d) that not later than 1st April 1987 the Body shall, in consultation with the borough councils review the existing network of metropolitan roads and prepare and submit to the Secretary of State for his approval proposals for the revision of that network;

(e) that, as respects metropolitan roads, the Road Traffic Regulation Act 1984 shall apply to the Body (for the purposes of traffic management and parking control) as they now apply to the Greater London Council;

(f)that the Body shall be a local authority for the purposes of section 38 of the Road Traffic Act 1972 (power of local authorities as to giving of road safety information and training);

(g) that the Body shall be authorised, for the purpose of regulating traffic on metropolitan roads, to exercise the powers of a borough council under the said Act of 1984 as respects roads communicating with or adjacent to metropolitan roads in accordance with procedures to be prescribed by the Secretary of State;

(h) that, for the purposes of ensuring that the exercise by the London borough council of their powers under the Road Traffic Regulations Act 1984 does not have any adverse effect on traffic on roads for which they are not the highway authority, the Body shall be given reserve powers similar to those given to the Secretary of State in Part 1 of Schedule 9 of the said Act;

(i) that the Body may exercise the powers of a London borough council or the Common Council under sections 6 and 9 of the Road Traffic Regulation Act 1984 for the purposes of prohibiting or restricting such use of heavy commercial vehicles as the Body considers expedient for preserving or improving the amenities of Greater London or some part of parts thereof;

(j) that the Body shall have a duty to control, manage, maintain and, where appropriate, develop and extend the system of urban traffic control through traffic light signals established by the Greater London Council;

(k) that the Body shall be a "London Authority" within the meaning of section 50 of the London Regional Transport Act 1984 (travel concessions on journeys in or around Greater London);

(l) that the Body shall be able to assist, by way of grant or loan, the provision of transport services by a voluntary organisation for the benefit of the public or any class of persons.")

The noble Lord said: This is one of a very important group of amendments to which I hope the Committee will listen with the same amount of enthusiasm as that with which it listened to the previous group of amendments. It is clear from the Second Reading debate and the votes both here and in another place that the GLC and the six metropolitan counties are to be abolished. However, there remain a number of
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unanswered questions relating to the effectiveness of the proposals in the Bill as far as highways and transport are concerned.
Travel is an essential part of our way of life, and in the metropolitan and London areas, in particular, journeys make up a very complex picture. The management and improvement of the increasingly sophisticated transport system is a multi-million pound industry. It is essential that the organisation of it is done effectively and efficiently. I believe that this requires a sensible organisational structure which can support the necessary specialist teams.
In April—just last month—your Lordships' Select Committee on Science and Technology, in their interim report, stated that the case for uniting highway, traffic and transport functions is strong. By putting down this and the following amendment, the object is to retain the best features of the existing arrangements. We need to keep together the skilled teams and the technology which have been developed over the years.
In drafting this Bill, the Government have recognised that problems may arise in the provision of highway and transport services to a satisfactory standard. But not having found the solutions to the problems which are likely to arise, the Government have found it necessary to give the Secretary of State a whole series of very powerful reserve powers. These would be used as necessary to rectify deficiencies which arise from the proposed arrangements. I do not believe that anyone in this Committee would regard that as being the neatest or the most elegant arrangement to insert in an Act of Parliament.
6.45 p.m.
In moving Amendment No. 58C, I intend to speak mainly about the problems of the London area. The noble Lord, Lord Evans, will be speaking to Amendment No. 58D:
Amendment No. 58D: insert the following new clause:
("Strategic Highway Functions in Metropolitan Counties.
The Secretary of State shall by order taking effect on the abolition date make provision for the authority established by section 27 of this Act for each metropolitan county to exercise the following functions relating to highways and road traffic in that county to the extent and in the manner that such order shall provide—

(a) the functions of the highway authority under the Highways Act 1980 in relation to principal roads within the county;

(b) the functions of a local authority for the purpose of section 1 of the Road Traffic Regulation Act 1984 in relation to the management of road traffic on principal roads within the county:

(c) issuing guidance as to the manner in which in relation to non principal roads the councils of metropolitan districts should exercise their powers under the 1984 Act, for the purpose of ensuring that the exercise by such councils of those traffic powers in relation to non principal roads does not have an adverse effect on traffic or any class of traffic using principal roads within the county or any traffic or class of traffic in any area other than the area of the district council, as the case may be;

(d) the functions relating to the construction and maintenance of bridges within the county which on that date are the responsibility of the highway authority;

(e) the functions contained in the Road Traffic Acts 1972 and 1974 in so far as the same relate to road safety within the county; and

(f) the collection, examination, analysis and dissemination of data required for the discharge of those functions.").

I assume that the noble Lord will concentrate on the six metropolitan counties. However, the principle in

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both amendments is the same. In fact, there is a theme running through all the amendments which have been grouped under this heading.
The purpose of Amendment No. 58C is to enable the London residuary body to prepare highway and traffic plans for London, to carry out research, to be the executive authority for the strategic road network, and to have limited powers to ensure satisfactory arrangements are made with the boroughs. The Bill as it stands proposes to abolish the only strategic highway and traffic authority in London and to replace it with 33 separate planning authorities and 34 highway and traffic authorities. There are no proposals in the Bill for co-ordinating transport programmes and budgets.
In pursuance of its London-wide responsibilities, the GLC at present employs a number of specialist teams backed up by sophisticated computer and data collection systems. These teams were praised for their cost-effectiveness and efficiency in the recent Cranbrook Report. They include those working in highways, bridge design and maintenance, urban traffic signal control, data collection and research, freight planning, road safety, cycling, parking, and other aspects of traffic management. All these will be disbanded upon abolition, and they will not be replaced.
The Government have recognised, however—or seem to have recognised—that there is some need for London-wide co-ordination. The Bill proposes a massive transfer of power and responsibilities from the GLC to the Secretary of State. The trunk road network, for instance, is being extended without passing through the normal channels of consultation and inquiry, some 300 miles of main roads are to be named "designated roads", and the Secretary of State will issue mandatory guidance on all roads. The Secretary of State—or, much more likely, civil servants—will become the final arbiter on highway and traffic policies throughout London. I believe that this is a recipe for increased costs, bureaucracy, conflict, inaction and loss of local control or even local knowledge.
The London residuary body as allowed for in Clause 55 would retain the most important of the London-wide powers and responsibilities and the specialist teams to implement cost-effective policies and programmes, while allowing considerable devolution of traffic powers to the boroughs. The body would co-ordinate strategic highway and traffic policies and programmes. It would implement this programme on the main road network and issue guidelines for traffic management and parking controls as part of the plans to which the boroughs would have regard. The authority would sustain the existing cost-effective and efficient centralised teams of experts and associated resources in line with the Cranbrook Report. This amendment ensures that strategic policies for London can be implemented cost-effectively and efficiently by teams of established specialists.
There is no intention in this or in any of the other amendments in this group dealing with this theme to criticise either the London boroughs or the districts within the now existing metropolitan counties. It is merely a function of the subject we are discussing—that is, transport and highways—that
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makes the smaller areas an inappropriate size properly to carry out the specialist tasks essential to the proper provision of the complicated transport needs of the public in large conurbations.
I am sure that many noble Lords have become aware of the quite deep disquiet of the very wide body of non-party groups and organisations which have indicated their concern over the Bill. There is a very long list. For brevity I shall mention only a few of them. The CBI, the British Road Federation, the Automobile Association, the Royal Automobile Club, the Institute of Highways, the Association of British Chambers of Commerce, the GLC Conservative Group, Air Freight Transport and the London Chamber of Commerce and Industry are all very concerned that there is no overall planning for the highways and traffic of London.
I submit to the Committee that the amendments in my name and that of the noble Lord, Lord Evans of Claughton, are deemed the most appropriate to meet the concern of almost all informed professional and experienced opinion. Our amendment would transfer the necessary functions immediately on abolition. It would transfer them to the most appropriate body and it would avoid the break-up and the loss of specialist expertise; and I would urge the Committee to support both Amendment Nos. 58C and 58D.
Lord Evans of Claughton: It might be appropriate if I were to speak now, as the noble Lord, Lord Carmichael of Kelvingrove, has suggested, on the amendment which deals with the same problem but in relation to the six metropolitan councils. The position is in a sense a little more straightforward than that of the metropolitan counties because our proposal is that the already recognised need for a passenger transport authority taken care of in Clause 27 makes a very good and neat vehicle for taking on the highways services function and avoids the necessity, which is obviously required in London, of a special residuary authority.
So it seems fairly obvious to anyone who has been engaged in local government, or, indeed, in the general running of county and district authorities since reorganistion outside the London area, that the kind of philosophical and practical reasons that the Government have for maintaning a passenger transport authority apply in very many ways in regard to the needs of an overall highways requirement. The highways and transport services are very closely integrated with each other. I have in mind, for instance, bus lanes and the necessity to co-ordinate traffic signals and so on involving buses and trains and ordinary passenger traffic. In other words, there is an almost unanswerable case—though after the last vote who knows what will happen—for doing the same with the overall specialist highways services at present run by the counties in the same way as the Government have conceded that it is necessary to deal with the transport services.
There is the question of urban traffic control. There is the question of accident investigation. There is transport data collection, analysis and planning. There are such matters as road condition surveys, bridge inspections, maintenance and design, major highways design, soils and materials and traffic management inquiries. Since 1973 all these have been co-ordinated

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in the metropolitan counties and without exception, as the noble Lord, Lord Carmichael of Kelvingrove, has said, this has been supported and confirmed as the ideal way of dealing with overall traffic problems by one authority; namely, a metropolitan county council. We on these Benches, and I believe many of your Lordships, would have liked still to have had this controlled by an elected authority. However, since the earlier narrow vote prevented that coming about, we are going for what we believe is a second best but still a very good remedy. We seek to treat highways services in the same way as the Government have accepted that the services of the transport requirements of metropolitan areas are being treated.
Perhaps I may spend a moment in referring to the particular problems of the area from which I come, though I shall try not to take up any points that the right reverend Prelate the Bishop of Liverpool takes up. The problems in our part of the world are particularly significant in terms of having to be treated in an overall way. The noble Lord, Lord Carmichael of Kelvingrove, has dealt very effectively and briefly with the Greater London Council's problems, but in Merseyside the boundaries between the metropolitan borough of Sefton and Knowsley are quite arbitrary. When one is travelling between the City of Liverpool and Knowsley, or the old Bootle which is now part of Sefton, one does not move through a cordon sanitaire, as it were, of a green belt or anything. One just moves from one set of terraced houses into a place with another set of terraced houses which are totally indistinguishable.
My briefing note says here—so I shall take courage to say it, though it is rather offensive to the metropolitan borough of Knowsley—that Knowsley is a sausage-shaped amalgamation of Liverpool east and outer suburbs without a single dominant centre. I would not say that myself. I would only quote someone else as having said it. Half the work journeys in Merseyside by car and 80 per cent. by rail cross district boundaries. More than half the work journeys to Liverpool city centre by car, bus and train originate from the other four districts that make up the metropolitan council, and the vast majority of the heaviest goods vehicles—and Merseyside is still a very important export port—cross district boundaries.
We can add to this the unique problems of the Mersey, which crosses through and divides Wirral from the rest of Merseyside. Perhaps some of your Lordships will be aware that the metropolitan borough of Wirral, of which I was a member for some years and where I lived, wants to declare UDI and thinks it should be an all-purpose authority. But in their wisdom this Government do not permit that as an alternative and so we must assume that the metropolitan borough of Wirral will be part of the county-wide organisation for transport and roads. One gets from The Wirral to Liverpool by car by paying an exorbitant toll of 40 pence, though in most of the rest of the country no such tolls are payable, as, for instance, in moving from one end of Manchester to the other. One must pay 40 pence every time one goes from Wirral to Liverpool or from Liverpool to Wirral and we should like to know what precise arrangements the Government have in mind for the Mersey Tunnel.
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What we should like—and many Conservative Members in another place have proposed this to the Secretary of State for Transport as being a help to Merseyside—is to see the tunnel toll-free; but that is an aside.
There are these special problems in Merseyside. I submit, however, that these problems, though special to Merseyside, are in another sense general to all the metropolitan counties and only slightly different from those of Greater London. We have a natural opportunity for using the Clause 27 body as the highways body in addition to being the passenger transport body. Anyone who works or lives in London knows how integrated must be policies for passenger transport, roads, private cars, buses and trains.
I would have thought that on mature reflection Her Majesty's Government might like to give serious consideration to, and be willing to accept, the principle that we deal with overall highways problems in the same way as they have chosen to deal with passenger transport in the metropolitan counties. I beg to support very warmly the speech of the noble Lord, Lord Carmichael of Kelvingrove, on the first amendment and I ask your Lordships to consider the amendment to which I have spoken and have a general debate about the problems of the GLC and the metropolitan counties together.
The Earl of Cranbrook: If it is agreeable to follow the suggestion that the noble Lord, Lord Evans of Claughton, has just made, I believe it would be appropriate if I were to discuss Amendment No. 59, which stands in the name of myself and three other Members of your Lordships' Select Committee on Science and Technology, whose interim report has already been referred to by the noble Lord, Lord Carmichael of Kelvingrove.
Amendment No. 59: Clause 7, page 3, line 40, at beginning insert ("Subject to the provisions of sections 38 and (London Highways and Traffic Authority) below").
Amendment No. 59 deals—
Lord Elton: Will my noble friend forgive me? Will he also speak to Amendment No. 129, which is the other side of the same problem?
7 p.m.
The Earl of Cranbrook: Yes. My noble friend is impatient with me, but I was getting there slowly. I was about to say that Amendment No. 59 is, in a sense, a paving amendment. It anticipates Amendments Nos. 115 to 119 and also Amendments Nos. 128, 128A and 129:

Amendment No. 115: Clause 27, page 18, line 18, leave out ("Passenger") and insert ("Strategic").

Amendment No. 116: Page 18, line 20, leave out ("passenger") and insert ("strategic").

Amendment No. 117: Page 18, line 21, leave out ("passenger") and insert ("strategic").

Amendment No. 118: Page 18, line 23, leave out ("passenger") and insert ("strategic").

Amendment No. 119: Page 18, line 27, leave out ("passenger") and insert ("strategic").

Amendment No. 128: Clause 38, page 24, line 18, leave out ("passenger") and insert ("strategic").

Amendment No. 128A: Page 24, line 20, at end insert—

("(2) If it appears that functions relating to highways or road traffic to which Schedule 4 or 5 to this Act refers could with

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advantage be discharged by two or more metropolitan district councils jointly, the Secretary of State may by order transfer to the authorities such functions as may be agreed by the district councils by which those functions are exercisable.
(3) The Secretary of State may, after consulting the authority and the district councils concerned, by order revoke an order or any part of an order under subsection (2) above.
(4) An order under this section may contain such supplementary and transitional provisions as the Secretary of State thinks necessary or expedient, including provisions for the transfer of property, staff, rights and liabilities and provisions amending any enactment or any instrument made under any enactment.").
Amendment No. 129: After Clause 38, insert the following new clause:
("London Highways and Traffic Authority.
.—(1) If it appears that functions relating to highways or road traffic in Greater London to which Schedule 4 or 5 to this Act refers could with advantage be discharged by two or more constituent councils jointly, the Secretary of State may by order, on or after the appointed day, establish for Greater London a body corporate to be known as the London Highways and Traffic Authority.
(2) The authority shall consist of members of the constituent councils appointed by them to be members of the authority.
(3) The constituent councils in relation to the authority shall be the London borough councils and the Common Council.
(4) The Secretary of State may by order transfer to the authority such functions relating to highways and road traffic in Greater London as may be agreed by the constituent councils by which those functions are exercisable.
(5) The Secretary of State may, after consulting the authority and the constituent councils concerned, by order revoke an order or any part of an order under subsection (4) above.
(6) An order under this section may contain such supplementary and transitional provisions as the Secretary of State thinks necessary or expedient, including provisions for the transfer of property, staff, rights and liabilities and provisions amending any enactment or any instrument made under any enactment.").
Together, these amendments cover the same subject as the two amendments which have just been introduced by the two noble Lords who have just spoken; that is to say, transport in London and in the metropolitan counties.
The effect of Amendments Nos. 115 to 119 and No. 128 would be to change the name of the proposed metropolitan county passenger authorities which are already in the Bill to strategic transport authorities. There is no particular value in the coin "strategic", but the Select Committee felt that that particular name, over which they would not press any issue whatever, indicated broadly the scope of those authorities that the Select Committee wished to propose.
Amendment No. 128A would permit the Secretary of State, if two or more metropolitan districts within a metropolitan county area wish him to do so, to make orders to set tip a joint facility through the strategic transport authority to operate their highways function. Similarly, Amendment No. 129 would permit the Secretary of State to establish a joint authority for London boroughs wishing to co-operate in certain highways functions.
There is a difference in approach in these amendments from those which were discussed by the two noble Lords in so far as the mechanism by which the strategic transport authorities would come into being is one in which the districts of metropolitan county areas and the London boroughs would voluntarily come together and make a proposal to the Secretary of State.
I want to stress that this set of amendments comes forward as a result of proposals which are published
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and available to your Lordships in the Select Committee's report on the local government Bill and as specifically detailed in that report. In paragraph 77 of the report your Lordships' Select Committee emphasised its overriding concern to preserve the integrity of the specialist services which have been built up in the transport area in recent years by the metropolitan counties and the Greater London Council and to ensure that these remain available to the metropolitan districts and the London boroughs after abolition.
The Select Committee was also concerned to safeguard centres of excellence, to retain scarce professional skills and, most importantly, to create an administrative structure which would encourage innovation for the benefit of present and future generations of urban citizens. The services in the transport field which the committee singled out for special consideration in the light of these principles were bridge and highway design, major road schemes, urban traffic control, data gathering, travel-demand forecasting and highway maintenance. These would be gathered under a strategic transport authority in the metropolitan counties.
In comments which I have received since the report was published this list seems to be generally accepted in professional circles with the addition of other strategic traffic management matters when appropriate; for instance, parking policy, which is important, abnormal load routing, and other such details as traffic engineering, possibly with the exclusion of highways maintenance.
The point is that this amendment does not seek to specify precisely those facilities which should be placed with the strategic transport authorities; it seeks to provide a mechanism by which the districts in consultation with each other, and the boroughs in consultation with each other, together with the Minister of Transport will be able to preserve the scientific capacity that now exists and to develop it in the future.
Since our report was published the Department of Transport has issued two circulars; one a discussion document relating to the future arrangements in the London boroughs, and the second, which followed shortly thereafter, relating to future arrangements in the metropolitan districts. These circulars are, I believe, in the Library of your Lordships' House and I need not elaborate on them in detail.
As regards the Greater London Council, it appears that the circulars envisage that traffic management policy, guidance, principal road policy and some monitoring will go to the Department of Transport. Other data gathering and the maintenance and use of the Greater London transport service data bank and its models would probably transfer in the first instance to the residuary body. It also appears from this memorandum that urban traffic control would transfer to the residuary body as the agent of the Secretary of State. This would have the effect of separating the planning and the operation from each other and from borough road schemes.
I fear that this system risks the loss of capacity to choose between alternative solutions and to develop combined ones. In particular, the separation of the data bases and the models from their users could, in

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fact, impede future development of sophisticated management techniques.
The Select Committee's report was mainly concerned with facilities, and I particularly emphasised that at Second Reading. In drafting amendments to the Bill we find it very difficult to separate facilities from functions because the Bill is about functions—therefore, the amendments refer to the transfer of functions—but this seems to me to be an inevitable factor when considering legislation. However, the underlying purpose of the amendments—and I stress this—is to offer to the Government a mechanism which in the view of the Select Committee will ensure the continued existence of bodies which are able to provide the staff and the facilities needed for transport matters in an efficient manner, in the long term, and not to separate these staff and facilities from the functions which they serve.
One omission in the department's memorandum is bridge engineering, for which, in neither case, do we see any provision made. Bridge engineering is an extremely scarce skill. At present within the metropolitan county councils there are small teams of specialists who service the very variable needs of their districts because it is at present the statutory duty of the counties. Some metropolitan districts may have large, modern bridges and others may have many small, brick bridges. Therefore, one anticipates that the future needs of districts will vary greatly and it is not sensible to consider splitting up the existing bridge engineering teams.
Some of these have been extremely innovative. For instance, I recommend to your Lordships that, if you have the opportunity, you should drop in on the West Yorkshire and ask the teams to exhibit to you the skills that they have developed in resisting bridges in a terrain which is constantly being undermined by the National Coal Board; and in which the ground is likely to, and does, subside. In fact, the West Yorkshire has devised a large concrete bridge which, I understand, is not only capable of dropping for a metre or more after it has been built, but at the same time can survive a torsion of 15 degrees. That is a remarkable engineering skill which has been developed because the need is there and the skills are there—but by a small team using highly sophisticated, specialised equipment based on its own skills and computer-aided designs.
Another aspect that has impressed your Lordships' Select Committee are the benefits of urban traffic control. This is extremely impressive. The saving, in journey time, for instance this time, in West Yorkshire, has been of something like 40 per cent. resident's time for any vehicle on the road when there are now 100 per cent. more vehicles on the road at any one time.
Traffic engineering can substitute for massive engineering works. It is a far cheaper option than enormous road building schemes. Traffic engineering can be used to open routes in the case of emergency to let through fire engines, ambulances or police. Traffic engineering can be adapted, very simply, to divert abnormal loads down the roads which are capable of carrying them. Examples like Strathclyde, where there is a sophisticated urban traffic control system in
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operation, emphasisd the fact that this must begin far outside the purview of any one metropolitan district. Those members of the Committee who drive down the motorway from Edinburgh to Glasgow may like to know that one begins to be under surveillance, and under the control of the urban traffic control system, before one has left the motorway and some time before one reaches Glasgow. All this operation is conducted centrally from the control.
This is the kind of important centralised skill to safeguard which this Bill must make provision. This is the purpose of our amendments. I recognise that we may not have the amendments right. We do not have the drafting skills that are available to the Government. However, as I have said before, I speak as a scientist interested in politics rather than as a political scientist. I am deeply concerned that the professional capacities which now exist should continue to be available in the future.
I emphasise that our amendments will work through a voluntary system. The point is that our proposed joint authority under Amendment No. 128A would need to operate a wider range of services than only that of passenger transport. The Select Committee did not feel that it was sensible to consider a passenger transport authority which did not have under its own control all the mechanisms for other aspects of traffic engineering. For instance, it must have the capacity to control the road marks on the roads, whether making bus lanes or preventing roadside parking. It must control all traffic light signals.
Incidentally, this is a criticism of the amendment of the noble Lord, Lord Evans, in so far as I do not believe it is sensible to separate major roads from minor roads. The traffic light system of any urban traffic control inevitably involves all roads, and I do not believe that one can separate these two classes of roads under a strategic transport authority.
I should like to give the Committee a further example, and to discuss briefly the current plans to relieve congestion in Headingley on the A.660 corridor. These plans involve a combination of the following: some road building; urban traffic control; a park-and-ride bus service and a promotion of train services. Many of the commuters live in Bradford but the problems are in Leeds. Thus it is essential that any proposals which we consider should keep together under united control the various arms of this complicated system and the services. There is an overriding need for continuity in the specialist teams and for security in staffing. I believe that at some stage a message must go from this Chamber to the professionals who are at present providing this service, giving them the assurance that their jobs will be there after April 1986.
I turn briefly to paragraph 3(7)(ii) of the Guidance Note for Metropolitan District Councils, which list? certain services which are already envisaged by the Government as being centralised. It is already thought that the following will need to be centralised for all districts in a metropolitan county; that is to say: traffic counting, both for local monitoring and local needs and for national censuses; accident data and analyses; road network description files; and travel surveys and analyses. The memorandum continues:
"To compile an inventory of existing MCC data sets which will

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need to be preserved and preparing storage and retrieval facilities as necessary. Most MCC computer hardware and software will probably be transferred to the residuary body as a transitional measure".
Later on in this Committee stage I shall, on behalf of the Select Committee, be introducing amendments which deal with the problem of the residuary body, which, like the Government, the Select Committee see as a useful body for a holding operation. However, it is only a temporary holding operation. Thus the question must be asked as to what plans exist to ensure the continuity of these traffic facilities, these traffic services, these traffic skills, and the whole gamut of transportation functions that we are discussing. What will exist after the residuary bodies have done their job? I believe that the amendments 'which are proposed by us, your Lordships' Select Committee, provide an option which is acceptable in terms of the Governments strategy in the Bill and one which I believe ought to be there to give comfort to the professionals and to ensure, for the public al large, that the services to which they have become accustomed will continue to be maintained.
7.15 p.m.
The Deputy Chairman of Committees (Lord Renton): It will assist the Chair and I think the Committee if the noble Earl will indicate whether Amendment No. 55 and the other amendments to which he has spoken are intended as alternatives to the new clauses in Amendments Nos. 58C and 58D, so that if those clauses were carried, his amendments would fall. Will he be so kind as to indicate?
The Earl of Cranbrook: I am subject to the ruling of the noble Lord the Deputy Chairman in such matters, but I suspect that it is true that, since we deal with the same matter, that might be so. However, I regret to say that the noble Lord the Deputy Chairman is a man with far greater experience and far greater skills in this matter than I.
Lord Elton: I think the answer to the question of the noble Lord the Deputy Chairman is that my noble friend's amendments are alternatives to those of the noble Lords opposite. I see them nodding their heads sagaciously in agreement.
Lord Kaberry of Adel: I wonder whether I may at this stage refer to a whole series of amendments which appear on the Marshalled List? If I speak now and we make a decision it will have the result of considerably shortening the Marshalled List. There are 19 in all. They are: Amendments Nos. 59A to 59E; 66; 69; 70; 71; 109A, B, C and D; 121A and 121B; 123; and 124A, B and C.
Amendment No. 59A: Clause 7, page 4, line 6, leave out ("metropolitan district councils") and insert ("police and traffic authorities or Northumbria Interim Police and Traffic Authority or Northumbria Police and Traffic Authority as the case may be").
Amendment No. 59B: Page 4, line 14, leave out ("metropolitan districts and").
Amendment No. 59C: Page 4, line 15, after ("London") insert ("and to the police and traffic authorities, and Northumbria Police and Traffic Authority").
Amendment No. 59D: Page 4, line 19, leave out ("metropolitan district councils") and insert ("police and traffic authority, Northumbria Police and Traffic Authority").
Amendment No. 59E: Page 4, line 22, leave out ("metropolitan district council") and insert ("police and traffic authority, Northumbria Police and Traffic Authority").
Amendment No. 66: Schedule 5, page 120, line 10, leave out ("or a metropolitan county").
Amendment No. 69: Page 121, line 5, leave out ("or a metropolitan county").
Amendment No. 70: Page 121, line 14 at end insert—("Reserve powers of the Secretary of State as to highways and road traffic in metropolitan counties.
10A.—(1) Where the Secretary of State is not satisfied in the case of a metropolitan county that all the local authorities in that area have made joint arrangements for the exercise of such of their functions under Part V of the 1984 Act as are necessary to secure the control, management, development and extension of any system of traffic control which relates to two or more of those authorties, or such other of their functions under the provisions referred to in Schedules 4 and 5 to this Act he may make an order under this paragraph.
(2) An order under this paragraph may transfer to the police authority for the relevant metropolitan county such functions of the local authorities in question under those Schedules as the Secretary of State considers necessary to enable the securing of the control, management, development and extension of that system or satisfactory arrangements for the discharge of any of those functions.
(3) Before making an order under this paragraph, the Secretary of State shall consult any local authority appearing to him to be likely to be affected.
(4) The Secretary of State shall revoke an order made under this paragraph in relation to a system of traffic control in operation in a metropolitan county or in relation to any other function if at any time he is satisfied that all the local authorities in that area have made joint arrangements for the exercise of such of their functions under Part V of the 1984 Act as are necessary to secure the control, management, development and extension of the system or for the exercise of any other function.
(5) An order under this paragraph may contain such supplementary and transitional provisions as the Secretary of State thinks necessary or expedient, including provisions for the transfer of property, staff, rights and liabilities and provision amending any enactment or any instrument made under any enactment.").
Amendment No. 71: Page 121, line 19 leave out ("and 10") and insert (", 10 and 10A").
Amendment No. 109A: Clause 22, page 16, line 15, at end insert:—
(" ( ) A system for traffic control shall for the purposes of this Act include a system of traffic control comprising inter alia transport planning, modelling and data collection, accident investigation data collection and analysis traffic management, associated highway and civil engineering design and construction, computing materials and highway maintenance services.").
Amendment No. 109B: Clause 23, page 16, line 16, leave out subsections (1) to (4) and insert:
("Metropolitan police and traffic authorities.
23.—(1) On the appointed day there shall be established for each metropolitan county which is a police area a body corporate to be known by the name of that county with the addition of the words "Police and Traffic Authority".
(2) The authorities established by this section shall be known as metropolitan county police and traffic authorities.
(3) Each metropolitan county police and traffic authority shall consist of—

(a) members of the constituent councils appointed by them to be members of the authority; and

(b) magistrates for the county appointed by a joint committee of those magistrates ("the joint magistrates' committee").

(4) The constituent councils in relation to a metropolitan county police and traffic authority shall be the councils of the metropolitan districts comprised in the county.
(4A) The magistrates appointed under subsection (3)(b) above shall not take part in any proceedings coming before the authority in connection with the functions vested in the Authority by paragraph 2 of Schedule 11 to this Act.").
Amendment No. 109C: Page 17, line 2, at end insert—
(" ( ) The Police and Traffic Authority may enter into arrangements with any or all of the metropolitan district councils within its area for the discharge of any of the functions contained in Schedules 4 or 5 to this Act.").
Amendment No. 109D: Clause 24, page 17, line 3, leave out subsection (1) to (3) and insert:
("Northumbria Police and Traffic Authority.
24.—(1) On the appointed day there shall be established for the police area constituted by the Northumbria Police (Amalgamation) Order 1973 (which consists of the metropolitan county of Tyne and Wear and the county of Northumberland) a body corporate which as from the abolition date shall be known as the Northumbria Police and Traffic Authority and before that date as the Northumbria Interim Police and Traffic Authority.
(2) The Authority shall consist of—

(a) members of the constituent councils appointed by them to be members of the authority;

(b) magistrates for the county of Tyne and Wear appointed by a joint committee of those magistrates ("the joint magistrates' committee"); and

(c) magistrates for the county of Northumberland appointed by the magistrates' courts committee for that county.

(3) The constituent councils in relation to that authority shall be the councils of the metropolitan districts comprised in the county of Tyne and Wear and the Northumberland County Council.
(3A) The members of the Northumberland County Council appointed under subsection (2)(a) above and the magistrates appointed under subsection (2)(b) above shall not take part in any proceedings coming before the authority in connection with the functions vested in the Authority by paragraph 1A of Schedule 11 to this Act.").
Amendment No. 121A: Schedule 10, page 140, leave out line 13 and insert—
(" Rochdale 3 3 3 ").
Amendment No. 121B: Clause 36, page 22, line 28, after ("police") insert ("traffic authorities").
Amendment No. 123: Page 22, line 39, after ("fire") insert ("and trading standards")
Amendment No. 124A: Schedule 11, page 143, line 31, after ("police") insert ('and traffic").
Amendment No. 124B: Page 143, line 34, after ("Police") insert ("and Traffic").
Amendment No. 124C: Page 144, line 12, at end insert—
(" 1A. The highway and traffic functions referred to in Schedules 4 and 5 to this Act where there is reference to a police and traffic authority or Northumbria Police and Traffic Authority.").
These amendments appear to amount to a lot but all they seek to do is to preserve the urban traffic control system which at present is operated in the six metropolitan counties. I go further and say that it should not be put under the passenger transport authority but that the direction of the control authority should go to the police authority for the county. I shall explain very briefly why I think that is the natural consequence of events to follow.
The traffic control systems in the metropolitan counties, more or less, give and take, are about the same. West Midlands has two control centres, for the eastern and western areas of their area. However, broadly speaking, with various odd agency agreements, they are all the same and operate from one central point.
It is essential today that we should not dissipate the expertise that has been built up in those urban traffic control systems. I have therefore sought to define in one of my amendments what it is essential the urban traffic control authority should have; otherwise, it may be left in extreme doubt as to what is its real function. It should have transport planning, modelling and data collection, accident investigation statistics, traffic management, associated highway and civil engineering design and contribution, and the working of computers in connection with all that.
We find throughout the country that in any conurbation traffic and highway measures have an impact over a wider area than the single district concerned. I am anxious that this should be preserved and managed, as I think it is presently being managed, extraordinarily well. I say that with some knowledge and experience. I have lived for some years in the city of Leeds, where we have always had a traffic problem. Over the years, traffic has continually snarled up at main intersections in the city. Every effort was made by council majorities of differing party complexion to try to solve the problem. However, we were always left with it.
The biggest problem was a place called City Square, so called because it is ovoid. Everything you can think of—gyratory traffic, single traffic, contra-flow traffic—was tried. It never worked until about five years ago, when we began to see the effect of centralised urban traffic control. It was not entirely new in this country; it was not new in the world. One had seen it operating in many countries throughout the world where, with the use of remote control television cameras and proper timing of pad-stalled traffic lights, traffic has flowed smoothly. That is our experience today in the city of Leeds. The skill and the science built up are now being used to deal with all highway development problems. One scheme for what could have been another spaghetti junction problem became very simple with the help of the urban traffic control authority, and many millions of pounds were, I believe, saved.
It so happens that just before I became an elected member of Leeds City Council, some 55 years ago this year, the first automated traffic signal system in the country had been inaugurated by the then chief constable of Leeds. There were fixed stops; there was no mat control; reflection was difficult. Everyone complained that traffic snarled up behind a red signal when it should have been green, and so on. That is, however, some 57 years ago. Since then, developments have gone extraordinarily well. I do not wish a system built up in that way to be lost in the West Yorkshire area by being divided into five parts among the five county districts that will take over highways control.
Local authorities will get back control, taken away from them in 1973, over their own highways, and I have no doubt that they will manage them extremely well. However, we shall not get back our police forces. Leeds and Bradford were amalgamated with others into the West Yorkshire police force controlled by a committee established under the Police Act. It is a committee of special composition that has worked extraordinarily well. I am not seeking to establish another committee to control this urban system of traffic control. I wish to put it with the very authority that has always been involved in traffic problems—problems that have to be dealt with manually should the automatic system break down. It is a proper link identifying the police with traffic control. Those who started it can carry it on and finish it well. I am therefore suggesting that the unified traffic control system should be the responsibility of the county police authority controlled by a newly-named committee, the police and traffic committee. If that is done, we shall see a continuity and development of the system that is now being so well carried out.
I have probably been a very poor draftsman in preparing these many amendments. However, experience in another place over many years has taught me that if the Government have at heart what you have in mind their draftsmen will put right any bad draftsmanship. I am hoping to persuade the Minister to turn his one sympathetic eye towards me and my amendments and to undertake that between now and another stage of the Bill he will study the matter in the greatest detail and bring back a properly worded amendment.
The Deputy Chairman of Committees: The noble Lord can also, I think, assist the Committee. It is my understanding that Amendment No. 59A, with other amendments to which the noble Lord has spoken, are also alternatives to Amendments No. 58C and 58D, and indeed alternatives also to the amendment moved by the noble Earl. Is that the noble Lord's understanding?
Lord Kaberry of Adel: That is correct. It is an alternative in every sense of the term.
Lord Ardwick: I wish to support both the original amendment and particularly the amendment moved by my noble friend Lord Carmichael of Kelvingrove. I do this for a special but very limited reason. It is a better and more radical solution to a problem created by the Bill than the remedy proposed in the names of the noble Lord, Lord Fanshawe, the noble Lord, Lord Tordoff, the noble Lord, Lord Monson, and myself. That is Amendment No. 61. It applies also to Amendment No. 62, standing in the name of my noble friend, which says pretty much the same.
One thing which is wrong with the Bill is that it gives to the Department of Transport unimpeded power to trunk many miles of London roads—power to trunk them without first consulting local interests, local authorities and those people who live on or by the roads to be trunked. After the roads have been trunked, the Secretary of State will hold inquiries—
Lord Elton: Will the noble Lord forgive me? He is, I think, speaking to Amendment No. 62, which does not relate to this group. We already have a very large group. I believe that noble Lords would welcome it if he could stick to it.
Lord Ardwick: I am not speaking to Amendment No. 62; I am speaking to this amendment. I am saying that this is a better amendment than the amendment I have put down. It provides a more radical and better solution than the amendment that other noble Lords and myself have signed and also the amendment in the name of my noble friend Lord Carmichael.
After the roads have been trunked, the Secretary of State, under the Bill, may hold inquiries. But these inquiries are not into whether the deed is to be done but how it is to be done. The fact that a road is unsuitable for trunking will not come into the inquiry. I am concerned in particular with something called the South Circular Road. However, it is not a road at all; it is a winding route that goes from Kew to Woolwich. The fact is that it is already bearing too much traffic, but of course that will not be relevant to the department; the fact that it is unsuitable for trunking will not be a consideration. Under the amendment, the
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new authority that is proposed—the residuary authority—will be required to work out the solutions with the local authorities. Surely that is exactly what should be done. God forbid that the environmental mess of the North Circular should ever be repeated with the South Circular.
7.30 p.m.
Earl De La Warr: It sounds as though my noble friend the Minister is being pulled in a number of directions. Indeed, in one important way I think that he is being pulled in one direction because he has been told by every noble Lord who has spoken so far that the one thing that they do not want is for the highway and traffic power to be left with the districts. Indeed, three separate suggestions have been put forward. I therefore hope that when my noble friend comes to answer he will, at least at one stage, do his best to sweep all those suggestions together and to treat them as one—although they have a negative element—and tell us why he thinks that district authorities are adequate to deal with highways and traffic.
I would only add to what has been said so eloquently by my noble friend Lord Cranbrook what appears to me to be the summing up of the case by his committee, which said at paragraph 73:
"the case for uniting highway, traffic and transport functions is strong. Since in each metropolitan county there is to be a passenger transport authority, the Committee propose that this should become a strategic transport authority, with two executive arms, one for passenger transport and the other for highways and traffic".
That, perhaps, goes a little bit too far as regards my own suggestion. However, I hope that the first part will be taken on board and that we shall hear from the Minister why he likes his suggestion. Hopefully, we shall hear that he is prepared to take all these suggestions away with him and think about them again.
Baroness Fisher of Rednal: I want to pose a question to the noble Lord and ask him whether he really understands the traffic functions of the metropolitan counties. If noble Lords look back to 1974 they will remember that one of the reasons for setting up the metropolitan counties was to overcome the lack of co-operation between the highway authorities of the smaller areas that were operating at that time. I do not know whether your Lordships remember those older authorities, but they were the large metropolitan authorities—Birmingham, Manchester, Liverpool and Leeds, and the surrounding shire counties. Therefore, there was a clash of opinion. This Bill is reverting back to a clash of opinion, but it is not reverting back to what all the district authorities used to do before 1974. It was only the major local authorities that had these wide powers. It appears to me that perhaps the Government really need to look at their proposals in 1974 and what they are proposing now because they will see a complete contradiction, bearing in mind of course that the traffic problems are now 10 times worse than they were 10 years ago. Indeed, that is an important point that one ought to remember.
There is a difference—a grave difference—between the metropolitan authorities and the GLC. Both my noble friend on the Front Bench and the noble Lord, Lord Evans, have spelt out the two distinct differences. The relationships between a metropolitan county and

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its districts and the GLC are very different. Apart from the trunk roads and motorways, for which the metropolitan counties are agents to the Secretary of State, the metropolitan counties are the sole highway authorities in their areas—they have complete control over the highways in their areas. That is extremely important when we are considering passenger transport.
As the noble Lord, Lord Evans, has said, in the West Midlands area and Merseyside and, I think it is true to say, also in Manchester, existing boundaries are not known unless one lives in those particular areas. One does not know whether one has moved from Birmingham into West Bromwich or vice versa, or from West Bromwich into Walsall. It is a continuous built-up area and it seems strange that the people in those areas who have enjoyed the benefits of public transport may, under the Bill, quite easily lose the benefits of those facilities. It is important for those of your Lordships who are not familiar with the metropolitan counties, especially the three which I have mentioned, to realise that they are conurbations with no borders, and no green belt dividing them.
In his observations the noble Earl, Lord Cranbrook, drew attention to specialist staff. I would be the last to underestimate all the capabilities of the noble Earl, Lord Cranbrook. I followed what he said with great admiration. However, I would draw attention to one particular aspect of the specialist staff about whom he spoke. I am referring to traffic analysis. We all know that the toll of road accidents is extremely serious and much more serious perhaps in the large conurbations where the traffic is much heavier. We would all say that the toll on the roads through fatalities and through serious injuries is something about which we ought to do something; and the "something" that we ought to do something about is contained in the Road Traffic Act 1974, which is a statutory obligation.
We could truly say that accident analysis is cost-effective because all road traffic accidents are a charge upon the National Health Service. If we look at the matter in the round, if we prevent accidents or reduce the number of accidents, then quite obviously there is a saving as regards the National Health Service expenditure. Therefore, I ask the Minister to give very serious consideration to a commitment in respect of this very small group of specialist staff in all the metropolitan counties who deal with the traffic investigation and accident analysis. I do not think that this service can possibly be taken on in the future by the district councils.
I know that the time is getting late and so I shall draw my remarks to a conclusion. I admired the description given by the noble Earl, Lord Cranbrook, of something that we are doing very well in the West Midlands and in all the areas which his committee visited. It is obvious that the committee were impressed. We must all ask the Minister to make quite sure that the findings of our own Select Committee are very seriously considered. Indeed, it was the noble Viscount the Leader of the House who told us that the arguments and the points of view that were expressed during our debates on this Bill would be seriously considered by the Government. I hope that this particular amendment, which is being moved both for
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London and for the metropolitan counties, will be given that consideration.
Before I sit down may I say that it was just weeks before the Government published their abolition proposal that they announced their policy for roads in England, in which the Secretary of State for Transport said that the lack of road improvements in the conurbations around London has been due to there being too many highway authorities with uncoordinated goals. Is the Secretary of State, are the Government, trying to create that same situation throughout the metropolitan counties?
Baroness Masham of Ilton: We have before us several amendments. If there is to be a Division I should be grateful for clear advice in order to know which one to support. On Saturday I spent four hours with a Conservative Member of Parliament and a Conservative councillor at the traffic control headquarters in Leeds seeing how efficient is the traffic flow and their high technology.
There is a highly dedicated and expert team which it has taken 10 years to build up. If this directorate of traffic highways and engineering should be dispersed it would be a retrograde step for such an important commercial city as Leeds. Even more important is that Leeds has two large teaching hospitals for a large area of Northern England. The efficient and quick movement of patients can be vital.
Furthermore, cross-boundary flow of traffic is important in the detection of crime and the movement of prisoners, and the police and the traffic control work closely together. I think it would be advisable if the noble Lord, Lord Brabazon, and the noble Lord, Lord Elton, visited this system in Leeds. It is admired throughout the world.
Lord Molson: It is at the same time the great advantage and the great disadvantage of your Lordships' House that it does not have the strict procedure which obtains in another place. It puts an almost intolerable burden upon the noble Lord who presides. We have some four amendments under discussion at the moment. I do not think that I am the only person who is not quite sure which of them is before us at the present moment.
I should like to follow what was said by my noble friend Lord De La Warr. There is one thing that emerges, and that is that every speaker, I think without exception, has expressed the view that it is not satisfactory that traffic should be handed over to the districts without there being adequate co-ordination.
The remedies which have been put forward are different. Perhaps the two most important are those put forward by my noble friend Lord Cranbrook, who was in favour of the traffic regulation being handed over to the passenger transport authority, and the other view, I think put by my noble friend just behind me, who thinks that it would be better for it to be handed over to the police authority. The Government are agreed that it is necessary for there to be a joint board to administer those two services, because they recognise that it is impossible, without great disadvantage, to put into fragments the administration of those two services.

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I think it is the unanimous view—and it certainly was the view of your Lordships' Select Committee—that the same arguments apply in the case of transport. Therefore, we are in the position that everybody is agreed that the proposals at present put forward by the Government are unsatisfactory. As to what should be put in their place we are not agreed. It is manifestly an extremely difficult and rather technical question.
7.45 p.m.
I am personally a bit disposed to favour the suggestion by my noble friend that the passenger transport and, if necessary, goods transport should be regulated by the police. About 30 years ago I had experience in the Ministry of Transport when our Ministry was nominally the traffic authority for London. We had power to make regulations forbidding parking in certain roads. Frequently we were asked by the police to add other roads to those where parking was limited. Normally we refused to give permission for it to be extended for this perfectly simple reason: we pointed out to the police that they already had regulations applying over quite a large part of London and they were not enforcing the no-parking regulations. It was not their fault.
At that time the law was rather absurd. Before a charge could be brought for illegal parking it was necessary for a constable to approach the illegally parked car and wait for the return of the driver. Your Lordships will not be surprised to hear that normally when a policeman was seen standing by an illegally parked car, the driver never returned, and so nothing could be done in that way. Because of that, which is such a clear memory in my mind, it seems to me that the responsibility for administering traffic control is so closely connected with the responsibilities of the police that I am rather disposed to favour the suggestion made in the amendment of my noble friend beside me.
I would ask the Government to look at this matter in a broad way. Perhaps after what happened earlier this afternoon they will be disposed to do so. Could they accept that every speaker, I think without exception this afternoon, has been opposed to the proposals contained in the Bill? If they would accept that, and undertake to consider the matter again before the Report stage and come forward with some proposal—whether that made by the Select Committee of your Lordships' House on Science and Technology, or some other practical and workable proposition—which would ensure that traffic was not dealt with simply within the area of a single district, but was dealt with in, I use the word again, a strategic way, covering a large and appropriate area, I feel that that would go a long way to meeting what appears to be the almost unanimous opinion of your Lordships.
The Lord Bishop of Liverpool: I rise to support Amendments Nos. 58C and 58D. In this Committee, as at Second Reading, the point has been well made that skilled teams have been brought together through the life of the metropolitan counties and the GLC, and that these centres of excellence should not be lost in the abolition. That point has been made with great authority by the noble Earl, Lord Cranbrook, on
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behalf of his committee. Nowhere is this more relevant than in the matter of transport.
Lord Elton: I do not want to be difficult, and I want to try to clean up the proceedings. The right reverend Prelate says that he is speaking in favour of Amendments Nos. 58 and 59, but the principle he has just endorsed is in fact embodied in my noble friend Lord Cranbrook's amendments. It was he who was talking about the non-dispersal. All I am asking is, is the right reverend Prelate speaking for Amendments Nos. 58C and 58D against Amendment No. 59, since they both, apparently, embody the principle of non-dispersal of expertise?
Lord Carmichael of Kelvingrove: I hope I was not too inadequate when I was speaking, but one of my principal points was that the teams should be maintained.
Lord Elton: I do the noble Lord a great injustice. What was in my mind was my noble friend's great emphasis on the need to keep expertise together and the fact that he has other amendments later in the Marshalled List for this purpose which may be germane.
The Lord Bishop of Liverpool: May I try to make myself as clear as I can. I share with the noble Lord, Lord Molson, the idea that there are three alternatives before the Committee, all of which are saying that there needs to be some way of making an overall provision for highways and transportation. If I understood the noble Earl correctly, his was a voluntary way; that this was something that the districts asked for. It is a point I made earlier in the Committee, that I am afraid I have little confidence that districts would take those initiatives in many cases where there is a need for an overall look. That is why I favour Amendments Nos. 58C and 58D which are not, as I understand it, on a voluntary basis of some districts asking for that.
The subject of local government repeatedly poses the question, "How local is local?" It is a subtle question and there are different answers to all manner of different subjects. "Local" will surely mean something different for transport matters than it will for housing matters, and to function effectively a transportation authority should be large enough to contain most of the daily travel movements of its population and to provide a good road network for its commercial traffic. As we have seen, it needs to have sufficient resources to embrace the sophisticated technology and expertise which the complex management problems of a great conurbation demands. If I may use the illustration of Merseyside, it has brought specialist staff to examine and evaluate highway schemes. There is a systematic programme of inspection and maintenance on bridges. In the matter of safety there are specialist facilities and equipment to carry out the testing of materials, skid tests and site testing. There is a multi-discipline joint transportation unit using the latest technology and expertise applied to planning and travel data.
District highway authorities would find this level of expenditure impossible to attain without wasteful and

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extravagant duplication of resources. I believe that road safety is one of the factors we are concerned with today. Perhaps the issue concerning highways and transportation we can most easily understand. Again, how local is local in matters of road safety? Often a district response has been to demands of local residents for a small engineering scheme. In a wider-ranging authority computerised techniques make it possible to determine priorities impartially in seeking to reduce accidents and to maintain highways. I would not want to argue that local residents should be unable to bring pressure to bear. In Merseyside there is good evidence that the county authority has responded quite well to local feelings. I am thinking particularly of the inner ring road in the Vauxhall area at the north end of Liverpool where changes were made to a major plan in response to local protests.
How local is local? Speaking of what I know best, the county of Merseyside, is the county or the district the more appropriate authority for highways and transportation? Merseyside is without question substantially one travel-to-work area. The noble Lord, Lord Evans of Claughton, made the point about the number of work journeys which cross district boundaries.
Traffic problems do not fall evenly. I am sure that Merseyside is not exceptional in this. If traffic problems do not fall evenly money ought not to be spent evenly. The county authority has been able to evaluate needs impartially and to concentrate expenditure in areas of greatest need. For example, 76 per cent. of total highway investment in Merseyside has been in Liverpool compared with a 35 per cent. share of rateable value. That has been for the good of the whole because people are constantly moving across district boundaries. But how can district councils respond in a comparable way?
I make the point that I believe it will not be right to rely on voluntary choice of districts. Part of what this Bill is about is streamlining the cities, getting rid of waste and unnecessary bureaucracy. Let us take the matter of co-operation with public transport. Under the Government's proposals the passenger transport executive will have to establish working relationships with five district highway authorities in Merseyside, each with different policies and priorities, instead of one county-wide authority. It seems inevitable that the Bill's proposals will be time consuming, will increase bureaucratic delays and be difficult to operate smoothly.
I linger for a moment on road safety. The Bill devolves responsibility for accident prevention to the districts. The Government seem to have missed completely the point of the value in keeping together the specialist county units. This goes against much professional opinion which your Lordships will know about.
We are not engaging simply in academic arguments about organisational methods. We are talking about people; in the case of road safety about lives. In Merseyside road accidents have been reduced by 15 per cent. over the last 10 years compared with the national reduction of 9 per cent. Why dismantle something that is working well? The metropolitan counties and the GLC have built up small specialised
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accident investigation and prevention teams which are widely acknowledged to be highly cost effective, particularly in their strategic application of engineering measures for accident reduction. The Parliamentary Advisory Council for Transport Safety says that to date debate in the Standing Committee in another place, correspondence and a meeting with the Minister have all failed to produce a satisfactory response concerning the arrangements for a strategic approach to this work after abolition. Taking into account the arguments that we have heard put forward in the Committee and those of the Select Committee on Science and Technology with respect to technical services, I press the Government to accept these amendments as a revision which will greatly improve this Bill.
Baroness Lockwood: The three sets of amendments which are before us seem to me in one way or another all to try to meet the objectives in the Select Committee's report: that is, to keep the teams of experts together and to retain the services on a strategic basis. The Select Committee's report, at paragraph 42, reads:
"the balancing of costs and benefits across a whole metropolitan area, regardless of district boundaries, is particularly important".
In moving this series of amendments, the noble Earl, Lord Cranbrook, referred to the various technical services that the Select Committee wished to keep together.
8 p.m.
My name is appended to the amendment which the noble Earl has moved. I added it as a member of the Select Committee, conscious of this overriding need to keep the teams together. But I am sure the noble Earl will understand if I say, having heard the discussion, that my first priority will go to Amendments Nos. 58C and 58D because I, too, have a reservation about the voluntary nature of the amendments tabled by the Select Committee succeeding in keeping the teams together. I wish that more of your Lordships could have accompanied the Select Committee on their visits to Greater Manchester, to West Yorkshire and to Strathclyde. I am not a scientist nor an engineer but it is quite clear from the demonstrations that we had that these are centres of excellence which should not be broken up at all.
This is a view not just of the Select Committee and Members of your Lordships' House. Since the publication of the report the Select Committee has received from Cornell University a letter from a person who describes himself as a civil engineer, an educator, a researcher and a consultant. In his letter he says:
"The engineering excellence in West Yorkshire is well known and respected on a worldwide basis. West Yorkshire engineers have made a lasting contribution in bridge design, earth reinforcement, mining engineering and waste disposal".
Then he goes on to say that their techniques are being sought both in the United States and in Japan-based industries.
This is borne out by the experience of West Yorkshire. The noble Baroness, Lady Masham, referred to her visit to Leeds over the past weekend, She may have noticed that West Yorkshire County Council have developed a profile detector which is

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able electronically to identify different categories of vehicles. Again, this detector has attracted worldwide interest and is being manufactured and sold by a British firm. What I am saying here is that it is not just the local government services with which we need to be concerned; it is also the sale of British technology abroad. This is a very important consideration which should not be overlooked by the Committee in its consideration of these amendments.
Reference has been made to the Minister's guidance to the metropolitan districts and the GLC. I think that this guidance shows beyond all doubt that the individual metropolitan districts cannot hope to replace the metropolitan counties unless they co-operate in joint schemes. One of my hesitations about the metropolitan districts co-operating can be seen in the reference which the noble Earl, Lord Cranbrook, made to the development in Leeds. They are trying to develop their scheme covering road, rail and parking facilities in order to ease the transport problems in the Headingley area. I happen to live at the rural end of Bradford District Council and most of my movements are through and into Leeds. It is absolutely clear that to obtain co-operation between Leeds and Bradford on urban traffic control and on the whole area of public transport would be extremely difficult. If one of them opted out and decided to establish its own transport system, then we should be in great difficulty. For those reasons, I do not think we can afford to rely on voluntary co-operation between the districts and therefore I should prefer to see something written into the Bill which makes it absolutely imperative that the districts co-operate and that there is a strategic authority.
One other reference I would make in relation to the Minister's guidance is that the guidance is so detailed that, in itself, it seems to indicate that the Minister does not have confidence in the ability of the district councils to cope with this problem. But the other omission from the guidance is that there is virtually no reference at all to the need to identify conurbation-wide transport needs. Anyone reading the Minister's evidence to the Select Committee will understand what I am saying. I think that this was pretty clear in some of the questions that she gave to the Select Committee. The Department of Transport seem unaware of the strategic needs of the metropolitan counties and of how essential it is to keep these services and these teams as an integrated and strategic whole.
Lord Brabazon of Tara: All these amendments address the same or similar points. In essence, they cover two lines of argument. The first is whether certain traffic and highways functions require a London or countrywide body; whether it is a residuary body or the passenger transport or police joint authorities or even a so-called joint committee which could be a new joint authority by another name. The other is whether specialist groups of expertise need to be kept together. The two issues need to be kept separate; for, while I do not believe strategic London or metropolitan county councils are necessary for highways and traffic, I recognise that certain specialist expertise needs to be maintained. Let me take first the question of the need for strategic authorities. This is an
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issue that we have already debated; and the first amendment is very similar to one which fell following the earlier debate.
Central to our policy to abolish the GLC and the MCCs is that as many as possible of the functions that they perform should be devolved to the boroughs and districts and that those services—police, fire and passenger transport in the metropolitan counties and fire and civil defence in London—which can be sensibly administered on abolition only on a London or county-wide basis we have provided for joint authorities. The vast majority of highway and traffic functions which the Bill devolves to boroughs and districts are however concerned with purely local issues. They are of concern to the inhabitants of one borough or district. Many are functions which the boroughs exercise already either under agency agreements or with concurrent powers. They are functions which it is neither necessary nor appropriate to transfer to area-wide authorities.
I freely acknowledge that there are some issues which cross boundaries or where action by one authority has direct repercussions beyond its own boundaries. But local government boundaries are not new and it would be sad and, I believe, an unjustified indictment of the boroughs and districts if the Committee were to suggest that they need a statutory basis on which to achieve co-operation in the discharge of their day-to-day business. I must emphasise that in the few cases where wider issues do arise, we have made provision in the Bill to ensure that they are properly considered; but they do not require a special strategic authority. The only result of such an authority would be that it meddled in many local matters in an attempt to find a role for itself. That is one of the current failings of the GLC. We want to free boroughs and districts from such unnecessary interference in local matters and I know that many councils welcome this prospect.
Turning to the particular proposals in these amendments, I should like to point out a few of the most obvious flaws. Amendment No. 58C, for example, provides for most of the GLC's highways and traffic functions to pass to the London residuary body. Our proposals will mean streamlined and efficient arrangements. Let us not forget that boroughs are already the highway authorities for nearly 7,000 miles, which is nearly 90 per cent. of London's roads. They are well capable of taking on a further 830 miles of metropolitan roads.
The present three-tier structure for highway and traffic functions is inefficient and unnecessary. This is a view which has been supported by a report from a Select Committee in another place. Three tiers mean administrative complexity, costly bureaucracy and confused responsibility. Even worse, some of the detailed proposals, particularly in the first amendment, No. 58C, would leave both boroughs in the London residuary authority with concurrent powers over certain roads. That is a sure recipe for chaos. Moreover, it is proposed that functions listed in the amendment should be given to the London residuary body. That is a wholly inappropriate organisation for such functions. We shall be discussing the residuary body when we come to Part VII of the Bill, but I should like to stress now that the residuary

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body is not designed to have major long-term functions and traffic and highway responsibilities are not appropriate for it. We have already voted against a successor strategic authority: we should not be misled into thinking that this amendment is in any way less contrary to the principle of this Bill.
So far as the metropolitan counties are concerned, the amendments before us suggest a whole plethora of interesting bodies: joint highways and traffic authorities, joint highways, traffic and passenger transport authorities and joint police and traffic authorities. I do not wish to dwell for too long on these suggestions. I have tried to explain why a county-wide authority is not necessary for highways and traffic matters, which are of mainly local concern. I should, however, like to point out that I see no overriding argument for putting highways, traffic and public transport together under one roof.
In London, the GLC has no public transport function, nor do the boroughs. In shire counties, the county council is the highway and traffic authority, while the buses are run by a variety of district councils, private and public companies. Big cities like Leicester and Nottingham do not come to a halt because different bodies run the buses and provide the roads. Why should places like Leeds or Wolverhampton? There have been powerfully argued points made in support of the amendment, but the facts of the matter are otherwise.
As drafted, Amendment No. 58D would also have the unfortunate effect of splitting responsibility for traffic and parking matters on principal roads. For example, the joint authority would be responsible for laying down yellow lines, but the district council would be responsible for locating parking meters. This sort of division would prevent a sensible approach to traffic problems and could only lead to delay and confusion. The amendment would mean that the general duties of a traffic authority to ensure the expeditious, convenient and safe movement of traffic under the Road Traffic Regulation Act 1984 would in practice be very difficult to achieve. It would undermine the approach being taken through this Bill of giving powers to those local authorities best placed to discharge them.
I can see the apparent logic in the proposal of the noble Lord, Lord Kaberry, to add traffic responsibilities to the duties of the police joint authority rather than, say, the fire joint authority. The police, after all, have some traffic responsibilities. It may seem convenient that the same district councillors who sit on the police authority should also take on traffic functions.
I cannot resist remarking in passing that there are few, if any, local authority responsibilities in which the police have no interest, and the same logic could therefore be applied equally to other functions. However, in the present instance the logic is in any case faulty. The police may have traffic responsibilities but the police authorities do not, or at least not to any significant or relevant extent.
8.15 p.m.
The noble Lord's proposals would not, therefore, allow the police authority to deploy the knowledge and
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expertise it requires for one purpose to a second purpose. It will need to acquire a whole new expertise. I very much doubt that it would be feasible, still less wise, to add to the considerable responsibilities of the members of the police joint authorities the equally considerable responsiblities which these amendments would confer.
I turn now to the issues raised by my noble friend Lord Cranbrook. Other noble Lords have today argued for strategic authorities to retain existing specialist teams and centres of highway and traffic expertise. I am, however, convinced that the boroughs and districts, as responsible authorities, are best placed to make arrangements for the services they need on a voluntary basis. There is a wide range of possible ways, including through private companies or a lead borough or district, in which the boroughs and the districts could share expert staff and facilities. We are, of course, exploring the possibility of one London borough taking the lead on a consultancy basis in providing specialist expertise on bridge maintenance and improvement, but we shall not be led to impose solutions.
Successor authorities must decide how to proceed in the knowledge that uncertainty should be dispelled as soon as possible. The proposed preparatory committees offer a suitable forum but the Government recognise the need to preserve professional expertise. The question is whether we need a full strategic body for that purpose. We will look at the methods of preserving expertise, but recall that functions fall to district or borough councils and those bodies have been invited to co-operate for that purpose. Some are already preparing and perhaps we may come back to review progress made when we come to the Report stage later on.
But it is too much to expect a cut-and-dried answer then. Detailed arrangements will take time to agree, through the preparatory committees we have provided for. I recognise the very great importance of giving staff some reasonable assurance about their future, but perhaps I may remind noble Lords about the assurances we have given, and which my noble friend Lord Skelmersdale repeated on the earlier amendments that we discussed this afternoon—that the residuary bodies can provide a means of keeping specialist teams together if permanent arrangements cannot be made by abolition day.
We also undertook to look further at the provisions in the Bill to see if they needed strengthening for this purpose and to report back. I can repeat that assurance. I recognise the particular concern about the future of the urban traffic control systems. I have not, as the noble Baroness, Lady Masham, has, visited the one in Leeds, but I have visited the one in Scotland Yard, and I am impressed by the work they do there. We accept that joint arrangements are needed when these cover the area of two or more boroughs or districts. Schedule 5 makes provision for my right honourable friend the Secretary of State for Transport, if necessary, to assume the responsibility for ensuring that functions are carried out in a sensible fashion.
I still hope the borough and district councils will come to satisfactory arrangements before abolition day to manage these important systems, but if they do not do so in time my right honourable friend's reserve

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powers will ensure that the benefits of these important systems are not jeopardised. There might also be a role in the short term for the appropriate residuary body, in the case of the UDCs my right honourable friend's agent, in maintaining the systems if he exercised his reserve powers.
On data, the boroughs already collect a considerable range of transport information in their capacity as highway and planning authorities. The Bill provides new powers for them to make arrangements for London-wide research and data collection. If appropriate, the existing computer facilities and data of the GLC will be transferred on an interim basis to the residuary body. It will then be for the successor authorities to settle the most suitable permanent arrangements for integrated data collection and analysis. In addition, as part of its responsibilities, the Department of Transport will be collecting much London-wide data and will make this available to boroughs under arrangements being discussed with them.
I have not given these amendments a very friendly reception, but there are distinctions between them. The amendments in the name of the noble Lords, Lord Carmichael of Kelvingrove and Lord Evans of Claughton, ask for compulsion, which we cannot accept. I hope I have shown my noble friend Lord Kaberry that we do not regard his amendment as being a practical solution.
Turning to the amendments in the name of my noble friend Lord Cranbrook, these contain a permissive element. In some respects—indeed, in many respects—they are similar to the amendments which we shall come to later on, on scientific and technical services. I wonder whether I may ask my noble friend, when it comes to his amendment, to reserve his amendments to a later stage.
Lord McIntosh of Haringey: That speech was a—
Lord Tordoff: Nobody has yet spoken from these Benches on this series of amendments, deliberately, but two of us were members of the Select Committee. I must say I am appalled at the response of the Minister. I get the impression that he has not been listening to a word that has been said in this debate. I can understand that the Minister would not wish to accept the amendments from the Labour Party Front Bench, or even from my noble friend Lord Evans of Claughton. But there is no indication in his reply that he has done other than read out a brief that was prepared before this debate started. I feel that things that have been said from all round the Committee indicate the genuine feeling that all of us have, politicians and non-politicians alike, that there is a very serious matter of which we in this Committee have to take the greatest cognizance. We are not just talking about waiting to see what happens, which is what the Minister is virtually saying, and which is virtually the same thing as Mrs. Chalker said to the Select Committee before they wrote their report. If we in the Select Committee had been contented with that response we would have said so in our report. The Select Committee was not satisfied with that response. I, like the noble Baroness, Lady Lockwood, feel that
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the amendments which have come from the Select Committee are perhaps not strong enough. But I do not even think that the Minister has answered his noble friend Lord Cranbrook, who was our chairman on this occasion, in anything like a proper manner.
The fact is that the members of the Select Committee left their political hats outside the door when they went into committee, and we came out with what I believe is a very important document, which has been read widely and has been widely received throughout the country as being an independent report. I think it is extremely sad that the Minister should come back with a Second Reading speech which seems to be totally unchanged as regards the Government's attitude. We are trying to preserve teams of expert people which have been built up over a number of years. Those people are making a great contribution to the way in which people live, move and have their being in our great conurbations: these are people who are saving money for those great conurbations. Moreover, they are producing software and ideas which can be sold abroad. It simply is not good enought to dismiss these matters in the way that the Government have done so far, and I really do hope that they can reconsider their position, even at this stage.
Lord Harmar-Nicholls: That was perhaps a slightly emotional and unrealistic response to my noble friend's speech. I do not accept at all his interpretation of what was said and the grounds on which he based his words. Of course my noble friend will have a general idea as to what sort of criticisms would be made. If the noble Lord had served in Government he would know that Governments do try to anticipate debates, particularly when they are putting forward a Bill which they have to defend and explain. I doubt whether any of the contributions that were made very effectively by many noble Lords were very new in relation to what had been discussed when the whole of this Bill was being put together. It is not just drawn out of a hat; and I would have expected my noble friend to come with something like a prepared answer to the obvious questions.
As regards the debate being overborne by critical speeches, that is not unreasonable: indeed, that is what it ought to be. Most of the noble Lords who have spoken have their names down to amendments, and because of that they have the priority of call. That is right. And in proposing their amendments they put forward things which they believe and all of them want, as they see it, to improve the Bill. Therefore we can gain the impression that there are overwhelming voices against it, just because those who do believe that the general basis of the Bill is a good one remain silent in order to get it on the way.
The right reverend Prelate was, I think, the only one to put forward the decision that we have to make if we want to push this to a vote. The right reverend Prelate was perfectly clear. He said that he had not a lot of confidence in the acumen and ability of districts and boroughs to come to the right kinds of conclusions. I would much rather—
The Lord Bishop of Liverpool: I do not think that the noble Lord should put words into my mouth. The

619
record will show that I never used the words "acumen" or "ability". The fact that I do not have confidence, for whatever reasons, that the districts and boroughs will co-operate as we all hope they will, is another matter.
Lord Harmar-Nicholls: I will withdraw the word "acumen" if the right reverend Prelate does not find that to be a fair reflection of what he has in mind; but he has just repeated the point—and it is a very proper point if that is what he believes. He believes that the local authorities are not so likely to be able to come to the kinds of conclusions that would be right or to give the guidance that he thinks ought to be given as would be this permanent authority. On that I venture to disagree with him, and I would hope that noble Lords who have themselves served on local authorities might perhaps be on my side. I have every confidence about the acumen—and I now use the word as I would wish to use it—and the far-sightedness and the desire of local authorities to do the right thing.
I also speak from experience, if the right reverend Prelate will allow me, in saying that local authorities are capable of getting together, and do get together, to arrive at a common denominator in meeting problems which face them. For years I sat as the chairman of a district health authority which comprised about 10 local authorities. That was simply because the areas of the 10 councils concerned made it more suitable to come to conclusions in one body than would have been the case if they had been taken separately. This was done quite voluntarily. If the decision we have taken is whether or not we ought to emasculate the Bill, which is designed to remove a tier of Government which slows up advancement and produces extra expense and which has no more recognised knowledge than have the local authorities that are represented now, I think that is the conclusion we ought to come to.
If my noble friend will allow me to say so, I thought that he established very clearly his case that if the amendment were accepted it would remove the real purpose of this Bill. There is no doubt about that. I think we ought not to do that if our only fear is, as the right reverend Prelate said, that there is not a lot of confidence in the local authorities taking on these functions. I should have liked—
A noble Lord: Come off it!
Lord Harmar-Nicholls: I should have liked my noble friend—and perhaps on these matters I talk with as much, if not more, authority than the noble Lord; he may be an expert economist, but I do not know how many local authorities he has served upon—to understand the inner workings and the way in which local authorities carry out their business. However, the criticism that I would put to my noble friend is this: I should have liked him to go a little bit further in explaining how the expertise might be preserved. I should have thought the one point that is generally accepted is that we do not want to disperse and lose the value of this expertise which is there. I gathered he said that he had been impressed with the need to preserve it and that he would come along with some sort of suggestion when we get to the Report stage.
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At this stage, I should have thought that in order to satisfy many of his noble friends who would like to go into the Lobby with him, if it comes to that, he would like, in advance of the Report stage, to take some extra advice as to how we would preserve the expertise which those on all sides would desire. On the general proposition of not accepting the amendments, however fluently the arguments have been put forward, I believe it is the right one if we want to preserve the main function of the Bill, which is to remove an unnecessary and expensive tier of local government.
Lord Elton: As I have been trying to assist your Lordships to come to a conclusion on this, may I say that my noble friend has put his finger on a slight difficulty. My noble friend on the Front Bench has pointed out the shortcomings of various amendments. He has pointed out that those in the name of my noble friend Lord Cranbrook if taken in the light of his later amendments, Nos. 131, 132 and 137, offer the means of preserving expertise and that, though we cannot accept everything that my noble friend puts on the Marshalled List without commitment, we would be happy to look at those amendments. Therefore, I would ask my noble friends to resist Amendments Nos. 58C, 58D and 59A, and hope that my noble friend Lord Cranbrook would allow us to consider his amendments at a later stage.
Lord Carmichael of Kelvingrove: I shall be very brief. I am grateful to the noble Lord for his last remarks. However, I think that at this particular stage of the Bill probably the feeling of the Committee is too definite to accept his guidance at this point, with no disrespect to him.
Two or three important questions have been raised by noble Lords who felt that joint activity or voluntary activity may not be acceptable. I would say that the right reverend Prelate the Bishop of Liverpool is in good company in speaking about the difficulty of having a great deal of reliance on local authorities, because in the Cranbrook Report, Mrs. Chalker herself, in paragraph 62, is reported as saying:
"… past experience casts doubt on the appropriateness of either voluntary joint committees or lead authorities … A more practicable option is a joint authority."
That is precisely why the amendment that I moved earlier is worded in the way that it is. I think it is important, as I tried to say in my opening remarks. I was not suggesting there was anything incompetent about local authorities. I have a great respect for them but they are just the wrong body; they are an inappropriate size for transport and for transport planning. Again, as the right reverend Prelate said, "local" in terms of transport is quite different from "local" in terms of housing. That is the main burden here.
Briefly, I think that the amendment of the noble Lord, Lord Kaberry, was partly answered by the Minister. I do not think the police authority is the most appropriate to assume responsibility for the kind of highway improvement and traffic management proposed. There were the questions of the expert teams and of bridge design and many other specialisations. I think that in winding up the Minister was

621
less than fair when he said that one of the purposes of this Bill is to free the boroughs and districts. He did not mention the enormous powers that will be given to the Secretary of State under this Bill. It removes power from the locality and puts it right into Whitehall; and everyone will agree that Whitehall is more remote from Manchester of Birmingham city centres than the local authority or the passenger transport authority.
The authorities that we have suggested in Amendments Nos. 58C and 58D are appropriate for each of the functions—one for the London area and one for the metropolitan counties. "Compulsion" is the wrong word to use. This is a voluntary coming together with the guidance of the Bill, which is essential if we are to keep these experts together. I believe that we are now at the stage when we should test the feeling of the Committee on this matter.
8.31 p.m.
On Question, Whether the said amendment (No. 58C) shall be agreed to?
Their Lordships divided: Contents, 117; Not-Contents, 103.

DIVISION NO. 2

CONTENTS

Airedale, L.

Hacking, L.

Amherst, E.

Hampton, L.

Ardwick, L.

Hanworth, V.

Attlee, E.

Hatch of Lusby, L.

Aylestone, L.

Hayter, L.

Barnett, L.

Hooson, L.

Beaumont of Whitley, L.

Houghton of Sowerby, L.

Beswick, L.

Howie of Troon, L.

Birk, B.

Ingleby, V.

Blease, L.

Irving of Dartford, L.

Boothby, L.

Jeger, B.

Boston of Faversham, L.

Jenkins of Putney, L.

Bottomley, L.

John-Mackie, L.

Brockway, L.

Kagan, L.

Brooks of Tremorfa, L.

Kaldor, L.

Buckmaster, V.

Kilbracken, L.

Carmichael of Kelvingrove, L.

Kilmarnock, L.

Chandos, V.

Kinloss, Ly.

Chitnis, L.

Kirkhill, L.

Cledwyn of Penrhos, L.

Kirkwood, L.

Collison, L.

Lawrence, L.

David, B.

Liverpool, Bp.

Dean of Beswick, L.

Lloyd of Kilgerran, L.

Delacourt-Smith of Alteryn, B.

Lockwood, B.

Longford, E.

Denington, B.

Lovell-Davis, L.

Diamond, L.

McCarthy, L.

Elwyn-Jones, L.

McIntosh of Haringey, L.

Ennals, L.

Mackie of Benshie, L.

Evans of Claughton, L.

MacLeod of Fuinary, L.

Ewart-Biggs, B.

McNair, L.

Ezra, L.

Mar, C.

Falkender, B.

Masham of Ilton, B.

Falkland, V.

Mayhew, L.

Fisher of Rednal, B.

Melchett, L.

Foot, L.

Molson, L.

Gallacher, L.

Monkswell, L.

Galpern, L.

Monson, L.

Gifford, L.

Mountevans, L.

Gladwyn, L.

Nathan, L.

Glenamara, L.

Nicol, B.

Graham of Edmonton, L.

Ogmore, L.

Gregson, L.

Oram, L.

Grey, E.

Phillips, B.

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Pitt of Hampstead, L.

Stedman, B.

Plummer of St. Marylebone, L.

Stewart of Fulham, L.

Stoddart of Swindon, L.

Ponsonby of Shulbrede, L. [Teller.]

Tavlor of Blackburn, L.

Tordoff, L. [Teller.]

Rea, L.

Walston, L.

Robson of Kiddington, B.

Wedderburn of Charlton, L.

Rochester, L.

Wells-Pestell, L.

Ross of Marnock, L.

Whaddon, L.

Scanlon, L.

White, B.

Seear, B.

Wigoder, L.

Seebohm, L.

Wilson of Langside, L.

Serota, B.

Winchilsea and Nottingham, E.

Shackleton, L.

Simon, V.

Winstanley, L.

Stallard, L.

Wootton of Abinger, B.

Stamp, L.

NOT-CONTENTS

Airey of Abingdon, B.

Inglewood, L.

Arran, E.

Ingrow, L.

Auckland, L.

Kaberry of Adel, L.

Belhaven and Stenton, L.

Kilmany, L.

Bellwin, L.

Lauderdale, E.

Beloff, L.

Layton, L.

Belstead, L.

Lindsey and Abingdon, E.

Bessborough, E.

Loch, L.

Bolton, L.

Long, V.

Boyd-Carpenter, L.

Lothian, M.

Brabazon of Tara, L.

Lucas of Chilworth, L.

Bridgeman, V.

McAlpine of West Green, L.

Brookeborough, V.

Macleod of Borve, B.

Brooks, L.

Margadale, L.

Brougham and Vaux, L.

Marshall of Leeds, L.

Bruce-Gardyne, L.

Massereene and Ferrand, V.

Caithness, E.

Maude of Stratford-upon-Avon, L.

Campbell of Alloway, L.

Carnegy of Lour, B.

Mersey, V.

Cathcart, E.

Monk Bretton, L.

Chelwood, L.

Munster, E.

Clitheroe, L.

Murton of Lindisfarne, L.

Coleraine, L.

Norfolk, D.

Colville of Culross, V.

Nugent of Guildford, L.

Cork and Orrery, E.

Onslow, E.

Cottesloe, L.

Orkney, E.

Cox, B.

Orr-Ewing, L.

Craigavon, V.

Peyton of Yeovil, L.

Cranbrook, E.

Polwarth, L.

Crawshaw, L.

Portland, D.

Croft, L.

Radnor, E.

Davidson, V.

Redesdale, L.

Denham, L. [Teller.]

Renton, L.

Digby, L.

Renwick, L.

Drumalbyn, L.

Rodney, L.

Elliot of Harwood, B.

St. Aldwyn, E.

Elton, L.

Sharples, B.

Enniskillen, E.

Skelmersdale, L.

Fairfax of Cameron, L.

Stanley of Alderley, L.

Ferrier, L.

Stockton, E.

Fortescue, E.

Strathcarron, L.

Gardner of Parkes, B.

Swinfen, L.

Glanusk, L.

Swinton, E. [Teller.]

Glenarthur, L.

Thomas of Swynnerton, L.

Gridley, L.

Trefgarne, L.

Haig, E.

Trenchard, V.

Hailsham of Saint Marylebone, L.

Trumpington, B.

Vaux of Harrowden, L.

Halsbury, E.

Vickers, B.

Harmar-Nicholls, L.

Vivian, L.

Hood, V.

Windlesham, L.

Hornsby-Smith, B.

Young of Graffham, L.

Hylton-Foster, B.

Resolved in the affirmative, and amendment agreed to accordingly.
8.40 p.m.
Lord Skelmersdale: I think that this might be an appropriate moment to take a short break.
Lord Evans of Claughton Lord Evans of Claughton moved Amendment No. 58D:
[Printed earlier: col. 592.]
The noble Lord said: I did not hear the noble Lord because of the noise, but I gather that I am likely to be the next speaker. In the light of the decision taken, I move with great pleasure and confidence that this Committee support Amendment No. 58D. I wish to test the feeling of the Committee.
On Question, amendment agreed to.
Lord Denham: I beg to move that the Committee be adjourned during pleasure until 9.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.42 until 9.30 P.m.]
Clause 7 [Highways and road traffic functions]:
[Amendments Nos. 59, 59A, 59B, 59C, 59D and 59E not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 60:
Page 4, line 27, at end insert—
("(4) The Secretary of State shall prepare and publish in each year following the abolition date a report setting out—

(a) the programme of expenditure for the following year on trunk roads in London;

(b) a summary of the exercise of his powers under this section and Schedule 5 over the previouslear;

(c) proposals for the exercise of the said powers, and the relevant procedures, for the forthcoming year in relation to traffic management measures and designated roads; and

(d) the results of consultations held by the Secretary of State with London borough councils, metropolitan district councils and other organisations in relation to guidance on traffic measures.")

The noble Lord said: Amendment No. 60 asks the Secretary of State to provide certain reports to Parliament if he takes over certain functions. The purpose of the amendment is to ensure that the Secretary of State makes public his programmes for expenditure and plans for traffic control on London's main roads. Individual local authorities are required to publish annual reports on their policy and programmes and therefore the Secretary of State particularly on designated roads, should also be required to follow a similar procedure.
At present the GLC is responsible for preparing and updating the statutory structure plan and associated transport plans. The council is responsible for setting highway policy on metropolitan roads—that is, main roads—and traffic policy on all roads in accordance with these plans. The council has a duty to publish an annual statement of transport policies and programmes which sets down its co-ordinating policies for highways, traffic management and freight policy. It reports on schemes to be implemented and on progress on schemes undertaken. Expenditure, including that on the borough schemes, is spelt out and the document is a public record on how the council wishes to spend money on the London-wide transport service areas that it controls, and is therefore an important part of the local democratic process. It is also a bid for transport supplementary grant.
The residuary authorities will have to produce policies and plans for London and the metropolitan areas. The London residuary body will produce transport plans and budgets. The Bill places no duty on the Secretary of State to produce an annual statement on co-ordinated London-wide highway and traffic policies and related budgets in respect of trunk and designated roads only. This is despite the fact that through the provisions in the Bill the Secretary of State is to take—or was to take—substantial control of London traffic. This is to some extent a fall-back amendment, proposing that the Secretary of State should have to do the same as is at present done by the local authorities.
The Government have on a number of occasions admitted the need for London-wide co-ordination of highway and traffic functions. Acceptance of Amendment No. 58C follows the support for this in this Committee and therefore changes matters to some extent. I should like to have the Minister's view on what changes there will be in the present Bill as a result of Amendment No. 58C. I hope that the Minister will be able to help us in this respect.
The implication of Amendment No. 60 before Amendment No. 58C was put forward was that if the Secretary of State wishes to take over any strategic traffic or highway control, it is right that he should state what his policies are, how much control he wishes to assume, and what his expenditure will be. London has enjoyed open Government for some time. In the case of these matters in particular, Londoners have been able to go before local committees and speak to local councillors, and there argue about expenditure, at either a local or wider level, depending on their particular interest. This amendment seeks to ensure that the Secretary of State will have to give people the same opportunity of being informed as they have traditionally enjoyed.
Amendment No. 60 would ensure that the Secretary of State will prepare an annual statement setting out the programme of expenditure on trunk roads in London, a summary of his exercise of reserve traffic powers over the previous year, proposals for the exercise of his powers over designated roads, and the results of consultations held between the London boroughs and other organisations in relation to guidance. Without this amendment Londoners will be kept in the dark about London transport policies and changes in those policies.
This amendment may require some change because earlier amendments were carried. But until we know the changes which the Government wish to suggest to this amendment, which has a great deal of force behind it, and until we decide on that, I beg to move Amendment No. 60 as it appears on the Marshalled List.
Lord Tordoff: I wonder whether it would be helpful to the Committee if the Government could indicate to what extent they believe that Amendment No. 60 is affected by the amendment that has been passed, and, indeed, how subsequent amendments might be affected. This might not be the moment to discuss this matter, but those of us who are not necessarily directly in touch through the usual channels may find it helpful to know just how many of the subsequent

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amendments are still valid in the light of the earlier amendment having been passed. The noble Lord, Lord Carmichael, suggested that Amendment No. 60 might have to be changed at a later stage. That is probably true, but I am not sure now many other amendments might be affected.
Lord Elton: As regards the amendments in the names of noble Lords other than myself, I understand that only Amendments Nos. 61 and 62 are out of court as a result of the amendments so far carried. It may be that I shall not have to bother your Lordships' Committee with one or two of my amendments later, but I have not come to a view on that yet.
Lord Brabazon of Tara: This amendment would require the Secretary of State to make an annual report about certain of his functions. I entirely agree that he should, like any other Minister, make statements about his policy and the performance of his functions; that is his duty to Parliament and the public. what I do not agree with is that there is any compelling need for him to be placed under a specific statutory obligation to report each year on some limited aspects of his functions and responsibilities. Not only would that give the selected function undue prominence; it is both unnecessary and inappropriate.
The specific duties are not necessary because the Secretary of State already makes regular statements about the exercise of his powers and functions. He regularly publishes White Papers on policies for roads and road reports which set out in some considerable detail his approach to policy and his performance of his national highway responsibilities. These documents include sections on action taken and planned in each region, with a specific section devoted to London.
In view of the decision taken by the Committee on Amendments Nos. 58C and 58D there is now some uncertainty as to how in practice the provisions of Schedule 4 and 5 will operate. We recognise the intention of this amendment but it may help the Committee now if I say that we are already considering how the coverage given in this existing series of
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documents can best reflect the small number of further responsibilities the Bill proposes for the Secretary of State. I hope, however, the Committee will agree that wrenching from their context would give these responsibilities an artificial and potentially misleading prominence.
Lord Carmichael of Kelvingrove: I appreciate the Minister's reply. I am always slightly concerned about a Minister's Secretary of State saying, "I do that in any case and therefore there is no need to do that". I was in another place long enough to hear of a number of cases in which Ministers had not made a report, in one case on a Scottish university, since 1885, although it was in statute that he should make the report; and we had to have a rather amusing exemption for the Secretary of State so that he did not need to go to the hulks. But I accept that transport policy is something that is rather more in the public mind and the public limelight and therefore, as the Minister has given the assurance that the Secretary of State does in any case produce adequate reports, there are facilities for asking the Secretary of State and reminding him of the necessity to give a report.
Lord Elton: For the sake of the record, the latest news from the front is that I gave your Lordships an incomplete list. I ought to add Amendments Nos. 62C, 63B and 64A. I will read those numbers again. The first tranche was Amendment Nos. 61 and 62 only, but I understand that Amendments 62C, 63B and 64A are also hors de combat, as it were.
Lord Tordoff: Since those amendments are all mine, I agree.
Lord Elton: The noble Lord shot himself in the foot, did he not?
Lord Carmichael of Kelvingrove: Before that rather welcome interruption, I was just about to beg leave of the Committee to withdraw Amendment No. 60.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Schedule 4 [Highways]:
Lord Fanshawe of Richmond Lord Fanshawe of Richmond moved Amendment No. 61:
Page 105, line 21, leave out from ("shall") to end of line and insert ("become a trunk road according to the provisions of the Highways Act 1980 subject always to the prior publication of the findings and recommendations of the relevant assessment study.")
The noble Lord said: I realise that my noble friend has told us that this matter may have been overtaken by the events earlier in the evening but I still would like the opportunity for my noble friend to be aware of the very real feeling which has caused the putting down of this amendment. I should also like to hear my noble friend's reply because it might have a slightly different effect on the main amendment which was moved earlier, Amendment No. 58C. My amendment empowers the Secretary of State to order any metropolitan road to become part of a national trunk network, and it is provided in the Highways Act 1980 that a draft order must be published, time for consideration must be given and a public inquiry held; and this Bill at the moment, prior to recent events earlier in the evening, removes the safeguard. I was endeavouring to incorporate it. I believe the incorporation of this safeguard is still needed, even if the appearance of a new body having the functions of a highway authority under the Highways Act 1980 in respect of metropolitan roads does take place. I should state at this moment that I am not in favour of such a body. I would like there to be an inquiry, and for the local authorities to take over these roads.
My interest is that for nearly 25 years I was Member of Parliament for Richmond, which includes an area where the A205, or South Circulr Road as it is more usually known, crosses the area of Richmond, Kew, Barnes, and South London. Over a quarter of a century I have seen a major increase in traffic of which noble Lords on all sides of the Committee who know that part of London will be aware. To describe the narrow lanes and suburban streets in Kew, the lower Mortlake Road, Clifford Avenue, Upper Richmond Road and the traffic that spills out into Barnes High Street would take a very long time, but it is important that noble Lords on both sides of the Committee should be aware of the problem.
The situation has been acknowledged by successive Ministers of all parties. There is nothing new about it. It is not a party political issue. Indeed, the noble Lord, Lord Carmichael, sitting opposite, and I debated this matter in another place some years ago. It is acknowledged by Ministers from both parties that the situation is very grave and has to be dealt with, but so far no Government, and certainly not the GLC, have managed to cope with this major hazard in the streets of South London.
I wholeheartedly support the Bill. I gave evidence to the Marshall Inquiry in 1977 pressing for the abolition of the GLC. I think that the lack of interest by the GLC in the South Circular Road and, indeed, in the roads throughout London, over the years that the GLC has been in existence, is to be deplored. I always pressed in the other place for action to be taken to remove responsibility for these roads from the GLC
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so I am in a slightly different position from other noble Lords in the Committee this evening. I should like to see responsibility for these roads, the South Circular in particular, to be passed to the local boroughs. In this case it would be the London Borough of Richmond upon Thames, which will be only too glad to take it over.
9.45 p.m.
In any case, whatever occurs there should first be an inquiry. Why do I say this? Your Lordships may not be aware that the fears and the feelings in the area of the South Circular Road are very intense. The emotion, which may not be justified but is there, is that action might be taken to widen the roads and destroy the environment along the route of the A205. As I said earlier, this includes narrow lanes and small suburban streets where the traffic flows at great speed. In many cases heavy juggernaut lorries are using roads which are not more than 14 feet wide. The fears of the residents have increased over the past few weeks. Householders, shopkeepers, old people, and mothers are worried. Some have been encouraged to agitate for political reasons. On many occasions fears have been raised quite unnecessarily, but the fears are there and should be recognised.
The locally elected people who are responsible for the area, both on the borough council and on the GLC, led by local Members of Parliament including, in particular, Jeremy Hanley, who led a determined and skilled campaign in Richmond, have made this clear to Ministers. If it has not been overtaken by events tonight I ask my noble friend to look very carefully at my proposals.
The Secretary of State initiated an assessment study and its findings will be given consideration. I hope that they will be put before any inquiry which might be set up under the 1980 Act, if the Minister agrees that such action should take place. Again, I stress that there is no reason why such an inquiry should not take place, even on transfer to a new body.
I should like to make one other point. Many of us complain, worry and grumble about the state of traffic on the South Circular Road, but one should ask: is there an alternative? I think that there is an alternative which this Government have looked at and previous Governments have considered but which the GLC has never put into action; that is, the possibility of a West London relief road—a road built on stilts, running over the railway between Olympia and Battersea. I understand that a study on this point by my noble friend's department is now under way. Perhaps my noble friend can give me an assurance that if this relief road was made, responsibility for the South Circular Road, as it is today, the A205, can be transferred to the local borough council. This is something on which I should welcome my noble friend's comment.
As the Committee will realise, I have this evening concentrated on one area and on one road. I think it brings an essential humanity to the issue, which perhaps is needed here tonight. As for some roads, the Secretary of State may have a case for ownership and

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trunking but it surely must be incumbent on him to establish it by means of a public inquiry. I hope that there will be some support from the Committee tonight for this amendment. I should like to hear the Minister's reply. I should also like to know in detail how the voting and the result of the Division on Amendment No. 58C affects my Amendment No. 61. I beg to move.
Lord Ardwick: I said on my noble friend's amendment that I thought it gave a better and more radical solution to the problem raised by this Bill than the amendment to which I have put my name. It seems that this is true. If it proves to be the case that the Department of Transport is not to have this absolute power to trunk in London at will, then the residents along the South Circular Road will feel very much relieved. There have been many meetings and protests. There has been a great deal in the local press. There have been many letters. We have had lots of personal letters. People are frightened of what might happen.
The South Circular Road is a very peculiar road. In fact, there is no such thing as the South Circular Road. There are roads which are supposed to comprise it, which wind through the suburbs, through the shopping centres, past the schools and either fringe or divide the parks and commons. By following the signposts labelled "South Circular Road" it is possible to pick a way through South London with many twists and some loops and thus find one's way from Kew to Woolwich. Italy was once described as not so much a nation state as a geographical expression. I may say the South Circular is not so much a road as a topographical expression, the mere indication of a route.
I live on the edge of Putney Common. The South Circular Road is about 200 yards away. Over the years, we have been threatened with one motorway scheme or another. These threats have been beaten off by the vigorous action of the residents, always supported and very often led by their elected representatives. Here we thought the threat was really alive again because the Bill, as it now stands, though we are now trying to amend it, enables the Secretary of State to take over an additional 65 miles of roads in London and, by order, to make them into trunk roads irrespective of the wishes of those who live on or near such thoroughfares. We are horrified at what might be done to our suburb if the South Circular were to be trunked.
The danger was very well seen by 13 amenity societies which are watching this debate with great interest. They are 13 amenity societies which cover the districts from Kew, through Richmond, Wandsworth, Streatham, Norwood, etc. They have a very clear insight into the powers that would be vested in the Minister if this Bill were to pass with this part unamended. As they say in a letter to me:
"He would dispense with all the normal safeguards for the public, of public consultation, rights of objection and, if necessary, a public inquiry."
In the weeks that have been leading up to this, we have been told in the representations that have been made that to designate a road as a trunk road is no more than a change of name and ownership. It implies
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nothing, it is said, in the way of future development. The Ministers who gave this assurance are right. One is not challenging their good faith. But the department itself is more forthright. Last year, there was a public inquiry concerning changes that were to be desired on the North Circular Road. The department's representative described the policy in regard to trunk roads. He said:
"The Government's policy is that trunk roads in London serve an essential purpose in providing the connections between inner London and the national motorway network. Their adequacy is a matter of national concern".
That is quite right. He said nothing about the fact that it is also a matter for local concern. He added that,
"the proposed addition to the London trunk network following abolition of the GLC will make this strategic network coherent and complete".
The man from the Ministry went on to be even more specific:
"The Government is carrying out a programme of improvements to the existing trunk roads in London and is considering priorities for the new roads for which it intends to accept responsibilit,. These improvements should encourage"—
note these words—
"more of the longer distance traffic to use these roads".
That is exactly what we fear. Up with the juggernauts! Carry on, car commuters! Already, as the noble Lord, Lord Fanshawe, has said, there is an unacceptable heavy volume of traffic passing along the residential and shopping streets that comprise the so-called South Circular Roatl. And there is this danger looming up of increasing the traffic load. The people of south London are haunted by fears that they will meet the same fate as befell others in regard to the North Circular Road, which became a trunk road many years ago. The Department of Transport has upgraded that road step by step. As it has improved one stretch of road, that has attracted increased traffic so that further stretches of the road have proved inadequate Still further schemes have been necessary to meet the new volumes.
At present 30 per cent. of the North Circular Road is still single carriageway. When the department's schemes are completed, none of it will be. At present, 27 per cent. of the road is dual carriageway with junctions at different levels. When the schemes are completed, 86 per cent. of this road going through north London, often between suburban houses and sometimes between factories, will have the standard very nearly of a motorway.
I looked at the road only this weekend. I have often driven along it, but I looked at it then from the point of view of people living along it. It must be hell. Down the middle is erected a great iron fence, sometimes with greenery growing up it which alleviates matters slightly. However, I am not trying to exaggerate when I say that it reminded me a little of the Berlin Wall. Certainly, it divides one community from another. To cross the road, people have to go 300 or 400 yards to a bridge. Ministers insist that no plans exist to improve the South Circular Road as a through route. Good! No plans perhaps, but what of aspirations and intentions? Ministers come and Ministers go, while departments remain for ever with their inexorable long-term aims and aspirations.

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The department was asked at another inquiry in January into a North Circular Road scheme to give an assurance that it would not be used as an argument for South Circular Road improvements to cope with the resulting flow. What was the witness's answer? The witness said that it was impossible to give an assurance that proposed North Circular developments would never be used as an argument for South Circular developments. He concluded:
"All I can say is that the Department of Transport is carrying out a study into the South Circular".
10 p.m.
Nobody has really believed, I fear, the repeated claims that trunking could mean no more than change of ownership. Richmond Council and the local amenity group have asked a number of times about the terms of reference given to the distinguished consulting engineers who are carrying out a study into the South Circular. Their inquiries have drawn only polite and meaningless responses. They asked whether it was possible to rule out road widenings, restrictions on pedestrian crossings and new alignments. The answer was:
"With the best will in the world I am unable to comment on the specific questions you raise".
The view which many of us hold is that when a road becomes a responsibility of the Department of Transport, then sooner or later it will be engineered to provide an unimpeded and speedy passage to vehicles of all weights and sizes. After all, the department's métier is to facilitate through traffic, although generally between cities rather than through them. So far as they are concerned, decent people though they may be, the environment must come second. The traffic is their priority—not people's lives and not people's amenities. That was why we were so insistent that the department should not, as this Bill sought to allow, have the right to trunk a road at will. That was why it was essential that the existing right to a public inquiry before trunking should be preserved.
A study of the North Circular inquiries will reveal that the type of inquiries which are held after it has been decided to trunk a road are appropriate to a given stretch; for example, whether this or that detour should be favoured, whether there should be a pedestrian tunnel under a road, or a footbridge above it. Whether or not the long distance traffic should be encouraged to be there at all would not be a matter within the inquiry's terms of reference.
Now it looks as though our fears are at rest. I took the view that it would be wrong for the people of this large part of London, who have been so anxious and so concerned for many months, to be deprived of a right of hearing as regards their grievances, even though it seems that their grievances are about to be rectified.
Lord Elton: Before we continue with this debate I ought to draw your Lordships' attention once more to what happened an hour or so ago. Your Lordships decided—against the advice of the Government—that the responsibility for GLC roads should not go to the
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Secretary of State but should go to the residuary body. This amendment proposes to do things which are compatible only with the GLC roads going to the Secretary of State. Therefore, this amendment cannot be incorporated into the Bill because it would make a nonsense of the Bill as it now stands. While I sympathise with those noble Lords who wish to air matters—and it is entirely in your Lordships' hands as to what happens—we clearly could not accept the amendment, and by that I mean that the Committee could not accept it. It is not a question of the Government accepting it; the Committee could not accept it. Nor, indeed, could the Committee accept Amendment No. 62, for the same reason. It is addressed to something which no longer exists—it is addressed to a provision which is no longer there.
I have commented on the matter at some length because your Lordships need to take a decision as to whether, nonetheless, you wish to discuss the amendments as though they were sensible amendments which could be incorporated in the Bill. My view is that that is rather a waste of time, but if your Lordships wish to do so, it is not for me to impose upon you.
Lord Fanshawe of Richmond: In view of my noble friend's advice I shall, with my noble friend's agreement—
Lord Diamond: Before the noble Lord seeks to withdraw his amendment I must insist on my own behalf—and I hope that I am representing the view of many others2—that we need a good deal more guidance from the Government than we have received so far. Let me explain why. The noble Lord the Minister has said that this amendment is hors de combat—I think that those were his words—meaning that if the amendment were carried and incorporated in the Bill, there would be a certain inconsistency between the schedule and the clause to which the schedule refers, which incorporates the amendment we have already discussed and voted on. But the noble Lord, Lord Fanshawe, who moved this amendment, has made it clear that this is an arrangement that he is fact would prefer.
I am asking the Government, therefore, to be good enough to tell the Committee what their plans are. If their plans are to return to this topic during a later stage of the Bill—and there are many such—then of course they would be talking to an audience which was aware of everything that had been decided and discussed and the reasons for it. But if the noble Lord is telling us that it is no part of the Government's intention to do that; that the Government reserve their right to bring this matter up in another place where they have an assured majority and can do exactly what they wish to do—or what they advise the House to do, to be courteous to the House—then any amendment which is not within the Bill cannot be discussed by the other place, as the noble Lord, Lord Fanshawe, knows.
The other place will be totally unaware of the fact that the ex-Member of Parliament for Richmond has moved an amendment dealing with Richmond which he holds to be important and which he would have preferred to be carried by your Lordships. The other place would be totally unaware of that and unable, by

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their rules of procedure, to discuss it. How then is this Committee to know how to deal with this amendment?
The noble Lord, Lord Elton, has said that we cannot incorporate it. I do not know what authority he produces for saying that the Committee cannot incorporate one amendment which is not wholly consistent with another. I accept the inconsistency; that is not open to argument. The question is, which amendments, being incorporated in the Bill, will be discussed by another place if the Government take a certain line, and which will be available for discussion in another place if the Government do not? We are totally unable to know which way to proceed until the Government tell us what are their considered plans.
Lord Stewart of Fulham: I think that the noble Lord, Lord Diamond, has put our dilemma very well. If the Government were able to give us an assurance that they have no intention of trying to overturn the decision which the Committee took recently about Amendments Nos. 58C and 58D, we should then know exactly where we are, and I think would accept the idea that there was not much point in proceeding with these amendments. But I am not going to bother to ask the noble Lord whether he can give such an undertaking because I know perfectly well that he cannot. If I had any doubts about that, the expression on the Chief Whip's face would dispel them. Therefore, I think we must proceed on the basis that the decision that the Committee has recently taken could be reversed, and that therefore there is some importance in these amendments.
I should like to say a few words on the merits of the case because it has been represented to me how strong and how widespread is the feeling against the sections of the Bill which give the Secretary of State power to make a road into a trunk road without all the usual safeguards.
Lord Harmar-Nicholls: Would the noble Lord give way? The noble Lord, Lord Stewart, and the noble Lord, Lord Diamond, know better than what they have just said as regards procedure. They know perfectly well that the other place can take pride in the fact that that is a talking shop. Their job is to talk and go all round a matter. That is not the function of this House. The function of this House is to revise a Bill in a responsible and proper manner. We have been told that in terms of this amendment the decision we came to a minute or two ago has ruled that out.
The noble Lord, Lord Diamond, knows very well that if in this House the Front Bench try on Report to remove the decision we made a minute or two ago, we in this House have the power—which they have not in the other House—to bring in an amendment at Third Reading, if need be. Therefore, they are not losing the opportunity.
They are merely using this place as a talking shop, and going over the top of the real procedures and conventions which are well understood. I believe that if we pay respect to the traditions and conventions as well as to the value of this House, we shall accept the guidance that to talk on this amendment, which can
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have no effect, is not doing the job properly. We are reserving the right, right up to the end of Third Reading, to bring in any amendment.
As regards my noble friend being asked to say what another place will do, it is a presumption that this House or any Member of it should try to tell the elected Chamber what they will eventually do. If later they decide to turn over what we have done, that is their power, but to ask anyone on the Front Bench in this Committee is a ridiculous nonsense, as the noble Lord knows.
Lord Tordoff: With respect to the noble Lord, if I may intervene in his intervention, we were not asking what another place would do, but what the Government would do. That is a totally different matter.
Lord Denham: Noble Lords opposite have rather suggested that because the Committee have taken certain decisions—they have taken two decisions this afternoon—the Government should now say, "We capitulate totally". It is the function of this Chamber to refer back to another place matters that we do not, as a House as a whole, think are quite right. It is not up to the Government here, because the Committee has pronounced on something, to say that irrevocably another place will accept it. We cannot do that. We are discussing this Bill. We have passed two amendments to this Bill, against the advice of the Government. I do not hold that against anybody. Can we please proceed now to discuss the rest of the Bill—there are many more amendments to discuss—and not ask the Government to say that they will not reverse things in another place, because it is not up to the Committee to ask this and it is not up to this Front Bench to agree to it.
The Deputy Chairman of Committees (Lord Ampthill): I should like to draw the Committee's attention to Standing Order No. 36, which reads:
"An amendment to a Bill must not be inconsistent with a previous decision given on the same stage of the Bill".
Lord Stewart of Fulham: I think when the Chief Whip reflects he will realise he has said exactly what I prophesied he would say, that the Government cannot and will not give us an undertaking that a decision already taken by the Committee will not be reversed. I repeat, therefore, that we must proceed on the assumption that that decision might be reversed and there would then be some merit in these amendments.
Lord Fanshawe of Richmond: May I—
Lord Stewart of Fulham: With respect, I think it is still my speech.
Lord Denham: I wonder whether we should be discussing this amendment, because I am advised it is incompatible with something that went before. I think we should probably, therefore, proceed with the rest of the Bill.
Lord Stewart of Fulham: I have been trying to get on with this. As I have said, this is still my speech, although there have been five interventions. I rose only because it has been represented to me from several quarters that there is deep and widespread feeling against the powers that the Secretary of State is given in the Bill to declare roads trunk roads without any of the usual safeguards. I was interested in the matter because I am acquainted with both ends of the South Circular Road. When I was a small boy in south-east London, I attended a school which was bang on a road which is now part of the South Circular Road. It was considered, even in the days when I attended that school, to be a rather dangerous and busy road. The school is still there and is still used, and the idea of its becoming a trunk road is extremely undesirable. More recently in my life, I have become acquainted with west London. Although the South Circular did not run through what used to be my constituency, it runs very near it; and there is other provision in the Bill for what are called "designated" roads that will affect roads in almost any part of London. The point in every case is that the Secretary of State is given almost arbitrary powers about them.
When we were debating Amendments Nos. 58C and 58D the whole burden of the Government's argument was that we should trust and admire the borough councils. Now we are being told that their wishes can be completely overridden and orders declaring trunk roads can be made without any of the rights and safeguards they used to have.
Lord Harmar-Nicholls: What amendment is this?
Lord Stewart of Fulham: I think I have listened enough to the noble Lord.
Lord Harmar-Nicholls: To what amendment is the noble Lord speaking?
Lord Stewart of Fulham: I am speaking to Amendment No. 61.
Lord Harmar-Nicholls: That is out of order.
10.15 p.m.
Lord Stewart of Fulham: I do not think so. The noble Lord seems to make up his constitutional doctrines as he goes along. I am afraid that they do not carry very much conviction with us.
I did not want to say more about this matter, but I know that there is widespread feeling against it. The Bill as it stands gives quite arbitrary powers to the Secretary of State and the rights of the boroughs and the districts in these matters ought to be restored.
Lord Fanshawe of Richmond: In view of the advice of the noble Lord the Deputy Chairman, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 62 not moved.]
Lord Tordoff: I am sorry to intervene again. The fact is that we have been told which amendments on this side of the Committee have been ruled out of order. It
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would be useful to know which amendments on the Government's side are also out of order in the same context. Perhaps the noble Lord could give us an indication of these.
Lord Elton: As far as I know it is only 71A.
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 62A:
Page 106, line 42, after ("(2)") insert ("Subject to sub-paragraph (4) below")
The noble Lord said: I am assured that this amendment is still in order. I can say it is purely a technical amendment to close a gap in paragraph 56 of Schedule 4, which deals with the agency agreements between metropolitan county councils and my right honourable friend the Secretary of State. Under these agreements, the MCCs act as agents for my right honourable friend in carrying out maintenance, improvement or construction work on trunk roads and motorways. As drafted, paragraph 56 provides that these agreements may be transferred by order to a successor local authority and that any agreement not so transferred will cease to have effect on abolition.
It may be that on 1st April 1986 there will still be payments outstanding from the Secretary of State for work done by an MCC before abolition or other sums due under the agreement. Equally, as a result, for example, of over-requisitions which the MCC had already received in advance of work being done, sums may be due to my right honourable friend the Secretary of State under the agreement. It would clearly be unsatisfactory from the point of view of both the MCC's ratepayers and the Secretary of State either to transfer such rights and liabilities to the local authority which is to inherit the agency agreement or simply to allow them to terminate.
The amendments accordingly provide for the residuary bodies established under Clause 55 to step into the shoes of the MCCs with respect to such outstanding rights and liabilities. This will enable the MCC ratepayers to benefit fron the sums due and for the Secretary of State also to be able to receive outstanding payments. I hope your Lordships will support this amendment, which will ensure that both parties to the agreements are fairly treated. The need for the amendment is not removed by your Lordships' decision on Amendment 58D since the MCCs will cease to be the Secretary of State's agents upon their abolition.
On Question, amendment agreed to.
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 62B:
Page 107, line 14, at end insert—
(" (4) All rights of a metropolitan county council arising from or in connection with any such agreement as is mentioned in sub-paragraph (1) above to receive payments from the Secretary of State and all liabilities of such a council arising as aforesaid to make payments to him (being rights and liabilities attributable to anything done or omitted under or in respect of any such agreement before the abolition date) shall be transferred on that

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date to the appropriate residuary body; and accordingly as from that date any such agreement shall have effect as respects such rights and liabilities as an agreement between the Secretary of State and the appropriate residuary body.")
On Question, amendment agreed to.
Schedule 4, as amended, agreed to.
Schedule 5 [Road traffic]:
The Deputy Chairman of Committees: In calling Amendment No. 62C, I should point out to the Committee that I cannot call No. 63 and that it is uncertain as to whether No. 62C can be called.
Lord Tordoff Lord Tordoff had given notice of his intention to move Amendment No. 62C:
Page 116, line 48, leave out sub-paragraph (1) and insert—
(" (1) For the purpose of securing the expeditious, convenient and safe movement of vehicles and other traffic, including pedestrians, and having regard to—

(a) the desirability of securing and maintaining reasonable access to buildings;

(b) the effect on the amenity of any locality affected and (without prejudice to the generality of this paragraph) the importance of regulating and restricting the use of roads by heavy commercial vehicles, so as to preserve or improve the amenities of the areas through which the roads run; and

(c) the importance of facilitating the passage of public service vehicles and of securing the safety and convenience of persons using or desiring to use such vehicles,

the Secretary of State may by order designate a road in Greater London and Part I and III of Schedule 1 to the Highways Act 1980 shall have effect as to the making of an order under this paragraph; and Schedule 2 of that Act shall have effect as to the validity and date of operation of any such order.")
The noble Lord said: Before saying "Not moved" in respect of this amendment, I want to say that should changes be made to this Bill at a later stage then, like the noble Lord, Lord Fanshawe of Richmond, in connection with his amendment, I would wish to being this back at a much later stage.
[Amendment No. 62C not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 63:
Page 117, line 3, leave out lines 3 to 8 and insert—

(" (a) the London borough councils and the Common Council;

(b) all bodies representative of those authorities, and

(c) such other bodies as the Secretary of State considers to be representative of persons likely to be affected by that designation ").

The noble Lord said: The purpose of this amendment is to ensure that the Secretary of State carries out meaningful consultations before designating a road and that the majority of borough councils to whom the roads belong agree with him on the policies to be adopted for them. Without such approval, the Secretary of State would be able to impose his policies on borough roads without local people being able to say how the roads should be run.
The Secretary of State can, by order, designate any borough road, not just ex-GLC metropolitan roads, for the purpose of facilitating the movement of traffic. He must consult with the boroughs in which the road is located, other boroughs he considers affected by the designation and any other body which he deems fit. But he, the Secretary of State, will have the final decision.
This category of designated route will be linked to London, and the Secretary of State has indicated that some 350 miles of borough roads will be categorised in this way. He does, however, have the power to extend the network at any time on these roads which form more than a third of the mileage of GLC roads which would be handed over. The boroughs will be unable to introduce any measures which prohibit, restrict or regulate traffic or parking without the approval of the Secretary of State. The same will apply to any other road if measures introduced on it affect traffic or parking on a designated route. If a borough undertakes any work on a designated road without the approval of the Secretary of State, then the Secretary of State can reverse or modify the work, as he sees fit, and charge the borough for the work he has done.
Borough councils will not be able to introduce any parking, bus priority measures, cycling facilities, pedestrian crossing facilities, lorry control or road safety measures on a designated or adjoining road if they do not meet the approval of the Secretary of State. He would then effectively be the traffic order-making authority for over half of London's main roads, 200 miles of trunk roads and 300 miles plus of designated roads. This is an unprecedented interference by central Government over local policies and individual schemes. It will lead to delays, bureaucracy and conflict, but always with the Secretary of State having the final word.
The Government claim that the proposals they are putting forward will increase local democracy. I believe this is quite wrong, and the Government must realise it. The proposals represent an enormous increase in central Government control. They reflect the fact that the Secretary of State clearly recognises the need for London-wide co-operation and co-ordination of traffic planning, yet he is getting rid of the one directly elected authority with the expert teams capable of co-ordination and replacing it by Whitehall centralisation. The House of Lords Select Committee on Science and Technology has spoken out against disbanding these expert teams, and I thoroughly agree with it. I hope that the Committee will accept this amendment. I beg to move.
Lord Brabazon of Tara: Before turning to the detail of this amendment I should like, if I may, to explain a little of the background to our proposals. London has some 8,000 miles of roads. After abolition, just under 7,800 miles will be the responsibility of the boroughs, and the responsibility of the remaining 210 miles will pass to the Secretary of State. While the remaining 210 miles of trunk roads known as key routes will form the most important routes for traffic distribution in London, providing links to the national network of trunk roads and motorways, there are about 300 further miles of roads of major importance for traffic movement within London.

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Any traffic or parking measures proposed by borough councils that reduce the capacity of these roads could have serious repercussions over extensive areas. For this reason, a power is proposed to enable these roads to be designated, which will have the effect of requiring the Secretary of State's consent to traffic or on-street parking measures proposed by boroughs on or affecting traffic or parking on designated roads. The intention is to use this power to protect against measures unjustifiably restricting capacity on these roads.
The amendments changing the consultation requirements are unsuitable in two ways: first, they would require all London boroughs and their associations to be consulted over any change to a designated road. All borough councils have already been consulted about the proposals for the initial designation of 300 miles, and other organisations and local groups have had the opportunity to express their views too. Of course, subsequent adjustments to the network of designated roads will be necessary to reflect the changing circumstances such as completion of a road. For instance, once the South Woodford to Barking relief road is constructed it may be appropriate to undesignate some other roads in that area. It would be excessively bureaucratic and needlessly time-consuming to have to consult all London boroughs over such changes, which would be of mainly local significance.
Secondly, the requirement to consult bodies which are thought to be representative of persons likely to be affected would impose an impossible task upon my right honourable friend. Although he would of course invite all interested bodies to comment and anyone interested would thus have an opportunity to make their views known, there is such a multiplicity of often-changing local organisations that he cannot know all of them. The drafting of the amendment would mean that the Secretary of State would never be able to be sure that all relevant bodies had been consulted. That is likely to lead to complex and time-consuming legal challenges. I am confident that the consultation requirements in the paragraph are all that is needed.
I am not quite clear whether the noble Lord spoke to the second amendment, No. 63A, with Amendment No. 63, but they do run concurrently.
Amendment No. 63A: Page 117, line 8, at end insert—
("(1A) Any proposals or policies which the Secretary of State may wish to introduce in relation to designated roads in Greater London shall be issued either—

(a) with the agreement of a majority of the councils of the London boroughs; or

(b) by order in circumstances where no agreement can be reached within such reasonable period as the Secretary of State may determine.

(1B) No order under sub-paragraph (1A) above shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.
(1C) The Secretary of State shall exercise his powers under this paragraph in accordance with any policies proposed by him with regard to designated roads which have been agreed by a majority of those councils.".)
The amendment would require any policies and proposals introduced by the Secretary of State in relation to designated roads to be subject either to the agreement of the majority of London borough councils or else to be set out in an order subject to
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positive resolution in Parliament. This amendment may reflect a misunderstanding about the scope of paragraph 5. Designation does not give the Secretary of State any powers to make proposals for traffic schemes. It only gives him the power to approve or withhold approval from traffic or parking schemes proposed by boroughs on or affecting designated roads.
The purpose of designation, as my right honourable friend the Minister of Transport explained at Committee stage in another place, is to ensure that the Secretary of State is in a position to consider whether a borough's traffic management proposals on or affecting a designated road will lead to serious and unjustified effects on the movement of traffic in the wider area. It recognises that the roads proposed for designation are the most important distributor roads in London. Thus, the policy to be adopted in operating this power has already been set out. The emphasis will now be on making the power work with the minimum of interference with borough councils. An elaborate statutory procedure to confirm simple policy is unnecessarily bureaucratic, and I therefore urge your Lordships to reject these amendments.
Lord McIntosh of Haringey: The Minister really ought to insist that the briefs he reads are not the briefs before yesterday. That speech could have been made had the Committee not made the decision it took earlier this evening and had it not been agreed by the Committee that there was to be a body responsible—the London residuary body—which would have the reponsibilities contained in the existing transport policies and programmes procedures. As it is, the brief he has read is almost entirely irrelevant to the amendment moved by my noble friend, and the noble Lord has really painted himself into a corner on this one.
What he has done is to show clearly that the Secretary of State is quite unable to make decisions which have to be taken and will now have to be taken by the London residuary body about traffic in London as a whole. He is quite unable to make any decisions about who is affected by traffic proposals in individual London boroughs. He is quite unable—because he has given only the most general assurances about the continuing responsibilities of the research, intelligence and scientific branch of the GLC—to make any decisions about who is actually affected by a road proposal on a designated road. He has denied himself all the weapons which he might have had if he had paid attention to the amendments which have now been carried.
On the basis of the Government's arguments earlier this evening, there is no answer whatsoever to the argument put forward by my noble friend. I really do think that the Minister ought in future to insist that his briefs are up to date and that they do respond to the situation as it faces the Committee.
Lord Carmichael of Kelvingrove: I listened with care to the Minister's reply and I think that what my noble friend Lord McIntosh said is perfectly true. If the Minister had been able to find an answer to the difficulty that we are now in because of what happened earlier today, his reply might have been more

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convincing. On the other hand, he made out a perfect case when he spoke about the difficulty of the Secretary of State going round all the boroughs for the sake of a by-pass road in Blackheath. That is exactly what we were trying to avoid, by having an authority which would be representative of the general views of London. There would be no need to expend effort and energy on one part of London, without another part of London within that body knowing and without being able to communicate it to the relevant parts. However, I have heard the Minister's reply and I believe that at this stage my best course would be to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 63A and 63B not moved.]
10.30 p.m.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 64:
Page 118, line 19, leave out sub-paragraph (2) and insert—
("(2) Any such guidance shall be issued either—

(a) with agreement of a majority of the councils of the London boroughs or, as the case may be, of the metropolitan county in question;

(b) by order in circumstances where no agreement can be reached within such reasonable period as the Secretary of State may determine.

(2A) No order under sub-paragraph (2) above shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.
(2B) Before preparing any such guidance the Secretary of State shall consult—

(a) the chief officers of police for the areas to which the guidance relates; and

(b) any association representative of London borough councils or district councils for the areas to which the guidance relates.")

The noble Lord said: I shall move this amendment very briefly. The amendment modifies the powers of the Secretary of State to intervene in local problems relating to traffic. Under this amendment, before issuing guidance on the exercise of traffic powers which affect more than one district, the Secretary of State must first try to obtain the agreement of the majority of constituent district councils. The amendment seeks to ensure that the guidance given to the London body will be the guidance of the districts of London and not a decision dictated by some central Government order.
The mandatory guidance and traffic powers considerably increase Government control over traffic policy in London and while everyone recognises that all local authorities fully participate in the drawing up of this policy after wide consultation with interested bodies, the feeling is that, nevertheless, there should be more positive means of local bodies making their views known, and so I believe that a London-wide body is required.
We are in great difficulty, because of the earlier amendment, as to how to deal with these points. But the department has little experience in formulating flexible traffic management policies or designated
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schemes in complex urban conditions. That has always been done by the boroughs, the districts, the metropolitan authorities or the county authorities, and the GLC certainly has these skills.
Criticisms of this aspect of the Bill were made by one Conservative Member in the Committee stage in the other place. He said:
"Far from allocating responsibility from the London authority to boroughs, the Bill provides for a high degree of Government control. The Bill is a recipe not only for control by the Secretary of State. He is, of course, responsible to Parliament and he could not possibly involve himself in 895 miles of London's roads. Therefore the Bill is a recipe for control by officials in Marsham Street".
It is in order to try to mitigate that possibility that I move this amendment. I beg to move.
Lord Brabazon of Tara: I am afraid that we need to consider, in the light of the amendments made earlier this evening, the appropriate course to be taken with this amendment of the noble Lord, Lord Carmichael, and I think it would be to the convenience of the Committee if I said no more about it at this stage.
Lord Diamond: May I say one word? As the noble Viscount the Leader of the House is here, he will be aware of the difficulties in which we are placed, because the Government insist on carrying on with the consideration of a Bill after it has been amended in a fundamental way. We have already had the extraordinary situation of an amendment being called, and then being declared to be out of order after it had been called and spoken to. We have had a Government Minister making a speech relevant to a situation which is no longer the case. Would it not have been better had the Government considered their situation somewhat more carefully rather than to have put the Committee into this difficulty?
Viscount Whitelaw: No is the answer to that, quite firmly. The answer is absolutely simple. I do not accept that what happened is a fundamental change in the Bill which was carried through in the Division.
Lord Tordoff: Would the noble Viscount the Leader of the House not accept that it is fundamental so far as this part of the Bill is concerned? Therefore we are in some difficulty, as the noble Lord the Minister has indicated, on this particular clause.
Lord Elton: There is a great deal of work still to be done on this Bill. A lot of the Bill is not touched by that amendment. It happens that the noble Lord, Lord McIntosh, said that my noble friend painted himself into a corner; so my noble friend resolutely put his brush into the pot and left it there, which is a very sensible thing to do. On this particular amendment, which does not go very wide, the intricacies of the effect of the amendment are fairly considerable. It is true that there will be borough roads and therefore the amendment is not otiose, but the noble Lord will understand that according to the extent of the borough roads and the extent to which the other powers of the boroughs have been interfered with, if I may so put it, by the earlier amendment, it really would be very unwise of us to give the noble Lord a robust and final answer to this amendment at this stage. But to say that

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we should adjourn or give up the proceedings as a result of that goes beyond what any of your Lordships would wish.
Lord Carmichael of Kelvingrove: I do not think anyone was suggesting that we should give up. There is a great deal of worry, as the noble Lords, Lord Tordoff and Lord Diamond, said, about this particular clause. We are certainly not suggesting that the entire Bill is in jeopardy because of this. This is in a particular clause. To be told that certain amendments are no longer applicable puts everyone in a difficult position in regard to Report or Third Reading if the Government should decide to return the Bill to how it was. It is a difficult situation. No one wants to adjourn. We are really in a great difficulty.
Lord Elton: I am not sure where the noble Lord has left us with this amendment. I am sure he will wish us to consider it, and that we shall do in the light of developments.
Lord Carmichael of Kelvingrove: Considering all that has happened, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 64A not moved.]
[Amendment No. 65 had been withdrawn from the Marshalled List.]
[Amendment No. 66 not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 67:
Page 120, line 28, at end insert—
(" (2A) Before making an order under this paragraph the Secretary of State shall consult all local authorities in Greater London or, as the case may be, the metropolitan county concerned and shall notify the authority or authorities which will be affected by the order at least six months before the order is made.")
The noble Lord said: The purpose of the amendment is to ensure that the Secretary of State cannot take over by order the powerful area traffic control system without first consulting with all London boroughs and giving six months' prior notice of intention. This may seem to be a contradiction of what I said earlier about the Secretary of State needing to consult with all London boroughs about a road in Blackheath or some other part in the conurbation; but it is quite different. This is a powerful traffic control system on which practically all of London's traffic depends, and it is only right that proper notice and warning should be given to the London boroughs before there is any thought of the Secretary of State taking control over it. I beg to move.
Lord Brabazon of Tara: This amendment would require the Secretary of State to consult all the boroughs and district councils to seek their proposals for the continuing operation and development of
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traffic control systems. If as a result he considers no satisfactory joint arrangements can be reached and put to him in good time before the abolition date, he must take steps to be in a position to exercise his reserve powers on 1st April 1986. My understanding is that now that Amendment No. 58C has been passed, and urban traffic control would therefore pass to the residuary body, this amendment is not applicable at this stage.
Lord Carmichael of Kelvingrove: This is the difficulty that we are in. But after the explanation of the noble Lord, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 68, 69, 70, 71 and 71A not moved.]
Lord Carmichael of Kelvingrove: Is the purpose of the noble Lord in not moving Amendment No. 71 A because there is doubt about the logicality of the amendment?
Lord Brabazon of Tara: Yes.
Lord Carmichael of Kelvingrove: I am grateful to the noble Lord for that answer.
[Amendment No. 72 not moved.]
Schedule 5 agreed to.
Lord Graham of Edmonton: There is an understanding as to the progress of the Bill and as to how far we should go beyond the point that we have now reached. There is an understanding as to the pace of the Bill, the amount of work we shall complete tonight and where we shall start on Thursday. If the Government Chief Whip were in his place, this would normally be the time when he would respond to a suggestion that proceedings on the Bill be adjourned. I think that the Minister will understand that I am trying to make it possible for the Chief Whip to make an appearance. Hey presto! I believe that the Government Chief Whip may be able to say something about the progress of the Bill. May I assist the Government Chief Whip by indicating that, as we have understood the arrangements that have been made, we were to reach a certain point in the progress of the Bill and then the Government Chief Whip would respond to the mood of the Committee, which is that we do not proceed beyond the point we have now reached.
Lord Denham: I have been in consultation—
Lord Ponsonby of Shulbrede: I apologise for not being present. I was in consultation with the Government Chief Whip. I understand that in our temporary absence we have reached Amendment No. 72 and other amendments have not been called. Therefore we have arrived at the time when we thought we would adjourn this evening.
Lord Denham: If we have reached the stage when we should adjourn I am very happy to do so. We have agreed through the usual channels outside what this time should be. Therefore I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Royal Bank of Scotland Bill
Reported fron the Unopposed Bill Committee, with amendments.
House adjourned at seventeen minutes before eleven o'clock.

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