Sitting of 28 April 1986

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

    Transport Infrastructure
    Dr. Marekasked the Secretary of State for Wales what further proposals he has for improving transport infrastructure in Wales in general and in Clwyd in particular.
    The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): My proposals for the motorway and trunk road network in Wales, including Clwyd, are in set out in "Roads in Wales 1985"—a copy of which is in the Library of the House—and I have also published a consultation document "Roads for Wales, the 1990's and beyond". I shall also continue to encourage and assist where appropriate those bodies responsible for the provision of other elements of the transport infrastructure in Wales.
    Dr. Marek: Is the Minister aware of my early-day motions on British Rail management, Nos. 2 to 5 inclusive, and Nos. 7 to 16 inclusive, which illustrate merely some of the horrors being perpetrated on the people of Wrexham following the singling of the line between Wrexham and Chester? As the Minister did not take my advice that he should try to stop British Rail from singling the line, now that the evidence of incompetence and dreadful services is before his eyes, will he encourage British Rail to reinstate double track as soon as possible?
    Mr. Roberts: I had noticed the early-day motions tabled by the hon. Gentleman, which appear to be rather more regular than the services that they describe. I must emphasise to the hon. Gentleman that the Wrexham-Chester line is an operational matter for British Rail. I understand that British Rail remains firmly of the view that when the singling work is complete this, together with other measures—for example, new signalling at Chester, automatic level crossings and new rolling stock—will greatly improve the services.
    Mr. Best: Bearing in mind the tremendous increase in traffic that has been occasioned by the A55, and particularly the traffic going along the A5 on Anglesey, will my hon. Friend look carefully at the possibility of a bypass around Holyhead and instruct a survey to be undertaken? Will he also accelerate the provision of bypasses around the five villages on Anglesey?
    Mr. Roberts: I am aware of the pressure that my hon. Friend is bringing on my Department about traffic on
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    Anglesey, and particularly on the A5. We have been studying the situation in various villages on Anglesey and we shall look at the Holyhead position as well.
    Mr. Wigley: Will the Minister convey to the Secretary of State our best wishes for a speedy recovery and return to the House? As the Cabinet has been considering grave transport matters, particularly airports, and as no Welsh Office Minister has been in Cabinet, is this a reflection on the Welsh Office, or of the indifference of the Prime Minister towards Wales in general?
    Mr. Roberts: I shall gladly convey the hon. Gentleman's good wishes to my right hon. Friend the Secretary of State, and I am pleased to tell the House that he is making a good recovery. As to Wales's interest in airports, I assure him and the House that the interests of Wales have not been neglected in any way.
    Mr. Raffan: During the last Welsh Grand Committee my hon. Friend said that the Mold bypass was scheduled for the latter end of the orginal time band, in other words, no later than December 1988, but my right hon. Friend the Secretary of State said that it was planned for the early part of the new band, in other words, soon after January 1988. Will my hon. Friend confirm that the Mold bypass will be started during 1988? Will it be started early or late that year?
    Mr. Roberts: The timing of the Mold bypass was discussed in the last Welsh Grand Committee, and I have nothing to add to what I said about it then. I assure my hon. Friend that we shall use our best endeavours to make sure that the bypass is started on time.
    Mr. Roy Hughes: May I express my good wishes to the Secretary of State, and express the wish that he will make a speedy recovery? Does the Minister appreciate that, far from improving the transport infrastructure in Wales, British Rail has proposals completely to decimate the rail-freight netword in south Wales. Therefore will he intercede with British Rail management to prevent that ill-conceived plan coming to fruition?
    Mr. Roberts: Although that is a matter for British Rail, I assure the hon. Gentleman that British Rail does not intend to decimate the freight service. Indeed, it is quite the reverse—British Rail wishes to strengthen the service. Although one can be critical of British Rail's activities in Wales, one must not neglect the fact that it is to invest some £55 million in improving Welsh services during the next four years.

    Planning Appeals
    Mr. Wigleyasked the Secretary of State for Wales how many planning appeals have been made to his Department during the last year for which figures are available.
    The Parliamentary Under-Secretary of State for Wales (Mr. Mark Robinson): In 1985 my Department received 912 planning appeals, 239 enforcement appeals and 11 other miscellaneous appeals.
    Mr. Wigley: Is the Minister aware of the grave misgivings in many parts of Wales, particularly in Gwynedd, at the way in which the Welsh Office upholds appeals about second homes in sensitive areas? As, in a project for 700 second homes in the village of Morfa

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    Bychan, which will become a town as large as Porthmadog if the project is implemented, an application going back to 1964 is now in dispute, will he give an assurance that the Welsh Office—in view of its acceptance of the local infrastructure plan and its designation of an SSSI on that exact spot in 1971—will stand up with the local community against such an outrageous development?
    Mr. Robinson: Our view on the general use of occupancy conditions has not changed. As the hon. Gentleman is aware, all planning appeals go to the Secretary of State's inspectors, who take the decision. They have not been given any recent or fresh instructions. It is open to local authorities to purchase homes which they fear may be used for secondary purposes. In that event, they may use their in-year receipts, and it is always open to them to come to the Secretary of State with proposals if their in-year receipts have already been utilised. We have a recent example of a local authority where that has been done. The Morfa Bychan case is a matter for the local planning authority, Dwyfor district council, not for my right hon. Friend.
    Mr. Gwilym Jones: As my right hon. Friend will know, this week his Department is holding a public inquiry into two planning appeals for Tongwynlais in my constituency. What provisions are possible for last minute representations, in view of the present postal strike in Cardiff in south Wales?
    Mr. Robinson: Obviously I cannot comment on individual cases. However, if my hon. Friend is aware of people wishing to make such representations, and can get them to send their representations to the Welsh Office, we shall ensure that they are delivered to the inspector. Where planning appeals have not come to the Welsh Office because they have been affected by the postal dispute, we shall make arrangements for them to be taken into account.
    Dr. Marek: Is the Minister aware of the ground rules for these appeals, that inspectors, in deciding these appeals, are influenced by his Department, and that there have been many decisions within the Principality which have been resented by the community, including in Wrexham, where appeals have been allowed for supermarkets on completely unsuitable sites and for cramped housing in areas where it should not have been built? Will the Minister see whether he can pay more attention to the expressed wishes of the community in deciding appeals when they come before him?
    Mr. Robinson: The Government regard the right of appeal as extremely valuable in the planning process. The inspectors must take into account all material and relevant factors, including the wishes of the local community. The Secretary of State relies on the inspectors' reports.

    Opencast Mining
    Mr. Raffanasked the Secretary of State of Wales when he will next meet the chairman of the National Coal Board to discuss opencast mining in Wales.
    Mr. Wyn Roberts: No meeting has been arranged at present.
    Mr. Raffan: Will my hon. Friend seek a meeting to dissuade the NCB from again applying to start opencast mining at Pont Einion Northop, on high-quality land in an attractive rural area? Will he take the opportunity to
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    remind the chairman of the NCB that the last application was rejected on the gound that need had not been demonstrated? Does my hon. Friend agree that one would be hard put to prove that need now that coal stocks are higher and oil prices have collapsed?
    Mr. Roberts: It is for the NCB to decide whether there has been sufficient change in circumstances since the earlier decision on the Pont Einion site to warrant its making a fresh application. I cannot comment on the merits of the case, because the matter may eventually come before my right hon. Friend the Secretary of State for decision. The procedure on applications for opencast mining has changed since March 1984. Such applications are now dealt with as part of the normal planning procedures.
    Mr. Coleman: Will the hon. Gentleman be careful in handling the applications, especially in view of the sensitivity in many areas of south Wales about opencast mining? Will the hon. Gentleman take care in granting applications by the NCB, in the face of often strong local opposition?
    Mr. Roberts: I am well aware of that position. That was part of the purpose of changing the procedure, to which I referred in my previous reply. The Housing and Planning Bill provides for a simplification of the opencast procedures by abolishing the need for ministerial authorisation. Planning permission will still be required. We shall ensure that any proposals that come before us for decision are publicised and that full opportunity is given for representations to be made by interested persons. That is, in any event, our current practice.
    Mr. Livsey: Will the hon. Gentleman do all that he can to encourage the NCB to become involved in deep mining, which is labour intensive, instead of opencast mining, which tends to be capital intensive and is highly destructive of the environment and the community in south Wales?
    Mr. Roberts: Again I must stress that that is a matter for the NCB. Obviously opencast coal is not only cheaper but has a much lower ash and chlorine content than deep-mined coal, but the health of many deep mines depends on opencast coal for blending to provide an acceptable product for customers. Opencast mining and deep mining are complementary rather than competitive.
    Mr. Barry Jones: We look to the Under-Secretary of State to assist the House, especially with the position in Wales as described by hon. Members. Does the hon. Gentleman know that in my constituency, in the Ewloe area, there is widespread condemnation of proposals to undertake opencast mining close to a primary school and housing development? The hon. Gentleman said that deep mining and opencast mining are complementary. Will he therefore tell the chairman of the NCB that, if the Bersham colliery in north-east Wales closes, the economy of north-east Wales will rock on its heels following the Courtaulds closure? Will the hon. Gentleman assure the House that, in spite of the steep drop in oil prices, there will be no new proposals for pit closures throughout the south Wales coalfields? I remind the hon. Gentleman that one in four men in the Welsh valleys is unemployed? That is far too high.
    Mr. Roberts: The hon. Gentleman has asked a number of questions. I think I have said sufficient to show that

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    opencast mining is complementary rather than necessarily an alternative. The hon. Gentleman mentioned Bersham colliery. Of course, it is always a matter of great concern when a pit has to be closed. If such an agreement is reached on Bersham, the board is confident that it can offer alternative jobs to those wishing to remain in the industry. There are generous redundancy terms for those who choose to leave. It is too soon to judge the longer-term effect of the current movement in oil prices, but lower oil prices obviously emphasise the need for the NCB to be competitive and make every effort to improve productivity.

    Housing Stock
    Mr. Bestasked the Secretary of State for Wales what provision he has made in the current financial year for improvement of the housing stock and a reduction in the backlog of renovation grants.
    Mr. Mark Robinson: Housing allocations for this year total £141·3 million, which is an increase of almost 30 per cent. over last year. Within this total we have made specially targeted supplements of £53 million for improvement of the housing stock and reduction of the grants backlog.
    Mr. Best: Does that welcome and generous announcement not show that the Welsh Office is more than playing its part in providing better housing for Wales and that it is now a matter for the local authorities to complement it?
    Mr. Robinson: I agree entirely with my hon. Friend. It is now important that local authorities fully spend the allocations which have been made available to them, as it will strengthen their case when we decide resources next year.
    Mr. Anderson: Does the Minister agree that it is not only proper to compare this year against last year, but to compare the current allocation with the actual need of our housing stock in the Principality? Given that, is the Minister seriously telling the House that his expert's advice to him is that our housing stock is staying about the same, is it, as people tell us, declining into obsolescence?
    Mr. Robinson: We are this year in the process of embarking on the biggest and most extensive house condition survey ever undertaken by the Welsh Office. We shall consider the results of that. I should also point out that the figure of spending of allocations this year compares with the equivalent figure in 1978–79, which was only £51 million at 1986–87 prices. Therefore, I think that it is a favourable improvement.
    Sir Raymond Gower: In future consideration of this matter, will my hon. Friend and his right hon. Friend take account of the age of the Welsh housing stock? Does my hon. Friend anticipate a reduction in the great backlog in the various housing authority areas?
    Mr. Robinson: That is specifically why we have decided to target certain parts of this year's allocation on the backlog of home improvement grants. Local authorities are aware of that.
    Mr. D. E. Thomas: Will the Minister explain to the House and to his hon. Friend the Member for Ynys Môn
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    (Mr. Best) the reason for the very low level of capital allocation for that authority, which stands as low as £29 per head for 1984–85?
    Mr. Robinson: The hon. Gentleman should know that we have also made available to Ynys Môn a special allocation to tackle the backlog, and it is aware of that.
    Mr. Roy Hughes: Will the Minister realise that during the seven-year period of office of this Government the housing problem throughout Wales has got dramatically worse? When will the Government launch a real major housing drive to build the new dwellings that are required to tackle the massive problem of the huge stock of pre-1919 dwellings which lack even basic amenities? Surely, with this period of heavy unemployment, now is the time for action.
    Mr. Robinson: That comes well from the hon. Gentleman. When the Labour party was in power between 1974 and 1979 it spent a mere £57 million on restoring the older housing stock, whereas we have spent £275 million. The Labour party also talks much about the public sector. It spent £86 million in Wales, while we have spent £208 million in the public sector. Therefore, our record stands comparison.

    Assisted Areas
    Mr. Gareth Wardellasked the Secretary of State for Wales what was the percentage of the working population residing in assisted areas qualifying for regional development grant in Wales (a) March 1984 and (b) March 1986.
    Mr. Wyn Roberts: Almost 90 per cent of the economically active population of Wales reside in an assisted area. Those residing in areas qualifying for regional development grant were 79·6 per cent. in March 1984 and 38·2 per cent. in March 1986 because of the Government's decision to focus that particular scheme on the areas of greatest need.
    Mr. Wardell: Is the Minister not ashamed of himself? The percentages he has just given mean that the Government have reduced the percentage of the working population of Wales who qualify for regional development grant from almost 80 per cent. to 35 per cent. Does that not mean that the Government are using regional policy in a far less effective a way now and are contributing to Wales being one of the poorest regions within the European Economic Community?
    Mr. Roberts: I completely disagree with the hon. Gentleman. He underestimates the value of regional selective assistance, which is available throughout the assisted areas. He is also underestimating the activities of the Welsh Development Agency, which has built over 1,100 advance factories in Wales since May 1979. There have been 1,153 offers of regional selective assistance since May 1979, giving 57,000 new jobs and safeguarding 31,000.
    Mr. Abse: Will the Minister note that the anxieties in Wales over the administration and lack of monitoring of grants for selective assistance increased on Friday when it was made clear by the Attorney-General that investigations into fraud in the Parrot Corporation were being extended, and apparently will include members or past members of the WDA? As the Parrot Corporation now has

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    writs issued against it for more than £15 million, and its latest report showed that it had lost £500,000, will the Secretary of State make a full statement to the House and relieve the anxieties of the work force in my constituency in Gwent, who believe that there is something amiss in the administration, structure and relationship of the WDA with the Minister and the Parrot Corporation?
    Mr. Roberts: The hon. Gentleman is right to say that the police are investigating the circumstances of the original investment in the Parrot Corporation. It is, as he understands, a matter for the Director of Public Prosecutions. I have no intention of making comments that might prejudice that matter.
    Writs have been issued in the United States of America against the Welsh Development Agency and others, although the agency has not yet had such a writ served upon it. It is well known to the House that the Public Accounts Committee has made known its intention to look into the WDA's investment in the Parrot Corporation.
    Mr. Best: Does my hon. Friend accept that resources should be concentrated on the areas of highest unemployment, such as the Holyhead travel-to-work area? Can he assure the House that the welcome initiative of enterprise in rural areas that was announced recently will be able to assist the small business sector in gaining finance and developing, which is so critical to overcoming unemployment in areas such as Anglesey?
    Mr. Roberts: I am grateful to my hon. Friend. Of course, assisted area status has helped many parts of Wales, including Ynys Môn, which my hon. Friend represents. Unemployment was a significant factor in the review, but account was taken, too, of many other factors, such as the likely relative need for current and future employment. Account was also taken of long-term unemployment, occupational and other structures, economic activity rates and so on. The rural enterprise package will help rural areas—in other words, areas outside centres of population of 10,000 people or more.
    Mr. Barry Jones: My hon. Friend the Member for Torfaen (Mr. Abse) made an important request for a full statement. When will the Minister make the statement for which my hon. Friend has been asking for many months?
    Mr. Roberts: I understand that, in addition to the Public Accounts Committee, the Select Committee on Welsh Affairs will consider the affairs of the Welsh Development Agency. While police investigations are continuing and the matter is still with the Director of Public Prosecutions, it would not be advisable for me to make any further comment.
    Mr. Gareth Wardell: On a point of order, Mr. Speaker.
    Mr. Speaker: The hon. Gentleman should raise his point of order after Question Time.
    Later—
    Mr. WardellOn a point of order, Mr. Speaker. I raise this point of order in my capacity as Chairman of the Select Committee on Welsh Affairs. Earlier this afternoon, the Minister, I am sure inadvertently, said that the Select Committee on Welsh Affairs was undertaking an investigation into the Welsh Development Agency. It is not so doing. Even if it were, can you confirm, Mr. Speaker, that this would in no way prejudice the Minister's making a statement about the Parrot Corporation?
    Mr. Wyn Roberts: Further to that point of order, Mr. Speaker. I am happy to confirm that it is the Welsh Grand Committee, rather than the Select Committee which is to discuss the Welsh Development Agency.

    Rhondda
    Mr. Rogersasked the Secretary of State for Wales if he will pay an official visit to Rhondda.
    Mr. Mark Robinson: My right hon. Friend had intended to visit the Rhondda last Friday, but had to cancel his engagement. I undertook the visit on his behalf.
    Mr. Rogers: I commiserate with the Secretary of State on his unfortunate illness. At the same time, I welcome back my hon. Friend the Member for Neath (Mr. Colman) after his recent illness.
    I welcomed the Minister's visit last Friday as an interesting development in the Rhondda valley. Will he make the Secretary of State aware of the fact that male unemployment in the Rhondda valley is now almost 27 per cent., and that on the Penrhys housing estate, where more than 4,000 people live, male unemployment is more than 80 per cent.? An injection of capital and expertise are desperately needed to relieve the enormous problems that arise from those horrific unemployment figures.
    Mr. Robinson: I join the hon. Gentleman in welcoming the hon. Member for Neath (Mr. Coleman) back to the Chamber after his recent illness.
    In this financial year, £732,000 has been allocated from the urban programme to Rhondda borough council, and since 1982 £1·37 million in urban development grants has been allocated to Mid Glamorgan, promising 345 permanent jobs and 229 temporary jobs. As the hon. Gentleman is aware, six projects have been approved for Rhondda borough council at a cost of more than £1 million, promising 310 permanent and 142 temporary jobs.

    NHS (Medical Staff)
    Mr. Gristasked the Secretary of State for Wales what has been the increase in medical staff serving the National Health Service in Wales since 1979.
    Mr. Mark Robinson: There was a 13·2 per cent. increase in total whole-time equivalent HNS medical staff in Wales between 1979 and 1985. The whole-time equivalent increased from 2,001 to 2,266 over the period.
    Mr. Grist: I should have liked my hon. Friend to give a clearer answer than that slightly jargonised one. Nevertheless, does not those figures give the lie to those who say that the Government are trying to run down and abolish the Health Service? Could he give the figure for centrally-funded operations for heart disease, which is, after all, one of the most dangerous aspects for the Health Service in Wales?
    Mr. Robinson: I entirely agree with my hon. Friend's latter sentiments. South Glamorgan district health authority has been provided with funds to achieve a target of 600 cardiac operations a year, and in 1985 605 such operations were performed. In addition, a new cardiac unit capable of carrying out 1,100 operations a year is being planned and will be funded by the Welsh Office.
    Mr. Wigley: Is the Minister aware of the crisis in Bangor with the lack of psychiatric beds in Ysbyty

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    Gwynedd hospital and a lack of staff to serve them? Is he aware that, compared with the standard 0·5 beds per 1,000 population, which should give 80 beds, there are now only 40, and that, to bring that up to a more acceptable level of 46, there would have to be 10 extra staff? Will he ensure that the resources are available to recruit those staff?
    Mr. Robinson: There are new beds in Gwynnedd precisely for that purpose. The management of psychiatric beds is a matter for the health authority.

    Employment Statistics
    Mr. Roy Hughesasked the Secretary of State for Wales what are the latest unadjusted figures for unemployment in (a) Newport, (b) Gwent and (c) Wales; what were the equivalent figures in May 1979; and what was the percentage increase in each case.
    Mr. Wyn Roberts: The unadjusted March 1986 figures of unemployment for Newport, Gwent and Wales are, respectively, 10,047; 30,219; and 184,247. Unadjusted figures for 1979 were produced on a different basis and cannot properly be compared with this year's figures.
    Mr. Hughes: Does the Minister recognise that seven years is a milestone in the life of any Government and that throughout that period we have had more or less catastrophic unemployment in Wales? The trend is still upwards and Welsh Office Ministers seem to have no answer to the problem. Therefore, is it not time for them to consider their position, or are they determined to con the people of Wales right to the very end?
    Mr. Roberts: We are doing our utmost to help employment in Wales. A few moments ago I referred to the number of advance factories that have been built by the Welsh Development Agency, and it is now embarking on a further programme of factory building involving an outlay of £27 million. I can also safely refer to the special employment measures, which give help to 43,850 people, and there are welcome developments in the hon. Gentleman's constituency. I am always astonished that we never hear about those good developments from the hon. Gentleman.
    Mrs. Clwyd: In that case, will the Minister act on the advice given by the coalfield communities campaign to the Select Committee on Energy last week, when it suggested that a package was needed for coalfield communities similar to that which the Government have put aside for the inner city areas? Will he also tell us how many jobs for ex-miners NCB (Enterprise) Ltd. has produced in south Wales?
    Mr. Roberts: The entire purpose of the valleys initiative announced by my right hon. Friend the Secretary of State is to focus support on the valleys of south Wales, and, of course, the moneys to be spent under that initiative are additional to the moneys already being spent under the urban programme and other programmes intended to support the valley communities. NCB (Enterprise) Ltd. has £20 million to invest, and I know from my visit to the enterprise train in Cardiff last week that it is doing extremely valuable work.

    GCSE Examination
    Mr. Gwilym Jonesasked the Secretary of State for Wales if he will make a statement on the latest preparations for the new general certificate of secondary education examination and on the resources that have been made available.
    Sir Anthony Meyerasked the Secretary of State for Wales if he is satisfied with the progress of arrangements for the introduction of the general certificate of secondary education examination in Wales.
    Sir Raymond Gowerasked the Secretary of State for Wales if he will make a statement on the extent of preparations for the introduction of the new general certificate of secondary education in Wales.
    Mr. Wyn Roberts: Preparation for the introduction of the GCSE is well on course in Wales. We have made significant resources available for the special programme of teacher training, and have offered local education authorities funds to supplement the secondary school capitation allowance during the first two years of the new examination courses.
    Mr. Jones: Does my hon. Friend agree that we should not lose sight of the fact that this new examination was generally welcomed as being superior to the existing examinations and therefore of advantage to school children? Accordingly, what reassurances can my hon. Friend give to parents in my constituency and throughout Wales who are gravely concerned that those advantages to their children are being jeopardised, or, at best, severely impaired, as a consequence of the teachers' dispute?
    Mr. Roberts: My hon. Friend is right to say that when the GCSE was announced, as long ago as June 1984, it was very much welcomed by all educationists, and there is no doubt that it is superior to the 0-level and CSE examinations. Those who desire to delay the start of the course in September this year and the subsequent examination must think seriously about their motives for doing so. The GCSE has had unprecedented support from the Government—far more financial support than any previous examination and course.
    Sir Anthony Meyer: In view of the importance of making it clear beyond peradventure that this examination will be introduced on the stated date and that action by the teachers' unions, which could conceivably damage the examination, cannot possibly postpone it, will my hon. Friend none the less consider giving additional weapons to those teachers who are doing their best to introduce the examination on time by considering whether there should be an increase in the capitation grant, particularly for science subjects?
    Mr. Roberts: I assure my hon. Friend that the Government do not regard alteration of the timetable as an option. The additional moneys that have been made available, particularly for books and equipment, to supplement the capitation fees amount to about £2,500 per secondary school per annum over the next two years and to about £18 per GCSE pupil.
    Sir Raymond Gower: Is my hon. Friend aware that numerous teachers, including some headmasters insist that they have no knowledge of these preparations? Does that not suggest a lack of communication between my hon.

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    Friend's Department, the education authorities and the schools? Will he therefore take emergency measures to get this message across?
    Mr. Roberts: I do not think that that can be right. In written answers to the hon. Member for Meirionnydd Nant Conwy (Mr. Thomas) I have listed the GCSE inset seminars that took place between 20 January and 7 April this year. Notice of the start of the new examination course was given as far back as June 1984, explanatory leaflets were issued in January 1985, national criteria have been published and a great deal of money has been spent on seminars, training materials, inset funding and books.
    Mr. Barry Jones: This is a good examination which is to make a lame start because of a tight-fisted Government. Will the Minister make available additional cash and give more time off to teachers so that they are able to prepare for the examination? There is a morale crisis among teachers and very great worry among parents, who are upset by the shortage of textbooks, equipment and teachers. Headmasters of high schools throughout Wales are anxious and are looking to the Minister for initiatives that will result in additional money and teachers.
    Mr. Roberts: A will and a commitment are needed by all concerned to go ahead with the start of this examination course. I was glad to hear the hon. Gentleman commend it. We have spent £45,000 on seminars for teacher preparation and we are to spend an additional £15,000 on further seminars. A sum of £150,000, to be spent on training materials, is under consideration. Inset funding has received £427,000, at a rate of grant of 90 per cent. I have already given details of the amount of money to be spent on books and materials during the next two years. I am entitled to repeat that that kind of financial commitment represents unprecedented expenditure on a course of this kind.

  CHURCH COMMISSIONERS

    Income and Expenditure
    Mr. Chapmanasked the hon. Member for Wokingham, as representing the Church Commissioners, what amount and proportion of the Church Commissioners' total revenue derives from income arising from its assets; and what total amounts and proportion of expenditure goes in support of stipends and pensions.
    Sir William van Straubenzee (Second Church Estates Commissioner, Representing Church Commissioners): From total revenue of some £140·7 million in 1985, £93·5 million, or 66·5 per cent., arose from their own assets, the remainder from parish giving and other local sources. From total expenditure of £138 million, £112 million, or 81·2 per cent., was spent on clergy stipends and pensions.
    Mr. Chapman: Notwithstanding the welcome increase in recent years in parish contributions towards stipends, does my hon. Friend agree that his answer underlines the simple fact that the improvement of clergy stipends and pensions depends greatly upon the Church's income from its assets? Therefore, it is in the interests of everybody that the Church should be encouraged to invest in land and property, the stock markets, and in all other ways.
    Sir William van Straubenzee: That is true. It is immensely important that the investment portfolio should
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    be well managed and that we should have a buoyant agriculture. Like many similar institutions, the Church benefits enormously when inflation is under control.
    Mr. Frank Field: Should we not pay attention not so much to the Church Commissioners' portfolio, as to the amount that the laity gives? Is it not a matter of concern that as soon as a clergyman has children the family becomes eligible for family income supplement, and that those children are the largest single group to claim help under the assisted places scheme?
    Sir William van Straubenzee: I cannot accept the hon. Gentleman's premise without first inquiring into the matter. However, I agree that there is a continuing duty to increase the laity's giving. That point is given constant attention by the joint committee charged with that task.

    Clergy Stipends
    Mr. Greenwayasked the hon. Member for Wokingham, as representing the Church Commissioners, what is the total raised towards clergy stipends in Easter offerings; and if he will make a statement.
    Sir William van Straubenzee: The answer is approximately £200,000 a year or, on average, £25 per incumbent.
    Mr. Greenway: Is my hon. Friend aware that on Easter Sunday I found in my place, just as I have every year of my life, a short note from the church warden saying that the ancient custom of the church is that Easter offerings shall be given as a personal offering to the incumbent? Is it not clear from what my hon. Friend has already said that that is not happening, and that Easter offerings are taxed? Will he join me in tackling our right hon. Friend the Chancellor of the Exchequer on that point and the Church Commissioners, in order to restore that true and traditional custom to its rightful place in the church?
    Sir William van Straubenzee: I cannot answer for the tax side of the question, except to say that I have noticed that successive Chancellors of the Exchequer of all political parties have sought to find a method of identifying the source of income so that it need not be taxed. It was the General Synod's decision that the sums raised should be included in the central augmentation, and that is the authority under which we proceed.
    Mr. Peter Bruinvelsasked the hon. Member for Wokingham, as representing the Church Commissioners, what was the average stipend for a clergyman on 1 January; how that compares with 1 January 1981 and 1 January 1976; if he will evaluate the benefits in kind, including housing, for each period; and if he will make a statement on the future funding of clergy stipends.
    Sir William van Straubenzee: The estimated average stipend of an incumbent on 1 January was £7,197 compared with £5,185 in 1981 and £2,534 in 1976. The equivalent figures for the housing "benefit in kind" are £3,800, £2,800 and £1,700.
    In 1985, 82 per cent. of the Church Commissioners' income was applied towards the pay, pensions and housing of the clergy and it is the Church Commissioners' hope to continue that level of support.
    Mr. Bruinvels: I welcome the substantial increase in the clergy stipends and I am pleased to note that stipends

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    are ahead of inflation. Will my hon. Friend note the concern felt by parents, who are deterring their sons from going forward to the Advisory Council for the Church's Ministry as potential ordinants because they consider it to be a not necessarily financially worthwhile career? Will he do all in his power to publicise the new stipends and the fact that the housing part of the stipends is so high?
    Sir William van Straubenzee: I am grateful to my hon. Friend for paying tribute to what has been done. Compared with 1985, there has been an increase in the stipend of 7·2 per cent., compared with inflation of 4·2 per cent. I am sure that my hon. Friend's question and my answer will help to publicise the issue. I am also sure that my hon. Friend will agree that a man offers himself for service primarily because of his vocation. The financial reward comes a long way behind that.

  PUBLIC ACCOUNTS COMMISSION

    National Audit Office
    Mr. Dalyellasked the right hon. Member for Taunton, as representing the Public Accounts Commission, what economy, efficiency and effectiveness examinations of the use of resources by the National Audit Office have been carried out to date by its auditor.
    Sir Edward du Cann: It is for the newly-appointed auditors of the National Audit Office, who come from the private sector, to decide whether to carry out such examinations. No reports of any such audits have, however, as yet been made to the commission.
    Mr. Dalyell: In the light of the right hon. Gentleman's announcement to the Taunton Conservative Association at the weekend, I express appreciation of what the right hon. Gentleman did in his capacity as Chairman of the 1922 Committee in making facilities available for Back Benchers, and of what he did as Chairman of the Treasury Committee in increasing Parliament's effectiveness on policy matters. Has he had an opportunity to consider the case of Jim Smith, which I raised with him? Has he reflected on the use of whistle blowers and deep throats in saving the public purse vast sums of money?
    Sir Edward du Cann: I do not know whether I am in order, but I must express my appreciation of the hon. Gentleman's generous comments, and I am grateful to hon. Members for their kindness.
    I am aware of the hon. Gentleman's speech in the House on 25 March and have total sympathy with his objectives. I shall draw what he said to the attention of the Comptroller and Auditor General and our colleagues, the members of the Public Accounts Committee. If the hon. Gentleman wishes to correspond with me in any way about the matter, I shall be happy to go further and accept the responsibility of ensuring that the Departments concerned are made aware of his views.
    Mr. Jessel: Is my right hon. Friend aware that the National Audit Office used its resources with great efficiency and effectiveness when last November it examined the proposal to set up a joint services defence school of music? Is he further aware that as a result the Public Accounts Committee also did excellent work and produced a report, which led the Government to reconsider
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    whether the Royal Military School of Music, which produces the finest military bands in the world, should remain at Kneller Hall, Twickenham?
    Sir Edward du Cann: I am glad to have the opportunity to associate myself with the tribute that my hon. Friend has rightly paid to the admirable work by the Comptroller and Auditor General. In my opinion, for what it is worth, the whole business of efficiency in Government and the sensible spending of money is markedly assisted by the competence of those who work in the National Audit Office under his leadership. If we please my hon. Friend with his passion for music, I am doubly content.

  HOUSE OF COMMONS

    Refreshment Department
    Mr. Greenwayasked the Lord Privy Seal if he will make a statement on the arrangements authorised by the Catering Sub-Committee of the House of Commons (Services) Committee for the supply of goods to the Refreshment Department without charge and in connection with publicity within the House for the suppliers.
    The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): The Catering Sub-Committee has not laid down any general policy on this matter. But I understand that the recent display of English apples in the Members' Cafeteria and Tea Room was specifically approved by the Chairman of the Sub-Committee in response to an initiative by the Apple and Pear Development Council.
    Mr. Greenway: Will my right hon. Friend convey the thanks of hon. Members to the Apple and Pear Development Council for the excellent free apples and pears provided a fortnight ago? Will he encourage the council to provide more English apples such as Cox's Orange Pippins and Worcester Pearmains as a means of promoting the vigour and health of Members, of keeping the doctor away and of aiding a most important British industry?
    Mr. Biffen: I shall certainly convey those thanks to the admirable Apple and Pear Development Council, and draw my hon. Friend's comments to the attention of the Catering Sub-Committee.
    Mr. Tony Banks: Does the Leader of the House not find it unacceptable that in the Restaurants hon. Members can still purchase real turtle soup and frogs' legs? Will he instruct the Catering Sub-Committee to stop purchasing such obscene products?
    Mr. Biffen: I would not normally buy those products at that price, but I shall convey those comments to the Chairman of the Catering Sub-Committee.

  LORD PRIVY SEAL

    Mr. Jim Smith
    Mr. Dalyellasked the Lord Privy Seal what consideration he has now given to the case of Jim Smith, pursuant to his answer, Official Report, 25 March, column 879.
    Mr. Biffen: I confirmed in my letter of 16 April 1986 to the hon. Member that I had asked my hon. Friend the

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    Minister of State for Defence Procurement to write to him about the issues raised on 25 March. He has now done so. The hon. Member has already approached Her Majesty's Treasury about its policy for payment of compensation and has received a reply.
    Mr. Dalyell: Is the right hon. Gentleman aware that that ridiculous letter arrived half an hour ago? As an independent member of the public, what does the Lord Privy Seal think should be done to protect the interests of whistle blowers and deep throats who have saved the Treasury a great deal of money by their actions?
    Mr. Biffen: The hon. Gentleman will appreciate that Ministers with departmental responsibilities for these matters can more appropriately answer that question. The hon. Gentleman will also appreciate that in the Easter and May Day Adjournment debate I said that I would contact my right hon. Friend the Secretary of State for Defence which I have done.
    Mr. Campbell-Savours: Is the Leader of the House aware that it is now 12 months since I raised this matter, and I have repeatedly raised it. Is he aware that in the past 12 months I have driven much information on this matter into the Public Accounts Committee? That Committee may be about to report on those matters. Does the right hon. Gentleman accept that it is the only Committee in the House which is equipped to establish the truth of what happened in the case of the Aish company and Mr. Jim Smith?
    Mr. Biffen: Earlier this afternoon I had the advantage of listening to the exchanges between the hon. Member for Linlithgow (Mr. Dalyell) and my right hon. Friend the Member for Taunton (Sir E. du Cann) on the work of the Public Accounts Committee in this respect. I shall take account of what the hon. Gentleman has said, and I am sure that hon. Members in all parts of the House will be interested in the findings of the Public Accounts Committee, whatever they are.
    Mr. Soames: Does my right hon. Friend agree that if the Government were less secretive the House would be able to do its job a great deal better? What steps will he take to ensure that we can have a freedom of information Act?
    Mr. Biffen: I think that that goes much wider than this question. In this respect, I point out to my hon. Friend that earlier in the life of the Government, in all good faith, we mounted a freedom of information Bill which encountered so much ambiguity and anxiety that, in the end, the measure ran into the ground.

  HOUSE OF COMMONS

    Private Notice Questions
    Mr. Dubsasked the Lord Privy Seal if he will move to refer to the Select Committee on Procedure the present arrangements for private notice questions; and if he will make a statement.
    Mr. Biffen: The arrangements for private notice questions are already within the general terms of reference of the Procedure Committee.
    Mr. Dubs: Does the Leader of the House agree that the House gives Mr. Speaker far too little guidance as regards
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    which questions should be selected for private notice and which questions should be rejected? It is therefore our fault that Mr. Speaker is often subject to a great deal of controversy when he refuses a private notice question, as in the case of the question concerning Libya on 14 April. Would it not be better if, in the interests of this House and of Mr. Speaker, the Procedure Committee reconsidered the limited guidance we now give and considered whether it could be more extensive and helpful to Mr. Speaker?
    Mr. Biffen: No, I do not think that I could agree with that proposition. One of the advantages of the present private notice procedure is, first, that it is private and not subject to contention on the Floor of the House, and, secondly, that Mr. Speaker does have a great deal of discretion.
    Mr. Winnick: Will the right hon. Gentleman bear in mind that private notice question applications are an extremely important facility for hon. Members and that they should not in any way be undermined? Will the right hon. Gentleman also bear in mind that if the Government were more forthcoming in making statements on important items of business, there would be less need for us to put in applications for private notice questions?
    Mr. Biffen: I agree entirely with the hon. Gentleman about the importance of private notice questions to hon. Members. I do not think that any analysis of the practice over the lifetime of this Government would suggest that we have made fewer statements than our predecessors.
    Mr. Ryman: I support the submission of my hon. Friend the Member for Walsall, North (Mr. Winnick). I am always putting down private notice questions, and they are invariably refused.
    Mr. Faulds: Mr. Speaker is a good judge.
    Mr. Ryman: Is the Leader of the House aware that I put down a question on the prison officers' dispute—
    Mr. Speaker: Order. Please do not say that.
    Mr. Ryman: There is a need for the Government to volunteer statements to the House from the Treasury Bench before being pressed to do so by question, private or otherwise.
    Mr. Biffen: In respect of private notice questions, I thought it was considered bad form to advertise one's failures. The hon. Gentleman raised the need for more Government statements. I assure him that if that were undertaken, it would not be long before hon. Members, quite properly, would complain that more and more prime time was being taken by Government statements.
    Mr. Shore: The Leader of the House may or may not be right in his general expression of satisfaction with the present handling of applications for private notice questions. We also heard what he said about it within the Procedure Committee's terms of reference. Can he tell us when the Procedure Committee last considered this quite important matter?
    Mr. Biffen: Not without notice.

    Late Night Car Service
    Mr. Peter Bruinvelsasked the Lord Privy Seal how many people are eligible for a free taxi home from the House of Commons after late night sittings; what was

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    (a) the cost and (b) the numbers involved in each of the past five years; and if he will take steps to extend this facility to right hon. and hon. Members.
    Mr. Biffen: Staff of the House and certain other individuals who are on late duty when the House or its Committees continue to sit after 11 pm are eligible to use the late night car service at no cost to themselves. The statistics involving numbers and cost are complex and do not lend themselves to oral answer. I will, however, set out the information in the Official Report. There are no proposals to extend the facility.
    Mr. Bruinvels: Does my right hon. Friend share my concern about the difficulty with which the House is now presented? It cost £56·8 million to run the House of Commons in the last financial year. Hon. Members speak late into the night, so staff have to stay here much longer than is necessary and therefore need a lift home. I am not suggesting that any hon. Member ought to have a free lift home, but surely the best solution would be for the House to stop sitting after 10.30 pm. There would then be no requirement for this taxation without representation and free taxis for many while hon. Members are left standing in the taxi queue.
    Mr. Biffen: The House is sitting no later today in any significant sense than in, say, 1980–81. If my hon. Friend wants the House to rise that much earlier, he should note that that can happen only if the most frequent participants in our debate show some continence.
    Following is the information:
    Records of the number of persons using this facility are not readily available and could be obtained only at disproportionate cost. In 1982–83, however, a special survey was mounted which revealed that 2,956 taxis were used to carry a total of 7,288 passengers.

    Cost of late night car service

    £

    1985–86

    80,780

    1984–85

    64,016

    Mr. Ron DaviesOn a point of order, Mr. Speaker, arising from Question Time. On Welsh questions we reached No. 11 slightly after 3.10 pm, when questions to the Chancellor of the Duchy of Lancaster started. You managed to call all the hon. Members who had tabled questions for the Chancellor, and also several supplementaries. At 3.18 pm we came to questions to the right lion. Member representing the Public Accounts Committee. Again you managed to call those who wished to ask supplementary questions. At 3.20 pm, you managed to call all the hon. Members who had tabled questions to the Leader of the House, as well as several hon. Members to ask supplementary questions..
    I understand, Mr. Speaker, that you cannot control the length of supplementary questions, nor the length of replies from the Minister. However, as only nine Members who had tabled questions for the Secretary of State for Wales were answered, would it be possible for you to examine the allocation of time for questions to the Secretary of State for Wales and other Question Times, so that Welsh Members have a fair crack of the whip?
    Mr. Speaker: I am sorry that I did not manage to call the hon. Gentleman today. I was hoping to do so. The allocation of time for Questions is not a matter for me, but Welsh questions went on for a further three minutes beyond 3.10 pm, and we made up time subsequently.
    Mr. D. E. ThomasFurther to that point of order, Mr. Speaker. Should not Welsh Members assist English Members in the disestablishment of the Church of England?
    Mr. Speaker: That is not a matter for me.

Binary Nerve Gas Weapons
3.30 pm
Mr. Denzil Davies: I beg leave to ask the Secretary of State for Defence, although I see that he is not here—I hope that he is not giving a radio interview in Scotland—a question of which I have given him private notice, namely, whether he will make a statement on the British Government's policy on the talks in NATO on a new generation of binary nerve gas weapons.
The Minister of State for the Armed Forces (Mr. John Stanley): I am sure that, if my right hon. Friend is giving a radio interview, he is not giving it in Scotland but at the Independent European Programme Group.
The Government note with concern the massive chemical warfare capability of the Soviet Union. We consider that the Alliance should continue, as its first priority, to work urgently in the current negotiations in Geneva for a comprehensive and verifiable global ban on all aspects of chemical warfare. A force goal requiring the United States to modernise its chemical weapons stocks with binary munitions is being discussed collectively within NATO in accordance with normal Alliance procedures. We believe that United States moves towards modernising its limited retaliatory capability with binary weapons will underline to the Soviet Union the benefits of reaching early agreement on a total ban. In the event that it is not possible to achieve such a ban, United States chemical weapons modernisation would contribute to upholding NATO's deterrent strategy of flexible response.
Mr. Davies: Is it not the case that a recommendation that binary nerve gas weapons should be part of NATO's armoury has already been accepted by NATO military representatives, including the United Kingdom representative? Is that recommendation soon to be discussed and considered by the civilian permanent representatives and Ministers of Defence, including the British Secretary of State for Defence?
Will the right hon. Gentleman tell the House whether one of the proposals is that the F111 aircraft based at Upper Heyford and Lakenheath should be equipped with chemical bombs—I believe that they are described as binary spray bombs in the trade—or are we to be told that the Government do not know, and apparently do not ask, what bombs can be carried by the F111s? Thirdly, is the Minister aware that if these proposals are accepted they will do considerable political damage to the NATO Alliance, especially at this time? Far from helping at the talks in Geneva, the proposals will jeopardise those talks and lead to a further escalation in the arms race. Will he make it clear that if necessary the British Government will veto these proposals and never allow these hideous new weapons on British soil?
Mr. Stanley: I can confirm to the right hon. Gentleman that the proposal for a force goal for the modernisation of the American chemical weapon capability has been considered by the military representatives. It has not yet been considered by the NATO ambassadors or by NATO Ministers. The right hon. Gentleman asked about basing in the United Kingdom. As I have previously made quite clear to the House, the United States Government have said that they have no plans to deploy binary chemical
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weapons in any foreign country in peacetime, and that should such deployment be considered in future, they will consult beforehand with the countries concerned.
I do not agree with the right hon. Gentleman's assessment of the implications for arms control. As has been well demonstrated, the intermediate nuclear forces deployment has made the Soviet Union negotiate much more seriously than ever before about INF arms control. I assure the House most fervently that the priority of the Government is to continue to try to achieve a total worldwide ban on chemical weapons. The right hon. Gentleman spoke about escalation. The basic military position must be considered when talking about escalation. For many years, the Soviet Union has taken advantage of no modernisation whatever by the United States since 1969. The Soviet Union has established a massive chemical warfare capability and it is in the interests of everybody in Western Europe and of vital importance against that massive Soviet capability our chemical warfare deterrent is maintained.
Sir Peter Blaker: Is my right hon. Friend aware that every hon. Member on this side welcomes his restatement of the NATO objective of securing a comprehensive ban on chemical weapons? We agree with him that the present proposal before NATO is more likely to persuade the Soviet Union to agree to such a ban or to move towards such a ban than the point of view of the Opposition, which seems totally devoid of common sense.
Mr. Stanley: I entirely agree with my right hon. Friend. As he well knows, not having a retaliatory capability and not preserving chemical warfare deterrents confer a major handicap on one's own conventional forces; that process tends severely to reduce the nuclear threshold, which I hope every hon. Member will want to keep as high as possible.
Dr. David Owen: Will the Minister of State accept that while the Soviet Union has nuclear weapons, many of us accept the need for nuclear weapons to be deployed by NATO forces? However, we find morally repugnant the idea that Britain should give any support to the deployment of nerve gases that are a hundred times more potent than mustard gas. Such weapons are not necessary for NATO and it is a weapons system and a form of warfare that we should utterly condemn and not agree to deploy.
Mr. Stanley: As the right hon. Gentleman is aware, there is no question of deployment in the United Kingdom and our policy remains wholly unchanged. The right hon. Gentleman says that the deployment of such weapons is repugnant. I remind him that throughout the time he was Foreign Secretary the United States had a national chemical weapon capability.
Mr. Peter Viggers: Does my right hon. Friend agree that, despite our self-denial of chemical weapons, the Russians have continued to accumulate, to test and to deploy chemical weapons and have 80,000 specially trained troops and 20,000 special reconnaisance and decontamination vehicles? Surely this proves that unilateral disarmament does not work with chemical weapons or other weapons.
Mr. Stanley: I endorse what my hon. Friend has said. The lack of efficacy of one-sided disarmament is

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graphically illustrated by chemical weapon development and by what he has said about the scale of the Soviet capability. It is estimated that the Soviet stockpile of chemical weapon agents totals 300,000 tonnes. It is a massive stockpile and the Soviet Union has a range of methods of delivering the weapons. I hope that every hon. Member recognises the crucial importance of deterring the Soviet Union from using that capability.
Mr. A. E. P. Duffy: The Minister has said that a decision has yet to be taken by NATO defence Ministers and by ambassadors. The right hon. Gentleman knows that, if the defence review committee establishes today a new generation of chemical warfare weapons as a force goal, it will become a common Alliance objective, to which Britain will subscribe. Despite him saying that the United States hopes that it does not have to stock chemical weapons outside the United States, what are the storage implications for Britain in certain circumstances?
Mr. Stanley: There are no storage implications, until such time as the United States approaches Britain and requests that chemical weapons be based in this country. The United States has made no such request and it has made it clear that such a request would not be made in peacetime.
Mr. Neil Thorne: Will my right hon. Friend confirm that it takes about three times as many men to perform a task in nuclear/biological/chemical kit than without it, and that if we have no such protection to afford our troops we shall require at least three times as many men as we already have? As the Soviet bloc already has three times as many men as we have, that would entail us having nine or 10 times the number of service men that we have now.
Mr. Stanley: I confirm what my hon. Friend says, which is that fighting a conventional war with one's own forces in NBC kit while the forces of other countries do not have to wear it would result in a serious degradation of one's conventional operating capability.
Mr. Roland Boyes: Does the Minister accept that we on the Opposition Benches agree that there should be a comprehensive and verifiable reduction in chemical weapon stocks? Does he agree also that the talks in Geneva are not advancing quickly enough? Does he accept that there is something illogical, contradictory and obscene about the argument that we must increase the number of chemical weapons before we can begin to reduce their number? The Minister says that everyone agrees with that argument, but I think that no one agrees with it.
Mr. Stanley: I see nothing obscene in the proposition that we should give ourselves the basic deterrent capability to ensure that these profoundly evil weapons are not used against our own people, whether civilians or service men, in western Europe.
Mr. Patrick Cormack: Is my right hon. Friend aware that every sane person hopes that a complete ban can be achieved, and that anyone who has
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seen the extra vulnerability of our troops on the sparsely populated northern flank that would stem from the extra protective clothing that they would have to wear to withstand chemical weapons will understand at a stroke how expensive and disastrous a policy of unilateralism would be?
Mr. Stanley: I am grateful to my hon. Friend. He is entirely right to reflect on what he has seen and on his own experiences on the northern flank. Fighting in aircraft or in armoured vehicles on the ground in NBC kit would severely degrade our operating capability.
Mr. Eric Deakins: Why is NATO being asked to endorse these appalling new weapons for United States forces in the USA when it was not asked for its views on the introduction of the SDI or the updating of the American nuclear strategic deterrent?
Mr. Stanley: As the hon. Member knows, there have been detailed discussions with all the NATO countries on the SDI programme. He will be aware that it was one of the requirements for congressional approval, and a reasonable one, that the NATO countries, whose deterrent would be added to by these weapons, endorsed a force goal indicating that they favoured the deployment.
Mr. Anthony Nelson: Does my right hon. Friend accept that some of us who are the staunchest proponents of our nuclear strategic deterrent are nevertheless gravely concerned about the wisdom of developing and building up a stockpile of ever more hideous and novel means of killing one another? Will he confirm that, whatever decision the United States takes about acquiring and building up such a stockpile on its own territory, the Government will be no party to the acquisition of those stocks in peacetime by other NATO states?
Mr. Stanley: One can speak only for this country, and, as I have made clear, there is no question of the deployment of American binary munitions in the United Kingdom in peacetime. It is of paramount importance that the NATO countries, and in this case the United States, maintain a viable deterrent capability against the formidable chemical weapons stockpile that the Soviet Union has acquired.
Mr. D. E. Thomas: Is it conceivable that these weapons will be brought to Caerwent to the United States arms dump in a time of emergency? Has the Minister's deterrence argument developed into an argument for continuing modernisation of the deterrent capability? How will a chemical deterrent deter the Soviet Union, and how is that an additional component to the existing nuclear deterrent? Will he explain this development in his deterrence theory?
Mr. Stanley: I hope that the hon. Gentleman will cast his mind back 40 years, and recall that perhaps it was because both sides had a chemical warfare capability that chemical weapons were never used between 1939 and 1945.

Agriculture Council
3.48 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John Selwyn Gummer): With permission, I will make a statement about the meeting of the Council of Agriculture Ministers which took place in Luxembourg from 21 to 25 April 1986. I attended this meeting with my right hon. Friend the Minister, who is, unfortunately, ill and not able to be present in the House. After negotiations which lasted throughout the week, the Council reached decisions on farm support prices and related measures for 1986–1987.
The basis of the agreement is a freeze in common support prices, with substantial price reductions for certain Mediterranean products, in particular tomatoes and tobacco. Following recent currency developments, some changes in green rates were indicated. It was, however, important that these were not of such a size that they undermined the policy of price restraint. For this reason, the United Kingdom supported devaluations of the green pound, the green franc and the green punt which will increase support prices in national currencies by 2·75 per cent. in the livestock sector and by 1·35 per cent. in the arable sector.
Turning to specific commodities, the United Kingdom has been particularly concerned about the growing surplus of cereals, and we made it clear at the beginning of the negotiations that we intended to press for effective changes to the existing regime on a fair basis. I am pleased to say that the changes we have agreed in the intervention arrangements and in quality standards, together with the introduction of a 3 per cent. co-responsibility levy, will have the effect of substantially reducing the effective level of support. The co-responsibility levy has been agreed for five years, with provision for a report by the Commission after two years on how the system is operating. As the House knows, we would have preferred a straight cut in the price for cereals. However, the co-responsibility mechanism as agreed is a substantial improvement on the simplification of the Commission's original unsatisfactory proposals.
The levy will apply to cereals sold into intervention and act as a direct price cut, with a real effect on the market. The levy will be collected at the processing stage, but cereals processed on the farm will be excluded. We would expect to pay a proportion of the total levy which is close to our share of Community cereals production. An aid for small cereals producers will be introduced. The detailed arrangements for this remain to be decided.
The Commission's original proposals included an unsatisfactory price structure for barley and a big increase in the average threshold price for maize. We secured changes in the Commission's proposals to remove the barley price distortion and to provide for a lower increase in the average maize threshold price.
The support levels for rapeseed and sunflower seed will also be reduced, if the crops in the Community exceed a prescribed maximum guaranteed quantity.
The reduction in cereal prices will be of particular benefit to pig and poultry producers. The final form of the monetary compensatory amount reductions in this sector have yet to be decided, and the Commission will be submitting proposals on this in the near future. In the
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meantime, increases in negative MCAs for pigs, eggs and poultry resulting from the recent realignment will be suspended until 1 June 1986.
For milk, I am glad to say that we resisted considerable pressure for a price increase. In addition, the Commission's proposal to change the fat-skim ratio was dropped. This will avoid adding to the costs of those food manufacturers who use skimmed milk.
Despite the very real steps taken by the European Community to reduce the milk surplus, culminating in the introduction of quotas, the Community is still a substantial over-producer of milk. Therefore, the United Kingdom was determined to secure a further reduction and so to cut this surplus. We were, however, insistent that the burden should fall equally on all member states. I am glad to say that, in the face of strong opposition from a number of countries, a further 3 per cent. cut in milk quotas was agreed. This will be effected over the next three years, initially through a Community buyout scheme, but if this voluntary system is not effective in all member states, it will be underpinned by compulsory reductions.
The maximum compensation chargeable to the Community budget for this scheme will be about 18p a litre over seven years. But each member state will be able to set the rate of payment according to its own circumstances. There is also provision for national schemes to continue alongside the Community scheme. We secured a provision which allows larger dairy farmers to sell part of their quotas under this scheme. Additionally, the arrangements to offset under-production of quota in one region against over-production in another will continue for a third year. This has given useful flexibility in the United Kingdom in each of the first two years of quotas.
For beef, we succeeded once again in securing an extension of the beef variable premium scheme unchanged. The maximum rate expressed in sterling will be increased as a result of the green rate devaluation. The Commission's proposals for reforming the regime for beef are to be further studied by the Council, with a view to the decisions being taken by the end of this year.
For sheep, we insisted on the removal of the proposed limit to the number of ewes per farm qualifying for the annual premium. We also secured the removal of the proposal to amalgamate Northern Ireland and the Irish Republic into a single region for the purpose of calculating ewe premium.
Turning to the budgetary costs, the Commission indicated that the package as a whole will produce a total saving over 1986 and 1987 of 777 million ecu, a saving of 118 million ecu greater than would have been achieved under the Commission's original proposal. There remains, however, a serious problem about the substantial additional costs resulting from changes in the relationship between the ecu and the dollar and from the realignment of currencies. In supporting the settlement, we made it clear that its budgetary implications would have to be referred to the ECOFIN Council. They are being considered today by the Council, which my right hon. Friend the Chancellor of the Exchequer is attending. We shall continue to seek a thorough examination of the scope for savings to minimise any supplemental budget this year.
Overall, this price fixing has produced a highly satisfactory outcome and one that follows closely the approach endorsed by the House, without opposition, on 10 March. The pressure on support prices in the

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Community has been maintained. In particular, the effective reduction agreed for cereals marks an important step in the battle against surplus production. The outgoers scheme for milk is the next stage in bringing about a better balance between production and consumption.
By devaluing the green pound, we have ensured that our farmers are treated fairly in relation to producers elsewhere in the Community, including particularly France and Ireland. We have removed from the original package those key elements of discrimination to which this House rightly took such exception—the 25 tonne exemption for cereals and the limits on headage payments for beef cattle and sheep. Moreover, this settlement will have a negligible effect on food prices, which are, in any case, continuing to rise less than the rate of inflation. The package therefore represents a further significant step towards improving the common agricultural policy while safeguarding the competitive position of our own farmers. It is therefore good for Britain and good for Europe.
Mr. Brynmor John: I thank the right hon. Gentleman for his statement, the arrangement of which was conducted with all the consideration that we have come to expect of the Government.
Is the figure which the right hon. Gentleman has cited of 18p a litre over seven years correct? In my copy of the statement the figure is 17p a litre. The right hon. Gentleman will appreciate that other additions to the final draft were not communicated to me.
Will the right hon. Gentleman pass on to the Minister of Agriculture, Fisheries and Food our good wishes for his recovery from illness? Clearly, the Minister was suffering from the long Report and Third Reading stages of the Agriculture Bill. I am sorry that he is not in his place.
I welcome the ewe premium, which I thought at first was the first step in the Government's farm woodlands policy because "ewe" was spelt "yew" in my copy. I welcome the retention, however temporarily, of the beef variable premium. It would make no sense in the present climate if the Community scrapped the only policy among all its regimes that is good for farmers and consumers. I welcome also, because the measure was included in our amendment to the legislation on the milk outgoers scheme, the ability to surrender part of the milk quota.
The central judgment on this package depends on what it does to solve the long-term problems of the common agricultural policy. The Minister of State did not merely say that that was the best we could do in all the circumstances; he rhapsodised about it, saying that it was
"good for Britain and good for Europe."
Other comments suggested that the package was a major step forward. It seems to be a case of optimism overcoming experience.
To describe the package in that way, the right hon. Gentleman must have some vision. Will it lead to a cut in the production of surplus commodities and, if so, by what percentage? If the right hon. Gentleman merely says that he will cut the rate at which the surpluses increase, I must tell him that that cannot possibly justify his description, because surpluses will continue to increase at a slower rate than previously. If the measures will not lead to a cut in production, does that not mean that, once again, Agriculture Ministers have dodged their responsibilities for a further year and have just looked at the matter on the basis that it will never arise?
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What is the budgetary effect of all the measures? I have heard a great deal about the savings which are supposed to be effected. Does the Minister confirm that the effect of the loss in value of the American dollar means that £1 billion will be added to the agricultural budget of the EEC or, is it, as Agra Europ said this morning, E1·5 billion? If that is so, how is it to be paid for? Is it to be paid for by even further cuts in the present miserable regional budget or is it to be paid for by extra income? Will the right hon. Gentleman give an assurance to the House that under no circumstances will the EEC raise the take it has from the VAT in the current year, at present 1·4 per cent.? That is a crucial question. It was raised during the debate on the subject and it is a question which I think that the Minister has to answer.
On the milk outgoers scheme, is the Minister satisfied that the amount under the European scheme, whether 17p or 18p a litre over seven years, is sufficient to attract voluntary yielding of the amount of production? A large number of people believe that it is not. Therefore, resort to compulsion will be necessary. In which case, how is that to be done? I hope that the tenants' share of the milk quota is not to be based upon the formula that was suggested in the new clause to the Agriculture Bill for outgoing tenants.
I put to the Minister the fundamental irrelevance of the co-responsibility levy on cereals. It did not work on milk, so why should we think that it should work on cereals? What will the scheme do? As I understand it, it imposes only a percentage tax which is half as great as that which is necessary to make it self-supporting and after all, that is the basic tenet of a co-responsibility levy.
The Minister has mentioned the effect on consumers of devaluation of the green pound. One thing is clear, although he said that the overall effect is minimal; we will have to wait and see, but, according to the Minister, butter is to go up by 1p to 1½p a pound. How will that affect the hard-pressed dairy industry? We talk about a surplus to requirements of 16 per cent., but, if raising the butter price reduces consumption even further, will he not be compounding the problem of the dairy industry?
I conclude that the Government have been a party to a package which shirks the underlying long-term problems of the farm industry. When will the Council face up to the problems? Does it not mean that agriculture deserves more candour from its Minister, Europewide, than it is getting at present?
Mr. Gummer: If we were to have said in advance of the price fixing that we would have moved so far and made such major changes, many Opposition Members would have denied that possibility. They would have said that we were suggesting a major change which could not have been achieved. Therefore, I think that it is a little churlish of the hon. Gentleman to talk about a situation in which we have ensured that every nation has accepted what could be, if they did not get a voluntary agreement, a compulsory cut in their production of milk.
We have a co-responsibility levy which will have a direct effect on prices, we have stopped the pressures for price rises in milk, we have seen that there have been substantial price cuts in Mediterranean products and we have seen that there has been a 777 million ecu reduction in what would otherwise have been the cost. We have done

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all those things and we have set this example within a change in the green pound rate which is less than might have taken place and less than many countries pressed for.
I agree with the hon. Gentleman that we will not solve all our problems by what we have done. When one is trying to move from massive surpluses, one can do so only in a way which gives the industry the time to make the necessary changes. There are limits to the weight one can put on farmers in any one year. If one looks at the substantial reduction in the price of cereals this year—cereals which have already been planted and the input costs of which have already been carried—one has to say that there is another side to the argument.
The hon. Gentleman will have to answer the farmers who will ask whether he was suggesting that, despite the increase in import costs and the reduction in the price of cereals, he would have increased the burden on farmers in this country. That is what the hon. Gentleman is saying. I hope that he will say that now in West Derbyshire and Ryedale and make clear exactly what he means. He clearly means the kind of weight reduction which it would have been impossible for farmers to bear in one year.
Of course, the hon. Gentleman is right to push us and see that we go on pressing for this change. However, there is a substantial change which we might not have expected otherwise. It would have been right for him to mention the extension of the BVPS. He made it sound as if that was an easy operation. Every year it causes difficulty because it is a system which we approve of but which other countries do not find acceptable. On this occasion, not only is it unchanged but clearly, its continuation is linked to the emergence of a new beef regime. It will be for us to see that we get a beef regime which suits the Community and Britain especially.
The hon. Gentleman specifically asked about the VAT. There is no question of breaking the VAT ceiling in 1986 and 1987. The Commission recognises that both the 1986 and 1987 budgets must stay within the 1·4 per cent. ceiling. We made that clear and it was clearly written into the minutes.
We believe that there is a difficulty with the milk outgoers scheme. I am sure that the hon. Gentleman will agree that, whatever price it is fixed at, one does not want to be spending more money than one needs to spend to get milk producers out. However, one must have enough, and we think that we have struck the right balance. We will be holding discussions with the National Farmers Union.
Of course the co-responsibility levy is not the way we would like to have done it. The hon. Gentleman is right. We would have preferred to have a direct price reduction. However, we have established a form of co-responsibility which is much fairer between the countries and which has many more of the effects of a direct cut in prices. That must be good.
The hon. Gentleman is right about the amount of the rise in the price of butter. It will be balanced by other reductions. I agree that we would like to have seen a reduction in the price of butter; that was our policy and we failed to achieve it. However, we achieved almost every other item on the milk side. I agree with the hon. Gentleman's comments about the increase in the price of butter. However, I think that it is only fair for him to say
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that it is just as certain that there will be certain other reductions. That is why the situation generally will be somewhat neutral.
Several hon. Members rose—
Mr. Speaker: Order. I have to take into account that we have a heavy day in front of us. I will allow equal time for Back Benchers—that is to say, 20 minutes for questions. I hope that in that time I may be able to call everybody.
Mr. Teddy Taylor: As we were told last year that strict budgetary controls were binding in the Council, can the Minister explain why, in the first year of restraint, he has passed a package which exceeds those controls? Can he also say what steps he is taking to ensure that those who are compensated for moving out of milk production will not begin to produce other commodities which are already in chronic surplus?
Mr. Gummer: On the second point, my hon. Friend knows that there are no rules to stop people from going into other forms of production. We are concerned to get people moving into things which are not in over-production and we are trying to arrange the regime so that we reduce the scope and the advantage of producing in those areas. My hon. Friend is perfectly right. There is no way in which we can stop people moving into another form of overproduction.
On the first point, I made it perfectly clear that the budgetary implications of this are being discussed at this moment at ECOFIN. However, the Commission has made it clear that it is intended that the budgets should be kept within the guidelines.
Mr. Richard Livsey: May I first send good wishes to the Minister, who I realised last week was suffering from ill-health. I wish him well.
We welcome the retention of the variable premium, what has been done with the sheepmeat regime and the devaluation of the green pound. That does not seem to be quiet sufficient. None the less, it is a move in the right direction. We are concerned that there appears to be no real resolve in the Community to reduce the surpluses. That especially applies to cereals. I believe that the Minister's estimate of 770 million ecu is somewhat at variance in that he said that it was a reduction. The estimates, by all accounts, appear on the supplementary budget which looks likely to come before us as a result of the settlement, and it could be an increase of 1·5 billion ecu or possibly 2·5 billion ecu, depending on the estimates. That is a serious problem. Sometimes farmers who most need support are not getting it, whereas the support prices are increasing the surpluses. Can the Minister make that clear?
Mr. Gummer: The hon. Gentleman cannot have it both ways. He cannot, on the one hand, object to the fact that the devaluation is not great enough, and, on the other, say that we are not trying to deal with the problems of surplus. He must accept that it was not sensible to have so large a devaluation that it would undermine the price part of the package. That would be unacceptable. The hon. Gentleman must get his act together on this. I realise that it would have been more electorally advantageous among the farming community to have a larger devaluation, but I think that those in the farming community understand that this was the right balance—to take into account the

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changes in the currencies, and not to undermine the price package. I gave the figures precisely as they are. They are the figures produced by the Commission.
Mr. David Harris: Although I welcome many parts of the package, particularly my right hon. Friend's success in resisting special pleading by countries such as Ireland for exemptions from quota arrangements, will he try to convince me a little more about the corn surplus? Can he tell me why a co-responsibility levy for cereals might succeed, whereas the co-responsibility levy for milk clearly failed?
Mr. Gummer: It would be wrong to suggest that a co-responsibility levy on its own would have the effect that I hope this package will, but if the co-responsibility levy is taken together with the effects of the changes in intervention and quality, the effect upon the price of cereals is sufficient not only because it hits particularly at the intervention point to lower the general price of cereals, but because it should be the beginning—only the beginning—of a reduction in the attraction of growing cereals. That is the effect of the price process. It is not as much as we should like, nor is it as much as others would press us to achieve.
There is a balance between moving in this direction and laying on the shoulders of farmers who have already put their crops in the ground a burden that they find intolerable. I think that we have got the balance about right, but we must not give up because we must continue to the next stage. This is only the beginning of the stage dealing with the surpluses. My hon. Friend was right to make that point to us.
Mr. Eric Deakins: Is the Minister aware that Agra Europ, which, unlike the Minister, is impartial on these matters, described the cereals agreement as a dog's breakfast and a disgrace? Is the right hon. Gentleman now telling the House that the previous opposition of the Minister of Agriculture, Fisheries and Food to a co-responsibility levy on cereals was not based on principle, as the Minister led the House to believe, but was merely one of detail?
Mr. Gummer: The hon. Gentleman must not miss out the fact that I said absolutely clearly that we would have much preferred direct price reductions to the co-responsibility levy. Nobody has ever kidded anybody else on that. We have said that, because we were unable to achieve a direct price reduction, we sought to have the system of co-responsibility levy most likely to produce the effects that we wanted. We therefore got rid of the discrimination against the United Kingdom. We therefore saw that we had a much simpler method of having a co-responsibility levy. We therefore saw that it, together with the rest of the package, had a considerable effect on the price of cereals. We therefore produced not a dog's breakfast but the very best compromise that 12 nations can reach, and that was very much better than the hon. Gentleman thought we could do.
Sir Anthony Meyer: Is my right hon. Friend aware that this settlement will be grievously disappointing to the prophets of doom who forecast that it would be impossible to achieve any agreement whatever, and that he and his right hon. Friend the Minister of Agriculture, Fisheries and Food deserve the
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warmest congratulations on getting the best possible settlement in the real world, which will be particularly welcome to Welsh sheep and beef farmers?
Mr. Gummer: I am sure that my hon. Friend will agree that on a day when we got 12 nations to agree on our agriculture policy, it was interesting that the Liberals produced two policies, one on agriculture and the other on the environment. Those policies were contradictory, the environment policy suggesting that we should go back to peasant farming.
Dr. Roger Thomas: As a direct consequence of what the Minister has announced today, what percentage fall will there be in the milk available for cheese and butter creameries? Can we look forward to further creamery closures and a further loss of jobs among people who are really outgoers but have no outgoers scheme of their own?
Mr. Gummer: The hon. Gentleman is right. If one reduces the amount of milk that is being produced by the 3 per cent. that we are talking about, that is bound to have a continuing effect of those who manufacture front milk. But the fact remains that those problems cannot be dealt with merely by ignoring the fact that, as a Community, we are producing about 14 per cent. more milk than we need. In those circumstances, it is proper for all of us to take an equal cut in the amount that we are producing.
Mr. Tony Marlow: My right hon. Friend said that it has been a highly satisfactory outcome—good for Britain and good for the Community. That is what has been said by his predecessors every single year that I have been here, yet the problems of the common agricultural policy get worse. In the immortal words of The Examiner, I wonder whether my right hon. Friend could explain? If he can do that, will he also tell the House, keen as he is to bring surpluses under control, by how much the surpluses will be reduced if we have the same weather patterns over the next 12 months as we had over the past 12 months?
Mr. Gummer: But would not my hon. Friend be more effective in his opposition to the common agricultural policy if he said today, "This is good as far as it goes, but it should have gone a lot further."? He does not do that, because it does not matter how far one goes in dealing with problems of moving from a Community that was set up to deal with shortage to a Community in a world with surpluses. However far we go down that road, my hon. Friend will not give at least a little credit where it is due. We have got 12 nations to move a long way down that road. We have much further to go down it. The package will have an impact on surpluses, but my hon. Friend must accept that surpluses grow at great speed as a result of technological change that no one forsaw 10 years ago. A great deal of change is required. One cannot ask the farming community to carry the whole of that change in too short a time, because that is not the nature of the agricultural system.
Mr. Nigel Spearing: The Minister said that the package is intended not to exceed the budgetary discipline by which the Government have set so much store. When will it be known whether this package breaks that discipline?
Mr. Gummer: The situation is simply this. The Commission has made it clear that this package will not

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break the budgetary discipline. The discussion that is continuing at the moment in the ECOFIN council is about the exogenous elements, or elements that come from outside the decisions, which are supposed to affect the budget—in other words, things that are seen as extraordinary items. They are being discussed today in the ECOFIN council, and my right hon. Friend the Chancellor of the Exchequer is known to have a strong adverse view about the acceptance of things that are supposedly extraneous but which are in fact part of the system.
Mr. Albert McQuarrie: I congratulate my right hon. Friend, as well as my right hon. Friend the Minister of Agriculture, Fisheries and Food, on maintaining the variable beef premium and on their determined stand against the ewe proposals which, allegedly, were going to be put forward by the Commission. However, the increase in support prices will not compensate for the increased costs as it will probably result in a 10 per cent. increase to Scottish farmers. In addition, the reduction from 27p to 18p per litre of milk will make the scheme less attractive. My right hon. Friend referred to the fact that all member states have some licence. Will the Government take cognisance of the existence of that licence? If milk producers are assisted in one state, will we in this country give similar assistance to our milk producers, especially since the landlord-tenant sharing scheme is affected by the proposals?
Mr. Gummer: I hope that my hon. Friend will agree with me that in his general stance on the common agricultural policy, he is rightly concerned with the extension and increase of surpluses. He must therefore accept that, if we intend to reduce those surpluses, we cannot continue to increase the prices to farmers for producing surpluses. That would be wrong even where inputs increase. I hope that my hon. Friend does not want us to increase the price of milk and yet in some way to reduce the cut in the price for cereals. We cannot do that and carry out what my hon. Friend in other circumstances has been pressing us to do, which is to reform the CAP.
The Government will look carefully at the additionality of the outgoers scheme and will listen to representations from the National Farmers Union, the Scottish Farmers Union and others, to see that we get the balance right. We intend to ensure that outgoers are achieved voluntarily at a price which is not greater than it need be. If we pay more than is necessary, that will increase the cost to the budget. People have not lost that price; rather, they will be offered a lower price for going out. They still have a choice about going out.
If we are to solve the problems of agriculture, those who want to see an immediate and swingeing reduction which would damage our farmers irretrievably, must stay their hand. Similarly, those who want us to keep farmers' incomes up irrespective of the effect on surpluses, must also stay theirs. The right answer is to be found somewhere between those views; that is why I support the package.
Mr. Robert Maclennan: In giving the Government credit where credit is due, I think that the beef and sheep premia arrangements are useful. However, is not the Minister trying to have it both ways by over-selling the benefits of the package to the European taxpayer and under-estimating the lack of help
674
to the beleaguered farm industry in Britain as a consequence of the decline of incomes—according to the Minister's table 26 in the annual review—since the Government took office? Is it not even more serious that the Government have reversed their position over the cereal co-responsibility levy and are pursuing a chimerical policy which failed for milk and will fail to curb surpluses for cereals? When will the Minister discuss what is to replace the co-responsibility levy for cereals?
Mr. Gummer: The hon. Gentleman, I think, does himself a disservice in not considering the facts and again asking for the two impossibles. On the one hand he asks for more money for farmers for the very products which are in surplus, and on the other he attacks the Government for trying to do something about that. I have been frank with the hon. Gentleman and told him that I would much prefer to have had a reduction in price. However, we were unable to achieve that. We have achieved a package which is much closer to what we wanted than any hon. Member thought possible before we entered into the negotiations. The hon. Gentleman would do himself more credit if he were to recognise that.
The Government will take the hon. Gentleman's contributions on agriculture seriously when he recognises that his alliance partners should stop suggesting to farmers that they should return to being peasants, working with old-fashioned, out-of-date tools in old-fashioned and out-of-date ways.
Mr. David Heathcoat-Amory: In an earlier reply, my right hon. Friend seemed to be saying that the price fixing, with its attendant supplementary budget, was in line with the Fontainebleau commitment to financial discipline. Does my right hon. Friend really think that? He can reach that conclusion only by treating the depreciation of the dollar as an exceptional item. But he is a member of a Government who believe in freely moving exchange rates. Does he really think that the depreciation of the dollar and the consequential increase in agricultural expenditure is a truly exceptional item which permits us to break through the 1·4 per cent. VAT ceiling and the large supplementary budget?
Mr. Gummer: My right hon. Friend will accept that being a member of the Government has advantages and disadvantages. One of the advantages is that one can say quite clearly which are the things for which one is responsible and which are those for which others are responsible. I am responsible for ensuring that, when we come to a package of this sort, the package we deal with must be within the budget and that the Commission makes absolute assurances about VAT and its ceilings. We must then consider what we do about the suggestions that some extraneous items are not, after all, written into the Luxembourg agreement. We believe that it is our job to see how much of that can be covered by savings. We will continue to do that, and I stated that clearly in my statement.
In the ECOFIN meeting today and tomorrow, my right hon. Friend the Chancellor of the Exchequer will look very carefully at proposals and suggestions that there are some extraneous items. I have listed what those items claim to be and I have cast considerable doubt upon some of the suggestions that have been put forward. I am also conscious of the fact that it is easier to talk about the disadvantages to the budget when the dollar moves one

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way, than to talk about the advantages to the budget when it moves in another way. Therefore, I hope that my right hon. Friend will accept that the Chancellor of the Exchequer will be raising the points which my right hon. Friend has just raised with fellow members of the Council.
Several Hon. Members rose—
Mr. Speaker: Order. I shall do my best to call those hon. Members who have been rising regularly. I ask for brief questions, as that will lead to shorter answers.
Mr. Paul Marland: I congratulate my right hon. Friend the Minister and my right hon. Friend the Minister of State on their tenacity in these negotiations and on the fact that they have arrived at some kind of agreement before the harvest, but I should like to return, without apology, to the co-responsibility levy on cereals. The co-responsibility levy on dairy products did not work. Does not my right hon. Friend think that he is merely tinkering with the situation to introduce one now? Can he assure me that, during the next five years that the levy is to exist, he will look at other ways of curtailing production?
Mr. Gummer: I repeat to my hon. Friend that I see the levy as part of the package and not on its own. We have specifically pressed for and received agreement—there will have to be a report on the workings of the co-responsibility levy within two years—that the levy is not fixed permanently but is for a five-year period. We will, of course, continue to press the Community in the direction which both he and I want, to reduce the prices of surplus products and change the system of intervention to achieve the result we all want, which is to bring production and demand into kilter.
Mr. Tony Baldry: Will my hon. Friend confirm that this year's settlement will be fair to farmers without being a heavy drain on consumers and that it will have a negligible effect of food prices, yet, because of the devaluation of the green pound, farmers will get a reasonable increase in receipts? Does he also agree therefore that the package strikes a good balance between the interests of the farmers on the one hand and the consumer on the other?
Mr. Gummer: I am sure that this is the best balance that can be achieved in circumstances in which we are trying to reduce production. Those cannot be favourable circumstances for farmers. The improvements in farm incomes, which come from the realignments of the green pound, will be offset by considerable reductions which arise from the measures that we have taken. That is a fact of life which arises when we produce too much of certain products. However, I believe that this is a step which the farmer can bear and is a step in the important direction of bringing supply and demand into line.
Mr. D. N. Campbell-Savours: How will the small dairy farmer in the county of Cumbria, on the margin of profitability, be affected by the deal, specifically in connection with milk quotas?
Mr. Gummer: The effect on the small dairy fanner, as on other dairy farmers, is that there will be no increase in the price of milk. However, the small dairy farmer will have the opportunity of taking the outgoers scheme if that is what he wants.
Mr. Campbell-Savours: In other words, he will have to go on the dole.
Mr. Gummer: The hon. Gentleman is again very keen to press the disadvantages of the policy which he must want.
Mr. Campbell-Savours: The NFU asked me to ask the Minister that question.
Mr. Gummer: If the hon. Gentleman only knows what question to ask because he has been lobbied, then it would be better for me to answer the lobbyist directly.
Mr. John Carlisle: Will my right hon. Friend appreciate that many Conservative Members and specifically my farming colleagues, will not like the contributory levy although we appreciate my right hon. Friend's position on that. However, we appreciate that my right hon. Friend came out with the best deal at the end of the day.
Did the Commission and the Ministers consider the problem of the present surpluses? Does he understand that there are great difficulties in export markets for United Kingdom traders against our European counterparts? Was there any discussion of what we will do with the massive surpluses which exist now and of whether he can assist, in export terms, in getting rid of them?
Mr. Gummer: There will be a number of opportunities in the immediate aftermath of the general decisions—in the detailed ones—to consider what my hon. Friend has said. I know that he has some suggestions which I hope that we shall be able to take up with the Commission.
Mr. John: The right hon. Gentleman will appreciate that I am not unused to advocacy, but which of the three defences on surplus production is he running? Is he running the defence that, as a result of all the measures taken together, production of the regimes producing a surplus will fall, or that they will not fall themselves but that surpluses will rise more slowly, or simply that he does not know whether they will fall?
Mr. Gummer: My answer is simple. Our job is to reduce surpluses. That falls into two parts. One is that surpluses are rising all the time and so first we must stop them rising. Secondly, we must bring the total into line with what is needed, partly by increasing consumption and partly by reducing surpluses. All that I have claimed for this package is that it goes further towards the reduction of surpluses than any package which he or anybody else envisaged before we went into the negotiations.

Libya
4.30 pm
Mr. Tam Dalyell: I beg to ask leave to move succinctly the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"to consider the contrast between the Prime Minister's explanation for permission to use the F111s from British bases and the explanation that is being given by the Pentagon and the contrast on the use of nuclear weapons."
I have to persuade you, Mr. Speaker, that the matter is definite. It may be unfortunate from the point of view of Parliament that an in-depth interview, such as none of us can give the Prime Minister, was administered by Mr. Gordon Clough yesterday on "The World this Weekend." In answer to Mr. Clough, the Prime Minister reiterated what indeed she had said in column 726 of Hansard of 15 April—that permission was given for the use of F111s because they were more accurate on particular targets, with the implication that they would save innocent lives.
I think that you will agree, Mr. Speaker, that Aviation Week and Space Technology, the most serious American journal, is very close to the Pentagon. In a major article on 21 April it said:
"The Navy's carrier aircraft could have hit all the Libyan targets at the same time, but they would have been tight on assets. There were a lot of good reasons to include the Air Force F-111s,' a senior military official said. 'In most of the contingency planning for large air strikes by the Sixth Fleet, the F-111s from Britain are factored into the operation.'"
The senior Pentagon official went on:
'"The Libyan attack provided a good proving ground for the F-111s to be flown in the Mediterranean … The ability to fly over France would have helped the mission considerably.
`Understandably, after the All-Navy action in Libya last month the Air Force wanted a piece of the action.' The official added 'The fact that the Defense Dept. budget is under consideration—and here was an opportunity to show how well the money is being spent on aircraft and weapons—was not overlooked by both services as a side benefit to the mission.
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Another reason to include the F-111s in the operation was that it showed the support of Great Britain for our antiterrorist activities.'"
Nowhere in that explanation is the point made by the Prime Minister. From the Americans we have contingency planning, proving grounds, the Defence Department's budget and Britain's support.
Mr. Speaker: Order. Will the hon. Gentleman bring his remarks to a close? He has had three minutes.
Mr. Dalyell: That is the definite aspect.
The urgent aspect is that there could be a repeat.
The important aspect is that nothing is more important than the truthfulness of the British Head of Government. Frankly, I think that the House of Commons has been given cock and bull tales and that yarns have been spun for us.
The matter also includes the nuclear—
Mr. Speaker: Order. The hon. Gentleman has had more than his time.
The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the discrepancies in the Prime Minister's explanation on the F111s and the American version."
I have listened carefully to what the hon. Gentleman has said, but I regret that I do not consider the matter that he raises is appropriate for discussion under Standing Order No. 10 and, therefore, I cannot submit his application to the House.
Further application under Standing Order No. 10.
Mr. Eric S. Heffer: On a point of order, Mr. Speaker.
Mr. Speaker: Order. There is a further application under Standing Order No. 10 and then I shall take points of order.
Mr. Heffer: It arises directly—
Mr. Speaker: That may be, but I have called the hon. Member for Walthamstow (Mr. Deakins).

Agricultural Price Settlement
4.35 pm
Mr. Eric Deakins: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the 1986 common agricultural policy price settlement,"
about which we have just had a statement.
The matter is specific because we have just had the statement, and it is important for six reasons. First, the settlement has been described by an impartial news organ, Agra Europ, as a "price debacle". Secondly, the settlement will do little to stem the rising tide of CAP expenditure, especially on cereals. Thirdly, total spending will exceed the budget guidelines. The Minister of State, Ministry of Agriculture, Fisheries and Food has admitted that. That is serious because the Government's agreement to increase the VAT limit last year was based on the quid pro quo of financial guidelines being strictly enforced. The Government's faith is now shown to be completely unjustified.
Fourthly, CAP spending is completely out of control. The settlement will breach the barriers of the financial guidelines, which are now shown, in the Minister's words, to be worthless, because he has said that they cannot take account of extraneous factors such as currency movements, and there are currency movements every month. Fifthly, the settlement will require another supplementary budget on top of an existing supplementary budget, despite assurances given to the House by Ministers. That budget will increase the United Kingdom's financial contributions to the EEC and ensure that the VAT ceiling will be raised to 1·6 per cent. at the earliest opportunity.
Finally, the settlement will undermine the important constitutional case currently before the European Court in
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Strasbourg, whereby the Council is disputing the Assembly's right to increase budget spending, because the Assembly's case was shown to have been proven by the fact that the Council's budget last year did not take agricultural spending fully into account.
The matter is urgent, first, because the statement has not given the House a full chance to express its total opposition to and concern about the implications of the package before decisions are implemented. We heard from the Minister that a meeting is going on today. Secondly, it is not a fit subject for an Adjournment debate. Finally, perhaps to anticipate something that you may have said on previous occasions, Mr. Speaker, in applications under Standing Order No. 10, the precedents in 1983, 1984 and 1985 are that after the announcement of the agricultural price settlement there was no subsequent debate on CAP pricing.
Mr. Speaker: The hon. Member for Walthamstow (Mr. Deakins) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the 1986 CAP price settlement."
I have listened carefully to the exchanges in the House and I fully appreciate the concern which the hon. Gentleman has expressed and the importance of the subject. Nevertheless, he knows that I have to take into account the business before the House and whether this should have precedence over that. I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10. Therefore, I cannot submit his application to the House.
Mr. Eric S. Heffer: In view of the time and the fact that many hon. Members wish to debate the British Shipbuilders (Borrowing Powers) Bill, I shall write to you, Mr. Speaker, on the subject. It is a matter of importance, but I do not wish to delay the debate.
Mr. Speaker: I am obliged to the hon. Gentleman.

Orders of the Day

  British Shipbuilders (Borrowing Powers) Bill
  Order for Second Reading read.
  4.40 pm
  The Minister of State, Department of Trade and Industry (Mr. Peter Morrison): I beg to move, That the Bill be now read a Second time.
  If I make a rather shorter speech than usual, it is to give right hon. and hon. Members in all parts of the House, particularly the Opposition, the opportunity to make their speeches, as the hon. Member for Liverpool, Walton (Mr. Heffer) pointed out. Furthermore, as I have already explained to the Opposition Front Bench spokesmen, I have a back problem, which means that standing for any length of time is somewhat complicated.
  I apologise on behalf of my right hon. Friend the Secretary of State for Trade and Industry for his absence. He would very much have liked to be here. However, as the Opposition know, he arranged a considerable time ago to be in the United States this week to talk about trade relations. My right hon. Friend will be following closely the Hansard report of the debate, as he considers shipbuilding to be one of his prime areas of responsibility.
  The Bill is technical, but in no sense do I believe it to be unimportant. Our shipbuilding industry has a very long history. Thanks to Mr. Graham Day and his successor, Mr. Hares, who takes over later in the week, there have been enormous strides towards efficiency. The work force of British Shipbuilders has played an important part in that process and it believes that those strides towards efficiency are necessary.
  The corporation's current borrowing powers are up to a maximum of £1,200 million. The House will recall that that limit was set in the British Shipbuilders (Borrowing Powers) Act 1983. It is likely that that limit will be reached at some stage during the summer, although I cannot say precisely when. That is the reason for the Bill. Its purpose is to increase to £1,300 million, and, at a later stage, to £1,400 million, subject to the affirmative resolution procedure, the amount that British Shipbuilders may receive by way of Government support. It is not related to public dividend capital, which is dealt with through the normal Estimates procedures; nor does the borrowing limit apply to grants paid under the intervention fund. Therefore, it is both a technical and an important Bill. Its introduction demonstrates the Government's continued commitment to British Shipbuilders.
  Since 1979, £1,449 million has been paid by direct aid to British Shipbuilders. That is made up of just over £1 billion by way of equity and loan, £235 million by way of intervention fund and £177 million by way of the redundancy payments scheme. By any stretch of the imagination, there is nothing mean about that. Indeed, some of my right hon. and hon. Friends may consider that it is over-generous. However, I believe that the Government have struck precisely the right balance.
  As the House appreciates, support alone cannot guarantee a future for the shipbuilding industry. I suspect that there is no right hon. or hon. Member who does not
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  realise that shipbuilding is a highly competitive, worldwide market and that at the best of times it is a market in which it is difficult to compete. I think that all right hon. and hon. Members will agree that today conditions are even worse than one dared to think that they would be as little as a year or so ago.
  Why is this a complicated and difficult market in which to compete? It goes back to the first oil crisis of 1973. Since then capacity has far outstripped demand and restructuring has taken place. In western Europe there has been a reduction in capacity of about 50 per cent. In Japan, capacity has been reduced by 35 per cent. However, while that restructuring was taking place, China and Korea entered the market. Despite that, the market had ticked over until recently. In part that was due to what I describe as both visible and invisible subsidies, as a result of which there was a modicum of new orders. Recently, however, a dramatic change has taken place in the shipyards both of the far east and of Europe.
  In Japan, for example, when Sanko—which has been, not perhaps completely single-handedly but to a major extent, responsible for orders for the Japanese shipbuilding industry—went out of business, Japanese yards had to lay off 10,000 workers, and there are calls for a further 20,000 job losses. In Korea there were no new orders in August and September of last year. Domestic orders have picked up in Korea since then, but it has shelved its plans for further expansion. There have been a few orders in Europe, but, even so, it seems that Sweden is reconciled to the closure of its nationalised industry, and Holland is cutting back on subsidies.
  Despite the current depressed state of the market, the Government believe that British Shipbuilders must continue to concentrate on certain areas: cost effectiveness, competitiveness and having the right support at the right time. As all right hon. and hon. Members who take a close interest in this matter will appreciate, that is the main thrust of its corporate plan for 1985. After what I would describe as the successful completion of the sale of the warship yards, all these activities are concentrated in the merchant shipbuilding sector.
  To maximise cost effectiveness, British Shipbuilders is doing certain things. It is concentrating on certain products, such as ferries, offshore supply vessels and diving supply vessels. Judging by its present work load, it is fair to say that that policy has been successful. It is securing better components at better prices. Thanks to its phase 5 pay and productivity agreement, it is adopting new building methods. That is a step in the right direction. It is also making appropriate capital investment. Since 1979, capital investment in the shipyards has been just under £330 million. It is investing in capital projects relating to CAD-CAM installations and, at a completely different end of the scale, upon the most up-to-date welding gear.
  The corporation's order book is as follows. I am happy to say that there are ships to be finished in all of its yards. Govan has an order for a P and O ferry, which will take some time still to finish. Smith's Dock has three of the four Cuban ships still under construction, and Austin and Pickersgill has two advanced bulk carriers still under construction. Last Friday saw the naming by my right hon. Friend the Prime Minister of the Stena Seawell at Sunderland. Sunderland has a second diving support vessel on the stocks, as well as a very large crane barge for ITM. Ferguson-Ailsa has a number of small ships

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  under construction, and Appledore has two dredgers on order. However, when this work runs out, British Shipbuilders will face a major problem.
  Against a target in 1985–86 of 200,000 gross tonnes of new orders, British Shipbuilders secured only 23,000 tonnes. I do not believe that that was because of lack of support. It was simply because there were remarkably few orders to be won, especially towards the end of last year. The latest figures I have for the world market last year show an order book at the end of 1985 of just over 25 million gross tonnes. That is the lowest level for three years. More significantly, it is very nearly the lowest level since 1979.
  To put the decline of the industry into context, it is worth while to remember that the peak order book in recent times, that of March 1974, stood at no fewer than 133 million gross tonnes. That is more than five times the level of orders that we now have.
  Building ships more efficiently is the key to delivering them on time and to the owners' satisfaction. I have already referred to the fact that my right hon. Friend the Prime Minister named the Stena Seawell last Friday. The delivery of that highly complex vessel on time and in perfect condition speaks volumes for the dedication and effectiveness of the Sunderland management and work force. It is the best kind of advertisement that the industry could have, and it is worth more than any amount of Government support. I am sure that all right hon. and hon. Members will join in applauding that success.
  Against this background of the corporation's own drive towards cost effectiveness lies the support that we are continuing to provide. In this financial year we have made provision for an external financing limit of £73 million for British Shipbuilders, covering payment of public dividend capital to meet the needs of the corporation and intervention support for individual orders.
  But as important as the value of support is the effectiveness of the manner in which it is provided. Not included in the British Shipbuilders' figures is the home credit scheme, which matches the financial terms that the United Kingdom owner ordering merchant ships could obtain if he was going overseas. But, as the House will appreciate, the key production aid is intervention fund support to bridge the price gap between United Kingdom costs and foreign prices. The present rate is 20·5 per cent. of contract price, although the Commission, which approves aid regimes within the present fifth directive on shipbuilding, will allow some flexibility on a case-by-case basis.
  We are also ready to consider other means of support case-by-case, as the need arises, although always within the international rules which have to be observed as a framework if any sense of order in this market is to be preserved. I have already mentioned the present Community regime. As the House knows, we are now embroiled in the discussions in Brussels over the content of the Community regime to follow the fifth directive; the new measure which will govern the provision of aid to shipbuilding in the Community from the beginning of 1987.
  We have already had a valuable session of the Council of Industry Ministers, which was attended by my hon. Friend the Under-Secretary of State. He made clear both our belief that aid for the industry will remain essential for some time to come, and that we are determined that such regulations as are introduced should cover all aids,
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  however given. As I have explained to the House, the United Kingdom aid regime is straightforward and transparent. It has to be said that those of some of our partners are much less so. In consequence, we have asked the Commission to ensure that it gets all shipbuilding aids in the Community on to the table and to make its recommendations for the next regime in the light of what is revealed by these inquiries. I am happy to report that the Commission is hard at work along those lines.
  Mr. Frank Field: The Minister mentioned putting everything on the table, so is it possible to put on the table too the £37 million subsidy given to Harland and Wolff? Is the hon. Gentleman aware that when Northern Ireland's accounts were approved in the House, the Minister responsible gave us an assurance that none of that money would be used to win orders that could go to English or Scottish yards? When we ask questions, it is said that we cannot be told where that money goes because of commercial confidentiality. Is that not a topic that could well be considered by the National Audit Office?
  Mr. Morrison: I know that the hon. Gentleman follows such matters closely and carefully, but I assure him that the Government looked carefully to ensure that the tenders from Harland and Wolff and from Swan Hunter were on a like-by-like basis. It would have been quite wrong and politically careless not to do that. But the hon. Gentleman will appreciate that the process took some time. There was the possibility of earlier decisions, but further checks were taken into account. I understand the disappointment felt about Swan Hunter, but no doubt the hon. Gentleman heard the statement last Thursday by my right hon. Friend the Secretary of State for Defence. Those matters were taken carefully and closely into account.
  Mr. Frank Field: I was not specifically thinking of the order that was announced last week. No hon. Member can discover where that £37 million goes. As it is spent but we cannot find out on which orders it is spent, is that not a topic for the National Audit Office?
  Mr. Morrison: I should be happy to look further at that point if the hon. Gentleman so wishes. However, I would not like to give any undertaking from the Dispatch Box. The hon. Gentleman will appreciate that Harland and Wolff does not fall within my ministerial responsibilities, but I am happy to look into the important point that he has raised.
  As I said at the beginning of my speech, the Bill is very important. All those Opposition Members present and, indeed, those of my right hon. and hon. Friends who are present, have close connections with the shipbuilding industry. Their constituencies may be involved with that industry to the exclusion of all others, and I appreciate that this topic is important to them. I shall listen carefully to what they all have to say and will, with the leave of the House, reply to the debate.
  I commend the Bill to the House. It represents a further strong indication of the support that the Government have already given British Shipbuilders over the years. That support has been very significant.
  4.54 pm
  Mr. John Smith: As usual, the Opposition will not oppose a Bill that gives British Shipbuilders extra borrowing powers. But this is the

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  occasion for a very timely debate on the shipbuilding industry. It is clear to all who know about the industry that the merchant shipping side is approaching as serious a crisis as it has ever faced.
  During the past few years the industry has shrunk, particularly in terms of manpower. Since 1979, we have lost 48,000 jobs in shipbuilding and ship repair. But even more important, a crisis is now imminent. The Minister read out the orders that are now with British merchant shipyards. But he failed to add that all of them are near completion. He did not mention any prospective orders. As far as I know, it is highly speculative whether any orders are in prospect. We face the awful truth that, as the year progresses, the time approaches when some of those yards will have no orders. If orders are not obtained very quickly, there will be a difficult gap to bridge if orders are subsequently obtained. I am sure that the Minister realises that a lot of preparatory work needs to be done before a ship is properly under construction.
  Some commentators, including, I believe, the retiring chairman of British Shipbuilders, have said that the years between 1986 and 1990 would be the crisis years for shipbuilding. It is believed that it is possible to contemplate some rise in orders after then, because of the shipping industry's need for replacement orders. Whether or not that is true, the crunch has already arrived for British merchant shipbuilding. Capacity simply cannot be reduced further. If it is, it will fall below the minimum size necessary to retain a proper shipbuilding industry. There must be a minimum size to justify the design capability, the research and development effort and the substantial work force and management who are committed to the industry. If the industry contracts further, we shall cease to have an industry.
  In 1986, shipbuilding in this country faces survival or extinction. Of course, the consequences of extinction are dramatic not just for the industry but for those areas of the country that are deeply dependent on it for their prosperity and employment. I need mention only Tyneside, Teesside, Wearside and Clyde, although there are more shipbuilding areas than that. However, those regions are particularly dependent on the industry, and it is unthinkable that ships should not be made on those principal rivers.
  Other trades are dependent on the shipbuilding industry, ranging from those involved in the steel industry to those that produce fairly minor pieces of equipment. It has been calculated that there are at least three jobs outwith the shipbuilding and ship repair industries for every one job within them. Therefore, the consequences go much wider than just the shipbuilding areas, and affect many other parts of our manufacturing industry.
  The tragedy for the industry is that a Conservative Government are in power at this time of crisis. It is now clear that the decision to privatise the naval shipyards was one of the most stupid decisions in the history of Government relationships with British shipbuilding. Just when the industry is at its most vulnerable, its most profitable part has been handed over to the private sector, leaving British Shipbuilders exposed.
  The former chairman of British Shipbuilders, Sir Robert Atkinson, told us when privatisation was being considered that, if it took place, we would cease to have an integrated industry, and the Government would be
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  taking away the very capability which had helped it to survive and which would enable it to survive again through the difficult years ahead.
  The industry would have had sufficient problems without privatisation, but with privatisation and its stunning financial effect on British shipbuilders the industry has been forced into an unnecessary crisis. A handicap has been imposed upon it just when there is a world slump in orders and a catastrophic decline in the United Kingdom merchant fleet. The problem for us is not a fall in orders but a relative fall in the British share of the market. Only about 2 per cent. of the world's shipbuilding orders come to Britain. Taking all that into account, the privatisation of the naval shipyards must rank as one of the most stupid acts of Government for many years.
  We say that the industry must survive. The Government's clear responsibility is to ensure that it does. The crisis is one of depth as well as of timing. Speed is necessary if there is to be a chance of survival. It is clear from recent days and months that the Government do not understand that the timing of orders is of tremendous importance to both naval and merchant shipbuilding. If the timing is wrong, unnecessary damage will be caused.
  I shall suggest a number of measures which, in addition to those which are under way, the Government should undertake to help the industry survive the crisis. First, there must be a proper Government procurement policy. Orders are available from the public sector. They should be organised and brought forward so that they are in time for the British shipbuilding industry. I hope that never again will orders go abroad such as that from Pacific Nuclear Carriers for an important nuclear carrier ship. For a British public sector organisation to give an order to another country is intolerable. The Government should have stopped that. I hope that if that occurs again it will be stopped.
  The Minister should co-ordinate and bring forward as many public sector orders as can be found. I hope that he will not say that it cannot be done, because it was done under a Labour Government. Indeed, my right hon. Friend the Member for Glasgow, Govan (Mr. Milian) was responsible on a number of occasions for intervening positively—for example, on British National Oil Corporation orders. The Government should make an internal effort to co-ordinate and organise orders as soon as possible. That would provide an important breathing space for our merchant yards.
  One initiative should be pursued vigorously by the Department of Trade and Industry. It affects in particular the Sunderland and Govan yards. I refer to the proposal by British Shipbuilders for the fleet support king 20/20 vessel. That has been developed extensively within British Shipbuilders and involves a new type of fleet auxiliary vessel. It has possibilities for foreign navies, but it is crucial that orders come from the Royal Navy to give it credibility on the foreign market. I do not suggest that it is a substitute for the auxiliary oiler replenishment vessels, but it is complementary to them. It represents a new opportunity for the British merchant yards by supplying naval orders, particularly abroad.
  Mr. Bob Clay: And it is cheaper.
  Mr. Smith: I have corresponded with the Secretary of State for Trade and Industry, who has passed the buck to the Ministry of Defence. Certainly my right hon. Friend

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  the Member for Govan and my hon. Friend the Member for Sunderland, North (Mr. Clay) will be pursuing this matter with the Ministry of Defence and the Department of Trade and Industry. I hope that the Department of Trade and Industry will not shuffle off responsibility, but will fight for this important new initiative for British Shipbuilders.
  Mr. Clay: My hon. Friend was kind enough to show me a letter from the Secretary of State for Trade and Industry about the FSK. Does he share my view that it appears that the Secretary of State does not even know the Ministry of Defence's position? He just says that it is a good project and that he hopes that the MOD will order it. He does not seem to be aware that several weeks ago his colleague in the Ministry of Defence said that the MOD did not intend to order it.
  Mr. Smith: It is clear that the Secretary of State for Trade and Industry is not aware of the Ministry of Defence argument that the ship would have to be armed. The Department of Trade and Industry and the Ministry of Defence should sort the matter out, and decide what is required and what would be suitable for British Shipbuilders to build. I hope that they will bear in mind the enormous importance of putting in an order in view of the enormous export potential involved.
  The Government must increase their support in various ways. I think in particular of the shipbuilding intervention fund. The Minister of State said that the Government are pursuing the matter within the EEC, but previously targets have been set but not achieved. I hope that that will not happen again.
  When we enter negotiations to safeguard our national interest we are not helped by free market speeches inside and outside the four walls of the Community. If the Government continually argue a free market policy they have little credibility when they come to argue in favour of an interventionist policy in terms of our national interest within the EEC. It would be helpful if the Government abandoned their free market postures because it is crucial that we gain as much advantage as possible from the shipbuilding intervention fund.
  In addition, I hope that the Government will examine the possibility of further United Kingdom support packages for the industry. Other Governments provide such packages and this Government should. I draw attention to one example. The report on European maritime transport policy published recently by the other place recommends that the British Government should re-examine the limit on loans. Currently an eight-year limit on loans applies to shipowners who buy vessels from British shipyards. That conforms with OECD guideline. It is well known and documented that other Community Governments give additional support. The report argues that there should be a 12-year loan capability. The Government cannot say that it is impossible to allow such a loan capability because other Governments with the same obligations allow it. That possibility must be examined urgently.
  I hope that the Government will further examine the extension of credit packages. My hon. Friend the Member for Sunderland, North will, no doubt, tell us about his interview with the Prime Minister a few days ago in his constituency. If the Prime Minister is claiming that credit packages in Britain are as good as in other parts of the
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  world, or that they can be made available, we want clarification as soon as possible. The Government should be putting their whole effort into finding ways of keeping the industry in existence.
  There can be few occasions when the future of an entire industry becomes at stake over a short period. From time to time particular parts of a certain industry get into difficulty. They can be helped when they need to be helped, but I cannot think of a recent example of the whole of an industry facing a crisis of existence in a period of only a few months. The months of crisis are here now and the future of the industry will be decided in the next few months. That is why it is crucial that urgent action be taken by a Government determined on one policy objective—the survival of the industry. Without that the industry will face extinction with consequences which are too frightening to contemplate for the country's manufacturing potential, for certain areas and for a series of ancillary trades.
  I am sorry to say that the Government's approach reveals that they do not understand the task or the seriousness of their responsibility. The Opposition have that awareness and we shall campaign with ceaseless vigour to ensure that the British shipbuilding industry survives for the future.
  5.9 pm
  Mr. Patrick Nicholls: We know that the purpose of the Bill is to increase from £1,200 million to £1,300 million the corporation's borrowing limit. We know that because my hon. Friend the Minister has told us so. I suppose that we could also discover the purpose by reading the Bill, but clause 1(1) runs to about 14 lines and contains a plethora of brackets. It is a feat to read that clause to oneself—out loud or in silence—and so ensure that the inflections, the brackets and finite verbs fall in the right place; but finally the subsection yields up its secrets. I think, in the end, I would have been able to find the answer without my hon. Friend telling me. I suspect that a bracket is missing from that subsection, but for the life of me I could not suggest where it should go. This is a drafting point—and perhaps as a lawyer it appeals to me—but that subsection is in a league of its own.
  It has already been said—and it will no doubt be repeated—that this is a long-standing problem In fairness, the right hon. and learned Member for Monklands, East (Mr. Smith) did not suggest that it was anything but a long-standing problem. Some of the correspondence which I have received concerning the fate of the British merchant fleet suggests that it is an immediate problem. Correspondents argue that, because it is so immediate, it is the responsibility of the Government. From the right hon. and learned Gentleman's speech I detected a recognition of the fact that the problem goes back a great deal further and that it cannot be attributed to the Government. I certainly would not argue that, because it is not the responsibility of this Government, it is necessarily the responsibility of the previous Labour Government.
  The lack of orders represents the problem of present overcapacity. Two years ago, the worldwide excess in shipping capacity reached 120 million DWT which represented an excess capacity of 30 per cent. in oil tankers, 22 per cent. in combined vessels, 20 per cent. in liners and 7 per cent. in container ships. That represented—no pun intended—the high-water mark. That situation

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  has been partly ameliorated by the scrapping of capacity, but there is still an overcapacity of between 40 and 50 per cent. I agree with the right hon. and learned Gentleman that the solution to overcapacity will not emerge until the 1990s.
  The problem facing the shipbuilding industry was recognised as long ago as 1975 by Mr. Eric Varley, the then Secretary of State for Industry, when he said:
  "The prospects for shipyards throughout the world are bleaker than perhaps at any time during the past 20 years. The demand for new merchant ships, especially oil tankers, has slumped to almost nothing. Existing orders are currently being cancelled."—[Official Report, 2 December 1975; Vol. 901, c. 1460.]
  In 1978, the right hon. Member for Manchester, Gorton (Mr. Kaufman), in his capacity as Minister of State, Department of Industry, when introducing the shipbuilding redundancy payments scheme, said:
  "shipbuilding industries all over the world are facing the inevitability of contraction and this country cannot isolate itself from that trend."—[Official Report, 16 January 1978; Vol. 942, c. 175.]
  The Government and the previous Labour Government faced the consequences of a contraction of world trade. What can be done about that? My hon. Friend the Minister said what the Government will do to meet that threat. There must be two broad approaches in Government policy. One must try to stem the losses and the other maximise the potential. The Government committed themselves to returning to the private sector the warship building yards in an attempt to stem some of the losses. Since 1979 the Government have invested £1,449 million. One may argue whether that is too much or too little.
  Some of the correspondence I have received has stressed that this country is worse off than other countries. Some argue that, therefore, the contraction in the merchant shipping industry is faced only by this country. If our performance was substantially worse than that of our competitors, it would be an accusation with which the Government would have to cope. However, when one studies the comparative state of affairs in the competitors' yards, it places our own position in perspective.
  In 1984–85, British Shipbuilders won 1·7 per cent. of new orders compared with 1·8 per cent. in 1980–81. Japan's performance is often used to criticise ours, but its share of the world market fell from 54 per cent. in 1983–84 to 38 per cent. in 1984–85. Exports from Japanese shipyards have slumped to their lowest level since 1978, and there is no improvement in sight. The shipbuilding division of the large Hitachi Zozen combine was reported to be working at barely 60 per cent. of capacity at its six yards in March 1984. This month, the major Japanese shipbuilders reached an agreement to cut capacity by 20 per cent. during the next two years.
  In 1975, Swedish yards employed 28,000 people, but by 1983 the figure was less than 8,000. The Kockums yard underwent severe restructuring, and in 1982 it turned consistent loss-making into a small profit.
  Norway has only two ships of any real size on its order books and its yards gained little significant work during the year.
  In West Germany, the new orders received in 1983 dropped from 4·4 per cent. to 2·4 per cent. In March 1984, the Financial Times reported that HDW had been forced
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  to close its merchant shipbuilding yard in Hamburg and A G Weser, part of the Krupp group, had closed its large yard in Bremen, with the loss of 2,000 jobs.
  France, however, after years of declining orders, has achieved success, but only with a massive injection of state aid. I am not trying to be contentious, but I think that most people would agree that the famous Polish shipping contract of the 1970s was not especially helpful. It was an example of getting business, provided that one was prepared to pay for it. France might have begun to go down a path which we have already been down.
  The Government, through subsidies, have ploughed almost £1·5 billion into the shipbuilding industry. One may argue whether that is the right figure. I do not believe that the Minister would claim to be able to justify that figure to the nearest pound, but it is clear that an industry is not benefited simply by pouring money into it in the face of logic, the facts and world trends. It is no use pouring in money in an undisciplined way simply because one wants to protect the industry. If such a method saved industry, any Government would use it, but it does not. The Government are in the unenviable position of having to use a Solomon's touch. They must pluck out of thin air a sum which recognises what ought to be done and where the British industry stands in the world pattern.
  Every week, I have to talk to my constituents about so-called cuts and the money that the Government have ploughed into a range of public services and undertakings—there is a substantial port in my area—but I have to tell them that there is a limit to how much can be ploughed in. Bearing in mind the world pattern and how we are faring, the money that the Government have put in is about right, although even my hon. Friend would not justify it to the last pound.
  The Government's policy and financial input can be commended. The Bill is consistent with those elements. I understand that there will probably not be a Division. If we were pressed to a Division, I should have no trouble in supporting the Bill.
  5.21 pm
  Mr. Bruce Millan: I was not sure what the hon. Member for Teignbridge (Mr. Nicholls) was arguing except, perhaps, for the closure of the British merchant shipbuilding industry. As for Government expenditure and subsidy, I did not hear any of the hon. Gentleman's colleagues recommending earlier the closure of agriculture, which legitimately receives large sums of public money.
  I am glad that we have the opportunity to discuss merchant shipbuilding, as much public attention has legitimately been given to the problems of naval shipyards and the auxiliary oiler replenishment vessel recently. As my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) said, the present crisis in British merchant shipbuilding could be terminal. We now have a rump of what the industry used to be. British Shipbuilders employs only about 10,000 people in merchant shipbuilding and, unless firm orders are obtained soon, about 4,000 of them will be made redundant by the end of the year and the rest will go during 1987. That is the extent of the crisis.
  The Minister mentioned the 23,000 tonnes of orders that have been obtained in the past financial year. That should be compared to the 200,000 tonnes target. It is insignificant in terms of keeping the industry going. The

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  lack of orders at my Govan yard is critical. Of course there is a world problem. Nobody is disputing that or suggesting that we can isolate ourselves, but some hon. Members tend to speak as though no orders are being placed. That is not so—l3 million tonnes of shipping was ordered in 1985, of which we got 20,000 tonnes.
  In 1984, rather more than 15 million tonnes was ordered and in 1983 19 million tonnes was ordered. The reduction is significant, but a substantial tonnage was available in 1985. Not all of it was available for tender by British Shipbuilders, however, for a variety of reasons, including the fact that many countries protect their industries. That makes competitive bidding by British Shipbuilders or other Western companies impossible.
  The rundown of the Japanese and South Korean industries has been mentioned, but Japan still has an order book of 9·7 million tonnes as compared with Britain's 350,000, all of which is under construction and will run out in the next year or 18 months. South Korea has 4·7 million tonnes of orders. European industries might be more analogous to ours, but West Germany, Finland, Denmark, Italy and France all have fuller order books than us.
  Describing the problem does not solve it, but it shows that we should not give up and believe that our industry must go into liquidation. There are orders about, but we have not got anything like enough of them. If the industry is to survive, we must exert more pressure than have any previous Government to ensure that such public sector ordering as there is is placed with British yards.
  It is scandalous that any public sector organisation should place an order abroad. There was a danger a few years ago of a Central Electricity Generating Board order for three colliers going abroad. Only political pressure brought it back to the United Kingdom. It was placed with Govan Shipbuilders, which delivered all on time. Indeed, at least one collier was delivered ahead of the delivery date.
  I noted what the Minister said about the intervention fund. It always seems absurd to go through the rigmarole of setting a limit to the fund and then not using the money because no orders come along. It would be much cheaper to provide some intervention fund assistance to obtain an order than to pay for a yard's rundown or for redundancy payments because orders are not obtained, to say nothing of the human, industrial and economic considerations.
  Mr. Peter Morrison: Perhaps I can help the right hon. Gentleman. I said earlier that there is some flexibility in the intervention fund. British Shipbuilders has not approached us about flexibility for an order, but we are prepared to examine each case as it comes.
  Mr. Milian: That is extremely helpful. Perhaps the Minister can also be helpful concerning credit terms. Like my right hon. and learned Friend the Member for Monklands, East, I noted what the Prime Minister said at a meeting in Newcastle last Friday.
  I would like the Minister to say that the Government will guarantee that no orders will be lost by British Shipbuilders simply because of inadequate credit terms, and that if they can compete with international competitors in terms of price—with intervention fund assistance where necessary—delivery dates and technical specifications, they will not lose orders because of inadequate credit terms. If such a statement could be
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  made, it would be very helpful in the context of this debate and in the context of the Govan yard, which is interested in the attempts that British Shipbuilders is making to obtain container ship orders from China and to obtain further ferry orders to add to the one that it is completing now.
  I am not privy to those negotiations, nor am I presuming to say that the Government are or are not being helpful. I am making no criticism of or, for that matter, conferring praise on the Government. I should like the Minister to say that he recognises the importance of the orders, not only for the Govan yard but for merchant shipbuilding as a whole. He should give an assurance that British shipyards will not lose out on these and other orders because of a lack of adequate credit terms.
  I mention the FSK 20/20 fleet support ship against the background of Govan shipyard. Its last order is the P and O ferry, which is due for launch in the autumn and for delivery in March 1987. After that, there in nothing on the order book. It is a tribute not only to the management but to the men at the yard that they have pledged themselves to meet the delivery dates although they are working themselves out of a job. I am sure that those pledges will be fulfilled. We desperately need another order, and although the FSK would not come within a time scale that would solve the immediate problem, it would be a considerable help to Govan shipbuilders and others.
  Partly for reasons of time, and partly because of the merits of the matter, I do not wish to discuss the decision made last week between Harland and Wolff and Swan Hunter. Nor do I wish to suggest that the FSK is a straight substitute for the AOR as a fleet support vessel. It is not. One order has been given for the AOR, and the second will go to Swan Hunter if proper terms can be negotiated. I am looking beyond that. It is not clear to me, nor has it been made clear in the defence White Paper or in anything that the Secretary of State for Defence has said, why subsequent orders for fleet support vessels should have the many weapons and other defence equipment that are included in the AOR. I do not understand the defence justification, apart from anything else, for the Ministry's line. The figure quoted in newspapers for the AOR is £130 million. The FSK, which would do the job more than adequately without the weapons system involved, is being quoted by British Shipbuilders at £65 million to £75 million, which is almost half the price of the AOR.
  I do not wish to compete, certainly not with my hon. Friends who are interested in the AOR, but there is a case for the FSK and I object to the fact that that case is not being properly considered by the Ministry of Defence. I hope that the Department of Trade and Industry will ensure that the case is properly considered by the Ministry of Defence. Unless it is, the chances of obtaining orders from foreign navies will be considerably reduced. This is an opportunity for the Government directly to underwrite the British merchant shipbuilding industry. I hope that they will take that opportunity and press the Ministry of Defence, as some Labour Members have already done, to consider positively the FSK 20/20. If they cannot give an undertaking to order the ship within the next year or two, will they at least express a genuine interest in it and ensure that it is considered as an alternative for the replacement of the Royal Naval Auxiliary fleet, which is aging and must be replaced in any case?
  5.34 pm
  Mr. Anthony Nelson: The right hon. Member for Glasgow, Govan (Mr. Milian) spoke with considerable experience and a strong constituency interest which is respected by hon. Members on both sides of the House. He has spoken previously about the need for support for the shipbuilding industry as part of a wider industrial strategy that he propounds, and he has always spoken with moderation and persuasion. At least some of his remarks will be taken on board by my hon. Friends at the Department of Trade and Industry. I could not agree with every aspect, but on finance, on which I hope to say a word in a moment, I share many of his sentiments.
  Whether we represent shipbuilding constituencies or not, we all have a national interest in the survival and prosperity of this most important industry. During the past decade or more, there has been a welcome bipartisan approach towards investment in the shipbuilding industry, reflected largely by the significant investment of public dividend capital and in debt finance by successive Governments in what is now called British Shipbuilders and in the many companies that comprised that nationalised concern.
  About £1 billion of public dividend capital has been invested by the Government, forming part of the £1·5 billion of total capital support, yet sadly this was during a period when British Shipbuilders lost an accumulated sum of about £650 million. It appears that the provision of capital, whether to write off losses or through "soft" state funding by public dividend capital, has not been sufficient to halt the decline of this great industry or to fit it to take advantage of future opportunities. I wish to suggest modestly one or two ways in which we should help the industry to alleviate some of its problems.
  Despite the despondent tone of much of the debate so far, there is reason to believe, nationally and internationally, that the shipbuilding industry can perhaps look forward to rather better times. None of us has an interest in trying to talk down the prospects of the industry or talk down the prospects for the market, unless there are demonstrable and immediately viable means of dissuading people. There are better prospects for world shipbuilding—first, because of the fall in the price of oil, which will be a circular trend. Although it may not maintain its low price, it will probably trade at lower real prices than it has historically.
  This will have two major advantages. First, it should increase the traffic of oil internationally, and oil comprises a significant part of maritime trade; secondly, oil as a constituent cost of transport will be significantly reduced. When we recall that a major reason for the decline in shipping internationally and, therefore, to a large extent, in shipbuilding, was the rapid and large increase in the price of oil, it is not unreasonable to expect that a converse movement might engender some revival.
  Secondly, there are better prospects because the fall in interest costs nationally and internationally should create not only a more viable world economy in which transport, including ships, may be ordered, but greater economic activity in those countries and lower costs of financing which will make new orders more viable. I believe—although it is more speculation than prophesy—that the price of commodities internationally, which is exceedingly low, will increase. I do not know whether it will move up rapidly, but the demand for international commodities of
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  all sorts—minerals and foodstuffs—will rise. These form a significant part of the cargo markets and might be expected to bring about a revival in "world scale" charter rates and, after a revival in the charter of older shipping, a revival in demand for new cargo and general vessels.
  As many hon. Members have said, there has been a fall in Europe in capacity for shipbuilding and there has also been a fall in Japan and elsewhere. This fall in capacity, combined with the much more streamlined and technologically efficient shipyards that are currently competing against each other, will provide a firmer basis on which to attract new orders. When one looks at some of the major customers for ships and sees the extent to which new build forms a large proportion of their fleets, one can say with a little confidence that there are better prospects for the future.
  One of the largest shipping companies in the world is the Worldwide Shipping Company which is registered in Hong Kong. The majority of its shipping fleet is less than five years old. The fleet owned by that company is bigger than the whole of the British merchant shipping fleet. If one takes that into account and assesses the extent to which such companies will look to international shipbuilders to replace their fleets, it is clear that there will be a demand for new build. Our aim must be to go out with renewed vigour and perhaps more imagination, with Government and industry working hand in hand more closely than hitherto to try to get a share of that cake.
  With great modesty, I should like to suggest five ways in which we might move forward. I hope they will commend themselves to my hon. Friend and to hon. Members. The first and I am sure the single most important factor that will assist the revival, continuity and survival of the industry is ship finance. That is the key. Whatever we may say about labour practices, quality, dates of delivery, heritage and so on—important as they all are—when one comes down to it, it is the cost and the extent to which purchasers, including Governments, are accountable to others for the purchases they make that are important. Customers should be able to undertake purchases at the lowest competitive levels of finance.
  The lower interest rates currently prevailing provide a welcome opportunity. On previous occasions I have argued for them to be lowered even more and for the Government, as far as they can, to influence the rates in this direction. That is the single most important factor that will create a more competitive opportunity for British Shipbuilders. We should look more pragmatically and imaginatively at the way in which British Shipbuilders tenders for orders. It should consider the extent to which it is allowed, within the rules of the game, to front-end load the interest costs within the price of a ship as opposed to the extent to which it costs the ship quite separately from the interest. In Britain, tendering is done honourably and correctly, but some other countries are far more inclined to offer an exceedingly low rate of interest, whereas the real interest cost is to a large extent absorbed within the capital price that is tendered for the ship.
  The home purchase scheme and preferential interest rates through ship mortgage finance have been helpful, as has the aid and trade provision, in providing low-cost ship finance. Although it is on the fringes of this matter, we should look imaginatively at barter deals. Such deals, especially given the movement of oil in recent years, provide a tripartite opportunity—as do all barter deals

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  between countries—to British Shipbuilders to get orders at viable prices, but the liability against a fall in the value of the commodities bartered is shared by others.
  It is essential that we have competitive and more stable rates of exchange that will enable us to tender internationally. As a small part of such a policy we should be members of the European monetary system. We should be able to tender in foreign currencies with a guarantee by the Britsh Government that any variation from the exchange rate basis on which a tender is made will be met by Government. I should like my hon. Friend to explore ways in which this can be done within GATT and other rules.
  Public sector orders, about which something has been said, should be far more related in future than they have been in the past to the export potential of the ships. The warship sector is a prime example. Under successive Governments, the types of ship ordered by the Royal Navy have not been suitable for export markets. In the merchant sector, the success some years ago of the SD14 as an off-the-shelf ship is an example of the way in which we should be buying ships in the public sector that have export potential.
  Although my hon. Friend said that British Shipbuilders is specialising much more than it has done in the past, there are dangers in specialising in the offshore oil industry; those dangers arise because of the reasons I enunciated earlier. Although British Shipbuilders should concentrate in a specialised sector of the market, in future it should also emphasise its capability in other technological sectors not involving energy or offshore exploration.
  The marketing policy of British Shipbuilders should be much more imaginative than it has been in the past. I should like to quote one example, and here I declare an interest. One of the companies that I advise is seeking to assist a middle eastern country in the development of its fisheries industry. To that end I contacted Ferguson-Ailsa to obtain information about its capability in that field. The company sent a brochure about the ships it builds. I had no further communication from the company about the inquiry, but I have been bombarded for months by Nordic interests which have this very day sent a delegation to the countries concerned to explore the opportunities. The Nordic export project fund is state and industry-financed in Scandinavia and is out to get business not only for its shipbuilding industry but for its engineering and manufacturing industries. It acts as a vanguard for many export companies.
  The Department of Trade and Industry and British Shipbuilders should renew their efforts to follow up inquiries for projects abroad and inquiries about ways in which they can work with others in turnkey projects to assist in the provision of vessels. In these and in other ways, but most of all in the provision of preferential finance, much can be done to ensure that British Shipbuilders takes better advantage of any future upturn than it has done in the past. To the extent that the Bill provides it with the wherewithal, I welcome this primary legislation and the terms in which my hon. Friend moved the Second Reading.
  5.49 pm
  Mr. Michael Meadowcroft: Like the hon. Member for Chichester (Mr. Nelson), I do not represent a shipbuilding constituency but I share his belief
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  that the progress and development of shipbuilding is important to the whole of Britain. I listened with interest to his rather optimistic views about the potential for shipbuilding, but in his speech I failed to detect a sense of the urgency of the matter. Unless there is some sign that his optimism is to be quickly justified, there will not be the capacity to pick up the orders when they are available.
  Like other hon. Members, I have no wish to oppose the increased capital finance that the Bill will make available. I should like to encourage a greater ability to invest in other spheres of service and industry where it is within the Government's power to do so. It seems a shame that we look at minor details and minor areas rather than at the whole area of Government spending. Set against the background of decisions in shipbuilding, which at best puzzle and at worst embitter those involved, it is important to appreciate the problems of people who are struggling to survive in the industry.
  The borrowing powers for British Shipbuilders need to be increased in the context of fair treatment rather than in the context of backing up the myth that there is free and open competition in the industry. If warship operations are rather more profitable than merchant shipbuilding, it is important to realise that it is essentially orders from Governments that provide that extra profit, and there is no point in trying to represent that as fair and free private competition. It would have been far more acceptable to me and my hon. Friends if at the same time as introducing the Bill to increase the borrowing powers of British Shipbuilders the Minister had been able to announce an earlier start date for the next AOR vessel and a definite offer to Swan Hunter. Even more acceptable would have been an announcement that an order for a type 23 frigate was to be placed with Swan Hunter.
  Mr. Nicholas Brown: The hon. Gentleman has referred to the AOR vessel, which, strictly speaking, goes outside the bounds of the Bill. However, will he explain what Liberal party policy is on the issue?
  Mr. Meadowcroft: It was made clear last week by the Liberal spokesman that the order for the next AOR vessel should be placed on Tyneside, and that the order should be accelerated.
  I do not know whether this is associated with lack of capital, but it appears that British Shipbuilders has got rid of its computing capacity by passing it over to Hoskins, which has declared redundancies. Some of those who have been made redundant will not have the rights that would have accrued to them if they had stayed with British Shipbuilders. This might be a small matter, but it is important to those who are involved. The capacity to maintain cash flow should be examined.
  I hope that the Minister will dispel the fear that increased capital capacity is being made available so that certain sections of the shipbuilding industry can be fattened up for privatisation. Against the backround of fairly general acceptance of what the Bill seeks to do, I hope that the Minister will give the House an assurance that investment is not taking place with a view to selling off sectors of the industry in future.
  5.53 pm
  Mr. Michael Fallon: The presence in the Chamber of five Members from the north-east bears

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  witness to the importance of shipbuilding for Tyneside, Teesside and Wearside. There is no better illustration of the Government's industrial policy than the Bill. It is modest in size but it will be huge in cost. The Bill is a good example of the Government's pragmatism and of the dogmatic empiricism which seems to envelop the Department of Trade and Industry these days.
  Ministerial support is to be extended again and Exchequer subsidy is to be increased. When the Bill is fully implemented, the borrowing limit of British Shipbuilders will have been raised five times in four years during this Parliament. The 1979 and 1981 measures raised the borrowing limit five times in the four years between 1979 and 1983. The Government started with a borrowing limit of about £200 million and we are now approaching a borrowing limit of £1,400 million. As my hon. Friend the Minister has said, progress has been made. British Shipbuilders has been streamlined and its management continues to be improved to stem the huge financial losses that BS suffered in the late 1970s and early 1980s and belatedly to improve productivity and working practices, which require improvement throughout the industry.
  Since the last major debate on a Bill of this sort, which took place in November 1984, and in which I was fortunate enough to participate, streamlining has taken place. Warship and other yards have gone, including Brooke Marine, Yarrow, Vosper Thornycroft, Hall Russell, Vickers and Swan Hunter. I believe that British Shipbuilders is in better shape now than it was. Parts of it have been released to the private sector and the losses involved in running the corporation have been reduced. It is to the credit of the Government that that has been achieved against a grim and deteriorating international background. It is to the credit also of the retiring chairman of British Shipbuilders, Graham Day. We should put on record the debt that the industry and the Government owe to Graham Day for the work that he has done.
  I hope that my hon. Friend the Minister will agree that we are a long way from the heady days of 1979 when his predecessor's predecessor was quoted as saying:
  "We are prepared to put public funds, for a two-year period, behind the industry's own efforts to achieve viability."—[Official Report, 23 July 1979; Vol. 971, c. 43.]
  We are even a long way from July 1983, when my hon. Friend's predecessor told the House:
  "We cannot afford to go on subsidising shipbuilding with these losses."—[Official Report, 28 July; Vol. 46, c. 1356.]
  When my hon. Friend replies, I hope that the will give us a clearer glimpse of the medium and longer-term prospects than he was able to do in his necessarily short speech on moving the Second Reading. The taxpayer at least would like to know whether the end of these losses is in sight.
  It would be wrong not to say something about last week's announcement about the AOR order, which is relevant to the Bill. My hon. Friend the Minister will know that the Government's decision, sensible as it appeared in London, was disappointing to those on Tyneside. However, there are lessons that Tyneside can learn from the decision. It must recognise that it must be preferable when it comes to price and design. If the tender from Harland and Wolff was as competitive as it was made out to be, a couple of questions at least deserve to be answered. Is warship procurement based on the old
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  principle of Buggins' turn? Will the various Departments that are involved in procurement policy genuinely evaluate on a competitive basis the bids that they receive?
  Secondly, what is the implication for a yard such as Harland and Wolff and the other yards that are covered by the Bill that still receive public funds? I asked last week whether, if the bid was as competitive as it was made out to be, my hon. Friend the Minister had any plans to privatise Harland and Wolff. I did not get an answer to that question, nor did I receive an answer to a question which I put before Easter, in which I observed that the subsidy for industry and employment in Northern Ireland is about 404 per cent. higher per head than that for England. I think that we deserve answers to these questions.
  The Government can be accused of many things, and my hon. Friend the Minister may or may not have been right in his forecasts and his description of the state of the industry. He may well be open to criticism from Opposition Members about the pace and evenness of the privatisation programme. In this debate, however, he cannot be accused of a failure to support British Shipbuilders. A total of £1·5 billion has been committed since 1979. That is a massive investment by the long-suffering taxpayer. It is no fault of the Government that it is not yet clear exactly how much of a return we are likely to see on it.
  5.58 pm
  Mr. Ted Garrett: It is my misfortune in life always to speak in debates on the problems of industry. I look forward to the day when I can speak about industrial and commercial problems with a success story behind us. During the years that I have represented my constituency I have had to talk about decline in the coal, machine tool, steel, fishing and civil engineering industries.
  I am by nature an optimist but I am only now starting to recover from the bitter disappointment of Swan Hunter not obtaining the AOR contract, which was awarded to Harland and Wolff. Despite all the words that have been uttered and all the words that have been put into print, the people of Tyneside still feel a sense of bitter resentment. They are still unconvinced that the decision was not political because they have not had any figures to convince them otherwise that the order was gained by Harland and Wolff on a purely commercial basis. I should like the Minister for Trade to give us the figures to show the true realisation of the price difference. I doubt whether the independent accountants had the time to go into the subsidy question or to produce the accurate figures that are alleged to have been the decisive factor.
  My memory of shipbuilding goes back many years. Even when I was a young man in the union, I was dealing with shipbuilding matters. In the Aircraft and Shipbuilding Industries Act 1977, some of us from the trade union side rather naively thought that we were doing Harland and Wolff a favour by wanting to incorporate it under the British shipbuilding flag. We were politely told by the then Government that Harland and Wolff would be better left out of the Act because it would receive higher grants and allowances. Later on, in some quiet manner, Harland and Wolff came under the Act, and so could receive subsidies.
  Harland and Wolff has two forms of subsidy. I deny any bias when I say that the managing director of Harland and Wolff, whom I consider to be an astute man, a good shipbuilder and a man respected in British Shipbuilders,

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  has put a deal together in which he has blended both the subsidies to get the correct figure. He will deny this, but underneath it all there remains the argument, given to me by senior management and independent people not employed in the shipbuilding industry, that it was physically impossible for the alleged £5 million difference to be on a strict commercial basis.
  I congratulate my hon. Friends and Conservative Members on the way in which they have fought for Swan Hunter. It was a long and bitter campaign. Oddly enough, I also wish to congratulate the Department of Trade and Industry. It was a slow starter in seeing the nature of the problem, but when it had grasped it, it fought for its corner, although it could not win. The odds were against it in Cabinet, in Cabinet Committees and in ministerial committees. It was against the Minister of Defence, the Secretary of State for Scotland and, some would say, the Prime Minister. I have my doubts about that. I think that on this occasion she was in a minority. That is purely my instinct. I am not privy to her inner thoughts, and I doubt whether I ever shall be. However, to be fair, she listened carefully and intently to my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) and me. I am fully convinced that she did not understand the full nature of the problem until that meeting, but she carried out some rethinking of policy after it.
  We cannot carry on being bitter and negative about what has happened. As has already been said, we must do something even at this black moment for British Shipbuilders. I do not believe that the industry will disappear. I do not think that that is the Government's will. However, I wish that some more initiative and imagination were shown. I am not blaming only the Government—past Governments have been responsible for the lack of the imagination that this country, as a maritime nation, should be adopting. We let passenger liner business go out at the time when the signs were that passenger liner business was increasing. It is now a booming business, but we are out of the industry. We should have a more strategic plan for our defence programme. It cannot go on in stops and starts and booms and slumps. If we have a truly national defence programme, orders should balance out better.
  I still believe in the British shipbuilding industry and I believe that we can remain a maritime nation, but the imagination must come from a variety of sources. It must come from confidence in the industry and in the shipowners, and, above all, from the confidence of this place. It is here in the House of Commons that such confidence should start, and it must start now.
  6.5 pm
  Mr. Bob Clay: One of the extraordinary things about this debate is that a similar debate may not be held next year, as many hon. Members have already said. We are facing the possibility of the end of merchant shipbuilding in this country by the end of this year or early next year. The Minister was remarkably complacent about that. I bitterly resent one or two, but not all, of the Conservative speeches about the Government pouring money into British shipbuilding. Let me put the record straight, using the same calculations as those used by the Minister about aggregating public money upwards since 1979. He talked about £1,449 million going to British shipbuilding. However, Ministry of Agriculture subsidies for the farming industry are at £5,538 million. Until the Government take account of that, we should not
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  hear anything about over-generosity towards shipbuilding. The Government have to decide whether they want a British shipbuilding industry.
  The Government have orders within their gift. Ii was amazing to hear the Prime Minister explain to me and to trade union colleagues on Friday morning that the irradiated fuel vessel order had gone to Japan because much of the trade that will be carried by the vessel is Japanese—in my view, that is Japan dumping its waste on this country, but nevertheless orders are orders. It seems extraordinary that the Japanese Government can not only oblige its shipowners to buy Japanese but can oblige British shipowners to buy Japanese if they want to trade with Japan. If the Government took a lesson out of the Japanese book, we should not be discussing these problems tonight.
  My right hon. Friend the Member for Glasgow, Govan (Mr. Milian) has already spoken about the FSK20/20. There was a surprising lack of understanding, which is now on the record, between the Department of Trade and Industry and the Ministry of Defence. It is clear that British Shipbuilders and the Admiralty had some misunderstanding about the vessel. It is incredible that British Shipbuilders was allowed to spend £250,000 on research and development and that people from the Admiralty went in and out talking about fine detail, only for the Government to say that they did not want the ship.
  It is extraordinary how the Department of Trade and Industry does not seem to have impressed on the Ministry of Defence the significant effect on export orders and other factors that the development of this ship could have. The new corporate plan for British Shipbuilders saw the FSK as something central, and it will now have to be rewritten. It is tragic that the Department of Trade and Industry did not explain long ago to the Ministry of Defence the significance of the ship.
  The Government should now do something about soft credit. Neither I nor my colleagues who were with me on Friday morning have any doubt that the Prime Minister said that the Government had looked at this and would take a different attitude. I have no doubt that she said specifically that, with the exception of Japan, from now on, orders would not be lost to this country because of inadequate credit arrangements. The words "soft loans" and other such terms were used.
  It is no good the Government saying that that is not a change of policy. One can point to specific orders from Ethiopia, Yugoslavia and other countries which have been lost by British Shipbuilders during the past couple of years simply because of the credit package. The intervention fund is important, but we know that even if the total base price is lower, if another country offers better credit facilities, such as a moratorium on payments, lower interest rates, or longer repayment periods, Third world countries in particular will place their orders with it. We have lost orders because of that.
  If the Government would do what the Prime Minister clearly undertook to do on Friday morning, with the exception of Japan, which is to be prepared to offer credit packages to undercut all competition, it would be possible to place orders in British yards. It should also be possible to force British shipowners to place orders with British yards. We hear a great deal of talk about the world recession, but if all the orders placed by British shipowners

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  last year had been placed in British shipyards, they would have more than filled the capacity of British yards, despite the world recession.
  I should like the Minister when he replies to answer my question about intervention fund money. In an intervention in the speech of my right hon. Friend the Member for Glasgow, Govan (Mr. Millan), he said that so far British Shipbuilders has not asked for any special arrangements. I have heard that before, and if it is the case, what is he doing about it? It seems incredible that we have been losing orders because of finance, yet he says that British Shipbuilders has never asked the Government to apply special arrangements. We should not have been praising Graham Day tonight, but damning the man for the butcher that he was. If he or his successor are so incompetent that they have never knocked on the door of special arrangements at the Department of Trade and Industry, it is they who should have been sacked long ago, instead of the thousands in the industry who have been dismissed. Why have they not considered the special arrangements that the Government offer?
  I know that people are worried about many areas, but I make no apology for spelling out to the Government the wider context. British Shipbuilders provides 3,100 jobs in my constituency in Sunderland. No one disputes that every job in the industry supports three outside it. Twelve thousand jobs in the area are already at stake. Male unemployment is already running at 45 per cent., 50 per cent. and 55 per cent. in large areas around the river. The loss of those jobs, even on the Government's calculations, which are a fiddle, would cost the Government £72 million a year. That is the cost to the Government in Sunderland alone by the closure of Sunderland Shipbuilders and Austin and Pickersgill. That does not include the human cost of misery and despair, and the decay of the town.
  Little time remains, and orders must be placed in both yards within the next few weeks. When the Prime Minister named the Stena Seawell on Friday, she praised the management and the work force. She said that the whole of Britain could be proud of the achievement in Sunderland, and what a marvellous yard it was. In the past she said the same about the Austin and Pickersgill yard. We shall remember those words, and expect that if she takes time to come to the north-east and praise the yards, her next step will be to find orders for them so that they will not close by the end of this year.
  6.14 pm
  Mr. Don Dixon: I remind my hon. Friend the Member for Sunderland, North (Mr. Clay) that the Prime Minister has on a number of occasions praised the National Health Service, yet we all know what she has done to it. The explanatory and financial memorandum states:
  "The Bill will have no effect on public service manpower."
  That is because there is little public sector manpower left in the shipbuilding industry. When the shipbuilding industry was nationalised in 1977, there were almost 83,000 employees, but this year there are fewer than 10,000. Therefore, I understand why that was stated.
  The Minister said that British Shipbuilders had received £235 million in intervention funding and £177 million for redundancies. I assume that most of the other money that it has received has been invested in the warship building yards, which have been sold to the private sector.
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  I am sorry that the hon. Member for Darlington (Mr. Fallon) has left the Chamber. In a previous debate he referred to Redheads shipyard, which is in the constituency of my hon. Friend the Member for South Shields (Dr. Clark). He stated:
  "Redheads in particular is more than simply a commercial success. I hope that all hon. Members would wish it to be a commercial success in a hostile ship repair environment. It is also a shining example to the rest of the industry, not simply the repair industry, of the much more flexible approach that is required in working practices, entrepreneurship and by going out across the continent of Europe to market one's product."—[Official Report, 27 November 1984; Vol. 68, c. 862.]
  Redheads ship repairers, in which many workers invested their redundancy pay, is now bankrupt. Those workers have lost both their redundancy pay and their jobs. That shows the effect of privatisation.
  Dr. David Clark: The House will recollect that on many occasions I was attacked across the Chamber for advising those workers not to put their hard-earned money into that foolhardy venture. My hon. Friend will recollect that those men were encouraged actively to do that by the Conservative party, the hon. Member for Darlington (Mr. Fallon), and, indeed, the then Minister of State, Department of Trade and Industry the hon. Member for Kingston-upon-Thames (Mr. Lamont), who opened the yard. Does my hon. Friend agree that, as the matter is still sub judice, there should be a committee of inquiry into the events surrounding the establishment and collapse of that company?
  Mr. Dixon: I certainly agree with my hon. Friend. Many of those men are particularly worried by the lack of information they received about the company going bankrupt.
  We shall not oppose the Bill. It has often been said that nobody wants to shoot a one-legged Father Christmas. At least this debate gives us an opportunity to discuss the many major problems facing the British shipbuilding industry today, and the men who have invested their lives in it. The Government should present a more positive approach in these days of crisis for the industry.
  The relationship between British shipowners and the industry is vital in terms of the need for home orders. British shipyards have been largely dependent on home owners in the post-war period. Unfortunately, the number of orders placed by British owners in British yards has declined considerably since the early 1960s. Between 1962 and 1966 an average of 67 per cent. of tonnage was home produced. Between 1967 and 1971 that figure collapsed to 32 per cent., and between 1972 and 1976 a mere 28 per cent. of British tonnage was built in British yards. Indeed, the Booz-Allen report, which was published in 1973, found few established links between British owners and British builders. That is in stark contrast to Japan where there is a close link between owners, builders, banks and the Government. Not one domestic order has been placed outside Japan since 1947. Everyone knows that Korea builds cheaper ships than Japan, yet Japanese shipowners always build their ships in domestic yards. It is a pity that British shipowners do not follow the same policy.
  The General Council of British Shipping has made some proposals to the Secretary of State regarding the Budget debate. One suggestion is that there should be roll-over relief for balancing charges. That would enable funds from the disposal of a ship to be set off against the cost

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  of a replacement vessel which would encourage shipowners to build more ships, hopefully, in British yards. When the Minister meets his European colleagues, I hope that he will discuss the scrap and build scheme. European community countries have debated that since 1977, but nothing has happened. To create orders to keep a viable shipbuilding industry in Britain, it is imperative to have a scrap and build scheme, even if it is conducted unilaterally.
  The state of the industry report, which was published in February this year by British Shipbuilders, was a doom and gloom report. It pointed out that the target for 1985–86 was 203,000 compensated gross tonnage, but, by the end of January British Shipbuilders had secured only 18,000 CGT, which was less than 9 per cent. of the target, and expected to achieve 70,000 CGT. However, as the Minister has pointed out, it did not achieve that tonnage.
  My right hon. and hon. Friends have referred to other parts of the British shipbuilding industry. That makes dismal reading, but I do not want to go into it because of the time constraints. Last delivery dates are as follows: Austin and Pickersgill, November 1986; Govan, March 1987; Smith's Dock, December 1986; Sunderland Shipbuilders, February 1987; Appledore, March 1987; Ferguson-Ailsa in Port Glasgow, May 1986; Ferguson-Ailsa in Troon, September 1986; and Clark Kincaid, October 1987. The comments of my hon. Friend the Member for Sunderland, North are true. Unless the Government take immediate steps to help the industry, there will be no shipbuilding debate this time next year, because there will be no shipbuilding industry.
  The trade unions have made enormous sacrificies in tackling the shipbuilding industry's problems. Thousands of jobs have been axed and the remaining workers have faced periods of great insecurity. Bitterness and disillusionment shroud the industry. Most of the yards to which we are referring and which are shedding labour are in areas of high unemployment.
  I should like to refer to Swan Hunter, although I appreciate that the Bill has nothing to do with naval works. My hon. Friend the Member for Wallsend (Mr. Garrett) has mentioned that yard, and I have no doubt that my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) will do the same, if he catches your eye, Mr. Speaker. Therefore, I do not want to dwell too long on it. The argument on placing the AOR orders—the Harland and Wolff design has been accepted—shows how resources can be wasted if the shipbuilding industry is split up. Swan Hunter's design team of 420 which is designing the AORs and Harland and Wolff's design team which is working for the Ministry of Defence are working against each other. That is what happens when the industry is split up. Swan Hunter has a first-class team, but unfortunately, because of the wastage of resources, it will have to go.
  I have a letter from the Ministry of Defence referring to orders for the third, fourth and fifth of the type 23. An article this morning in the Financial Times refers to a cut in the defence budget of £3 billion over the next three years. The article states:
  "However, a prime target for cuts will be the Navy's shipbuilding programme, which seems certain to fall short of the Government's stated target of three new warship orders a year. This will mean delays to the new Type 23 frigate, as well as, possibly, to the building of conventionally powered submarines."
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  Swan Hunter has not only lost the order for the AORs but stands little chance of getting the order for the type 23 frigate if the Government carry out their cuts in the defence programme.
  The men at Swan Hunter were led up the garden path. Every worker received a copy of the document issued by the management when it was considering a buy-out. It states:
  "This morning a meeting took place at which the team negotiating for the purchase of the company met trade union representatives from all groups of employees, including fulltime officials, for the purpose of announcing their intentions for the company.
  To set aside your concerns and worries about future prospects and job security, we can confirm the following statement was made:—
  All existing employees will be kept on."
  No sooner had the management buy-out taken place than it was talking about a crisis and possibly closing if the orders were not received. People in the shipbuilding industry have faced that problem for a considerable time. Since 1979 when the Conservative party was elected to government, there has been insecurity, redundancies and closure of yards. Unless the Government do something about that, Britain will be the only maritime nation that does not have a shipbuilding or ship repairing capability to service our fleets. I hope that the Minister, when he stops talking to the Government Whip, will take some notice of the shipbuilding industry and the suggestions of my right hon. and hon. Friends. Much more could be said about the industry, but I shall conclude to allow my hon. Friends time to speak.
  Several Hon. Members rose—
  Mr. Speaker: Order. I remind hon. Members that the first of the Front-Bench speakers will seek to rise at 6·40 pm. I hope that the Minister and the spokesman for the Opposition will have time to speak in that time.
  6.24 pm
  Dr. Norman A. Godman: I shall take your words on board, Mr. Speaker.
  It is always of considerable regret when British maritime interests place orders for vessels in south-east Asia. I recall the Scottish shipping line, the Berm Line, placing an order with Daewoo of South Korea for a bulk carrier and a semi-submersible rig. About 18 months ago, Trinity House ordered a lighthouse from south-east Asia. Such orders reflect what the annual report of Lloyd's Register of Shipping called the "unassailable" position occupied by south-east Asian shipbuilding nations.
  I support the comments of my right hon. Friend the Member for Glasgow, Govan (Mr. Milian) on the intervention fund. The fund must be used flexibly and imaginatively. I was pleased to hear the Minister's intervention. We need a domestic scrap-and-build programme. I have argued in the House and elsewhere that if we want a motto it should be, "Build British and sail British."
  Because we now have a single company, North-Eastern Shipbuilders, in north-east England, I wonder whether the board of British Shipbuilders has similar plans for its yards, and Clark Kincaid on Clydeside.
  The debate takes place against the depressing backcloth of decline in the European shipbuilding industry. This dreich state is seen at its depressing worst on Clydeside. My constituency has been badly damaged by scandalously

  705
  high unemployment, with 26 per cent. male unemployment and more than 1,000 people out of work. The Government must act to halt the continuing decline in shipbuilding and in marine engineering.
  I shall refer to constituency interests. I urge the House to ignore the remarks of the hon. Member for Chichester (Mr. Nelson) about Ferguson-Ailsa, a yard in my constituency. That yard has a first-class approach to marketing its skills and services. I resent ill-founded criticism of that yard, which is struggling mightily. Clark Kincaid, which is in my constituency and that of my hon. Friend the Member for Wallsend (Mr. Garrett), is the last marine engine builder of any size on the Clyde and the Tyne. Not long ago the company was praised by Cunard for the quality and delivery date of the engine built for the Atlantic Conveyor, which was to replace the vessel of that name sunk in the Falklands war. Clark Kincaid is building two small medium-speed land engines for the Cayman Islands and two marine engines—a Sulzer and a BW engine. It is crucial to maintain that marine engineering capacity.
  The Minister mentioned Ferguson-Ailsa of Port Glasgow and Troon. He said that the yards were building several small vessels. I shall be slightly more accurate than that. At Port Glasgow the yard is completing the second of two anchor-handling vessels for the Canadian Arctic oil industry. The yard at Troon is shortly to finish the second of two offshore supply vessels for Seaforth Maritime. In addition, a research vessel for the Ministry of Agriculture, Fisheries and Food is being constructed. Those two yards—Port Glasgow and Troon—are under the FergusonAilsa title. They have some 700 employees. They are first-class specialist yards which are desperately short of orders. Clark Kincaid is a first-class outfit. It has excellent industrial relations and a high quality of work. I confidently expect Ferguson-Ailsa to win the order for a new fisheries protection vessel, which is to be placed soon by the Department of Agriculture and Fisheries for Scotland. That is in line with what was said by my right hon. Friend the Member for Glasgow, Govan (Mr. Milian). It is essential that the state, public utilities and public corporations place their orders with our yards. Once the fisheries protection vessel is launched, it will patrol the Scottish fishing grounds on behalf of the Department of Agriculture and Fisheries for Scotland.
  In its recent report on fisheries protection the Select Committee on Scottish Affairs urged the Scottish Office to place the order with a Scottish yard. That yard should and must be Ferguson-Ailsa. It has designed the vessel, it built the previous vessel for the fisheries protection service and should build this one.
  I shall make my final quick points as I am conscious that my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) wishes to speak.
  This is an important issue in Scotland at the moment. Within the next 12 weeks Caledonian-MacBrayne will announce the placing of an order for a 1,000-passenger car ferry. It is to be used for the Hebridean islands service. I would like to say to Mr. Colin Patterson, the chief executive, and the board members of the Scottish Transport Group that that order must be placed with a Scottish yard. Again I say, declaring a constituency
  706
  interest, that that yard should be Ferguson-Ailsa. It has built vessels before for Caledonian-MacBrayne and it should be given this order.
  It is essential, of course, that Ferguson-Ailsa submits a sensible and competitive tender and I have no doubt that it will do so. However, Mr. Patterson and his colleagues must remember that they are employed to provide a service for their Scottish customers— the people who travel among the islands and between the mainland and the islands. Those passengers and the overwhelming majority of Scots want the vessel to be built in a Scottish yard.
  My final comment concerns Scott Lithgow, formerly owned by British Shipbuilders and now owned by Trafalgar House. It, too, is a yard which is grievously short of work. It now has a first-class industrial relations record with an excellent quality of work.
  I am given to understand that the shipping company, ACL, plans, in the near future, to extend five of its vessels. Naturally, I sincerely hope that that work is carried out in the United Kingdom. I do not want to see the work go to West Germany where the QE2 is heading for its refit and re-engining. If the work for ACL is to be done in the United Kingdom, why not at Scott Lithgow? Trafalgar House has a major stake in ACL-25 per cent. of the equity I believe. On the basis of demanding work for British and Scottish yards, I urge Sir Nigel Broackes and his colleagues to recommend to ACL that the work be undertaken by Scott Lithgow. It is essential that British maritime interests place their orders with British yards. They are two sides of the same coin.
  6.34 pm
  Mr. Nicholas Brown: I thank my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) for curtailing his speech so that I can make a short contribution.
  I endorse the remarks made by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). He said that the privatisation of the warship building yards was lunacy, because the profits from that could have made a contribution to the very matters we are discussing today. However, the Government would not get very fat on the £5 million that they apparently got for Swan Hunter when it was privatised. If the terms and conditions and full extent of the deal were so fair to the managers and owners of Swan Hunter, I ask the Minister whether his Department would be prepared to buy it back if the owners wished to sell it to them. Will he address that point in his reply?
  The moneys referred to in the Bill cover the question of redundancy payments. The yards which have been privatised out of British Shipbuilders are no longer covered by the redundancy payments scheme. It was felt, of course, that they would not need redundancy payments because there was work for them to get. That is not turning out to be the case for Swan Hunter. The workers face the possibility of being made redundant on terms substantially less favourable than for those who accepted voluntary redundancy a year and two years ago. The responsibility is the Government's, not that of the private owners of the yard. Is the Minister willing to make any sort of financial contribution towards the relief of that set of circumstances that the Government have done so much to bring about?
  Both Cammell Laird and Swan Hunter are mixed yards. They have been forced to become warship yards and have been promised work as well. Swan Hunter, at least, still

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  has an eye towards trying to obtain some merchant orders. In his introduction the Minister referred to intervention funding and to looking at individual work on a case-by-case basis. If Swan Hunter is to survive at all, I understand that there is an outside possibility of it still obtaining merchant work. Can we come to see the Minister and have its case discussed on a case-by-case basis? It is not taking work from any other shipyard; it is tendering for it because of its specialist nature. Is the Minister's door open to Swan Hunter, or will merchant orders be subsidised on a case-by-case basis for those yards that the Minister has designated as merchant yards and yards, such as Swan Hunter, which used to do merchant work, will be out of it altogether?
  My hon. Friend the Member for Birkenhead (Mr. Field) referred to the special subsidy arrangements at Harland and Wolff, as did the hon. Member for Darlington (Mr. Fallon). They made the point that there are substantially more yards than work. Is it true that the subsidy arrangements mean that Harland and Wolff will always have a competitive edge and that it will always be there when mainland British merchant yards are struggling without the same financial support? How will the Minister allay that fear? How will he demonstrate to those who represent not only warship yards, such as those I represent, but those who represent merchant yards that somehow Harland and Wolff will not always have a competitive edge because it always has more subsidy than is provided for mainland Britain? That is certainly a real fear on Tyneside, and the Minister should allay it not just by assurances but by being able to demonstrate that there is no such subsidy.
  Tyneside is not trying to take work from other communities. We just want to be treated fairly. We do not want the work that our community should have taken and put elsewhere. We feel that the AOR was taken for political reasons and placed in Belfast. The type 22 frigate went to Cammell Laird; it should have come to us. There was a £9 million cost for the British taxpayer. There was a promise of the type 23 frigate to make up for that, and that is now two years overdue.
  If the Government are serious about seeing Swan Hunter and shipbuilding survive on the Tyne, the Minister, who has direct responsibility because he sold the yard into the private sector, should discuss with his right hon. Friend the Secretary of State for Defence when those promised orders will be committed and how the assurances that the Government have given to the people of Tyneside will be upheld. The suspicion on Tyneside is that those promises will not be upheld.
  6.39 pm
  Mr. Gordon Brown: While, technically, the debate has been about the extension of British Shipbuilders' borrowing powers, it has also been, rightly and properly, about the contraction of the industry, the risk to jobs, the threat to established skills, and the fears and needs of the shipbuilding communities up and down the country. It has been about the problems of Sunderland, which were mentioned by my hon. Friend the Member for Sunderland, North (Mr. Clay). It has one of the highest unemployment rates in the country. The industry faces closure if no new orders are found before the end of the year. The skills of the workers were praised by the Prime Minister on Friday but now they face the prospect of closure and of a rundown of the industry if the
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  Government do nothing. The debate has also been about the problems of Govan and Greenock, where no new orders are yet available and where, additionally, jobs will be lost, and unemployment in an area of high unemployment will rise.
  The debate has also been about the problems of the north-east. I congratulate my hon. Friends the Members for Newcastle upon Tyne, East (Mr. Brown), for Jarrow (Mr. Dixon) and for Wallsend (Mr. Garrett) on the campaign that they have mounted for orders for Swan Hunter. It seems remarkable that, when a yard is denationalised, orders and jobs dematerialise almost overnight. The Minister should tell us what his Department will do to persuade the Ministry of Defence to speed up the promised orders for type 23 and the second AOR so that jobs can be saved and retained at Swan Hunter in the north-east.
  When we have already suffered a halving of the capacity of the shipbuilding industry over the past seven years, when, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) said, 48,000 jobs have been lost throughout the shipbuilding and ship repairing industry, when we have only 2 per cent. of world orders for merchant shipbuilding at the moment, and when the retiring chairman of British Shipbuilders, who was praised by Conservative Members, has said clearly that the industry is facing a bare-knuckle fight for survival, and fears that the merchant shipbuilding industry could go exactly the same way as the motor cycle industry, the question is not the generalities raised by Conservative Members in their lengthy speeches, but what the Government are doing. The question is what they will do through their public purchasing powers, activities to secure proper intervention fund support, and the development of packages that can beat the rest of the world by ensuring the maintenance and continuation of our merchant fleet. What will the Government do to prevent a catastrophic rundown in the merchant shipping industry over the next year, and to prevent a decline that could lead to the disappearance of the industry as a whole?
  Both sides of the House share a concern about the decline of the merchant shipping industry. It was 1,200 strong in 1979 and is only 600 strong today. The General Council of British Shipping fears that the figure could fall to 400 and then to 200 by 1995. When last week the Committee in another place called for urgent measures from the Government to secure orders for British yards and to ensure that the British merchant fleet could maintain and expand its capacity to deal not only with industrial but with defence needs, the question that the Minister must answer during the debate is: why has he not done more? What more will he do to persuade British shipowners to buy British, to repair British and, indeed, to sail British, in the interests of the industry?
  There are three things that the Minister can do. The first is to use the Government's public purchasing powers to the benefit of shipbuilding communities. Surely it is in the Department's interest and, indeed, in other Department's interests, when faced with the prospect of ever-rising unemployment at great cost to the Government, to speed up the orders that have been mentioned by Opposition Members. Those orders are desperately needed by the various Departments, but, because of cash shortages, particularly in the Ministry of Defence, they are not being placed.

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  My right hon. Friend the Member for Glasgow, Govan (Mr. Millan) and my hon. Friend the Member for Sunderland, North mentioned the FSK 20/20. The Minister should clarify the position. The Ministry of Defence encouraged British Shipbuilders to design that; British Shipbuilders could build and export it. It is not a substitute but it is a complement to the AOR. The Minister should tell us what pressure he will bring to bear on the Ministry of Defence to ensure that those orders, which could help Sunderland and Govan retain jobs, are placed as soon as possible.
  Secondly—the Minister raised this point—there should be effective pressure to secure proper support from the intervention fund. When the Under-Secretary spoke in a debate last year, he said that he was fighting for Britain in Europe. Over the next few months his proposal for 35 per cent. subvention became only just over 20 per cent. subvention under the intervention fund. This year's negotiations have started with the Commissioner for competition, who says that he wants an effective and significant reduction in the overall level of aid. The Under-Secretary, who appears to be leading the negotiations on behalf of the Government, is quoted as saying that he wants an
  "end to the nonsense of worldwide subsidies."
  While not offering Britain as a sacrificial lamb, he has also said that Europe could take the lead in the process of ending the "buying" business for orders.
  We should like the Minister to give us an assurance that he and his colleagues will fight for decent intervention fund support, that he will not be swept aside by the Commissioner for competition, that he will not yield to other countries that want a cut in intervention fund support, and that he agrees with us that we cannot afford the luxury of misplaced ideologies about free market forces—other countries are doing their best to protect their industries, while we seem to be mouthing monetarist orthodoxies in Europe.
  Thirdly, the Government can take to heart what the Prime Minister seemed to be saying on Friday, which Downing street seemed to withdraw—that we need better packages to enable us to persuade people to buy British and build in British yards. The Prime Minister appeared to say that at the moment we could offer packages that were better than in any other country except Japan. That is contradicted by the evidence that the Department of Trade and Industry gave to the Committee in another place, when the officials appeared to be saying that other countries were able to beat us hands down, especially France and Germany, which could offer better and longer repayment periods and better credit packages for building ships.
  The Under-Secretary appeared to say that other countries in Europe were offering hidden subsidies while our subsidies were all transparent and above board. If a study has not been done and if proposals have not been brought forward to improve the credit and loan packages on offer, the Minister could help by giving us an assurance that he will examine the packages and ways in which to improve them, take up the point that was made by my right hon. Friend the Member for Govan and guarantee to us that no order will be lost because the credit terms that are on offer in this country are detrimental compared with those offered by other countries.
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  We are talking about the survival or extinction of the merchant shipbuilding industry. We are talking not about an industry that is old-fashioned, but about an industry that has moved into high technology. This afternoon the Minister acknowledged the widespread gains in productivity that have been achieved—what he called the enormous strides forward. He also acknowledged the improvement in industrial relations. However, the Government need to match the commitment that has been made by the work forces throughout the country. What we need from the Government is a commitment to use their public purchasing powers to secure orders, to fight in Europe for an expansion of intervention fund support, to develop the packages that can be offered to secure the orders that Britain needs, and to ensure that British shipowners will buy British, sail British and repair British for the future of the industry.
  What we need are not the complacent words that the Minister appeared to use at the beginning of the debate, but an assurance that dynamic initiatives will be taken to secure the future of the yards, to secure orders, to save the jobs and to safeguard the future of an industry that is vital not only for our industrial and trading needs but for the defence of this country.
  6.49 pm
  Mr. Peter Morrison: In the short time that is available, I shall attempt to respond to what has been a very serious debate and pick up as many of the points as I possibly can.
  If at the beginning of the debate I gave the hon. Member for Dunfermline, East (Mr. Brown) the impression that I was complacent, I assure him that that was not so. His right hon. and learned Friend the Member for Monklands, East (Mr. Smith) described the severity of the position, and I agree that it is very serious. I would not go so far as to use the words of the hon. Member for Dunfermline, East and say that it was a case of survival or extinction, but I am more than aware of the serious problems faced by the merchant shipbuilding industry in Britain.
  I do not wish to detain the House with the debate about privatisation and whether that was a good or bad decision. The right hon. and learned Member for Monklands, East would expect me to defend the decision to privatise, and I do that with conviction. I believe that the employees in the Vickers consortium, 80 per cent. of whom took up the shares, would agree that privatisation was the most sensible way forward.
  I should like to reiterate what I said at the beginning of the debate about the Government's commitment to the industry. If we had not been committed to the industry, we would not—at a time of scarce resources—have invested £1,440 million in the industry since we came to power in 1979. The Government have made a major commitment in that sense.
  One of the main themes running through the debate, which was raised by the right hon. and learned Member for Monklands, East and by the hon. Member for Dunfermline, East, has been public sector purchasing policy. I agree that any responsible Government should have regard to that. I am sure, however, that the right hon. and learned Member for Monklands, East would accept that significant orders have been placed with the shipbuilding industry by the Ministry of Defence.
  The right hon. and learned Gentleman also raised the point about the British Nuclear Fuels Ltd. ship. He will be

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  aware that the first four ships ordered by that consortium came from this country. The right hon. and learned Gentleman's point referred to the fifth ship, and the tender from the Japanese was substantially below the tender from British Shipbuilders. It is also fair to say, as the right hon. and learned Gentleman realises, that the company is not British dominated. It is Japanese-French as well as British.
  The right hon. and learned Gentleman also raised a specific point about the FSK 20/20, as did many of his hon. Friends. I believe that is a good ship, and of course it is important for the future. It has export potential. I understand all those points. However, the Opposition will appreciate that the Secretary of State for Defence must look carefully at his precise needs. He cannot, off the top of his head, create orders in a way that the Opposition would like.
  The right hon. and learned Member for Monklands, East raised the matter of the increase in intervention fund support. As I said when I intervened in the speech of the right hon. Member for Glasgow, Govan (Mr. Milian), we can consider support through the intervention fund on a case by case basis and there can be some flexibility.
  The hon. Member for Sunderland, North (Mr. Clay) made the point with some vigour that it was surprising that British Shipbuilders had not come to the Government for support. That may be surprising, but so far as I know that has not happened because there has been no increase in the use of flexibility relating to the intervention fund. That is not a reason for no orders coming forward. I understand the passion with which the hon. Member for Sunderland, North puts his case, but, in all honesty, the position is not quite as he would like it to be.
  Another of the themes running through the debate, which was raised by the right hon. Member for Govan among others, was the provision of credit. I appreciate that the competition in connection with the allocation of credit can become unfair or even more fair, and we must consider that position. There is the possibility of softer credit in certain circumstances using the aid and trade provision. I confirm that we are ready to consider the use of that provision in appropriate cases, and I can specifically confirm that, in the case referred to by the right hon. Member for Govan and his right hon. and learned Friend the Member for Monklands, East, we are ready to use it. We must judge each case on its merits.
  I believe that a misunderstanding arose from the interpretation of the meeting between the hon. Member for Sunderland, North and shop stewards and my right hon. Friend the Prime Minister. I was not present at that meeting, but I have heard reports that it was very constructive on both sides. I am sure that the shop stewards appreciate that the Government and the Prime Minister are doing everything within their power to help British Shipbuilders and will therefore help with the jobs that are available.
  Mr. Clay: In fairness to the shop stewards and to myself, the Minister should not mislead the House by implying that we thought that the Prime Minister was doing everything in her power. As the Minister has allowed me to intervene, may I say that my recollection of the meeting and that of the shop stewards is clear. The Prime Minister was not simply talking about one situation. She said that from now on no country, other than Japan, can undercut this country on credit in connection with orders.
  Mr. Morrison: As I have said, I was not at the meeting but I did receive reports. I have related to the hon. Gentleman the present position for credits under the aid and trade provisions.
  My hon. Friend the Member for Teignbridge (Mr. Nicholls) referred to the right hon. Member for Manchester, Gorton (Mr. Kaufman) and to a former Secretary of State, Mr. Eric Varley, and what they said about the industry in the 1970s. They had to deal at that stage, as did the then Government, with a very difficult situation. As the hon. Member for Wallsend (Mr. Garrett) said, the problems with the industry should he dealt with on a broad rather than a party political front. I believe that that has been the tone of the debate so far, and I agree that that is the approach that we should take.
  Mr. Gordon Brown: Before the Minister leaves the point about credit packages, whatever the Prime Minister said, will he give us an undertaking that no other country will be able to undercut us on credit terms and that he will ensure that British Shipbuilders can offer the best credit terms?
  Mr. Morrison: The hon. Gentleman is asking the impossible.
  Mr. Gordon Brown: No, I am not.
  Mr. Morrison: With due respect, the hon. Gentleman is asking the impossible. How am Ito know precisely what other countries may be offering by way of credit? The right hon. and learned Member for Monklands, East, who has been a senior Secretary of State, knows perfectly well that it is not always possible to know about credit terms as negotiations are commercially confidential. It would be impossible for me to give such an undertaking to the hon. Member for Dunfermline, East or to the right hon. and learned Member for Monklands, East without misleading them and the House.
  My hon. Friend the Member for Teignbridge referred to the previous Labour Administration who said how difficult it was for people to manage the shipbuilding industry in western Europe and throughout the world because of the contraction of the industry. Of course, shipbuilding is extremely important to certain parts of the country, to the north-east and parts of Scotland in particular. I therefore understand why the Opposition make the point with conviction that the Government should force British shipowners to buy British ships. I cannot acquiesce to that request. It is fair to say that in recent years two thirds of British ships bought by British shipowners have come from British shipyards. Obviously, we shall do what we can to sell to Britain's shipowners the ideas of British Shipbuilders.
  I commend the Bill to the House. I am sure that it is a further step in helping British Shipbuilders in the direction that it should be going.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Archie Hamilton.]
  Committee tomorrow.

  BRITISH SHIPBUILDERS (BORROWING POWERS) BILL [MONEY]
  Queen's Recommendation having been signified—
  Resolved,

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  That, for the purposes of any Act resulting from the British Shipbuilders (Borrowing Powers) Bill (`the Act'), it is expedient to authorize—

  (a) any increase in the sums payable out of the National Loans Fund, the Consolidated Fund or money provided by Parliament under the Aircraft and Shipbuilding Industries Act 1977 which is attributable to provisions of the Act raising to £1,300 million the limit imposed by section 11(7) of the said Act of 1977 and authorising the Secretary of State to provide by order for that limit to be increased or further increased up to a maximum of £1,400 million; and

  (b) the payment of any sums into the National Loans Fund or the Consolidated Fund.—[Mr. Archie Hamilton.]

  Harwich Parkeston Quay Bill
  Order for Second Reading read.
  7 pm
  Sir Julian Ridsdale: I beg to move, That the Bill be now read a Second time.
  Before I deal with the principle of the Bill, may I remind the House of the distinction between the Second Reading of a public Bill and a private Bill. "Erskine May" says:
  "a public Bill being founded on reasons of state policy, the House, in agreeing to its second reading, accepts and affirms those reasons; but the expediency of a private Bill, being mainly founded on allegations of fact, which have not yet been proved, the House, in agreeing to its second reading, affirms the principle of the Bill conditionally, and subject to the proof of such allegations before the committee. Where, irrespective of such facts, the principle is objectionable, the House will not consent to the second reading; but otherwise, the expediency of the measure is usually left for the consideration of the committee."
  In general, the principle of the Bill is to create new quays, vital for our growing trade, with no damage to the environment, and to reclaim land which will become valuable industrial land with admirable port facilities in an area which has a high level of unemployment. I hope that no hon. Member will wish to vote against that principle. Of course, there are matters in dispute, but, as "Erskine May" advises,
  "the expediency of the measure is usually left for the consideration of the committee."
  I trust that the House will follow that advice.
  The principal object of the Bill is to authorise the development of Bath Side bay, Harwich, which lies between the existing harbour facilities at Parkeston quay to the west and Harwich to the east. The development will consist of the phased construction of a quay wall fronting the river Stour across Bath Side bay. In addition, approximately 330 acreas of tidal mud flats will be reclaimed. Once constructed the quay wall will provide four deep-sea container berths and facilities for handling approximately 100,000 containers per annum.
  It is expected that the first container berth could be in operation within 18 months of the work beginning and the construction of the remaining three container berths will take place when required to meet commercial shipping demands.
  It is exciting that the Bill, which creates quays as they become necessary, offers the first real prospect for the development of Bath Side bay, a project first proposed in the 1850s and a development by a company that has the resources to finance such a project.
  The anticipated cost of the construction of the sea wall and the reclamation is £33 million at present-day prices. The overall cost of the development is expected to be in the region of £100 million at present day prices.
  To the south of the port area will be a substantial area of land suitable for industrial and commercial use. Implementation, in association with the construction of stage two of the Dovercourt bypass, will ensure adequate road access.
  Naturally, with the high rates of unemployment that there are in north-east Essex, I welcome the development. Many of my constituents are watching expectantly for the employment prospects that are likely to arise from the Bill, not only in the port itself but in the industrial and commercial area directly to the south of it.

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  Therefore, the House would bear a grave responsibility if, for some unfortunate reason, this evening it denies a Second Reading to the Bill, especially now that there is the capital and momentum to move forward from the considerable progress that has already been made since the new management took over responsibility for the port of Parkeston quay, Harwich.
  Last year, thanks to quick decisions being made by the new management and help from the Essex county council, a substantial part of the land behind the proposed first berth and around the shore line of Bath Side bay has already been reclaimed with the necessary consents but without statutory powers, as the opportunity arose to acquire a large quantity of good quality material recovered from the dredging of the main channel of Harwich harbour. That reclamation was carried out by the Harwich harbour board with the present company's consent. It amounts to approximately 25 per cent. of the total area of the bay previously covered by water at high tide.
  As the Second Reading of the Bill has already been blocked, and although this would be better taken in Committee, I should explain that there was a previous Act called the Bath Side Bay Development Act 1972 in which the Ear1par Development Company Ltd. obtained powers for the reclamation and development of port facilities in Bath Side bay. The works to be authorised by this Bill are on what is virtually the same site as those authorised by the 1972 Act. It is for that reason that the Bill proposes the repeal of that Act, which has never been implemented. Indeed, there is no way in which the 1972 Act could be implemented without the agreement and participation of Sealink Holdings Ltd. as it is the owner of a major part of the land lying above low water mark within the area designated for development in the Act. There are no provisions in the Act whereby Earlpar can acquire Sealink Holdings Ltd's interests other than by agreement.
  Harwich Terminal Holdings, the holding company of Ear1par, makes much of the point that the 1972 Act authorised reclamation by sealing off the bay from the main river channel, in the first instance by the formation of a bund across the bay. It says that that was required by the Essex river authority, but investigation of the relevant papers shows that that is not so, rather that the river authority was concerned that if Earlpar were to proceed with reclamation in that way it should show that it had adequate funds to complete the job, so that the sealing off operation would not be left incomplete and without the subsequent back up of landward reclamation.
  There is no specific provision in the 1972 Act to require reclamation in that way, but the works then authorised specified bunds stretching across the bay and would not be apt for the method of reclamation now proposed—reclaiming the bay progressively from the eastern end, keeping the reclamation of the landward area in step with any extension of the quay face.
  The scheme of development authorised by the 1972 Act is, in the view of Sealink Holdings Ltd., impracticable as it involves the cost of comprehensive reclamation of Bath Side bay in the first instance before any deep water port facilities can be provided.
  Mr. Nicholas Fairbairn: What section of the 1972 Act says, first, as my hon. Friend has just told us, that the method proposed is not provided for, and, secondly, that the method that he has just described is provided for?
  Sir Julian Ridsdale: I shall give my hon. Friend a reference if I have the leave of the House to reply to the debate.
  Harwich Terminal Holdings also complained of discourtesy, in that the Bill has been promoted without notice to it. There is a long history of negotiations, culminating in the proposal made on behalf of Harwich Terminal Holdings that it should sell the 1972 Act for £7·24 million. After considering this proposal, put to it by merchant bankers on behalf of Harwich Terminal Holdings and Earlpar, a letter was written by Sea Containers on 20 March 1985 informing them that the company had decided that it could proceed without the assistance of Harwich Terminal Holdings or its associates. There were further discussions, but these were inconclusive. I am satisfied in connection with the deposit of the Bill that due notice was served on Earlpar in respect of the intended repeal of its 1972 Act.
  Felixstowe Dock and Railway Company is promoting its own Bill to authorise extension of its container port. I was glad to speak in support of its Bill last year I hope that it will agree in principle to this Bill and that any worries that it may have about the phased development of Parkeston quay will be ironed out in Committee. This also applies to the concerns of some of my constituents about the right to use Gas House creek and the adjoining Gas House quay. I am glad that negotiations are in progress with Trinity House, with a view to solving points of difference amicably.
  Finally, may I remind the House again that the principle of this Bill is to create new quays, with no damage to the environment, and to reclaim land, some of which will become valuable industrial land with admirable port facilities in an area that has very high unemployment. I sincerely trust that no hon. Member will wish to vote against that principle and will be willing to let matters of dispute be for consideration of the Committee, as ' Erskine May" advises. I, too, underline the need for urgency in coming to a decision.
  Mr. Albert McQuarrie: I do not want to delay my hon. Friend's initial speech. I hope sincerely that later he will have the permission of the House to answer the debate, but I should not like him to sit down now without saying what, if any, consideration has been given by the present owners of Sealink to providing compensation for Earlpar. My hon. Friend referred to the sum of £7·24 million, but I am sure he will agree that that figure is now dead and gone and that since then there have been no further negotiations.
  Sir Julian Ridsdale: I am glad that my hon. Friend has raised that extremely important point. Sealink and Harwich Terminal Holdings are conducting negotiations upon that matter. I have been informed today that Harwich Terminal Holdings said that it did not wish to have a meeting with Sealink Holdings because it would not be a meeting between the heads of the companies at which an agreement could be reached. I am glad to be able to tell my hon. Friend that Sealink Holdings said in reply that it is perfectly willing to have a meeting to conduct negotiations on this matter with the heads of the companies concerned. I think that that covers my hon. Friend's point. The promoters of the Bill are naturally anxious to reach agreement with Harwich Terminal Holdings upon this question.
  Mr. Fairbairn: If I may pursue that point with my hon. Friend, assuming that the House gives a Second Reading to the Bill tonight, does he take the view that Sealink's bargaining position will be strengthened and that that of Harwich Terminal Holdings will be weakened, or does he take the view that it will be left as it is? If he takes the view that it will be left as it is, what is the haste for a Second Reading of the Bill before the settlement?
  Sir Julian Ridsdale: The haste is because of the momentum that has been created in Harwich. I pointed out in my speech that there is a very high rate of unemployment in Harwich and that there is an urgent desire to reclaim the land in order to create industrial land in Harwich that a company, with reasonable assets, will wish to take up.
  Mr. Fairbairn: What about the bargaining?
  Sir Julian Ridsdale: I shall deal with that point. First, however, may I underline the urgency of this matter. Those of my hon. Friends who are faced with a rate of unemployment that is similar to that in Harwich will agree with me that I ought to do my best to urge them to give a Second Reading in principle to the Bill. "Erskine May" advises that this is a matter of expediency.
  As for the negotiations, I think that my hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn) will agree that the first price asked for the Bill was extremely high. I do not wish to put myself in the middle of the negotiations, but I know the proprietors. Having listened to the debate and having looked at the facts, as I have done, I am sure that they will want a reasonable agreement to be reached with Harwich Terminal Holdings. It is impossible for me, as a middleman, to say more than that, as I have no responsibility for the matter. All I ask my hon. Friends to do is to concentrate upon the principle of the Bill. If they object to it, they will wish to vote against its Second Reading or to talk the Bill out.
  I wish to underline the need for urgency in reaching a decision. The fall in the price of oil should create a great demand for British manufactured goods throughout the Community and worldwide. The creation of these port facilities would result in Harwich being able to take shipping from any part of the world. A container port would be created on our east coast which would result in great advantages not only for my constituents but for Essex and the country generally.
  For these reasons, I hope that the House will give a Second Reading to the Bill and that on the question of expediency it will follow the advice of "Erskine May" and deal with those matters in Committee.
  7.18 pm
  Mr. Willie Hamilton: I beg to move,
  That the Bill be read a Second time upon this day six months.
  Hon. Members may wonder why a Scottish Member should move a motion. They might be even more curious—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. I am sorry to interrupt the hon. Gentleman, but the motion that he sought to move has not been selected, and, indeed, is not normally selected.
  Mr. Hamilton: I beg your pardon, Mr. Deputy Speaker. I was about to explain why the motion standing in my name is supported by five hon. Members of Scottish origin—even if they are not all Scottish Members. One
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  of them represented a Scottish constituency, but now represents Southend, East. I do not know their motives in supporting the motion. Indeed, I am rather embarrassed to find myself in such undesirable company. I hasten to add that I have had no consultations whatever on the matter. However, I have had some private conversations with the hon. Member for Harwich (Sir J. Ridsdale), and I think that he understands my position fairly well. I have no objection to any hon. Member who seeks to further his constituency's interests, especially if there is any prospect of creating jobs in an area—like many others—that has high unemployment.
  I should make my position clear. My active interest in private Bill procedure was excited by the strange and unsavoury story of the Felixstowe Bill and by the experiences of my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) when she served on the Committee dealing with that Bill. On 12 February, we had a lively debate following a motion from the Chairman of Ways and Means to reduce the quorum in order to expedite the Bill's passage. During that debate, I and other Opposition Members revealed that the Bill's promoters were major financial contributors to the Tory party. We also sought to show how antiquated and unsatisfactory private Bill practice is. The procedure was, and is, open to abuse of one sort or another.
  On that occasion, history was made when the Chairman of Ways and Means, as you will recall, Mr. Deputy Speaker, moved that motion and implied that an inquiry into that procedure would be initiated. Those debates were obviously read in Harwich, because a lady wrote me a long letter, saying that the Bill
  "illustrates the deficiencies of Private Bill procedures to an even greater degree than the Felixstowe Bill."
  In an informed way, she then eloquently explained why the Bill should be rejected. I need not go into the details of that letter now, but she said that the Bill was promoted by Sealink Harbours Ltd., which is a United Kingdom company with a Bermudan holding company headed by Mr. James Sherwood, of Channel tunnel fame. The implication is clear.
  That lady suggested that some inquiries might be made about Mr. Sherwood and his activities vis-a-vis the Conservative party, following the relationship that we established between the company promoting the Felixstowe Bill and the Conservative party. She made several points, and said that the plan would threaten the outstanding conservation area of old Harwich and Gas House creek, which abuts the conservation area.
  Sir Bernard Braine: As always, I have listened with respect to the hon. Gentleman. He has referred to the private Bill procedure. Surely he is aware that his informant's objections could be properly dealt with in Committee. Does not the hon. Gentleman adhere to that view? If not, why not?
  Mr. Hamilton: I do not know whether the hon. Gentleman was present when we debated the Felixstowe Bill, but we then pointed out the wholly antiquated and unsatisfactory nature of that procedure. Four hon. Members were appointed to the Committee and were compelled to attend, on penalty of being fined. My hon. Friend the Member for Cynon Valley happened to be serving on the Committee debating the Gas Bill as well. She made the very relevant point that her constituents were much more concerned that she should attend the

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  Committee debating the Gas Bill and the privatisation of the gas industry than that she should attend a Committee debating the Felixstowe Bill. She asked me what she should do, and I told her not to attend the sittings of the Committee on the Felixstowe Bill. She did not attend the latter, and she then received stern letters from the authorities saying that she must attend. I told her not to and she decided not to attend.
  At that point, my hon. Friend the Member for Leeds, Central (Mr. Fatchett) also refused to attend, and the Chairman of Ways and Means, whose duty it is to see that private Bills get through, moved a motion reducing the quorum to, I believe, three. That meant that there were two Conservative Members and possibly one Labour Member if he or she could be found. Those three hon. Members were to determine a matter of crucial national interest. Opposition Members all said that the procedure was absurd.
  It is ridiculous that a matter of national policy should be determined by three or four Back Benchers who have been compelled to attend and to hear hour after hour of droning from highly paid counsel and QCs. The only people to laugh at our private Bill procedure are parliamentary agents and counsel. They are making money out of it. It is time that that came to an end.
  I am under no illusions about what is happening. I support the hon. Member for Harwich in his attempt to create jobs. I would support any hon. Member who tried to do that. The Bill raises several points that could be raised in Committee, but then that procedure is unsatisfactory.
  Sir Eldon Griffiths: I introduced the Felixstowe Bill and followed its Committee stage with interest. The hon. Gentleman is a very good constitutionalist and Member of Parliament. But if he believes that private Bill procedures are out of date and anachronistic, would it not be better to go through the proper procedures for changing them than to recommend to his hon. Friends that they should, in effect, go on strike?
  Mr. Hamilton: The hon. Gentleman is also a skilled parliamentarian and must understand that there are limits to what a Back Bencher can do. An investigation into the private Bill procedure is in hand, but meanwhile we must take what steps we can to prevent or inhibit that procedure's smooth operation, and to influence that Committee's proceedings. The private Bill procedure must be radically changed, because it is at present absurd.
  Mr. Bill Walker: The hon. Gentleman will be aware, being a Scottish Member, that it is not unusual to be on more than one Committee at a time. That means that the Committee which the hon. Member does not attend does not do its work properly or effectively. An examination of procedure is long overdue.
  Mr. Hamilton: The hon. Gentleman supports my view. The more hon. Members who take that view, the more pressure can be put on the Chairman of Ways and Means to make a radical change and to end the nonsense. I am not worried about forcing a vote today, so long as the protest about the absurdity of our procedures is put on the record.
  The Bill proposes to repeal the Bathside Bay Development Act 1972 which operates until 1992 and was obtained through the private Bill procedure. The Bill
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  repeats the substance of that Act's provisions. The Bill is proposed by Sealink Harbours Ltd. The powers of the 1972 Act are vested in the Earlpar Development Company Ltd., which has now petitioned. The chairman of that company happens to be the Earl of Lauderdale—Patrick Maitland, as I knew him many years ago in the House. I am in strange company.
  The Earl of Lauderdale has written to me and seen me. He has a financial interest, which he has frankly declared. He has given me information which is not readily available. This is a complex matter which underlines the undesirability of dealing with such matters in a private Bill Committee, which we now have to tolerate.
  Mr. Fairbairn: As someone with vast experience of the procedure, who has been both perspicacious in observing it and critical of it, can the hon. Gentleman tell me whether he knows of a precedent for the proposal that one private Bill should be brought before Parliament by one interested party in order to extinguish the inalienable rights granted by Parliament to another party?
  Mr. Hamilton: I do not think that there is such a precedent. A private Bill was passed by the House in 1972 and this, another private Bill, seeks to repeal that measure. That is reprehensible and undesirable and the House has the power to stop it.
  The 1972 Act and the Bill relate to the reclamation for harbour development of more than 250 acres of tidal mudflats west of Harwich, fronting the Stour-Orwell estuary. The engineering feasibility of the reclamation project was first established by the Earlpar company, which negotiated over the years with British Rail, the freeholders, to undertake the work on a development agreement, then a lease of the reclaimed land. The development was obstructed by the requirements of section 9 of the Harbours Act 1964. That required Government consent for any harbour works involving capital investment above a certain amount. Consent was dependent on a recommendation by the National Ports Council. This, in turn, required the company to demonstrate that it had a contractual user commitment in bankable terms to ensure that the capital could be both serviced and redeemed. The prospective user had to be willing to undertake to make "X" use of the harbour, at "Y" dues, over "Z" period—all this for a harbour not yet built, on land not yet reclaimed.
  The section 9 requirement was not repealed until the Ports (Finance) Act 1985. However, the freehold of that site today, having been passed by British Rail to Sealink, had through privatisation passed by July 1984 to Mr. John Sherwood's American Sea Containers Ltd. The sale was carried out under the Transport Act 1981, which requires any purchaser of Sealink's harbour interests to take over related liabilities as well as assets. The liabilities included an enjoyment of 15 years of technical studies determining the feasibility of a reclamation project and geophysical conditions for harbour development. They had been made freely available by the Earlpar company to the freeholder, British Rail, in the light of successive letters of intent.
  Sea Containers Ltd. has so far ignored Earlpar's offer to sell the company's assets and the benefit of the studies as well as introduce a user, both to make a firm commitment and to help fund the development. Instead, Sea Containers has chosen to seek to obtain these benefits for nothing by a private Bill—[Interruption.] I see that

  721
  the hon. Member for Harwich (Sir J. Ridsdale) disagrees with me. I hope that he will make these matters clear later because they are sore points to petitioners against the Biil.
  The Bill ignores the environmental protests of those in Harwich who are worried about protecting and using Gashouse creek at the east end of Bath Side Bay. I understand that the petitioners, on their behalf, have been refused a hearing before the Committee on Opposed Bills to be set up should the Bill obtain a Second Reading. Environmental rights will thus be eliminated without being heard. The creek was specifically protected under the 1972 Act.
  The hon. Member for Harwich mentioned Trinity House interests. I am not sure whether those interests are protected, but, according to my information, they are likely to be ignored by the Bill. Trinity House has petitioned, and I understand that negotiations with the promoters are proceeding. I understand that the port of Felixstowe has also petitioned on the ground of anxiety about the effect which piecemeal harbour development will have on the estuarial regime. I do not know whether that is so. It needs explanation, and I hope that the hon. Member for Harwich will explain.
  That interest was protected by the 1972 Act which this Bill proposes to repeal. The regime is also threatened by increasingly high tides while the volume of sea-going freight handled on the estuary has risen by about 50 per cent. in the past five years.
  The Bill describes the original 1972 Act as
  "spent or of no practical utility".
  The hon. Member for Harwich said that. At the time that Sealink was being privatised, the Harwich harbour authority undertook dredging operations in the estuary and, at the instance of the Earlpar company, was persuaded by British Rail to deposit the spoils on Bath Side bay to start off the reclamation. Nearly one third of Bath Side has been filled in as a result. The parliamentary powers which protected this operation from interference by others—for example, the dumping of harmful refuse—existed in the 1972 Act. Therefore, that Act has already proved its relevance and value.
  When I got the letter from the lady in Harwich and also the representations of the Earl of Lauderdale, I received, as a consequence, a letter from the parliamentary agents, Sherwood and Company, of Queen Anne's Chambers, Westminster, which asked me to give my reasons for objecting to the Bill. I simply replied by enclosing a copy of the long letter which I had received from the lady in Harwich. I deleted her name and address because I did not have her permission to use it. I also explained my views, in principle, on the private Bill procedure.
  The lady subsequently apologised to the hon. Member for Harwich because she had made some incorrect allegations in her letter which she later withdrew. I had stirred up a hornet's nest which I regret. I do not regret my part in these proceedings. My hon. Friend the Member for Denton and Reddish (Mr. Bennett) had put down a blocking motion on the Bill, to which I added my name. I consulted my hon. Friend about the terms of the letter and my hon. Friend asked me to put my name to the blocking motion because there was something irregular about it. That is confirmed to some extent by the letter from the lady in Harwich. I shall end with a fairly lengthy quotation, but I believe it is important to get it on the record.
  Mr. Fairbairn: Let's have it all.
  Mr. Hamilton: In due course I may allow the hon. and learned Gentleman to see the letter.
  The letter states:
  "Why are Parliament and the people of Harwich subjected to the introduction of this Bill? There is no doubt in my mind, and that of others, that this is only their first foray into the conservation area. At present, you may know, the seamen here are on strike due to redundancies and the loss of Sealink's freight contract to Felixstowe. If you consult the Unions here, you will find that they have further fears, particularly regarding intrusion of foreign crews and workers, and yet this town would become `Sealinkville', wholly dependent on Sealink if this Bill were enacted. Questions were asked in Committee on the Felixstowe Bill concerning the Promoters' donations to Tory Party funds—Mr. Sherwood has friends in high places—it might be interesting to put the same questions to him."
  If this Bill goes to Committee, I hope the same questions will be put to Mr. Sherwood as were put to the relevant people who promoted the Felixstowe Bill.
  The letter continues to consider the role of the Crown Estate Commissioners which was not mentioned by the hon. Member for Harwich:
  "Yet another aspect is the Crown Estate Commissioners. I have been attempting to investigate the ownership of land delineated in the Book of Reference to the Bill, as the Promoters can list any land as theirs or reputed to be theirs with no proof of ownership, the system relying entirely on someone petitioning to say it is not; such research is also lengthy, which the procedural timetable does not allow for. The Crown Estate Commissioners state that they are already negotiating with Sealink about making their land in Bath Side Bay available to Sealink. This seems incredible with an Act over the area still in operation and a Bill just introduced; I trust that they will not be permitted to transfer it to Sealink whilst the Bill is before the House. My other information from them"—
  that is, the Crown Estates Commissioners—
  "concerned the bed of the Creek which Sealink purport to own. They say this was transferred to the United Land Company in 1871. They agree with my contention that the bed of a tidal river so far as the tide ebbs and flows is vested in the Crown and that when it is granted or acquired with this grant or acquisition passes intrinsically the public right of navigation and fishing right and rights ancillary thereto over the locus of the grant or acquisition."
  Mr. Fairbairn rose—
  Mr. Hamilton: I shall just finish the paragraph:
  "They state that the custodian of such rights on behalf of the public is the Attorney General. I trust that the Attorney General will enforce these rights in the case of this Bill."
  Mr. Fairbairn: This may seem a strange question for one Scottish Member to ask another about the law of England but, given that the lady is right about these matters, do the regalia majora and regalia minora apply to the shores of England as they do to the shores of Scotland and are the shores the rights of the Crown and not the rights of the proprietor?
  Mr. Hamilton: I do not know. I think the hon. and learned Gentleman should apply for membership of the Committee. I will recommend him for that because clearly he has many pertinent questions to put to the promoters of the Bill.
  I shall finish the quote:
  "I think, as you do, that the fight for reform in Private Bill procedures is a fight for some democratic representation for common people in these matters. Justice is not being done and the interests of a multinational company are being given not only precedence but almost sole hearing. Private Bill procedures in Bills such as the Harwich Parkeston Quay Bill are no longer democratic in any acceptable sense."
  I entirely agree with that proposition; and that is why I am making this speech. I want it to be put on record

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  —I hope other hon. Members will put it on record in the course of the Bill—that, unless we get this procedure reformed and modernised, we ought not to allow private Bills to go through the House under this procedure.
  Sir Eldon Griffiths: I also want the procedure reformed. Does the hon. Gentleman think that it is right that he should tell the House that the letter he is reading is from Mrs. Cullen, who was originally a petitioner against the Bill? Her petition was struck out by the Court of Referees. Her locus was disallowed by the procedures of this House because she does not claim any other right but as a member of the public. Since the Court of Referees has taken that view, does the hon. Gentleman think it is proper to seek to import her objections when the proper procedures have said that they are not revelant?
  Mr. Hamilton: I do not know, but she has made some valid arguments in the letter, which ought to be recorded. I have not asked her permission to quote the letter and I have deliberately sought not to identify her, but the hon. Member for Bury St. Edmunds (Sir E. Griffiths) has, and he may be right. The principles on which she is acting are sound. She believes that there are rights of individual citizens which are being treated in a slipshod manner and that citizens are unable to put their arguments to a Committee of the House. Such people's interests are not being protected as they should be.
  These are matters of fundamental national interest and they should not be dealt with in this feudalistic way, which gives only the lawyers acting on behalf of the promoters or the petitioners a fair deal. If I put that on record and repeat it every time that a private Bill is considered in the House, the message might eventually lead to radical change in the procedure.
  7.50 pm
  Sir Bernard Braine: The hon. Member for Fife, Central (Mr. Hamilton) has been a Member of the House for a long time and has a great knowledge of procedure. Anything that he says on that subject must be listened to with respect. I had a little sympathy with him at one stage, but he did not answer my question. I am not concerned who the lady is. As the hon. Gentleman did not have her permission to reveal her name, he properly did not do so, but he did not deny the allegation of my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths) that her case was not thought to be justified and that her petition was rejected by the Court of Referees.
  I did not want to go into that, for the reason that my question was not whether the private Bill procedure is as well framed and conducted as it should be, but whether, bearing in mind the objections that the hon. Gentleman voiced on behalf of the lady concerned, he nevertheless thought that these matters could properly be considered in Committee under the existing private Bill procedure.
  I have always understood that to be the case. I should have thought that the Earl of Lauderdale could make such objections as he has in Committee, irrespective of whether or not he has an interest in the matter. Surely we are interested in arriving at objective truth, discovering where justice lies and what is the right thing to do, and that can be done in Committee.
  Mr. Bill Walker: My right hon. Friend has also been a Member of the House for a long time and is experienced in procedural matters. Does he have any experience of a private Bill being introduced to remove a private Act?
  Sir Bernard Braine: No, I do not recall any such precedent. Perhaps that ought to be considered, but I do not believe that it should delay the Bill's passage. The point could be considered in detail in Committee.
  I am speaking as a senior Member for the county of Essex because I support what my colleague of many years' standing, my hon. Friend the Member for Harwich (Sir J. Ridsdale), is doing. He has been a doughty campaigner for the north-eastern part of our county, and he is as anxious as others in that area that nothing should stand in the way of a scheme which will bring undoubted benefits to our county as a whole.
  Essex is expanding. Our population will grow well beyond the year 2000 and the development of the M25 and the M 11 means that we shall experience considerable growth in business and industry. My hon. Friend the Member for Hornchurch (Mr. Squire) nods agreement, for he knows that this development will enable goods to reach the continent more speedily through the east coast ports. The Bill would facilitate much more than port expansion next door to the existing container handling complex at Parkeston—or to improve employment opportunities in my hon. Friend's constituency.
  The good effects will be felt throughout our county. That is why the Essex county council strongly favours a swift decision. Indeed, it is quite remarkable that the first container berth is expected to be ready within 18 months of the start of the work and that three more are likely to follow. The project is linked to the provision of substantial additional land for industrial and commercial development and the construction of the second phase of the Dovercourt bypass. Some work has already been undertaken, and we are now raring to go.
  In short, the project is likely to lead to a substantial increase in container traffic, which will stimulate business in an area far beyond Harwich, extending to south-east Essex, mid-Essex and the former metropolitan Essex, which is now in Greater London. That development is needed now.
  I do not propose to go into my hon. Friend's moderately argued case in detail. Perhaps there are objections which ought to be heard in accordance with our established private Bill traditions and procedures, but the right place for that is in Committee. I did not agree with all of the conclusions reached by the hon. Member for Fife, Central, but he adduced some arguments that we should note. However, that has no bearing on the desirability of the Bill's swift passage or on the urgency of the work to be done. I hope, therefore, that the House will support the Bill.
  I should like to thank my hon. Friend the Member for Harwich, on behalf of my part of Essex, for his skill and efficacy in bringing this matter before us.
  7.59 pm
  Mr. Albert McQuarrie: I sympathise with the points made so eloquently by my hon. Friend the Member for Harwich (Sir J. Ridsdale) about employment in his constituency. During the past few months, I have had considerable experience in piloting private Bills through the House, fortunately successfully.

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  I also subscribe to the views expressed by the hon. Member for Fife, Central (Mr. Hamilton). Something must be done about private Bills, which are in many cases ridiculous. It is an abuse of the House for them to be brought here instead of being dealt with through normal legislation, which is possible in local government.
  Having taken much interest in this issue and read the Bill thoroughly, I shall devote my remarks to what I consider to be the unfair treatment which Earlpar Development Company has received from the new owner of Sealink and what has taken place since the Bath Side Bay Development Act 1972 was passed. I shall endeavour to respect the statement by my hon. Friend the Member for Harwich that discussions are taking place between Sealink and Harwich Terminal Holdings, whose wholly owned subsidiary is the Earlpar Development Company.
  Clause 23 and the second schedule to the Bill would repeal the Bath Side Bay Development Act, granted by Parliament under the private Bill procedure in 1972 and extended by the Secretary of State for Transport to run until 1992—a further six years. The Act was granted to Harwich Terminal Holdings, but the wholly owned subsidiary of that company was the Earlpar Development Company, which was incorporated in 1970.
  Harwich Terminal Holdings is a petitioner against the Bill. It owns Earlpar Development Company, along with a development account asset worth about £700,000 at historical cost. That represents cash outgoings and obligations in respect of expenses incurred in preparing and advancing the reclamation and development scheme with which the Bill and the existing Act have been concerned for nearly 15 years.
  The original Act and the Bill deal with the powers, as the hon. Member for Fife, Central pointed out.
  Mr. Fairbairn: Will my hon. Friend advise me whether there are any proposals in the Bill to compensate the original company for the work it has done in the meantime when the new company takes over its permanent powers?
  Mr.McQuarrie: I hope that my hon. and learned Friend will bear with me, because I intend to take that issue fully into account.
  The original Act and the Bill deal with the powers to reclaim about 250 acres of tidal mud flats called Bath Side bay, fronting the Stour-Orwell estuary opposite Felixstowe, between Harwich on the east and Parkeston quay on the west. The freehold of Parkeston quay and Bath Side bay was passed by British Rail to Sealink, which on privatisation was bought by the Bermuda-registered American company, Sea Containers, on 27 July 1984. Sealink is a promoter of the Bill to establish its powers to carry out the reclamation and the harbour development while extinguishing those powers established by the 1972 Act, which was granted to the Earlpar Development Company.
  When buying Sealink, Mr. James Sherwood, the president of Sea Containers, could not obtain more than the Transport Act 1981 authorised British Rail to dispose of. Nor could he escape whatever liabilities were included in the package. This is a very important factor. Parliament authorised British Rail to sell its Sealink Harbours undertakings,
  "including all property rights and liabilities"
  726
  of that part of Sealink which applied to Parkeston quay. Among those assets was the freehold of Bath Side bay's mud flats. That asset embraced its inherent potential for reclamation and development. Purchase of that development potential could mean nothing without a clear and sure liability for all the related engineering studies and the other works that had advanced the physical feasibility of the reclamation scheme during a period of 12 years.
  Reclamation and development of the Bath Side bay had been dreamt about and rejected as, at worst, impractical, and, at best, uneconomic, for many years. But about 1968, Robert Earley and Partners—now Earley Campling Lee and Partners—later in association with the Earlpar Development Company, commissioned studies which in 1969 were explained to British Rail. Thus was first established the feasibility of the scheme. That and a series of soil surveys, hydrological studies and other investigations were commissioned by the Earlpar Development Company, it having the copyright, which was made freely available to British Rail on the clear understanding—repeatedly confirmed—that the Earlpar Development Company would carry out the scheme.
  As regards British Rail, and later Sealink, it lay with the freeholder to grant a development agreement so that Earlpar Development Company could have access to the tidal mud flats in the first place. That development agreement was to be followed by a lease of the land once it had been reclaimed.
  British Rail was throughout sympathetic, even enthusiastic, but anxieties about competition and a greed for extracting the maximum reliability inhibited progress. The consultant's—Earlpar Development Company—first approach was on 22 October 1969, and it was rewarded with a sympathetic reply from British Rail early in 1970, setting the tone of the relationship which would exist for the next 14 years.
  The letter from British Rail read:
  "I assure you that if any useful developments could be introduced into the Bath Side area at Harwich, the Board would be only too pleased to assist by making land available. Our past considerations of this matter have always led us to believe that the cost of reclamation would be prohibitive, but since your company appear to be sure that more modern methods of reclamation will make this a feasible proposition, you may rest assured that the Board do not wish to place any obstacle in your way."
  A series of letters and meetings followed, during which, in April 1971, British Rail confirmed its intent to the point that Earlpar enjoyed its support for the Bath Side Bay Development Bill, which was enacted in August 1972. One and a half years later, in February 1974, draft heads of intention were agreed in a 10,000-word document of 34 pages. The worst sticking points were British Rail's protectionist requirement against Earlpar's port servicing trade with Benelux or any port in France as far west as Boulogne. But, despite that, three letters from the British Rail chairman, Mr. Richard Marsh—who is now in the Upper House—confirmed British Rail's readiness to proceed.
  Progress was impeded by the Harbours Act 1964, because no port development above a certain capital cost could proceed without section 9 consent, which was mentioned by the hon. Member for Fife, Central. The Government would grant this only after consulting the National Ports Council. That body needed a bankable, contractual user commitment to prove that the user was ready to guarantee the use of X facilities over Y number

  727
  of years at Z cost. This had to be in terms sufficient to service and later to redeem the capital invested. Such a commitment was required for a harbour that was unbuilt on land that was then unreclaimed. That inhibiting requirement remained in force until it was repealed by the Ports (Finance) Act 1985—about the time that Sea Containers approached Sealink.
  As far back as 1972, Earlpar's first application for a section 9 consent was refused, but the company was invited to return with a further application. That was submitted in April 1974 but rejected eight months later. The grounds for rejection were political: that such a private enterprise project could not be allowed to pre-empt the then Government's policy of nationalising the ports.
  By the autumn of 1977 the company was back in negotiation. British Rail gave a letter of support for a third application for section 9 consent, but the application failed because British Rail's terms for a trading clause to protect its narrow shipping interests, Benelux to Boulogne, were found to conflict with article 85 of the treaty of Rome.
  British Rail proposed funding the development itself, employing Earlpar as its agent, with its Act. British Rail finally withdrew from this plan because of the trading climate, but gave yet another letter of intent dated June 1980 to enable Earlpar to try once more for section 9 consent and to help it in raising the finance. Four months later the then Secretary of State for the Environment extended the powers of the 1972 Act until 9 August 1992.
  In July 1981 the company was at last given a section 9 consent for reclamation alone. The company also received British Rail's proposals to extend its letter of intent to take account of the new situation. Unfortunately, progress was inhibited by the prospect of Sealink being privatised under the Transport Act 1981. As long as privatisation was pending, no finance could be firmed up.
  The purchase of Sealink by Sea Containers on 29 July 1984 was quickly followed by Mr. James Sherwood's public announcement that he meant to reclaim Bath Side bay and to develop that whole frontage as a major new port complex in competition with Felixstowe across the water. Mr. Sherwood's company took over at a favourable time because, thanks to Earlpar's warning, initiative and plans, the British Railways Board, the Harwich harbour authority and the Essex county council all saw the danger of a missed opportunity.
  The harbour authority had been planning to dump at sea all the rich sandy spoil dredged up in deepening its estuary channel. The authority agreed to put the spoil ashore at Bath Side and thus get the reclamation started. The dredging was carried out by Harwich Harbour Conservancy Board, and deposition of the spoil on Bath Side was funded by Essex county council, as it was then, to prepare for the Dovercourt bypass road. It was done with the consent of Sealink which, to be fair, was the freeholder, but it was also done with the authorisation of the Secretary of State for Transport. That authorisation was given on 29 November 1984, and he cited section 34 of the Coast Protection Act 1949.
  The company had a large number of contacts with the authorities and they certainly require to be spoken about, because it has to be proved that Earlpar has been unfairly dealt with by this new company, Sea Containers.
  Mr. Fairbairn: My hon. Friend spoke about section 34 of the Coast Protection Act 1949 and said that it was used by the Secretary of State to obtain the necessary
  728
  powers or to frustrate the company. Does my hon. Friend think that was a proper thing to do, or does he think that it demonstrates the fallacy and falsehood of the Bill?
  Mr. McQuarrie: I am grateful to my hon. and learned Friend for his comments. He is quite right. The action by the Secretary of State demonstrates the fallacy and the shortfall in the Bill.
  The chronological summary of Earlpar's progress commences in October 1969 and continues until the summer of 1974 when negotiations with the British Railways Board and its property division resulted in British Rail making a clear statement of its wish to proceed.
  In 1972, the first rejection of the application for section 9 consent under the Harbours Act 1964 took place. In April 1972 the company was granted planning consent, and in 1973 draft heads of intention were proposed by British Rail. In 1974 the second rejection on political grounds of a section 9 application occurred. In February 1975, this phase of talks with British Rail was concluded. From February 1975 until the end of 1977 efforts focused on securing a contractual user commitment to satisfy the essential requirement for National Ports Council support for another section 9 application. In 1978 and 1981, further conversations took place with British Rail to try to arrange an agreement.
  Mr. Fairbairn: My hon. Friend is rushing through these matters. These important negotiations were an attempt to create employment by redeeming this land and making port facilities. The negotiations were important. They are not matters that we can pass over just by saying that they took place in those years. Why was there no acceptance of a matter about which we are being asked to pass a Bill to make possible immediately?
  Mr. McQuarrie: I am grateful to my hon. and learned Friend for drawing attention to that. I have no wish to delay the House, but equally I have no wish that the House should not hear what should be said about this Bill. If my hon. and learned Friend feels that I am rushing through it—as he knows, it is my wont to speak fast rather than slowly—I shall endeavour to speak a little more slowly for his benefit. I agree that these are important matters. Important discussions took place. They cannot be taken lightly, and I do not want to give the impression that they were rushed. A lot of detail was covered in the discussions and I shall come to that during my speech.
  In 1978 yet another section 9 application was made. It was frustrated when it was discovered that restrictive clauses in the proposed Bath Side bay agreement protecting Sealink traffic from Benelux to Boulogne would conflict with article 85 of the treaty of Rome.
  In 1979, British Rail proposed that it would make a direct investment in the project. That was a clear indication of British Rail's confidence that Earlpar was on the right track with the project. Unfortunately, negotiations proved abortive during 1980 because of the heavy front-end loading of the scheme and the forecast of delayed returns. British Rail issued a further letter of intent in 1980 and it was later given an extension verbally. In August 1980, the Bath Side bay Development Act was extended to 1992. In July 1981, section 9 consent was granted for reclamation only. At that stage efforts were

  729
  focused on raising funds, but these were inhibited by the privatisation programme included in the Transport Act 1981.
  In March 1984, there was news of the Harwich Harbour Conservancy Board's plan to dump at sea spoil obtained from estuarial dredging. From April to July of 1984 there were intensive negotiations with Sealink, the Harwich Harbour Conservancy Board and Essex county council to ensure that the spoil was used for partial reclamation. Authorisation to dump the spoil on Bath Side bay was given by the Department of Transport in November 1984. On 27 July 1984, Sealink sold to Sea Containers Ltd. At that stage, further conversations with Harwich Terminal Holdings Ltd. were brought to a halt. In November 1984 dredging started and spoil was deposited according to the plans of Harwich International Terminals. In March 1985 a conversation with Sea Containers was closed by Sea Containers.
  Sir Julian Ridsdale: Does my hon. Friend agree that one of the reasons for the breaking off of the negotiations was the absurd price of £7·24 million asked by Harwich Terminal Holdings for the work that it had done beforehand?
  Mr. McQuarrie: I am grateful to my hon. Friend for drawing that to my attention. It is an important matter.
  Mr. Bill Walker: My hon. Friend has considerable experience of the construction industry and he knows what happens when work is partially completed. He will be aware of the importance of technical information. Is it his experience that one starts negotiations from a bargaining position and that no one expects the first bargaining position to be accepted?
  Mr. McQuarrie: I am grateful to my hon. Friend for that intervention.
  I reply to my hon. Friend the Member for Harwich by saying that the original offer, on the advice of Hambros bank, was to ask for compensation of £7·24 million. Sea Containers did not even entertain discussions with Earlpar, the development company, because the conversations which commenced in March 1985 were closed by Sea Containers without any offer of compensation.
  In July 1985, contact was resumed and there was a meeting with Mr. James Sherwood at which HIT was invited to make new proposals. In November 1985 proposals were put forward by HIT, but Mr. Sherwood did not respond. It is unfair to suggest that HIT asked for £7·24 million—a request which was thrown out by Sea Containers and Mr. James Sherwood—without making any alternative proposal. Had there been some form of negotiation on meaningful terms of a financial return to HIT for nearly 15 years of work, we would not be discussing these important issues tonight.
  Sea Containers found everything necessary for partial reclamation to begin when it took over, and at no expense to itself. It also found a library of technical feasibility studies which over the years Earlpar had made freely available to British Railways Board's engineers as well as to the Harwich harbour authority and the Anglian water authority. In the light of no fewer than five demonstrations by the British Railways Board of its manifest intention that
  730
  the Earlpar project should go ahead, eventually Earlpar placed no embargo on material, nor thought of stressing its own copyright.
  I turn to the company's contact with Sea Containers. Following the takeover of Sealink, Earlpar made contact with Sea Containers to discuss collaboration on the outright sale of its company and its Act; the rights to the studies conducted over a period of nearly 15 years; and the score or so of consents that Earlpar had obtained. It was advised by its merchant banker, as my hon. Friend the Member for Harwich has said, to propose a figure of £7·24 million as compensation for nearly 15 years of work. That was rejected by Sea Containers in the spring of 1985, and the matter has gone no further.
  Sir Julian Ridsdale: I think my hon. Friend is wrong in saying that the matter has gone no further. I said when I addressed the House that at this stage negotiations have been offered at top level between the two companies. The offer was made that the negotiations should take place tomorrow. Does my hon. Friend agree that the issue should be taken up in Committee and that it should not be used as a reason for opposing Second Reading?
  Mr. McQuarrie: I am sure that my hon. Friend does not want to mislead the House. Perhaps he is not in possession of the information with which I have been supplied. I do not suggest that he is wrong or that I am wrong. The information that has been conveyed to me, no later than this afternoon—indeed, earlier this evening—is to the effect that negotiations are not in hand, not even with the junior members of Sea Containers. If my hon. Friend can give the House positive information on who is conducting the negotiations and which member of HIT or Earlpar is involved in them, it will be for the benefit of the House to hear it.
  Sir Julian Ridsdale: I have in my hand a letter dated 28 April 1986 from Sherwoods. The final sentence reads:
  "Should your clients wish to pursue this, it is suggested that they make an approach to Mr. Sherwood or Mr. Bray direct."
  Mr. McQuarrie: I shall address myself to that alleged letter in due course. I can tell the House that as far as I am concerned there is no such letter in existence. That is the position of Earlpar.
  Mr. Fairbairn: On a point of order, Mr. Deputy Speaker. If, during the course of Second Reading of a private Bill, a company had offered a financial inducement to those who are resisting it to resist, is that not improper?
  Mr. Deputy Speaker (Sir Paul Dean): This matter can legitimately be debated on Second Reading, but it is not a matter for the Chair.
  Mr. McQuarrie: I hope that I have not got my hon. and learned Friend wrong. I hope that he is not suggesting that any negotiation between the parties, even at this late stage, is irregular. My hon. Friend the Member for Harwich has said that he is in possession of a letter, but I can tell him that Lord Lauderdale, to whom the hon. Member for Fife, Central referred, has told me that no such letter exists as far as his organisation is concerned. I must take the word of the noble Lord who has had so much to do with the Bill.
  Sir Julian Ridsdale: That shows how much better this could have been dealt with, if my hon. Friend had allowed it, in Committee rather than on Second Reading. I am

  731
  pleased to say that I have this letter, dated 28 April, which is in reply to a letter of 28 April from Dyson Bell and Co, acting for Lord Lauderdale.
  Mr. McQuarrie: I hope that there will be a little time for my hon. Friend to respond to some of the points that have been raised, so that he can tell the House what the letter says about financial compensation to Earlpar. Some of us feel that an injustice has been done to a company that has spent nearly 15 years developing something and then, because some big brother has taken over the place, has been thrown out without any question of compensation. That simply is not on, and I regret to say to my hon. Friend the Member for Harwich that that is the pertinent point that I am trying to illustrate.
  Mr. Fairbairn: This has now been going on for a long time. Can my hon. Friend speculate on how it has come to pass that a letter, offering to negotiate, came from the other side on 28 April which, if I am not mistaken, is tonight?
  Mr. McQuarrie: I am grateful for that point. The letter is in response to a request for negotiations made several weeks ago. As soon as the names went down on the blocking motion, Sea Containers finally saw fit to make a sign to Lord Lauderdale and his colleagues that it wished to have talks. It did not get beyond that. I know that my colleagues and other hon. Members are anxious to speak, but the case must be proven, and Mr. Sherwood has an obligation to Earlpar that he has not so far honoured.
  Mr. Sherwood and his assistant, Mr. David Bray, met Earlpar's directors in July 1985 for a further discussion. Mr. Sherwood spoke of the possibility of a new private Bill, and he was warned that it was certain to run into difficulties, if only because of its conflict with the present Act. He finished by inviting Earlpar to make a new proposal, which it did. In November, Mr. Bray repeated the invitation to the chairman of Earlpar's holding company, Mr. Anthony Reardon-Smith, to write in with his suggestions for discussions with Sealink that week.
  In the meantime, Earlpar has received approaches from a British shipping company of worldwide standing, eager to develop a container facility at the port, eager to do business through Earlpar, and able to play a significant part in funding. What is more, it is eager to give employment in an area which, as my hon. Friend the Member for Harwich has said, has high unemployment.
  Sealink's plan, as explained to Earlpar at the meeting in July and as is implicit in the Bill, is to develop the harbour works piecemeal, working eastwards from Parkeston quay as user commitments become available. As Sealink has lately been losing user commitments to Felixstowe, the introduction of a substantial potential user should have been of interest, as well as being a sign of Earlpar's continued readiness to co-operate on reasonable terms.
  Earlpar sent proposals on 28 November 1985 to Mr. Bray, from whom it received no acknowledgement, let alone a reply. In recent weeks, since a petition against the Bill was deposited, Sealink has said that the proposals have been answered by telephone—not by a letter, in a good business way—rejecting Earlpar's proposals. Earlpar has said that it can only say that that is the case. It had no communication from Mr. Bray until a message was passed through Sealink's parliamentary agents a week ago, after a proposal put forward in November 1985.
  732
  Let me now summarise my conclusions. It was Earlpar that convinced British Rail and then Sealink of the feasibility of the scheme. Earlpar has provided, and owns, the critical engineering studies enabling the project to go forward. The company's powers have another six years to run. Thanks to Earlpar's initiatives, one third of the bay has been reclaimed at no cost to Sealink. In turn, that may have modified the capital cost of the reclamation and development project by up to 30 per cent.
  The historic obstacle to Earlpar's scheme—the requirement for section 9 consent, based on a bankable contractual user commitment for a harbour, as yet unbuilt, on land, as yet unclaimed—no longer obtains, because Earlpar has done a first-class job. Earlpar has a sound and potential user, eager to do business on starting the port development and supplied with ample resources.
  No doubt the promoters have ample resources of their own, but the very range of their interests could be an argument against coherent supervision. Their attitude to the matter is likely to be distracted by association with a mixed bag of divergent interests. Apart from five other Sealink harbours—Stranraer, Heysham, Holyhead, Newhaven and Folkestone—and some 12 ferry routes, they include entry to the leisure markets with the Venice-Simplon Orient Express, ownership of several former British Rail hotels, as well as one in Venice, a protect for a Peking-Hong Kong version of the Orient Express, not to say tourist steamers on Lake Windermere, the "Gourmet's Discriminating Guide to London" and the Illustrated London News.
  This resort to the private Bill procedure to secure repeal of an Act enjoying another six years to run should not be permitted as long as the company that has spent nearly 15 years developing the project has not been compensated. My hon. Friend the Member for Harwich must give us a firm guarantee that positive steps will be taken. I do not consider that the Committee is the place for that undertaking to be given. It must be given on the Floor of the House. If he does not have the information, I ask him to endeavour to get it from wherever it is available. Unless he can give us that information, the Bill should be rejected out of hand.
  8.38 pm
  The Parliamentary Under-Secretary of State for Transport (Mr. Michael Spicer): At this point I shall briefly tell the House the Government's view on the Bill. It is the traditional view for all Bills of this type.
  The Government have considered the contents of the Bill and have no objection to the powers sought by Sealink Harbours Ltd. A few minor drafting points have been raised in correspondence with the promoters, but I have no reason to believe that they will not be cleared up satisfactorily.
  The debate has already shown that the issue is not without controversy. The speech of the hon. Member for Fife, Central (Mr. Hamilton) and the intervention of my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) have certainly left that in no doubt. As has been pointed out, there are four petitioners outstanding against the Bill. The Government's position, which is traditional, is that they will have the opportunity to present their objections to the Private Bill Committee. The Committee will undertake the function given to it by Parliament to examine in detail the issues involved, with the advantage of being able to hear expert evidence.

  733
  Therefore, as is traditional for the Government in the circumstances, I recommend to the House that the Bill be given a Second Reading, and—
  Mr. McQuarrie: I am surprised to hear my hon. Friend say that the Government are supporting a private Bill. Surely the Government are supposed to stand apart from private legislation.
  Mr. Spicer: Perhaps I did not stress it sufficiently clearly, or perhaps my hon. Friend did not hear me say, that the Government, as is traditional with private Bills, believe that the matter should go to the Private Bill Committee which, as my hon. Friend knows, has substantial powers to amend the Bill. The Government take the view—to that extent they are neutral—that that is the best forum for private Bills to be discussed in detail.
  Mr. Bill Walker: Have my hon. Friend the Minister and the Department of Transport had an opportunity to consider in depth the implication for private legislation if subsequent legislation to repeal Acts which give companies powers is introduced? If so, what is the Department's view?
  Mr. Spicer: The Department is not responsible for the business of the House. As my hon. Friend knows, the matter is under consideration. I am advised that the Committee could consider that point. It has the powers to do so. I have listened with great interest to the debate about whether this is the best procedure, but it is right for the Department to have a view on the matter.
  Mr. Fairbairn: Surely even the Department of Transport must occasionally speak to the Department of Trade and Industry. Is it not horrified if General Motors, as an American company, is not to be allowed to interfere with our beloved British Land Rover, and that an American company is to be allowed to interfere with a company created in 1972? It is not that we are handing something away. We are revoking an Act of Parliament which gives to a British company something that an American company wants an Act of Parliament to revoke.
  Mr. Spicer: My hon. and learned Friend makes an interesting point which he will undoubtedly make to the Committee. Parliament has laid down that the matter should go to a Private Bill Committee, and that is the only point that I seek to make. Because of that view which is traditionally taken by the Government, the Government believe that the Bill should be given a Second Reading.
  8.44 pm
  Mr. Roger Stott: I, too, wish to make a short intervention in the family argument on the Conservative Benches. It is clear who has drawn the short straw.
  It has been interesting to listen to the proceedings thus far, especially the intervention of the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) in his gesture of contrived anger about what is going on between an American company and a British company. I participated in the proceedings on the Bill which became the Transport Act 1981. My hon. Friends and I told the then Minister that something like this might happen. I did not see then the massed ranks of the Conservative party opposing the privatisation of Sealink, the Sealink Harbours and British Rail interests in the matter. I shall
  734
  come to that in a moment. This evening I do not intend to arbitrate in the row between Earlpar and Sealink—two well-heeled, rich companies which have their advocates in the Tory party.
  It is right to say that the private Bill procedure needs to be examined. My hon. Friend the Member for Fife, Central (Mr. Hamilton) outlined many points with which most hon. Members agree. It is anachronistic that we should proceed in this way during the second half of the 20th century. Parliament needs to examine its procedures more closely in future.
  The question about section 9 of the Harbours Act 1964 was raised by the hon. Member for Banff and Buchan (Mr. McQuarrie), who duly read his brief word for word, and my hon. Friend the Member for Fife, Central. That particular section was removed by statutory instrument in an hour and a half's debate in the House some time ago. I spoke against its removal because it was one piece of legislation which would prevent piecemeal port development from taking place.
  We in the Labour party are worried that we have no ports policy of any description. I make that point every time I stand at the Dispatch Box. The removal of section 9 makes possible piecemeal ports development all over the place without regard to the United Kingdom's total tonnage capacity, to the damage that it may do to other existing ports or to the proper considerations of a marine and port policy. My arguments on that are firmly on the record, so I need not repeat them now.
  As I understand it, the arguments are not the same as they were when we were opposing the development of Felixstowe, which we did for many reasons. First, Felixstowe was being built on a site of outstanding natural beauty. I do not think that that is so in this case. Secondly, the site of Felixstowe was an area of special scientific interest. My hon. Friends deployed those two arguments against the extension of Felixstowe.
  The third argument, which I used, was about overcapacity in the ports industry. There is too much capacity, and any further piecemeal development, no matter where it occurs, is bound to have a knock-on effect with other United Kingdom ports. That is why we need a proper ports policy which will take into account the capacity of containerisation, and can designate where ports are and are not developed. If we keep developing the east coast, it will mean west coast closures and Channel port problems. [Interruption.] The hon. Member for Bury St. Edmunds (Sir E. Griffiths) says that that is not so, but he knows as well as I do of the difficulties that may occur at Ipswich because of the development at Felixstowe. I do not wish to provoke him to his feet because I do not wish to say much more. Nevertheless, it is worth bearing in mind that we do not have a proper ports policy, and we do not seem to know where we are going.
  Mr. Sherwood who owns Sea Containers and Sealink is a promoter of the Channel tunnel—strange bedfellows. His scheme did not find favour, but one did—the rail-only Channel Tunnel Group scheme. The freight shipped through the Channel tunnel on railway lines will affect the amount of freight likely to pass through British ports. We should carefully consider whether to give permission to further harbour developments while we bear in mind that the Channel tunnel will be built.
  I do not object to the Bill being given a Second Reading. Hon. Members will have their day in Committee

  735
  when all the points of the hon. Member for Harwich (Sir J. Ridsdale) will be discussed. It is sad that we do not have a clear policy on our direction in the ports industry.
  Mr. Fairbairn: What is the Labour party's policy? What is its policy for Perth harbour?
  Mr. Stott: It is clear that the hon. and learned Gentleman does not read Labour party publications or documents on transport policy. He has not read the latest publication in which we explain a series of options. We are developing a strategy for the ports industry. The hon. and learned Gentleman appears to be concerned, but I do not know where he was late on that night when we discussed the statutory instrument that removed section 9 of the Harbours Act 1964. If he felt as I do, he should have supported my hon. Friends and me in arguing for its retention.
  If section 9 had been retained it would not have been possible to undertake these developments without requiring the Secretary of State to give his approval. Presumably, the Secretary of State would give his approval only if he thought that the development of a particular harbour was in the national interest, not in the interest merely of the promoter calling for the development of that harbour. Harbour development should be conducted not on a piecemeal basis but on a national basis first. On the east coast, the two big fat cats of Harwich and Felixstowe are fighting it out in the interests of no one but themselves.
  8.51 pm
  Sir Eldon Griffiths: Until the interventions of my hon. Friend the Under-Secretary of State and the hon. Member for Wigan (Mr. Stott), the debate had been a contest between Essex and Scotland. I am a Suffolk Member with a riparian interest, as my hon. Friend the Member for Harwich (Sir J. Ridsdale) knows, because Felixstowe and Ipswich are Suffolk ports and share the same haven with Harwich. I have taken a close interest in the matter and at the weekend read with interest the promoter's arguments and some of the arguments of the petitioners. We have been treated to some views that do not appear in any petition against the Bill but reflect the concerns of those at Earlpar who previously were involved in the engineering works in the Bathgate area.
  I support the Bill and urge the House to give it a Second Reading. I stand firmly with my hon. Friend the Member for Harwich, who put the matter, as is his custom, succinctly and well. I support the Bill for local reasons. Harwich, with its unemployment level, needs investment and will benefit from the jobs created by the measure. It is no small matter that the legislation proposes total investment of about £100 million, of which about £33 million will be on construction. That is bound to result in hundreds of jobs, which must be something of which the House will approve. That is more important than the debate about who gets what with respect to Earlpar and the promoters.
  Mr. Fairbairn: Will my hon. Friend give way?
  Sir Eldon Griffiths: I shall give way, but I want to make a relatively serious and short speech. I do not want to become too involved in legalistics with my hon. and learned Friend.
  Mr. Fairbairn: I shall not be legalistic. My hon. Friend claims that expenditure of £100 million is proposed
  736
  in the legislation. I took the trouble to read the Bill and it makes no such proposal. Where does my hon. Friend suggest that that proposal is made?
  Sir Eldon Griffiths: I did not say that and, if my hon. and learned Friend had been listening, he would not have imagined it. I said that the project involved expenditure of about £100 million. I am in favour of that.
  I am in favour of the Bill for local reasons. I say, as one who was a transport Minister for a number of years, that, if British Rail had continued to be the manager of the port of Harwich, it would not have achieved the investment level now proposed. I have nothing against British Rail, but its management of the port of Harwich was not good enough. I, for one, am glad that Sealink has taken over the facilities. That is part of our privatisation policy, which I believe is successful. I am glad that private enterprise is providing for Harwich what public enterprise so lamentably failed to do for so long.
  I support the Bill also because it is right to have competition among the haven ports. The port of Ipswich is efficient in handling relatively small, specialist cargoes, and I know it well. The port has developed and its progress is assured, especially with the new highway system that the Government have managed to provide for it and the other haven ports.
  By any measure, Felixstowe is one of our great national success stories. It has come from nothing in the 1953 floods to being arguably the most efficient port in western Europe. It is a jewel in the east Anglian crown. Felixstowe's progress, when the private Bill on Felixstowe is supported by the House, will further the improvement of our ports industry in the haven area. It is right that there should be competition. As Harwich, too, comes forward, the industries and businesses of east Anglia will have a choice and an opportunity to use Ipswich, Felixstowe or Harwich. We shall have riches in our ports industry, and that will be good.
  Felixstowe has raised some objections. It is concerned about whether there should be a seawall or a bung. The promoters say that shelving sand will be sufficient. I do not know the answer, but I am sure that the two ports will work together intelligently to find a sensible answer. I hope that the Committee will form a view on the best engineering solution to that problem. I have read with interest the views of those who wish to look after Gas House creek. That is a perfectly proper matter for the Committee to consider, as I am sure it will. I believe that proper provision will be made.
  I am not impressed by the arguments of Mrs. Cullen, whose petition was disallowed by the Committee referees. I listened carefully to the hon. Member for Fife, Central (Mr. Hamilton). I share his concern about the need to modernise our private Bill procedure. I have sat on enough private Bill Committees, and avoided sitting on more, as the House will understand, to be well aware of the disadvantages of that procedure. I hope that when the House considers private Bill procedure it will not throw out the baby with the bath water because many of the private Bill Committees achieve a profound examination of matters that it would be impossible for us to handle on the Floor of the House. I believe that on balance it is a good procedure and should be changed only cautiously and sparingly. The detailed questions about the Bill can and will be handled intelligently either by negotiation or in Committee or both.

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  Above all, I support the Bill because it is in the national interest to help the development of East Anglia. In the previous century East Anglia was a forgotten region. It was cut off by the Fens and by poor transport. Today it is Britain's new frontier. It is a fortunate area in that our trade has turned around to the European ports. I believe that 58 per cent. of our trade is with the European Economic Community. Felixstowe, Ipswich and Harwich have certainly benefited from that. East Anglia is also fortunate in that the great research and development centre of Cambridge is beginning to spill over high-tech and biotech into our market towns and provide new, modern and competitive industries. We are also fortunate in that as Stansted develops to the south it will provide us with a new regional airport. I am not in favour of a large Stansted. I have opposed it. However, a modest development at Stansted will complement the tremendous development of the ports and the benefits of academia coming from Cambridge university into our regions. It must be right in a developing region such as East Anglia that the ports industry should go ahead to assist British exports.
  I am glad that the hon. Member for Wigan ended by taking a neutral view about the Bill and commending the House to give it a Second Reading so that it can be considered in greater detail in Committee. During my time as a transport Minister, when I had a particular responsibility for ports, I put large sums of Harbours Act money into two of our main west coast ports—Liverpool and Bristol. There was about £45 million for the west dock in Bristol, which was much more money in those days than it is today, and, as I recall, I put a further £40 million into Liverpool to build the new Seaforth dock. There was tangible evidence of investment in the western ports in the belief that they would benefit from modernisation. I am sorry to say that in Liverpool most of it was thrown away by restrictive practices, bad management and the general mood of the country looking more and more to the east. Similarly, although the west dock in Bristol has moved forward—you were very conscious, Mr. Deputy Speaker, at the time of the development in that area—I am not convinced that the money in question would not have been better spent if it had been put into the modernisation of the port of London and perhaps of Felixstowe, too.
  Any national ports policy has to take account of the fact that our trade is now to the east. The great world girdling container vessels, which will stop only once in north-west Europe, must have a port in this country where we can handle the goods with speed and efficiency so that they are attracted to come here and not simply to Rotterdam. On a national level, there is only one place where those ports can be provided—that is, on the North sea where they can compete with Rotterdam. It is an unfortunate fact of geography—I say this as someone who was born and grew up in the north-west and who wrote his first essay about the great docks of Liverpool when I was a schoolboy—that our economic structure has altered. We now look more to the east than to the west. Therefore, any national ports policy must comprehend the building of modern and efficient ports within the East Anglian region.
  I should like to make this suggestion. Like many others, I have toiled on private Bill Committees. I think, if I am not mistaken, that the first that I sat on, which was one of the longest, concerned your constituency, Mr. Deputy
  738
  Speaker. It was about the building of a steel jetty from south Wells in such a fashion that it would have intruded on the maritime environment of the area that you so elegantly represent, Mr. Deputy Speaker. In the event, it was one of the many private Bills which, although passed, bit the dust, and the jetty was not proceeded with. You were one of those who opposed it, Mr. Deputy Speaker.
  Private Bill Committees are not the easiest and the best way to proceed, but the matters which have been fairly raised by my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie), and which no doubt will be raised by other hon. Members who have still to speak, concern Earlpar's problems. There is an issue. Some compensation should be paid. But surely this is a matter for negotiation between the firms. It is not strictly a matter to be dealt with on the Floor of the House. The Committee is the best place to do it; the two firms are the best people to do it. I hope very much that justice will be done between them, but that is no reason for opposing the Second Reading of the Bill in the House.
  9.6 pm
  Mr. Nicholas Fairbairn: I should like to start from the point with which my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths) finished. He said that there is no reason for opposing a Bill on the basis of a failed negotiation. I cannot agree with him at all. He represents the Police Federation and constantly speaks of the rights and morals of law and order, so I find that a strange point for him of all people to make.
  Sir Eldon Griffiths: This is not criminal law. It is civil law.
  Mr. Fairbairn: No. Although my hon. Friend may not know it, the civil law also starts from a moral stance. That is the moral stance of equality. It is exactly the same in the civil law as in the criminal law. The point is that there should not be handed to one party a weapon that makes it impossible for the other party to obtain its rights. That is the position that I find so constitutionally unacceptable about the Bill.
  I find it extraordinary that Parliament, by whatever procedure—but, in this case, by a private procedure—should have passed an Act of Parliament in 1972 which gives this power to a specific company. I shall read part of the Act to demonstrate what Parliament said. It was
  "An Act to empower Earlpar Development Company Limited to construct and operate works at Bath Side Bay, Harwich; and for other purposes."
  I share this feeling with many hon. Members, including the hon. Member for Fife, Central (Mr. Hamilton), for whom, as he knows, I have a warm regard and with whom, oddly enough, I happen to agree on many matters. That may not be something which, in the evening of his time here, he would wish to be on his curriculum vitae. I am sorry, but it is something that will have to be written in. I agree; I find the procedure extraordinary. Nevertheless, Parliament had the capacity to grant to a company an Act of Parliament. After all, let us not forget that the business before the House, before 7 o'clock, was about empowering the shipbuilding industry to borrow hundreds of millions of pounds. That Bill was on two sides of a sheet of paper. We are dealing with an Act of Parliament, passed in 1972, which has 31 pages, 36 clauses, and a schedule. If Parliament took the trouble to pass an Act in 1972, granting powers to the Earlpar Development Company to

  739
  "construct and operate works at Bath Side Bay, Harwich; and for other purposes."
  which extend to 1992, it is a strange constitutional abuse of procedure that someone else should ask Parliament to remove those powers.
  One cannot leave something in a will and then say, "By the way, I am terribly sorry, but my second cousin has come along and asked that the will be cancelled." We have given powers to the company to do certain things until 1992. Parliament cannot come along now and say, "We are terribly sorry, old chap. We have a big brother who wants to take those powers from you without compensation."
  I asked my hon. Friend the Member for Harwich (Sir J. Ridsdale) whether there had been any negotiation as his reply might have cleared my mind. I asked him furthermore whether, in his view, the bargaining position in the negotiations would be altered by the passing of the Second Reading of the Bill. My hon. Friend could not answer either question, but he said in answer to one of my hon. Friends that a letter, which offered negotiations, had been sent on 28 April which, if I am not mistaken, is today.
  We have heard in several of the contributions to the debate that there was a moment at which Earlpar Development Company, on the advice of its financial advisers, suggested that £7·24 million was the proper price to pay for the work which had hitherto been done and would be of benefit to those who inherited.
  I do not know whether that figure is correct, whether it is an exaggerated price, absurdly high or absurdly low. I do not know how that figure relates to the work and I do not wish to develop that matter. However, if I am told that someone has seen my name, the name of the hon. Member for Fife, Central, the name of my hon. Friend the Member for Tayside, North (Mr. Walker), the name of my hon. Friend the Member for Edinburgh, Central (Mr. Fletcher) or the name of my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) on the Order Paper stating that the Second Reading should be in six months time and a letter arrives on that day saying that negotiations will take place, I can only say that nothing would be or could be more equitable. Perhaps my hon. Friend the Member for Harwich could give me a satisfactory explanation—and I will give way if he wishes to do so—why, on 28 April, negotiations were suddenly offered.
  As a lawyer I have always represented the law of Scotland and, without offending any Front Bench Members or any other Member of the House, let me say that that law has a more equitable and also a more sceptical approach to equity. I find it very odd that an offer should be made for negotiation on the day when it looked as if someone might block the ability to extinguish the rights of the other party to have any claim. If the rights granted by Parliament in 1972—these are the rights, the absolute rights, the only rights under this complicated Act passed on 9 August 1972—are extinguished or prospectively extinguished by the passing of this Second Reading, the letter of intent of today, so belatedly entered into, would immediately be withdrawn and not acted on.
  Sir Eldon Griffiths: I appreciate my hon. and learned Friend's apprehension and I, too, would be most unhappy if this Second Reading were, as it were, to close the door to the negotiation of the proper compensation that I think all of us would wish to achieve. But does not he accept that
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  a Committee of the House can, if it is not satisfied with the arrangements that are proposed, throw out the Bill and the promoters will be back where they started? Therefore, there is no question of a prospective extinguishment of the rights of the original developers; rather it is a matter of whether my hon. and learned Friend is prepared to trust a Committee of the House to arrive at a just approach.
  Mr. Fairbairn: I am interested in that concept of jurisprudence. I find it extraordinary, because if there had ever been any genuine intention to negotiate, a letter saying so would not have been dated today. It would have been proceeded with months ago, indeed, more than a year ago. The company would have said, "We are going to take over from you an asset." Indeed, it would not have needed a private procedure at all; it could have been bought. Therefore, I am sorry to say to my hon. Friend that I do not accept that concept at all.
  Is my hon. Friend seriously saying to the House that a Committee will throw out a private Bill? We do not know who will be the members of the Committee. Is he saying that they will form a sort of civil court of their own and that, if they are not satisfied that there has been a proper civil award for work done and contractual obligations due, they will throw out the Bill? I have never heard such an extraordinary concept.
  I know that we are the High Court of Parliament, but we are a High Court of Parliament that does not perform the allotment or aggregation of civil claims. When the High Court of Parliament looks like blocking a Bill for six months to concentrate the mind, in the same way that hanging does, I cannot understand why my hon. Friend should suggest that all of a sudden a Committee of the House of Commons, composed of we know not whom, should say, "We shall throw out the Bill because we are not satisfied that a civil claim, with which we have no right to deal, is not satisfactory." I have never heard such an extraordinary concept.
  It is inequitable and wrong that a Bill of Parliament under private procedure should be allowed to deprive another company, which has done all the work, of its just claim and that another company, if this Bill were to be enacted, should get all the benefit. That is the most extraordinary concept of jurisprudence that I have ever heard.
  If my hon. Friend genuinely means that, why has my hon. Friend the Member for Harwich been unable to answer my question about whether, if we pass the Second Reading tonight, the negotiating position of those in whose favour the Act was passed in 1972 will be improved or worsened by the passing of Second Reading?
  Sir Eldon Griffiths: It will be exactly the same.
  Mr. Fairbairn: My hon. Friend says that it is exactly the same. I do not think that it is exactly the same. As I am a Jacobite episcopalian, who thus has a certain scepticism about motivation, when I see that the offer to treat is dated 28 April after it had been seen that there was opposition, I say to myself, "Exactly the same, eh?" Let us suppose that none of us had put down our names.
  Sir Julian Ridsdale rose—
  Mr. Fairbairn: Let us suppose that there was no question of this matter being delayed for six months. Would people say exactly the same?
  Sir Julian Ridsdale: I am grateful to my hon. and learned Friend for giving way, particularly because he is labouring the point that this letter is dated 28 April and that this is the date when negotiations have been carried on. I have in my hand a letter from Sherwoods about the Bill which is dated 14 April. It says:
  "When we considered with you at the telephone today a possible date for the proposed meeting to discuss the issue raised in your client's petition against this Bill, it appeared that the three alternative dates offered by the promoters would not be convenient. We have since obtained further instructions and are now able to offer the afternoon of Tuesday the 29th April. Please let us know whether a meeting in our offices at, say, 2.30 on that date would be acceptable."
  Mr. Fairbairn: I am most obliged to my hon. Friend. I was hoping that an hon. Member would raise that date, too. It was the date when the hon. Member for Fife, Central was joined by Conservative Members on the motion that this Bill should not be considered for six months. I was waiting for the corroboration and was frightened that it would not come. But there it is. We have been persuaded that, because of this matter, an offer to treat has been made.
  Mr. Sayeed: Will my hon. and learned Friend give way?
  Mr. Fairbairn: In a moment.
  When I examine witnesses, I try to understand the motivation of those who give evidence before me. When on the day that it is seen that there may be opposition—14 April—somebody sends a letter and when on the date of the Bill's Second Reading another letter is sent about dates being awkward, all I can say is that in six months' time a date when it is not awkward may have been found, when it would be more convenient not to snatch the baggage. I am sorry to say that I find the evidence ever more convincing that this is an attempt to steal the baggage. I shall develop that point later when I look at both Bills, having first given way to my hon. Friend.
  Mr. Sayeed: I am grateful to my hon. and learned Friend for giving way. I am sorry that he appears to demonstrate a lack of trust in a Committee of the House. He suggests that a Committee is not permitted to attach conditions to a Bill. However, I have already sat for 24 days on the Felixstowe Dock and Railway Bill. The proceedings have not yet been concluded, one of the reasons being that although we are prepared to support the Bill in principle we have attached conditions and the Chairman will not sign the Bill until those conditions are met. A Committee of this House, which I believe all right hon. and hon. Members should be able to trust, should be able to attach conditions that ensure an equitable agreement between the promoters and the objectors to the Bill.
  Mr. FairbairnIt has been suggested, I think, that I would not trust a Committee. I would trust Committees to do many things, although I am not sure that I am willing to list them. However, I do not expect a Committee to say that a Bill will be granted provided that the compensation that should be paid for the extinction of the 1972 Act is £122,000,846, £648,000 or whatever. It would be meaningless and inappropriate for a Committee to say, "And we expect you to come to an equitable agreement."
  I have served on many Committees, and on perhaps more than my hon. Friend the Member for Bristol, East
  742
  (Mr. Sayeed). I am confident, particularly given our eccentric procedures, that they frequently reach a decision that is quite different from that intended by any of those serving on them. Therefore, without casting any aspersions on the honour and excellence of our Committees, I would not trust a Committee to come to an equitable conclusion when one party hopes to take from the other powers granted to it by an Act of Parliament until 1992.
  It is not right that this procedure should be used by one company to take from another powers granted to it by Parliament. That is fundamentally objectionable. I might also find it fundamentally objectionable that Parliament should grant the first company any powers, but that is another matter. However, I am certain that Parliament cannot grant rights to one company in a full Act of Parliament and then remove those same powers in an Act of Parliament that makes no reference to the previous Act, other than occasionally to imitate its language and to refer in schedule 2 to
  1972 c. xxxvi Bath Side Bay The whole Act. Development Act 1972
  When I studied jurisprudence, private international law and constitutional law, I became aware that one could not grant powers and rights under a private Act—and possibly even under a public Act—and then pass an Act that repeals the first Act without any reference to compensation for the rights under it. Something cannot be confiscated without any compensation for it, and that is borne out by nationalisation Acts, Appropriation Acts and even by compulsory purchase orders. Whether an Act is private, or is a private Act that involves something such as compulsory purchase, as was the case with the Forth Bridge and Tay Bridge Acts, compensation is provided for the powers granted against those involved. But where is there any mention of compensation in this Bill? Where does it demonstrate the extinction of rights granted by Parliament in 1972? Hon. Members may say that this is a private family row, and may ask what Scotland has to do with East Anglia. The answer is that Parliament is a place of principle. It is astonishing that anybody should agree, in the wake of the recent idiotic political, anti-American little-Englandism, that an American company should be allowed to come to Parliament to take away from a British company, whose managing director is Scottish—that does not matter—powers granted to it without any reference to compensation.
  Some say that the Committee can always deal with that, but this is the Chamber in which our rights are held. I do not believe that the hon. Members for Wigan (Mr. Stott) and for Fife, Central believe that if one loses in this Chamber one's ideas are safe in the next. As a lawyer I do not say to my client, "It does not matter if you lose in the first court because there is always the appeal court." That is not the order of events. If one does not win in the first court, one's chances thereafter are extremely doubtful. It is a question of tossing the coin. The principle must be decided here and not left to some unknown and undecided Committee, the composition of which we do not know.
  Comparing the Act and the Bill, I am torn between two concepts. The first is that the Bill is a crib and the second is that it is a bad crib. The reason is that the powers granted under the 1972 Act which empower Earlpar Development Company Ltd. to construct and operate works at Bath Side

  743
  bay are to be snatched from that company to allow Sealink Harbours Ltd. to construct works and to acquire land at Bath Side bay. The powers are approximately the same. The Bill also extends the limits of jurisdiction to Parkeston quay. Slightly different language is used, but we are talking about a snatch.
  We are talking about a strange concept, because in private legislation all the suppositions and premises are stated, but they are in question. One states one's views and the Bill is the end result. It is interesting to note the comparisons between the two measures. The 1972 measure proceeded on the basis of a genuine proposition. It was said that the company had been formed for certain purposes and that
  "existing port facilities and allied services—in the counties of Essex and East Suffolk are insufficient for present and future needs."
  That proposition is not contained in the Bill. The Act stated:
  "it would be of national benefit and local advantage if improved and additional facilities and services were provided".
  That proposition is not in the Bill. If the hon. Member for Wigan believes in the fantasy concept of a national ports policy, it may well start off by saying that in the counties of Suffolk and Essex the ports are
  "insufficient for present and future needs and it would be of national benefit and local advantage if improved and additional facilities and services were provided:"
  To that extent, the 1972 Act provided a marvellous blueprint for a national ports policy. I notice that the Harwich Parkeston Quay Bill makes no claim upon either local requirements or national interests. To that extent, I hope I may get a nod of recognition from the hon. Member for Blaydon (Mr. McWilliam) for a policy I do not approve of—that is, if he is not too engaged with his hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), whose interest in this matter I know to be crucial.
  It is important to compare the two pieces of legislation. When we read the meat of the legislation in section 2 we understand what the authorised works are. In the original Act, the authorised works meant
  "works described in and authorised by section 4 of this Act."
  In the new Bill it means
  "the works and operations authorised by section 4 of this Act."
  In other words, this Bill is a crib of the original Act to thieve the benefits. That thieving process was suddenly discovered, apparently, through a matter of negotiations 14 days ago and again today.
  The company under the original Act meant Earlpar Development Company. The company under the new Bill means Sealink Harbours Limited. If that is not plain downright theft by a company which decided to negotiate when it realised that there were some people who proposed that Second Reading should not happen for another six months, I do not understand what brought it to the wisdom of negotiation so coincidentally 14 days ago, and when another letter went out on this very day because the dates were not convenient—the day of the Second Reading.
  There are many matters which are imitated. One is not imitated and I would be interested to learn from the winding-up speech what makes the difference. In section 2(3) of the original Act, there is a phrase of some importance:
  "All directions, distances, lengths and widths stated in any description of works, powers or lands shall be construed as if the words 'or thereabouts' were inserted after each such direction, distance, length and width".
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  If one considers the new Bill, which for once does not plagiarise the original Act, it states under clause 2(2):
  "All directions, distances and lengths stated in any description of works, powers or lands shall be construed as if the words 'or thereabouts' were inserted after each such direction, distance and length."
  I do not know whether this is a one-dimensional scheme which is being proposed under the Harwich Parkeston Quay Bill.
  I should like to know how the concept of width disappears in measurement, or are we to take it that the Committee will be composed of philosopher kings? We are told, "Leave it to them." It is like Socrates' republic. It was a marvellous idea, but they could not find the philosopher kings to put it into practice. The Committee is to work out compensation and equity and will say that this is all the most marvellous concept that the world has ever seen.
  In advance of the philosopher kings being selected, how was it thought in the Harwich Parkeston Quay Bill that all directions, distances and lengths stated in any description should be construed as if the words "or thereabouts" should apply to them, but not the width? Width evidently has to be absolute because, under the 1972 Act, it also had to be "or thereabouts".
  The Committee which is to have these powers of remarkable insight might be told by Sealink that the pier will be 180 yd long, 60 ft deep and 640 in wide. The Committee might say, "We will not allow the Bill to proceed unless you provide us with a pier which, in a micrometer screw gauge is 640 in wide because, 'or thereabouts' will not do. It will do for depth and it will do for length but it will not do for width."
  I understand that the Committee will be able to negotiate in what must be one of the most difficult arbitrations—the worth of the work done by the company. That arbitration is quite outside the powers and rights of any Committee. Nevertheless, it will apparently have to say, "Ah now, come to width, old chap. There is no 'or thereabouts' about that. Unless you can provide your pier sand plan, bunch, munch or bung, or whatever it is, to the amount that we say, you do not get your Act", because the company has not taken the power to say, "or thereabouts".
  If I am told that the Committee is to be so wise that it will arbitrate in what would seem to me, if I was given the brief as a Queen's Counsel, an extremely difficult financial negotiation and that it will be able to refuse the Bill if an arbitration which it believes is equitable is not reached, I must ask on what basis it will make that judgment. I should have thought that it would be extremely easy to make that judgment because those who propose the Bill to extinguish rights granted by the 1972 Act will have no reason to negotiate at all.
  Sir Julian Ridsdale: As it appears that I shall not be given the opportunity to reply, I should like to tell my hon. and learned Friend that I only wish that Lord Lauderdale had come to me as the Member of Parliament for Harwich who helped him considerably with the 1972 Bill and told me the facts and figures. I would then have been able to arbitrate between him and Sealink. That course was never followed by the noble Lord. I was suddenly confronted by the £7·2 million and by this new Bill. I am anxious to ensure that the sorely needed jobs of my constituents will be there. Some of the things said by Scottish hon. Members are not correct, and I hope that they will have

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  the confidence to rely on me not only to look after my constituents whose jobs are under threat but also to see that a fair arbitration takes place.
  Mr. Fairbairn: I am obliged to my hon. Friend the Member for Harwich, and I take his remarks seriously. My hon. Friend will note that the motion that stands in my name and the names of the hon. Member for Fife, Central (Mr. Hamilton) and of my hon. Friends the Members for Tayside, North (Mr. Walker), Banff and Buchan (Mr. McQuarrie), Edinburgh, Central (Mr. Fletcher) and Southend, East (Mr. Taylor) makes the proposal that Second Reading should be postponed for six months.
  There is in Scotland at the moment an arbitration about a hospital. That is a matter of no greater complication than this matter. It is estimated that that arbitration may take 12 years. If my hon. Friend the Member for Harwich thinks that six months is a long time in the life of an arbitration, I must tell him that I do not. I say with the greatest sincerity that it is a short time for any development that might come about in his constituency to provide jobs.
  In that six months, if my hon. Friend can reach an equitable agreement after arbitration for work done under powers granted by Parliament which persist for another six years, I will be more than happy when he brings his Bill forward in six months time to do all that I can to ensure that every Scottish company and every asset is directed towards creating work in his constituency. Every hon. Member of whatever party wants to create work in his constituency.
  It is not that I do not trust my hon. Friend, but given the history of non-negotiation and sudden negotiation it is clear that there is no real intent to negotiate by those who seek to extinguish the powers granted by Parliament to the Earlpar company. I would not be a party to the Second Reading of any Bill, public or private, that sought to remove powers and rights granted to a party where there was not in the whole Bill any mention of compensation or arbitration.
  It may be of interest to my hon. Friend the Member for Harwich to have regard to the 1972 Act in which the matter of arbitration is specifically mentioned. My hon. Friend says that he will use his good offices to arbitrate and at the same time introduces a Bill to extinguish rights granted by Parliament. The Act granting those rights specifically deals with the matter of arbitration. The hon. Member does not mention arbitration, but gives his word as the result of a letter written on the day when those of us who are asking that this matter be postponed for six months happened to put our names down. There was another letter today, but that has not been received by those to whom it was sent because they are taking part in this debate.
  I am sorry to say that, notwithstanding all the generosity within my heart, I do not believe the good will of those on behalf of whom my hon. Friend speaks. However, I shall believe in the equity and honour of those on behalf of whom he speaks if tonight we decide that the Bill's Second Reading should be postponed for six months. I do not know the procedures that apply in the consideration of these matters and perhaps the hon. Member for Fife, Central does. However, if we are successful and the Bill is not considered for a further six months, we may come to know within the rules of the House that by chance and coincidence rather than
  746
  chastening the matter has been resolved. That might be tomorrow, next week, or in two months' time. If that happens and if there is anything that we can do to hasten the building by one company or the other of the facilities that will provide employment in my hon. Friend's constituency, I am sure that we shall do it.
  If my hon. Friend wishes to have employment in his constituency, what is wrong with the contracts that were entered into to undertake developments under the powers given by Parliament in the 1972 Act, which would provide employment in my hon. Friend's constituency? What is so special about employment that is created by Sealink, the American company, and what is so poor about employment by Earlpar?
  I do not know what steps my hon. Friend took. He may have been industrious, and, if he was, I shall applaud him. He may have taken steps with the Department of Transport and other Departments to stop all the blocking of attempts by Earlpar to continue its development over the years. If my hon. Friend is so concerned about employment in his constituency, I do not know whether he took those steps. What I do know is that I can see a rogue deal at a great distance.
  We are discussing a minor private measure which involves a principle which my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) and others have raised in the House. We have heard much about the patriotism of the British people being shattered. It is a terrible concept that Americans should own a British company or invest in Britain in any way. This is a private measure that seeks to allow an American company that is based in Bermuda to take from a British company based and registered in England—I use "England" in its proper sense, but there is suitable Scottish representation and guidance—powers that have been granted by Parliament, and to do so without compensation. I find it extraordinary that my hon. Friend should propose that the House should approve a measure which goes contrary to all the principles that are held by those on the Government Benches.
  Mr. Stott: Capitalism.
  Mr. Fairbairn: With the greatest respect to the hon. Gentleman, removing something from somebody by legislation without compensation has never been conceived, even by Socialism, or achieved in the House, and I hope that it will never be, although it is sometimes threatened.
  It is contrary to the principles of Conservative Members, and to the concept announced with apparently shattering effect on the Government and Cabinet, that a foreign company based in Bermuda should be in a position to take away from a British company its right to development. My hon. Friend the Member for Bury St. Edmunds may be right in saying that East Anglia is, in some way, the heaven on earth of Great Britain, but that is not the view that I have formed. I thought that Scotland had certain advantages that were rather greater, especially in Perthshire and the port of Perth, which has great capabilities that I hope the hon. Member for Wigan will not forget in his national docks policy.
  The English often forget that Scotland also has an east coast. There is no particular advantage in East Anglia that there is not in east Lothian, east Perthshire or east Fife. The greatest European trade, and the cause of Christianity

  747
  coming to Scotland in the first place, was the trade between Flanders and Fife. They missed out East Anglia, and did so wisely, if the East Anglians are as perverse as they appear to be in introducing legislation that attempts to remove from those who are granted them by Parliament powers on trade and development, without compensation or without reference to compensation.
  It is extraordinary to use a private Bill to attempt to extinguish powers granted by an Act of Parliament merely by referring in schedule 2 to the extinguishing of a whole Act without compensation or justification, extent or reason. There is no question that the work that has been done under the 1972 Act was passed, in good faith and in confidence, to British Rail and by it to Sealink which was, to all intents and purposes, British Rail. That being so, the company should have been rewarded.
  Why is it claimed, as I think that it has been by my hon. Friend the Member for Harwich, that some negotiations are available, which were put in prospect when we tabled the motion objecting to the Bill, suggesting that six months is not too long a time to do a little arbitration? If there was no claim by the Earlpar company, Sealink has nothing to fear and, if it has a claim, it is outrageous that Parliament should be asked to extinguish that claim through legislation. That is a constitutional wrong of which the Minister should take account. For Parliament to extinguish a civil claim by legislation is wrong. If there is no civil claim, why is the company negotiating, and why is it trying for an Act of Parliament to extinguish that claim? That is why—
  Sir JulianRidsdale rose in his place and claimed to move, That the Question be now put.
  Question put, That the Question be now put:—
  The House divided: Ayes 98, Noes 16.

  Division No. 160]

  [9.59 pm

  AYES

  Alexander, Richard

  Brandon-Bravo, Martin

  Amess, David

  Bright, Graham

  Atkins, Robert (South Ribbie)

  Brooke, Hon Peter

  Baker, Nicholas (Dorset N)

  Brown, M. (Brigg & Cl'thpes)

  Best, Keith

  Buck, Sir Antony

  Bevan, David Gilroy

  Burt, Alistair

  Biffen, Rt Hon John

  Butterfill, John

  Biggs-Davison, Sir John

  Carttiss, Michael

  Blackburn, John

  Chope, Christopher

  Blaker, Rt Hon Sir Peter

  Clark, Dr Michael (Rochford)

  Boscawen, Hon Robert

  Colvin, Michael

  Bottomley, Peter

  Coombs, Simon

  Braine, Rt Hon Sir Bernard

  Cope, John

  748

  Cormack, Patrick

  Newton, Tony

  Cranborne, Viscount

  Norris, Steven

  Crouch, David

  Onslow, Cranley

  Dalyell, Tam

  Penhaligon, David

  Dorrell, Stephen

  Powley, John

  Dunn, Robert

  Rathbone, Tim

  Durant, Tony

  Rhys Williams, Sir Brandon

  Emery, Sir Peter

  Rumbold, Mrs Angela

  Eyre, Sir Reginald

  Sackville, Hon Thomas

  Fookes, Miss Janet

  Sainsbury, Hon Timothy

  Forth, Eric

  Sayeed, Jonathan

  Fraser, Peter (Angus East)

  Shepherd, Colin (Hereford)

  Garel-Jones, Tristan

  Shersby, Michael

  Greenway, Harry

  Sims, Roger

  Gregory, Conal

  Skeet, Sir Trevor

  Griffiths, Peter (Portsm'th N)

  Spicer, Michael (S Worcs)

  Ground, Patrick

  Squire, Robin

  Hamilton, Hon A. (Epsom)

  Stevens, Lewis (Nuneaton)

  Harris, David

  Tebbit, Rt Hon Norman

  Hayes, J.

  Thompson, Donald (Calder V)

  Howell, Ralph (Norfolk, N)

  Thorne, Neil (Ilford S)

  Jessel, Toby

  Thurnham, Peter

  Johnson Smith, Sir Geoffrey

  van Straubenzee, Sir W.

  Knowles, Michael

  Viggers, Peter

  Lennox-Boyd, Hon Mark

  Waddington, David

  Lester, Jim

  Wallace, James

  Lloyd, Peter (Fareham)

  Wardle, C. (Bexhill)

  Luce, Rt Hon Richard

  Watts, John

  McCrindle, Robert

  Wells, Bowen (Hertford)

  MacKay, John (Argyll & Bute)

  Wells, Sir John (Maidstone)

  Maclean, David John

  Whitfield, John

  Malone, Gerald

  Wolfson, Mark

  Marek, Dr John

  Yeo, Tim

  Marland, Paul

  Young, Sir George (Acton)

  Marshall, Michael (Arundel)

  Mather, Carol

  Tellers for the Ayes:

  Maude, Hon Francis

  Sir Julian Ridsdale and

  Neubert, Michael

  Sir Eldon Griffiths.

  NOES

  Callaghan, Jim (Heyw'd & M)

  McQuarrie, Albert

  Cocks, Rt Hon M. (Bristol S)

  Maxton, John

  Davies, Ronald (Caerphilly)

  Prescott, John

  Dixon, Donald

  Sheerman, Barry

  Duffy, A. E. P.

  Skinner, Dennis

  Eadie, Alex

  Stewart, Andrew (Sherwood)

  Evans, John (St. Helens N)

  Gourlay, Harry

  Tellers for the Noes:

  McCurley, Mrs Anna

  Mr. Nicholas Fairbairn and

  McKay, Allen (Penistone)

  Mr. Bill Walker.

  Whereupon Mr. SPEAKER declared that the Question was not decided in the affirmative, Because it was not supported by the majority Prescribed by Standing Order No.32 (Majority for Closure.)
  It being after Ten o'clock, the debate stood adjourned.

  Industrial Training
  10.11 pm
  Mr. John Cope (Treasurer of Her Majesty's Household): In the absence of my hon. Friend the Minister, who will be here shortly—
  Mr. John Evans: Where is he?
  Mr. Cope:—I beg to move,
  That the draft Industrial Training Levy (Engineering Board) Order 1986, which was laid before this House on 14th April, be approved.
  The order is before hon. Members today because one part of it involves a levy in excess of 1 per cent. of emoluments. Therefore, it requires an affirmative resolution of each House under section 12(6) of the Industrial Training Act 1982. I shall outline the full details of the levy order.
  Hon. Members will be well aware, as I am in my constituency and as my hon. Friend the Parliamentary Under-Secretary is in his, of the importance of the engineering industry, which is the largest manufacturing sector in terms of employment. In 1985 engineering output rose by 5 per cent., the fourth consecutive year of growth.
  Mr. Dennis Skinner rose—
  Mr. Speaker: Order.
  Mr. Cope: Mechanical engineering in particular experienced its strongest growth since 1974 with output 6 per cent. above its 1984 level. If the industry is to build on those achievements, it is important that all firms play their part in training. We must ensure that employers continue to develop the skills of their work force in order to increase both productivity and growth.
  I refer to the details of the levy. It is expected to raise about £171·5 million before taking exemption into account, and over £19 million after exemption. The levy will cover a period of 12 months to 31 August 1986, and it makes no changes to arrangements currently operating, which were approved by the House last year. It is in two main parts. In the mainstream of engineering establishments of 1,000 or fewer employees, where there is a levy of 1 per cent. of emoluments, 0·06 per cent. of the levy is non-exemptible. In larger establishments 0·06 per cent. is non-exemptible in respect of the first 1,000 employees, and 0·054 per cent. is non-exemptible in respect of the remainder.
  For establishments in the mechanical and electrical engineering construction industry sector, the levy is in several parts, and my hon. Friend the Parliamentary Under-Secretary will give the details of that if the House requires it. The employer and employee members of the Mechanical and Electrical Engineering Construction Industry Sector Committee agreed to the levy unanimously and the proposals were subsequently endorsed by the board without dissent. Letters of support have been received from the two major employer organisations in the sector. There is thus consensus in the industry for the proposals, as required by the 1982 Act.
  I therefore recommend the order to the House. It has widespread support and is necessary to meet the industry's future training needs. If there are any further points that any hon. Member would like to raise, my hon. Friend the Parliamentary Under-Secretary is here to deal with them.
  10.16 pm
  Mr. Barry Sheerman: This is an historic evening, with the Government failing to get their business by two votes—[Interruption.]—and then with the appearance by the Minister, too late to bat when he was supposed to. I am sure the speech by the Whip, the hon. Member for Northavon (Mr. Cope), was every bit as good as the one that we might have had, had the Minister got here.
  Mr. Evans: It was much better.
  Mr. Sheerman: It is important to concentrate on the background against which we see the introduction of the order. I shall seek first to set the order in context because it was the original purpose of the engineering industry training board levy in the 1960s to assess the training needs of the engineering industry, which is so crucial to the industrial effort of our country. It was then the intention of the legislation that the engineering industry training board should levy the requisite amount of money to fund and carry out training appropriate to the needs of the industry and the country.
  Originally, that levy was set at 2·5 per cent. It was based on a firm's payroll—the numbers employed—but it was intended to meet the real costs of training for that industry. Sadly—on reflection—there was such an outcry from industry and the employers' organisations that there was an early reduction to 1 per cent. of the payroll. That forced the original intentions of the EITB off the track. Since that time it has never been fully equipped to do the job envisaged for it by the initial legislation. That was to identify the training needs of the industry and the country, in the national interest, and to ensure that they were carried out.
  Indeed, the EITB has been forced off the track particularly since the introduction of exemption certificates to the levy. Sadly, the income to the EITB has withered away. We see that 97 per cent. of firms in the engineering industry can claim exemption, and indeed do so. So much of the industry is exempted that the budget of the EITB is far too small to begin to perform the task that it should be doing. The basic criterion for exemption was too low and the system, as the Minister must know, does not work. The Government know that very well.
  The effects of that background and the disastrous policies pursued by the Government on education and training since 1979 are clear in the even more clearly reduced circumstances of the industrial training boards in general, the closure of most of them and the fact that the engineering industry training board is supposed to stand on the sidelines while market forces and the philosophy of voluntarism triumphs.
  After the abolition of most of the industrial training boards, and taking into account the cowed position of those which remain, 97 per cent. of engineering firms are exempted. The levy is too low and the exemptions are too many. The criteria for training done by industries to enable them to get out of training and paying the levy are laughable. There is a serious need to return to the original spirit of the engineering industry training boards when they were established. The reasons for that are clear if we consider the broad picture of education and training in Britain, and especially in engineering. In this crucial sector of our manufacturing industry, we see a total collapse, skill shortages and the decline of the skill base

  751
  of the engineering industry. Firms are poaching rather than training. The commitment to training has reached rock bottom. That is a sad position for a once great and proud industry. So much for the Government's devotion to the watchword "voluntarism" as though that was all that ever mattered.
  The House would not wish me to rely merely on rhetoric to advance the seriousness of the position. I need rely only on the facts published by the board. The board's influence has withered away and its ability to influence industry has been undermined by the exemption certificate system. For the past three years and longer, the Opposition have warned the Government about what would happen to engineering training if they treated the problem as lightly as they have, and more pressure has been mounting to give exemptions to training so that they are almost universal.
  The board compared April 1978 with April 1985. It carried out a spot check on one day in each month and these revealed that the numbers of those in training declined much faster than the decline in manpower in engineering. We are not juggling the figures. Even if we took into account the acknowledged decline in the industry's employment, we can see from the figures for engineering technicians that, in April 1978, there were 140 technicians in training for every 1,000 technicians in the industry. Sadly, that figure has declined to 90 for every 1,000 technicians. For craftsmen, the position is even more disastrous. In 1978, there were 145 men and women in training for every 1,000 engineering craftsmen. The figures today are down to 75 in 1,000, and that is a disastrous drop from 145 per 1,000.
  Let us look at another interesting category. We may not associate industrial training boards with graduates, but in 1978 there were 160 graduate engineers per 1,000 in training in the industry. That was down to 120 in 1,000 in 1985. Those are the most reliable statistics. They are more sensitive and accurate than those published by the Department, because the EITB is so much closer to the industry.
  What are we seeing in engineering apprenticeships overall? We know that between 1979 and 1986 they have halved, and that is during a period when we have seen a lack of skilled young men and women in industry. In 1979 we had 20,000 craft and technician apprentices. We now have fewer than 9,000. That is a disastrous decline.
  It is estimated that we need between 4,000 and 5,000 apprentices coming out of training every year simply to meet the natural wastage caused by retirement. The sad fact is that we are not even producing enough apprentices to meet the natural wastage. The number has fallen from 20,000 to 9,000 and we are on a spiral into decline and frustration for our country and its economy.
  I understand that just last week there was an MSC review of engineering industry training board funding which was generally pessimistic. We can expect even further cuts in the board's budget. I remind the Minister that in the past three years that has declined from £17 million to £5 million this year. That is the result of a wicked policy of moving away from the proper funding of proper training to short-term, pump-priming, gimmicky training that does no one any good.
  Put those hard facts in the context of a recent independent survey which showed that Britain'ss manufacturing industry spends 0·15 per cent. of turnover on training yet our major industrial competitors spend
  752
  between 1 per cent. and 2 per cent. That is the measure of the problem that we in Britain face and the context in which the order is being moved this evening.
  Put it in the context of a speech made by the chairman of the MSC, Mr. Bryan Nicholson, on 21 March, just a few days ago. He said that Britain' work force is "a bunch of thickies" compared with our competitor countries. That is a sad comment on seven years of Government control of our training programmes.
  The MSC has also published a study by a respected firm of accountants—Coopers and Lybrand—entitled "A Challenge to Complacency". When it was published, Mr. Bryan Nicholson wrote to a large number of manufacturing companies in this country, but he received such a pathetic response that even he, whose appointment was made by this Government, is beginning to believe that the Government's adherence to voluntarism and market forces urgently needs to be reviewed.
  The lessons to be learned in engineering could not be clearer. Any intelligent Government response would be properly to assess, plan and evaluate British engineering needs. When those needs had been assessed the Government ought to plan ahead for manpower needs, not to rely upon the day-to-day response of market forces. However, this Government do not like to plan ahead. Government resources and legislation would be required to raise the money to meet British engineering needs. That would be in the interests of both the industry and the country.
  That brings me back to the order absolutely square-on. That was the original intention of the Engineering Industry Training Board and the levy system. How sad it is for this country's future productivity that we have moved so far from the original intention.
  A comprehensive national strategy covering education and training is needed, of which the EITB should be a key part. Instead, the EITB, together with a few other training boards, is embattled, isolated and fragmented. It cannot train properly, because it is not part of a proper training system and is unable to grapple with the immense problems that face the engineering industry and this country. It has no hope of dealing with cross-sectoral problems and the regional problems that are so important to any industrial training plan.
  Face-saving gestures are not needed, such as a department of education and training. That would not deal with the problems. It would divert the attention of the public away from the real gaps in our training strategy. We need a commitment to rise from the dead—I use that term reluctantly—this nation's education and training system and to introduce innovation, dynamism and growth.
  Inadequate though it is, the Opposition do not intend to oppose the order. The EITB is still part of the slim 25 per cent. of industry that comes under the umbrella of the industrial training boards. Consequently we shall not vote against the order. However, that is not to be seen by anybody, particularly by the Minister, as meaning that we do not believe that the training system is in tatters. The EITB deserves more than the passing of this order. It needs to be completely reframed and resuscitated.
  10.33 pm
  Mr. David Penhaligon: My view is that the situation is rather worse than that which has been outlined by the hon. Member for Huddersfield (Mr. Sheerman).I

  753
  do not argue about his statistics, but one of the ironies about this great nation, where the Industrial Revolution started, is that, although that historic fact can be denied by no one, Britain is an anti-technology and anti-industrial country. I say that, having reflected upon the attitudes expressed by members of the Civil Service and the education service, and by those in schools and universities and, indeed, Parliament.
  I am one of the few hon. Members who is a qualified engineer. Among the middle classes and the better educated people there is a belief that one cannot be proud of engineering and technology, especially of the more mechanical sort, and that a career in engineering and technology is to be pursued only if other opportunities do not present themselves. That fundamental weakness is now catching up with us in terms of our competence in various skills.
  I began my apprenticeship with an engineering company 24 or 25 years ago. On reflection, I recognise that the level of skills being taught then was insufficient, but that unsatisfactory state of affairs 24 or 25 years ago has become a great deal worse since then.
  I do not intend to defend the former apprenticeship system. It had many merits, but it also had some weaknesses. It was a time-serving operation as opposed to a skill-acquiring operation. However, one is tempted to believe that, although the time-serving part of the apprenticeship system has been abolished, the skill acquisition side of it has not been introduced to the extent that is needed.
  The order is all right as far as it goes, but, if we are to pull the country up in terms of competition and industrial production, a different attitude must be adopted at many different levels. For example, far too much of Britain's production engineering is designed by skilled engineers, not using the skills which exist within their companies, but making up for the skills not available within their companies. Job elements are reduced to the minimum so that someone with a few weeks or days training can do the job. That will not build an international reputation for the level of competence in engineering products that we must have to survive as an industrial country.
  The Government are in charge and they have power to influence such matters. I urge the Government to reexamine the level of skills acquired in our nation—at all levels. I am not talking only of manual skills. Manual skills are of tremendous importance and I do not underestimate them, but some people seem to believe that all that we have to acquire are manual skills. That is not so. We must acquire low technician skills, high technician skills and entrepreneurial, fresh and new engineering skills. All those skills are required if the country is to get out of the mire.
  I have been a Member of the House for about 12 years, and the more that I become influenced by my friends in London, as opposed to my friends in Cornwall, the more I am persuaded of the view that there is, at a middle and upper class level inwards, an anti-technology and anti-making things attitude. Britain's living standards rely upon those who can make things, mine things, grow things or catch things. The country has no other means of wealth production.
  The mining people are experiencing difficulties in Cornwall—to put it mildly. For all that, we cannot
  754
  develop a series of policies which expand Britain's poor capacities when in the long run, in this great nation of ours, there is nothing like an economic future for them. Some Government of the future must turn around this long-ingrained attitude that exists in the British person and British society which, ironically, is anti-technology. That is amazing in view of Britain's history of industrial revolution and innovation over the last 50 to 100 years.
  10.38 pm
  The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier): I apologise unreservedly to the House for my discourtesy in not being present when the debate began.
  The hon. Member for Huddersfield (Mr. Sheerman) said that he would set the order in context, but he failed to do that. He ended his remarks by saying that the Opposition did not intend to oppose the order because he thought that to a certain extent it was fair enough. There was something of a dichotomy in what he said to the House. He suggested that the budget was far too small for the engineering industry training board and the purpose for which the board wished to use that budget. However, the House is aware that the board is made up of representatives of the trade union movement and employers. The board was unanimous in its decision that this order should be presented to the House.
  There is no difference of opinion between the hon. Member for Huddersfield (Mr. Sheerman) and myself as to the importance of training. We both consider it an important investment and not a cost. When the hon. Gentleman suggests that the levy is too low—I think he used those specific words—why did the ITB decide to agree unanimously to the measures which we are considering tonight?
  The hon. Gentleman referred to the decline in engineering, and, more specifically, to the decline in apprenticeships. However, the decline in apprenticeships was arrested as a result of the introduction of the youth training scheme. There is evidence of that fact and I discussed that when we considered the matter in Committee at an earlier date.
  I am concerned about some of the hon. Gentleman's allegations about those training organisations which now come under the umbrella of non-statutory training organisations. The hon. Gentleman will be interested to hear that I have recently written to all the NSTOs previously covered by ITBs asking them precisely what they are doing at the moment. It is some time since we introduced legislation to rearrange the training and to keep some statutory training organisations and some non-statutory. I shall be interested to learn what is the current state of play and whether they have honoured the undertakings they gave when they were applying to the consultation exercise with regard to tackling certain ITBs. I am sure the hon. Member for Huddersfield will be interested in their answers.
  I welcomed the intervention of the hon. Member for Truro (Mr. Penhaligon). He also referred to apprenticeships and I sympathise with what he said. The hon. Gentleman suggested to the House that there was an anti-technology feeling in Britain. I would go further and suggest there is an anti-industry or anti-manufacturing feeling in Britain.
  That is one of the reasons why the hon. Gentleman and I welcome Industry Year 1986. This is another opportunity

  755
  for us to dispel the dirty overalls image of manufacturing industry. I know that the hon. Member for Huddersfield will welcome the fact that much is being done by the trade unions in Industry Year, as well as by the CBI, the Institute of Directors and other employer organisations. These bodies and the Church are trying to get the message across about the improved interface between industry and education.
  We should have done this 40 years. I am not making a party political point; it does not matter who was in power at the time. The effort has been made a little late in the day, but it is never too late. Many moves are afoot to try to dispel the dirty overalls image of industry and that must be for the betterment of improved relations between industry and education.
  Mr. Trippier: Some time ago I had the privilege of launching a video, which has gone to every secondary school in the land, entitled "To be an engineer". This works to dispel the dirty overalls image of engineering. I hope it will improve the image of engineering specifically, and I hope it will convince not only youngsters to consider engineering but also their parents. That is important.
  Mr. Andrew Rowe: My hon. Friend mentioned the interface between education and training. Does he agree that the dramatic shortage of mathematics teachers in schools—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. We are discussing the industry training board levy, not training and education in general.
  Mr. Trippier: I know that my hon. Friend has an important interest in this subject. I am sure that I am to blame for leading him down that path. Those who concentrate on that subject in school would have a natural bent towards engineering later in life.
  I pay tribute to the hon. Member for Truro (Mr. Penhaligon) for introducing this important aspect of what we are trying to achieve in 1986—a matter that draws all sides of the House together.
  Mr. Sheerman: Surely the Minister is aware that, on a public relations level, of course the matter draws the House together, but we are deeply divided by the fact that the Government have not put in the resources for the
  756
  training that is needed. Voluntarism does not work. The Minister has not said how he will get the Government to see that, and get money into training.
  Mr. Trippier: The hon. Gentleman says that voluntarism does not work. He is prejudging the results of the consultation exercise that I am conducting, which will be open to public scrutiny when it is completed. I am sure that the hon. Gentleman welcomes the fact that I have written to the NSTOs inviting their views about what is going on. The hon. Gentleman may be in for a surprise. Perhaps I might put it a little more strongly. The hon. Gentleman may be in for a pleasant surprise—it was to me—to discover that some of the NSTOs have gone a little further and done much more than they ever did when the training bodies were statutory. The hon. Gentleman is a little premature suggesting the outcome of the consultation exercise.
  Mr. Penhaligon: If a young man or woman has designs on becoming a competent technician engineer not a graduate or craft engineer, how would the Minister suggest he or she goes about it? Surely he is not telling us that YTS, although it has some advantages, is the most obvious course?
  Mr. Trippier: The hon. Gentleman is not making a valid point. Apart from the normal channels, which have been open for some time, YTS can play a significant part in the youngster gaining credit towards a proper craft apprenticeship which would be recognised by a validating body, which would enable him or her to be qualified.
  I welcome the fact that, broadly, the alliance welcomes YTS. The hon. Member for Huddersfield is invariably supportive. I despair of some of his hon. Friends, who try at every possible opportunity to knock or rubbish it. It has proved the most successful training scheme that we have had and it bears comparison with international programmes or schemes.
  We have had a useful and interesting debate. I am grateful to the hon. Member for Huddersfield for saying that the Opposition will not oppose the order, and I commend it to the House.
  Question put and agreed to.
  Resolved,
  That the draft Industrial Training Levy (Engineering Board) Order 1986, which was laid before this House on 14th April, be approved.

  10, Downing Street (Chief Information Officer)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]
  10.48 pm
  Mr. Tam Dalyell: The genesis of this debate on the post of chief information officer at No. 10 is to be found in the exchange on the Floor of the House on Monday 14 April, which is in Hansard at column 575.
  I interject that I welcome the presence of the Leader of the House. It is good parliamentary practice when Mr. Speaker can oblige those of us who in genuine circumstances have had to resort to the time honoured phrasing, "On a point of order. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the issue on the Adjournment at the earliest opportunity."
  I am acutely aware that in our system a civil servant cannot directly answer criticisms of him made on the Floor of the House, so let me say at once that my criticisms are directed not at Mr. Bernard Ingham, but at his boss, the Prime Minister, a politician who can answer back, and at the way at which she has allowed and encouraged Mr. Ingham to go about his business.
  Mr. David Harris: Shameful.
  Mr. Dalyell: An hon. Member on the Government side shouted "Shameful."
  I am not alone in these opinions, and I should like to quote from one of the grandest mandarins in Whitehall in the 1970s, Sir Frank Cooper, permanent secretary to the Ministry of Defence. In the Suntory Toyota lecture, he said:
  "A further paradox is that the more it has become technically easier to communicate the less good has that communication become between Government and the governed. Indeed, the aim now is the management of the media with a very much higher degree of central control from No. 10 Downing Street and with the connivance of a part of the media. There is now public relations—which I would define as biased information. I suggest that the post of Chief Informatiion Officer at No. 10 Downing Street is in fact a political job in a party sense and is not a job which it is proper for a Civil Servant to fill unless he or she resigns from the Civil Service on appointment. Moreover, what is said ought to be said on the record. The participation of the media in the lobby system is a public disgrace."
  That is Sir Frank Cooper's view.
  Mr. Harris: I am the person who shouted "Shameful" at the hon. Member for Linlithgow (Mr Dalyell) for his attack on a civil servant. The hon. Gentleman was a parliamentary private secretary to the late Richard Crossman. After the debate, perhaps I could refer him to the Crossman diaries. The section dealing with 28 September 1966 says that the hon. Gentleman's boss spent most of the day trying to work out how he could manipulate the press and the Government information services for the then Labour Government. Will the hon. Gentleman refresh his memory about what happened in those days of a Labour Government
  Mr. Dalyell: I can refresh my memory clearly. There are different views on this. Sir Donald Maitland, for example, would not have acted in the way that a number of other chief information officers have acted. I take seriously the remarks by the hon. Member for St. Ives (Mr. Harris), because I remember 1966 only too well.
  758
  There are problems here. That is why I was careful to say that I was getting at the politicians, not the civil servant who cannot answer back, rough though that civil servant may have been. It is not a cheap attack. In page 60 of Henry Porter's "Lies, Damned Lies" we are told that the advice that Mr. Ingham gave was that
  "remedial action should be taken against troublesome journals, whether national, provincial or specialist."
  Porter and others have at least to be answered.
  What I am saying is a serious reflection on the job specification. Is it appropriate, for example, for a civil servant on his own initiative to offer cover for selectively leaking a Law Officer's letter? What sort of position did Mr. Ingham imagine that he was putting Miss Collette Bowe into when he required her to phone Mr. Chris Moncrieff with the selective contents of the Solicitor-General's letter over Westland? Can one imagine Sir Donald Maitland, the late William Clark, Sir Tom McCaffrey or any other holder of the office deeming it proper or ethical to make any such request of a civil servant colleague? [Interruption.] If the hon. Gentleman would like to name names, I shall listen to him.
  Mr. Harris: The hon. Gentleman says that he is not attacking this civil servant. The allegations that he has made are a blatant attack on a civil servant who, because of the rules of procedure, is incapable of answering back. As I said in a seated interjection earlier, I think that that is shameful.
  Mr. Dalyell: The reply is that any traditional civil servant proposing to do that which ethically he knew he should not do would seek a prime ministerial instruction. Did Mr. Ingham ask the Prime Minister on 6 January about the leaking of the Solicitor-General's letter? After all, the Prime Minister was next door in the very same 10 Downing street building and the then Secretary of State for Trade and Industry was in his Yorkshire constituency. Why are the Prime Minister and Mr. Ingham so coy about appearing before the Select Committee on Defence that is considering the Westland affair on behalf of the House? It was the Prime Minister who endorsed the reference of the Westland affair to the Select Committee of which my right hon. Friend the Member for Dudley, East (Dr. Gilbert) is a distinguished and leading member.
  There is one of two explanations. Either Mr. Ingham asked the Prime Minister about the Solicitor-General's letter, or Mr. Ingham knows the Prime Minister's mental processes so well that he knows instinctively what she would want done. If an answer were given at all, was it along the lines, "You know what I think and would want done"—wink, wink?
  It would seem most unlikely that the Prime Minister felt that the former Secretary of State for Trade and Industry had done anything very wrong in her eyes, bearing in mind that at the time of his resignation she was reported to have spent over an hour trying to dissuade him from resigning. After his resignation, the Prime Minister was reported as indicating that she hoped it would not be long before he was back in a senior position in the Government.
  I have no brief for the right hon. and learned Member for Richmond, Yorks (Mr. Brittan), but, to put it bluntly, he was the fall guy. Many of us would agree with what Mr. Alan Watkins has stated in print—that he has heard from leading Conservatives that "Poor Leon is carrying the can". We all have to judge one another in this place. I do not find it believable that the former Secretary of State for

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  Trade and Industry, a careful QC, let alone a former Home Secretary, would dream up the device of selectively leaking a Law Officer's letter. Cover having been offered to Collette Bowe, there is only one explanation why Mr. Ingham was not dismissed in the aftermath of the Westland affair—that either implicitly or explicitly the Prime Minister approved of Mr. Ingham's action in giving cover.
  We should go into these matters in some detail. On 5 February the Select Committee questioned Sir Robert Armstrong in case he might be able to provide answers which would make it unnecessary to call the five civil servants, including Bernard Ingham and Collette Bowe, as Sir Robert had interviewed them all during his inquiry. However, the Committee still reserved its right to call them if not satisfied with the information obtained from Sir Robert.
  It is clear that the Committee was not fully satisfied, because it asked Sir Robert to appear before it again to answer some further questions. This he did on 5 March. However, there were a number of questions which Sir Robert was not prepared to answer. My right hon. Friend the Member for Dudley, East, who is present, asked about the officials' knowledge of the special status of the Law Officers' letters. Sir Robert would not answer. My right hon. Friend asked him if the only person who could answer was Mr. Ingham. Sir Robert said that he could answer but was not prepared to do so. My right hon. Friend then asked:
  "Then the only person who can answer is Mr. Ingham?"
  Sir Robert appeared to indicate that that was so. My right hon. Friend asked Sir Robert:
  "If you can't answer, the only people who can are Mr. Powell and Mr. Ingham."
  In reply to several questions Sir Robert took refuge in repeatedly quoting the Prime Minister's reply to me on 27 January, the oft-repeated reply:
  "I gave my consent."—[Official Report, 27 January 1986; Vol. 90, c. 650.]
  It is of interest to note that on 5 March Sir Robert Armstrong said that the five civil servants were not responsible for the way that the leaked letter was handled, as the former Secretary of State for Trade and Industry had taken full responsibility for the way in which the information was disclosed. It is of even greater interest to note that on his earlier appearance on 5 February, Sir Robert made a different statement. He said that when the letter arrived at the Department of Trade and Industry, the then Secretary of State was out fulfilling a luncheon engagement, that an official had read the letter over the telephone to him, and that the then Secretary of State had decided that it should be brought into the public domain.
  Sir Robert emphasised that while the then Secretary of State had authorised the disclosure, it had been the officials who had decided on the method to be used. Sir Robert summed up by telling the Committee that, although the former Secretary of State wanted the information brought into the public domain before the Westland press conference that day, he did not say how this was to be done.
  From all this, and particularly in view of Sir Robert's inability or unwillingness to answer questions himself, I believe that on 5 March the need to call for evidence from certain key civil servants had been positively established. To save time, I shall refer to the article by Richard Norton-Taylor in The Guardian on 11 March.
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  On 1 April, Mr. John Carvel wrote in The Guardian that Labour members of the Committee were planning to repeat their request to examine the officials, particularly Mr. Ingham. He also wrote:
  "The Committee has been advised that a request from Mr. Ingham would be refused by the Prime Minister, but that if the Committee instructed him to attend, he would turn up and say nothing."
  Although, in theory, the Committee's wish to see the civil servants was still on the table, arrangements were being made to have the final hearing, which a Minister would wind up. On 10 April, The Guardian reported that, at a private meeting of the Committee, the Labour members' move to summon the five civil servants or just Mr. Ingham was defeated.
  A question along the following lines could properly be put to the Prime Minister. "It was reported in The Guardian on 1 April 1986 that the Defence Committee had been advised that a request for Mr. Ingham to attend would be refused by the Prime Minister but that if the Committee instructed him to attend he would turn up and say nothing. Is it true that the Prime Minister would refuse to allow Mr. Ingham to appear and, if so, bearing in mind Sir Robert Armstrong's inability to answer questions put to him by the Committee, on what grounds would the Prime Minister refuse to allow Mr. Ingham to appear?" If the Prime Minister replied that she would not refuse to allow Mr. Ingham to appear, the following question might then be asked: "Would the Prime Minister think it appropriate for Mr. Ingham to appear before the Committee and then to refuse to answer its questions?" Why should a civil servant—the chief press officer—be subject to special treatment before Committees of the House of Commons that does not extend to the generality of civil servants?
  Westland is not simply a one-off episode. There is a whole litany of operations unbecoming to a civil servant. As one who gave evidence to the Franks Committee for an hour and 25 minutes, I was appalled at the way that the chief information officer gave that complicated report to the Lobby correspondents at 3.30 pm when their deadlines were at 5 pm. This is not the kind of guidance that a civil servant should give on behalf of the Prime Minister, but it is not the civil servant that I blame; it is the Prime Minister, because I bet that the instructions were hers. Did not Mr. Ingham have to apologise to the Lord Chancellor for suggesting that Judge Jeffries might be the appropriate judge to preside over the trial of Clive Ponting at the Old Bailey?
  We are tonight not considering the role of a mere press secretary, but dealing with the position of a man who is an adviser on central decisions of Government in Britain, and whose power has grown exponentially, along a geometric progression, with the years during which he has occupied the office. The longer a man occupies this office, the more power accrues to him.
  I do not think that I exaggerate if I say that, with the arguable exception of Sir Robert Armstrong, Mr. Bernard Ingham has evolved as the most important man making decisions in British politics. When I put this view to a senior Conservative Privy Councillor, he shook his head sadly and said that he could not dissent.
  The blame must rest not with Mr. Ingham but with the Prime Minister who has become so dependent and has allowed this to happen. This is an unsatisfactory position.
  11.5 pm
  The Minister of State, Privy Council Office and the Minister for the Arts (Mr. Richard Luce): The hon. Member for Linlithgow (Mr. Dalyell) is well known for his persistence on many issues. He certainly gave the House notice recently that he would raise this issue about the chief press secretary at No. 10. Having listened to him, I believe that he is misguided in his views. Indeed, I would go further: the hon Gentleman is continuing to demonstrate his ability to develop obsessions—I can think of no other word—about issues, and to formulate some allegations which are completely unsubstantiated but which become genuine figments of his imagination. I can give an exact example of that from the end of his speech when he referred to Mr. Ingham as one of perhaps two men in Government who take the most important decisions. That is an exact description of a figment of his imagination. Nothing could be further from the truth.
  The hon. Gentleman proceded to talk about the so-called Westland affair, and, more precisely, the events surrounding the disclosure of the Solicitor-General's letter which have been fully explained to the House by my right hon. Friend the Prime Minister on both 23 and 27 January. My right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) contributed to the debate on 27 January. The events were the subject of an inquiry conducted by the head of the home Civil Service who subsequently gave evidence to the Defence Select Committee on 5 February and 5 March. The role of officials in this matter has thus been fully described and explained to the House and the public, and I have nothing tonight to add to what has been said. If the hon. Gentleman thinks that there is some great or sinister matter still to discover, I can assure him that he is completely mistaken. This issue is worn to a frazzle.
  I shall seek to answer the debate by concentrating on the role of the chief press officer and the most unfair allegations that the hon. Gentleman makes about Mr. Ingham.
  Mr. Jonathan Sayeed: Will my hon. Friend say whether he believes that Mr. Ingham has acted in any way different from the way in which Mr. Joe Haines acted when he was chief press officer to Lord Wilson of Rievaulx when he was Prime Minister?
  Mr. Luce: I can establish that. I know that Mr. Ingham has managed to maintain a steady and continuous relationship with the Lobby which has not always been the case in the past.
  The hon. Gentleman argued that the post of chief press secretary should be a party political appointment, and that it is no longer possible or right for the holder of that office to be a civil servant. He cites in support of that the views of Sir Frank Cooper, ex-permanent secretary at the Ministry of Defence, in a recent lecture. Obviously, both Sir Frank and the hon. Gentleman are entitled to their views on this, as on any other matter, but I do not agree with them.
  It is important to stress the role of the chief press officer or any information officer. It is to promote an informed press and public about the Government's policies and measures, and to advise Ministers and officials on presentation.
  Obviously, the chief press officer will aim to ensure that the merits of those policies and the arguments in their
  762
  favour are brought as fully as possible to the public's attention. He would be failing in his job if he did not do that. But it is his job, as it is the job of all civil servants, to serve his Minister as a member of the Government to th best of his ability, to give him well-informed, dispassionate and impartial advice, and to give effect to the Minister's decisions with skill, vigour and loyalty. The present chief press secretary at No. 10 Downing street does just that.
  On 23 January this year, my right hon. Friend the Prime Minister said:
  "I should like to say that Mr. Ingham has served successive Governments with devotion and dedication, and I have great confidence in him."—[Official Report, 23 January 1986, Vol. 90, c. 459.]
  That is absolutely right.
  Let us look at Mr. Ingham's career—19 years as a professional journalist and about 19 years as a civil servant, of which 17 have been as an information officer. He has endless experience in information services within government. It is notable that Mr. Ingham has served loyally as an information adviser both Labour and Conservative Governments. It is notable that he has been an information officer to Mr. Varley, and to Barbara Castle. Above all, quite apart from his service to the Prime Minister, he has been an information adviser to the right hon. Member for Chesterfield (Mr. Benn). If Mr. Ingham is capable of serving the right hon. Gentleman and my right hon. Friend the Prime Minister, that is a sharp demonstration of his ability to provide an impartial service as a loyal civil servant with a great deal of integrity. The allegations of the hon. Member for Linlithgow should be totally and utterly refuted.
  Mr. Dalyell: If Mr. Ingham has such integrity and is a loyal civil servant, why, with all that experience, did he give cover to Collette Bowe in giving information to Mr. Chris Moncrieff of the Press Association in the form of a leaked Law Officers' letter? A man of such integrity and experience would not have done that unless he either knew the Prime Minister's mind or had prime ministerial instruction. It is the Prime Minister who is at the root of that trouble.
  Mr. Luce: As I have already said, this issue has been gone over time and time again. My right hon. Friend the Prime Minister and Sir Robert Armstrong have given substantial evidence on it. Of course, we await the report of the Select Committee on Defence.
  The feeling seems to be that the fact that the chief press secretary deals with the media somehow makes it party political. I agree that the need to deal with the media means that particular skills and qualities are required of an information officer that may not always be required for other jobs in the Civil Service. That is why many, although by no means all, information officers come, as the chief press secretary at No. 10 came, from within the Government Information Service. Information officers must, of course, have the ear of their Ministers but must also have a detailed knowledge of their Department and its responsibilities so that they are well placed to present them to the media. That does not make the task a party political one—indeed, it is the task, for example in the Conservative party, of the party chairman and others to speak for the party.
  I wonder whether the correspondents who deal from day to day with information officers would prefer them to

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  be political appointees. The reputation and the effectiveness of information officers depend on our contacts being able to rely on what they say. If they were party political appointees, there would be a much greater danger of suspicion that the information coming out of the Department was being distorted for party political considerations. It is a matter of establishing credibility and trust.
  It is worth quoting from a speech in May 1983 in Cardiff by Mr. Ingham to a conference of the Guild of British Newspaper Editors in which he said:
  "no one will, or should, take the slightest notice of a word I say if I cannot be relied upon to get it right; my crucial stock-in-trade is reliability; otherwise I lack credibility and cease to be useful either to Government or media".
  That is correct. I believe that it is true that Mr. Ingham is widely respected and generally respected by the press for that.
  I do not agree that there is something special about the post of the chief press secretary at No. 10, apart from the fact that it is one of the two top jobs in the Government Information Service. Like any other job in the Prime Minister's office, the holder of this must be exceptionally able. A close relationship with Ministers and the ability to command the respect of the press are the essential requirements of the job, as the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) emphasised in his evidence to the Treasury and Civil Service Sub-Committee. As I have just said, to serve a Minister successfully, any civil servant must gain his confidence. Therefore, there is no difference there. Any senior civil servant, chief information officer or permanent secretary, must advise a Minister clearly and in an unbiased manner and carry out the Minister's instructions. Therefore, there is no difference there. All senior civil servants, in advising Ministers, are serving the Government and not a political party. Again, there is no difference with No. 10.
  Of course, the chief press secretary at 10 Downing street, like departmental chief information officers, has to have an understanding of political sensitivities and of the political framework and environment within which his Minister and the Government of which he is a member are operating. However, there is nothing unique about that. It is no less true of all civil servants who are in the business of advising Ministers and executing their policies.
  764
  History shows that civil servants are no less capable than others of carrying out the duties of the chief press secretary effectively and acceptably. Over the past 20 years there have been both civil servant and journalist holders of the No. 10 chief information officer job. The civil servants concerned have shown themselves perfectly capable of presenting the policies of whichever administration was currently in power. I believe that journalists would agree that the civil servant holders have performed no less satisfactorily than professional journalist occupiers of the post.
  I have sought to demonstrate why, in the Government's view, Mr. Ingham is doing an excellent job and why there are strong advantages in having an experienced civil servant to do the job. I think that in answering the debate generally I must take the opportunity to say that my experience as a Civil Service Minister points to the fact that civil servants as a whole, including Mr. Ingham, serve this Government, as they would serve any Government, loyally, professionally and with integrity; and I believe that we can be proud of them.
  Mr. Dalyell: If the emphasis is to be put on obeying ministerial instructions, we are now left with the fact that it was the Prime Minister's instructions, implicit or explicit, which offered the cover to Miss Bowe to leak the Solicitor-General's letter against one of her own Ministers. The Minister's reply does not put Mr. Ingham in a bad light but the Prime Minister. If all that he says about the chief press officer's virtues is true, the Prime Minister has to say how, if she was so loyally served by a man obeying ministerial instructions, cover was given to leak a letter against one of her own Ministers. After tonight it is the Prime Minister, not Mr. Ingham, who is in the dock.
  Mr. Luce: The hon. Gentleman is continuing to try to make political capital out of an issue from which it is no longer possible to make any political capital. The issue has been covered time and again by my right hon. Friend the Prime Minister, the Secretary to the Cabinet and the head of the home Civil Service who has given evidence to the Select Committee on Home Affairs.
  Question put and agreed to.
  Adjourned accordingly at eighteen minutes past Eleven 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 Hereford.

"Conductive Education"
Baroness Dudley: 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 plans they have for evaluating "conductive education" for those suffering from motor disorders, now well established in Hungary, and what resources are being made available for backing a conductive education programme.
The Earl of Swinton: My Lords, the Spastics Society has submitted an application for central government funding towards a proposed study of conductive education, and that is at present under close consideration. There are no funds available to the Secretary of State for Education and Science from which he could pay directly for an independent programme of conductive education.
Baroness Dudley: My Lords, will my noble friend say how many people are attending the course that they have in Hungary for conductive education? Is it true that around 70 per cent. of the children learn to walk and go to normal schools within four years?
The Earl of Swinton: My Lords, I honestly do not know the size of that particular school in Hungary. I think that my noble friend's figure of 70 per cent. is right. However, I ought to point out that I also understand that the children are very much selected as to those who are most likely to succeed in walking, before they are taken to that school.
Baroness Fisher of Rednal: My Lords, is the noble Earl aware that Birmingham Education Committee and Birmingham social services are pioneering a scheme for those particular children? An advertisement for a director was placed last weekend. The funding of that centre will be by Birmingham City Council, Dr. Barnardo's, the Parkinson's Disease Society, and the Percy Bilton Fund. That scheme is to be evaluated by Nottingham University. Is the Minister aware of that project, and will he see that some resource is sent there if at all possible, especially in respect of the evaluation of that project?
The Earl of Swinton: My Lords, I was aware of the project but not of quite so much detail as is the noble Baroness, who knows more about it than I do. I understand that the DHSS was approached for funding in respect of the conductive education project in Birmingham but decided after very careful consideration that it would be inappropriate to support that particular project. It was made clear last year to the sponsors of the Birmingham project that the DES would be ready to consider a more limited scheme concerned with producing an effective evaluation of the system of conductive education as practised in Hungary and its transferability to this country. The university has not as yet submitted a formal application along those lines.
Lord Ennals: My Lords, I am grateful to the noble Earl for the answers that he has just given. I wonder whether he or his right honourable friend can look more closely into the Birmingham operation. As the noble Earl said, it is conducted primarily through the University of Birmingham. Is the noble Earl aware that in respect of motor disorders such as cystic fibrosis, multiple sclerosis, cerebral palsy, spina bifida and Parkinson's disease, there has been a tremendous advance by Dr. Andrew Sutton, based partly on the research that has been carried out in Hungary? Is the noble Earl aware also that funding is a major problem? Approximately £300,000 is needed in order to proceed with that absolutely vital research, affecting, as the noble Baroness said, many, many children who are in a very severe condition.
The Earl of Swinton: Yes, my Lords. I assure the noble Lord that we shall be following with interest what goes on. However, we feel that there is a lot more research needed into the subject. That is why the approach now being made by the Spastics Society is being considered with great sympathy. I understand that there is no consensus of opinion about that method of treatment. Some professionals have been very enthusiastic about it, particularly in the field of cerebral palsy and in some aspects of mental handicap and other neurological handicaps. Others in the field, including Her Majesty's Inspectorate, have reservations. They feel that although the method may be considered impressive in respect of movement, it can be at the expense of other areas of educational and social development.
The Earl of Selkirk: My Lords, will my noble friend give the House some picture of the nature of conductive education? It is a subject with which I am not very familiar.
The Earl of Swinton: My Lords, conductive education has been developed in Hungary, where it is used as the main basis for the early education of physically handicapped children and as a method of treating or re-educating adults with major handicaps. The essence of the method is to treat children and others like normal individuals with the object of educating them on general subjects, but incorporating into the general subjects lessons on how to eat, walk, sit and solve problems. Children are allocated to one particular "superperson", who is a cross between a teacher and therapist and is known as a conductor, who takes them through the whole process of education as they grow older.
Baroness Fisher of Rednal: My Lords, is the noble Earl aware that Birmingham City Council is pioneering the scheme and not Birmingham University? It all arose through one of the children in the city who is now in Budapest. The city itself felt, after visiting the centre, that it was a useful exercise, as the noble Earl has said, to see whether the scheme could be put into operation and then evaluated. However, it is not a university scheme.
The Earl of Swinton: My Lords, I bow to the superior knowledge of the noble Baroness in respect of what goes on in and around Birmingham. I am sure that she is absolutely right.

London Road Development:Grants
2.42 p.m.
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether there are any road developments planned in London following the abolition of the GLC which will be eligible for government grants.
Viscount Davidson: My Lords, I understand that a number of boroughs are currently developing plans to
4
tackle bad traffic problems in their areas and we shall consider bids for grant assistance when they come forward. This year boroughs are getting £32 million of transport supplementary grant, including support for 23 major schemes, 15 of them new this year. A further £73 million of their expenditure on roads is eligible for block grant support.
Lord Gainford: My Lords, I thank my noble friend for that Answer. Are the grants he mentions for new road schemes only?
Viscount Davidson: My Lords, major road improvements, traffic management schemes and provisions for cyclists are eligible. The latest TSG circular draws attention to this.
Lord Underhill: My Lords, may I ask the noble Viscount about two matters associated with the original Question? First, do not all traffic management schemes on roads that are designated by the Secretary of State have to be vetted by the department and guidance notes issued to the boroughs concerned; and have those guidance notes yet been issued? Secondly, as there is no strategic authority for greater London—Parliament in its wisdom decided not to have one—are there any steps for co-ordination of priorities and overall policies for road schemes?
Viscount Davidson: My Lords, the Department of Transport published guidance to local authorities in Circular 2/86 on 1st April 1986. That has gone to all boroughs. The title is Transport Policies and Programme Submissions for 1987–88. As regards co-ordination between boroughs and the department, the noble Lord will be interested to know that on 14th April Circular 3/86, entitled Highways and Traffic Management in London from 1st April, 1986, sets out full details of the arrangements now in place.
Lord Strabolgi: My Lords, is there any overall plan to deal with the question of the long-distance coaches in London? I do not mean the tourist coaches but the long-distance passenger coaches which at the moment are concentrated on one bus station in Victoria. Is it proposed to have another station in the north of London for the north of England traffic, or is it all to be left to the whim of local authorities?
Viscount Davidson: My Lords, with respect, I feel that that supplementary question is rather outside the scope of the original Question and I shall have to write to the noble Lord.
Lord Avebury: My Lords, can the noble Viscount confirm that the change following abolition of the GLC is from one set of strategic proposals being submitted by the GLC in respect of metropolitan roads to 32 different sets of proposals being submitted by the London boroughs and the City of London? Can he say what increase in staff in the Department of Transport will be necessary to cope with a 32-fold increase in the number of applications?
Viscount Davidson: My Lords, as far as I am aware there will not be any increase in staff, but I shall check with the department.

NHS Immunisation Programme
2.45 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 what action is anticipated or has been undertaken following the report by the Comptroller and Auditor General on NHS preventive medicine in relation to the minor increases in diphtheria, tetanus and polio and the epidemics of measles and whooping cough which continue to recur.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, the department is fully aware of the importance of immunisation programmes. Since 1983 we have provided special funding to boost the uptake of whooping cough and rubella vaccination and in 1985 we asked health authorities to draw up programmes for increased uptake of childhood immunisations in general. Following the Comptroller and Auditor General's report, we are considering how best further to improve health authorities' performance and our monitoring of it.
Lord Molloy: My Lords, I thank the noble Baroness very much indeed for that reply. She could have added, for example, that there is also an excellent report on how polio and tetanus are being attacked. That, I am sure she will agree, reflects great credit on our National Health Service. The uptake for those measures is now 84 per cent. However, will the noble Baroness be gracious enough to consider the fact that, although a 65 per cent. uptake is recorded for measles and whooping cough, they are both killer diseases and there has been some recurrence of these among children? Will she give this House an assurance that that aspect will be looked at?
Baroness Trumpington: My Lords, I welcome the report and the authors are to be congratulated. With regard to what is being done nationally, my department plays its part in encouraging higher uptake rates by issuing advice direct to doctors and nurses about child immunisation. We are trying to warn parents and, indeed, everyone, of the dangers of not immunising children.
Lord Ennals: My Lords, I am most grateful to the noble Baroness for what she said. May I ask two questions in relation to whooping cough? Is there now a steady increase in the number of parents who are sensibly having their children vaccinated? Secondly, in view of the number of court cases that are to be heard concerning compensation for alleged vaccine damage and the possible effect that a court ruling one way or another may have on public attitudes, is the department prepared with a contingency plan for publicity in case a court ruling should have an adverse effect?
Baroness Trumpington: My Lords, one case is currently before the courts and therefore it is not
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appropriate for me to comment further. However, I think it is worth pointing out on the first part of the noble Lord's supplementary question that fears of vaccine damage led to a sharp fall in uptake from 80 per cent. in 1970 to 31 per cent. in 1978. The uptake has been improving slowly and has now reached 65 per cent. For measles, the level of uptake has only increased from 50 per cent. to the present level of 63 per cent. We cannot emphasise too much the need for parents to take advantage of the vaccination programme.
Lord Molloy: My Lords, will the noble Baroness allow me to take advantage of the very good atmosphere at present to mention the remarkable work which is being done on the preventive medicine side of the National Health Service and to ask whether she will be gracious enough to look at the critical part of the comptroller's report concerning the 60-odd health authorities which in his opinion are not doing enough to combat cervical cancer? Far too many women who are just over 36 years of age are dying and, as the report says, with more intense activity in those health authorities the number could be drastically reduced.
Baroness Trumpington: My Lords, my graciousness does not actually go quite so far as to take cervical cancer into the present context of this Question. But try me again.
Lord Molloy: My Lords, I am quite sure that the noble Baroness has read the report, but that little bit has perhaps slipped her mind. Perhaps I may ask her to get her staff to look at the points that I have raised. I am sure that the country would be very pleased with both of us in our joint endeavours to enhance our National Health Service.
Baroness Seear: My Lords, would the noble Baroness agree with me that the noble Lord, Lord Molloy, needs no encouragement?

Unification Church and Charitable Status
2.50 p.m.
Lord Denning: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they expect a final decision to be made by the courts, including any appeals, as to the charitable status of the Unification Church.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, the Treasury Solicitor estimates that the trial at first instance of the Attorney-General's actions concerning the charitable status of the two trusts associated with the Unification Church is unlikely to be concluded before late 1988 or early 1989.
No reliable estimates can be given for the timing of any appeals. This will depend on a number of factors, including the nature of the appeals, the state of the

7
court lists at the relevant time and whether or not the appeals are expedited.
Lord Denning: My Lords, I thank the noble and learned Lord the Lord Chancellor for his Answer, but is it not a fact that a deplorable length of time has elapsed since the decision in March 1981? It is over five years since the Daily Mail exposed the Moonies and their evil practices, and a jury found that the Daily Mail was justified, adding a rider that the tax-free status of the Unification Church should be investigated. That was over five years ago. The present situation is that the Attorney-General has started an action, and in view of what my noble and learned friend has said, is it to take another five years? Would it not be better and quicker to have a short statute that deprived this cult and similar cults of tax-free status and controlled their evil activities?
The Lord Chancellor: My Lords, I think that perhaps my noble and learned friend is straying into a discussion of the merits of a case which is sub judice. Undoubtedly the Daily Mail action stopped in March 1981. As soon afterwards as the 23rd June of the same year the Attorney-General wrote to the Charity Commissioners formally inviting them to remove the two trusts associated with the Unification Church from the Register of Charities. At that stage there was an indication of an appeal in the libel action, which held things up. The Court of Appeal dismissed the appeal on the 20th December 1982.
I think my noble and learned friend will realise that to have proceeded with the Charity Commissioners pending the appeal would have been inappropriate. The commissioners replied on the 20th January, stating that it would be considered an oppressive and unjustifiable use of their powers to institute a formal inquiry into the two charities. On the 7th February 1983 the Attorney-General again wrote to the Charity Commissioners. On the 10th February the commissioners replied that they remained of the conscientious view that on the information before them there was insufficient justification to use their powers under the Charities Act. On the 7th March the Attorney-General formally renewed his request that the commissioners remove the two institutions from the register. On the 17th March they replied that they had no power to do so.
Proceedings take the form of originating summonses directed to the trustees of the two relevant trusts associated with the Unification Church. One is called the Sun Myung Moon Foundation and the other is called the Holy Spirit Association for the Unification of World Christianity. I do not think I can give my noble and learned friend much other information without straying beyond the bounds of the Question.
Lord Allen of Abbeydale: My Lords, am I right in thinking that in addition to the two charitable trusts which have been referred to there are some 90 other organisations of a non-charitable kind connected with the Unification Church, so that a decision five years hence to strike the two charities off the register will not necessarily mean the end of this particular church?
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Whatever one thinks about it, is one not driven back to the point raised by my noble and learned friend that if this church is to be banned, it is a matter for Parliament? Whatever attitude one has to this particular sect, I think that this would raise questions of religious toleration which would not be entirely non-controversial.
The Lord Chancellor: My Lords, I do not think that I have particulars of the 90 other bodies. The period of five years was given by my noble and learned friend, but my original Answer gave the end of 1988 or the beginning of 1989 as a probable date for the end of the first instance proceedings.
I do not know that I can help the House very much on the subject of legislation. Parliament is omnipotent. However, I suppose that any legislation of this kind would be either private or hybrid. The noble Lord and the House will realise the difficulties which sometimes attend these measures. Perhaps I had better not talk about religious toleration.
Lord Avebury: My Lords, will the noble and learned Lord elaborate a little on the reasons why the Charity Commissioners felt that they could not exercise their powers in this instance? In what circumstances are the Charity Commissioners empowered to strike off the register any allegedly non-charitable organisation?
The Lord Chancellor: My Lords, I am not very well briefed in this matter because it is basically a question for the Charity Commissioners and the general law rather than for Her Majesty's Government. I may be wrong, but I think that the question demands an analysis of what on paper are alleged to be the objects of the foundations in question. Should it turn out that I have misled the House, I shall write to the noble Lord.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 p.m. this afternoon my noble friend Lord Belstead will, with the leave of the House, repeat a Statement that is to be made in another place on the agriculture price fixing settlement.
It may be for the convenience of the House if I announce that the Committee stage of the Housing (Scotland) Bill will be adjourned at approximately 7 p.m. for a short period and that during this adjournment the Second Reading of the Armed Forces Bill will be taken.

Latent Damage Bill [H.L.]
2.59 p.m.
Report received.
Clause 1 [Time limits for negligence actions in respect of latent damage not involving personal injuries]:
Lord Hacking Lord Hacking moved Amendment No. 1:
Page 2, line 14, leave out ("any potential") and insert ("the")
The noble Lord said: My Lords, as those Members of your Lordships' House who were present at the Committee stage may remember, the noble and learned Lord cast me—I do not think that we got our biblical roles quite right—as Esau when I moved a similar amendment. Before inviting your Lordships to join the noble and learned Lord and myself again in the Book of Genesis, with the noble and learned Lord, I assume, playing the role of Isaac and myself again cast in the role of Esau, I should like to make some general observations concerning all the amendments that I have tabled for the Report stage.
My amendments, for discussion by your Lordships, are tabled for two principal reasons. The first is an attempt, possibly a forlorn one, to shorten the drafting of the Bill in certain parts in order to increase its clarity. It has been my submission on earlier occasions with earlier Bills that Bills are not improved through being written at too great a length and in too great complexity. While supporting the principle of the Bill and its main effect, I am critical of certain parts of its drafting. For that reason I have tabled the first three amendments.
The second reason for my amendments is to draw attention to the problems of the building and construction industry and, indeed, the professions at large as they face these proposals which will become law when the Bill is passed. There were few Members of your Lordships' House who spoke in support of my amendments or indeed in support of the building and construction industry at Committee stage. The noble Lord, Lord Howie, and myself almost alone carried the banner on behalf of these interests. I therefore hope that at this Report stage there will be more support for the amendments that I am moving.
Before the start of the Report stage I considered where I might find support. We are fortunate in having upon the Woolsack the noble and learned Lord, who has had a long career as a lawyer and as a public speaker and paper writer. It was not difficult, therefore, to discover an example, during the noble and learned Lord's illustrious career, of his espousing the cause of the professions. In 1977, if my information is correct, the noble and learned Lord delivered a powerful speech on behalf of the professions recommending, among other things, that they should be represented by a confederation of British professional associations. The noble and learned Lord then said that the professions should be:
"more united and self-conscious of their separate interests in putting forward their distinctive point of view".
I can do no more than echo and endorse those words of the noble and learned Lord. That is what I have attempted to do at Second Reading, in Committee and now on Report. In doing so I have tried particularly to focus upon the problems of the building and construction industry.
Despite my efforts to gain more support at this stage of the Bill, it is unfortunately the case that several noble Lords with deep experience of the building and construction industry are not able to be present. However, the noble Viscount, Lord Caldecote, the noble Earl, Lord Lloyd-George, and the noble Lords, Lord Mais, Lord McAlpine of Moffat, Lord Kimball and Lord Taylor of Hadfield, all with deep experience within the building and construction industry, have
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kindly agreed that I should mention their names in support of my amendments. This concludes my introductory remarks upon the amendments that I have tabled on Report.
I turn to the particular amendment under discussion. There are, in fact, two amendments concerning which the noble and learned Lord detected at an earlier stage the voice of Jacob behind Esau. The amendments were suggested to me by the Law Society. They concern the identification of the party who has the knowledge for the purpose of the "knowledge tests". In case that sounds a little technical, I should like to explain it in simple terms. One of the major provisions of the Bill is to allow plaintiffs an extended period of time in which to bring their actions, a period based upon the time when the plaintiff knew or should have known that he suffered the latent damage. The counter-balance is the long-stop provision (contained in the proposed Section 14B) which is designed to provide a complete cut-off point after 15 years stemming from the breach of duty. We shall come to that point later. Instead of referring in subsection (5) to the earliest date on which "the plaintiff" first had knowledge—there are then a number of tests upon which I shall later be commenting—the Bill uses the phraseology -any potential plaintiff". This is dissimilar to the Limitation Act. Section 11(4)(b) of the Limitation Act—the equivalent provision concerning personal injury—contains direct reference—
Lord Lloyd of Kilgerran: My Lords, I am sorry to interrupt the noble Lord and I must apologise also because I missed the first three minutes of his speech. The noble Lord mentioned the name of the noble Lord, Lord Howie of Troon, with whom I have been associated in some building activities through the Institution of Consulting Engineers. Is the noble Lord now speaking to Amendment No. 6?
Lord Hacking: My Lords, the answer is simple. I am speaking to Amendments Nos. 1 and 2. I am sorry if I did not make that plain. I regret that the noble Lord missed the first three minutes. I shall not, however, repeat what the House has already heard. I do not intend to have a second run.
I was making the point that the Limitation Act 1980 directed its attention, in an equivalent provision concerning persons who suffer personal injuries that they know not of at the time, to the actual plaintiff. Section 14 of that Act therefore contains an extended period for those persons to bring their actions. This was not the law until 1963. In 1963, however, following the sad case of Cartledge and Jopling, where a number of miners were found to be statute barred and unable to bring an action for damages for severe injuries, Parliament came to the rescue. What was not dealt with by Parliament in 1963 was latent damage—the matter that we are now discussing.
The simple and straightforward point is that this Bill, instead of identifying the actual plaintiff—the only person who is, in the end, concerned—who has brought the proceedings, uses the wider language of "any potential plaintiff". It is true that the noble and learned Lord made plain in Committee that it was the intention of this provision only to identify the plaintiff

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who subsequently brings the action. Thus the noble and learned Lord sought to persuade me that the amendment was not necessary and that the meaning was clear enough from the face of the statute. That is the point of issue between the noble and learned Lord and myself. I would respectfully ask him whether he will be so kind to consider again this drafting matter—it is nothing more—and to consider whether it would not be simpler and easier to refer to "the plaintiff" and to remove altogether the descriptive passage that lies between lines 19 and 23 on page 2 of the Bill. I beg to move.
Lord Denning: My Lords, I should like to support this amendment. As I see it, this is a matter of drafting. Amendments Nos. 1 and 2 put the matter in simple, clear, intelligible language, whereas the Bill, in the proposed Section 14A, seems to me to be obscure and to give rise to many points on which lawyers may disagree.
Let me give noble Lords an illustration from subsection 7:
"The other facts referred to …above are"—
and this is the paragraph which I find difficult—
"(c) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant".
That takes an awful lot of understanding, if I may say so.
The same applies to a lot of this Bill. It seems to me, from reading it, that the amendment put forward by my noble friend Lord Hacking makes it quite clear that it has to be,
"of such facts about the damage … as would lead a reasonable person … to consider it sufficiently serious to justify his instituting proceedings".
In other words, I prefer the simple language of the amendment rather than the complicated language of the original draft although they both come to the same thing. I therefore support the amendment.
Lord Elwyn-Jones: My Lords, was the noble and learned Lord not dealing with the third amendment in his most interesting observation?
Lord Denning: My Lords, I have been trying to speak to all of them.
Baroness Phillips: My Lords, as one who is a layman in these matters, who has tried rather hard to follow this discussion, I wonder whether the noble Lord, Lord Hacking, when he replies can enlighten me about the reference to Esau and Jacob. So far as I can recall, neither was a legislator or a lawyer. I am waiting to learn the erudite connection in his introduction of the amendment.
The Lord Chancellor: My Lords, I am afraid that I am responsible originally for the reference to Genesis. Perhaps I may enlighten the noble Baroness. There is a story in Genesis about when Jacob led his rather blind old father Isaac to believe that he was Esau by tying a goat's skin on to his hands. Isaac was slightly puzzled and said, "The voice is the voice of Jacob but the hand is the hand of Esau", who was a hairy man.
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I am sorry to see that the right reverend Prelate was driven out by that. But, with respect, I think that the noble Lord, Lord Hacking, had the roles wrong; or perhaps I did at the Committee stage. The original purpose of my reference in Committee was to point out that he was speaking in the part of the Law Society rather than in his own character. I believe that clears that matter up.
My belief is that we shall have to deal with Amendment No. 1 now because Amendment No. 2, despite my noble and learned friend Lord Denning's powerful oration, has nothing to do with the point in Amendment No. 1. If Amendment No. 2 were to succeed—I express no opinion as to the probability of that—Amendment No. 3, as a matter of order, could not be called. I think that Amendment No. 3 probably had more connection with Amendment No. 1 than did Amendment No. 2. However, this was discussed at length in Committee, when I perhaps gave too short and cursory a reply because at that stage we had present my noble and learned friend Lord Scarman who was responsible for the report and who spoke against this particular amendment for reasons which I then thought saved me the trouble—
Lord Hacking: My Lords, I apologise for interrupting the noble and learned Lord. It is entirely my fault. The amendments on which I was addressing the House were Amendments Nos. 1 and 3, which are coupled together and which are the Law Society amendments as the noble and learned Lord detected with the voice of Jacob through Esau. If I may, I shall address your Lordships on Amendment No. 2, which is a separate matter, in a moment.
3.15 p.m.
The Lord Chancellor: My Lords, I think that would be the convenient course. It was perhaps my fault that I did not spell out the reasons in detail as to why I did not accept Amendment No. 1 in Committee. Basically it is a drafting amendment and it is based on a false assumption. Those who were responsible for Amendment No. 1 have made the false assumption that the effect of the reference in Section 14A(5) of the proposed new clause to any potential plaintiff is to cause the starting date for the provision to run at large against all potential plaintiffs as soon as any potential plaintiff has actual knowledge that he has suffered damage. The starting date, they say, is the earliest date upon which any potential plaintiff has knowledge of the facts referred to in subsections (5)(a) and (5)(b).
However, those references are to the material facts about the damage and the other facts relevant to the current action, in both cases as defined in the clause. The intention of these provisions, as applied by the proposed Section 14A(6) and 14A(7), is to cause the period of limitation,
"to start to run when the plaintiff knows, or might reasonably be expected to know, that he has suffered such damage as would justify a reasonable plaintiff in initiating the proceedings in hand against the defendant who did not dispute liability and was able to satisfy a judgment".
I take that from paragraph 4.8 of the Scarman Report.
The Law Society founded its argument on knowledge of the existence at large of the tortious act but the clause is founded on the damage in respect of

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which damages are claimed. The material facts concern that damage and his damage is unique to each separate potential plaintiff. The true nature of the test can be brought out by considering the case of a negligent act which may cause damage to several plaintiffs, such as the negligent drawing of a will. When such a potential plaintiff is inclined to proceed his statement of claim will allege (a) that the advice was given (for instance, by the will being drawn); (b) that the advice is beyond correction (as when the testator has died); (c) that the will fails in its alleged purpose to benefit the plaintiff; and (d) that the plaintiff only discovered the damage he has suffered on a date within the Section 14A limitation period.
The defendant, for his part, will challenge as a matter of limitation under (d) above on the proposed subsection (6) ground that a reasonable plaintiff would have commenced these proceedings earlier and that the time has run out. He may even show as a matter of evidence that earlier, albeit separate, proceedings were commenced by a different plaintiff affected by the negligent advice. The example also illustrates the need for some expression such as "potential plaintiff" instead of, as is proposed in the amendment put forward, the word "plaintiff" without the adjective "potential" inserted in advance of it.
For example, in the above instance I gave, if the special period of limitation expired before any plaintiff took action there would have been no actual plaintiff to consider but 10 potential plaintiffs. If an action were brought outside the special limitation period the defendant would be able to show, if such were the case, that the starting date had begun when the actual plaintiff was only a potential plaintiff who might reasonably have been expected to know that he had suffered such damage as would justify a reasonable person in instituting proceedings.
Another case which I could cite in support of the text as drafted is where one or more of the potential plaintiffs has special knowledge or expertise; for instance, he may be a structural engineer or a solicitor. While his expertise may allow him to detect the signs of damage in advance of other plaintiffs, the effect of the proposed Section 14A(6) and (9), as drafted, is to ensure that the other potential plaintiffs are not disadvantaged by this fact.
A defendant to an action brought by a second plaintiff cannot simply escape by saying that more than three years have elapsed since a first plaintiff discovered the signs of damage, if it is not reasonable to impute the first plaintiffs knowledge against the second plaintiff under Section 14A(9) and if the material facts about the damage were not such as to lead a reasonable person to institute proceedings. The reference to potential plaintiffs is also necessary in relation to Clause 3.
The Law Society says that it is difficult to understand why that can be so, since a new cause of action is only created by Clause 3(1) of the Bill where the predecessor in title had not discovered the defect. However, that argument overlooks that there may be several concurrent interests in the property and that the holders of each of these interests may have a separate right of action in respect of the same act of negligence. I could give examples of the transfer of
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freehold land subject to leases or easements, or the mortgaging or chartering of a defectively designed ship. I am afraid that this is not every exciting stuff! However, I must point out that the draftsman, to whom I referred the amendment before, still sticks to her opinion. She is not yet convinced against her will, and I take the same view as she does.
Lord Hacking: My Lords, in moving the amendment it was my purpose to ask the noble and learned Lord whether he would be kind enough to give the matter further consideration. I am not sure whether he has been referring to discussions which have taken place since the Committee stage or whether they took place before the Committee stage. However, I still seek from him the kindness of his offer to give the matter further consideration.
The noble and learned Lord has taken us twice, by a long and complicated journey, through the provisions of the proposed Section 14A, and I shall have much more to say about that when I move the next amendment. However, in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hacking Lord Hacking moved Amendment No. 2:
Page 2, line 14, leave out from ("knowledge") to end of line 41 and insert ("of such facts about the damage that was attributable in whole or in part to the act or omission in respect of which damages are claimed, as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings in which such damages are claimed.").
The noble Lord said: My Lords, I shall now be addressing your Lordships—and I feel sure of my ground now I have a numbered Marshalled List in my hand which I did not have earlier—on Amendment No. 2 which stands by itself. I am delighted also that the noble Lord, Lord Lloyd of Kilgerran, is now in the Chamber so that I shall not have to repeat any of my remarks on this amendment.
The amendment is directed to making this part of the statute simpler and shorter. As I have commented, the noble and learned Lord has had to take us twice, by a complicated journey, through these subsections. As I drew attention to your Lordships in Committee—and I do so again briefly for those of your Lordships who were not present in Committee—the Bill sets out to provide a series of tests of the plaintiffs knowledge, or the knowledge that should be impugned upon the plaintiff, for the starting point of this extended period of limitation which will enable him to bring his action three years from the date when he knew or ought to have known that he had suffered latent damage. There are two main tests. The first test appears in subsection (5)(a), which is directed to:
"the material facts about the damage in respect of which damages are claimed".
The second test refers to:
"other facts relevant to the current action".
Having established those two main tests, the statute then goes on to provide a series of subtests. Subsection (6) sets out the material facts and the tests in that regard. Subsection (7) provides the further tests in respect of "the other facts" which are relevant for the test of the plaintiffs knowledge.
I seek only to establish the principle that these subsections could be reduced in size and usefully brought to a position of greater clarity without in any way moving away from the recommendations of the Law Reform Committee. Indeed, the noble and learned Lord, Lord Scarman, who is not with us today but who was with us in Committee, accepted that this amendment was loyal to his committee's report and to the Bill. He sought only to say that the tests themselves were not difficult. Those of your Lordships who were present in Committee will recall that he then went through each of the individual tests.
My riposte then and my riposte now to the noble and learned Lord, Lord Scarman, is that while the tests individually are not complicated—and it was amply illustrated by the noble and learned Lord just now in the submissions which he made on my earlier amendment—on every occasion that the test of knowledge arises, the plaintiff has to go through this complicated journey. He goes through one gate after another, turning left, turning right and then going forward. It is almost like snakes and ladders.
That is not a satisfactory imposition to place upon plaintiffs; it is not a satisfactory imposition to place upon defendants. In other words, it is not satisfactory to have such an imposition upon any party in litigation. Moreover, as I commented in Committee, statutes are not only used in courts and subject to construction by lawyers and judges; statutes are lifted off the shelves by insurance men and by others who want to know the law and the position of their client, whether their client be a plaintiff or a defendant. Surely it all adds up to this: by having longer and more complicated provisions, litigation is encouraged and the efficiency of the Bill is lost. I beg to move.
Lord Denning: My Lords, I was really speaking to this amendment previously. My plea was that we should have the simple language of the amendment instead of the complicated language of the Bill. The language of the Bill is still obscure and it is only matched by the obscurity of the language used by my noble and learned friend the Lord Chancellor on the last occasion. I support the amendment on the ground that, for goodness sake, let us have our legislation in simple, clear language!
Lord Edmund-Davies: My Lords, I should like to identify myself with that view. The proposed language seems to me to be far clearer than that at present embodied in the Bill.
Viscount Esher: My Lords, I am glad to hear that the noble and learned Lord, Lord Denning, supports the amendment. I am sorry that I have been unable to attend earlier debates on the Bill, but I have read them with great care having myself, as a young architect many years ago, been through this mill, and wishing to do what I could to support the position taken by the professional people in the building industry and people speaking for the industry itself.
3.30 p.m.
In the instance I mentioned just now the plaintiff was a government supported development
16
corporation, the contractor was a famous international building firm and the defendants were three young architects, one of whom was myself, paid 10 per house—this was a housing project—in the way of fees, on which we could not possibly carry the insurance needed, nor afford the cost of representation of the quality available to the other parties.
It was the plaintiff and the contractors who had—and I think I quote—"the powerful organisation and articulacy" flatteringly credited to the building professions by noble and learned Lords. In the event we met our half share of the liability by selling my family silver. For those not so fortunate it would have meant bankruptcy and the end of our practice.
I mention this ancient tale because we now have a new generaton of young architects widely admired, I think I am right in saying, not just by architects themselves but by the public in general, yet almost to a man they are what the Victorians used, rather brutally, to call "men of straw". At the other end of the age spectrum, with increasingly early retirement, we are going to have a number of pensioners vulnerable to what are called "stale claims" which the RIBA has shown could be as much as 30 years old even with the long stop proposed in the Bill.
Much has been heard in these debates of discoverability; too little, I would suggest, of insurability. I support this amendment, and in particular its reference to the building industry as a special case, because insurability depends on a clear definition of risks. This is particularly difficult in our industry. The Law Reform Committee referred to the
"time-consuming, expensive and sometimes impossible task of ascertaining exactly when damage occurred".
Lord Broxbourne: My Lords, where does the noble Viscount find in this amendment a reference to the special characteristics of the construction industry? Surely those references come in Amendment No. 6, an important amendment which is awaiting discussion.
Viscount Esher: My Lords, perhaps the noble Lord, Lord Hacking, could make this plain. I hope I am speaking to his Amendment No. 2.
Lord Hacking: My Lords, I hesitate to intervene. It is not for me to decide issues between two noble Lords. However, my amendment particularly directed to the construction industry is indeed Amendment No. 6 and the collateral amendments to it.
Viscount Esher: My Lords, the Law Reform Committee referred to the difficulty of ascertaining exactly when damage occurs, which is critical in this Bill. Noble and learned Lords will be familiar with the Latin maxim "Interest respublicam ut sit finis litium", which although the Latin is a little odd, could be translated as "It is in the interests of society that there should be an end to litigation".
However, it is no good defining the end if you cannot trace the beginning. In all other countries about which I have been able to obtain information, the limitation period runs from the date of completion. Only thus can the building team be properly insured and only thus can the claimant be sure of getting the two things he must have—certainty of compensation

17
and speed of payment—so as to limit the risk he carries.
In the view of the industry the committee's report, and the Bill itself based upon it, contain two fatal flaws. The first is the failure to meet the special needs of the building industry, when on its own admission latent damage concerns the building industry probably more than any other section of society. The second is the neglect of the problem of insurability.
If Ministers in another place insist on having this Bill as it stands, unamended, new legislation is inevitable if we are to protect this country from the insurance famine which has become a major threat to American society. In the event of that legislation, I would suggest that it must contain two components. First, it must be fully compatible with the practices of the European Community, which are, outside the United Kingdom, closely comparable; and, secondly, it must look towards what many of us in the industry see as the only sensible way ahead; the collective responsibility and the collective insurance of the whole building team, consultants, contractors and developers (often in any case one organisation now in the case of design and build contracts) so that we can at last work as a team and not face the expense of spirit and the waste of the time of the courts fighting one another. In other words, in line with modern practice we should move the long stop around to fine leg and get a better wicket keeper.
Lord Elwyn-Jones: My Lords, it is no doubt due to my lack of understanding, but it appeared to me that the noble Viscount was addressing himself to the final amendments, to which we shall come in the fullness of time, and at this rate I do not know when that will be. When two noble and learned Lords find obscurity in the drafting, the provision merits, putting it at its lowest, the most careful examination again by the noble and learned Lord.
I was greatly impressed by the assistance given to us by the noble and learned Lord, Lord Scarman. He reminded us that a committee of very experienced characters considered these problems over the course of four years, went into them carefully and gave their conclusion in paragraph 4.7 that:
"although the proposed amendment has the advantage of simplicity the more complicated formula for which the committee opted gives more guidance to a plaintiff uncertain as to his position than does the simple advantage".
I rather liked his peroration:
"In this case, brevity may be the soul of wit but it is not the soul of explanation".—[Official Report, 8/4/86; cols. 99–100.]
For my part, I am reasonably content with the Bill as it stands.
The Lord Chancellor: My Lords, the Bill contains two principal proposals. One has to do with the principle of discoverability, which provides potential plaintiffs with an "esprit de l'escalier" after the six years is over. The other is the long stop which is for the benefit of architects and others. I must tell the noble Viscount, Lord Esher, that his speech was directed solely to the latter, whereas this amendment is concerned entirely with the former. I promise to deal with some of his points when the latter come into consideration on the later amendments.
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My noble friend Lord Broxbourne was quite right in sounding a minute gun warning in the earlier parts of his speech. But having said that, and after having had the advantage in Committee of the noble and learned Lord, Lord Scarman, and at this stage of the noble and learned Lord, Lord Elwyn-Jones, I must range myself unequivocally on their side in spite of the battery of heavy artillery coming from the Cross-Benches at the other end of the Chamber.
This point was considered very carefully indeed by the Scarman Committee at paragraph 4.5 and going to and including paragraph 4.8 of its report. Broadly speaking, it had to decide as to the application of the discoverability test to a potential plaintiff in one of three alternative ways. One, which it enumerated as three and which it rejected in its entirety, was to disregard constructive knowledge altogether. This amendment follows the Committee's report at least to that extent. That leaves the first two.
The first, it is said, would be to define knowledge fairly generally. That is what this amendment seeks to do. It follows a Scottish model. If my noble and learned friend on the Government Front Bench will forgive me, that is neither an advantage nor a disadvantage in discussing possible changes to the English law.
The second was to adapt the words already present—a factor to which none of the noble and learned Lords on the Cross-Benches referred—in the consolidation Act of 1980. It was after careful consideration that the Scarman Committee in its report and the noble and learned Lord, Lord Scarman, at the Committee stage came down firmly on the side of that second alternative. They gave their reasons at length. My noble and learned friend Lord Denning spoke of cumbersome and complicated language and said that my exposition of the position under Amendment No. 1 came within that definition, to which I willingly plead guilty. I did not know any other way to say what I wanted to say.
The noble and learned Lord, Lord Edmund-Davies, said the same thing, but I remain rather firmly of the same opinion that the noble and learned Lord, Lord Scarman, expressed in Committee (at col. 100 of the Official Report) and the noble and learned Lord, Lord Elwyn-Jones, gave us in his speech this afternoon. The noble and learned Lord, Lord Scarman, observed that there was
"a balance of advantage and disadvantage to be considered"
in defining knowlege for the purpose of the potential plaintiff's extended period of limitation.
The Law Reform Committee's recommendation at paragraph 4.8 of its report, to which subsections (6) to (9) inclusive give effect, provide the plaintiff with more guidance than the amendment now proposed by the noble Lord, Lord Hacking. The noble and learned Lord, Lord Scarman, considered that it was a necessary safeguard for the potential plaintiff, before time had run against him, to be able to establish, first, factual causation, found in subsection (7)(a) of the Bill; the identity of the defendant, found in subsection (7)(b) of the Bill; and, if the breach of duty was that of a person other than the defendant,
"the identity of that person and the additional facts supporting the bringing of an action against the defendant".

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found in subsection (7)(c) of the Bill.
Then he said—and I would respectfully adopt these words from his Committee speech:
"those details are not difficult and they are not legal jargon; they are indicating to a plaintiff and his adviser the sort of matters which they have to consider in making up their minds as to whether the damage is sufficiently serious".—[Official Report, 8/4/86; cols. 99–100.]
I respectfully suggest to the House that Lord Scarman and his Committee were right. They gave the matter careful attention.
That simplicity, as I think the noble and learned Lord, Lord Elwyn-Jones said, is not necessarily a safeguard against litigation. Rather than the spurious simplicity contained in general words in a sentence or two, the spelling out of guidelines is, in our system—although not, I think, in some Continental systems—a safeguard against litigation. The whole law of negligence in the French civil code is contained, I believe, in a single sentence, but is has not led to any diminution of litigation in French courts.
This is a clear indication of where we should follow the committee and not follow the rather spurious simplicity of the proposed amendment. I am not saying that the world would come to an end if the amendment were passed (except that Amendment No. 3 could not be called, of which it is my duty to remind the House), but I think that the text is better. For that reason, I am unable to accept the amendment.
3.45 p.m.
Lord Hacking: My Lords, I feel a little hurt that the noble and learned Lord referred to my amendment in terms of "spurious simplicity". I should make it quite plain, although I would be more than happy to be associated with Scotland and Scottish law, that the drafting of my amendment does not come from Scotland; it comes from the Bill that your Lordships are considering. It is an attempt, no more and no less, to extract the essential provisions out of these series of texts without inviting plaintiffs or defendants to go through these complicated journeys which were so well illustrated by the noble and learned Lord when he was addressing this House on Amendments Nos. 1 and 3.
Having said that, it is not my intention to press this to a Division. In a moment or two, if no other noble Lords wish to address this House, I shall be withdrawing this amendment, but before I do so I should like to thank noble Lords who have spoken in support of my amendment, and I should particularly like to thank both the noble and learned Lords who spoke from these Benches in favour of this amendment. At least I feel I have a little more support than I had in Committee, and I am very grateful for that.
I am also grateful to the noble Viscount, Lord Esher, for his comments. As was pointed out by the noble Lord, Lord Broxbourne, the weight of Amendments Nos. 4, 5 and 6 is directed towards the problem of the construction industry, but the words that the noble Viscount spoke are also applicable in a more general sense to this amendment, because it is in the interests of the building and construction industries and in the interests of all plaintiffs and defendants that there
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should be greater clarity to this Bill. Without naming those distinguished bodies in the building and construction industries that have viewed this amendment and commented favourably upon it, I should like to record that it has the support of some most distinguished bodies and institutions within the industries.
Having made those comments and having at this stage not obtained the willingness of the noble and learned Lord to give further consideration to the drafting of this part of the Bill, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hacking Lord Hacking had given notice of his intention to move Amendment No. 3:
Page 2, leave out lines 19 to 23.
The noble Lord said: I shall not formally move this amendment because now we have the numbering right this was considered when I addressed your Lordships on Amendment No. 1. Therefore, I do not intend to move Amendment No. 3.
[Amendment No. 3. not moved.]
Lord Hacking Lord Hacking moved Amendment No. 4:
Page 3, line 14, leave out ("An") and insert ("Notwithstanding section 14A of this Act no")
The noble Lord said: My Lords, Amendment No. 4 should be considered with Amendments Nos. 5 and 6. They are all directed to the drafting of Section 14B. The proposed Section 14B is the section setting up the proposed long-stop provision. This amendment seeks to place an alternative starting event for the long-stop period. As drafted, although the words are not precisely used in the Bill, the starting period for the long-stop is 15 years from breach of duty. This amendment seeks to give an alternative starting date based upon completion.
In Committee both myself and the noble Lord, Lord Howie, tabled different amendments which were discussed together. The noble Lord, Lord Howie, and I have now joined to move one amendment—not that we were apart before; we were simply examining the problem slightly differently. We were making exactly the same proposal; namely, that there should be an alternative starting date based upon completion, but the time periods were different and the noble Lord, Lord Howie, spread his amendment wider than I did. My amendment was directed just at the building and construction industries, as is this one, but the noble Lord, Lord Howie, based his amendment rather wider.
I should draw to your Lordships' attention that my amendment also seeks to give greater clarity to Section 14A. It seeks to remove some of the longer phraseology contained in the proposed Section 14B. Thus another feature of my amendment is another attempt to give greater clarity to the Bill.
There seems to be a certain activity in the House. I do not know whether any noble Lord wishes to intervene. However, if no noble Lord wishes to intervene, I shall continue with my comments.
This amendment singles out the building and construction industry. It does so for two reasons. The

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first reason is that the building and construction industry is an industry whose activities are dissimilar to other activities also covered by the Latent Damage Bill; such activities as the provision of services and the manufacture of products. Your Lordships may remember this point from Committee. Because of the wide base of this proposed measure, covering all activities, definition is lost. I have tabled and moved this amendment because in those circumstances it seems logical in the construction and building of structures, when it is possible to have greater definition, that that definition should sensibly be included in the Bill.
The other point is that although this Bill, as I pointed out earlier, covers the full range of activities from the provision of services and the making of products, the truth is that it will be used on the great majority of occasions just in the building and construction industries. For that second reason it seems to me particularly important properly to focus on that area of activity in which the Bill has its main concern.
I am still conscious that there is a certain amount of movement in the House.
Lord Mishcon: In your favour.
Lord Hacking: My Lords, if your Lordships wish me to continue, I shall do so, but if I am wanted to give way to more important matters, I should wish to do that.
The problem therefore, when one applies the test of breach of duty as the starting event in the building and construction industry, is that that breach of duty concerning the same defect can occur on a number of different occasions. For example, it can occur when the building was incorrectly designed; when the building although correctly designed was incorrectly drawn on the relevant plans; when plans, either incorrectly designed or drawn, were submitted for the contractor's tender; when the defect was constructed or assembled; when the premises or that part of the premises containing the defect were improperly inspected or when the building is handed over for completion. I have set out six—I could have identified more—different points in time relating to the same defect when the limitation period under the long-stop provision might be activated. It is for that reason that it seems sensible—which is why I am urging this on the House—that, for the building and construction industries, the completion date should be the starting point. When this matter was considered previously Parliament decided that the limitation period should begin in the building industries unequivocally and clearly at the completion date. I refer to the Defective Premises Act 1972 and in Section 1(5) the test for the date for breach of duty is when the building or part of the building has been completed. Thus Parliament has already decided that an action should start in reference to a building on completion.
There is also relevance to what other jurisdictions do. I have carried out a survey and I shall briefly summarise my investigations concerning other jurisdictions, particularly in the EC. The result of my inquiries reveals that while their statutes of limitation are not entirely similar—there are different concept
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sinvolved—they all have a long-stop period, which may be new to English law but not new to European law, based on completion. In Italy it is 11 years from completion. In France, it is 10 years from acceptance. In Germany, depending whether it involves injury to people or things, it is 30 or eight years from acceptance. In the Netherlands it is a long time—30 years from delivery. In Spain it is 15 years from completion. As a matter of interest in the United States of America, in that highly litigious country, I can quote from two states. In Georgia it is eight or five years from substantial completion and under the laws of Massachusetts there is a statute called the Statute of Repose, which operates after the limitation period, within which a plaintiff is entitled to bring an action—in this case three years. The Statute of Repose—the equivalent of our long-stop period—then sets six years from substantial completion. When, therefore, other jurisdictions have considered what should be the appropriate starting date, they come to completion.
For all those reasons I would submit that this should be the appropriate starting point. It is a matter which concerns the building construction industry. Again, I tell your Lordships that a great number of very substantial bodies (and when I say "substantial", I mean substantial in their experience) and worthy institutions in the building industry—and the Royal Institute of British Architecture is one, and the Institution of Civil Engineers, is another; indeed, all the leading institutes—support this amendment and through me they urge your Lordships that this is an important amendment, important for clarity and important for the execution of this Bill. For all those reasons I move this amendment. So that your Lordships are not in any doubt, my arguments are directed to Amendments Nos. 4, 5 and 6.
4 p.m.
The Lord Chancellor: My Lords, I have ascertained that the Statement has been cleared but from what inquiries I have been able to make the consensus, I gather, is that we should continue with this amendment until the end of the debate and take the Statement afterwards. If that is the will of the House, and only if it is the will of the House, I now say that the Question is, That Amendment No. 4 be agreed to.
Lord Howie of Troon: My Lords, as your Lordships will recall, I was associated with the noble Lord, Lord Hacking, in somewhat similar amendments at the Committee stage of the Bill. My amendments were alternatives to his but, as he said a moment ago, we sought the same end ultimately. We have now reached a compromise where we are putting forward and speaking to the same amendment. These amendments really try to seek certainty in the application of the long stop, which is a new matter for English law although, as the noble Lord, Lord Hacking, said a little while ago, it is not unknown elsewhere.
It is fair to say that our compromise amendment does not give the kind of total certainty that I should have liked to see. That could only have been achieved, as the noble Viscount, Lord Esher, said in an earlier debate, by using the time of completion, and that alone, as the beginning of the long stop period. But

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that has proved to be unattainable. We discussed this earlier on with the Government and the Government have been unyielding. We have reached a half-way house in which there are two dates for the long stop. The long stop will reach 15 years from the breach of duty or 12 years from the time of completion.
I think it is fair to say that that is somewhat rough justice but I believe it to be rather less rough justice than the Bill gives us. The point about certainty was touched upon earlier by the noble Viscount, Lord Esher, when he remarked that uncertainty throws undue burdens of insurance on the industry and hence, through that, on to the costs of building in general. It has a further ill-effect on the building industry: that uncertainty on the part of the designer leads him to overdesign and to add further cost to the industry in that way. It also leads him to be somewhat sparing in innovation.
The search for certainty interested the Law Reform Committee as well. In Part 2 of the report the committee was dealing with the present state of the law and with the question of causes of action accruing when damage occurs—no sooner and no later, as the committee says in paragraph 2.1 of the report. After considering that question, the committee gave its view in general terms of the existing law in paragraph 2.12. So far as defendants were concerned, they were faced with great uncertainty and the committee went on to say:
"The courts are now being required to perform the time-consuming, expensive and sometimes impossible task of ascertaining exactly when the damage occurred. We do not think that this situation can be justified".
That is what the committee said. The committee then went on to recommend some changes in the law, including the introduction of the long stop of 15 years, which is included in the Bill. But the weakness of the long stop, as I see it, is that it is measured in the Bill from the breach of duty. Ascertaining when the breach of duty occurs in respect of the long stop is no more certain than ascertaining the time the damage occurred under the present legal conditions. I outlined this problem in some detail in committee, and I shall not go over it again. Noble Lords will remember that I used the example of the foundation of a power station. I demonstrated how there were a number of occasions when the breach of duty could occur and indicated how those occasions could be spread over a considerable number of years. My arguments are to be found in col. 114 of the Official Report for 8th April last. As I have said, I shall not repeat them today.
In fact, the breach of duty can only be determined if the courts are asked to perform time-consuming, expensive and sometimes impossible tasks of ascertaining exactly when it occurred. I suggest to your Lordships that if that could not be justified in connection with the time of actual damage, I do not see how it can be justified in terms of the breach of duty. The committee criticised the uncertainty in one case but the Bill keeps it in the other. I am sure that is not the kind of inconsistency that we should like to see continued.
There is one point that I should like to touch upon briefly. In the course of the Committee stage, in arguing against the amendments put down by the
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noble Lord, Lord Hacking and by me, the noble and learned Lord, the Lord Chancellor listed what he called a formidable list of supporters of the Bill in this connection. It was a formidable list, but who were they? There was of course the committee itself, which deliberated for four years on this matter, as I discovered earlier this afternoon. Four years was either too long or too short: who can tell? The list included the Official Referees, who are a learned and formidable body—learned perhaps more in law than they are in actual construction, though they know a good deal about the law on construction. The rest of the list consisted of other lawyers, accountants, property people, landowners and the Consumers Association.
Out of the 15 or 20 on that list, there were only two who were connected in any close way with the construction industry itself. One of them, I can say without appearing dismissive, was a somewhat small organisation and the other was a somewhat large organisation. I should say that since then the large organisation which featured on the list of the noble and learned Lord the Lord Chancellor has now changed sides and is today supporting the amendment of the noble Lord, Lord Hacking.
During our exchanges in the Committee stage, the noble and learned Lord the Lord Chancellor suggested that we did not want to swap lists of names. I think it was just as well that he suggested that because if your Lordships look through the list of people providing evidence to the committee, you will find that 30 or more were closely connected with the construction industry and they submitted evidence of one kind or another, but there were only two of them that he was able to bring to his aid during the earlier debate, and as I say, one of them has deserted him since then.
The compromise that we suggest has one major difficulty for the plaintiffs. There is no point in glossing over the difficulty—that is, if we have to choose between 15 years from the breach of duty and 12 years from the time of completion, there is the problem of something that occurs right at the end of a contract, where some plaintiffs might feel that in this compromise they were being shortchanged.
I ask your Lordships again to think back to the kind of contract which is really imporant, and that concerns the kind of example I have mentioned and also the kind of example mentioned earlier today by the noble Viscount, Lord Esher, where the likely plaintiff is somebody such as an electricity board or the Department of the Environment—that is, some quite substantial body, and where the project itself is quite substantial. In the kind of substantial project I am thinking about the dangerous period for structural faults—which are the important ones that should worry people, rather than minor ones—is the earlier part of the construction period and not the late part, where this overlap occurs. As I say, there is an element of rough justice but, taking one thing with another, it seems to me that the balance is reasonable.
My last point is this. I ask your Lordships to turn your attention to what 15 years actually means, and to think back to what you were doing 15 years ago. Can you say, hand on heart, that you can actually remember what happened and that there would be

25
good witnesses? Would 15 years add staleness to the memory? I can remember that 15 years ago I was involved in a construction project on the Firth of Forth; but without looking back at ancient records I cannot remember whether the project was in the design stage, whether the tenders had been sent out, whether the contract had been let or whether it was actually started. Somebody may remember, but I cannot do so. What is more interesting is that the senior people who were involved with me in that contract have all now departed from the scene: they have all retired and they are all gone. Fifteen years is a very long time, and some weight should be given to that aspect in our deliberations.
I said earlier that a compromise was rough justice. It is not exactly what the consulting engineers or the architects would want; it is not what the builders or the contractors would exactly want, and it is not what the plaintiffs would want; but it is fairer to everybody than what is provided in the Bill, and it should be supported.
4.15 p.m.
Lord Broxbourne: My Lords, this amendment provides an option which the Bill does not and it takes into account the special characteristics of the construction industry, which the Bill does not. Prima facie, it is therefore an attractive proposition. Of course it is not an open and shut case. Nobody acquainted with the intricacies of building and civil engineering law would expect it to be. For myself, I have spent many interesting, if not exactly hilarious, hours in my forensic capacity on these matters, and even in an editorial capacity, seeking to explain the mysteries of these matters. I refer to what for many years was known by the cold and impersonal title of The Annotation of the Standard Forms of Building Contract. For the new edition, the publishers very kindly renamed it Walker-Smith on the Standard Forms of Building Contract—but your Lordships will note that they waited until I changed my name before they gave it that pleasing description!
We are here concerned in this amendment with two related concepts: the length of the long stop and the starting date. As to the length, this is discussed in paragraph 4.13 of the admirable report (as one would expect from its leading author) of the Scarman Committee. As they indicate, of course there is no absolute solution in mathematical terms. As they say, in the final analysis the question of length is one of judgment. In the event, they rejected 10 years, they rejected 12 years and they rejected 20 years. They recommended 15 years as striking the right balance: a good, pragmatic, British compromise approach.
However, the 12-year period proposed by the amendment is also a compromise approach between the periods of 20 years and 10 years recommended by various responsible bodies. The 20-year period, according to the report, would permit some stale claims and expose many defendants to the risk of litigation for an unreasonable length of time.
The 10-year period was also put forward in responsible and authoritative quarters. It is indeed the long stop period specified in that attractive document, the EC directive on product liability, on which I spent many hours years ago as the then chairman of the legal
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committee of what I suppose we must now call the unreformed European Parliament. Of course, that consideration may not be the only one that leads your Lordships to doubt the validity and correctness of the period there specified. But the 10-year period also suffers from a major defect. It is shorter than the period of limitation under the Limitation Act for contracts under seal, and that covers the great majority of contracts entered into by local authorities. The 12-year period avoids this difficulty and also it much reduces the danger of stale claims.
It has been argued that to shorten the period from 15 to 12 years prejudices the consumer—that is the building owner—but there is this balancing consideration of the insurance factor. The longer the period, the greater the reluctance of the insurer; and indeed there are many cases where claims have not been brought because no effective insurance has been completed. Therefore there is a powerful case. in my submission, for the 12-year period and I come shortly to the related question of the date: completion or date of breach. Here Lord Scarman's report, on page 20, says:
"A number of those who wrote to us—especially those involved in the construction industry—suggested that the date of completion would be even easier to ascertain than the date of breach t duty".
The noble and learned Lord the Lord Chancellor referred to the difficulty of defining the completion date. He referred to that on Second Reading:
"even in relation to the construction industry … Completion is a contractual concept, essentially difficult to apply, and perhaps wholly inapplicable to the law of tort".—[Official Report, 17/3/86; col. 799.]
With great respect and in the presence of so many distinguished noble and learned Lords, I wonder whether the dichotomy is not perhaps overstated. Of course, we are dealing here with tort, but contractual provisions regarding completion would clearly be a help in defining the date of completion. Those are spelt out in some detail and with precision in the main form of contract used—JCT 80—the joint contract tribunal form for those purposes, where clause 1 fixes the date for completion by reference to the date specified in the appendix and later clauses—I shall not weary your Lordships with a recital of them—give effect to that with provisions also covering extension in prescribed cases.
It also prescribes for certification, which reduces the effect of any objection as to imprecision or difficulty of application. The noble Lord, Lord Hacking, rightly drew attention to the importance of certification in an earlier stage of the proceedings. There is then the statutory authority for the completion date contained in Section 1 of the Defective Premises Act 1972 and also, if my recollection serves, in the rating legislation for unoccupied premises. It is not all one way. There can be uncertainty as to the date of breach, as the catalogue of possible dates specified in Committee by the noble Lord, Lord Hacking, showed. Therefore, taking account of all the difficulties and imprecisions of this complex branch of law, there is a case to answer, and possibly a formidable case, on both aspects of the matter—on the starting date and the length of the period.
No doubt further consideration will be given in the light of the observations made at this stage of the Bill

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and will be communicated to the House on Third Reading, when we come to it. I respectfully request that when reporting the result of this further consideration the noble and learned Lord the Lord Chancellor will give further and better particulars of his list of supporters cited in col. 128 on 8th April and will say whether their support precluded the option of the 12-year period. Those supporters whom he catalogued are, in any event, only a relatively small minority of the 100 to 150 consulted by the Law Reform Committee, as set out in pages 31 to 34 of the Scarman Report. I must respectfully inform the noble and learned Lord that most of those he cited have no direct concern with the construction industry.
We await the Third Reading with interest and anticipation. Meanwhile, to end on a non-controversial note, I think that the House would wish to express appreciation to the noble Lords, Lord Hacking and Lord Howie of Troon, for bringing these important matters to your Lordships' attention. In opening, the noble Lord, Lord Hacking, said he hoped that he would receive more support for this matter than he did in Committee. I hope that he will not, in that context and in regard to the support which I have sought to give him now, be tempted to recall the Virgilian lines, "Non tali auxilio nec defensoribus istis".
Lord Denning: My Lords, I should like to commend to the House and to my noble and learned friend the Lord Chancellor close consideration of this amendment. It is sought by the building and construction industry, which is the one most affected by this legislation. It gives full weight to the report of Lord Scarman's committee. It weighed the two alternatives from where the starting point should be. Should it be the date of the breach of duty or the date of the completion of the work? It came to the date of the breach of duty.
Agreeing so far, I should like to point out that we should remove inconsistencies in our law. In the Defective Premises Act 1972 the statute clearly provides:
"Any cause of action … shall be deemed … to have accrued at the time when the dwelling was completed",
and the 12 years runs from that date. That Act deals with the same question: defects in structure of a dwellinghouse when the dwellinghouse is built in such a way as to be not in a workmanlike manner or impliedly not fit for human habitation. The Defective Premises Act 1972 gives a 12-year limitation from the date of completion.
I hope that at least something will be done before the next stage of this Bill to co-ordinate in law all those provisions. There should not be a different limitation period for cases under that Act or under speciality contracts. Many building contracts come under speciality clauses and the limitation was 20 years, although it is now 12. When sued for breach of contract, those contracts had their own limitation periods. I ask only that this provision be considered with the other statutes so as to make them all equal if need be from date of completion, or let us strike out the date of completion in those matters and bring
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them into accordance with this Act. I plead for consistency in statutes relating to this matter.
4.30 p.m.
Lord Mishcon: My Lords, of course the noble Lord, Lord Broxbourne, was right when he said that there are arguments for and against any period of limitation or any long stop period that one cares to choose. I join with him in thanking the noble Lord, Lord Hacking, for the consistent way in which with assiduous skill he has tried to bring many amendments before the House at various stages of the Bill. His intention obviously has been to make this a better Bill. That does not necessarily mean that we must agree with the noble Lord's efforts.
Whatever period, as the noble Lord, Lord Broxbourne said, we choose there can be arguments of hardship for the plaintiff or for the defendant. The one thing that the committee did, bearing in mind, with great respect to the noble and learned Lord, Lord Denning, the Defective Buildings Act 1972 which had been passed before the committee sat and deliberated, was to come to the conclusion that, yes, there were arguments for 10 years, arguments for 20 years and arguments for 12 years, not from the breach of duty but from the completion of a building. The committee decided, with that homely, English sense of compromise to which the noble Lord, Lord Broxbourne, referred and which has stood us in good stead over the years, to make it a clear-cut case of 15 years.
The noble Lord, Lord Howie, made what he believed (rightly so) to be an effective point when he dealt with the question of memory. He asked: can you remember what happened 15 years ago? I turn to him and ask: can you equally remember with great accuracy what happened 12 years ago after the completion of a building? I must say that the difference in my mind, at all events, of what I can recollect 12 or 15 years ago is clouded in mistiness and I do not think that I would be able to point out with clarity a difference in my memories between those two periods.
Lord Howie of Troon: My Lords, I wonder whether my noble friend will say not "with clarity" but "with less unclarity".
Lord Mishcon: My Lords, if my noble friend wishes me to use the words "less unclarity", I shall certainly do so, but the point remains the same—
Lord Boyd-Carpenter: It is horrible English, my Lords.
Lord Mishcon: My Lords, it is horrible construction, if I may say so. That is what we are dealing with today, but in a different sense. Unless you have an overwhelming argument to the contrary, it is a little reckless, when you are discussing something—even if you have considered it for a few hours at Committee and Report stages—to throw overboard the deliberations of four years of a pretty high ranking committee. If we are to get this Bill through—and one hopes that this is not deferred till the Third Reading—then let us try to make up our minds and I suggest that we support that committee on this occasion.

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It is all very well to pass over the question of whether or not completion of a building is a more certain date from which to reckon time than is the breach of duty. I have looked at the wording and I see that it is,
"the date on which such building or structure, or any separate part thereof, was completed".
I must say that I can hear the noble Lord, Lord Broxbourne, with that eloquence to which we became so accustomed in cases of this type and others, delving into the mysteries of a building or any part thereof, or the structure thereof, and making a most uncertain case for when the date of this long-stop provision should apply.
But he quoted quite correctly the noble and learned Lord the Lord Chancellor, who does not need me to aid him in any argument. Indeed, he has remarked in the past that when I have endeavoured to aid him I have had quite the reverse effect on the House. But it so happens that at col. 799, if we are dealing with those who are experienced in these matters, he added a sentence which I hope I heard correctly—and I apologise to the noble and learned Lord if I did not—and which the noble Lord, Lord Broxbourne, did not quote. He said:
"Furthermore, on consultation the suggestion was firmly rejected by the official referees who are perhaps the specialists best qualified to referee this decision." [Official Report, 17/3/86.]
They deal with little else, as the noble Lord, Lord Broxbourne, knows, other than building cases and building disputes and that, we were told, was the definite view of the official referees.
Lord Broxbourne: My Lords, I am much obliged to the noble Lord for his characteristic courtesy. I have great respect for the official referees court, with which I was not wholly unfamiliar. They try many other cases which, I think, loom larger in their calendars—compensation for acquisition of land, landlord and tenant and other such matters. Large building and civil engineering contract cases go normally not to the official referees, because there are built-in arbitration clauses both in the standard forms of building contracts and in civil engineering contracts, as the noble Lord well knows.
Lord Mishcon: My Lords, I am obliged for that intervention. I think the noble Lord, Lord Broxbourne, will be the first to agree with me when I say that they, of all our judges, have the best experience of building cases and if this is the view that they have taken, then I say: so be it.
There is only one observation that I should like to make and I hope that it will be deemed to be a little relevant to what we are talking about on this amendment. In my view when we are dealing with the long-stop provision there is a case for saying, possibly—I underline the word "possibly"—that a plaintiff is the one who is hard dealt by in view of this arbitrary fixing of 15 years, when he might well have a case of hardship which he would want to bring before the court and when the court might be moved with an ultimate long-stop of 20 years.
I mention this only because my noble and learned friend Lord Silkin brought forward such an amendment at Committee stage. But I wanted the House to know, and I know that my noble and learned
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friend Lord Elwyn-Jones wanted the House to know, that our noble and learned friend Lord Silkin is absent abroad and might well have brought this before the House at Report stage. It is relevant to remember in that context, though it must be for him to decide, that there is a further stage of the Bill when he might have an opportunity of bringing that point again before the House.
Lord Howie of Troon: My Lords, before my noble friend sits down will he reflect that when the amendment refers to,
"such building or structure, or any separate part thereof'
it is referring to the fact that in big building contracts there may be several different dates of completion for different parts of the structure?
Lord Mishcon: My Lords, my noble friend Lord Howie has merely underlined the complexity of the definition.
Lord Hacking: My Lords, before the noble Lord sits down I wonder whether I may draw one other matter to his attention. The reference to separate parts is taken from the Defective Premises Act. I should like to say that it was taken from Scotland, but, in fact, that phraseology is taken straight from the Defective Premises Act.
Lord Mishcon: My Lords, I answer the noble Lord, Lord Hacking, only by saying that the fact that there can be complexity in one Act is no good reason for imposing it upon another.
Lord Lloyd of Kilgerran: My Lords, I intervene in this debate on only three grounds, which may he very briefly stated. First, I shall be speaking in the context of Amendment No. 6 without the advantage of having read that exotic volume known as Walker-Smith on Building Contracts, the title of which is, I understand, now to be changed to Broxbourne on Building Contracts. Next, in order to save time, I adopt wholly the facts put before the House today and also the facts put before the Committee, when the noble Lord, Lord Howie, as an engineer, so explicitly pointed out the problems affecting the building and construction industry.
My second reason for interfering—I beg your Lordships' pardon and I should have said intervening; I dare say that both those words are synonymous in the context of the length of the debate—is that I remember the words of the noble and learned Lord, Lord Wilberforce, at the Committee stage, when he said that the terms of reference of the committee of the noble and learned Lord, Lord Scarman, were too narrow.
In my speech at Second Reading I indicated the problems arising for the construction industry and the insurance industry. The distinguished chairman of Lloyd's the noble Lord, Lord Kimball, also referred to that difficulty, and the noble and learned Lord the Lord Chancellor in the course of his speech at Second Reading was good enough to take up my point about insurance problems. If, as I anticipate, for a variety of reasons, the noble and learned Lord who sits on the Woolsack will be rejecting this amendment, may I

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respectfully follow the general theme at the end of the speech of the noble Lord, Lord Broxbourne, when he hoped that something more might be said about the problem which has arisen in the construction industry? Certainly it is clear from these debates that the position of a very influential section of the construction industry, which earns so much money from exports and which would have tremendous difficulties in the interpretation of this Bill, should be considered later.
Therefore, I presume that if for any reason the noble and learned Lord the Lord Chancellor were to reject the amendment, he would assist both the House and many Members of the House who have expressed the difficulties that arise for contractors, consultants, builders and all the people involved in the construction industry. With great diffidence and reluctance, but in the interest of what has been said on behalf of the building industry, I ask the noble and learned Lord either to consider the amendment further or to indicate briefly what action could be taken to help deal with the mischief that the building and construction industry find arises from the Bill.
The Lord Chancellor: My Lords, as to one of the remarks made by the noble Lord, Lord Lloyd of Kilgerran, I heard the noble and learned Lord, Lord Wilberforce, say that the terms of reference were too narrow. However, as they took four years on their existing terms of reference, I shudder to think what would have happened if those terms had been enlarged. I believe that, on the whole, the noble and learned Lord, Lord Scarman, was not unduly constrained by those terms of reference. Indeed, he rather says so in the course of his report, so I do not think that I need trouble too much with that particular point.
Let us try to see the wood for the trees. The Bill was introduced to deal with a difficulty that arises out of the law of tort in negligence. The noble and learned Lord, Lord Scarman, said—and I agree with him—that there were two injustices: one to potential plaintiffs and one to potential defendants. The difficulty with potential plaintiffs he dealt with by introducing the period of discoverability in addition to the normal six years.
The injustice to potential defendants the noble and learned Lord dealt with by the so-called long stop. Do not let us forget that the so-called long stop effectively deprives a plaintiff of what would otherwise be his right for a wrong that has been committed against him. The second point that I hope will not be forgotten, despite the numerous and eloquent speeches that have been delivered on behalf of the construction industry, is that the construction industry is extremely well organised, is extremely articulate, and knows what it wants; whereas the unfortunate victims are not an identifiable body at all.
That is something that has governed my own thinking about this particular Bill more than anything else, because I have to defend those who are not, in the nature of things, able to defend themselves. That point was well made by the noble and learned Lord, Lord Elwyn-Jones, at some stage that I seem to remember, and also by the noble Lord, Lord Mishcon. Let me say
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that I thought that he was right, in view of a remark that fell from the noble Lord a few moments ago.
What is really being said in the amendment is that there is to be one law for the construction industry and one law for everybody else who is a potential defendant. One is first of all depriving an unidentified number of plaintiffs of what would otherwise be their rights. As the noble Lord, Lord Mishcon, reminded the House, the noble and learned Lord, Lord Silkin, told the House on Second Reading of an unfortunate experience of his own after a period of 25 years. Secondly, one is saying that there are to be first-class citizens in the form of the construction industry and second-class citizens in the form of solicitors, accountants and everybody else. One class is to have 12 years and the other is to have 15 years.
To add complexity to that situation of having one law for the construction industry and one law for everybody else, they are to start from different points in time. To add further complexity—and I know that the noble and learned Lord, Lord Denning, is keen on simplicity—not only is there to be a special law for the construction industry as to the date of completion but it is also to be completion not only of the building but also from when,
"further work to such building or structure, or such separate part of such building or structure, to rectify work already done, was completed".
That is not a move in favour of simplicity. I would say to the noble and learned Lord on the Cross-Benches: physician, heal thyself. It was not I who invented that!
4.45 p.m.
Lord Howie of Troon: My Lords, I am sorry to interrupt the noble and learned Lord, but when he speaks about there being one law for the construction industry and another law for the rest—and he mentions solicitors and others—does he not recollect that the amendments I put down at Committee stage were meant to include everybody, but that he threw them out anyway?
The Lord Chancellor: My Lords, I am dealing now with Amendment No. 4, and not with some other amendment that the noble Lord has not thought fit to repeat at this stage of the Bill. I think that that is enough to say in reply.
The first question, therefore, is whether it is right to have two separate laws with two different starting points for two different kinds of potential defendant. The Law Reform Committee recognised in paragraph 4.20 of its 24th report that the majority of claims for latent damage arose out of building and construction work. Having considered the matter very carefully, it did not recommend that there should be any special provision for that or any other particular sector. Indeed, the committee recommended that there should be no restriction in the areas of activity to which its proposed reforms should apply.
I therefore start from the premise that the burden of proof rather lies on those who want to create first-class and second-class citizens rather than against them. The Law Reform Committee considered various dates, but it considered also the possible objections to the concept of breach of duty, which is the concept down on which the committee eventually came. It is,

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as a matter of fact, already well established in English law, both in contract and in tort. It lies at the heart of the tort of negligence, which is what we are discussing.
It was recognised by the Law Reform Committee that in the majority of cases the date of the breach of duty is likely to be reasonably certain, and in all cases it will be capable of being made reasonably certain. The existence of now well-established duty situations and accepted standards of care in regulated activities, including the construction sector, suggest that only in hard cases are problems likely to occur. Indeed, at an earlier stage that point was effectively conceded, I am told, by the Royal Institute of British Architects when the Minister for Housing and Construction met representatives of the construction industry on 16th July 1985.
Such problems as there may be in establishing when breach of duty took place are much more likely to arise in cases of omissions. In such cases, the test of breach is when the duty is no longer capable of performance. Those who are interested will find that in the Midland Bank Trust v. Hett, Stubbs and Kemp, to be found in [1979] Chancery Reports at page 384.
On consultation on the Law Reform Committee's report, there were of course a large number of persons who took various views about it. However, among those persons were not only the Official Referees—to whom the noble Lord, Lord Mishcon, most convincingly made reference a few moments ago—but also (and of this I ask the House to take note) the Consumers Association on the same side. If this series of amendments is passed, then the effect might not be altogether favourable to British architects. It could be that my undertaking to my colleagues that this would be Second Reading Committee stuff in another place and would be uncontroversial might lead to the foundering of the whole Bill, and they might lose their long-stop altogether. Therefore, I think they must be a little careful before drumming up a great deal of support for this kind of amendment.
There are, of course, other matters. I think that one noble Lord—it might have been my noble friend Lord Broxbourne—referred to the EC legislation. That is a quite different cup of tea. That is about liability for defective products. It contains a provision for absolute liability, while this Bill is concerned with negligence, and it extinguishes the plaintiff's right after 10 years and has no direct reference to the law of limitation.
Reference was also made by two noble Lords to the Defective Premises Act. My noble and learned friend Lord Denning was one and I think the noble Lord, Lord Hacking, was the other noble Lord who referred to it. With great respect, this analogy is misconceived. I should like to say a few words on this Act because it is important that one should bear it in mind.
Section 1(5) of the Defective Premises Act provides that any cause of action in respect of a breach of duty imposed by Section 1, a duty to build dwellings properly, should be deemed to have been accrued when the dwelling was completed. It is a much simpler formula than that proposed in the amendment. In other words, it merely provides for the postponement of the cause of action for breach of statutory duty under that Act. It does not provide for taking away from someone who has been wronged a right which he
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already possesses. It emphatically does not provide any precedent whatever for the commencement of the period covered by the long-stop.
Although I think the point I have made is the one I put in the forefront of my argument, I should like to add that the 1972 Act was based on a Law Commission report called Civil Liability of Vendors and Lessors for Defective Premises. The Act was designed to impose on builders of residential property, subject to certain specific exceptions, duties in tort analagous to those in contract. Unfortunately, the Act suffers from serious shortcomings which are gradually coming to light. For a combination of reasons it has never been properly tested in the courts to this day.
As regards the limitation provision to which I have referred in Section 1(5), that essentially contractual provision has now been effectively outmoded by the common law duty of care following the decision of the Court of Appeal in Dutton v. Bognor Regis; secondly, by Section 71 of the Health and Safety At Work Act 1974; and, thirdly, as a result of the decision which has been repeatedly referred to in earlier stages of this debate of Anns v. Merton. Frankly, I should say that this renders the analogy not one upon which it is wise for noble Lords to rely in reaching their conclusion.
I am bound to say that I agree with the conclusion of the Scarman Report at paragraph 4.12. It states:
"A number of those who wrote to us—especially those involved in the construction industry—suggested that the date of completion would be even easier to ascertain than the date of breach of duty. Section 1(5) of the Defective Premises Act 1972, for instance, provides that for the purposes of proceedings under the Act a cause of action shall be deemed to have accrued at the time the dwelling was completed. We are doubtful though whether this is really a satisfactory alternative and in particular we can see formidable difficulties in adapting the concept of completion to all the types of circumstances (other than personal injury) where latent damage might arise. There is also the possibility of injustice to defendants where completion, on a very large project for instance, takes place many years after the relevant breach of duty".
I agree with that. But if the members of the Scarman Committee had been faced with this amendment which has two alternative sets of law—one for the construction industry and one for everybody else—with different termini a quo and with the further complication of the last words of paragraph (b) I have little doubt that they would have rejected the suggestion. That is the conclusion to which I come, and that is the conclusion to which I invite the House to come, too.
Lord Hacking: My Lords, I am grateful to every noble Lord who has participated in this debate. The House has been considering this amendment for just over an hour and I think we have now reached the point in our discussions where it would not be fruitful to go on any further. It would not be fruitful because I doubt whether we will be able to persuade the noble and learned Lord to change his mind and it would not be fruitful because, in any event, we have had a most full discussion. I again therefore thank all noble Lords who have participated.
I shall, therefore, be seeking leave to withdraw the amendment but before I do so I will make two short observations. Once again the noble and learned Lord made a very powerful speech on behalf of the inarticulate plaintiff which, of course, includes big property

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companies as well as persons of more humble origins and less erudition. The noble and learned Lord also said that my amendment would create first- and second-class citizens. It was not my intention to do that, and nor do I believe that I did so in moving the amendment. I am glad to see the noble Lord, Lord Howie, nod his head in agreement. Nor, indeed, in my extensive discussions with the building and construction industries were they in any way trying to seek special advantage for themselves as defendants or for their industries. They were seeking a law which would have easier and clearer application and which would benefit both plaintiffs and the defendants.
I make one final observation before seeking leave to withdraw the amendment. The noble and learned Lord referred to depriving plaintiffs of their rights. However, some questions must be asked, must there not? What right does the plaintiff have when there is such staleness of an action that the defendant no longer exists or cannot be found? What rights does the plaintiff have when the defendant no longer has the money to pay the compensation ordered by the courts in favour of the plaintiff because the defendant is no longer in the same financial condition or is no longer insured? Those are the realities of life and it is with those realities of life that I moved the amendment.
Although I have had good support from your Lordships' House, including support from the noble and learned Lord, Lord Denning, the noble Lords, Lord Broxbourne and Lord Lloyd of Kilgerran, and others, it is clear that we have not persuaded the noble and learned Lord the Lord Chancellor. For that practical reason alone it is time for me to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Lord Chancellor: My Lords, before we have the Statement, does the noble Lord, Lord Hacking, intend to move Amendments Nos. 5 and 6? They have already been spoken to.
Lord Hacking: My Lords, I have already spoken to those amendments which were, of course, linked with Amendment No. 4. I do not intend to move them.
[Amendments Nos. 5 and 6 not moved.]

Agriculture Price Fixing Settlement
5 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, with the leave of the House, I shall now repeat a Statement on the outcome of the meeting of the Council of Agriculture Ministers which is being made in another place by my right honourable friend the Minister of State, Mr. Gummer. The Statement is as follows:
"With permission, Mr. Speaker I will make a Statement about the meeting of the Council of Agriculture Ministers which took place in Luxembourg on 21st to 25th April 1986. I attended this meeting with my right honourable friend the
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Minister, who is unfortunately ill and not able to be present in the House.
"After negotiations which lasted throughout the week, the Council reached decisions on farm support prices and related measures for 1986–1987.
"The basis of the agreement is a freeze in common support prices, with substantial price reductions for certain Mediterranean products, in particular tomatoes and tobacco. Following recent currency developments, some changes in green rates were indicated. It was, however, important that these were not of such a size that they undermined the policy of price restraint. For this reason the United Kingdom supported devaluations of the green pound, the green franc and the green punt, which will increase support prices in national currencies by 2.75 per cent. in the livestock sector and by 1.35 per cent. in the arable sector.
"Turning to specific commodities, the United Kingdom has been particularly concerned about the growing surplus of cereals, and we made it clear at the beginning of these negotiations that we intended to press for effective changes to the existing regime on a fair basis. I am pleased to say that the changes we have agreed in the intervention arrangements and in quality standards, together with the introduction of a 3 per cent. co-responsibility levy, will have the effect of substantially reducing the effective level of support. The co-responsibility levy has been agreed for five years, with provision for a report by the Commission after two years on how the system is operating. As the House knows, we would have preferred a straight cut in the price for cereals. However, the co-responsibility mechanism as agreed is a substantial improvement on and simplification of the Commission's original unsatisfactory proposals. The levy will apply to cereals sold into intervention and act as a direct price cut, with a real effect on the market. The levy will be collected at the processing stage, but cereals processed on the farm will be excluded. We would expect to pay a proportion of the total levy which is close to our share of Community cereals production.
"An aid for small cereals producers will be introduced. The detailed arrangements for this remain to be decided.
"The Commission's original proposals included an unsatisfactory price structure for barley and a big increase in the average threshold price for maize. We secured changes in the Commission's proposals to remove the barley price distortion and to provide for a lower increase in the average maize threshold price.
"The support levels for rapeseed and sunflower seed will also be reduced if the crops in the Community exceed a prescribed maximum guaranteed quantity.
"The reduction in cereal prices will be of particular benefit to pig and poultry producers. The final form of the MCA reductions in this sector has yet to be decided, and the Commission will be submitting proposals on this in the near future. In the meantime, increases in negative MCAs for pigs, eggs, and poultry resulting from the recent realignment will be suspended until 1st June 1986.

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"For milk, I am glad to say that we resisted considerable pressure for a price increase. In addition, the Commission's proposal to change the fat:skiin ratio was dropped. This will avoid adding to the costs of those food manufacturers who use skimmed milk.
"Despite the very real steps taken by the European Community to reduce the milk surplus, culminating in the introduction of quotas, the Community is still a substantial over-producer of milk. The United Kingdom was determined to secure a further reduction and so to cut this surplus. We were, however, insistent that the burden should fall equally on all member states. I am glad to say that, in the face of strong opposition from a number of countries, a further 3 per cent. cut in milk quotas was agreed. This will be effected over the next three years, initially through a Community buy-out scheme, but if this voluntary system is not effective in all member states, it will be underpinned by compulsory reductions. The maximum compensation chargeable to the Community budget for this scheme will be about 18p. per litre over seven years. But each member state will be able to set the rate of payment according to its own circumstances. There is also provision for national schemes to continue alongside the Community scheme. We secured a provision which allows larger dairy farmers to sell part of their quotas under this scheme.
"Additionally, the arrangements to off-set under-production of quota in one region against overproduction in another will continue for a third year. This has given useful flexibility in the United Kingdom in each of the first two years of quotas.
"For beef, we succeeded once again in securing an extension of the beef variable premium scheme unchanged. The maximum rate expressed in sterling will be increased as a result of the green rate devaluation. The Commission's proposals for reforming the regime for beef are to be further studied by the Council with a view to the decisions being taken by the end of this year.
"For sheep, we insisted on the removal of the proposed limit to the number of ewes per farm qualifying for the annual premium. We also secured the removal of the proposal to amalgamate Northern Ireland and the Irish Republic into a single region for the purpose of calculating ewe premium.
"Turning to the budgetary costs, the Commission indicated that the package as a whole will produce a total saving over 1986 and 1987 of 777 million ecu, a saving of 118 million ecu greater than would have been achieved under the Commission's original proposal. There remains, however, a serious problem about the substantial additional costs resulting from changes in the relationship between the ecu and the dollar and from the realignment of currencies. In supporting the settlement we made it clear that its budgetary implications would have to be referred, to the ECOFIN Council. They are being considered today by this council, which my right honourable friend the Chancellor of the Exchequer is attending. We will continue to seek a thorough examination of the scope for savings to minimise any supplementary budget this year.
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"Overall, this price fixing has produced a highly satisfactory outcome and one that follows closely the approach endorsed by the House, without opposition, on 10th March. The pressure on support prices in the Community has been maintained. In particular, the effective reduction agreed for cereals marks an important step in the battle against surplus production. The outgoers scheme for milk is the next stage in bringing about a better balance between production and consumption.
"By devaluing the green pound, we have ensured that our farmers are treated fairly in relation to producers elsewhere in the Community, including particularly France and Ireland. We have removed from the original package those key elements of discrimination to which this House rightly took such exception—the 25-tonne exemption for cereals and the limits on headage payments for beef-cattle and sheep. Moreover, this settlement will have a negligible effect on food prices, which are, in any case, continuing to rise less than the rate of inflation. The package, therefore, represents a further significant step towards improving the common agricultural policy while safeguarding the competitive position of our own farmers. It is therefore good for Britain and good for Europe."
My Lords, that concludes the Statement.
Lord John-Mackie: My Lords, we are very grateful to the noble Lord for repeating the Statement. I am sorry to hear that the Minister is not too well and we hope that he will have a good recovery. He has had a very busy time indeed this last week because I think there have been six solid days of negotiation.
First and foremost, as regards the Statement itself I should just like to mention the euphoria—it is almost euphoria—in the last paragraph. It is perhaps a little too enthusiastic. However, we cannot begrudge the Government a little enthusiasm sometimes.
As regards paragraph 2, I wonder whether the Government have given any more thought to the question of the green pound and the continual adjustments that have to be made. I note that the Chancellor of the Exchequer and the Minister are both keen on joining the EMS, which would solve many of the problems in that respect.
I note that no details of the intervention arrangements have been decided. That is an arrangement which is very important to farmers and rumour has it that there will be no intervention buying from harvest until December. I wonder whether the Minister can enlighten us a little about this.
It is not quite clear exactly how the co-responsibility levy of 3 per cent will work. The Statement says in particular that,
"The levy will apply to cereals sold into intervention"
I presume that this means all cereals sold and not only those sold into intervention. The Statement goes on:
"The levy will be collected at the processing stage, but cereals processed on the farm will be excluded".
Does that mean that they will be excluded if they are processed and sold? I think this is rather important, because if one can process cereals—for example, crush them—and then sell them for horsefeed and so on, there is a very big loophole. I think that is a loophole

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that needs to be explained. It is very good that the Minister has managed to get a fair spread of this levy. The first proposal of 25 tonnes was obviously going to be unfair.
The support levels for rapeseed and sunflower seed, if one reads the sentence carefully, amount to a quota, do they not? Although the word "quota" is avoided, there is no doubt that quite a few people are beginning to think along quota lines. I have no doubt that the poultry and pig production people will be pleased with some of the figures if the price of foodstuffs comes down.
On the important issue of the 3 per cent. cut in milk quotas under the outgoers scheme, I made my opinion known last Monday in the debate and I shall say no more today except to note that, again, it is stated that if this is not a success, it will be underpinned by compulsory reductions. Once more, this is going back to quotas; and it is happening repeatedly. We note that when originally mooted it was going to be nearly 27p a litre. It is now reduced, according to my original copy, to 17p, although the Minister said, I think, 18p. There are a fair number of corrections. I do not believe that this will be anything like the attraction that the EC considered it earlier for people to take the outgoers scheme, especially when it is now obvious that the landlord—this is where the tenants are concerned—will get a fairly large share of it.
The flexibility in the United Kingdom in the first two years of the quota is good. I must congratulate the Minister on the beef premium scheme and the ewes qualifying for annual premium. I note the misprint showing ewes spelt "yews". I wonder whether this relates to thoughts about woodlands that might be planted. I do not know. But that is a Freudian slip.
The overall fixing has produced a highly satisfactory outcome, says the Statement. It goes on to say that this is an important step in a battle against surplus production. I wonder very much whether that is the case. There is nothing significant so far as one can see in what the EC has done compared with its original, not very significant proposals. Its slackening of them now will not do much good at all. I would welcome the Minister's remarks on the questions I have asked.
Lord Mackie of Benshie: My Lords, following, as usual, my noble kinsman, I find he has said much of what I was going to say, including pinching my crack about yew trees that I would have put rather better. I should like to thank the Minister for repeating the Statement. I must say, however, that it is all too late. The Minister has done well in regard to a freeze in common support prices. But we are are up against a curious and difficult situation. If there had been a freeze five years ago, with the farmers of the Continent clearly told what we were going to do and what prices were going to be, we would not be in the mess that we are today. However, it is still better late than never.
It is not, of course, a freeze. We are adjusting the green currency so that there will be a rise in prices in France and Germany, and I see, also here. The paper does not tell all—except to people like myself who know about these things. The intervention arrangements will hit the farmers who can least afford it
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extremely hard. I should like the Minister to say, broadly, what the intention is. I understand from newspaper reports that there will be no intervention until well after harvest. I should have thought that this would mean a drop in the price that the farmer selling off the combine will have to take, when he cannot afford to keep it until November and December, of anything up to £20 a tonne below the stated price.
5.15 p.m.
This sort of device is wrong. We should be fixing a bottom price so that people would know what they were to get. This should be sufficiently low to deter excess production, particularly from the bad lands—the land that should not be growing. It should be coupled with the proposal, which again comes far too late, to assist small producers. The Statement says that detailed arrangements remain to be decided. They will have to be decided fairly quickly before harvest if they are to be any help to the people who will be hit extremely hard by the lack, so far as I can see, of any intervention during the back end of this year. The Minister should, I feel, comment upon that.
I should also like the noble Lord to say whether he thinks that this will result in a drop in cereal production. Will the good lands produce so much more that, despite the fact that people drop out from the bad lands, there will be a further surplus this year? If he can say whether this is likely, it might be useful. I feel that there will still be a surplus.
Taken as a whole, the move is in the right direction. At least some of our Continental partners are beginning to see sense. The Minister should, however, say whether he considers that spending will be kept within the budget. I know that he has passed this matter on to the finance Ministers. But it does not look to me as though it can, particularly with the pending trade war with the United States over the export of cereals.
In short, the Statement goes some way towards correcting many of the acts of foolishness that have been perpetrated owing to the lack of courage shown by the agriculture Ministers, not so much by the Commission. I fear, however, that things are still on course for the production of more surplus food which may well bust the whole system.
Lord Belstead: My Lords, I am grateful to both noble Lords for their reception of my right honourable friend's Statement. The noble Lord, Lord John-Mackie, has kindly said a few words about my right honourable friend, who is not well, which I know he will appreciate. The noble Lord, Lord John-Mackie, put the question as to whether we should now join the EMS. All that I would say on the agro-monetary aspect is that the Community states, I believe, would feel that justice was done.
As the noble Lord will know, there was no scope under the present system for either Germany or, indeed, the Netherlands to have a devaluation of their green currencies. It was, however, open to other countries. When one looks across the board and sees what has been done in other countries, it was right that we should have some devaluation of the green pound and in particularly that the Community should have differentiated between the livestock sector where the

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devaluation is greater and the crops sector. I simply add that devaluation of the green pound is going to be worth about £160 million so far as British producers are concerned. Against that £160 million, however, must be put all the other reductions in prices in the package, so that in the end we have what is in effect a freeze in returns.
The noble Lord, Lord John-Mackie, asked me to say something about intervention, as did the noble Lord, Lord Mackie of Benshie. It has been agreed by the Ministers in the Agriculture Council that there will be no intervention for the months of July and August. Intervention will be available from 1st October, with harmonised periods for payment. It will be available also from 1st September but with longer payment delays which still have to be fixed.
The noble Lord asked me to say a word or two about the co-responsibility levy. We shall have to see the detailed rules which will be proposed by the Commission in due course. However, if I may answer a specific point which the noble Lord, Lord John-Mackie, put to me, the intention is to exclude cereals processed on the farm for use on that farm. It is not intended, as I understand it, to exclude cereals processed for sale, for instance, by farm co-operatives.
The noble Lord was good enough to say that he very much welcomed the removal of the 25-tonne exclusion clause which would indeed have ended up with the United Kingdom paying in co-responsibility some three-quarters of the amount which would be required from the whole of the Community. We now have a fair deal with regard to the the co-responsibility levy. We shall find ourselves paying in levy very much the same sort of percentage as our percentage of production of cereals in the Community.
The noble Lord said that the Statement with regard to rape and sunflower seeds is nothing more nor less than a quota in another name. With respect to the noble Lord, I do not think that I would agree with him. It is a more effective guarantee threshold system which is based on a United Kingdom suggestion and which will ensure that aid levels are reduced proportionately when production exceeds the prescribed threshold. Noble Lords may ask why we have to bring this forward. Did we not already have it? Yes, we did, but the Germans succeeded in removing it at the last price fixing. With regard to rape and sunflower seeds we have succeeded in putting it back in. If I may say so, it is a sensible move.
The noble Lord again on milk, said that he felt this was a move towards quotas. With respect to the noble Lord, whom I normally follow in what he says because of his great experience, what has been put forward is much more refined than that. We shall all want to look to see what the small print says on the Community outgoers scheme.
There are two points that I would make. First, there will be some opportunity for a certain amount of restructuring under the scheme. I shall not go further than that. I think that we shall want to see what the opportunities may be. Secondly, when the noble Lord asked whether the 18p will be enough. I think that with the new provision for part quotas we shall have a good response. I do not think we shall have to resort to compulsory cuts, but this will depend upon producers.
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The noble Lord, Lord Mackie of Benshie, said that this comes too late. There was a great deal, understandably, in this Statement about another place, a very important debate in another place, and other matters. In your Lordships' House we have had three enormously important reports which were produced by the European sub-committees of your Lordships' House and which were debated about a week ago. I remember that one of the main matters which came out of the report on cereals and on the price fixing was the need for consistency. I therefore simply say to the noble Lord that his criticism has weight. As usual, he hits the nail on the head. But I very much hope that this price fixing will be the start of a more consistent policy.
The noble Lord said that he felt that intervention would hit hard the farmers who could least afford it. I hope that I have given the noble Lord the details of what the intervention arrangements are and he may now take a slightly more beneficent view.
The noble Lord asked two further questions. The first was whether cereal production would drop; and, finally, what was the effect from a financial point of view. With regard to production dropping, I must put on record that my right honourable friend the Minister, when he addressed the National Farmers' Union annual general meeting, for the first time put forward the thesis so far as the British Government are concerned that we needed to look for a package in which he believed there might be not only price restraint but also a voluntary set-aside scheme. We are all now anxiously awaiting proposals from the European Commission on structures, which, so we understand, will include some proposals for set-aside. But we must wait and see.
With regard to the financial effects, the noble Lord is absolutely right. There is a great problem regarding the level of the dollar and the movement of European currencies.
I finally make the point that the commissioner confirmed during the Council that the Commission recognises that both the 1986 and 1987 budgets must stay within the 1.4 per cent. ceiling for VAT.
Lord Boyd-Carpenter: My Lords, can my noble friend say whether the Community is still supplying certain foodstuffs at very low prices to Libya, and, if so, whether it has been decided to stop that?
Lord Belstead: My Lords, the Community, so I am advised, has taken on board in the Council of Agriculture Ministers the prevalent feeling about this point. If I may confine myself for a moment to milk products, the terms of any trade with Libya would depend upon offers made by traders. However, I am absolutely certain that the Commission will take account of the current trade relations with Libya, arid the Commission has said that the Community will not be offering any further special deals for Libya.
Lord Cledwyn of Penrhos: My Lords, I congratulate the noble Lord on the cheerful and optimistic way in which he read out the Statement. He has the right kind of temperament to be one of the Ministers of Agriculture.

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I do not want to upset the noble Lord unduly, but may I put one short question to him about the budgetary implications of this agreement? It seems that the new package will add £1 billion to the farm budget. Does he agree that this will inevitably precipitate a fresh controversy on how to prevent the Community going bankrupt in the autumn? Where is the money to come from? As a result of this extra spending the countries of the EC will be forced either to raise the share of VAT—which is now 1.4 per cent., and that goes to Brussels—or to cut spending in other directions, for example, on the regional and social fund.
I am therefore putting three possibilities to the noble Lord: VAT; a supplementary budget of some other kind; or a cut in this fund. If there is a cut, does he not agree with me that there will be considerable protests especially from the two new members of the Community? Will the noble Lord therefore agree with me that we should be very cautious in the way in which we present this agreement?
Lord Belstead: My Lords, I in no way disagree with the noble Lord, Lord Cledwyn, in his last words. He has every right to counsel caution and to warn me that there should be a becoming gravity in these matters. However, I ought to say to the noble Lord that the original proposals which were put forward by the Commission were estimated to produce savings, after taking account of revenue from the cereals co-responsibility levy of 659 million ecu, which is about £410 million. As a result of this Council the savings will be some 777 million ecu, which is the equivalent of about £485 million. Therefore as a result of the deliberations which ended on Friday the savings have been very much increased over and above what the Commission had intended.
In saying that, I take the point made by the noble Lord. It is an extension of what the noble Lord, Lord Mackie of Benshie, asked: "Are not the cards nonetheless stacked up against us?" There is the problem of the level of the dollar, and of the movement in the European currencies despite the fact that they are within the EMS. The noble Lord, Lord John-Mackie, was recommending that the moment may have come for Britain to join that. Perhaps I ought just to say that the commissioner indicated that the agreement reached is consistent with the budget discipline agreement. The Commission takes the view that the forecast overrun of expenditure is the result of extraneous factors related to changes in the ecu/dollar relationship and the realignment of currencies. The budget discipline text provides for such exceptional circumstances to be taken into account, but because this is a very grave matter it is being discussed today in ECOFIN.
I would only add what I said also to the noble Lord, Lord Mackie of Benshie: Namely, that the commissioner also gave an undertaking that he realised that the 1986 and the 1987 budgets had to stay within the 1.4 per cent. VAT ceiling.
Lord Walston: My Lords, I should like to ask the Minister two questions. I am confused about the saving of 700 million ecus. Is it a saving over last year's
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expenditure? Can we now look forward to the agricultural budget being 700 million ecus less than it was last year; or is it a saving over some earlier estimate which was a good deal higher? Can he tell us how much he expects the agricultural budget to be this year in comparison with last year?
Can he also tell us how much he expects the surplus of, for example, wheat, to diminish, if at all, this year as compared with last year? Given the fact that the Minister described it as a highly satisfactory outcome, are we entitled to think that there will be some savings of that nature and some diminution in surpluses?
Finally, on a purely technical point, I should like to know whether the 3 per cent. co-responsibility levy is to be paid only on grain cereals which are sold into intervention; or is it to be paid on all cereals? If the latter, is it 3 per cent. on quantity or 3 per cent. on price? How do you assess such crops as malting barley? Will they have to pay a higher co-responsibility levy than those which are simply sold for grinding?
Lord Belstead: My Lords, the savings to which I have been referring are savings over projected expenditure. Once again, I in no way try to hide the fact that this means that the cost of the Community, from the point of view of agriculture, will continue to rise and that that means that we shall need a consistent policy in order to bring it down.
Secondly, the noble Lord asks whether or not the surplus of wheat will diminish. As the noble Lord knows better than I, all the wheat is in the ground and that will be harvested anyway. However, it will mean about a 6 per cent. cut in returns to producers. I therefore repeat that if producers begin to know that this is the beginning of a consistent policy, they will start to take heed. Incidentally, it is interesting that the only commodities which have received an uplift so far as these negotiations are concerned are, I think, peas and beans for protein.
Finally, the noble Lord asked exactly what the 3 per cent. co-responsibility levy means. It will mean £3·39 a tonne, payable on sales for processing for human or industrial use into intervention or for export. That will be the effect of the levy.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord ask his right honourable friend to find a better name than ECOFIN? It sounds like a ballistic missile!
Lord Belstead: My Lords, it is one of the many matters which I think we shall have to ask the Treasury to deal with, because it is not so much an agricultural as a financial council.
Lord John-Mackie: My Lords, I should like to raise a point for clarification. The Minister referred to 3 per cent. all over and then he said £3 per tonne. It does not seem to add up. Is it £3 per tonne or 3 per cent.?
Lord Belstead: My Lords, I am advised that it is 3 per cent. of the intervention price, and as things stand at the moment it will work out in cash terms at £3·39 per tonne.

Highways (Amendment) Bill
5.35 p.m.
Lord Denham: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Highways (Amendment) Bill, have consented to place their prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Lord Dean of Beswick: My Lords, I beg to move that the Bill be now read a third time.
Moved, That the Bill be now read a third time.—(Lord Dean of Beswick.)
Lord Henderson of Brompton: My Lords, I should like to detain the House for only one or two minutes. I pray in aid the fact that so far the Bill's passage through both Houses of Parliament has taken only 21 minutes. Therefore I hope that one or two minutes extra may not be begrudged me.
First, I should like to join the noble Lord, Lord Dean of Beswick, in the tribute which he paid on Second Reading to Mr. Michael Cocks who is the Bill's sponsor in another place. Mr. Cocks, obviously drawing on his expertise as a Chief Whip, used his legerdemain and "magicked" the Bill through the House of Commons without a word being spoken. I wish that he would impart that secret to some of us who could well use it in other spheres!
My purpose in rising today is partly to recall the fact that this matter was first raised in this House during our debates on the Straw and Stubble Burning Bills which the noble Lord, Lord Alport, introduced in the House in two previous Sessions, but the noble Lord did not finally pursue the matter. However, the question of the danger caused to those travelling on highways by smoke from the burning of straw and stubble was raised in this House and serious attention was paid to it by the noble Lord the Deputy Leader of the House, Lord Belstead, when he was speaking as the responsible Minister answering the debate on straw and stubble burning.
I should like to quote from a letter which the noble Lord, Lord Belstead, wrote to me after the noble Lord, Lord Alport, withdrew his Bill last Session. I pursued the matter with the noble Lord, Lord Belstead, and he acknowledged my letter about the dangers of smoke from straw and stubble burning obscuring visibility on roads. He said:
"As you know, this is a problem which Michael Jopling and I take very seriously. It is not an entirely straightforward matter to tackle through legislation but we are discussing the scope for amending the Highways Act 1980 with Lynda Chalker, and I am hopeful that we may be able to find a practical solution which satisfies all our concerns".
That letter was written on 29th March last year. It is a matter of some congratulation to the Government that they have managed to reach the happy stage when the Bill is about to pass through the second House just over a year after that letter was written. I thought it only right to thank the noble Lord and I am very glad that he is in the House to hear me do so.
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The substantive matter which I wish to raise and of which I have given notice to the noble Viscount, is that I believe it is right that some publicity should be given between now and the next straw and stubble burning season, so that those concerned and the general public know the effect of this small but important piece of legislation.
If we look at the short title of the Bill it merely refers to the Highways (Amendment) Bill. However, if we look at the Long Title it says that it is:
"to amend the Highways Act 1980 so as to impose penalties in cases where a user of a highway is injured, interrupted or endangered in consequence of the lighting of a fire on the highway or elsewhere".
This is a very important matter. It has led to fear and injury, and even death.
Therefore, I make no apology for asking the Minister kindly to tell the House what he has in mind in order to spread the knowledge that this legislation has been passed by Parliament. Farmers are no doubt aware of their responsibilities under the code which has been issued by the National Farmers' Union and no doubt by the by-laws issued by local authorities. But they now ought to know the important consequences for them not just of lighting straw or stubble but of any fire—that it could have the consequences embodied in the Long Title of this Bill. Equally the local authorities and the police should be made aware, and not least the general public, so that they will feel more secure when they travel on the roads during the straw and stubble burning season.
Lord Underhill: My Lords, I too shall not detain the House for long. There is one point to add to the useful comments of the noble Lord, Lord Henderson. As I said at Second Reading, this is a useful Bill which clarifies and deals with an omission in the present law, and I want to do nothing to impede its progress. But if one looks at the Bill one finds that the maximum penalty for lighting a fire on or over a highway, or discharging any firearm or firework within 50 feet of the centre, is on level 3, which I understand is £400.
If one looks at subsection (3), which deals with the lighting of fires on land off the highway, we find that the maximum fine there is on level 5, which I am told is £2,000. The noble Earl, Lord Caithness, at Second Reading on 18th March referred to the present law, and said (at col. 955 of Hansard):
"the maximum penalty under that part of the Act currently stands at £400, and that really is too low given the problems that can arise".
I understand that the Automobile Association wrote to the noble Earl in his position as Under-Secretary of State for Transport on 4th April raising this matter. As I believe no amendment has been passed by your Lordships, this Bill will not go back to the other place, and therefore it cannot be dealt with there. However, may I ask whether there are proposals in mind for dealing with this? It is an anomaly to have a maximum fine of £2,000 for lighting a fire off the highway and £400 on a highway. That ought to be clarified in some way or other.
Viscount Davidson: My Lords, my noble friend Lord Caithness is unable to be present today to represent the Government, and he has asked me to take his place. May I reply to the two noble Lords who have spoken in reverse order? The noble Lord. Lord

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Underhill, raised the question of the disparity between maximum fines for fires started on the road and those started off the road. My noble friend has replied to the AA, in essence, that the reason for this disparity is that fires started deliberately on the roads are very few. They are generally stringently controlled and contained; for example, as part of road maintenance works or in connection with statutory undertakers' apparatus under the road.
These fires will not have the scale or frequency of fires lit away from roads. The exceptional nature of an offence caused by a fire lit away from the road and the need for an effective deterrent against careless burning, particularly straw and stubble burning, justifies the higher maximum fine, which incidentally matches the maximum fine for offences under the Home Office's straw and stubble burning by-laws.
However, I have taken note of the concern expressed by the noble Lord about this disparity. I am not entirely convinced by the arguments now put forward, which might have been discussed fully at an earlier stage, but I shall ensure that they are reviewed when next there is a general highways amendment Bill or a consolidation Bill.
The noble Lord, Lord Henderson, asked me what publicity the Government intended to give to the new provisions of this Bill. I am grateful to him for having given me notice that he was going to do so. We shall issue a press notice at the appropriate time and we shall also be writing to the local authority associations to remind them that the Bill will shortly be coming into effect.
However, I suspect that the noble Lord principally had in mind the farming industry in the context of straw and stubble burning. This is an area to which we attach great importance, and special arrangements will apply. The Ministry of Agriculture, Fisheries and Food will once again be mounting a publicity campaign in the early summer to encourage farmers to burn safely and to use alternatives wherever possible.
Road safety and the new provisions in this Bill will be a prominent feature of this year's campaign, which will be designed to ensure that the message about the Bill reaches all cereal farmers. In addition, I understand that the National Farmers' Union intends to publish a new version of its code of practice which will take full account of the Bill's provisions and will also give them suitable publicity in its journal, which goes to over 100,000 farmers.
So far as those farmers who do not belong to the National Farmers' Union are concerned they should be aware of the Bill through the Ministry of Agriculture's publicity. Although the details of this year's campaign have not yet been settled, I can say that as part of last year's campaign every cereal grower in England and Wales was sent a leaflet reminding them of the advice in the code of practice and of the alternatives to burning. In conclusion, I thank the noble Lord, Lord Dean of Beswick for guiding this Bill through your Lordships' House, I re-emphasise the Government's support for it and I commend it to your Lordships.
On Question, Bill read a third time, and passed.

Housing (Scotland) Bill
5.47 p.m.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Gray of Contin.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 1 [Extension of right to purchase and of "secure tenancy"]:
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 1:
Page 1, line 6, leave out subsection (1).
The noble Lord said: It is rather surprising that the most important Scottish Bill of this Session comes on at about 12 minutes to six. It belies the importance of it, but then so too does the Bill itself. The amendment I move is
"Page 1, line 6, to leave out subsection (1)".
I defy anyone, be they in Scotland, England or anywhere else, to know what this means. Clause 1(1) reads:
"In section 1(3) of the 1980 Act (dwelling-houses to which right to purchase applies), for the words 'of paragraphs (a), (b), (c) or (f)' there shall be substituted the words 'paragraph, other than (g),'."
Earlier today, I think it was the noble and learned Lord, Lord Denning, who made a plea for plain English. All we have here is hieroglyphics, and no indication at all of what this means. For my sins I was once given the task of examining Chinese codes and cyphers and making an estimate of how long it would take the Japanese to break them down. I can tell your Lordships that it was easier to break those things down than some of the subsections in this Bill.
What the wording means is that the provision extends the right of mandatory purchase to people living in housing associations in Scotland. Housing associations are relatively young in Scotland. There are one or two quite important ones very much older. I am not talking about Scottish special housing associations, but they were covered in the original Act of 1980.
The housing association movement, which is mainly financed through the Housing Corporation, took quite a time in Scotland to get off the ground, but since about 1974 of the 153 associations most are relatively young. I remember opening one in Ayr, I think it was for the Church association, and I discovered that they had about 57 separate associations throughout Scotland, either completed or started. That is an indication of the need for the kind of middle way between renting and owning that was being provided by the housing association movement in Scotland.
They were left out of the 1980 Act. We had a 1980 amending Act in the same year, and they were not included in that. We had a still further amendment within I think a planning Act, and there was no contact made there. Indeed, the Secretary of State expressed himself in 1984, barely two years ago, as satisfied with

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the way things were working and said that he had no intention of making any change. Then along came this indication in 1985 that they were going to give tenants in housing associations houses the same right to buy their houses.
The purpose of the housing association was to provide rented houses in particular and special cases. Indeed, that led to a special development within our cities whereby a very enlightened group of volunteers came together and started little community associations, taking derelict tenement blocks, redecorating them, and thus doing something to keep people in the centre of cities. But if we give the right to buy and take away control from these people it is going to mean that we might slide back into the same position which created the problem in the first instance. We really have to stop that.
It may well he that the Government are too far down on this road, quite unnecessary for Scotland, and just following the English Act—although they are not quite following the English Act because they will be even harder on future charitable associations than they are at the present time. That is covered in the English Act but not in the Scottish Act. I am trying to take this out altogether here, but I suppose that is going too far. If there were more time I would go on for a considerable length and even probably divide the House on this matter; but I gather we are considering with this amendment an amendment by the noble Lord, Lord Mackie, as well. I do not know whether that is right or not?
Lord Gray of Contin: Yes.
Lord Ross of Marnock: It is right; but we are having the discussion upon this amendment. This amendment will first be put, and then it will be up to the noble Lord, Lord Mackie, as to whether he wants to move his amendment formally and then proceed to a Division. I should like to have the justification of the Government for doing this, as it is quite unnecessary in Scotland. In fact, it is damaging to the movement, and it will completely undermine some of the smaller associations. People will lose heart and say, "Why should we put our efforts into this when the Government are making haste to destroy our efforts?"
It may well be that the noble Lord, Lord Gray, is getting advice to accept this amendment—I do not know why he laughs. He is not neutral on this one, of course. He was not very neutral on the last Bill which we discussed, the one about the Western Relief Road. He let his neutrality slip then in an unnecessary speech, and he is not neutral on this one. He is trying to support the Government. Well, it takes a bit of supporting, but I will leave him to do it. In the meantime, I beg to move the amendment in my name.
Lord Gray of Contin: The noble Lord, Lord Ross of Marnock, has lost none of the persuasive technique for which he is well known; but what he manages to disguise to some extent is that the amendment which he is proposing strikes at the very heart of this Bill. There is no question in this amendment of trying to improve the Bill in any way. This is a wrecking amendment which strikes at the very heart of the Bill.
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One of the important objectives of this Bill is to extend the right to buy to tenants of registered housing associations, and also to tenants of regional councils and related authorities; in our view, it is time for such tenants to be given the same rights as other public sector tenants. This amendment seeks to deny the right to buy to these new categories of tenants; in so doing it would destroy one of the principal purposes of the Bill.
The arguments which led us to accept that housing association tenants should be excluded from the right to buy under the original 1980 legislation no longer carry such force. Scottish housing associations have grown in maturity and in numbers in the intervening years. They now hold a sizeable stock of houses which—and we must not forget this—have been provided with public money. It is difficult to justify continuing to exclude their tenants from the rights which are enjoyed by other tenants in the public sector in Scotland, and indeed by tenants of housing associations in England and Wales.
Moreover, housing associations in Scotland have been given every opportunity to implement a sales policy on a voluntary basis. The fact is that a number of associations have set themselves against sales totally, while others, although they may be prepared to sell to their tenants, are unwilling to offer discount. Up to December 1985, only 69 housing association homes had been sold at a discount, with a further 25 without discount out of a total stock of about 30,000.
I am not impressed by the argument that housing associations are in some way different from other public sector landlords, and that they, uniquely, should be able to go on adding to their stock without any requirement to give tenants an opportunity to purchase their homes if they so wish. In particular, suggestions that sales will somehow seriously weaken the housing association movement are plainly nonsense. I appreciate that associations have a genuine concern for their role in meeting special needs. The legislation, however, will contain adequate safeguards to enable associations to retain sheltered and amenity housing for the elderly. I would remind the Committee that housing association tenants in England and Wales have had the right to buy since 1980; the evidence is clear that sales do not cause the housing association movement to go into any form of terminal decline.
Secondly, the amendments seek to deny the right to buy to tenants of regional councils and of police and fire authorities. Once again, we have been disappointed that regional councils have not been more vigorous in pursuing a voluntary sales policy. Tenants have found it particularly difficult to understand why their landlords were prepared to sell at discounts equivalent to those available under the right to buy in some cases but not in others. This is a position we find very difficult to defend. Tenants of regional councils inevitably compare their position with others in the public sector. We have concluded therefore that tenants of regional councils can no longer be denied the right to buy their homes and that they should be able to exerise that right on the same terms as other public sector tenants.
We believe that tenants of houses who have been provided with public money are entitled to buy their

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homes after a time at a fair price. This right should extend as widely as possible across the public sector. Clause 1 has this effect, by bringing tenants of regional councils and housing associations within the right to buy. I am sure that the present amendment, which seeks to deny the right, will not be welcomed by the majority of the tenants of housing associations and regional councils. I hope that the noble Lord will withdraw his amendment; I cannot commend it to the House.
6 p.m.
The Earl of Selkirk: At the outset I should like to thank my noble friend Lord Gray for the care with which he has provided us with Notes on Clauses. Also he has fully answered two or three very penetrating letters, for which I am extremely grateful. He could not have done more.
I should like to make one comment generally. It does not help housing to have a Bill so complicated that one can hardly understand it. Already housing associations have had to take counsels' advice on the meaning of some of the clauses. I know from a letter that I have received that even the Scottish Office is not fully aware of the implications of some parts of the Bill. Mere complication in itself is not a good thing. It is the complications of rented property over half a century which has brought rented property to its knees.
The noble Lord said that this is a wrecking amendment. I want to know whether the Government are trying to wreck the 1974 Act. Is this the policy of the Government? Does my noble friend remember that Act? It started with a Tory initiative. After the election it was carried through by Mr. Crosland, who was one of the best housing Ministers that the Labour Party has produced. It was then welcomed by Mrs Thatcher, who I think at that time was shadow Minister of housing. She said she would do her utmost to see that it was put on the statute book. This is one of the few Acts in the whole of this century that has been welcomed by both sides. Does my noble friend intend to wreck this?
The one criticism that has been advanced is that not enough houses were sold. There was no attempt to praise the housing associations for the number of very clever systems which they initiated particularly to help those who are weak, such as bells in the house to warn people and arrangements for visitors of one kind or another. These systems have been arranged deliberately.
I take particular joy in Glasgow. I used to look at these great tenements about which the architects said that nothing could be done and they were quite impossible; and the local authority failed. The housing associations have made them into tenantable properties which are eagerly sought to be bought. This is a tremendous step forward in the basic problem of Scottish housing. Is that what the Government want to scrap?
I have heard no criticism except that not enough houses were sold. The noble Lord knows the difficulty, and we must repeat it. If a charity is obliged to sell a house at a discount, the Inland Revenue will declare
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that such an organisation is not a charity. If the noble Lord does not accept what I say, I can read him a letter from the Inland Revenue saying precisely and exactly that. If the charity did not sell it would be hauled before the courts. That is putting charitable associations into a totally impossible position. I cannot believe that it is in the interests of Scotland. Is it really the Government's wish to destroy all the charitable associations in Scotland?
As the noble Lord has said, this is a new role. It has come under the 1974 Act. I should like to cite the 1974 Act in one sentence from Mr. Crosland. He said that it would be an intolerable choice in this country if people were limited to choosing between owner occupation and council houses. I put that to my noble friend. Does he accept that that is an intolerable situation or does he not? The whole purpose of Mr. Crosland's Act, so welcomed by the Tories, was to try to restore a rented section in the central area. Rented property is perfectly respectable and is essential for certain types of people, such as young married people and those who cannot afford to buy houses. They are the people who are least well off.
This Bill is putting the emphasis on those who are rather better off. There is a slight financial division being made which is wholly undesirable. Anybody who listened to the speech made by my noble friend Lord Seebohm on the Duke of Edinburgh's report knows that there is a problem with rented houses. The noble Lord need not worry about owner occupation. It is going ahead like a house on fire, if I may put it wrongly that way. In the last four years the building societies have invested about £5 billion in loans covering 350,000 different properties. We need not worry about this. It is a different proposition.
We want somebody to take the trouble with those who are least well off. This is the sphere into which the housing associations are going. I believe there are 7,000 houses occupied by old people in Scotland that have only an outside lavatory. That is the kind of area that should be tackled. Never mind about owner occupation; that is going well.
Age Concern in Great Britain has given me some details about old people. In this country 1 million people have no regular visitors. It is true that in housing associations there are regular visitors looking after these people. I should not worry greatly (I put this now to the noble Lord) if he said that housing associations could sell under Section 14; the HOTCHA system. If he said that the Secretary of State would give permission for that I should be happy to leave it at that. It is proper that some of the housing associations should be sold. But I object to the wholesale possibility of selling, which would mean, if it was taken advantage of, that half the houses would be sold and the whole movement would fall to the ground. I ask the Minister to think carefully about this. It is something that has gone much too far. I believe it would be contrary to the interests and certainly against the wishes of every single housing association in Scotland. I ask the Minister, please, to think about this more deeply than he has up to now.
Baroness Elliot of Harwood: I should like to support my noble friend Lord Selkirk. I have had some experience, having been chairman of a housing

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committee, and I have had experience, too, of charitable housing associations. I have also had experience of building houses for people who are handicapped in different ways. What my noble friend said is right.
We want people to be able to buy their own houses. That is something we have been urging people to do and they are doing it. We want as many houses as we can possibly have for everybody and we want every type of house, but certain types of houses should be reserved for various necessities, and should not be sold because that would put the housing associations into a difficult position.
I know that it is difficult to differentiate in this way in a Bill, but this gives us an opportunity; I agree with my noble friend that it is an opportunity that we must not let go. We must see that we have a fair deal not only for those who want to buy (I am all for them buying), but for those who want to rent and, above all, for those who need special houses because of the conditions under which they live. I hope that the Minister will consider this, before completely wiping out all these provisions in the Bill.
I also agree with the noble Lord, Lord Ross, because I tried to find out what this meant. I could not understand a single word of it. It was not until he had explained it, and the noble Lord, Lord Gray, had explained it, that I had any idea of what this meant. I think that if we are going to pass Bills, it is terrible to have the kind of wording that is used in this Bill. The noble Lord should do something about it.
Lord Taylor of Gryfe: From these Benches I should like to support the amendment by the noble Lord, Lord Ross of Marnock. I know that the Minister is a very reasonable man and I hope that he will respond to the pleas that have just been made by the noble Earl and by the noble Baroness, Lady Elliot, with her very considerable experience in handling housing problems in local government in Scotland. This is not a doctrinaire matter, this is not a matter in which parties are lining up one against one another. This is a question of developing a housing policy with very serious social implications.
A long time ago I was on the city council in Glasgow. My leader at that time was the father of the noble Lord, Lord Carmichael of Kelvingrove. We were operating in the post-war period in Glasgow when there was a great housing need. The measure of our success seemed to be the number of houses that we could build in a year. That was understandable because of the great need for housing at that time. But we neglected some values in housing administration. We created large ghettos of local authority housing; and the people who lived in local authority housing, the 30,000 or 40,000 people in the Castlemilk and the other local authority areas, had little responsibility within the community in which they lived. The housing was managed for them by the corporation somewhere up there in Glasgow. I came to believe, in the light of experience of Glasgow housing, that there must be diversity in the running of housing management, there must be opportunities for new types of organisations, and in particular there must be opportunities for community involvement in running housing estates.
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The housing associations—which are unanimous in opposing this Bill and in supporting the amendment moved by the noble Lord, Lord Ross of Marnock—are a very interesting part of the diverse pattern of housing administration. They involve local people and, what is more, they involve volunteers in local administration which is also important. I think that we are entitled to encourage them. The noble Lord the Minister said in his opening remarks today that their representations were a lot of nonsense. I do not believe that to be true.
Lord Gray of Contin: The noble Lord is misquoting me.
Lord Taylor of Gryfe: I think that those were the words that were used. I am sorry if I have misquoted the Minister. The word "nonsense" certainly was used in that connection. In any case I cannot believe that the serious people who are involved in a voluntary capacity in helping to develop the local community are guilty of talking nonsense. They are deeply concerned and any wounding of the associations, any reduction of the trust and the authority which they enjoy, will discourage people from local community involvement. For those reasons I certainly support the amendment.
May I say one other thing? I drove through Glasgow yesterday and I looked at some of the rehabilitation that has taken place in the tenement areas. It is a joy to behold. Areas that were written off as derelict now are alive. There is a sense of activity and revival in the Maryhill Road and in Govanhill and other areas where these associations are operating. I would ask the Minister to respond to the views of these people who have provided us with useful information in this regard and to respond to the plea of noble Lords who are traditionally his own supporters on the Government Benches.
6.15 p.m.
Baroness Carnegy of Lour: I think that it is important that we do not get entirely "conned" by this thinking. I have every sympathy with what my noble friends Lord Selkirk and Lady Elliot have said about the wonderful work of housing associations. Of course, they have done splendid work; of course it is the most excellent thing that voluntary people should involve themselves in housing. But there is another side to this. We are not sitting here thinking entirely about the people who have been involved in housing associations and who doubtless will continue to be involved. We are thinking about the tenants, the people who rent the houses which in the case of local authority housing have been entirely provided by public funds.
I remember—and I was not in your Lordships' House at the time—reading in the press of the debates which took place when the right to buy local authority houses was being discussed. The same argument was used then: that so many people have thought so sensitively and well about local authority housing—and they have. Many councillors have devoted a great deal of time to that. I remember my father's attitude to it when he was a county councillor. He felt then very much about local authority housing as people who run housing associations feel now.
Lord Taylor of Gryfe: I am sorry to interrupt the noble Baroness. We are not opposed to the sale of council houses and we had not been opposed to the sale of council houses when those discussions took place. We are discussing specifically the small area of the housing associations.
Baroness Carnegy of Lour: May I continue? I am sorry if I was labouring that point, but I think it rather important because times have moved on and people have begun to want to buy houses. A housing association house has been provided by public money. So far as the tenants are concerned the only point is that the landlords are different. I think that to continue to deny all tenants of housing associations the righi to buy—which is what the amendment of the noble Lord, Lord Ross of Marnock, is suggesting, as I understand it—is very unjust indeed to the tenants. To try to do this is surprising when one knows how many people want to buy.
It may well be that in some of the housing association areas there are houses that will be exempt. Fair enough. It may be that there are many people who will not want to buy. Fair enough. But to suggest that this Bill in 1986 should frustrate the rights of the tenants of housing associations to buy, which is proposed in the Bill—as opposed to the rights of tenants of council houses—seems to be out of date, condescending and absolutely wrong. The people who run housing associations should understand this. There may well be a continuing role for housing associations, but to say that no one who is a tenant of those associations should have the right to buy is totally out of date. I hope very much that the Government will resist this.
Lord Jacques: In England and Wales, and presumably in Scotland, the charitable housing association is quite different from a local authority. The local authority is part of government. It is responsible to the community as a whole and in addition it is inhibited by a waiting list. But a charitable housing association is not part of government. It is an association of individuals who wish to provide housing for rent where they see a need and very often they have, at least in part, financed the whole matter by making cheap loans and cheap share capital available to the association. Furthermore, in almost every association there is a great deal of voluntary service, for which the association never pays. This is part of the charity. Presumably the position in Scotland is the same as that in England and Wales, but I can assure the Committee that in England and Wales the whole of the finance for these houses was not provided by government. Some of the finance was provided by the shareholders of the charitable housing association and their purpose was to build houses to rent.
When they made a contract with the Government to make grants towards houses, it was not a clause in the contract that the tenant would be allowed to buy the house: that was not a clause at the time of the contract. None of us can change a contract once it is made. Once it is made, that is it: we cannot change it. And for the Government to change a contract by the use of parliamentary power is a misuse of that power. In my opinion, that is the main objection to this clause.
Lord Belhaven and Stenton: I want to support the noble Earl and the noble Baroness very strongly indeed in their remarks. I shall not repeat their points, because they have made them far better than I could.
Lord Mackie of Benshie: As we are discussing the two amendments together, I should like to say something about the situation on the first amendment when talking about the second. I must say that the Minister should be thinking seriously about the Government's attitude, because people are talking about their experience and their feelings. I do not think that anyone is really talking in political terms.
When we look at the 30,000 houses in the control of housing associations as against the total, we are not merely talking about breaching an enormous principle. The noble Lord—I think I have said this before—is really being unusually and uncharacteristically doctrinaire in this matter. He ought not to think in terms of black and white but should realise that there are shades of grey which he should note and act on, particularly bearing in mind the very large amount of support coming from all over the Chamber for the first amendment. I admit that though the principle he is upholding is wrong the amendment might perhaps be said (though I doubt it) to be a wrecking amendment. However, I do not think there is any doubt at all that the whole movement in Scotland is in danger of being very seriously disturbed. Indeed, it might well go into a decline after all the valuable work that has been done if this matter goes through without substantial amendment right throughout the Bill.
Certainly, when we come to look at the work of community housing associations in particular areas, for them suddenly to be told that they have got to sell their houses if anyone wants to buy them, at a substantial discount (and, if it happens to be a flat, at a further 10 per cent. discount) would be very disturbing. I should have thought that the noble Baroness, my noble neighbour, was quite wrong when she said that doubtless the housing associations would continue. I do not think it is beyond doubt at all. I think that many of them may be extremely perturbed, particularly the smaller associations and the community ones.
At Second Reading I cited an association which had done work in the Grass Market in Edinburgh. It has 86 houses. A tremendous improvement has been made in the Grass Market. There has been a build-up in the community spirit there and of course also an enormous build-up in the value of the houses. It is in the centre of a city where a seedy area has become, because of the work of the association, a much more desirable area. Then suddenly this body is going to be told that it must sell. No doubt there will be a queue a mile long to buy, because they could not resist the temptation to resell, even after five years.
The same is true of the rural associations. Most of them are very small, and I think that if the Minister is going to insist on principle (though I doubt whether he would carry it on the first amendment) he must look to giving the Committee some satisfaction, in view of the opinions expressed on all sides, when it comes to the detail of this Bill.
The Earl of Dundee: I should like to support the remarks of my noble friend Lord Selkirk and the amendment of the noble Lord, Lord Mackie of Benshie. I believe that in Scotland there are about 30 housing associations which have a stock of less than 50 homes and there are 53 with less than 250 houses. That is out of 153 housing associations. Would my noble friend the Minister agree that the amendment of the noble Lord, Lord Mackie, attempts to achieve a balance between extending the right to buy on the one hand and protecting the small, rural housing associations on the other? No doubt it may be objected that if associations with less than a certain stock of homes are exempted from the legislation, as this amendment seeks to effect, their tenants would be denied a right to buy and would thus be disadvantaged. If so, would my noble friend the Minister consider the expedient that such tenants be entitled to buy at discounted terms elsewhere in the public sector, as my noble friend Lord Selkirk has already suggested?
The Earl of Perth: As I understand it, we are taking Amendments Nos. 1 and 2 together. I think that Amendment No. 1 perhaps goes a little wide. When we come to Amendment No. 2, for reasons which were given not only by the noble Lord, Lord Mackie of Benshie, but also by the noble Earl, Lord Selkirk, and many others, we are getting into what seems to me to be the heart of this matter; namely, that to try to make all housing association houses available for purchase goes too far. The noble Lord, Lord Gray, said that it was a wrecking amendment. Very well; I will accept that, on condition that when we get to the more particular cases such as that of the noble Lord, Lord Mackie of Benshie, the noble Lord and the Government should accept what we are trying to do in our amendments. I have particularly in mind the question of charitable housing, which comes up at a later date.
Therefore I say to the Committee that perhaps No. 1 is going a bit far, but on No. 2 I say, no. Perhaps the noble Lord will also take to heart what so many of us have said; namely, that as it stands at this moment it is really not intelligible, and he ought to give us an undertaking that would help us all in the housing associations, that at Report stage he will introduce a clause that gets away from this rigmarole which nobody understands, and tell us quite clearly and purposefully what he intends to do.
Lord Gray of Contin: I am grateful to noble Lords on all sides who have participated in the debate on this, the first of our amendments. I shall try to deal with the individual points that have been made and to explain where there has obviously been some considerable misunderstanding. For example, the noble Lord, Lord Jacques—and we are delighted that he is intervening in a Scottish debate—obviously misunderstood the situation, because of course the tenants of housing associations in England and Wales have had the right to buy since 1980.
Lord Jacques: Not the charitable housing associations. That was thrown out by your Lordships' House.
6.30 p.m.
Lord Gray of Contin: I shall come back to the noble Lord's point in a moment. If I have misunderstood him, I shall put that right. I should like to deal first with the points raised by my noble friends Lord Selkirk and Lady Elliot. They complained about the complicated nature of the Bill. I am sorry that the Bill is not as clear as they would like it to be. That is almost inevitable when a Bill amends two existing Acts—the Tenants' Rights, Etc., (Scotland) Act 1980 and the Housing Associations Act 1985. We hope that some consolidation will be possible before too long. In the meantime, we have made available in the Library and elsewhere Notes on Clauses, and we have reprinted the 1980 Act in its most up-to-date form. I hope that that has been of some help. We have also gone out of our way, when we have been asked, to explain points specifically to Members of your Lordships' House, and I greatly appreciate what my noble friend Lord Selkirk said at the beginning of his remarks about the letters that I sent to him. I hope that they have been helpful.
The noble Lord asked about the Housing Act 1974. That Act was replaced by the Housing Associations Act 1985, a consolidating Act. The policies remain as before: to support the housing association movement in providing in their special way for Scotland's housing needs. I fully agree with the noble Lord that associations in Scotland have done remarkable rehabilitation work, and we shall continue to support them in that. It seems hardly fair, as some of your Lordships were suggesting (in particular, the noble Lord, Lord Taylor of Gryfe), that in effect discrimination be enforced against that group of tenants. Why should tenants of ordianry council houses be able to buy their houses and yet tenants of housing association houses be excluded?
Lord Jacques: We have told the noble Lord why.
Lord Gray of Contin: I do not accept why, and a great many of the housing association tenants will not accept why.
Lord Ross of Marnock: Why have the Government accepted it for six years?
Lord Gray of Contin: The noble Lord has made his case forcefully, and I shall reply in my own way. The noble Lord, Lord Ross of Marnock, makes his speeches in his way, and I shall make mine in my way. The noble Lord, Lord Taylor of Gryfe, made that suggestion, and I am sure that that is not what he basically has in mind. The effect of his remarks is that he is discriminating against those tenants, as are other noble Lords opposite. The official Opposition will do everything in their power to try to wreck the Bill. That is perfectly fair, but let us not have any doubt as to what they are seeking to do. They would dearly like to take the right away from everybody, or perhaps the noble Lord, Lord Ross, would, but his party would not. His party has come round substantially to accepting the principle of house sales. It is something that it totally condemned a few years ago, but not now. We now hear a different note. That is a change which is at least a change in the right direction. Let us hope that it moves some more in other ways in due course.

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The noble Baroness, Lady Carnegy of Lour, seized upon the point made by the noble Lord, Lord Taylor of Gryfe. The noble Lord pointed out some of the errors which were made immediately after the war at Easterhouse, Castlemilk and other similar schemes in the Glasgow area.
I want to deal first with what my noble friend Lord Selkirk said. He spoke a good deal about charities. The position is not exactly as he said it was, but I do not want to become too involved in an argument on that narrow issue at the moment because we shall come to it in later amendments and I shall deal with it then. The noble Lord spoke about houses for rent. I think my noble friend Lord Dundee, also suggested that the selling of houses would reduce the number of houses available for rent. Sales do not affect the supply of houses for rent. Studies have shown that people who have bought would in any case have been most unlikely to move and thus create vacancies. The noble Lord and the noble Baroness, Lady Elliot, raised a similar point. The housing association movement in Scotland is strong, and is still growing. Not only are new housing associations being developed in rural areas but many associations are developing new forms of provision, in particular, for those with special needs. Increasingly, rehabilitation work in the cities is succeeding in keeping owner occupiers in tenement blocks alongside their renting neighbours.
A measure of sales to sitting tenants will in no way harm those various developments. All it does is to give housing association tenants the same right as council tenants. Surely it is difficult to argue against that. The noble Lord referred to HOFTA—the Home Ownership for Tenants' Associations—and we shall be examining the need for it in Scotland a little later.
The noble Lord, Lord Jacques, also raised the point about houses being provided without public funds. It is true that a few houses were provided using funds other than Government funds, but since then those associations have been supported by public funding. If they have never had any public money, the right to buy does not apply. That is contained in Schedule 1, page 21.
The Earl of Selkirk: This is a terribly important point. Housing associations have had land provided to them at low cost. They have also had public money. The noble Lord has said, "Any public money and they must and can sell". Does he really mean that? Many of these houses have had a mixture of grants—I think the noble Lord knows this—and public money. As I understand it, under this Bill as it stands they are obliged to sell on request. The noble Lord must try to clear up that point. There are many unsatisfactory matters. I do not want to attack the noble Lord's speech, but I cannot accept one or two of the things that he has said.
The movement is not strong. It has 36,000 houses, and the noble Lord wants to sell half of them. In the past four years building societies have helped buy 350,000 houses. There is no difficulty about buying houses. There is a mass of money available; and the noble Lord is taking away this small crumb.
Lord Gray of Contin: I do not think that my noble friend is is being wholly fair. He has stated that he is in favour of the principle of tenants of council houses having the right to purchase their houses, and yet he is saying that he is prepared to deprive housing association tenants from having the same right. If they are among the less well off, they will not be seeking to buy their houses. It is those who have prospered and who have gathered together some money who would like to purchase their houses. Is my noble friend suggesting that they should be deprived of the right which is available, perhaps a few streets away, to council house tenants? That seems a strange argument to me. My noble friend asked me a specific question. I reiterate what I said when I answered his question. By public funding I mean that if they have never had any public money the right to buy does not apply. As regards land being made available to them cheaply, I cannot answer that question without notice but I shall certainly come back to my noble friend—
The Earl of Selkirk: That is the whole point.
Lord Gray of Contin: My noble friend is not being quite fair on this. I have answered his question clearly.
The Earl of Selkirk: May I ask my noble friend this question? I again take the words of Mr. Crosland. It would be intolerable if citizens of this country had only the choice of a council house or owner occupation. What is required is a substantial rented area. That is the purpose of the 1974 Act and that is the point I am emphasising.
Lord Gray of Contin: I accept what my noble friend says and there is no question of the substantial rented area being put at risk.
The Earl of Selkirk: Does the noble Lord realise that the rented sector has practically halved in the last 12 years and is going down steadily?
Lord Gray of Contin: With respect to my noble friend, the housing associations are still growing and new associations are being set up even now. I shall move on to the next point which I want to raise.
The noble Lord, Lord Mackie, said that if there is to be an RTB for housing association tenants we need a series of qualifications to it. But we have already taken care to provide essential qualifications to the right to buy, just as with council houses. For example, hostel places, sheltered houses for the elderly and, with a recent government amendment, neighbour support schemes are all exempt. To these we have added the vast majority of existing charitable associations. Finally, as for council houses, there are also arrangements in respect of houses specially adapted for the elderly or disabled. We shall have an opportunity later to discuss further exemptions in connection with appropriate amendments.
If I may return to the first point of the noble Lord, Lord Jacques, the charitable housing associations in England and Wales are predominantly special needs houses. Scottish charitable housing associations cover a much wider range of provision and a blanket exclusion would not be fair to their tenants. Special needs housing and other classes of stock are subject to specific exemptions—
Lord Jacques: That is a comment made up by the Scottish Office which just does not know what the position is in England and Wales. The position in England and Wales is that the tenant of the charitable housing association does not have a right to buy, because that was rejected by this House. A charitable housing association in Scotland is very much the same as a charitable housing association in England. They are the smaller housing associations to which people other than the Government have contributed money. I cannot accept this distinction which has now been created by the Scottish Office.
Lord Gray of Contin: I am sorry that the noble Lord cannot accept it, but he will have a full opportunity to discuss this matter a little later because there are other amendments which deal with this point. Nevertheless, even if we do not agree, I am glad that the noble Lord has seen fit to participate in Scottish business.
The noble Lord, Lord Mackie of Benshie, was also talking to his amendment which is grouped with this one and out of courtesy it is only right that I should briefly deal with that amendment as well. He explained that the purpose of the amendment is to exclude from the right to buy houses owned by a Scottish housing association with a stock of less than 250 dwellings. The noble Lord will appreciate that, by and large, we are not breaking new ground in introducing a right to buy for housing association tenants in Scotland, but we are extending to additional categories of tenant an already successful policy which has been widely welcomed.
The right to buy was not applied to housing association tenants under the 1980 Act—and I come to the question put to me by the noble Lord, Lord Ross of Marnock—but since then housing associations have grown in maturity and numbers. They now hold a sizeable stock of houses which have been provided with public money, and it is difficult to justify continuing to exclude their tenants from rights which are enjoyed by tenants in the public sector in Scotland and by tenants of housing associations elsewhere in Great Britain. It would be unjust to deny tenants the opportunity to purchase their homes simply because their associations owned a certain number of houses, and I am in no doubt that it would be regarded as unfair by the tenants concerned. I have made that point several times, but nobody has made reference to the tenants.
6.45 p.m.
The main argument advanced against applying the right to buy to smaller associations is that sales would affect their viability. I have to say that, because management allowances are paid on a unit basis, viability, provided that overheads are also in proportion to the stock, is not related to the size of the association. If, particularly where stock numbers are low, even prudent management cannot prevent a genuine revenue deficit, there are avenues through which it can seek assistance to meet that deficit. Nor do I accept that the right to buy would pose significant administrative problems for small associations. Indeed there may be some advantage in sales, albeit small, in that the net proceeds of any sale will be used first to repay any outstanding loan and housing association
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grant on the house, but where the sale proceeds exceed the amount required to satisfy this, the surplus will accrue to the association itself.
Finally, I doubt that the right to buy will impair the development of associations. The suggestion which has been made, that newly formed associations seeking to build up their stock to a reasonable level will have this objective defeated by a rush of right to buy applications, is, I feel, something of a distortion. I find it difficult to believe that a new association operating proper allocation policies would find within its initial tenants a high proportion both willing and able to buy, but that is no reason why we should deprive those who would wish to buy. Even in England where the right to buy has been available since 1980, sales average less than 2 per cent. of the total housing association stock. In addition, a newly formed association is likely to have a significant proportion of newly built or recently built renovated houses where the cost floor provisions will apply.
My noble friend Lord Selkirk said that it would be intolerable if the only choice was council houses or owner occupation. We fully recognise this for the reason that we have consistently given considerable support to the housing association movement. We have made over £600 million available to associations in the last six years. A right to buy may be taken up by a small percentage of tenants but the sales receipts will be available to the movement.
I have some information about the land question which my noble friend raised. Although land may be given cheaply, it costs public money to develop it and that leads to the right to buy. I revert to the early point which I made about public money and relate it to the land, as my noble friend did.
I have listened carefully to the arguments which have been deployed both from the other side and from the Alliance Benches, and I have particularly listened to those of my noble friends on this side who have had some doubts about this question and who may feel tempted to support either of the amendments. I must advise my noble friends that either of the amendments would seriously damage the Bill. Therefore, I hope that my noble friends will think very carefully. I hope also that I have been able to persuade them that the amendments should be rejected.
Baroness Carnegy of Lour: My Lords, before my noble friend sits down, may I ask him to clarify one point? I feel that there is some confusion as to who exactly is affected by the amendment.
As I understand it, the amendment would deny the right to buy to all tenants of housing associations—the hale and hearty ones—that have used public money. I take the point made by my noble friend Lord Selkirk, that land may have been given from private funds and that it would not necessarily all have come from public money. However, looked at from the point of view of the tenant, money that has been provided by the taxpayer has contributed to such houses, as it has contributed to council houses. It has contributed in the same way that it has contributed to housing association houses in England.
The amendment is denying the right of council tenants in Scotland the right that has been given to

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them already in England and Wales. Am I right in thinking that? Am I right in thinking also that where rented accommodation needs to be extended, if it is not appropriate for housing associations to do that, then that must happen in other ways in future, as it does in England and Wales, through private money?
I appreciate that we shall be coming later to the question of charitable housing associations. It will then be for your Lordships to decide whether you want to do that which the Government are suggesting or that which this House approved in the case of England and Wales; which is, as I understand it, something different. But this amendment concerns all tenants. Will my noble friend the Minister say whether my understanding is correct, so that we may know exactly what it is that we are or are not supporting?
The Earl of Selkirk: My Lords, perhaps I may reply to one point that my noble friend Baroness Carnegy of Lour has made. I wonder whether the Committee realises the seriousness of what my noble friend has said. Any public money given to a house leaves the right to buy. That means that never in future will the Government help rented property—never. We are denying such help completely, and yet everybody knows that rented property is the weakness of all the housing propositions. The proposal that has been made is a very dangerous one.
Baroness Carnegy of Lour: Perhaps I—
Noble Lords: No!
Baroness Carnegy of Lour: I ask the Committee to allow me to say that every council house that is built in future would be Government-built property that would initially—
Noble Lords: No!
Baroness Carnegy of Lour: There are all the categories that are exempt in this Bill. It is completely untrue to say that never will the Government help rented property. That is very misleading.
Lord Ross of Marnock: I believe that it was the noble Baroness who began her speech by saying that the Committee was in danger of being conned. That is the second time the noble Baroness has used that phrase in Scottish debates. Does she remember the last occasion? It was when we asked for a review of the rating system in Scotland. We were defeated by five votes. The next thing that happened was that Mrs. Thatcher went to a Scottish conference and discovered that the whole of Scotland was in uproar because of the rating situation.
I do not know who she is trying to con, but she is not doing so successfully. Even the Minister floundered today. No wonder, because the noble Baroness, Lady Elliot, and the noble Earls, Lord Kintore, Lord Selkirk, Lord Dundee and Lord Perth, were all against the Minister because they realised that the situation here is different. With all due respect to my noble friend Lord Jacques, it is different from the position in England.
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The noble Lord the Minister says that we left out such a provision in 1980 and we left it out later—but now it has matured. Five years' maturity? The actual number of houses is 36,000 or 37,000. At least one-fifth of the associations have houses in groups of about 30. Some have even fewer than that. This is different. Hitherto, it is something that the Government themselves and the Secretary of State, less than two years ago, were proclaiming was worthwhile. It is not good enough. Why not leave well alone?
The man in New St. Andrew's House does not know best on this particular occasion. I am really surprised by the noble Lord, Lord Gray. Someone asked him to look at this in black and white; he was well-named for that. He could not see it in black and he could not see it in white; he could not see it at all. He floundered his way through a Scottish Office brief that was one of the worst I have ever heard. I do not blame the Minister for that, because the House is against him.
I am a reasonable man. The suggestion is that I went far too wide in what I was proposing. I am prepared to withdraw my amendment, to allow the noble Lord, Lord Mackie, formally to move this amendment, and to permit the House to make a decision that will protect Scotland against the kind of misleading Government that we have.
Amendment, by leave, withdrawn.
Lord Mackie of Benshie Lord Mackie of Benshie moved Amendment No. 2:
Page 1, line 9, at end insert—
(" ( ) In section 1(11) of that Act after paragraph (c) there shall be inserted the following paragraph—
"(d) Where the landlord of a dwelling house is a registered housing association within the meaning of the Housing Association Act 1985 and the housing association total stock is less than 250 dwellings;".")
The noble Lord said: As this subject has been exhaustively discussed and replied to, I have pleasure in formally moving Amendment No. 2.
6.56 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided Their Lordships divided: Contents, 79; Not-Contents, 81.

DIVISION NO. 1

CONTENTS

Airedale, L.

Elwyn-Jones, L.

Amherst, E.

Falkender, B.

Ardwick, L.

Fisher of Rednal, B.

Attlee, E.

Gallacher, L.

Barnett, L.

Galpern, L.

Birk, B.

Graham of Edmonton, L.

Blyton, L.

Grey, E.

Boston of Faversham, L.

Hampton, L.

Bottomley, L.

Harris of Greenwich, L.

Carmichael of Kelvingrove, L. [Teller.]

Heycock, L.

Hooson, L.

Cledwyn of Penrhos, L.

Houghton of Sowerby, L.

Craigavon, V.

Hylton-Foster, B.

Crawshaw of Aintree, L.

Jacques, L.

David, B.

Jeger, B.

Davies of Penrhys, L.

Jenkins of Putney, L.

Dean of Beswick, L.

John-Mackie, L.

Denington, B.

Kilbracken, L.

Donoughue, L.

Kilmarnock, L.

Dundee, E.

Kinnoull, E.

Elliot of Harwood, B.

Kintore, E.

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Lawrence, L.

Ross of Marnock, L.

Llewelyn-Davies of Hastoe, B

Seear, B.

Lockwood, B.

Selkirk, E.

Lovell-Davis, L.

Shackleton, L.

McGregor of Durris, L.

Stedman, B.

Mclntosh of Haringey, L.

Stewart of Fulham, L.

Mackie of Benshie, L. [Teller.]

Stoddart of Swindon, L.

Strabolgi, L.

MacLeod of Fuinary, L.

Strathcona and Mount Royal, L.

McNair, L.

Mayhew, L.

Taylor of Blackburn, L.

Mellish, L.

Taylor of Gryfe, L.

Morton of Shuna, L.

Taylor of Mansfield, L.

Mountevans, L.

Tordoff, L.

Nicol, B.

Turner of Camden, B.

Perth, E.

Wallace of Coslany, L.

Phillips, B.

Wells-Pestell, L.

Pitt of Hampstead, L.

Whaddon, L.

Ponsonby of Shulbrede, L.

White, B.

Prys-Davies, L.

Wilson of Rievaulx, L.

NOT-CONTENTS

Alexander of Tunis, E.

McAlpine of West Green, L.

Allenby of Megiddo, V.

McFadzean, L.

Ashbourne, L.

Macleod of Borve, B.

Belhaven and Stenton, L.

Mancroft, L.

Belstead, L.

Margadale, L.

Boyd-Carpenter, L.

Marley, L.

Brabazon of Tara, L.

Marshall of Leeds, L.

Brougham and Vaux, L.

Maude of Stratford-upon-Avon, L.

Butterworth, L.

Cameron of Lochbroom, L.

Merrivale, L.

Carnegy of Lour, B.

Mersey, V.

Cathcart, E.

Montgomery of Alamein, V.

Chelwood, L.

Mottistone, L.

Coleraine, L.

Munster, E.

Colville of Culross, V.

Newall, L.

Colwyn, L.

Orr-Ewing, L.

Craigmyle, L.

Peel, E.

Davidson, V.

Pender, L.

De La Warr, E.

Peyton of Yeovil, L.

Denham, L. [Teller.]

Polwarth, L.

Dormer, L.

Portland, D.

Elliott of Morpeth, L.

Quinton, L.

Elton, L.

Rankeillour, L.

Faithfull, B.

Reay, L.

Forbes, L.

Renwick, L.

Gibson-Watt, L.

Shannon, E.

Gisborough, L.

Skelmersdale, L.

Glanusk, L.

Strathclyde, L.

Glenarthur, L.

Swinfen, L.

Gray of Contin, L.

Swinton, E. [Teller.]

Gridley, L.

Trefgarne, L.

Grimston of Westbury, L.

Trumpington, B.

Hailsham of Saint Marylebone, L.

Vaux of Harrowden, L.

Vickers, B.

Harvington, L.

Vivian, L.

Hooper, B.

Ward of Witley, V.

Kaberry of Adel, L.

Windlesham, L.

Lane-Fox, B.

Wise, L.

Lauderdale, E.

Wynford, L.

Lindsey and Abingdon, E.

Young of Graffham, L.

Long, V.

Zouche of Haryngworth, L.

Lyell, L.

Resolved in the negative, and amendment disagreed to accordingly.
7.4 p.m.
Viscount Davidson: In moving that the House do now resume I suggest that we do not return to the Committee stage before ten minutes to eight o'clock. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Armed Forces Bill
7.5 p.m.
The Minister of State for Defence Support (Lord Trefgarne): My Lords, I beg to move that this Bill be now read a second time.
The Armed Forces Bill is considered every five years and provides for the continuation of each of the three service discipline Acts. The Bill now before your Lordships has already been subject to detailed examination by a Select Committee of another place. At this stage I should only mention that it recommended that the present system of quinquennial Bills continue. Clause 1 provides for this system of parliamentary scrutiny to continue as before, and I commend it to your Lordships.
The other clauses of the Bill contain a number of measures to bring service law more closely into line with civil criminal law and practice, as well as some which are designed to rectify deficiencies or anomalies which have come to light since the previous Armed Forces Act. It does not contain as much in the way of significant innovation as some of its predecessors have done, but it is nevertheless a worthwhile Bill with several interesting points to which I should like to draw particular attention.
Clause 2 of the Bill makes it an offence intentionally to interfere with or impair the efficiency of service equipment, or to modify or interfere with signals being received or transmitted by such equipment, or to do anything likely to produce such results. This new provision has been made necessary by the increasing dependence of the services on computers in both the operational and administrative fields, and it is designed primarily to deal with interference short of actual physical damage; an example might be the alteration of a computer program.
The following clause deals with offences which can be committed in relation to official documents and amends the section of each service discipline Act relating to such offences. Its principal objective is to make it quite clear that the section applies not just to written records, such as books and ledgers, but also to more modern information storage methods such as computer tapes, photographs and microfilm.
I should also draw your Lordships' attention to Clause 7, which removes the three-year time limit normally affecting proceedings under service law. This time limit applies to almost all proceedings under that law, whether before a court-martial, a Standing Civilian Court, or summary proceedings. At present the only cases exempt from the time limit are those criminal cases where the relevant civilian statute otherwise provides and cases involving desertion, mutiny, failure to suppress mutiny, or those civil offences committed outside the U.K. for which the Attorney-General consents to the proceedings. This general time limit has no equivalent in the civil criminal law, although certain statutes impose their own time limits for certain specified offences. The three-year limit has created some difficulties in the past, particularly in cases such as fraud, which require long and complex investigation and preparation before they are brought to trial. This clause abolishes the three-year time limit, but where the general

67
criminal law contains a specific time limit on any particular indictable offence that time limit would of course continue to apply to service law. I believe that this is a sensible measure to bring service law more closely into line with the civilian criminal law.
We should not forget that service law applies not only to our servicemen. Some parts of the service discipline Acts also apply to certain civilians overseas; for example, when they are supporting the services or are part of a serviceman's family. When such people commit offences, their cases may be dealt with by court-martial or by summary proceedings. Additionally, in north-west Europe, those subject to army or air force law may be dealt with by a special court established to deal only with civilians, known as the Standing Civilian Court. It is our firm intention that civilians subject to service law should as far as possible be subject to the same provisions and punishments as apply in the U.K. Clauses 9, 10 and 11 of this Bill are included in furtherance of that aim.
Clause 13 of the Bill stems directly from the 1981 report of the Select Committee of another place which examined the Armed Forces Bill of that year and recommended that consideration be given to providing a legal framework for the transfer of service children at risk overseas into the hands of the United Kingdom welfare authorities. This clause does precisely that, and also allows the service place of safety order on the child to run for a maximum of 24 hours in the United Kingdom (within the overall maximum of 28 days permitted by the 1981 Act). This 24-hour period allows time for the local welfare authorities to make the necessary arrangements to meet the child. I believe that the clause provides valuable extra protection for the child at risk, and I hope that your Lordships will welcome it.
The last clause that I should like to single out is Clause 14. It emphasises the growing importance of the role of women in our armed forces, in this case the army in particular. Clause 14 removes the present statutory obstacles in the way of imposing on regular army servicewomen a regular reserve liability on completion of their active service in the same way as for men. Servicewomen fill many vital roles in the army, and in some of these important areas there are shortages in the reserve. The sensible solution is to allow women to fill them by imposing a regular reserve liability and this is made possible by Clause 14. Those mainly affected will be new entrants, but some existing servicewomen may also be invited to accept the liability, though I should stress that in the case of existing servicewomen there will be no question of compulsion in this matter.
The remaining provisions of the Bill are largely technical and I do not propose to delay your Lordships by discussing them in detail at this moment. Suffice it to say that I believe the Bill contains a number of useful new provisions, together with others which will tidy up the present service discipline Acts. It is our duty to ensure that our volunteer servicemen, in taking on a commitment to serve under the service discipline Acts, are indeed protected by a fair and clear disciplinary system. I believe that this Bill is a valuable contribution to that end and I commend it to your Lordships. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Trefgarne).
7.13 p.m.
Lord Graham of Edmonton: My Lords, I can assure the Minister that there will be no difficulties, though there will be differences between us, in ensuring a speedy passage of this Bill through your Lordships' House, because we on this side of the Chamber, and indeed noble Lords from all sides of the House, recognise that a Bill of this kind is an integral part not only of our legislation but of the proper conduct of discipline in the armed forces. Though this Bill is simply a piece of legislation to us, we believe that it is of vital interest to those who are serving in the armed forces, and, more importantly so far as concerns the Minister, to those whom he seeks to attract to serve.
I was particularly interested—and no doubt we can pursue the matter further at Committee stage—in the intention of the Government to provide those in the armed forces with the kind of rights that are enjoyed by those in civilian life. We recognise the restrictions imposed by the very nature of service in the armed forces and its responsibilities, and I was pleased to hear the Minister refer to particular chapters in relation to this. I do not intend to deal with the whole Bill and its raison d'etre in what may be called a full dress Second Reading speech.
Quite rightly the Minister drew attention to those points which he considered worthy of emphasis as being of special importance. I want simply to say that matters which we consider to be of importance (and we shall return to them at Committee stage) can be identified fairly well as those matters about which the Select Committee desired to hear evidence. Some of the evidence was unsatisfactory and some was disputed; some of the conclusions were dissented from. Colleagues in another place felt that they would like to hear more about matters concerning summary jurisdiction, court martial, the death penalty, terms of service, desertion, absence without leave, homosexuality, drug and alcohol abuse and trade union rights.
It would not be proper to deal with these matters at length at the Second Reading stage and I simply say to the Minister and his advisers that it would not be my intention to use too often the right to produce amendments and initiate debates at Committee stage but to use the question of whether the clause shall stand part of the Bill in order to invite the Minister to say a little more, so as to understand more fully whether there has been a change in thinking since the matter was debated in another place.
My honourable friend Mr. Kevin McNamara highlighted not so much what the Bill encompasses but areas for which the Bill refuses to legislate, despite the powerful arguments at all stages of the Bill in another place. I note from the proceedings in another place that Members were reminded of the dictum of Lord Justice Mansfield in 1812. It is a good dictum so far as this Bill is concerned. He said:
"A person does not, by enlisting in the armed forces, thereby cease to enjoy his rights as a citizen or to be exempt from his liabilities under the ordinary law of the land".

69
I shall touch on some of the matters that we shall return to at a later stage. First of all, there is the question of the rights of homosexuals who are serving in the armed forces. I use as my text evidence given in the report of the Select Committee on page 244. There is a memorandum from the "At Ease" Counselling Service, which states:
"Any homosexual act, or lesbian act, has been classed as illegal in the armed forces of this country for many years, as indeed it was in civilian life until the Sexual Offences Act of 1967. The military were, however, specifically excluded from that reform and as such many thousands of homosexual men and lesbian women serving in Her Majesty's Forces are, through no fault of their own, being subjected to intolerable levels of discrimination, abuse, violence, harassment, interrogation, imprisonment and dismissal."
I do not for a moment lay those pejorative charges at the door of what I call "the authority" or the military, but it is a matter upon which I wish to engage the Minister not at length but in some degree at a later stage.
There is also the question of drugs. I am not sure whether the Minister has seen the Sunday Times issue of yesterday but in it there is an article by Stephen Davis which carries the headline "Army goes into battle on drug abuse in ranks". He may recall that one of the renewal orders was before the House some two years ago. I acknowledged then that it was a difficult situation. Drug abuse in civilian life has permeated many closed institutions—I made reference to the prison service—and it is a problem that they are all trying to tackle.
The article in the Sunday Times states:
"The Army is introducing chemical drug-testing machines in a new drive against drug abuse in the services … The rising trend of drug use in British society, especially among the young, has fuelled concern among the armed forces, which need to recruit 30,000 men and women a year to meet their manpower requirements. About 87,000 of their personnel, 27 per cent. of the total, are aged 21 or under".
When I looked for some reference to the scale of the problem as seen by "the authority", I found on page 157:
"Scale of the Problem in the Armed Forces".
This is a memorandum submitted by the Ministry of Defence. It goes on:
"The precise extent of drug abuse within the Armed Forces is difficult to assess due to its illegal nature which necessarily results in clandestine activity by those involved. Those convicted in past years on drug related offences are shown at Annex A together with provisional figures for the first six months of 1985. In 1984, 353 Servicemen and women were convicted in military and civilian proceedings of drug related offences. This represents just 0.1 per cent. of total Service manpower or around 1 case per thousand personnel. Based on these figures the Services problem with drug abuse could be assessed as relatively minor".
Looking at that in isolation, I could be persuaded that the problem is relatively minor. However, yesterday's newspaper article while giving the figure of 353, also says that this was a rise from 122 in 1982. The trend is of course very important. If there has been an increase of that proportion in two years the Minister has surely a responsibility to say that it is not merely a minor problem but that he appreciates that, should the trend continue, it will represent not 0.1 per cent. but 0.2 per cent. and that will happen not within three years but two. The noble Lord will recognise that this is an issue to which we shall return later.
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Another matter of great concern upon which the Minister touched relates to the detention and treatment of young persons and children. Clause 11 proposes that the power to make custodial orders in relation to civilians should be extended to male offenders between the age of 15 and 17. By this amendment, the military legal system would be accruing to itself powers comparable to juvenile courts and children's panels in Scotland. The At Ease organisation tells me:
"Such an amendment must cause concern for the management of the court hearing for the juvenile and his family. Many adult defendants have remarked upon the intimidatory nature of court martials and the pace at which the proceedings are conducted. There is no suggestion in the Bill that male offenders between the ages of 15 and 17 years should be dealt with by a different coup and procedure than those of 17 years and above".
The organisation says a great deal more. It is neither appropriate nor relevant to make those points here. I would, however, give the Minister notice that if he is unable to say more tonight I shall be returning to this matter in Committee. I shall also be raising on the appropriate clause in Committee the impact of those parts of the Bill that endow the armed forces with what are termed emergency powers, especially as they affect the civilian population. Here again, there is a smack of a desire to leave far too much in the dark concerning matters that can affect those living near military establishments. I expect from the Minister tonight and later the stock answer that the national interest demands secrecy at times, even when disclosure may enlighten and educate those who are directly affected. I shall want therefore to return to the issue of emergency powers.
There is little more that I wish to say at this stage. Within the minimum of procedural time with which we shall be provided to carry out our responsibilities, we shall not impede the passage of the Bill. We shall, however, have some searching questions to ask at later stages.
7.24 p.m.
Lord Mayhew: My Lords, I apologise for the absence of my name from the list of speakers. I should, however, like to associate my noble friends and myself with the general purpose of the Bill, which on balance is a good one. There are a number of clauses that we welcome. These are Clauses 2 and 3, and 9 and 10. But, equally, there are some questions that we shall need to ask at the Committee stage and one or two changes that we shall try to make. We agree with the noble Lord, Lord Graham, that Clause 11 needs a lot more looking at. The noble Lord the Minister will have difficulty in this House over that clause. It is not self-evident at all that a court martial is the proper body to sentence those under 17 to a custodial penalty. It is not self-evident at all. We shall argue from these Benches in Committee that it is wholly inappropriate that a court martial should be given these powers and that different provisions should be made in these cases.
Our approach in Committee, as indeed now, is that we want to respond to genuine demand for change. Where there is no real demand for change and no particular problem to be met and overcome, we shall not press our views. There is a tendency, with great respect to the Labour Opposition, to seek for ideas to impose on the armed services which they quite

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strongly reject and that are not really calculated to solve particular problems. This is always a danger. I sympathise to some extent with what the noble Lord, Lord Graham, was saying about homosexuality in the armed forces, though I could not possibly accept the specific recommendation made by the Campaign for Homosexual Equality on page 233 of the Select Committee report. I shall not deal with that now; it can be done at Committee stage.
We are entitled to ask whether the armed forces are demanding change in this field. Is this the right moment to impose on the armed forces our ideas about what needs to be done? I accept the logical case that homosexual conduct that is prejudicial to good order and discipline should be punished as being prejudicial to good order and discipline and not as a crime. But homosexual conduct between consenting adults that is not prejudicial to good order and discipline should, as in civilian life, go free. That seems logical enough to me. There is also a commonsense view about what needs to be done on which I shall speak at greater length, I hope, at the Committee stage.
I feel rather the same about the problem of NCOs on courts martial. Is there really a demand for it? Is there really a great problem that needs to be solved? I shall listen but I have not seen enough evidence of serious miscarriages of justice or of desire on the part of NCOs or other ranks in the armed services to have NCOs on courts martial.
The noble Lord, Lord Graham, did not mention trade unions. That surprised me. I thought that the noble Lord would make a long speech about the need for highly unionised armed forces in this country. Again, I ask: what is the problem to be solved and what are the demands for change? I do not see a great deal of pressure. My guess is that the trade unions are no less unpopular in the armed forces than they are outside the armed forces. I should be very surprised if it was otherwise. Nor have I heard of any glaring injustices occurring as a result of the little unionisation in the forces. After all, there is absolutely nothing to prevent members of the armed forces joining a union, paying the subscription and paying the political levy. The noble Lord, Lord Graham, should perhaps be content with that. It can, however, be discussed if necessary at the Committee stage.
I do not intend now to make a proper speech but simply to give the general support of the Alliance parties to the Bill and to warn that we shall put down some amendments on one or two matters at Committee stage.
Lord Trefgarne: My Lords, I am greatly obliged to both noble Lords for their constructive contributions to this debate, and above all for giving me some indication of the points that they will wish to raise when we come to a later stage of the Bill. Forewarned is forearmed, and I look forward to debating their amendments with them when the time comes. In the meantime, I beg to move.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 7.50 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.31 to 7.50 p.m.]

Housing (Scotland) Bill
House again in Committee on Clause 1.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 3:
Page 1, line 9, at end insert—
("(1A) In section 3A of the 1980 Act (Secretary of State's power to authorise refusal to sell certain dwelling houses provided for elderly persons)—

(a) for subsection (1) there shall be substituted the following subsection—

"(1) This section applies to a dwelling house which—

(a) is particularly suitable for occupation by persons of pensionable age, having regard—

(i) to its location, and

(ii) to its size, design, heating system and other features so far as those have been provided by the landlord or a predecessor of the landlord, and

(b) was let to the tenant or a predecessor in title of his for occupation by a person of pensionable age or a physically disabled person (whether the tenant or predecessor or another person).";

(b) for subsection (3), for the words "specify the facilities and features of design or adaptation" there shall be substituted the words "specify those aspects of the location, size, design, heating system and other features".").

The noble Lord said: This amendment brings the right-to-buy exclusion arrangement for elderly persons' housing in line with those secured on an all-party basis in your Lordships' House during the passage of the English Housing and Building Control Act 1984. I am sure that the Minister will be familiar with these provisions and that when he saw the amendment he recalled that my noble friend Baroness Birk on 28th February moved amendments to the same effect as I am about to move this evening.
Under the right to buy elderly persons' housing is currently excluded if the Secretary of State is satisfied that it meets certain tests. The main test is that the house has facilities which are substantially different from those of an ordinary house and it has been designed or adapted for occupation by an elderly person whose special needs require accommodation of the kind provided by that particular dwellinghouse.
One of the unfortunate matters that has occurred during the operation of this provision is that the Secretary of State has placed a very severe interpretation upon it and authorities are being required to demonstrate that their dwellings meet the detailed design laid down in the Scottish Design Standards Handbook, including even, for example, types of floor covering. That makes it very difficult for older dwellings to be included which were built for elderly persons before the handbook was produced. It almost seems like sleight of hand that the Secretary of State should use such criteria, bearing in mind that when the houses were originally adapted they were perfectly suitable, and that in many cases it is merely because society has moved to a different level that new standards, quite correctly, are set up. However, it does not mean that houses meeting the old

73
standards—until they are improved—are still not perfectly suitable for elderly people, and much more suitable than the average house.
The way in which the provisions have been interpreted recently does not take account of historical circumstances. The handbook—perhaps quite correctly for new build—is very strict on room size, the number of rooms and so on. By far the majority of dwellings submitted to the Secretary of State are being refused exemption, often on very minor grounds of detail. Many of these properties would generally be accepted as elderly persons' bungalows, although for historic and other reasons they do not meet the very special detailed design standards to which I have already referred.
It is also important to realise that, under an equivalent exemption arrangement, 95 per cent. of cases were turned down by the Government in England, and, according to the Institute of Housing—it does not have an equivalent overall figure for Scotland—direct evidence from individual local authorities suggests a similar success rate in Scotland. There is a real shortage of public sector accommodation throughout Scotland for the elderly. That which is available is not easily replaced once it has been sold, especially when one looks at the pressures on the finances of housing authorities at present. Therefore we believe that an essential pool of rented accommodation should be protected; that is, special houses which were built or adapted for a particular purpose.
The amendment proposed borrows the wording from the English changes which won all-party support in your Lordships' House in 1984. It would remove the stringent design tests currently required, and should allow a greater degree of flexibility to be incorporated within the Secretary of State's decisions. The intention is to exclude the majority of purpose-built or converted accommodation for the elderly from the right to buy. If that were to happen, we would also hope that there would be a change in the criteria that would guide the Secretary of State on whether or not he gave exemption from the right to buy.
In simple terms I consider—and the Institute of Housing also considers—that certain principal points should be met before a house is considered suitable for the elderly. There should be easy access on foot to the dwelling. The accommodation, generally speaking, should be on one level, although occasionally if there were a lift involved, perhaps two levels would be acceptable. There should be no more than two bedrooms, because we do not want large houses. There should be some form of central heating. The w.c., bath and shower should be designed for easy and safe use by elderly persons and, of course, working surfaces, shelves, cupboards, electricity sockets and light switches should be set at heights suitable for elderly persons.
It is not intruding too much on the Bill to suggest that the amendment should be accepted by the Government. I cannot see it greatly reducing the number of houses for sale, but it would certainly be a great help in alleviating the pressure on local authorities and housing associations to provide houses for elderly people. It would also mean that the Scottish
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housing associations would be in the same position as the English associations, and that is something which I would hope the Minister would find difficult to resist, especially when one bears in mind that it is obviously better than the situation which we have in Scotland at present. Without the amendment we would be in a worse position than the English associations. I beg to move.
Lord Mackie of Benshie: I should like to support the amendment which is certainly in line with similar amendments to which I gave support in the 1984 Bill. Again, I should like to stress a point regarding the rural areas. One of the things that makes a rural area work is the provision of retirement houses for old people. Certainly in Angus the old county council had a very enlightened policy and said simply that if a farm worker had worked all his days for his own house and never cost the community a penny, he was entitled to a retirement house. They built a lot of retirement houses, and those houses are now available for sale. In my view it is quite wrong because there is an enormous temptation in a rural area. Normally the occupants have sons or daughters who are well-off and working in some other area. The chance to buy a cheap house for them to use as a holiday home is one which has no good social purpose but which is very nice for the family themselves. For that reason alone I think that the Minister should accept the modifications to the specifications as to what should be exempt, as set out in the amendment. Although the Minister is talking about defence or some other subject with the noble Lord, I trust and hope that he will understand that my standing here talking is in support of the amendment and will do something about it.
8 p.m.
Lord Gray of Contin: I apologise to the noble Lord for allowing my attention to wander momentarily during his intervention. I assure him that I fully appreciate the points that he was making in support of the noble Lord, Lord Carmichael.
I am bound to admit that when I studied this amendment a little earlier in the day I was puzzled as to what arguments the noble Lords would produce to support it. In my view the amendment simply offers an alternative wording for Section 3A of the Tenants' Rights, Etc. (Scotland) Act 1980, without in any way altering its effect.
I understand, however, that the noble Lords' purpose is to specify in greater detail what is meant by the words "facilities substantially different from an ordinary dwelling-house". But his concern is unfounded. In practice, I believe that both the Scottish and English provisions are closely similar in their effect. We have never had any complaint from landlords or tenants that they have difficulty in recognising which features might qualify a house under Section 3A. I believe therefore that this amendment is unnecessary.
The criteria which the Secretary of State adopts in deciding whether a house has features which qualify it as being "substantially different from an ordinary dwelling-house" are well known to landlords. There is certainly no secret about them. The Secretary of

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State's decision is taken by reference to paragraph 9.2.1. of Part 5 of the Scottish Housing Handbook. This lists a number of design features appropriate to elderly persons' housing. They include, first, that the house should be provided at ground or first floor level, or in multi-storey developments with lift access (in other words, the English reference to "location"). The remaining specifications relate to space standards, heating standards and the provision of special features such as grab rails, special doors and light switches. These equate to the reference in the English provision (and indeed in the present amendment) to "size, design, heating system and other features".
In deciding whether a house should be exempted from the right to buy, the Secretary of State would normally look for a House to have a majority of the features listed in the Scottish Housing Handbook. The house is by no means required to have all the features, however, and one advantage of the Scottish system is that each case is considered on its merits. The Committee will note that the Secretary of State does not normally look at whether the house is currently let to an elderly person or his successor (which is a requirement of the English provision and the current amendment). In practice, given the type of house, it would be very unusual for the landlord to have let it to somebody other than an elderly person, but this is not something about which we make a requirement in Scotland.
I could understand the case for this amendment if it were argued that the Secretary of State had somehow exercised his power under Section 3A of the 1980 Act in an arbitrary manner. But the Secretary of State's decisions are reached by reference to objective criteria set out in the Scottish Housing Handbook. I appreciate that the Act does not say that the Secretary of State must have regard to the Scottish Housing Handbook, but in practice that is the way that the words "facilities substantially different from an ordinary dwelling-house" are interpreted.
Although the number is not large, the Secretary of State receives a steady flow of applications from landlords under Section 3A. About two-thirds of the applications are accepted and the landlord is then given permission to refuse the sale. I think it is significant that we have never had a complaint either from a landlord or a tenant over an individual decision. Nor indeed has it ever been suggested by landlords, who I am sure would be the first to complain, that they could not understand the basis on which the Secretary of State's decisions are reached or that the criteria he adopts are unfair. In those circumstances, and with that full explanation, I hope that the noble Lord will be prepared to withdraw his amendment.
Lord Carmichael of Kelvingrove: There are two points. There is the point made by the noble Lord, Lord Mackie of Benshie, on houses built for farm workers, when, I imagine in general at a fairly advanced age, they retire and these houses are then taken up profitably for sale as holiday homes.
The other question is on design features. The complaints I have received suggest that the
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interpretation is too strict. Some houses may be traditionally accepted as being for elderly people, with many of the features that the noble Lord, Lord Gray, mentioned—the space standards, the light sockets, handrails, and such things. But others may not because of the period when they were built compared with the period we are in now. Some enlightened authorities were building features into houses which were received with great acclaim 20 years ago, but now we have moved on and they are perhaps not quite enough. Nevertheless they are far more suitable for the elderly than the ordinary house. Since money has been spent on the adaptations, it seems wrong that we should allow these houses to be sold into the open market.
The Minister spoke about the record of the Secretary of State. Instead of merely saying that two-thirds of the applications have been accepted by the Secretary of State, could he stretch a point and give us figures? On some of these Bills we talk about two-thirds one minute and percentages another, and it would be helpful to get the figures. What is it two-thirds of? I should be happier if I could hear these figures.
Lord Gray of Contin: I cannot give the noble Lord that figure off the top of my head. I am afraid that two-thirds is the best I can do for him tonight, but I shall get the figures for him, drop him a note and let him know what they are.
Let me deal with the point raised by the noble Lord, Lord Mackie of Benshie, and the point raised by the noble Lord, Lord Carmichael. First, on the point raised by the noble Lord, Lord Mackie, about retirement homes in rural areas being sold as holiday homes, the 1980 Act has provisions in Section 4 to prevent houses being re-sold as holiday homes.
The noble Lord, Lord Carmichael, raised a point about the Secretary of State's interpretation of Section 3A being severe. That is not my understanding. I do not think that it is any more severe than the recent amendment where houses would also have to qualify in respect of size, design, heating systems and other features. The same features listed in the handbook and presently used by the Secretary of State apply. It is not our experience that there are resulting complaints. I think that the Secretary of State uses the guidelines fairly.
Lord Mackie of Benshie: I accept much of what the Minister says, but if there are 100 objections to the sale of houses from the local authorities or the landlords, whoever they are, and one-third are upheld, that is a fair number. But if that was the case in a rural area, it would be fairly serious. It would be interesting to have a break-down of the figures if that were possible.
Lord Gray of Contin: I shall certainly provide that, and when I write to the noble Lord, Lord Carmichael, I shall make sure that the noble Lord, Lord Mackie, receives a copy. But I think we are talking of relatively small numbers.
Lord Carmichael of Kelvingrove: I thank the Minister for promising to write to me. I think I should

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also say to him that people in Scotland will have read his words and his interpretation of the Act, or they will read them. I find the information as skimpy in some ways as does the Minister, but there is perhaps more excuse for me than the Minister. I shall look forward to hearing his reply, but I should say that I will inquire in Scotland, and I reserve the right to raise the same point in more detail at the Report stage. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Increased discount where dwelling-house purchased is a flat]:
Lord Gray of Contin Lord Gray of Contin moved Amendment No. 4:
Page 2, line 12, leave out ("(2)") and insert ("(3)").
The noble Lord said: For the convenience of the Committee, I think we have agreed that we should deal with Amendments Nos. 4, 7, 8 and 13.
I indicated in introducing our debate on Second Reading that we were giving further thought to the provisions of Clause 2 of the Bill, as a result of pressure which had arisen in another place, and that we would he bringing forward further amendments. The present amendments are the result of that consideration.
It may be helpful if I remind the Committee that a tenant exercising the right to buy is entitled to a discount on the market value of his council home, which is related to the length of time he has been a public sector tenant. In order to buy, the tenant must normally have a qualifying period of at least two years. He is then entitled to a basic discount of 32 per cent., which rises by a further 1 per cent. for each additional year, up to a maximum discount of 60 per cent. after 30 years.
Clause 2 of the Bill, as introduced, proposed that discount should be increased by 10 per cent., where the house being purchased is a flat. People buying a flat would then be entitled, under our original proposals, to a new minimum discount of 42 per cent. after two years, rising to 70 per cent. after 30 years.
We felt that this was necessary because flats had been selling much more slowly than other types of houses under the right to buy. Flats account for almost half the total public sector stock in Scotland. However, in 1984, to take the most recent year, out of more than 16,000 houses sold under the right to buy, fewer than 2,000 were flats. This pattern has been repeated in every year since the right to buy was introduced. Our research suggested that purchasers were apprehensive about the additional costs and responsibilities associated with owning a flat; and this is why we thought it fair to recognise their concerns by the provision of additional discount. I should mention that similar changes to the discount rules for England and Wales were included in the current Housing and Planning Bill.
During the passage of both the present Bill and the Housing and Planning Bill in another place, there was concern that our proposal for an additional 10 per cent. discount did not go far enough and that some further incentive was needed if we were to make the purchase of a council flat an attractive proposition. As a result, we undertook to give further consideration, as
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I indicated on Second Reading, to what might be an appropriate level of discount on flats.
The present amendments therefore provide for a rather better discount for flats. Where somebody is buying a flat, we are proposing that his discount entitlement should rise by steps of 2 per cent. each year, instead of 1 per cent. as at present. A tenant with a minimum two years' standing therefore would be entitled to a discount on a flat of 44 per cent., and the maximum of 70 per cent. would be reached after 15 years.
As a result, the upper and lower limits of the discount scale on flats sold under the right to buy will remain virtually the same as in the Bill as introduced. However, the time required in order to qualify for the maximum discount will be halved. This will benefit the tenants of all types of flats. It recognises that because of the way allocation systems operate, tenants of flats tend to be younger people, and I believe that the amendments will be particularly welcomed by younger purchasers taking their first steps into home ownership.
Perhaps I may say something briefly about Amendment No. 13. This amends Section 9A of the 1980 Act and is consequential upon the other changes we are making to the rules governing discount on flats. Section 9A of the 1980 Act provides that where a person is granted a secure tenancy in pursuance of Section 10(3) of the Housing Defects Act 1984, he does not have to wait the minimum two years, as any other tenant would, before qualifying for the right to buy, but becomes immediately eligible to buy, although starting at a basic 30 per cent. discount. As a consequence of our proposal to increase the minimum discount on flats by 10 per cent., it is necessary' to amend Section 9A to provide that where a person whose house has been repurchased as defective is granted the secure tenancy of a flat, he shall qualify immediately to buy at a minimum discount of 40 per cent. (and then rising by an additional 2 per cent. for each subsequent year of tenancy, as with any ordinary tenant).
These amendments fulfil our undertaking to see whether we could improve on our earlier proposals for discount on flats. They will promote the extension of home ownership to council flats and will be of particular benefit to younger purchasers. I beg to move.
8.15 p.m.
Lord Ross of Marnock: There is no end to the generosity of this Government in respect of the people who used to be very much despised by the party opposite. I remember it being stated that people who lived in council houses were second-class citizens. I think the Member of Parliament who said that is now a Member of this Chamber.
Here, certain flats are being given special bargain rates. I think it is in line with that television programme "The Price is Right"—come on down! Bargains for everyone, at the expense of someone else. It is not the Government who own these houses; the landlords of these houses are the local authorities, the housing authorities, or now included within this—as

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we have agreed to Clause 1—the housing associations. You can well imagine how a housing association which has worked hard on a particular tenement property—and they will be flats—will find that it has to grant a discount of 70 per cent. The tenants may have been in that house for only two years—I hope I shall be corrected if I am wrong—but if they have come from a local authority house before going into that one that counts as waiting time, so they can get a discount of 70 per cent.
I suppose that from her good business sense the noble Baroness, Lady Carnegy, will think this is wonderful, giving them 70 per cent. discount. I think it is robbing the local authorities of their property to do this kind of thing. By the way, I am a little muddled these days so I looked this up, and the proposed change is:
"after the words '32 per cent.' there shall be inserted the words', or where the dwelling-house is a flat 42 per cent,' "
I looked up the Act. That says:
"the discount for the purposes of this subsection shall be— (i) 33 per cent."
It does not refer anywhere to 60 per cent; it refers to 50 per cent. Can we have an explanation as to why we are referenced to a figure in the Act and when one reads the Act it is not there? It does not say "the Act as amended by". This is how it becomes ridiculously complicated for simple-minded Lords who voted the wrong way last time, including the noble Baroness, the con-woman. She is prepared to be conned into anything. If any vote is predictable in this Chamber, it is hers. Never mind, one day she might make it to the Front Bench; but that is not the way to do it. If she wants to make herself invaluable to the Front Bench she should vote against the Government once or twice. She will gain promotion quicker that way. I have had longer experience of the House of Commons and other places than the noble Viscount who has now come to grace the Front Bench. I can tell him that that is the way to achieve that particular ambition.
I cannot see the justification for this clause. I have two amendments down, but the change it makes gives speedier access to the 7 per cent. I am "agin" it. I think the Government are quite wrong. We have had some figures quoted to us about these flats not selling so well. I believe they are selling better in Scotland than they are in England. I believe that about 12 per cent. of these flats have gone in Scotland. I can understand the Government feeling that they are not selling well enough, simply because people have not been buying in Scotland.
To get them to buy we enlarge the carrot. We now have the 42 per cent. for a start, increasing by 2 per cent. and reaching the 70 per cent. much more quickly. What that means to me is that the Government's policy is failing. One can explain the 12 per cent. more easily because there are more of these kinds of flats in Scotland than there are in England: the old four in a block. The Government recognise the failure and in their determination to give this right to buy (which means to reduce the liability of the Government and to reduce the housing grant to local authorities) they are selling these flats at these give-away prices. The generosity of this Government is
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staggering towards people whom so recently they despised.
I could quote yet another, perhaps not a lady on this occasion—she became a Baroness too—but she was a Member of Parliament for a time. As she is no longer with us I do not think I will quote her, but she too had this attitude towards council tenants.
The council tenants whom the Tories so despised are now becoming the people who are given the bargains and the better bargains. I think the Government's policy is wrong. In many cases the policy in respect of local authorities is wrong, bearing in mind that the houses on which people have taken up the right to buy have been the best houses. One can see that all over the place, in Ayrshire, in Kilmarnock, in Glasgow and in Edinburgh. They are the best houses and now when the market is sticking the Government increase the inducement. But they are still giving away houses for which people are waiting on the housing list. If the houses are sold they will not be available. I do not know whether the Minister knows, but there are young people who are subsidising their parents to buy the houses in the knowledge that their aged parents will die and that they will move into them; so the bargain is not even to the tenants but to the sons and daughters. I do not think that is right. People will wait in the queues and will not get in.
The further evil of this is that it will now apply not only to the local authority houses. By virtue of Clause 1 and two votes in this Committee it will apply also to housing association houses. I do not think the Committee can be proud of that. I am sorry, but I cannot support the Government in what they are doing in this amendment.
Lord Gray of Contin: The noble Lord raised one or two points that I should answer. He spoke about the 33 per cent. and the 50 per cent. Those figures refer to discount repayment requirements, not to discount itself. He spoke about sales at discount being at the expense of the landlord. That is not so. The so-called cost floor provisions which we shall no doubt discuss on Clause 3 provide that discount is restricted if the sale price will not be sufficient to cover the outstanding debt on the house.
The noble Lord, Lord Ross, spoke about discount on housing association fiats. While housing association flats will be subject to the same discount as council flats—that is, up to 70 per cent.—it must be remembered that housing association flats are often newly renovated at considerable public cost. In those cases the maximum discount may be limited by the outstanding debt test, the cost floor already in the 1980 Act.
I hope that this clarifies the questions that the noble Lord had and that he may now be prepared to accept the amendment.
On Question, amendment agreed to.
The Deputy Chairman of Committees (Earl Cathcart): In calling Amendment No. 5, I should advise the Committee that if that Amendment is agreed to I cannot call Amendments Nos. 6 and 7.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 5:
Page 2, line 15, leave out paragraph (a).
The noble Lord said: The Bill states:
"In sub-paragraph (i), after the words '32 per cent'."
Subparagraph (i))relates to Section 1(5)(b) of the 1980 Act. That is the Tenants' Rights, Etc. (Scotland) Act 1980. Section I (5) of that Act states:
"Subject to subsection (7) below … the discount for the purposes of this subsection shall be".
There is no figure 32; the figure is 33. May I have that explained? Explain away what is there. What is referred to is in Section 1(5)(b) of the 1980 Act. In that subsection the figure referred to is 33 per cent. Until that is properly explained I do not think we should allow it to go into statute.
Lord Gray of Contin: I am happy to be able to answer the noble Lord's query. Section 1(5)(b) was amended by the Tenants' rights, Etc. (Scotland) (Amendment) Act 1984.
Lord Ross of Marnock: I thought that. In fact, I think I said that, but that was not the explanation given to me by the noble Lord, Lord Gray of Contin, when he replied to my earlier remarks. Perhaps he would like to apologise now.
Lord Gray of Contin: The brass neck of the noble Lord really takes some beating! I have no intention of apologising, but I shall carefully read the record and if I have made any mistake of course I shall acknowledge it to the noble Lord.
Lord Ross of Marnock: The noble Lord sought to explain why the figure was 33. I seem to be referring to an entirely different discount. Now he has the right answer. He should have given me that answer in the first instance. That being so, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.30 p.m.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 6:
Page 2, line 17, after ("flat") insert ("constructed after 1919").
The noble Lord said: This is an amendment which is most important for housing associations, particularly in the large conurbations of Scotland—Aberdeen, Dundee, Edinburgh, Glasgow, Greenock and such places—where the long-established type of housing has been the Scottish tenement, practically all of which were built prior to 1919. The noble Earl, Lord Selkirk, earlier spoke about how attractive these houses are now that they have been cleared up, many of them by housing associations, and how much in demand they are. Housing association rehabilitation work is mainly carried out in areas of mixed tenure tenements constructed prior to 1919.
Housing associations themselves encourage owners to retain and improve their property. Unlike local authority housing schemes, there is an already
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established and often vibrant housing market in and adjacent to the areas where the housing associations are involved. In these circumstances it really seems that there is no requirement to enhance the discount for rehabilitated tenement fiats in such areas. I can speak very srongly of certain areas; for instance, the Maryhill area, and, perhaps even more importantly, the Partick area, of Glasgow where the demand for tenement property is extremely high. There is no difficulty in selling houses in this area.
Therefore, to take from the housing associations houses, many of which were provided through a great deal of voluntary effort and were built before 1919, seems to me to be unfair. It also fails to show any gratitude on the part of the Government and shows a profligate attitude with public money, since there is no difficulty in selling flats of this nature. I hope that the Minister will take this on board and agree with Amendment No. 6. With that amendment perhaps it will be convenient to take also Amendment No. 10. I hope that both will be acceptable to the Government. I beg to move.
Lord Gray of Contin: The effect of these amendments would be to deny particular groups of tenants the same discount entitlement as is available to kindred tenants living in similar properties built after 1919. I have listened carefuly to the arguments put by the noble Lord; I have to say that I consider them unacceptable. The noble Lord has pointed out that the majority of such flats will be owned by housing associations. This may be true, although it should also be remembered that some local authorities also have such tenements in their stock.
It has been argued that housing association flats are likely to have been recently refurbished and will therefore be more attractive to purchasers. This may well be the case. However, the experience among local authorities has been that flats of all types have sold markedly less well than other houses. This is not so much because the tenants do not like their flats, as because they are apprehensive about the associated responsibilities and costs—such as for common repairs—which go with the purchase of a flat. There is no reason to suppose these views will not be shared equally by housing association tenants.
But I believe that this argument is largely irrelevant. The principle of discount is a central feature of the right-to-buy scheme. The basic discount reflects the fact that the house or flat is being sold with a sitting tenant; and thereafter additional discount is granted, reflecting the tenant's tenure of publicly-funded housing. To argue that tenants living in flats built before 1919 should not be entitled to the same discount as other flat dwellers, because their flats are likely to prove more popular, is to misunderstand totally why a discount is given in the first place.
In conclusion, I do not believe that there is any case for different discounts being applied purely on the basis of whether a particular flat was built before or after 1919. The discount reflects the fact that the house is being sold with a sitting tenant and also the period of time over which that tenant has been contributing towards the cost of publicly-funded housing. I must therefore ask the Committee to reject these

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amendments if the noble Lord insists on pressing them.
Lord Morton of Shuna: I have difficulty in understanding the noble Lord, Lord Gray, and I wonder whether he has ever lived in one of the cities. Where are the stone tenements in Scotland built after 1919? There are plenty of council multi-storey flats and one can see why perhaps they have to be made specially attractive. But the whole purpose of the Government's proposal is to make flats more attractive so as to facilitate their sale and to make a distinction. This amendment would remove from that distinction the flats which are already attractive, which are the flats in the old tenement blocks which have been restored. It does not appear to me that the noble Lord has answered the point at all. I certainly know of no tenement flats in the style of the pre-1919 ones that have been built anywhere in Scotland since then. They are a completely different type of flat.
Lord Gray of Contin: I am sorry but I cannot really help the noble Lord very much. He suggested that he did not understand me. I thought that what I said was as plain as a pikestaff. I really cannot understand where he is becoming confused. He asked about flats built after 1919 in local authority ownership; obviously I cannot answer that question off the top of my head. I am advised that such flats exist. But it really is rather a pointless question to ask where they are at this stage of the proceedings. No doubt we shall be able to get the information for the noble Lord if the noble Lord, Lord Mackie of Benshie, keeps speaking for long enough.
Lord Mackie of Benshie: As I understood the noble Lord on the Opposition Front Bench, it was not the plainness that he was complaining about; it was the logic. His argument was perfectly plain to me: that if you knocked 10 per cent. off flats because they were not selling very well, then if you had flats that were selling very well, there was no need to knock off the 10 per cent. As a simple horse dealer that appears to me to be sensible.
Lord Gray of Contin: I am grateful to the noble Lord, Lord Mackie. Edinburgh District Council, I can inform the noble Lord, has tenements in Barony Street, Newtown, Edinburgh, built in the 1930s and other equally attractive blocks built since.
Lord Carmichael of Kelvingrove: I cannot understand the Minister. I can see his point that the whole object was to sell as many houses and flats as possible. But I believe that he is missing, and the philosophy of the Bill is missing, one of the vitally important points of our whole argument. The noble Earl, Lord Selkirk, and others from all parts of the Committee have travelled through some of these cities in the last few years and have seen the enormous improvements that have been made, largely due to enthusiasm by housing associations.
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I know that a very large number of flats were built in places in Glasgow by the old city improvements department, particularly in the central part of the city, but they are now local authority houses and there are fairly big groups of them. They are very desirable houses. The Minister in the earlier Bill has his rights to sell these flats. I am sure that the inquiries will discover that the houses round about Glasgow Cross, High Street, Duke Street and George Street will go very reasonably.
What we are concerned about are the small housing associations, not those with houses of anything like the numbers that I have been speaking about; houses that the old city improvements department bequeathed to the district council. I am talking about relatively small numbers of houses built before 1919. The question of houses, stone-built houses, built after 1919, or built in the same pattern, does not arise.
I am concerned about the old-established Glasgow tenement houses which many people believe represent not a bad way of housing people because some of them are and always were of a very high standard. We are concerned with trying to preserve these houses. A worry that housing associations have is that if they have spent a great deal of money and have improved a number of houses in a block, they can then be bought by people who frequently are afraid of the cost of repair. If enough of the houses are bought, the majority then do not belong to the housing association. Therefore common repairs are difficult and planned maintenance of the houses is not possible because the ownership is so disparate. The housing associations rightly feel that the great work they have been able to do, with the co-operation of all sorts of local people, will go by the board.
If the noble Lord thinks again of some of the streets in the cities, he will realise that in the old days, even before the advent of housing associations, many of our tenements were individually owned. That was the case in my old constituency. But great problems arose over roofs, for instance, with a roof costing several thousand pounds to repair; and it was mainly a Labour Government and local authorities which put money towards repairing the roofs. Goodness gracious, had we not had so many parts of Glasgow renewed over the last 25 years, the houses would have been in an extremely bad state and we should have been much worse off for housing than we are now!
This is an important amendment. It is not asking too much. We are talking about houses that sell readily, but we feel that houses of pre-1919 construction, owned by housing associations, should be exempt from this Bill. I hope that the Minister will look again at it and think more closely before he makes too negative a response to the points I have genuinely tried to put forward tonight.
Lord Ross of Marnock: I think we are hoping to get an answer from the Minister as to whether anything has got through to him. We are not talking about houses built after 1919; we are talking about houses built before. We are trying to rescue something from the generalised power we are giving to tenants of housing association houses. The smaller housing

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associations in Glasgow work on these old tenements. The photographs taken before and after of these old tenement properties are worth seeing. There are just a handful of such properties.
These are the smaller housing associations and we are trying to rescue them. They know quite well that, having renovated these properties at great expense—and the Government have helped, but the labour has been given by the voluntary organisations—if they have to sell some of these rather preciously rehabilitated houses their work is going for nothing.
We are limiting our demand or request—we are almost down on our knees now—to asking for these houses to be saved. These are the houses that the noble Baroness, Lady Elliot, and the noble Earl, Lord Perth, were speaking about. There are only a small number of houses where people have to be manipulated out and then back in. These housing associations have achieved something and they see that achievement going. These houses are all pre-1919; some of them are from 1890. They are such good houses that the National Trust for Scotland has bought one in Glasgow which is now a show house.
The community housing association has rehabilitated these houses and got people into them. They are paying considerable rents for them. The associations have achieved something by keeping people in the centre of Glasgow and retaining architecturally valuable properties. That is the sole purpose of this amendment: it is limited to that. If the Minister says he is prepared to look at that, I think we would gladly withdraw the amendment. Surely his mind is not so closed that he is not prepared to talk this over with his officials.
8.45 p.m.
The Earl of Perth: Having heard the last intervention of the noble Lord, Lord Ross of Marnock, I think it would help us all if the noble Lord, Lord Gray, could tell us the magnitude of what we are talking about. When I hear it said that such things are of importance for preservation reasons, and so on, I think it is hard for the Committee to judge the merits on one side or the other without the facts. If the noble Lord would give us the information for which the noble Lord, Lord Ross, asked, that would be helpful. I understand the amendment will not be pressed if he knows that at the Report stage we shall be given further details.
Lord Gray of Contin: I am grateful to the noble Earl, Lord Perth, and I shall not keep him waiting even till the Report stage: I shall give him the information now. The noble Lord, Lord Ross, was talking about small groups of tenements and suggested that we are talking about a handful of properties. The housing association tenement stock in Glasgow is over 13,000, so—
Lord Ross of Marnock: The local authority's stock in Glasgow is more than half a million.
Lord Gray of Contin: The noble Lord must listen. I did not say the local authority: I said the housing
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association tenement stock in Glasgow is over 13,000. He wants to deprive those tenants of the right which is available to others. I do not, the Government do not and I am perfectly sure the noble Earl, Lord Perth, does not want to do that.
I sometimes despair when I hear noble Lords on the other side talk about people who wish to buy their houses in such terms: whenever the houses are bought they are going to be allowed to get into a state of disrepair. That is what they suggest, but nothing could be further from the truth. When somebody buys his own house he is going to take a pride in it. He is jolly well going to make sure that it does not fail into disrepair. Therefore the wholly political arguments—in disguise, I admit—which are put forward by the noble Lord, Lord Ross of Marnock, do not cut any ice. These people are entitled to the same privileges as local authority tenants. Why should we deprive them of the right to buy their houses?
No, I am sorry. I have listened carefully, as I always do, to the noble Lords, Lord Ross of Marnock and Lord Carmichael, because they are both very experienced in housing matters. They have both been Ministers in another place, and I respect their knowledge. But they also are in Opposition and they have to make their case as best they can. They have not been convincing and I cannot accept their arguments. I am sorry.
Lord Mackie of Benshie: My heart, too, bleeds for these poor people who cannot buy their houses; like the Minister's, it has bled frequently tonight. But many of these amendments are about the 10 per cent. less on flats. We are talking in some cases about the feelings of housing associations which have built up such properties and which know they are extremely attractive. They may have to dispose of them at 10 per cent. less than the price of a house, although some of the flats, particularly the older stone-built ones, when done up are more attractive. I think the Minister should look at this and at least consider the feelings of the people who do the voluntary work in these housing associations.
I know that there are exceptions. I mentioned one of them, and there is another amendment coming up concerning flats in blocks of four, which are extremely effective. I think the Minister might look at this and see whether the feelings are genuine. They are not all political; I can assure him of that.
Lord Gray of Contin: I am sure that the noble Lord is sincere, as were others, but I am afraid that I am not prepared to accept these amendments, nor to take them back, and if noble Lords insist on forcing them, then I must resist.
The Earl of Perth: May I be clear about what the noble Lord, Lord Gray, is saying? As I understand it, he said that there are 13,000 flats which were constructed before 1919. Is that correct?
Lord Gray of Contin: No. If I could explain to the noble Earl, I said that there are over 13,000 houses in the housing association tenement stock in Glasgow. I

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did not say, but I now say, that a great many of them would have been constructed before 1919. I do not say that all those tenements were constructed before 1919.
The Earl of Perth: I still ask the noble Lord whether he could help us with the figures on Report. If only 1,000 or 2,000 of those 13,000 were constructed before 1919, and if they were of a special quality, that makes a difference.
Lord Gray of Contin: The movers of the amendment have this matter within their power. If they care to withdraw their amendment, they can table a similar amendment on Report, but for the reasons which I have given I am not prepared to accept the present amendment. I understand that over 80 per cent. of the 13,000 were built before 1919.
Lord Carmichael of Kelvingrove: If 80 per cent. of 13,000 houses is divided among a fairly large number of housing associations, it means that each of them does not have many pre-1919 houses. If we scale the figures down in that way we realise the effort that has been made by local people in preserving, and making a valuable contribution to, the housing stock. It could not be considered to be massive. The housing is not necessarily the most important part of the contribution, but, as I said on Second Reading, that has had an effect on areas which would not otherwise have been saved.
There is a point which I must take up with the noble Lord the Minister. He was kind enough to say that the noble Lord, Lord Ross of Marnock, and myself had some experience of housing. I never had any experience of housing in government, but I claim a great deal of experience of living in tenement houses in both the East End and the West End of Glasgow. Anyone who believes that there are no problems with houses in closes which are owned by individuals does not know anything about living in tenement property. I have lived in closes where everyone owned their own houses and where getting repairs done was an incredibly difficult job. There had to be meeting after meeting because some people just did not have the money to pay for the repairs; and because the matter was divided equally between all the owners of the tenements there was no majority such as there is with a housing association, which has a majority and can go ahead with repairs and make arrangements with those who are in difficulty about meeting the cost of repairs.
It is sometimes difficult for people to find the money for repairs. Of course people are proud of their houses and do a great deal to them, but when there is a bill for anything up to £20,000 to repair a roof and there are only 12 people living in a close, a big strain is suddenly put on them. I should like to make that clear, because it is something about which I know a little. I believe that the noble Lord the Minister was, if anything, rather harsh and perhaps over-political. This is something upon which we should put down a marker. I hope that the Committee will give an opinion on the amendment. I should like to await the result of a Division.
8.54 p.m.
On Question, Whether the said amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 29; Not-Contents, 46.

DIVISION NO. 2

CONTENTS

Airedale, L.

McNair, L.

Barnett, L.

Molloy, L.

Carmichael of Kelvingrove, L.

Morton of Shuna, L.

Crawshaw of Aintree, L.

Mountevans, L.

David, B. [Teller.]

Nicol, B.

Dean of Beswick, L.

Parry L.

Graham of Edmonton, L. [Teller.]

Ross of Marnock, L.

Seear, B.

Hooson, L.

Stoddart of Swindon, L.

Hughes, L.

Strabolgi, L.

John-Mackie, L.

Taylor of Blackburn, L.

Kilmarnock, L.

Taylor of Gryfe, L.

Lawrence, L.

Tordoff, L.

Lockwood, B.

White, B.

Mackie of Benshie, L.

Ypres, E.

NOT-CONTENTS

Allenby of Megiddo, V.

Harvington, L.

Belstead, L.

Hooper, B.

Brabazon of Tara, L.

Kaberry of Adel, L.

Broadbridge, L.

Kintore, E.

Brougham and Vaux, L.

Lauderdale, E.

Butterworth, L.

Lindsey and Abingdon, E.

Cameron of Lochbroom, L.

Long, V.

Campbell of Croy, L.

Lyell, L.

Carnegy of Lour, B.

Margadale, L.

Cathcart, E.

Marshall of Leeds, L.

Coleraine, L.

Mersey, V.

Craigmyle, L.

Montgomery of Alamein, V.

Crathorne, L.

Perth, E.

Davidson, V.

Quinton, L.

Denham, L. [Teller.]

Skelmersdale, L.

Elliot of Harwood, B.

Swinton, E. [Teller.]

Elliott of Morpeth, L.

Trefgarne, L.

Ferrers, E.

Trumpington, B.

Forbes, L.

Vaux of Harrowden, L.

Gibson-Watt, L.

Windlesham, L.

Gisborough, L.

Wise, L.

Glenarthur, L.

Wynford, L.

Gray of Contin, L.

Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
9.2 p.m.
Lord Gray of Contin Lord Gray of Contin moved Amendment No. 7:
Page 2, line 17, leave out ("(42)") and insert ("(44)").
On Question, amendment agreed to.
Lord Gray of Contin Lord Gray of Contin moved Amendment No. 8:
Page 2, line 18, after ("(b)"), insert ("in sub-paragraph (ii), after the words "one per cent." there shall be inserted the words ", or where the dwelling-house is a flat two per cent.,";.
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Strabolgi): Before I call Amendment No. 9, I must inform your Lordships that if No. 9 is agreed to I cannot call Amendment No. 10.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 9:
Page 2, line 18, leave out paragraph (b).
The noble Lord said: In case anyone is worrying himself sick about Amendment No. 10 not being called, I can tell him that we discussed it along with the earlier one, which was on exactly the same point, and we do not propose to move it.
Amendment No. 9 is to leave out paragraph (b), which refers to "60 per cent." But the phrase "60 per cent." does not appear in the Act. Is the explanation the same as before, that it has been amended by a further Act? If that is the case, could we have an explanation and be told the name of the Act so that we can add it to the bundle of Acts that we need in order to interpret this Bill? I beg to move.
Lord Gray of Contin: Yes, the noble Lord is correct. This is from statutes already in force.
Lord Ross of Marnock: Yes, but which one.
Lord Gray of Contin: I shall have to check that for the noble Lord, but I think it is Section 1(5)(b)(i).
Lord Ross of Marnock: We know it is Section 1(5)(b)(i). I am reading that, but it does not mention 60 per cent.; it mentions 50 per cent. I have already suggested that this has arisen because another amending Act has been passed. I think it was a planning Act of some kind. I just want the reference to it so that we get it right somewhere.
Lord Gray of Contin: It is Statutes in Force, the Tenants' Rights, Etc., (Scotland) Act 1980, Chapter 52, and I am told that the reference of Section 1(5)(b)(i) which I gave the noble Lord is correct.
Lord Ross of Marnock: But which statute made it so different?
Lord Gray of Contin: The noble Lord is nit-picking. This is becoming like Fred Karno's army. It is the Tenants' Rights, Etc., (Scotland) Amendment Act 1984.
Lord Ross of Marnock: That is very different. The reference in Clause 2 of this Bill is:
"Subject to subsection (2) below, in section 1(5)(b) of the 1980 Act".
The 1980 Act does not contain the words "60 per cent.". That was amended by the 1984 Act. If we had had that explanation at the start, we would all have been saved a certain amount of trouble. The Minister looked rather floundered and flustered, and he was leading a Fred Karno's army himself.
Lord Gray of Contin: The noble Lord asked the question.
Lord Ross of Marnock: If you are a good parliamentarian, you never ask a question unless you
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know the answer. After that persuasive reply from the Minister, of course I shall be delighted to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 10 and 11 not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 12:
Page 2, line 26, at end insert ("and that building not having more than three storeys").
The noble Lord said: This amendment is concerned with buildings no higher than three storeys.
Lord Gray of Contin: It has already been spoken to.
Lord Carmichael of Kelvingrove: This amendment was not moved previously but was merely discussed with other amendments. I hope that the Minister, if he is unwilling to accept the amendment, will give some explanation as to why he is unable to accept it. Surely this amendment has to be moved as we reach it.
Lord Gray of Contin: The groupings were agreed to, and this amendment was grouped with three other amendments and has already been spoken to. The normal procedure is that it would not be moved.
Lord Ross of Marnock: If we are taking amendments together, then the normal procedure would be for the Chairman to say which amendments are to be taken together. I presume—though nobody has said this, or nobody heard it—that this amendment goes with Amendments Nos. 4, 5, 7, 8, 9, 11, 12 and 13. That has not been put to the Committee. In any case, Amendment No. 12 has not been moved and we are entitled to move it.
The Deputy Chairman of Committees: Is Amendment No. 12 moved?
Lord Carmichael of Kelvingrove: I should like to move the amendment. Roughly the same argument applies as was put before to the noble Lord the Minister concerning smaller buildings containing four flats or fewer within them. The noble Lord, Lord Mackie of Benshie, has his signature to this amendment as well. They are homes that not only go without trouble but are also in considerable demand. I therefore hope that the Minister will give the Committee a slightly better explanation than he did in respect of the amendment we discussed earlier concerning buildings of no more than two storeys. I beg to move.
Lord Gray of Contin: Amendment No. 12 seeks to provide that tenants shall qualify for extra discount on flats but only if their flat is in a building of not more than three storeys. That would exclude from the additional discount flats in low- and high-rise blocks. But flats in two-storey blocks—commonly known as the four-in-a-block type of house—would qualify for extra discount.

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I confess that in considering this amendment in advance of today's proceedings I found it a little difficult to follow. The mystery deepened on Friday when there appeared on the Order Paper Amendment No. 11 with the exact opposite effect: to exclude from extra discount flats in two-storey blocks but include all others. I concluded therefore that the noble Lord's purpose was no doubt probing.
In proposing additional discount on flats, our purpose is to recognise that the number of flats sold under the right to buy has been disappointing. That applies to flats of all types, and we do not believe that there is any distinction to be made between flats in multistorey blocks on the one hand and flats of the four-in-a-block type on the other hand. It has sometimes been suggested that four-in-a-block flats are more popular and therefore should be excluded from the extra discount. However, the figures do not support that suggestion.
Of all houses sold under the right to buy, only about 12 per cent. have been flats, even though flats account for about half the total stock. Within that total, the difference in popularity between different flat types is nothing like so strong as has been suggested in some quarters. Exact figures are not available because the figures for the stock arise from the 1981 census, whose division of house types did not match in all respects that used for sales returns. It is possible to say that about 2 per cent. of the stock of four-in-a-block flats have been sold, compared to about 1.7 per cent. of the stock of flats of other kinds, predominantly those in higher blocks.
On the basis of those figures, one could not construct a case for excluding tenants of particular kinds of flats from the extra discount provided by the Bill. In the light of that explanation, I trust that the noble Lord will withdraw his amendment.
Lord Carmichael of Kelvingrove: I apologise to the Minister, but on looking more closely at the amendment—I do not have the script but I am sure this was my fault—I find that I have there the word "not", which rather disturbs matters. I apologise to the Committee, because that changes the entire balance of the amendment. It should have read:
"and that building having more than three storeys".
I apologise for that.
The only point I should like to make to the Minister is that I find it difficult to believe that the different types of flats sell proportionately the same, when one considers the number of high-rise flats. By the time we reach Report stage, perhaps the Minister will have some figures from local authorities that have been selling flats, to find out just what proportion of high-rise flats is involved. From my observations and the usual "vibes" one gets when moving around, one reaches the point where one finds that flats of four in a block are obviously much more desirable than most others, except perhaps in local authorities which have the old and much sought after semi-detached house.
It would be helpful if, before we part with this Bill some time in the next month or so, the Minister is able
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to give us the figures showing the actual breakdown, so far as local authorities know, of the number of high-rise flats and other types that have been sold. Having said that, and again with my apologies to the Minister, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.15 p.m.
Lord Gray of Contin Lord Gray of Contin moved Amendment No. 13:
Page 2, line 27, leave out ("(Subsection (1)") and insert ("(Subject to subsection (3) below, in section 9A of the 1980 Act (application of Part I of that Act when dwelling-house is repurchased as defective), after the words "'30 per cent.';" there shall be inserted the words "(AA) for the words '44 per cent.' there shall be substituted the words '40 per cent.';".
(3) Subsections (1) and (2)").
On Question, amendment agreed to.
Clause 2, as amended, agreed to.
Clause 3 [Amendment of date after which certain restrictions may apply as regards price fixed for purchase of dwelling-house; and extension of those restrictions]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 14:
Page 4, line 4, leave out from beginning to end of line 6.
The noble Lord said: The purpose of this amendment, and Amendment No. 15, is that the statutory instrument referred to in Clause 3(5) should be dealt with by affirmative resolution of the two Houses of Parliament rather than by negative resolution.
The statutory instrument is covered in subsection (4). If I understand this rather tortuous way of legislating, it deals with the date on which values are to be set; the effective date of the tenancy and matters of value, deductions from the cost of the property and therefore deductions in the extent to which the discount is allowed to be taken off. It appears to me that this would be much better dealt with by affirmative resolution, so that the matter could be discussed, rather than by negative resolution. I beg to move.
However, in moving the amendment perhaps I may take the opportunity of pointing out that Amendment No. 16 deals with Clause 4 and not with Clause 3 as would appear from the Marshalled List.
Lord Gray of Contin: I agree with the noble Lord, Lord Morton, that Amendment No. 16 deals with Clause 4. It is a mistake on the Marshalled List.
Clause 3 has two main purposes. First, it changes the cut-off date for the outstanding debt test. That is the date after which discount may be restricted if it would bring the sale price of a house below the outstanding debt on that house. In 1980, when the right to buy was introduced, that date was set in the 1980 Act at 15th May 1975, which was in fact the date of local government reorganisation. It has not been changed since. We are proposing that the date should now be moved forward three years to 31st December 1978.

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This is a modest change which we are satisfied will not have any adverse financial consequences for authorities but will, we believe, be welcomed as relieving them of some unnecessary work.
Secondly, the clause provides that discount may be restricted if it would bring the sale price below the debt outstanding on recent works to modernise and improve the house. Over the years we have had representations from a range of authorities that they should not he required to sell at less than the outstanding debt on modernisation works. They felt it unfair that cases might arise where a house was expensively modernised and then the authority obliged to sell it to the tenant at a discount; at a price which was insufficient to meet the debt on the modernisation works. We have accepted these arguments and the Bill provides that modernisation costs shall be brought within the outstanding debt test for the first time. I undertand that this change has been welcomed by the Convention of Scottish Local Authorities.
The Bill therefore moves forward the cut-off date by three years and extends the debt test to cover modernisation works. The Secretary of State has always had the power, under the existing Section 1(7), to disapply the outstanding debt test by order, made by statutory instrument subject to negative resolution. As a consequence of the further changes we are making, we are proposing in subsections (4) and (5) of Clause 3 that he should also have power by order to modify the operation of the outstanding debt test and to change the cut-off date.
In future, it is conceivable that it might be desirable to make further changes to the cut-off date and to the terms of the outstanding debt test. We have no immediate plans for such changes; but, if they did seem appropriate, it seems undesirable and unnecessary that they should only be able to be made by primary legislation. That is why we propose that the Secretary of State should have the power to make further changes by order.
The order-making power not only permits the terms of the outstanding debt test to be changed, including the date, but also different terms, for example a different date, to be set for different authorities. It might be felt desirable to set a different date for different housing authorities, for example, to take account of differences in the composition of their stock; or even to set a different definition of the outstanding debt in different cases. It might be, although this is perhaps less likely, that different terms would apply to different types of houses across all landlords. The clause is phrased as it is to provide flexibility, so that if an authority discovers that the terms of the test do not meet its own local situation, and if its representations seem justified to us, we have the power to make adjustments without having to resort again to the lengthy process of primary legislation.
In concluding that negative resolution was the appropriate procedure, we were also influenced by the fact that the Secretary of State already has a power, under Section 1(7) of the 1980 Act, to disapply the outstanding debt test entirely, and that power is exercisable by order subject to negative resolution
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procedure. An order as proposed in the present clause, which merely alters the terms of an existing test, is obviously much less drastic than one which removes the test entirely; and it would seem a little strange to make the less severe type of change subject to affirmative resolution procedure, when the Secretary of State could, if he wished, abolish the test entirely by an order subject to negative resolution.
I fear that I must apologise for trying the patience of the Committee with this lengthy explanation, but I hope that the noble Lord will now feel able to withdraw his amendments.
Lord Morton of Shuna: It was a very long explanation but it was clear and I think that even I managed to understand it. I am very much obliged to the noble Lord. However, as he explained so clearly, the new powers to make regulations cover very much wider areas than the previous powers. Under the last few lines of subsection (4) they cover powers making:
"different provision in relation to different areas, cases or classes of case and may exclude certain areas, cases or classes of case".
I should have thought that, when one is allowing that form of wide discretion, it is much better that it should be by affirmative resolution rather than by negative resolution. But on the understanding that I may return to this point later and in the hope that the noble Lord will consider the matter further, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Morton of Shuna Lord Morton of Shuna had given notice of his intention to move Amendment No. 15:
Page 4, line 8, leave out from ("to") to end of line 9 and insert ("approval by both Houses of Parliament").
The noble Lord said: It follows that I shall not move the amendment.
[Amendment No. 15 not moved.]
Clause 3 agreed to.
Clause 4 [Secretary of State's power to give directions as to conditions in offers to sell]:
The Deputy Chairman of Committees: Before I call Amendment No. 16, I must inform the Committee that at the beginning of the insertion, owing to a misprint, the word "it" should be deleted.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 16:
Page 4, line 18, leave out ("appears to") and insert ("has been shown to the satisfaction of the Sheriff by").
The noble Lord said: I beg to move this amendment. This section gives the Secretary of State power, if he thinks that the inclusion of conditions of a particular kind in offers to sell would be undesirable, to give directions to landlords generally or of a particular description. This is a very wide power to give to the Secretary of State. The amendment is to make the section read:
"Where it has been shown to the satisfaction of the Sheriff by the Secretary of State that the inclusion of conditions".

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In other words, it would be for the Secretary of State to satisfy the appropriate sheriff that the particular conditions would be unreasonable. It appears to me that this would be a very reasonable condition to make because it would mean that the Secretary of State had to satisfy someone else that he was acting reasonably instead of just acting totally off his own hand. I beg to move.
Lord Gray of Contin: Clause 4 enables the Secretary of State to issue directions to local authorities and other landlords concerning the conditions which they may include in future offers to sell under the right to buy. The power is necessary for two reasons. Firstly, there have been allegations that landlords have threatened tenants with onerous conditions, in order to deter them from purchasing. We would be concerned if there were evidence that this was happening on a wide scale, and the clause will give the power to take action to remedy such abuse, saving considerable inconvenience for both purchasers and the Lands Tribunal.
Secondly, the power might be helpful to landlords. We hope that other provisions of this Bill will lead to an increase in the numbers of council flats sold. One of the problems of selling flats is the division of responsibility between landlord and new owners for service charges and common repairs. It may be that some general guidance from the Secretary of State in this area would be of help to landlords and purchasers. Before issuing directions of either type, it would, of course, be our intention to consult with local authorities.
The noble Lord's amendment proposes that, instead of the Secretary of State, the power to issue direction should be given to the sheriff. I must say that I am doubtful whether the courts would welcome this additional work. What is more, it would to my knowledge be without precedent for the sheriff to be given a general power to issue directions to local authorities let alone the public landords. Nor is it clear how the proposal is to work. Are individual sheriffs only to have power to issue directions in their own area, or are their directions to be binding across the whole of Scotland? And how are their directions to be enforced? What if different sheriffs were to issue conflicting directions? Within the realms of the court, it is not unusual to come across controversy over sentences. So what might be the result in this case can well be imagined.
It would be, I believe, a unique step to give the sheriffs power to issue directions to landlords about the general operation of the right to buy. I do not believe that such a power would be practicable. Nor do I think that it would be welcomed by the courts.
Behind this amendment, I suspect, lies a feeling that somehow the Secretary of State is taking a very remarkable and unusual power, and that he may exercise that power unreasonably. I do not accept, however, that this power is so unusual. There are other areas where the Secretary of State is empowered to issue directions to landlords on the operation of their
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statutory duties. In the housing field, the power to issue guidance on the Housing (Homeless Persons) Act 1977 springs to mind. Nor do I accept that the Secretary of State is likely to act unreasonably. If he were to, then there are procedures for judicial review of his actions.
In all the circumstances, therefore, I do not believe that this amendment would be an improvement in the present clause, and I hope that, on reflection, the noble Lord will agree to withdraw it.
Lord Morton of Shuna: As the noble Lord is no doubt well aware, if a potential purchaser thinks that a condition being imposed upon him is unreasonable he can go to the court or to the Lands Tribunal to get it put right. It seems to me entirely unnecessary that the Secretary of State should have to issue directions. However, in the circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
9.30 p.m.
Clause 5 [Financial and other assistance for tenants involved in proceedings under Part 1 of 1980 Act etc.]:
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 17:
Page 5, line 21, leave out from ("assistance") to end of line 23.
The noble Lord said: This is another of these unusual amendments. Why should I do work that the Government can do for me? Clause 5 states:
"After section 9A of the 1980 Act there shall be inserted".
I look for Section 9A of the 1980 Act and, surprise, surprise, there is no Section 9A of the 1980 Act. I presume therefore that this is in another amendment somewhere.
This point draws the attention of the Committee to the impossibility of easily understanding this Bill and its meaning. It may well be that the Government barely have time to read the briefs, and do not read them terribly well. I do not blame them for that because the lighting has become dim and I can understand the difficulties in reading the briefs. But for an Opposition, without a Civil Service behind them, to try to understand these matters is shatteringly difficult.
I am concerned that the Government are providing the power that the Secretary of State shall,
"on written application to him by the tenant or purchaser give financial or other assistance … if the Secretary of State thinks fit to do so",
and if the applicant is involved with a local authority or a housing association. The clause provides the power to give financial help and other assistance.
The clause states:
"Provided that assistance under this section shall be given only where the Secretary of State considers—>
(a) that the case raises a question of principle and that it is in the public interest to give the applicant such assistance"—
I should like an explanation of the following words—
"or
(b) that there is some other special consideration".

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Who will determine the other special consideration? Is it once again the Secretary of State? Can we be given any indication of what the other considerations are likely to be?
With regard to legal proceedings we are loading the dice on one side. We have already heard about the difficulties and how undesirable it is that the Government should give tenants money. But here they will give them money and assistance in a legal battle against the landlord. Can the Minister let us know what is in the Secretary of State's mind? Can he tell me what happened to Section 9A? Where did it come from? Where did it go? I beg to move.
Lord Gray of Contin: Clause 5 gives the Secretary of State power to assist tenants or purchasers who may be involved in legal action against their landlords on matters concerning the right to buy, but only if the case has special features; for example, because it raises a question of principle and it is in the public interest that the tenant should be given assistance.
The clause is not a general power for the Secretary of State to get involved in litigation between tenants and their landlords on individual house purchasers. Where disputes of this type arise there are adequate remedies in the Tenants' Rights Act 1980 and at common law. There can be cases, however, which give rise to issues of principle, concerning the interpretation of the Tenants' Rights Act 1980 and where possibly tenants might be unwilling to proceed without assistance; for example, because they do not qualify for legal aid and are concerned about the possible costs. In those circumstances the Secretary of State may judge it in the wider interest that the case should proceed in order to have the principle which is in dispute resolved. It may be that he would judge it necessary to give assistance to the tenant in order to bring this about. Clause 5 gives the Secretary of State a reserve power, therefore, to intervene in these limited circumstances.
The clause inserts a new Section 9B into the 1980 Act. Section 9A was inserted by the Housing Defects Act 1984, Chapter 50. I shall refer to the matter later. Section 9B(1) sets out the power of the Secretary of State to give assistance, provided he considers either that the case raises a question of principle or that there is some other special consideration. The words, "some other special consideration" provide, as it were, a safety net because we cannot at this stage predict all the circumstances in which the Secretary of State might judge it necessary to exercise this power.
I have described the main circumstances in which we think it likely that the power would be used, and I have emphasised that it is a reserve power which the Secretary of State intends to use sparingly. The important point is that the case should have special features, in the sense that it raises a matter of public interest, or has some other special consideration. This is a fairly standard phrase and I do not think that there is anything sinister to be read into it. If Members of the Committee are interested in precedents, then they will find closely similar wording in both Section 75 of the Sex Discrimination Act 1975, and Section 66 of the
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Race Relations Act 1976; both excellent pieces of statute which were, as I recall, introduced when the noble Lord was in office.
Subsection (3) lists the type of assistance which the Secretary of State may give. We envisage that this would most likely take the form of financial assistance. But provision is made so that the Secretary of State may give assistance in the form of arranging for legal representation for the applicant, possibly in the form of advice, which could be advice from his own department. It seemed to us sensible that the forms of assistance which might he given should be drawn fairly widely.
I hope that, in the light of my explanation, the noble Lord may be prepared to withdraw his amendment.
Lord Ross of Marnock: The noble Lord eventually came round to giving an explanation of the words:
"or (b) that there is some other special consideration".
As I understand it, his explanation is that there may well be some other special consideration. In other words, he just repeated the words that are already in the Bill and for which I sought a justification. However, he then tells me that they are well-founded; they are in the Sex Discrimination Act 1975 and the Race Relations Act of, I think, 1979. The noble Lord said that I should know about them because I was in office at the time. With all due respect, I was not in office as regards the second Act. It might have seemed like it, but I was not in office. I do not think that there is very much to justify a comparison with the powers given to somebody else—not to the Secretary of State for Scotland—in either of the Acts, whether or not I was in office.
We are discussing a very considerable power. As I have said, I can understand it if there is something which is fairly obviously a matter of principle. There may be defective drafting in this particular Bill. I would not be the slightest bit surprised if there were defective drafting in the Bill. It will he for the courts to sort out the matter, and the Secretary of State would naturally want to come in on the side of the person who thinks—and who the Secretary of State has led to think—he has a right to buy. However, with all due respect, the phrase, "other special consideration" is rather vague. When it involves the Secretary of State taking sides in a legal battle, we require a little more justification than we have had at present.
I understand the difficulties of the Minister of State in this regard. This is not a subject in which he is well versed; and it may fall much more in the field of the noble and learned Lord the Lord Advocate, rather than the Minister of State. It may well be that at another stage he will be able to give us a better explanation than he has given today. Quite frankly, he has not given us any at all. He just repeated the words that are there. I should have thought that perhaps he might have been able to produce something new.
It is not good enough to have this so-called safety net where no one is ever going to be able to do battle against the Secretary of State and win. He has this safety net where he can come in with all the power of

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the state against somebody who is being beleaguered. It may well be one of these small housing associations in Glasgow, in Edinburgh or somewhere else in Scotland, and it may find that instead of one of the tenants it is up against the Secretary of State. It is not good enough to put this in just like that and say, "Well, it is a safety net". A safety net for whom? It is a safety net purely for the Secretary of State.
We should have left it in the first instance that "the case raises a question of principle and that it is in the public interest to give the applicant such assistance". After all, even in that definition, whch we are prepared to accept, it is the Secretary of State who decides that. I do not think that we have had an adequate explanation yet of this line and a half of print.
The Deputy Chairman of Committees: Is the noble Lord withdrawing his amendment?
Lord Ross of Marnock: Not yet. If there is no explanation forthcoming, I can only presume that there is no explanation. If there is no explanation, then the words should not be here. We are prepared to be persuaded that the Government are right, and yet we get no words at all from them. This is new to Scottish legislation. We have not got such a safety net yet for the Secretary of State. If we let it in this time we shall get it in legislation time and time again, and they will be referring back to the Housing (Scotland) Act 1986, which the House accepted with acclamation; without objection.
There will probably be some objection. If the Minister cannot give me an explanation now, I am prepared to withdraw the amendment and put it down for the next stage of the Bill. That will give him time to get on with it, and I hope that the light will be better so that he will be able to read it a bit better when we get that explanation. In the meantime, it is obvious that I shall need to withdraw the amendment.
Lord Hughes: Before my noble friend withdraws his amendment, as I gathered he said he might do, may I say that these words, which are preceded by the word "or", would seem to indicate that the provision is intended to deal with a matter which is either a question of principle or in the public interest? The very least that the Minister should do is to give an undertaking to my noble friend that he will show how these words can be applied in a way which includes both the public interest and a matter of principle. At the moment it sounds as if it is an alternative.
Lord Gray of Contin: I can clearly see what noble Lords opposite are trying to do. However, I shall try to explain again for their benefit a little more slowly and a little more clearly in the hope that they will understand. The clause inserts a new Section 9B into the 1980 Act.
Lord Ross of Marnock: That we know.
Lord Gray of Contin: It did not sound from what the noble Lord said that he did. If he knew, he certainly did not understand. Subsection (1) sets out the power of the Secretary of State to give assistance.
Lord Ross of Marnock: It is nothing to do with subsection (1).
Lord Gray of Contin: If the noble Lord wants to make yet another speech, I shall give way to him, but muttering there from a sedentary position is no help to anybody.
Lord Ross of Marnock: The amendment is to leave out certain words. It has nothing to do with subsection (1). It has nothing to do with subsection (1)(a). It is related purely and simply to the words:
"or
(b) that there is some other special consideration".
That is all. I want an explanation just of that. I know what subsection (1) says, and I agree with it. I know what it says in subsection (1)(a), and I am prepared to accept that. I am asking for an explanation purely and simply of the words,
"that there is some other special consideration".
and nothing else.
9.45 p.m.
Lord Gray of Contin: The noble Lord has already had that explanation, where I dealt specifically with the words "some other special consideration" providing, as it were, a safety net. That is a term which the noble Lord did not like, but it is not unusual to have a safety net of this kind in legislation, as the noble Lord knows perfectly well, because nobody can predict at this stage all the circumstances in which the Secretary of State might judge it necessary to exercise this power. It is for that reason that that form of wording is applied.
I described the main circumstances in which we think it is likely the power would be used, and I emphasised that it is a reserve power which the Secretary of State intends to use sparingly. I then went on to explain that the important point was that the case should have special features in the sense that it raises a matter of public interest or has some other special consideration. I should have thought that what I have explained was really self-evident. What I have said covers the situation where special circumstances may arise which are not covered by subsection (1)(a) but where the Secretary of State may nevertheless judge it appropriate to assist.
I have made that as clear as I think it is possible to make it, and I cannot give the noble Lord any more explanation than that. In view of what I have said, I hope he will now be prepared to withdraw his amendment. Whether he returns to it at a later stage must be for the judgment of the noble Lord.
Lord Hughes: In putting myself in danger of being regarded by the Minister of State as being of inferior

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intelligence, which was what he seemed to imply, I asked him a question, and he has not answered it. My question was: Does "that there is some special consideration" mean that a question of principle has not arisen, or that it is not in the public interest? Normally if the one is going with the other the word joining them together would he "and", not "or". The word "or" is an alternative. What is the answer to that? If it is necessary for me to repeat it and keep on repeating it until he gets the relevant note, I am quite happy to do so. In the hope that what he has now been given will enable him to answer the question, I shall sit down.
Lord Morton of Shuna: If I can also add myself to those whom the noble Lord, Lord Gray, considers cannot understand what is written, surely the Secretary of State is only interested, or should only be interested, in this matter in questions of principle which are in the public interest. If something is not a question of principle and not in the public interest, what special considerations are there which would justify the Secretary of State doing anything?
Lord Gray of Contin: I am sorry, but I really am not going to bore the remainder of the Committee by going over yet again what "some other special consideration" might be. I have explained it twice already, and if noble Lords are not prepared to accept that explanation all I can suggest to them is that they read Hansard tomorrow and study this again, because it is crystal clear.
Lord Hughes: It will not make a halfpenny worth of difference reading it tomorrow. The Minister of State is refusing to tell us whether in applying (b)—there is some special consideration—it does not cover a matter of principle or it is not in the public interest. All I am asking is: does he mean that the special consideration must be in addition to the matter of principle, or in the public interest; or can it apply when either one or both of those does not apply? Can he answer that now? He has had at least three notes from the Box. Surely they at least are capable of providing an answer to a question.
Lord Gray of Contin: The best I can do is to supplement the great amount of information which I have already given to him. I am not suggesting anything about the noble Lord's intelligence; he did this job and I remember him doing it very well indeed, so he must not feel so sensitive. If he feels sensitive he should sit here for a while.
Lord Hughes: I should be delighted, provided that noble Lords presently there had left.
Lord Gray of Contin: This provision could allow the Secretary of State to assist in cases that do not give rise to issues of principle but have other considerations. It is not only issues of principle. It could apply where other considerations occur. I have already spelt out
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those other considerations loud and clear. I have answered the noble Lord's point, I think.
Lord Hughes: At last!
Lord Gray of Contin: At last?
Lord Hughes: I thank the Minister for confirming that.
Lord Ross of Marnock: In view of that lengths and repeated explanation that took us nowhere, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No 18:
Page 5, line 34, leave out paragraph (a).
The noble Lord said: The purpose of this amendment is to leave out "giving advice" from line 34. All I want to know is this. I do not want the whole clause explained at this late hour of the night. All I want is an explanation of "giving advice". We are talking about legal proceedings.
Lord Gray of Contin: I am grateful to the noble Lord for giving way, but this is the point that we had earlier. This is part of an agreed grouping. This amendment has already been spoken to with an earlier amendment.
Lord Ross of Marnock: Nobody said a word about this amendment. Nobody said a word about the last amendment that the Minister queried. Amendment No. 4 was the head of the group and the person moving that amendment should have said that we were discussing this along with the other eight or nine.
Lord Gray of Contin: I did.
Lord Ross of Marnock: No, with due respect the Minister did not mention any of the others at all. I have a good memory for what is said or not said, even when it is said from a sedentary position and even when it is not reported in Hansard.
I should like to know what kind of advice the Secretary of State will give. It is not usual for the Secretary of State to give legal advice and it must be legal advice of some kind when he is intervening in legal proceedings. It might be non-legal language; it might be very rude language, but we should remember that we are dealing only with special circumstances.
I should have thought that the best thing for the Secretary of State to do would be to get in touch with his law officer and pass over the giving of advice on a legal matter to a legal department. I know that there are lawyers in the Scottish Office, but I do not think this is desirable. I should have thought that the place for advice to be given is under legal aid, rather than for the Secretary of State to give all this under (a), (b), (c), (d) and (e).

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This is strange, but I do not see why giving advice, separate from
"arranging for the giving of advice or assistance by a solicitor or counsel"
should be specially mentioned. I beg to move.
Lord Gray of Contin: Subsection (3) lists the type of assistance that the Secretary of State may give. We envisage that this would most likely take the form of financial assistance, but provision is made so that the Secretary of State may give assistance in the form of arranging for legal representation for the applicant, possibly in the form of advice which could be advice from his own department. It seemed to us sensible that the forms of assistance which might be given should be drawn fairly widely.
Again, there is nothing sinister in this and similar wording will be found in both the Race Relations Act
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and the Sex Discrimination Act to which I referred earlier. It could be legal advice but that would more likely be covered by subsections (3)(c) or (3)(d). Advice under subsection (3)(a) might be in the form of, say, maps or other information which the Secretary of State has in his possession. That is the purpose of subsection (3).
Lord Ross of Marnock: Bearing in mind that this is something of high importance, raising a question of principle or some other unspecified special consideration, I should have thought that maps would hardly enter into it. I just cannot see it. I think we had better return to this. I suggest that the Government look at this and also at paragraphs (a), (b), (c), (d) and (e). In the meantime, I shall withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 [Information from landlords in relation to Secretary of State's powers under Part I of 1980 Act]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 19:
Page 6, line 36, leave out subsection (2).
The noble Lord said: This amendment is to leave out subsection (2) of Clause 6. This subsection says:
"Any officer of the landlord designated in the notice"—
that is the notice given by the Secretary of State—
"for that purpose or having custody or control of the document or in a position to give that information shall, without instructions from the landlord, take all reasonable steps to ensure that the notice is complied with".
That may be all right for a local authority; but has the Minister really considered what happens in a housing association if the provision refers to "any officer of the landlord"? Who—the office boy? What is going to happen? Surely an organisation such as a housing association, a committee in effect, has to have some power of deciding whether to comply or refuse to comply and seek judicial review. It is a very wide-ranging power to say that an officer, any officer, chosen apparently by the Secretary of State in his notice, shall have to do things without reference to his employers. It is a very wide, deep power and there seems to be no necessity for subsection (2). I beg to move.
Lord Gray of Contin: Clause 6 gives the Secretary of State a power to require information from public landlords, where it is necessary in relation to the exercise of his power under Part I of the 1980 Act; that is, under the right to buy. This power is necessary in consequence of Clauses 4 and 5 of this Bill. Clause 5 of the Bill gives the Secretary of State power to give assistance to tenants involved in court proceedings. However, before deciding whether it would be appropriate to exercise this power, it may well be that the Secretary of State will require to obtain certain information from the landlord. Clause 4 of the Bill provides that the Secretary of State may give directions as to conditions included in offers to sell. Again, it may be necessary for the Secretary of State to obtain information from landlords concerning such offers, in order to decide whether it would be appropriate to issue directions.
Subsection (2) provides that any officer designated in a notice served by the Secretary of State and who is in a position to give information shall, without instructions from the landlord, take all reasonable steps to ensure that the notice is complied with. I regret that this provision is necessary. We have, however, had experience of a council withdrawing from its officials the delegated authority to complete, certify and submit returns required by the Government under statute. Subsection (2) is intended to avoid the possibility in future of a landlord engineering a confrontation with the Secretary of State by directing staff not to comply with a notice served under this clause.
10 p.m.
An individual officer of the landlord authority will be placed under a clear statutory duty to comply with
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the requirements of such a notice. The officer named would be likely to be a senior officer, such as a director or a chief executive. It would be unlikely that the Secretary of State would specify an office boy, as the noble Lord suggested—but I realise that he was just highlighting the point he was trying to make. That is the situation. It is sad that we need such a requirement, but I have explained the background to it and I hope that in the light of that explanation the noble Lord might be prepared to withdraw the amendment.
Lord Ross of Marnock: It is a very serious power indeed and I have no doubt that failure to comply with it will carry penalties. The Government already have powers to deal with local authorities and I would be very surprised indeed if they had not powers to deal with a defaulting local authority in this respect, or any other.
It is really an extension of their power to go ahead and get round an unwilling authority, be it a housing association or a local authority, by designating any officer in the notice. I do not know whether the Government will be absolutely right about that. They could nominate someone whom they thought was in control, but he could be easily removed from control. The Government could say, "Well, he was in control but he is no longer. He still has to do what we tell him and give us information behind the back of the local authority"—and it may well be against the will of the local authority.
It is much more likely that the Government will be able to say, "This man has information and he must divulge that information to us". What happens if the man says, "I have not got the information", or, "I have forgotten the information"? What are the penalties? This is a new and serious power—to go behind the back of a local authority to an officer of that authority who may or may not have the information. He is much more likely to have information but not to have actual control of the documents.
I am not entirely happy that the Government need to take this power. I am perfectly sure they could do it in some other way, directly with the local authority, rather than descend to the business of naming an individual who is a municipal servant or a servant of the housing association. I think it is deplorable. It may be all very well for the Minister of State to say that it has happened with one local authority. I do not think it has happened in many cases among all the authorities and among municipal servants sufficiently to justify this action, bearing in mind that I am perfectly sure the Government have got other powers. They may not be quite so handy and they may not be quite so easy to wield as this new power that is given; but I think there is a considerable danger in taking this kind of power, particularly in respect of individuals. I think it is a grave departure from our usual relationship with municipal servants that they should be submitted to this kind of situation. I hope the Government will think again about it.
Lord Gray of Contin: I note what the noble Lord has said. As he pointed out, he is quite sure that the Secretary of State has other powers which he could use

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so far as this is concerned. That is quite true. The Secretary of State already has the power under Section 199 of the Local Government (Scotland) Act 1973 to require authorities to give him information. That power, however, is limited to local authorities and would not cover housing associations. The new power under Clause 6 goes wider in that it extends to all right-to-buy landlords. At the same time, it is more limited in being confined to matters arising out of the right-to-buy provisions. The noble Lord is right. There is that 1973 Act power, but that would cover only local authorities. I hope that I have explained that point.
Lord Morton of Shuna: It is unsatisfactory legislation even if it is necessary. What do you do if you are the employee of a housing association and you are told that you will get the sack if you comply with the order? What sanction does the Secretary of State have? There is no penalty under the Bill. It is unusual to place an obligation on someone to obey the law when there is no penalty. Is the housing association or the individual to be fined? We can deal with the local authority under the 1973 Act but there is no penalty here. The noble Lord would be better to take away this clause and consider where it is leading.
Lord Gray of Contin: If a named person cannot comply because he genuinely does not know, he cannot be in default of the statutory requirement.
Lord Morton of Shuna: What happens if he is in default? Where is the penalty? It is unfortunate that when the Secretary of State has power to issue orders anyone in Scotland can defy him because no penalty can be imposed. It is odd legislation.
The Deputy Chairman of Committees: Is the noble Lord withdrawing the amendment?
Lord Morton of Shuna: I was hoping for an answer. Is there any penalty on the defaulting officer who is not employed by the local authority?
Lord Hughes: While the noble Lord the Minister is waiting for the requisite information to be transmitted across the Floor, perhaps I may ask him a question on a different point. The words that present me with difficulty are:
"without instructions from the landlord".
What is obviously intended by what the noble Lord the Minister said is that the officer concerned does not have to seek instructions from the housing association about giving that information. What happens if when he receives the order he is in possession of instructions from the landlord which are, "Do not give this information"? Does that person have a get out if he can say to the Secretary of State, "But I am not without instructions from the landlord"?
Lord Gray of Contin: The point which the noble Lords, Lord Hughes and Lord Morton, have made is open to question. There is no power against an individual. The power would be against the authority.
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I am prepared to take back this point and look at it, as suggested by the noble Lord, and we can perhaps return to it at a later stage.
Lord Morton of Shuna: It is always surprising but pleasant to have some sign of movement from the other side. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Clauses 7 to 11 agreed to.
Schedule 1 [Amendment of 1980 Act]:
The Deputy Chairman of Committees: Before I call Amendment No. 20, I must inform your Lordships that there is a misprint in the wording of the insertion which in line 4 should read "of" instead of "if". I am also bound to say that if Amendment No. 20 is agreed to, I cannot call Amendments Nos. 21 or 22.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 20:
Page 21, line 51, leave out from beginning to end of line 12 on page 22 and insert—

(" (i) the rules of the landlord, registered in terms of section 9 or 10 (registration of rules) of the Industrial and Provident Societies Act 1965, are such as would admit of a claim for, and a grant of, exemption from tax under section 360(1) of the Income and Corporation Taxes Act 1970 (special exemptions for charities); and

(ii) such exemption has been granted (whether or not retrospectively) and is in force; or")

The noble Lord said: I understand that on the groupings—and perhaps for the first time the groupings had better be mentioned, for we did not hear the noble Lord, Lord Gray, mention Amendment No. 4 when he was speaking to various others—I am supposed to be speaking to Amendments Nos. 20, 21 and 22. These amendments come at a very late stage, and it is very unfortunate, when the Committee is sitting late, that this crucial series of amendments should be dealt with at this time.
For some reason the Bill provides that charitable status should apply to housing associations only if they had charitable status from 3rd October 1980. The reason for that date is unclear. Presumably, it is the date of the order bringing in the Tenants' Rights, Etc. (Scotland) Act, which did not apply to housing associations anyway, so its purpose is vague. There is no reason why a charity formed on 4th October 1980 should not get the same benefit as those formed earlier.
There are charities which have been re-arranged since, and, therefore, will not get the benefit. For example, the Servite Housing Association operated long before 3rd October 1980, but it promoted a separate Scottish association which took over its property. It is clearly a charitable organisation. If the parent had not formed a separate Scottish association, its Scottish property would be exempt. But just because of the separation its property is now not exempt. The Kingdom Housing Association was formed before October 1980, but was not registered until after that date. The same situations apply with the Edinburgh association, the Grassmarket Housing Association, to which the noble Lord, Lord Mackie of Benshie, has spoken, because this became charitable after October 1980.
Why is this date chosen? What is the opposition to Amendment No. 21, which would make subparagraph (i) read,
"the landlord has claimed and been granted … under section 360(1) of the Income and Corporation Taxes Act … (special exemptions for charities)"?
What is wrong with that? What is special about 1980?
Similarly, another way of approaching it would be by Amendment No. 20, under which an association's rules are such that it is admitted to exemption from tax under the Act. Amendment No. 22, in the names of the noble Earl, Lord Selkirk, and the noble Earl, Lord Perth, leaving out "3 October 1980," is to the same effect. We have had no explanation as to why 1980 is chosen. I beg to move.
10.15 p.m.
Lord Gray of Contin: I think I might come in at this stage, because what I have to say on this amendment may be helpful to the Committee at this late hour and save time in dealing with this amendment. The excellent work done by the housing associations which operate as charities in Scotland is recognised on all sides of the Committee, and it has been suggested that this work might be impaired by the provisions of the Bill.
Exemptions from the right to buy have to be very carefully considered. When it was brought in in 1980, housing association tenants were excluded because of fears that the development of the housing association movement in Scotland, then not long out of its infancy, might he harmed.
Six years on that is not the case. Now we are extending to tenants of housing associations rights that have been enjoyed by their public sector neighbours for many years. And here is the crux of our present difficulty. There is no reason why tenants of housing associations, which are in most other respects very similar to their local authority tenant neighbours, should be excluded from the right to buy simply because of the constitutional nature of their association. We are therefore concerned to ensure that the right to buy is extended to as many people as possible while, at the same time, protecting the stock of houses required for special needs. However, we recognise that some associations in Scotland that operate under charitable rules and have charitable tax status have considerable stock of both kinds, were set up in a way which did not allow for the introduction of the right to buy, and would now be placed in difficulty if the right to buy were applied to them.
For those reasons the Bill now exempts from the right to buy associations that were formed on a charitable basis and have enjoyed charitable tax status since 3rd October 1980. Amendment No. 20 would, in its first part, remove the requirement that an association should have formed under charitable rules and would allow associations to change their status to that of a charitable association at any time. Clearly that has potential as a device to avoid the right to buy and is unacceptable. Any association that has any serious intention of operating in the charitable field will have formed itself with rules appropriate to that function. Associations that form in the future to carry out some function for which charitable status would be appropriate will almost certainly be operating in the
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field of special needs and here, as your Lordships' Committee knows, special needs stock is exempt in its own right.
The other two amendments proposed by the Opposition Benches and my noble friend would remove the requirement to have obtained charitable tax status by 3rd October 1980. We recognise that that requirement is probably more restrictive than it need he and a small number of associations that formed with charitable rules but did not approach the tax authorities until some later date have been unnecessarily excluded.
In addition, there is a similar small number of associations again having formed with charitable rules which may not even now have approached the tax authorities but may be able to gain tax exemption on a retrospective basis as provided for in the Bill. We therefore have it in mind to bring forward at Report stage an amendment to alter the date for tax status from 3rd October 1980 to 14th November 1985, the date of introduction of the present Bill. We believe that that amendment, if agreed to, would admit a further four associations to the exemption from the right to buy and enable the others who have as yet not considered their tax status to review their position.
It is not easy to see that any further easing of the requirements for exemption from the right to buy for charitable housing associations is necessary or desirable. Associations that we would all regard as having worthwhile charitable objectives do so because they are dealing with the housing of less favoured members of society and for them it is the nature of the stock that determines their exclusion from the right to buy. The present form of the exemption, taking account of both charitable status and special needs stock, is likely to exempt more than 14,000 tenants from the right to buy out of a total housing association stock of some 37,000. Many people whose landlords are housing associations with charitable status will already feel aggrieved that their rights have been taken away simply because of the legal nature of their landlords; I doubt that any wider exemption would be acceptable to such tenants.
I invite noble Lords on both sides of the Committee to withdraw their amendments on the understanding that I will bring forward an amendment of the type that I have promised at Report stage.
Lord Taylor of Gryfe: I have here a brief from the Scottish Federation of Housing Associations. One comment which it makes concerns exemption. I am delighted to hear that the date is to be amended on Report. However, the association makes the very strong point that charitable housing associations which are registered in England and Wales but which operate in Scotland will be exempt. Because of the incompatability of Scottish legislation with English legislation this suggests that an anomaly will arise. Is this true, or will this also be taken care of when the Minister looks at the dates for exemption prior to the Report stage?
Lord Hughes: What the Minister has just said is very important but until we see the nature of the amendment we do not know how valuable it will be. It

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would not be much use to us to receive details of the amendment only two or three days before Report stage. Will the Minister therefore accept that it is desirable—indeed, more than that, it is absolutely essential—that those of us who are particularly interested in the housing association movement should have ample opportunity to look at the amendment to work out its effect on associations before we are asked to divide on it?
Having said that, I must declare an interest. I am president of the Scottish Federation of Housing Associations. The noble Lords, Lord Mackie of Benshie and Lord Campbell of Croy, are both vice-presidents of the federation. I am certain that we should be placed in a impossible position if the federation were to phone us, for example, the day before we are to vote on the amendment to say that it had just learnt of the amendment and to give reasons why it felt that it is half a loaf but better than no bread, or that is is desirable or that it is rotten.
I am not asking that the Minister give this information specially to the noble Lord, Lord Mackie of Benshie, and myself but that it should be published early enough for all who are interested in the matter to have the opportunity to discuss it if necessary. Will the noble Lord undertake to do that?
The Earl of Perth: What we have heard from the noble Lord, Lord Gray, is very important. However, I am not entirely happy that it goes as far as he wants. I say that because, as I understand it, there will still be a difference between the practice in England and Wales and the practice in Scotland, If that is right, I wonder why.
At Second Reading the noble Lord, Lord Gray, said:
"it is wrong to suggest that the Bill prevents the formation of any new charitable housing associations in Scotland".—[Official Report, 18/3/86; col. 946.]
With great respect, even on the basis that the noble Lord has told us there is to be an amendment on Report, that statement is wrong. How can I form a new charitable association for housing if I know that shortly afterwards (the date we were given is 14th November and "shortly after" may be five or six years) the tenants will have the right to buy and that they can buy at a considerable discount?
If I understand charitable law correctly, I think that means that the Inland Revenue would not accept that it was a charitable body. Therefore, as I read this, we are still not where we want to be. In England and Wales charitable housing associations, without any cut-off date, are allowed to carry on, whereas in Scotland that is not to be the case. I do not see the reason for that. I am afraid that the noble Lord is not right when he says that it is wrong to suggest that the Bill prevents the formation of any new charitable housing associations in Scotland for the reasons that I have given. While I am delighted that he will take this amendment away and help in a considerable degree, I beg that he will go even further if the points I have made are correct.
Lord Mackie of Benshie: I shall not detain the Committee for very long. I appreciated the Minister's arguments that any new charitable organisation would
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indeed almost certainly be formed for some special purpose and have some special equipment or special buildings which would exclude it from the necessity to sell houses under the Act. But it is quite possible, and in fact entirely probable, that some proper charitable association could be formed that had houses which did not conform with the regulations required to put them outside the Act. Therefore, I welcome his promise to look at this point again. I think it is necessary that he should look at all aspects of the matter, because it is a very imporant point and the anomalies between Scotland and England are quite unbearable, particularly where charities may operate in both countries.
Lord Morton of Shuna: I think that the best thing I can do is to withdraw these amendments at this stage and wait and see. I must say that I think there are difficulties in the date of publication of the Bill. It may be that it should more properly be the date that the Bill is passed, because that might be more suitable.
There is also a difficulty with the type of charitable housing association that one hopes will be formed in the future, for example, to accommodate people coming out of mental hospitals at their half-way stage, where the whole purpose is that they should be living in ordinary housing with ordinary people. If ordinary people are to have a right to buy, it rises a very great difficulty in that kind of charity running its organisation. But at this stage I beg leave to withdraw the amendment.
Lord Gray of Contin: Before the noble Lord withdraws his amendment, one or two points were raised which perhaps I may answer. The noble Lord, Lord Taylor, asked me about housing associations which are registered with the Charity Commissioners in England. Housing associations which are registered with the Charity Commissioners in England will be exempt from the right to buy in Scotland, to ensure that each single association is treated in the same way both north and south of the Border.
The noble Lord, Lord Hughes, asked me about the timing of the amendment. The amendment will substitute "14th November 1985" for "3rd October 1980" and it is doubtful whether any consequentials will be necessary. However, I have taken note of what the noble Lord has said and I shall see that officials table the amendment in as good time as possible.
The noble Earl, Lord Perth, suggested that the amendment would prevent the formation of new charitable associations in Scotland. It is true that any new charitable association in Scotland would lose its charitable tax status if its stock were eligible for the right to buy, but associations whose stock is for special needs—and most new charitable associations will be in this category—will have their stock exempt for that reason; in other words, by virtue of the physical features of the houses.
The other point raised by the noble Lord, Lord Morton, and other noble Lords was that Servite comes into the exemption under the concession that I shall be making. I thank the two noble Lords for their albeit qualified acceptance of what is on offer. I cannot expect more because they will have to study this issue

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and see the amendment. I am grateful to the noble Lord, Lord Morton, for agreeing to withdraw his amendment.
Lord Morton of Shuna: Now that I have permission to do so, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 21 not moved.]
10.30 p.m.
The Earl of Perth The Earl of Perth moved Amendment No. 22:
Page 22, line 1, leave out ("from 3rd October 1980,")
The noble Earl said: I wish to move the amendment, although I shall afterwards withdraw it, because I remain unhappy about the remark of the noble Lord, Lord Gray of Contin, that most charitable organisations would qualify for different reasons. Why only "most"? Why not all? Why are we in Scotland to be treated in a different manner to England? Why should there exist an anomaly whereby, if I start a charitable housing association in England, set up one house there and then devote all my attention to Scotland, I get away with it? I hope that the noble Lord, Lord Gray, will look at this in the broad and realise that it is not enough simply to have a date. Let us get rid of the date! Let us accept that charitable housing associations, be they in England, Wales or Scotland, all enjoy the same advantage. Without that, for the reasons given by several noble Lords, we are in a mess. A great deal of unhappiness will be caused. We shall not be able to set up new charitable housing associations in Scotland, and that will not do. I do not know whether anyone else wishes to make a comment on the amendment, but before withdrawing it, I shall wait and see.
The Deputy Chairman of Committees: Is the noble Earl moving the amendment? He spoke to it earlier but he has not moved it.
The Earl of Perth The Earl of Perth: I am sorry. I move Amendment No. 22.
The Earl of Dundee: I should like to support the remarks of the noble Earl, Lord Perth. There are surely two important reasons why the existing draft regarding charitable status should be amended. First, there is the case in itself already recognised and already the law in England and Wales that properties of associations which are charities should be exempt from the right to buy. Secondly, there is the need to prevent the anomaly whereby this is now accepted in England and Wales but would not be in Scotland except in regard to associations that had existed before October 1980, although, as my noble friend the Minister now says, there would be a different and more generous date.
There are obvious differences in overall numbers and in percentages of association charities between Scotland and England. Arising from a comparison, it might always be that the useful purpose and functioning of Scottish housing associations would not necessarily appear to suffer as and when Scottish association charities were depleted in number. However, would my noble friend the Minister not agree that arising from such a comparison, the reverse is in fact the position? The different numbers and
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proportions in Scotland would surely suggest that it is sensible to exempt housing association charities even if England and Wales had not done so. Conversely, there is surely all the more reason for so doing, given that England and Wales have now done so.
Lord Gray of Contin: The noble Earl, Lord Perth, asks for the date to be done away with and for all charities to be exempt. I am afraid that this cannot be done. To make such a broad exemption would open the way to what would be no more than a device to avoid the right to buy provisions. The whole objective of the legislation is to make sure that the right to buy provisions are extended to tenants of housing associations in the same way that they are, and have been, available to local government tenants. We have been talking about that matter all evening.
In England, the stock of housing is basically special need. Therefore, by virtue of its type, it is exempt. This is why I said to the noble Earl, Lord Perth, and I repeat to my noble friend Lord Dundee, that it is true that any new charitable association in Scotland would lose its charitable tax status if its stock was eligible for the right to buy. But associations whose stock is for special needs—and almost all of them would be in this category—will have their stock exempt for that reason. That is by virtue of the physical features of the houses. That would exempt them.
But the noble Lord is correct that the amendment I shall make will not apply across the board. But it will extend very substantially those charitable associations which will be eligible.
Lord Hughes: The Minister is giving as his reason for not doing what the noble Earls, Lord Perth and Lord Dundee, are asking that it would be an opportunity for associations to be formed for the purpose principally, or perhaps solely, of avoiding the right to buy. Where this position exists, in England is there any evidence—perhaps even where there are local authorities which the Government dislike because of their attitude to sales—that any housing association of the kind that he apparently fears could be created in Scotland has been created south of the Border?
Lord Gray of Contin: Not to my knowledge, hut I could not answer that question without checking my facts. However, this is something to which we can return at a later date.
Lord Hughes: The Minister will investigate to find out whether there is what he would regard as a fraudulent housing association? Let me put this another way. He will investigate to find out whether there is a housing association formed for what he would regard as a fraudulent purpose?
Lord Gray of Contin: The noble Lord must not put words in my mouth. He asked me a question to which I am not able to give him the answer at the present moment. I have said to the noble Lord that we can return to this when we are discussing the matter at a later date. In the meantime, I shall try to find out the situation for him.
Lord Ross of Marnock: Surely at a later date one of the things we shall do is to remove this reference to the date, 3rd October 1980? Why do we not do it now, and then let us argue about what other date will be put in? That would be an earnest of the Government's good faith. Then all they would have to do thereafter would be to convince the Committee that the Government's new date is the right date.
I think that the important matter is to get rid of the reference to 3rd October 1980. The Government say that they have to do that anyway. They want to do that at a later stage. May I suggest that the Government do it now and then put in their idea of a new date later on? We can then see whether or not it is worthwhile. But I think that it would be worthwhile testing the Government's good faith on this as to whether they want to take out "3 October 1980". But that depends not upon me but upon the noble Earl, Lord Perth.
Lord Taylor of Gryfe: The date is important and the noble Lord, Lord Ross of Marnock, has made that point. But even more fundamental is the matter raised by the noble Earl, Lord Perth. It is the fact that the legislation affecting Scotland will be different from the legislation in England. That is a rather fundamental point which might also be tested.
Lord Gray of Contin: I feel that I have been very fair to the Committee tonight. I have made a very reasonable proposition. I wonder whether it is worth making concessions at all. I sometimes think that it is better to put one's head down and drive on because when one makes a concession all that happens is that people come back and say, "That is not enough, we want twice as much again".
Lord Hughes: I shall not be long. I would suggest to the noble Lord that the worst possible thing to do is to put one's head down and drive on. There comes disaster.
Lord Gray of Contin: I have no intention of doing that anyway, the noble Lord will be glad to hear. I have made a suggestion. The noble Lord, Lord Morton, has withdrawn his amendments. I hope that the noble Earl, Lord Perth, will agree to withdraw his amendment. We shall table our amendment in plenty of time. The House will have an opportunity of studying it and of consulting about it, and we can return to it at a later stage. I am not prepared to accept the guidance of the noble Lord, Lord Ross of Marnock, on this occasion. We shall deal with the matter in our amendment.
The Earl of Perth: I have listened to the exchange which has taken place and I am very grateful to the various noble Lords who have spoken in support of the amendment. I do not think at this late hour that it would be right to test the will of the Committee. However, I feel very strongly that before the Report stage the noble Lord, Lord Gray, should find a reason—which I certainly cannot imagine—why Scotland should be treated differently from England and Wales. The noble Lord says that we might misuse our rights, whereas the English and the Welsh do not do so. I am very unhappy with that argument. I hope
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that the noble Lord will do the same for us as has been done by the Government in respect of England and Wales.
I recall, too, that on this issue in respect of the English and Welsh Housing Bill the Government suffered perhaps one of the greatest defeats that they have ever suffered. Scotland is small by comparison, but the principle is the same. I trust the Scots. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees: Before I call Amendment No. 23, I have to inform your Lordships that Amendment No. 23 has been misprinted and should read: "Page 22, line 14". I therefore propose, subject to your Lordships' agreement, that we should take it after Amendment No. 24. I therefore propose to call Amendment No. 24, but before doing so I have to inform your Lordships that if Amendment No. 24 is agreed to, I cannot call Amendment No. 23. I call Amendment No. 24.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 24:
Page 22, line 14, leave out ("(not exceeding 14)")
The noble Lord said: I did not propose to move Amendment No 23 anyway. I suggest to the Committee that, together with Amendment No. 24, we should also discuss Amendments Nos. 25, 26, 27 and 29. This group of amendments may seem rather complicated, but it is quite simple. The amendments are designed to give greater flexibility to housing associations and to allow them to cater more adequately for groups within the community.
The original reason for Amendment No. 24 was the limit of 14 houses. That triggered the idea that there was too much rigidity in the whole scheme. In general, although the Government have accepted the principle that there should be houses for people who require special treatment, they have hedged it round with so many safeguards that any initiatives as regards housing for care are greatly limited. The type of definition which the Government introduce is bound to place severe and irrelevant restrictions upon the development of community care initiatives which could be managed according to the needs of the people involved. For instance, one of the amendments which we are dealing with in this group concerns young people. The amendment suggests that the provision should read:
"young persons in need of care or support",
instead of merely referring to young people who had been previously in the care of local authorities. We know that the experience of housing associations working with young people is that many young, single people need social support because they come from a family background which has had a disruptive influence on their development. As they develop into young adults they are as much in need of supported housing as the young people who have previously been in local authority care.
The same applies to older people in the community; the elderly persons in the community who are in need of care and support. The new category proposed in Amendment No. 27, category IV, would allow for

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elderly people in need of care and support. Disabled people and those who need support in their youth, their old age or during any difficult or traumatic period in their life require a supportive community.
Housing associations are in the forefront of new developments in caring for and supporting people in their own homes. Many of these schemes need not only a home for the person with special needs but also a supporting network around them. The sale of houses from housing association stock will lead to a degeneration in care of those most in need. Therefore, we suggest that more flexibility should be brought into the whole question of the number of houses within a group that can be used for those in need of care before the houses become eligible for sale.
We also suggest that, rather than leave a figure of 14 for the Secretary of State as a rigid limit, there should be flexibility. The Secretary of State should be able, as he sees fit, to nominate a limit above 14, but of course a limit which could not be exceeded. I beg to move.
10.45 p.m.
Lord Gray of Contin: These amendments relate to our proposal in the Bill that certain housing association schemes providing neighbourhood support for people with special needs should be excluded from the right to buy. During the passage of the Bill in another place there was concern about the effect of the right to buy on housing associations providing houses for people with special needs. While we believe that the existing safeguards in the 1980 Act relating to special needs housing for the elderly and disabled are working satisfactorily—and they will be extended to cover housing associations by this Bill—we accepted that there was one type of scheme which is unique to the housing association movement and which would not be covered by the present provisions. These are schemes which provide care and support in the community for groups such as ex-offenders and the mentally disabled.
The idea is that selected tenants, who act as what are called "caring neighbours", are allocated ordinary general needs houses, but in close proximity to tenants who require some special support and for whom the ordinary tenants accept responsibility. These schemes are sometimes also known as "neighbour support schemes". We accepted that such schemes should be excluded from the right to buy, and this is achieved by subparagraph (ii)(g) of paragraph 1(f) of Schedule 1 the Bill (that is, lines 13 to 31 on page 22). I should perhaps point out that it is to be all the houses in such schemes which are excluded from the right to buy; that is, both the houses which are let to the disabled people and the houses which are let to the "caring neighbours". The exclusion relates to schemes of not more than 14 houses.
I believe that these amendments are unnecessary. In the first place we are talking about essentially small schemes. We felt it necessary to put a limit on the number of houses because we should not wish inadvertently to find that we had excluded the full stock of an association's houses simply because it included one or two neighbourhood support houses. I think it is important that it is only the houses which actually form part of the neighbourhood support service that are to be excluded from the right to buy.
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In consulting with housing associations on our proposals we concluded that the vast majority of such schemes consisted of 12 houses or fewer, and we set the ceiling in the Bill slightly higher (at 14) in order to correspond with what we understood to be existing practice and to leave associations some flexibility. With that explanation, and in view of what he himself has said, I hope that the noble Lord will feel that I have been able to illustrate that the Government gave a considerable amount of thought to this; and of course it was discussed at some length in another place as well. In view of what I have said, I hope he will be prepared to withdraw this group of amendments.
Lord Ross of Marnock: We are here dealing with quite a number of amendments, and I notice that the Minister of State did not say anything at all about No. 25, for instance. He did not mention No. 25. It is a quite important amendment and its implication would be considerable. I think he was a little unfair. If he is as reasonable as he claims, and if he does not want to be too inflexible, I do not see why he could not have accepted the first amendment and leave out "not exceeding 14" if he says the kind of housing association that he has in mind seldom has as many as that. Such associations may well have 14, 15 or 16. Indeed, at one time I had thought of 20 as being a fairly reasonable number to give the right spread. That is the amendment that was misplaced by virtue of a mistake in putting down "line 4" instead of "line 14".
I am not very happy at what the Government have done here. I know it is fairly late at night, but I can tell the noble Lord that each of these individual amendments is worth a considerable debate. The people are important; their future is important; the people doing the work of the housing associations are important.
I do not think it is giving credit to them and the work they are performing, or to the importance of the subject, that we should be here at eight minutes to eleven in an almost empty Chamber discussing the future of these matters. We did not start this today until about ten minutes to six. I do not think that is treating Scottish business in the right way. I shall certainly remember for a very long time the speech lasting twenty minutes and more that we had from the Minister of State in winding up while a few more Members were dragged in to vote for an amendment on which the Government did not want to be beaten. That is what happened. We are dealing with important matters at this time of night and not giving proper satisfaction to them. There is not a lot between us here, and I should like to think that the Government will have another look at this whole section of amendments.
I wonder what the Government's objection is to No. 24. The words look to be rather otiose but I think they are rather important words too, as no doubt the Minister of State will tell us if he now addresses himself to that particular amendment. I should like to hear what he has to say about No. 24, for instance, but 1 do not think there is very much more to go on.
Are we on No. 29 as well? No. 29 is on an entirely different subject. I do not know who grouped these amendments, but certainly anybody on our side who agreed to them did not know very much about what

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they were doing because No. 29 deals with an order on the part of the Secretary of State in regard to this matter, to amend and make changes. The amendment suggested is to increase the number of dwellinghouses under subsection (2)(g). That is the one we are discussing now. It is an entirely different point to deal with an order in regard to what is a substantial piece of legislation.
Lord Gray of Contin: I am always happy to oblige the noble Lord. I dealt with Amendment No. 24. I dealt with Amendments Nos. 24 and 29. We were not talking to Amendment No. 23 as it was not in order. The noble Lord wanted me to say a word or two about Amendment No. 25. Our proposal is to exempt a housing association type of scheme which deals with people with special needs in a unique way through neighbourhood support. The words "being a landlord so mentioned" mean a landlord who is a registered housing association. They have the effect, therefore, of confining the exemption to schemes of the type specified where the landlord is a housing association. This is because such developments are unique to the housing association movement.
The other amendments were Nos. 26 and 27. It is only right, in view of what the noble Lord said, that I should mention them. Amendments Nos. 26 and 27 seek to extend the list of special needs categories which are covered by the exemption. I believe that this is unnecessary. We accept that it is not possible at this stage to draw up a list of all the categories of special need which may be catered for in neighbourhood support in the future. The development of neighbourhood support schemes is still in its early stages. All we are attempting to do on the face of the Bill is to list the main categories of need that we know to be covered by existing schemes based on our discussions with the housing associations.
We are then taking a power—it is in the new Section 11A at lines 33 to 36 on page 22—to add further categories to the list by order. This means that as proposals come forward to extend the neighbourhood support schemes into other areas of special need we shall have the flexibility to add to the list of exemptions if that seems appropriate. I trust that with these explanations the noble Lord, Lord Carmichael, may be prepared to withdraw his amendment.
Lord Carmichael of Kelvingrove: I thank the Minister for his explanation. I hope he has taken the point both from what I said and from what my noble friend Lord Ross of Marnock said that we want more flexibility. We are not tying the Government down to anything. We want flexibility and that is why I considered that Amendment No. 29 seemed logical, as it gives the Secretary of State power to add to the categories, again giving him flexibility without tying him down. This is something that we should consider on Report to see what the Minister has to say about it then. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 23 not moved.]
[Amendments Nos. 25 to 29 not moved.]
Lord Gray of Contin Lord Gray of Contin moved Amendment No. 30:
Page 23, line 49, leave out ("that") insert ("the former")
The noble Lord said: This is a minor drafting amendment which I believe, nevertheless, will be helpful in solving a slight confusion that might have arisen over the present wording of the Bill. Paragraph 3 of Schedule 1 refers at lines 48 and 49 on page 23 to
"the date for the time being specified in that subsection".
Somebody referring back to line 47, however, to find out which subsection is intended will discover that there are two subsections mentioned, subsections (7) and (7A) of Section 1 of the 1980 Act. It is intended that the words "that subsection" in line 49 should refer to subsection (7), which is the subsection amended by the Bill. This is, as I have said, a minor drafting amendment, but in its small way it removes a possible area of confusion that might arise in future. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 31 and 32 not moved.]
11 p.m.
Lord Gray of Contin Lord Gray of Contin moved Amendment No. 33:
age 28, line 39, leave out ("payments") and insert ("repayments")
The noble Lord said: This is a very minor drafting amendment which I trust need not detain the Committee long. Paragraph 15 of Schedule 1 amends Section 30 of the Tenants' Rights etc. (Scotland) Act 1980, which sets out the arrangements whereby local authorities determine the rates of interest to be charged on loans granted by them for house purchase and improvement. The new subsection (8) deals with arrangements for varying the amount of the borrower's repayments. Unfortunately, an error has crept into line 39, which speaks of "periodic payments" where, in fact, what is meant is "periodic repayments". This is, as I say, a very minor drafting point, but the amendment puts the matter right. I beg to move.
On Question, amendment agreed to.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 34:
age 29, line 18, after ("stepchild") insert ("or adopted child")
The noble Lord said: This is self-explanatory, and I beg to move that we include "adopted child" along with "stepchild" as one of the family.
Lord Gray of Contin: I am glad to be able to assure the noble Lord that his concern that adopted children may be disadvantaged is unfounded, and that this amendment is unnecessary. The Adoption (Scotland) Act 1978 provides, in Section 39, that children who have been the subject of an adoption order are to be treated for all purposes as if they were legitimate children. It is unnecessary, therefore, to make any further provision in the new Section 82A of the 1980 Act, inserted by paragraph 17 of Schedule 1 to this Bill. The Adoption Act already ensures that an adopted child has the same rights as the natural child of a tenant. In the light of this explanation, I hope the noble Lord will agree to withdraw his amendment.
Lord Ross of Marnock: I am glad to withdraw the amendment, and I am very glad that publicity should

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be given to the fact that people should realise more and more that an adopted child is part of the family and the word "adopted" does not need to be mentioned. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1, as amended, agreed to.
Clause 12 agreed to.
Clause 13 [Payments etc. in community-based housing associations]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 35:
Page 10, line 37, leave out paragraph (b) and insert—
("(b) the granting of a tenancy of a dwelling to a person described in section (2) below who is not an employee of the association: but only if the granting of the tenancy is made under the published rules required under subsection (1A) of section 27 of the 1980 Act.")
The noble Lord said: With this amendment, it probably will be convenient for the Committee to take Amendments Nos. 36 and 37. This group of amendments has in my experience in the local areas created more indignation than almost any other single part of the Bill; because the very people who did so much work to establish the associations, and in many cases to save the areas, as well as doing a job in housing, are now feeling that they are being penalised. People who have done a great deal of work on a voluntary basis feel that they are being penalised because it is being considered that the granting of a tenancy, even within the association's published allocation policy, is a benefit.
I understand that it works so unfairly that, even if it were an all-Scottish housing association—and there are one or two—if you were a member of a local association in Edinburgh and you had a daughter, a son or any member of your family in Aberdeen or Inverness, or wherever else the national association happened to have branches, you would be considered as having a benefit by being given a house in these areas, although in every other way you may very well be fully qualified to receive such a dwelling.
I am sure that the Minister has been approached. I and most other Members I have spoken to, both here and in the other place who have any ties at all with housing associations or any knowledge of them, have been deluged by genuine people who feel that they are being unfairly treated. They feel that people in local authorities are not treated in the same way. People in the Scottish Special Housing Association who have relatives who are given houses are not treated in the same way, and they do not see why they, as voluntary people who have been working so hard for their association, should be treated differently.
The important point is that there is a published allocation policy. That can be very easily checked and looked at by the Secretary of State; and of course it will also be accepted by the Housing Corporation and recognised by them. So we are dealing with a very rigid set of rules and regulations; yet we understand that because of the way the Bill is at present worded anyone related in any way—and it can be a fairly far-out relationship—to someone who is a member of a housing association would be deemed ineligible for a dwellinghouse. I am sure the Minister is fully familiar
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with the argument and I just hope he will be able to throw some light on it and give some help to the people who have worked so hard for so long to try to make possible what has become a really important part of our housing scheme. I beg to move.
Lord Mackie of Benshie: I shall take the opportunity to speak to Amendment No. 37. It is a very late hour—far too late an hour to be discussing this extremely important set of amendments—but it will be very interesting to hear what the Minister has to say. We can perhaps get some good sense out of him—perhaps even a concession or an acceptance, though that might be too much to hope for. As the noble Lord, Lord Carmichael, said, these are very important amendments and they have aroused a great deal of heat. One can see the situation quite clearly where a person works for a community association—and these we reckon have done most good in run-down areas. Even the remotest relative is not able to apply for a house, in spite of the stringent regulations which can be enforced to see that there is no jiggery-pokery. This is too much. I feel that if it goes through, it will do enormous harm to a great many associations. If voluntary workers are penalised for doing the work they are doing, obviously they will not remain voluntary workers for very long. I await with interest what the Minister has to say.
Lord Gray of Contin: I thank the noble Lord, Lord Carmichael, for explaining his reasons for tabling this amendment, which, as he has explained, would increase the range of circumstances in which a community-based housing association could grant a tenancy to a voluntary officer, committee member or a close relative of one. In considering the previous amendment mention was made that the allocation of publicly funded housing is an area which is wide open to accusations, justified or otherwise, of injustice and preferential treatment, whether the authority concerned is a housing association or another housing body. Housing associations are particularly susceptible to such accusations, since there is a connection between the authority granting the tenancy and the individual receiving it.
The particular problems of community-based housing associations in relation to the granting of benefits arise from those characteristics which make their contributions so valuable; and their membership and their activities are confined to a specific geographic area. Their renovation programmes must therefore at certain points conflict with the interests of their committee members or their relatives who are resident in the area. In that situation there is a clear need, both operational and on grounds of equity, for the association to be able to buy a house from and offer a tenancy to those people when their houses are directly affected by the renovation programme. The clause as drafted gives associations that ability and the 12-month period makes allowance for people who have moved out of the area recently or on a temporary basis.
The noble Lord's amendment would enable community-based housing associations to grant tenancies to committee members, officers and their relatives who were not currently resident in the area. While that would undoubtedly facilitate the return of

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such people to the community from which they might have moved or been obliged to move some time previously, I have to say that I see that as a distinctly different category of allocation from those provided for in paragraph (b) of new Clause 15A. The same arguments about the direct effect of the development programme on their homes do not apply, and without that distinction they are not in a materially different position from the committee members of any other housing association. There is certainly no operational need or difficulty related to equity there.
The provisions set out in Clause 13 were carefully drawn up to provide a specific solution to a particular problem which is probably unique to community-based housing associations in Scotland. As such, I accept that it merits a solution which is not available to housing associations generally, but only to the extent that the problem is unique. I do not believe that it is necessary or even desirable to widen the scope of the clause in the way proposed in the amendment.
We are also dealing with Amendment No. 36. The effect of Clause 13 will be to permit community-based housing associations in certain specified circumstances to buy a dwelling from, or offer the lease of a dwelling to, a voluntary officer, committee member or a close relative of such a person. Such measures are deemed necessary in order to facilitate the renovation programmes of the associations and to ensure that those persons are treated on the same basis as others who are resident in houses which may be affected by the programme.
The effect of the noble Lord's amendment would be to prevent the close relatives of voluntary officers and committee members of those associations from benefiting from the limited exemptions set out in the Bill. Relatives might include the actual owner or tenant of an affected flat, for example, where a committee member lived with his parents. It is unlikely to be welcomed, therefore, by the persons affected since they will regard it as being unfair, or by community-based housing associations which would be unable to acquire properties from the individuals or to offer tenancies to them in order to advance rehabilitation projects.
The noble Lord, Lord Mackie, who spoke to Amendment No. 37, acknowledged that his amendment goes some way beyond the terms of Clause 13, as it stands, by attaching new provisions to Section 15(2) of the Housing Associations Act 1985. It will enable all housing associations to grant tenancies to and acquire properties from their committee members, officers and employees. It would also have the effect of extending the limited range of permitted benefits listed in Section 15(2) of the 1985 Act to include the granting of tenancies under the terms of published rules governing allocations.
The existing powers of the Housing Corporation, under the Housing Act 1974, were insufficient to cope with those developments and new provisions were introduced in the Housing Act 1980. Those provisions preclude registered housing associations from making any payments other than those specified or granting any other benefits to committee members, officers or employees, persons who had held such positions within the preceding 12 months, close relatives of such
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persons or businesses in which such persons had a direct interest. Those provisions now lie in Section 15 of the consolidating Housing Associations Act 1985.
The restrictions imposed on housing associations by Section 15 of the 1985 Act are designed to ensure that decisions on the use of public funds are taken in a fair and proper manner and that there is no question, real or implied, of a conflict of interest for officers and committee members. The practices which led to the introduction of those restrictions were not universal and they had little impact in Scotland, but there was sufficient evidence of abuse and uncertainty to justify the action taken. It can be argued that measures introduced to cope with the problems of dual interest in relation to payments, consultancies and contracts are not appropriate to the granting of tenancies, but in the granting of individual tenancies, even under a defined and published set of rules, there will always be choices to be made between competing applicants. We all know that the allocation of publicly funded housing is regularly subjected to criticism and accusations of injustice. Where there is a connection between some officer or member of a housing authority and the recipient of the tenancy, suspicions, justified or not, can easily arise. Indeed, it is likely that problems of this kind arouse greater public interest than the wider commercial and accountability issues which rightly concern us here.
I recognise that the measures contained in Clause 13 do not go as far as some associations would have wished and this amendment reflects that. However, I do not think that the case for the more relaxed control suggested by the amendment has been made. Indeed, I think there is a serious risk that the sensible controls introduced in 1980 would be seriously eroded by it. I believe that Clause 13 deals with the distinct problems facing community-based housing associations which are unique to them in a way that they will welcome. Once again, I apologise to the Committee for that rather lengthy explanation, but they are very important amendments which I take seriously. I trust that with that explanation noble Lords will be prepared to withdraw their amendments.
Lord Carmichael of Kelvingrove: I thank the Minister for that very full explanation. I do not think he need apologise for its length because this is a very important subject. I am sure he will equally realise that that sort of reply needs a certain amount of expertise and I do not have the benefit of that to the extent that he does. Perhaps he will accept that if we withdraw the amendment we shall want it looked at by those who are involved and will want to leave ourselves free to bring it back at Report stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 36 and 37 not moved.]
Clause 13 agreed to.
Clauses 14 to 17 agreed to.
[Amendment No. 38 not moved.]
Remaining clauses and schedules agreed to.
House resumed; Bill reported with the amendments.

York City Council Bill [H.L.]
Reported from the Select Committee with amendments, and recommitted to an Unopposed Bill Committee.
House adjourned at nineteen minutes past eleven o'clock.

  DETAINED PERSONS: TELEPHONE CALLS
  DETAINED PERSONS: TELEPHONE CALLS
  VOLUNTARY HOUSING PROJECTS FOR EX-OFFENDERS
  VOLUNTARY HOUSING PROJECTS FOR EX-OFFENDERS
  SDI RESEARCH ACTIVITIES
  SDI RESEARCH ACTIVITIES
  Mr. WILLIAM McRAE
  Mr. WILLIAM McRAE
  HOSPITAL OUT-PATIENTS: PRESCRIPTIONS
  HOSPITAL OUT-PATIENTS: PRESCRIPTIONS
  DRUGS: COMPARATIVE DISPENSING COSTS
  DRUGS: COMPARATIVE DISPENSING COSTS
  EUROPEAN COMMUNITY DEVELOPMENT COUNCIL
  EUROPEAN COMMUNITY DEVELOPMENT COUNCIL