Sitting of 19 February 1986

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

PRIVATE BUSINESS
PETERHEAD HARBOURS (SOUTH BAY DEVELOPMENT) ORDER CONFIRMATION BILL
Read the Third time, and passed.

Oral Answers to Questions
  ENVIRONMENT

    Simplified Planning Zones
    Mr. Adleyasked the Secretary of State for the Environment if, under the proposals for creating simplified planning zones, he will make it his policy to remove the obligation on local authorities mandatorily to consider the creation of such zones; and if he will make a statement.
    The Minister for Housing, Urban Affairs and Construction (Mr. John Patten): The requirement of the Housing and Planning Bill is no more than that the authority shall consider whether simplified planning zones should be established. I see no likelihood at all that local authorities, or the Secretary of State, would require such zones to be set up in areas in which they would be environmentally unsuitable.
    Mr. Adley: I thank my hon. Friend for that reply, and I support his proposition of SPZs in urban areas. Is he aware that forcing local authorities which do not want to do so, to go through all the bureaucratic exercise of doing the job is not only annoying, but reinforces the views of those who are worried about the whole thrust of Government policy? Will he re-examine the Bill to see whether he can restrict the obligation to urban areas only?
    Mr. Patten: We do not want to increase bureaucracy. That is not the intention of SPZs, which are meant to reduce bureaucracy. However, I fully understand my hon. Friend's point, which he has put forward strongly on behalf of his constituents. I undertake to look again in Committee at the points that he has made.
    Mr. Nellist: Is not the simplification of planning zones fraught with problems, as the London Docklands Development Corporation, which is a halfway house towards simplification of planning zones, has shown over the illegality of the razor wire fence at News International's plant at Wapping? Would not the full simplification of planning zones bring about even more such abuses?
    Mr. Patten: No, not at all. I should have thought that the hon. Gentleman would welcome the fact that the docklands development in London has introduced more than £1 billion of capital and much needed development.
    Mr. Nicholas Baker: My hon. Friend's reassuring answer will be very welcome. Are not Dorset and other areas in the south of England places where SPZs are clearly unsuitable and unwanted, and would be an environmental disaster?
    Mr. Patten: I am always anxious to try to reassure the county of Dorset, and I have already given the undertaking to look in Committee at SPZs in connection with rural, urban, green belt and other areas.
    Dr. David Clark: Does the Minister appreciate that the proposal for SPZs is causing great concern and is believed to be a way of undermining the green belt areas, the areas of outstanding natural beauty and other areas, especially as they were excluded in the consultative document but not in the Bill? Will the Minister give a categorical assurance that SPZs will not be allowed in green belt and other special areas?
    Mr. Patten: I have already said that during the passage of the Bill in Committee we will conisder the point about green belt development. Will the hon. Gentleman speak to his Labour colleagues in the controlling groups on Oxford and Cambridge city councils, who want to make incursions into green belt areas, and get them to restrain themselves?
    Mr. Wiggin: Does my hon. Friend accept that this concept has to be confined to urban areas, and for that matter derelict urban areas? Will he seek to delineate those areas in the Bill?
    Mr. Patten: That is an interesting suggestion. One of the reasons for introducing SPZs is to do all that we can to help inner city areas, a policy which I know my hon. Friend supports. We must also look closely at the important environmental points that my hon. Friend has made.

    British Nuclear Fuels
    Mr. Skinnerasked the Secretary of State for the Environment what recent meetings he has had with British Nuclear Fuels regarding the monitoring of waste products; and if he will make a statement.
    The Minister for Environment, Countryside and Local Government (Mr. William Waldegrave): My right hon. Friend visited Sellafield in October 1985. There has been no formal ministerial meeting with BNFL since then.
    Mr. Skinner: Why does the Minister not go up to Sellafield and tell the management that the British people are fed up to the back teeth with hearing the management continually pour out lies about all the outbreaks that are taking place? There has been another outbreak in the last 24 hours, and the management has had to admit today that two workers have been slightly contaminated, which it denied yesterday. Will the Minister go up there and tell the management that there should be a proper truly independent public inquiry and that if it is found necessary to close the plant every worker will be paid for as long as the inquiry lasts?
    Mr. Waldegrave: I find the hon. Gentleman's concern about environmental pollution a little selective. We do not have the benefit of his advice in the House when we are debating pollution from coal-fired power stations. It is right that people inside and outside the House should recognise that the record at Sellafield has been good despite the problems, which my Department recognises and discusses with the management.
    It is also right that those inside and outside the House should accept that some of those who attack Sellafield do so, not because they are worried about pollution, but because they see in the civil nuclear industry a dangerous competitor to the coal mining industry.
    Mr. Skinner rose—
    Mr. Speaker: Order.
    Mr. Franks: Will my hon. Friend accept that many hon. Members, particularly those who represent Cumbrian constituencies, are sick and tired of the lack of real information from Sellafield about incidents? Will he instruct BNFL that the public need to be reassured, not in the jargon of arrogant scientists, but in language that the layman can understand and accept?
    Mr. Waldegrave: My hon. Friend is entirely right. The record is good, but there is no question but that we have to do better at getting that across to the people. We must make it clear that the public concern is being met and that the public institutions which exist to check that the record is good are open to public inspection.
    Mr. Campbell-Savours: Does the Minister accept that B30, where yesterday's incident took place, is about to be decommissioned because it is an old plant and is to be replaced by pond 5? I hope that no such incidents will take place in the future. Does he also accept that if the plant were to close there would be a loss not only of 11,000 jobs in West Cumbria but of a further 15,000 to 20,000 jobs which are indirectly involved in and dependent on the nuclear industry? In the light of that, is it not unacceptable that many people in Britain, including environmental groups, demand closure of the plant when they know that perfectly reasonable and sensible options are open to the industry to resolve the problems? Is it not fair to say that if the Nuclear Installations Inspectorate does its work in the way that it should there should be no problems in future?
    Mr. Waldegrave: No one has a better right than the hon. Gentleman to speak on this matter, because he understands the real environmental concern and knows that they can be met. My Department strengthened the Radio Chemical Inspectorate last year and insisted on a greater monitoring programme by the plant. We are in discussion with my hon. Friends in the Ministry of Agriculture, Fisheries and Food on a new authorising limit, as the hon. Gentleman knows. There is no problem here which cannot be dealt with. It will be dealt with and, in all the important cases, is already being dealt with. The hon. Gentleman is right in what he says about pond 5. That is another of the major steps to improvement at the plant.
    Mr. Forman: Is it not clear that nothing useful will be achieved in this important matter by the hysterical approach of the hon. Member for Bolsover (Mr. Skinner)? In view of that, will my hon. Friend take the trouble to put in Hansard the figures for the increased numbers of staff in the relevant inspectorates, which is important, and also
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    the details of the long-run epidemiological monitoring, which is necessary to see that there is no damage to human health?
    Mr. Waldegrave: I shall be delighted to do as my hon. Friend requests, and I shall see that it is done. After the Black report, my right hon. Friend the Secretary of State for Social Services set up the Committee on the Medical Aspects of Radiation in the Environment to monitor those matters on a permanent basis. That was a sensible thing to do, and it received support from all those whose concern about this is serious and not merely hysterical.
    Mr. Evans: Is the hon. Gentleman aware that some of us who have supported the nuclear industry all our political lives will reject his argument that those who express concern about the enviromental aspects of nuclear power are somehow trying to promote the coal industry? Is the hon. Gentleman aware that that is a false argument and only creates false impressions? Will he accept that some of us are growing increasingly worried about the competence and sometimes the arrogance of some of the higher levels of management in BNFL? Does he agree that it would be far better if management were more open and honest in giving answers on matters of direct concern to the public?
    Mr. Waldegrave: I took great care to differentiate between people's concerns. The hon. Member for Workington (Mr. Campbell-Savours), whose constituents are near Sellafield, has more right and reason to be concerned about this matter than have many other hon. Members. I recognise that there are proper concerns, which are shared by Conservative Members, to ensure that the right thing is done and is seen to be done. In so far as the hon. Member for St. Helens, North (Mr. Evans) supports that aim, I certainly agree with him. I would not wish to say that everyone's concerns are hysterical. We must recognise that some people are deliberately stirring up the issue.
    Mr. Hickmet: Great concern is felt about the announcement of the proposals by the Nuclear Industry Radioactive Waste Executive on the storage of nuclear waste. Why has there not been an announcement since that list was delivered on 8 January? Will there be an announcement shortly? Are alternative solutions being considered?
    Mr. Waldegrave: My hon. Friend can expect an announcement shortly. The matter has been under consideration by my right hon. Friend the Secretary of State and Ministers collectively.
    Mr. D. E. Thomas: Does the hon. Gentleman accept that those of us with nuclear power stations in our constituencies are concerned when nuclear waste is entrusted to the BNFL and incidents such as we have heard about occur? Will the hon. Gentleman ensure that Sellafield is open to international and European inspection? What discussions has the hon. Gentleman had with the Scottish and Welsh environmental departments about environmental aspects, and with the Irish Government, who have expressed serious concern about pollution in the Irish sea?
    Mr. Waldegrave: I should like to reassure the hon. Gentleman that the Scottish and Welsh Offices and the Republic of Ireland are closely involved in this matter. Some months ago we set up with the Government of the

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    Republic a joint committee at official level, which has been working well and exchanging information. There is no reason to hide anything. There are good arrangements for inspection. Information is published and available and is reported to all the international organisations with an interest in it.
    Mr. Foulkes: Does the hon. Gentleman accept that parents in south-west Scotland, including my constituency, are genuinely worried about the effect of radioactive discharges from Sellafield and possible links with the high incidence of leukaemia? Does he agree that it does neither the work force at Sellafield nor parents any good for the management at Sellafied, after four incidents this year, to give yet more bland reassurances? They do not reassure parents. Will the hon. Gentleman meet Scottish Office Ministers to consider what urgent action can be taken to allay the genuine fears of parents in southwest Scotland?
    Mr. Waldegrave: The first responsibility of all of us who have the privilege of being hon. Members and having all the information easily available to us is to do our part in allaying unnecessary fears. I know that the hon. Gentleman will do that. I shall certainly be delighted to meet my opposite numbers in the Scottish Office to discuss whether anything further should be done. We meet regularly on this issue.
    Mr. Dickens: Is it not a fact that there is always a measurable risk in terms of health and safety at plants, whether petro-chemical plants, oil-fired power stations or steelworks? Is not the safety record of the nuclear industry second to none? Are not the safety measures which are rightly imposed on the industry also second to none? Does my hon. Friend therefore agree that the general public should not be alarmed, because the nuclear industry is a controllable industry on which we shall have to rely in future years?
    Mr. Waldegrave: My hon. Friend is entirely right. There is no great industrial activity that does not contain some risk. I have to say that the nuclear industry is asked to work, and does work, to far higher tolerances of safety than any other industry. If one compares the number of people injured or even killed in other tragically high risk industries, or even higher risk industries, such as railways or mining, one finds that the record of the nuclear industry is second to none.
    Mr. Simon Hughes: Does the Minister realise that the country will regard his replies as extremely complacent, just as they regard the attitude of the chief spokesman for the Labour party as completely hypocritical? [Interruption.]
    Mr. Speaker: Order. In fairness, I have not yet called the chief spokesman for the Labour party, and the hon. Gentleman must not cast such aspersions upon anybody in the House.
    Mr. Hughes: The remarks made by the chief spokesman for the Labour party—
    Hon. Members: Withdraw.
    Mr. Speaker: Order. I think that the hon. Gentleman would help the House and himself if he withdrew the statement.
    Mr. Hughes: Mr. Speaker, at your behest I shall withdraw the remark. The remarks made by the chief
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    spokesman for the Labour party in public are entirely unacceptable, because if the House had followed the advice of my right hon. Friend the Leader of the Liberal party and all of his colleagues, who unanimously and alone in 1978 opposed the extension of reprocessing, we would not have had the problems that we have had since then. Will the Minister—
    Hon. Members: Too long.
    Mr. Speaker: Order. Briefly, please.
    Mr. Hughes: Will the Minister accept that unless there is a suspension of reprocessing, and until there is international inspection and a chance for the House to debate the Select Committee report, there will be no confidence in the Government, in BNFL or in its chairman?
    Mr. Waldegrave: I advise the hon. Gentleman to read the eloquent speech of the leader of the Social Democratic party on the occasion of the debate on the THORP reprocessing plant. He might learn something that would be helpful to his contribution to these debates.
    Dr. Cunningham: Will the Minister accept that, with my hon. Friends, I regard the blaming of the work force for the problems of the management of the nuclear industry as unacceptable? We also regard mass unemployment, as advocated by the Liberal party spokesman, to solve the problems as unacceptable. Will he recognise that the series of incidents, however minor in radiological terms, which have occurred in the past few weeks at Sellafield can do nothing other than undermine public confidence in the industry and its future? In view of the Minister's remarks about the need for more openness, will the Government undertake to review the workings of the Official Secrets Act as it applies to the civil nuclear industry? Will the Government invite the Nuclear Installations Inspectorate—that arm of the Health and Safety Executive which is the public's statutory and independent watchdog in these matters—to carry out a rigorous, independent safety audit of the old part of the Magnox fuel reprocessing facilities at Sellafield? Will they ensure that such a report is made public and debated in the House? Will the Government reject the opportunist and contemptible remarks and inconsistent attitudes of the alliance, as demonstrated by the SDP and the Liberal party?
    Mr. Waldegrave: For a moment I was not sure to whom the hon. Gentleman was pointing. It behoves us all to reject some of the irresponsible riding of bandwagons that there has been on this subject. It brings no pleasure to my Department or anyone else to have to read in the newspapers about the problems of Sellafield. We must all recognise that with an enormous plant, some of which is old in industrial terms, there will be some problems from time to time. We must keep a sense of proportion about the matter. We have a group examining the publication of information about environmental matters in general. I shall ensure that this matter is dealt with by that group. On the hon. Gentleman's second point, the Health and Safety Commission may well consider his suggestion carefully. It would seem to have some merit.

    Football (Crowd Behaviour)
    Mr. Canavanasked the Secretary of State for the Environment what recent discussions he has had with the football authorities about crowd behaviour.
    The Parliamentary Under-Secretary of State for the Environment (Mr. Richard Tracey): We continue to review progress and issues in my working group, comprising representatives of the football authorities, the Home Office and Department of Transport. The group last met a week ago on Wednesday 12 February.
    Mr. Canavan: In view of the Belgian Government's ban on all British teams playing in Belgium following the tragic events in the Heysel stadium last May, and the fact that Scotland has now been drawn to play Belgium in the European Nations Cup, will the Minister remind the Belgian Government that I am still awaiting the courtesy of a reply to my letter to them of last May in which I pointed out that FIFA and UEFA draw a distinction between Scottish and English football? They are not punishing Scottish football teams and their supporters for the misconduct of some English supporters. The Belgian Government should follow suit by lifting their ban immediately on Scottish teams and allow them to play in Belgium.
    Mr. Tracey: I appreciate the hon. Gentleman's anxiety. He has correctly drawn attention to the narrower definition put upon teams by UEFA and FIFA. It must be for the Belgian Government, with their much broader interpretation, to determine when and how they should ease their ban on British teams. In all the circumstances, I do not think that it would be appropriate for me to seek to intervene.
    Mr. Powley: I support the discussions that have taken place between my hon. Friend and the football authorities, but does he agree that we need to encourage a greater sense of self-discipline in some sportsmen and some members of the crowds who go to sporting events, thus diminishing the amount of crowd and sportsmen's misbehaviour?
    Mr. Tracey: I entirely agree. Within my working group we have had considerable discussions about the community interest which we encourage between football clubs and the communities around them. I applaud those football clubs which encourage community interest and family involvement.
    Mr. Jim Callaghan: What discussion has the Minister had with the football authorities and the police in the light of the dreadful incident that occurred recently outside the Liverpool stadium, when soccer hooligans, not fans, squirted a harmful liquid into the faces of the Manchester United players? What preventive measures does he intend to take to stop the recurrence of such an incident, when a footballer may be seriously injured or killed?
    Mr. Tracey: That was a regrettable incident and one which both sides of the House will deplore. It was a matter of public order and there is a police investigation into it. It would be wrong for me to comment further at this stage.

    Inner City Regeneration
    Mr. Lawlerasked the Secretary of State for the Environment what new proposals he has for regeneration of the inner cities.
    The Secretary of State for the Environment (Mr. Kenneth Baker): The Housing and Planning Bill was given a Second Reading on 4 February.
    Mr. Lawler: Does my right hon. Friend agree that the £100 million underspend on urban development grant during the past three years represents many wasted opportunities for redevelopment of the inner cities? Will he pledge that the allocation will not be cut next year, but that officials will assist and encourage local authorities and other organisations to seek out more eligible schemes, especially in those areas, such as Bradford, which were excluded from the recent policy initiative?
    Mr. Baker: I entirely agree with my hon. Friend. It is regrettable that in the first two years of the urban development grant there was a slow take-up, to which the Select Committee has drawn attention. I have no doubt that UDG is an excellent type of grant, and it already supports 146 projects, involving £330 million. Bradford has benefited by about £5 million. I have seen the large derelict site in the middle of Bradford—a dump called Listerhills—and proposals are coming to me about it.
    Mr. Robert Sheldon: Has the Secretary of State read the 10th report of this Session of the Public Accounts Committee, which shows that the urban programme has not been spent up to the limit agreed by the Treasury for each of the past three years? Is that not wrong and, indeed, disgraceful? What is he doing about it?
    Mr. Baker: I am trying to ensure that we spend up to the limit. I have read the report, which is an interesting and useful contribution to the debate. I attach considerable importance to the urban programme. Where we have underspent on UDG, I have allocated it to, for example, development corporations and derelict land grant.
    Mr. Heddle: As a high proportion of the buildings in inner cities are derelict, obsolete or under-utilised, will my right hon. Friend seriously consider redirecting part of the urban regeneration grant, which the Housing and Planning Bill introduces, and which Conservative Members welcome, to revitalise buildings as well as the land on which they stand?
    Mr. Baker: The powers of grant that I am taking in the Housing and Planning Bill will allow me and other Ministers a considerable degree of flexibility in devising ways of supporting the inner cities, whether for land or for buildings. I am sure that money spent on the reclamation of derelict land in our cities is money well spent.
    Mr. Cartwright: Does the Secretary of State accept that in the United States urban regeneration bonds offering tax free interest payments on long-term investments have been extremely successful in attracting private capital into declining urban areas? Will the Government use a similar incentive to attract much-needed private investment into our inner cities?
    Mr. Baker: I am not particularly attracted by the advantages of industrial revenue bonds. The Federal Government in America are now moving to withdraw them. Our grants, the UDG and derelict land grant, and the new powers that I am taking under the Bill give Ministers the instruments to assist in the regeneration of cities.
    Mr. Lyell: Will my right hon. Friend study carefully the evidence of large acreages of unused and derelict land

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    in the hands of local authorities and the Property Services Agency, and the unused and empty dwellings in the ownership of local authorities? Will he do everything that he can to ensure that they are sold to the private sector, so that private capital can be introduced to make a profit in the inner cities?
    Mr. Baker: My hon. and learned Friend makes a good and fair point. We now have the registers of under-used and derelict land, and my predecessor and I have issued a number of directives about the disposal of that land. When there is a problem in housing and inner city regeneration, it is wrong that land should lie idle, especially land held and owned by public authorities.
    Mr. John Fraser: Will the Secretary of State confirm that, in real terms, there will be no increase in financial assistance to the inner cities in the next financial year, and that he is now subordinate to an unelected member of the House of Lords regarding the development of inner city policy?
    Mr. Baker: The hon. Gentleman is referring to the pilot studies in eight areas, which I fully support. They are directed at unemployed young people, and he should be sufficiently broad and wise to support those initiatives. I am anxious to make as many resources available as possible. I must find ways of attracting more private sector money into the cities.
    Mr. Steen: Will my right hon. Friend avoid being drawn by the Opposition into competing in seeing how much money each side can pour into the bottomless pit of the inner cities? Does he agree that pouring more public money into the inner cities will not solve the problem?
    Mr. Baker: It depends on how it is spent and how it is used. If the money is spent on the regeneration of workshop units, on regenerating old houses and warehouses, and on bringing life back to the cities, I believe that it will be money well spent.

    Rate Support Grant
    Mr. Stan Thorneasked the Secretary of State for the Environment what representations about the 1986–87 grant settlement he has received from non-metropolitan county councils since the rate support grant settlement for 1986–87 was approved in January.
    Mr. Waldegrave: I met a deputation from Cumbria county council on 29 January and my hon. Friend met a deputation from Derbyshire county council on 6 February. In addition, we have received written representations from a number of shire counties since the settlement was approved.
    Mr. Thorne: In a speech in December 1985 the Secretary of State referred to an expectation of 9·5 per cent. rate increases. From the first batch of Tory councils to announce increases, Buckinghamshire proposes 30 per cent. and Lincolnshire and Norfolk 22 per cent. Does that mean that they are chronic overspenders?
    Mr. Waldegrave: Proposed rate increases in several shire counties are higher than we would have hoped—none is higher than in my own county of Avon, which is Labour-controlled —because there have been real increases in expenditure, which were no part of the Government's plans.
    Mr. Higgins: Is my hon. Friend aware that many of those making representations welcome the decision to allocate more funds to the inner cities? Why was no attempt made to find offset savings from other Departments, rather than from the shire counties?
    Mr. Waldegrave: The decisions that my right hon. Friend the Secretary of State had to take about the allocation of ratepayers' and taxpayers' money were difficult, as they always are. It was thought right to respond to the concerns expressed in the House.
    Mr. Allan Roberts: Is the Minister aware that some Conservative county councils will follow Conservative-controlled Sefton metropolitan district council, which intends to do a "Liverpool"? They are contemplating an illegal budget—underbudgeting in Sefton by £2 million —on the assumption that they might receive extra rate support grant during the financial year from money clawed back from overspending councils, which the Secretary of State can redistribute. Will he condemn that act of illegality by Conservative councils?
    Mr. Waldegrave: If the hon. Gentleman finds it difficult to distinguish between the behaviour of Sefton and Liverpool councils, there is nothing that I can do to unconfuse him. It is perfectly right for a council to make a reasonable review of its reserves and revenues and to budget legally within them.
    Sir Anthony Grant: Will my hon. Friend give an assurance that one result of the many representations that he has received about the current rate support grant will be the long-awaited and much-promised fairer deal next year for responsible shire counties?
    Mr. Waldegrave: The outcome is always dependent upon the total provision and the total rate support grant percentage. Although I know that many of my hon. Friends find it difficult to accept, within those constraints several steps were taken to help the lower spending authorities.
    Mr. Straw: As almost every one of the 29 shire authorities which have raised their rates by almost 20 per cent. is still proposing to spend below the standard of need set by the Government, why does the Minister not have the guts to admit that rates are rocketing in Conservative and Labour areas because of cuts in the rate support grant and not because of increases in expenditure? In the light of those figures, how can the Minister justify the wild claim made by the Secretary of State on 18 December that rate increases would be only 7·5 to 8 per cent., when increases of more than 20 per cent. were predicted, and were predictable?
    Mr. Waldegrave: The, hon. Gentleman will find it difficult to make that allegation stick on my right hon. Friend, who is a most sober citizen. The fact—I have the figures in front of me—is that in many authorities where the rate increases are more than we would have wished, including Gloucestershire and Essex, there were real increases in spending, which were never part of the Government's plans.

    Rating Reform
    Mr. Marlowasked the Secretary of State for the Environment what representations he has received about the establishment of an accurate register for the proposed community charge.
    The Parliamentary Under-Secretary of State for the Environment (Mrs. Angela Rumbold): I have so far received a small number of representations covering a range of issues in response to the recently published Green Paper "Paying for Local Government", but it is far too early to draw any conclusions from these.
    Mr. Marlow: As both the electoral register and the community charge register will be available for public scrutiny, would it not be sensible and save a lot of bureaucracy if the information for both those registers were collected on the same form? Will my hon. Friend lay to rest the ridiculous red herring that the community charge is a tax on voting, because whether or not someone has paid the tax will have no effect on the right to vote?
    Mrs. Rumbold: My hon. Friend is right. The community charge is intended to be a charge for local services, not a charge on voting. It would be better to have separate registers, so that we can register those who would not necessarily be eligible for voting, but who would be eligible to pay the community charge.
    Mr. Hardy: Have not the representations made the point that, in addition to the unnecessary bureaucratic cost, the vast majority of people will be worse off and that those who will gain the greatest benefit will be those who live in the biggest houses?
    Mrs. Rumbold: The hon. Gentleman is not correct. The people who will gain most from the community charge will be the single who live alone. That represents many of the worst off in our community.
    Mr. Squire: Is my hon. Friend not worried that the scheme may involve considerable administrative costs for local authorities, whether or not it leads to an increase in overtime?
    Mrs. Rumbold: The community charge is likely to cause a small increase in administration, but we believe that the system will be so infinitely preferable to the present system that the additional cost will be well worth it.
    Mr. Straw: Why will the Minister not at least listen to the anxiety expressed by the Home Office, that using the electoral register will seriously damage the integrity of that register and will be seen, especially by low-income families, as a disincentive to exercise the right to vote? If the Minister is determined to continue with the idea of a poll tax, will she at least recognise the overwhelming need to have entirely separate registers?
    Mrs. Rumbold: Indeed, I do, and that is precisely what I said in reply to my hon. Friend the Member for Northampton, North (Mr. Marlow). There will be a separate register for the community charge, which I must repeat is not a poll tax. It is a charge for local services, to be paid by those who use local services.
    Mr. Spencer: Does my hon. Friend agree that the proposed community charge would have a sobering effect on councils such as the city of Leicester, which, after an advantageous rate support grant settlement, is gleefully proclaiming that it will increase rates by 80 per cent.?
    Mrs. Rumbold: My hon. and learned Friend is right. The great advantage of the community charge is that there will be a direct link of accountability, wholly perceptible
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    and transparent to the voters. That will be of immense advantage to those who live in an area. The idea of an 80 per cent. increase is disgraceful.

    Manchester (Vacant Housing)
    Mr. Litherlandasked the Secretary of State for the Environment if he will provide financial support to assist Manchester city council in purchasing vacant housing on private estates which building societies and private builders are unable to sell; and if he will make a statement.
    Mr. John Patten: It is for Manchester city council to decide its spending priorities. If it wishes to buy private sector houses to resell for owner-occupation, either outright or under shared ownership terms, it is welcome to do so.
    Mr. Litherland: Is the Minister aware that many young people who were forced into buying in the private sector because of the scarcity of rented accommodation are now abandoning their homes because they cannot meet their mortgage commitments? In one estate in Manchester, Central, 17 of 42 houses built two years ago are empty and vandalised. Does that not prove that the Tories have no housing policy? It is a scandal. The Government should provide the finance so that the county council can acquire those properties.
    Mr. Patten: The hon. Gentleman should recognise that one of the reasons for such houses falling into that state is the high rate levels levied by Manchester city council. I have correspondence in the Department from residents of Manchester who say that high rate rises are driving owner-occupiers out of their homes.
    Mr. Sumberg: If my hon. Friend is minded to consider this matter, will he make it conditional on its application to areas wholly within the city of Manchester, bearing in mind that the leader of Manchester city council demanded the incorporation in that city of the Prestwich and Whitefield parts of my constituency? That demand is rejected and resented by the people who live there, because they do not wish to pay the high rates and have the extravagant services which Mancunians have to bear under the Labour party.
    Mr. Patten: I can well understand why the constituents in those parts of my hon. Friend's constituency dread the possibility of coming under Manchester city council. I cannot understand why that council, when it is offered Government money, as I have offered, to conduct a proper study into housing conditions in the Hulme estate does not choose to take it and help its ratepayers.

    "Faith in the City"
    Mr. Simon Hughesasked the Secretary of State for the Environment if he has plans for further meetings with the Archbishop of Canterbury and members of his commission on the subject of the report "Faith in the City"; and if he will make a statement.
    Mr. Kenneth Baker: When I met the Archbishop of Canterbury on 28 January I offered the assistance of my Department in following up his commission's work on the assessment of need in urban areas. We also agreed to look at the potential for joint initiatives involving Government programmes and the proposed Church urban fund.
    Mr. Hughes: Given the announcement in another place on Monday by Lord Skelmersdale that the recommendation of the Lord Chancellor's committee that law centres should be funded is not to be taken up by the Government, and given that the worst crisis will come in the metropolitan counties and Greater London during the coming year because of their abolition, will the Secretary of State tell us whether he accepts the Archbishop's commission's recommendations that the law centres should be funded? If they cannot be funded by the Lord Chancellor's Department, will his Department look sympathetically at their funding next year?
    Mr. Baker: The spokesman for the Liberal party is asking yet again for more expenditure in the inner cities. The Liberal party also asks for more spending in the shires, the rural districts and the suburbs. How is all this Liberal largesse to be funded? Where is the money to come from? The hon. Gentleman would he infinitely more credible if he set out how we are to fund all the special interest groups which the Liberal party promises to support. The Liberal party comes to the House and weeps and wrings its hands over every special interest group, but where is the money to come from?
    Mr. Lilley: When my right hon. Friend met the Archbishop, did he draw to his attention the excellent comment on the Archbishop's report by the Chief Rabbi? In particular, did he draw to the Archbishop's attention the comment by the Chief Rabbi that in the Archbishop's report Christian charity was roughly balanced by a measure of blatant political bias?
    Mr. Baker: I have read the document from the Chief Rabbi entitled, "From Doom to Hope", and I was so impressed with it that I asked the Chief Rabbi to meet me to discuss it. Some of the sentiments expressed are plain speaking and good. One of them reads:
    "A Jewish religious contribution would lay greater emphasis on building up self respect by encouraging ambition and enterprise … let them [parents] encourage ambition and excellence in every negro child as Jewish parents encourage in their children and they will pull down their ghetto walls as surely as we demolished ours."
    Mr. Heffer: Has the right hon. Gentleman looked carefully at the housing proposals in the commission's report? If so, what is the right hon. Gentleman's response? Will we get a real response, or will we get the usual guff that we had from the right hon. Lady the Prime Minister the other night on television?
    Mr. Baker: During my meeting with the Archbishop, we discussed that matter. The commission intends to develop a form of neighbourhood partnership that will be directed towards housing, among other things. I am also holding discussions with various large financial institutions on ways in which they can help to deal with the housing problems in our cities and towns.
    Dr. Hampson: Does my right hon. Friend agree that one hope for the inner cities is the idea of a task force, on the lines of the Liverpool task force? Does he further agree that £8 million for the new task forces can be only a beginning if we are to have effective leverage to draw in private money? Which Minister will be responsible for the Leeds and northern task forces?
    Mr. Baker: The task forces will cover a population of only 300,000. We will have to see how they get on. I am optimistic that they will show results in a short time. They
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    are especially directed towards dealing with the problems of young unemployed people, especially from ethnic minorities, in the inner cities.
    There are several instruments to hand—the new urban renewal grant, which can bring in money, and the other grants to which I have already referred. We must find ways to attract more private sector development and finance into the inner cities. The public sector must act as a catalyst for that.
    Dr. Cunningham: Does the Secretary of State not recognise that local authorities are, and will remain, a major and significant force to tackle the problems of the inner cities? Given that, is it not a humiliation for the right hon. Gentleman and his ministerial colleagues to have been elbowed aside from that responsibility, which has now been given to the Department of Employment?
    How can the people of Britain's inner cities be sanguine, or even hopeful, about the Government's policies when, in the words of the Audit Commission, they have resulted in a 20 per cent. cut in real terms in the resources available to tackle the problems? Is £8 million not peanuts when set beside the scale of those cuts? Does it not all add up to the fact that while this Government and their policies remain, the problems of Britain's inner cities will continue to mount?
    Mr. Baker: I fundamentally disagree with the hon. Gentleman. While we have been in office the urban programme has increased from below £100 million to more than £300 million. We have introduced a variety of grants, and we are introducing another this year, to help with the problems.
    We must marshall all the resources available from the public sector, and that is the purpose of the pilot studies in the inner cities. I wish that the hon. Gentleman would give them a little more welcome. The studies were welcomed by his hon. Friends, so why can he not welcome them?

    Hackney Black People's Association
    Mr. Ottawayasked the Secretary of State for the Environment if he will make a statement on the funding of the Hackney Black People's Association.
    The Parliamentary Under-Secretary of State for the Environment (Sir George Young): I believe that most of the funding for Hackney Black People's Association comes from the GLC and Hackney borough council. In 1985–86 those two authorities are providing nearly £30,000 for an advice and information centre and for Afro-Caribbean arts and cultural activities. The association also manages a youth communications project, which has received support from the Hackney inner area programme amounting to £21,300 this year. This project aims to develop the communication skills of young unemployed black people and to improve their employment prospects.
    Mr. Ottaway: Is my hon. Friend aware that the Hackney Black People's Association recently offered a platform to Mr. Louis Farrakhan, the anti-semitic admirer of Adolf Hitler? Is that a proper use of GLC funds?
    Sir George Young: I was amazed that an association which purports to foster good race relations issued an invitation to someone who is notorious for his anti-semitic views. I was delighted that my right hon. Friend the Home Secretary refused him admission.
    Mr. Sedgemore: Does the Minister accept that most hon. Members deplore the anti-semitic views of Mr. Farrakhan, with his disgusting references to God's ovens, just as they deplore the attempts by the hon. Member for Northampton, North to bad mouth the Hackney Black People's Association and to act in a fashion that is calculated, if not designed, to incite racial hatred in Hackney? Does the Minister accept that all we ask for in Hackney is equivalent treatment with the people in the City of London down the road? When will we get that?
    Sir George Young: My hon. Friend the Member for Nottingham, North (Mr. Ottaway) is an influential person, but I should be very surprised if his question this afternoon were to raise the temperature in Hackney.
    Mr. Marlow: On a point of order, Mr. Speaker. The hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) referred to me, when he meant another hon. Member.
    Mr. Speaker: I shall take points of order after Question Time.

    Housing Stock
    Mr. Hicksasked the Secretary of State for the Environment if he is satisfied with the current level of investment in improving the quality of the existing housing stock; and if he will make a statement.
    Mr. Kenneth Baker: The primary responsibility for deciding how much should be spent on improving the housing stock rests with the owners.
    Mr. Hicks: At a time when over 200,000 building trade workers are unemployed, when almost 4 million houses are classified as substandard in some way, and when there are lengthy waiting lists for home improvement grants, including 2,000 in my constituency, does my right hon. Friend agree that it is both economic stupidity and political folly not to embark upon a major home improvement investment programme in this labour-intensive activity, similar to what we had three years ago?
    Mr. Baker: I hear what my hon. Friend says. I remind him that provision for local authority housing capital expenditure next year, 1986–87, is £2,532 million, which is some 9 per cent. up on this year, and that local authorities and new town development corporations are spending about £2·5 billion a year on maintaining and modernising their stock.
    Mr. Rooker: Is not the outturn this year higher than the planned expenditure? Is it not the case that even the Government's modest increase is less than the outturn, so that there is a cut? Should it not be the aim of any Government committed to decent housing for all the people to make sure that there is enough investment, from whatever sources, to improve and maintain the housing stock at a rate at least equal to the rate of deterioration? Why do the Government not have that as their aim?
    Mr. Baker: I assure the hon. Gentleman that we do have that as our aim. Spending on repairs and improvement to private housing stock is running at a massive £9 billion a year. While we have been in office we have paid out some £2·5 billion in grants to the private sector. This year the amount is likely to be £500 million.

    Football (Crowd Behaviour)
    Mr. Jannerasked the Secretary of State for the Environment if, when he next meets the secretary of the Football Association, he will raise with him the measures being taken by the football authorities to regulate the numbers and conduct of persons travelling to other countries in connection with football matches; and if he will make a statement.
    Mr. Tracey: Yes. These matters are covered by the European convention agreed last year, following a United Kingdom initiative, and require co-operation between Governments and football authorities. We are considering particular steps needed for the World Cup in Mexico and the European Nations Cup.
    Mr. Janner: When considering the problems of people travelling to and in foreign countries on football business, will the Minister please consider the tragic death of my constituent, Mr. Jim Grey, a football coach teaching in Saudi who was knocked down and killed by a vehicle? Will he consider the deplorable lack of advance in any prospect of his widow, receiving compensation? Will he please consult the Football Association and the Foreign and Commonwealth office to see what can be done to help that lady?
    Mr. Tracey: We have great sympathy for the hon. and learned Gentleman's constituent. After considerable efforts with the Saudi authorities, the Football Association's general secretary has sought our advice. It is primarily a matter for the Foreign and Commonwealth Office, which is considering what advice and help it can give.
    Mr. Robert Atkins: Why is it that the proper game of football, namely, rugby union, can be played between England and Scotland in the Calcutta Cup without problems—that is, apart from England losing—yet soccer causes so many problems?
    Mr. Tracey: I am not sure that in the context of the original question travel between England and Scotland is travel between foreign places, but I take note of what my hon. Friend has said.

    Bison System Flats
    Mr. Nicholas Brownasked the Secretary of State for the Environment what are the criteria upon which he grants local authorities loan sanction in respect of the demolition of multi-storey Bison system flats.
    Sir George Young: Local authorities do not need loan sanction for the demolition of housing which they own. However, they may now apply to continue to receive housing subsidy in relation to the original costs of such housing. Such applications should be made before deciding to demolish, and my right hon. Friend will agree to them only if he is satisfied that the alternatives to demolition have been fully assessed, including disposal to the private sector.
    Mr. Brown: The Minister well knows that local authorities need the subsidy. Is he not making up his policy as he goes along? Why is he condemning people to live in these terrible dwellings? In particular, how can he justify allowing Newcastle city council to demolish, with subsidy, three of the four Bison flats in my constituency, and not allow the demolition of the fourth?
    Sir George Young: We have allowed subsidy to continue on two blocks—Crescent and Parade Houses—and the application for a third block is before us now. The reason why there is a problem with the fourth block is that it has already been demolished.

    Marine Nature Reserve
    Mr. Kenneth Carlisleasked the Secretary of State for the Environment whether he will make a statement on progress being made to establish the first marine nature reserve.
    Mr. Waldegrave: Good progress is being made at Lundy. The Nature Conservancy Council hopes to go out to consultation in the spring and put formal proposals to my right hon. Friend in the summer.
    Mr. Carlisle: I respect my hon. Friend's efforts to achieve voluntary agreement for the first marine nature
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    reserve, but it is now more than four years since the Wildlife and Countryside Act gave us the obligation to establish such reserves. If voluntary agreement for a marine nature reserve is not reached in the very near future, will my hon. Friend ensure that Parliament takes powers so that the Government can impose the first reserve?
    Mr. Waldegrave: I gave a pledge—to my hon. Friend, I believe—that we must have a reserve within 12 to 18 months of a commitment that I made some time ago. We are still within that time scale, but we are watching the situation very closely, because no further slippage would be tolerable.
    Mr. Skinner: On a point of order, Mr. Speaker.
    Mr. Speaker: I will take the point of order afterwards.
    Mr. Skinner: So long as I can make it before the Minister of State leaves the Chamber.

British Leyland Subsidiaries
3.30 pm
Mr. John Smith(by private notice) asked the Secretary of State for Trade and Industry if he will make a further statement on the disposal of British Leyland subsidiaries in the light of the deadline on negotiations announced by the Government.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): As I told the House on Monday, other proposals for the future of the Land Rover, Freight Rover and Leyland Trucks businesses, which are the subject of current discussions between BL and GM, would be considered on their commercial merits. I named those who were willing to have their interests made public. Since then there has been no material change in the position.
As I said on Monday, it is in the interests of all concerned in the industry that these negotiations should come to a successful end as soon as they conceivably can so that damaging uncertainty can be removed. Accordingly, those companies indicating an interest in one or more of these businesses have been asked by the BL board to indicate by 4 March whether they have a firm intention to make an offer.
Mr. Smith: When the Secretary of State made his statement on Monday 17 February, why did he not tell the House about the deadline of Tuesday 4 March and also about the deadline requiring those wishing to meet BL senior management to do so before 28 February? I understand that the Secretary of State gave information about this to the lobby yesterday evening. Given that a letter was sent by Hill Samuel, apparently acting on behalf of the Government, informing interested parties of those deadlines on 14 February—three days before the right hon. Gentleman's last statement to the House—why did not the Secretary of State tell the House of Commons that those deadlines had been set?
Will the Secretary of State confirm that one of the interested parties—General Motors—has been having secret discussions for the past nine months? In those circumstances, why has such a sharp deadline been set for the others? Does this mean that the Government are merely going through the motions in respect of other intending purchasers? When, if at all, is it proposed to consult the representatives of the thousands of employees whose livelihood is entirely connected with the future of British Leyland subsidiaries?
As the Secretary of State apparently confirmed to the lobby yesterday evening, it seems that there are now six named bidders for Land Rover. Has it occurred to the Government that it might be wise to keep that company rather than sell it as everyone else seems so interested in acquiring it?
Will the Secretary of State also confirm that he told the lobby yesterday that if the General Motors proposal went ahead it would probably require a reference to the Monopolies and Mergers Commission? Will he clarify that point, which was put to the lobby but has never been discussed in the House?
Finally, will the hon. Gentleman reflect on what the Minister of State said last night? When asked whether there would be an Adjournment debate on this, the Minister of State replied that the House of Commons was
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sovereign. Does that mean that there will be a full parliamentary debate on the whole issue before any deal is struck?
Mr. Channon: As for what the right hon. and learned Gentleman said about the Monopolies and Mergers Commission, I did not say that to the lobby. [Interruption.] I did not mention the Monopolies and Mergers Commission.
As for consultation with the work force— [Interruption.] I have never mentioned the Monopolies and Mergers Commission. As to the work force, the BL board told me that it intends to communicate with the work force at once, or as soon as possible. [HON. MEMBERS: "When?"] That is a matter for the board, but I think at once.
As for secret discussions with General Motors, I do not think that anybody can say that they were very secret. The discussions have been going on for quite a long time, as I have explained to the House many times. [HON. MEMBERS: "How long?"]
As for the so-called deadline, I should have thought that the right hon. and learned Gentleman had at least this in common with the Government—we must come to a conclusion about these matters in the reasonably near future. Surely any responsible hon. Member on either side of the House, whatever his views about the future of those companies, should wish for a conclusion at a very early date. That is why I think it is right for the BL board to do as it has—to say that, by 4 March, other businesses should have a firm intention to make an offer. I hope that they will then be appraised during March and that we shall be able to come to conclusions soon.
Mr. Steve Norris: Is my right hon. Friend aware that many of us agree entirely with him that, in the interests of those who work in the company, we should bring any negotiations to a conclusion as speedily as possible? Does he further agree that it is damaging to the work force to see all of these negotiations, at the instigation of the Opposition, conducted in public to their detriment?
Mr. Channon: I agree with my hon. Friend on both counts. We must try to act in the interests of people in those companies and to reach a sensible conclusion rather than make party political capital.
Mr. Terry Davis: Why are the merchant bankers Hill Samuel involved in these discussions? Who appointed them? Is there any connection with the fact that a director of BL is also a director of Hill Samuel? Is this another example of the City of London taking an opportunity to feather its nest at the expense of British industry?
Mr. Channon: The hon. Gentleman is talking hysterical nonsense. The British Leyland board, like other companies in these circumstances, has its own merchant bankers, and Hill Samuel happens to be the merchant bank acting for it.
Mr. Michael Heseltine: Does my right hon. Friend agree that it would be better to reach the right decision more slowly than the wrong decision more quickly? Will he bear in mind that in Britain's negotiations with Ford, Chrysler and General Motors there have been promises and assurances but very little compliance with either?
Mr. Channon: I want to come to the right conclusion in reasonably quick time because I believe that that is essential in the interests of the companies concerned and of all of those who work in them and want them to succeed in the future.
Mr. Tam Dalyell: My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) referred to the letter of 14 February. Why did not the Secretary of State tell the House of Commons about the deadline?
Mr. Channon: I have not seen the letter of 14 February. [Interruption.] Nor is it in any way surprising that that should be the case. Hill Samuel is the merchant banker to the BL board, not to me.
Mr. Alex Fletcher: Will British bidders be given a reasonable time scale in which to submit their bids? Should not Ministers give preference to British bidders quite unashamedly, not because we are anti-American—far from it—but because the assurance of British ownership should be more acceptable to the Government than assurances from overseas owners, no matter how prestigious they may be?
Mr. Channon: I can assure my hon. Friend, as I have done on many occasions, that we shall give serious consideration to any bids. No bids have so far been received.
Mr. David Steel: Will the Secretary of State recognise that both sides of the House want a clear assurance that it is the policy of the Government that British Leyland should remain British Leyland and that it should not become American Leyland? Therefore, as a matter of policy, should not preference be given to those bids that come from other British companies? Will the right hon. Gentleman confirm that this decision cannot be left to the BL board itself as national assets are involved?
Mr. Channon: The Government's policy is to have the best solution for these companies, whether it be American or British. I am far more concerned with the need to achieve a proper future for these companies, and that, I suggest, is what any responsible hon. Member should be working towards.
Mr. Hal Miller: In the face of all this synthetic indignation, does my right hon. Friend accept that ever since the Government announced their intention to privatise British Leyland it has been quite plain that bids were open for any part of British Leyland? In view of the Opposition's belated and mischevious attempt to make political capital out of this and to cause further delay and uncertainty among all those who supply truck and bus and Land Rover, who work in the company and who sell the product, surely there is a need for an early and decisive conclusion to this matter?
Mr. Channon: I entirely agree with my hon. Friend, and I hope that that is the general wish in the House.
Mr. Jack Straw: The Secretary of State is giving the impression that he is not answering the question that has been put to him three times by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) and two of my other hon. Friends. Was he aware of the letter sent by Hill Samuel, whether he read
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it or not? Was he aware of the deadline? If he was, why was the House not told of it when he made his statement on Monday?
Mr. Channon: I answered the hon. Gentleman's question a moment ago. I have given the House the fullest information in my possession, and I have answered any questions that the House has put to me; I shall go on doing so. During the past two weeks there has been a private notice question on 3 February, a debate on 5 February, a statement on 6 February, questions on 12 February, a private notice question on 17 February, a debate on 18 February, and another private notice question on 19 February. The idea that hon. Members have not had the chance to question me is ridiculous.
Mr. David Madel: Will my right hon. Friend confirm that any arrangement between General Motors and Leyland Trucks will not succeed unless the management and unions in those firms are able to agree the details? As neither the management at plant level nor the unions yet know the details of any proposal, what is the point of constantly raising the matter in this House? Neither the work force nor management have yet had any firm proposals on which to negotiate.
Mr. Channon: As my hon. Friend knows, at the present stage no bids have been received from any quarter for these companies. We must try to get to a situation where sensible decisions can be taken, but negotiating in public, as the Opposition would clearly like to do, is very damaging for the future of the companies concerned.
Mr. D. N. Campbell-Savours: May we have an assurance that, whatever happens in the end, Japanese Isuzu diesel engines will not be fitted to Land Rover or Range Rover?
Mr. Channon: When I last spoke in a debate such as this, I said that satisfactory assurances would have to be obtained before I could recommend any deal to the House.
Mr. John Mark Taylor: Will my right hon. Friend accept, and take note of, the virtues of management buy-outs with worker participation, such as in the National Freight Consortium? Will he consider the application of such a scheme to the future of Land Rover, and will he consider it consistent with wider ownership of shares, which our party has always advocated?
Mr. Channon: As I told my hon. Friend on another occasion, if a serious proposal comes forward. it will be considered.
Mr. Andrew Faulds: If the right hon. Gentleman knew of the deadline set out in the letter of 14 February, why did he not previously tell the House of its existence?
Mr. Channon: I have set no deadline—4 March is simply the date by which BL expects alternative interested parties to declare a firm intention of making an offer. That seems to be wholly reasonable. I have kept nothing from the House.
Mr. Robert Atkins: Will my right hon. Friend confirm that it has always been the inviolate rule of British Leyland to tell the work force before anybody else what is going on that affects its interest? Does he agree that those of us who have a real interest in the work force, those of us who have a constituency interest as I do,

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as the Member for Leyland, find the activities of the Labour party, supported by those who will jump on any bandwagon, scurrilous and disgraceful and worrying the work force even more than it is now?
Mr. Channon: I entirely agree with my hon. Friend.
Mr. Ian Wrigglesworth: As there has been considerable speculation about the fact that General Motors will not purchase other parts of BL unless Land Rover is included, will the Secretary of State give an assurance that the Land Rover part of the deal can be disentangled from the General Motors bid, and that a purchaser from Britain can make a serious offer for it?
Mr. Channon: Any proposal will be looked at on its merits. I understand that the GM board wishes to buy both companies or neither, but, as I have already tried to explain, I would never agree to a deal for Land Rover unless I were convinced that is would be in the long-term interest of Land Rover—and that with a GM deal if satisfactory assurances can be obtained and with the American outlets available—I could see a secure and good future for Land Rover.
Mr. Derek Conway: Concern about this matter comes not only from the west midlands but equally from my constituency, where several hundred jobs are involved. Does my right hon. Friend accept that we should prefer to see a longer negotiating time scale if that meant that a British bid could be acceptable? I accept that it is difficult to conduct negotiations via the House, but I hope that, before the lobby, the House of Commons will have a say as to where a nationalised industry which should remain British goes.
Mr. Channon: I assure my hon. Friend that there will be time for any serious bid from any source to be considered. No bids have yet been seen. There have been some declarations of interest in the companies concerned. I agree that bidding companies must be given an opportunity to make their proposals. I believe that what the BL board proposes is adequate.
Mr. John Evans: Is the Secretary of State aware that the widespread doubt and uncertainty has largely been created by his own inept and incompetent performance? Will he acknowledge that this is not just a question of Leyland, and if there is any reduction in production by BL it will have a major impact on the Pilkington factory in St. Helens, which is a major supplier of glass to the industry? Will he bear that in mind?
Mr. Channon: I shall bear that in mind. I reject the first part of the hon. Gentleman's question. Some of the major component suppliers to this industry, and I have permission to quote Guest Keen and Nettlefolds —[Interruption.] So hon. Members wish to laugh at the.
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components manufacturers. GKN has said that, subject to satisfactory assurances, the Bedford-Leyland merger and the GM ownership of Land Rover would be desirable from the United Kingdom point of view.
Mr. Anthony Beaumont-Dark: Will my right hon. Friend accept that many of us agree that this virtually daily questioning is not helpful to solving the problem? But will he also bear in mind that it underlines not just the wishes of the House but the fact that the people of this nation wish to see not an American dream come true to control our motor industry but a British dream come true— a viable British alternative to the problem? Carelessly and quickly selling out is like marriage, which is meant to be for ever; and once one has sold out it is for ever. Will my right hon. Friend make sure that before he sells out to General Motors he gives the British people a genuine chance to control their destiny?
Mr. Channon: My hon. Friend has made his views clear on many occasions and I respect them. I have already assured the House that I will give a genuine chance to any serious bid that comes forward and I repeat that assurance to my hon. Friend today. I am grateful to him for what he said in the first half of his question. It is difficult for all those involved in the companies to have this daily barrage which the Opposition are clearly trying to create for party political reasons.
Mr. Stan Thorne: Is the Secretary of State aware that an official group from British Leyland came to the House yesterday to make it clear that, in its opinion, the bus and truck division, in which it has invested considerable skill and effort, must remain in public hands?
Mr. Channon: That is a view that I understand, but it has never been the Government's view, because we believe that we should privatise those industries.
Mr. Patrick McNair-Wilson: Does my right hon. Friend agree that had it not been for United States investment in Britain since the war our industrial base would be a great deal smaller than it is and, since a large part of that investment was sanctioned by the Labour party when it was in power, will he reject this hypocritical anti-Americanism and put the interests of the work force and the business first in any discussions that take place?
Mr. Channon: Yes, I will. American investment in Britain has been very much welcomed and there has been substantial British investment in the United States. Labour Members, with their anti-American taunts, are playing a dangerous game. They are threatening the livelihoods of thousands of people employed by American companies in Britain, including General Motors and Ford.
Several Hon. Members rose—
Mr. Speaker: Order. We must move on.

Points of Order
Mr. John Prescott: On a point of order, Mr. Speaker. It arises from written question No. 153 on today's Order Paper from the hon. Member for Cardiff, West (Mr. Terlezki) in the answer to which the press was informed of a No. 10 briefing this morning that the Government intended once again to readjust the monthly unemployment statistics downwards.
You will recall that on a previous occasion, Mr. Speaker, when the Government readjusted the unemployment figures downwards on 12 November 1982, by over 200,000 it was covered by a statement to the House, and that on the second occasion, in April 1983, when the readjustment downwards was more than 350,000, it was included in a statement by the Chancellor to the House.
It is an affront to the House that the non-elected Secretary of State for Employment is not accountable to this House for his actions. Indeed, he is in contempt of the House and past practices in hiding away this further readjustment of the unemployment figures in a written reply, particularly when, in employment questions yesterday, the Paymaster General and Minister for Employment addressed himself to the question and did not answer it.
May I appeal to you, Mr. Speaker, as the protector of rights in the House, to appeal to other quarters to see whether a statement can be made to the House tomorrow about a further fiddling down of the unemployment figures?
Mr. Speaker: I am not responsible for answers given to written questions. The hon. Gentleman's point of order will have been heard by the Government Front Bench.
The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): Further to the point of order, Mr. Speaker—there seems to be a curious lack of Labour Members on their feet inclined to join in on it. I believe that written answers should be given to the House. I do not approve of the practice whereby the press obtains answers before the House. I regret that that has taken place. The question has been answered by way of written answer. It is a perfectly routine answer which speaks for itself. I advise the hon. Member for Kingston upon Hull, East (Mr. Prescott) to address himself to its contents. I think that he will find that it will cause little excitement.
Mr. Dennis Skinner: On a point of order, Mr. Speaker. Last week, you said that, whenever a point of order was raised to which a Minister responded, the response would be treated as a statement. I want to make it absolutely clear before I raise my other point of order that I hope that my point of order will not prejudice the rights of my colleagues to have another crack at the Minister in calling for a statement on the unemployment figures.
Mr. Speaker: Order. The hon. Member is always helpful to me. I called him on a point of order. Will he please put his point of order to me?
Mr. Skinner: During Environment Questions, the Minister for Environment, Countryside and Local Government said when I called for an inquiry into Sellafield that I had not shown any interest in
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contaminiation and pollution in the coal industry and associated industries. I wish to point out that the Minister—
Mr. Speaker: Order. The hon. Member is an old hand. He knows the rules better than most.
Mr. Skinner: This is a point of order, Mr. Speaker.
Mr. Speaker: The hon. Member knows equally well that it is not in order to continue—
Mr. Skinner: It is a genuine point of order, Mr. Speaker.
Mr. Speaker: Order. The hon. Member knows perfectly well that it is not in order to continue Question Time by means of a point of order. Many things are said in the House with which hon. Members disagree. The hon. Member will put his point of order to me, not to the Minister.
Mr. Skinner: It is a point of order for you. Mr. Speaker. It is well-known in the House that, when an hon. Member misleads the House about another hon. Member. it is a matter for the Speaker. The Minister said that I had not participated in any exercises against contamination, other than Sellafield. In defending this call for the Minister to withdraw that misleading statement, I point out that in 1976 I called for the closure of a plant in my constituency because Coalite Industries Ltd. was producing dioxin. The Minister in question then was working for Arnold Weinstock, and trying to get the nuclear power industry contracts. The Minister for Environment, Countryside and Local Government has a duty to withdraw his statement.
Mr. Speaker: I think that the whole House would agree that there is no dispute about the hon. Member for Bolsover (Mr. Skinner). He is an assiduous Member. There is no controversy about that.
Sir John Farr: On a point of order, Mr. Speaker. Will you please help me? How can it be possible for the hon. Member for Kingston upon Hull, East (Mr. Prescott) to ask for your ruling on how the formula for unemployment figures is calculated and for that question to be in order, yet only the other day your office advised me that I could not raise with the Chair questions about the actions of the Select Committee on Defence in exceeding the powers given to it under the Standing Orders? Your office told me that I could not raise that matter with you in relation to the conduct of the House.
It seems strange that a technical detail, such as the formula for compiling the unemployment figures, can be raised on a point of order, yet what is transparently happening in relation to certain Select Committees, such as the Select Committee on Trade and Industry and the Select Committee on Defence, which are exceeding the powers laid down by Parliament in the Standing Orders, cannot be raised on a point of order.
Mr. Speaker: The hon. Member has raised an important point. I should like to say to the whole House that we are getting into the habit of having points of order raised virtually every day which have absolutely nothing to do with me but have to do with the Government Front Bench. The hon. Member for Harborough (Sir J. Farr) is right. When a right hon. or hon. Member gets to his feet on a point of order, I have no idea what he will say. If hon.

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Members went to the Table Office for advice, they would receive exactly the same advice that the hon. Member for Harborough received.
Mr. Neil Kinnock: On a point of order, Mr. Speaker. I can understand your concern—I am sure it is shared throughout the House—at the number of times that it has been necessary to use the facility of points of order to try to secure information which truly and genuinely should be volunteered by the Government by direct means to the House of Commons so that they can be cross-questioned. When a Government resorts to other means—press leaks, written answers or press briefings —to ensure that they are not scrutinised in the House, can you suggest any way of dealing with the matter other than by raising points of order?
Mr. Terry Davis (Brimingham, Hodge Hill): On a point of order, Mr. Speaker. In view of what you said recently on a similar occasion, may I ask you to rule that the comments made by the Paymaster General on a point of order were equivalent to a statement on which he can now be questioned by hon. Members?
Mr. Speaker: I rule in particular circumstances and, if I may put it this way to the House, I am sure the House will agree that it is a question of the context in which things are said and done. It would be an unfortunate ruling if I were to say that every time a Minister got to his feet to assist the House it became a statement. That might mean that Ministers would never get to their feet, and that would not be to the benefit of the House.
Mr. John Evans: On a point of order, Mr. Speaker. This is about the third time in 12 years that I have raised a point of order in the House. Is it not an abuse of the procedures and privileges of the House for the Minister who was answering questions yesterday and was asked specifically about the subject of employment statistics not to answer that question or give the House the information when today a written answer has been given which suggests a change? Surely the Government cannot have arrived at a change of policy in 24 hours. Surely Back Benchers have rights. The Government have ignored and abused the privileges of hon. Members.
Mr. Speaker: This is an Opposition day, so hon. Members are taking time away from Back Benchers and the Opposition in raising points of order. I have no responsibility for answers given to questions.
Mr. Tony Marlow: On a point of order, Mr. Speaker. I hope that this will be a constructive point of order. The hon. Member for Hackney South and Shoreditch (Mr. Sedgemore), when he was asking his question, gave a rather colourful description of an hon. Member. He mentioned my constituency, implying that he was referring to me. I now understand that he did not mean my constituency. I wonder whether he could have an opportunity to put the record straight.
Mr. Speaker: Certainly not. Fortunately, my microphones do not always pick up the colourful descriptions.
Mr. Robert Litherland: On a point of order, Mr. Speaker, referring to Question Time. Yesterday, in Prime Minister's Question Time, you
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allowed five questions on the subject of Afghanistan. Today, in Environment Questions, you allowed two questions on housing in Manchester when quite a number of Members wanted to speak.
Mr. Speaker: That is an important point. I think that the whole House would be interested to know about it. It was a rare occasion in Prime Minister's Questions yesterday when we had a substantive question. Most of the questions to the Prime Minister are open and are basically on the same subject. I took a judgment today, and I accept that we did not get far with Environment questions. I decided that the matter of the Sellafield leak was of major interest to hon. Members and I allowed questions on it to run a little.
Mr. Allan Rogers rose—
Mr. Speaker: Order. It is using the hon. Gentleman's own time, but I will take the point of order if it is legitimate.
Mr. Rogers: On a point of order, Mr. Speaker. It arises out of the statement made by the Paymaster General earlier. Am I right in understanding that the answer to a written question was given without his knowledge or consent? I see that he is nodding. Will he confirm that that is the truth? An answer to a written question was given without his consent. I see that he is nodding. That is enough.
Mr. Dave Nellist: On a point of order, Mr. Speaker. If I remember correctly, on Monday, when we had an exchange on the subject of British Leyland, you said that those hon. Members who were not called on that occasion would take precedence next time the subject was raised. I have constituents working for Austin Rover, Land Rover, Unipart, Self-Changing Gears and other parts of Leyland. I and other Labour Members did not get the chance today to raise the question of the dismissal of the senior shop steward of the Transport and General Workers Union at Land Rover, Solihull, for opposing privatisation. I wanted to bring that to your notice. I want to bring to your notice our resolute opposition to privatisation of BL, in whole or in part, with American or British capital.
Mr. Speaker: I did say that. I am sorry that I did not call the hon. Gentleman. I think that I should have done so.

Points of Order

  BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 7 MARCH
  Members successful in the ballot were:

  Mr. John Evans.

  Mr. Sydney Chapman.

  Mr. Geoff Lawler.

BILLS PRESENTED
  EMPLOYMENT (AGE LIMITS)
  Mrs. Ann Clwyd, supported by Ms. Jo Richardson, Ms. Clare Short, Mr. Richard Caborn, Mr. Clive Soley, Mr. Doug Hoyle, Mr. John Marek, Ms. Harriet Harman, Mr. George Foulkes, Mr. Brian Sedgemore, Mr. Roland Boyes, and Mr. John McWilliam presented a Bill to prohibit the use of age limits in job appointments, training schemes, promotion, retirement and advertising of jobs; to make other provision relating to employment; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 18 April and to be printed. [Bill 88.]
  HIGHWAYS (AMENDMENT)
  Mr. Michael Cocks, supported by Mr. Malcolm Bruce, Mrs. Gwyneth Dunwoody, Mr. Hugh Dykes, Mr. Frank Haynes, Mr. Robert Hicks, Mr. Daniel Knox, Mr. Ken Weetch, Mr. Dafydd Wigley and Mr. Gordon Wilson, persented a Bill 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: And the same was read the First time; and ordered to be read a Second time upon Friday 21 February and to be printed. [Bill 89.]

Amendment of the Constitution of the House of Lords (Bishops)
4.6 pm
Mr. Richard Holt: I beg to move,
That leave be given to bring in a Bill to amend the constitution of the House of Lords in relation to membership of bishops and to make consequential provision.
Frequently, when I am asked what is needed to be a Member of Parliament I reply, patience, a strong constitution and a loud voice. Never does that apply quite so much as when one has a ten-minute Bill. Patience in this context goes back to the year 1301, because my ten-minute Bill seeks to amend the constitution. It is sometimes thought that we do not have a written constitution and that everything is by precedent. That is very often true, but for bishops it is untrue. The place of bishops in the House of Lords is enshrined in law and has been ever since laws were validated in this country.
I was surprised to find from my researches that the number of bishops first established by Henry VIII in 1550 was 26. Today, we still have 26. After all those years, the number is the same. There have been changes, such as the disestablishment of the Welsh Church and the Irish Church, and other changes over the years, but in spite of them the number of bishops in the other place has remained constant at 26—two archbishops and 24 bishops.
The restoration Act laid down that the five senior prelates—the two archbishops, the Bishop of Durham, the Bishop of London arid the Bishop of Winchester—shall sit in the House of Lords as of right. All the other bishops take Buggins' turn to bring the numbers up. That was established by statute in 1847.
Why, as a Member of the House of Commons, am I seeking to alter the constitution of the House of Lords? The answer is that that is the way in which it has always been done. The Commoners have initiated the legislation, the Lords have rejected it, and ultimately the Commoners have made it law. I want to strengthen the House of Lords, and I think that one way to do that is to ensure that it reflects the more ecumenical society in which we live and is a true reflection of the nation. I also hope that in that way we would have greater integration of Wales, Scotland and Northern Ireland.
It is significant that right back to Henry VIII's Act of 1550 one bishopric only was deliberately excluded—that of Sodor and Man. It is excluded because the bishop who holds that see is automatically a Member of the Manx House. That applies to no bishop other than an English one. This is the Parliament of the United Kingdom. It is not the Parliament of England. It should reflect and expand in the House of Lords Church leaders' views from all parts of the country. It should not be confined merely to those in England.
There will be a rumble from people who will say, "This is the short road to disestablishing the Church." I shall remind hon. Members of the report of the Archbishop's commission, "Church and State", which was published in 1970. It said:
"it is hard to define what is meant by the term 'Church as by law established'." The words … were originally used to denote the statutory prcess by which the allegiance of the Church of England … and the forms of worship and doctrines of that Church were imposed by law."

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Many right hon. and hon. Members who are here today took part in the famous debate of 1974. I recommend that all hon. Members read the 100 pages of Hansard to see that the measure debated was a step down the road toward what one might call disestablishment, but it has not happened. Like the other snares and red herrings put out from time to time, it is not true. I am not seeking to disestablish anyone. I am trying to establish more people. That will be seen by what I want to introduce into the House of Lords.
The Bill seeks to phase out 12 of the 26 English anglican bishops. The best way to make progress in such matters is slowly, patiently and by negotiation. The law has been around for 355 years, and I do not seek to change it in 10 minutes. Why should I?
I shall go back to the beginning and show why there are any bishops at all in the House of Lords. They are there because King Edward I in 1300 could not read or write and someone had to take the minutes. They put bishops in, and the bishops have been there ever since.
I want the bishops in the House of Lords to reflect society. I seek to introduce there the Moderator of the Church of Scotland, the Archbishop of the Church of Wales, who was shamefully disestablished in 1920 by Lloyd George for political purposes, the Primate of All Ireland and Bishop of Armagh, and the four Catholic cardinals, archbishops or bishops, as appropriate of Westminster, Edinburgh, Cardiff and Armagh, the Methodist Chairman or his nominee and the Chief Rabbi.
I may be criticised for not extending the list to other religions and forms of worship. I am deliberately reducing the numbers by 12 and introducing nine to allow additional people to be put forward for nomination in the fulness of time.
I shall give some of the statistical evidence on various forms of church worship today. In part, the statistics lie behind my thinking. The statistics have been supplied by
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the House of Commons Library. The best measure that it has is the number of communicants. The Church of England had 1·9 million in 1900 and has 1·5 million today. The Church of Scotland had 1·1 million and now has 900,000. There were 1·9 million Catholics in 1900 and 5 million today. There were 770,000 Methodists and there are now 451,000, and there are 350,000 Jews. Religions without a clear leader do not deserve to be considered, but I do not exclude them. I am trying to introduce harmony, not discord. I am trying to see that in the other place more people bring thoughts and words like those of the Chief Rabbi to parliamentary debates.
I should like to think that everyone, irrespective of the immediate reaction, would like to think about this proposal, because if it saved one life in Northern Ireland it would be a measure well worth introducing.
Question put and agreed to.
Bill ordered to be brought in by Mr. Richard Holt, Mr. Robert Key, Sir John Stradling Thomas, Mr. Derek Conway, Mr. Michael Stern, Mr. Steve Norris, Mr. William Cash, Mr. Seamus Mallon, Mr. Michael J. Martin and Mr. Albert McQuarrie.

Amendment of the Constitution of the House of Lords (Bishops)
  AMENDMENT OF THE CONSTITUTION OF THE HOUSE OF LORDS (BISHOPS)
  Mr. Richard Holt accordingly presented a Bill to amend the constitution of the House of Lords in relation to membership of bishops and to make consequential provision: And the same was read the First time; and ordered to be read a Second time upon Friday 2 May and to be printed. [Bill 87.]

Royal Assent
Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Act:
Atomic Energy Authority Act 1986.

Opposition Day
[8th Allotted Day]
Opposition Day

  Strategic Defence Initiative
  Mr. Speaker: I have selected the amendment in the name of the Prime Minister. As we are running somewhat late and as there are many right hon. and hon. Members who wish to take part in the debate, may I call for short speeches.
  4.27 pm
  Mr. Denis Healey: I beg to move,
  That this House regrets Her Majesty's Government's support for the Strategic Defence Initiative.
  In some ways the strategic defence initiative is probably the most important issue in the field of foreign and defence policy, disarmament and high technology that the House has discussed for many years. Its supporters and opponents will at least agree on that.
  On 23 March 1983, President Reagan made a speech in which he asked for a fundamental change in the basic policy upon which western security has been built since the second world war. He made this speech without any consultation with any of his allies, although NATO's nuclear planning group was meeting at that time. He said that the
  "human spirit must be capable of rising above dealing with other nations by threatening their existence … peace could not rest much longer on the threat of mutual suicide."
  The President dedicated himself to produce a defence against nuclear ballistic missiles which would make:
  "nuclear weapons impotent and obsolete."
  Later in Baltimore, he told schoolchildren that "the hand of providence" inspired that speech.
  The President never explained how ballistic missile defence would protect the world against nuclear bombs which were carried on aircraft, such as those dropped on Hiroshima and Nagasaki, by cruise missiles, by individuals or in the hold of ships. He never explained how abolishing nuclear weapons would control conventional forces, which in an all-out war could inflict horrific damage, or how he could achieve any of his objectives without reducing the political tensions that have been the cause of the arms race. However, we can all agree that at least it was a noble vision, which has been endorsed by the Campaign for Nuclear Disarmament.
  The strategic defence initiative that we are now discussing is very different from what President Reagan proposed nearly three years ago. The American Administration now say that the purpose of research is not to replace nuclear deterrence but to enhance it—to make the mutual suicide pact even more binding than it is today, and to threaten the survival of other nations more effectively. It is already clear that the Administration's aim for the next 30 years at least will be to protect not the peoples of the world, but American land-based missiles, which are one of the components in America's strategic nuclear triad.
  "For the foreseeable future,"
  the official American apologia for SDI now recounts,
  "offensive nuclear forces, and the prospect of nuclear retaliation will remain the key element of deterrence."
  Therefore, simultaneously with SDI, the United States Government are beginning to deploy a whole arsenal of
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  new strategic nuclear weapons—the MX missile, the D5 submarine-launched missile and the Midgetman mobile missile. They foresee an immense increase in funding for research and development into what they call advanced strategic missile systems, which are a new arsenal of weapons that will enter service in the late 1990s when the first strategic defence is planned to be available. That must mean a stupendous acceleration of the arms race, greatly increasing the risk of nuclear war and making disarmament more difficult.
  Indeed, the case against the President's present proposals was made most eloquently by the President in his original speech when he said:
  "If defensive systems were paired with offensive systems they could be regarded as fostering an aggressive policy, and nobody really wants that."
  The point that the combination of defence and offensive forces would appear to increase the possibility of a first strike against an enemy was repeated by him in his interview with Soviet journalists only last October, when he pointed out that it would make a first strike more feasible. The point was put most dramatically by ex-President Nixon when he said of the SDI:
  "Such systems would be destabilising if they provided a shield so that you could use the sword."
  That is the basic case against the attempt to produce a ballistic missile defence, which is the purpose of the SDI.
  It is not surprising that the SDI has been opposed in a somewhat coded way, not only by our Foreign Secretary in his remarkable speech in the middle of last year, for which I paid him tribute, but by two of the past three American Presidents—Presidents Carter and Ford—three of the past four American Defence Secretaries —Secretaries Brown, Schlesinger and McNamara—and all six of the surviving American Defence Secretaries who are opposed to breaking the ABM treaty, which would be necessary if a star wars system were to be deployed.
  Faced with that threat which, to use President Reagan's words, could make a first strike by the United States more likely, it is not surprising that the Soviet Government have made it clear that they will not sit on their hands. If SDI proceeds, they will increase the number of offensive missiles in the hope of swamping American defences, as the United Stated did by introducing multiple independently targeted re-entry vehicles when the Russians first began deploying ballistic missile defences in the late 1960s, and, as Secretary Schlesinger, in a powerful. article attacking SDI, pointed out, as any Western Government would do in similar circumstances. Indeed, the Chevaline programme, which was introduced by the Conservative Government in the early 1970s, was introduced as a response to the Soviet deployment of an ABM system around Moscow.
  That is not the only Soviet reponse. The Soviet Government will also seek to develop weapons which would either put the American space-based system out of action—the most likely weapon for that would be some sort of space bomb which would circle the world permanently—or make the system ineffective, for example by introducing fast burn into their intercontinental missiles so that the boost phase, which is the first target of the American system, would be reduced from five minutes to 50 seconds, and would take place entirely in the atmosphere, which it is much more difficult for the

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  proposed American laser weapons to penetrate. Finally, the Russians have made it clear that they would plan to develop their own space-based defensive systems.
  Dr. Alan Glyn: I have listened carefully to the right hon. Gentleman and I agree with him. But he has not mentioned the time scale for the development of the SDI by the Americans.
  Mr. Healey: From discussions with General Abrahamson and others I understand that the Americans hope to start deploying some sort of ballistic missile defence within about 10 years, although the first system may be based on land rather than in space. The fact that the Americans are known to be researching into such systems makes it sensible for the Russians to start preparing against them now, just as western countries, faced with the possibility of Soviet systems, immediately started taking action either to swamp them or copy them.
  Mr. James Couchman rose—
  Sir Antony Buck rose—
  Mr. Healey: I shall give way from time to time, but I do not wish to conduct a seminar. I have no doubt that you, Mr. Speaker, will note the anxiety of hon. Members to speak.
  American official sources have made it clear that in the next 10 years, if the arms race proceeds, the Soviet Union will be able to increase the number of its missiles much faster than the United States simply by keeping existing production lines open. Indeed, it could increase the number of its warheads from about 9,000 to 30,000 within 10 years, especially if the United States abandons the SALT II agreement, which would restrict the number of missiles, as the American Defence Department has asked the President to do.
  Even that is not the full horror of the prospect before us. The United States has now admitted that it is examining the possibility of putting nuclear weapons into orbit to use as pumps for X-ray lasers. It has already carried out many tests for that purpose on its testing grounds in Nevada. It is already exploring nuclear weapons as an element in its SDI, although earlier it always said that the SDI would be an entirely conventional system.
  We must never lose sight of the fact that the technologies that are now under examination could be used for offensive as well as defensive purposes. In response to papers produced by several American university teams, a spokesman for the American strategic defence initiative has already admitted that any laser weapon powerful enough to destroy a missile in the atmosphere could, with some redesigning, be used to incinerate a city. Even the non-nuclear lasers contemplated by the United States could produce climatic effects as horrific and catastrophic to humanity as the nuclear winter—a concept with which people are now becoming familiar.
  Faced with that terrifying prospect, any European Government should be using all their efforts to stop the arms race from entering that new phase while there is still time. Despite the publicly expressed hostility of the French Government to the SDI, and despite the deep and public divisions in the German Government about the SDI, the
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  British Prime Minister decided to jump the gun on all her European allies and not only to endorse the programme but to offer to put British scientists at its disposal.
  The Prime Minister sought to justify that sell-out by two arguments. First, she told us that the President gave her satisfactory undertakings at their meeting in December 1984 on the deployment of a space-based system. The second argument was that it was impossible to monitor an agreement to ban research into such a system. However, it is already clear that the American Administration have not the slightest intention of honouring three out of the four undertakings that they gave to the Prime Minister in Washington 14 months ago.
  The first condition was that America would seek not to achieve superiority but to maintain the balance of strategic forces. On 1 February 1984, Secretary Weinberger told Congress:
  "If we get a system … which we know can render their weapons impotent, we would be back in a situation we were in, for example, when we were the only nation with the nuclear weapon."
  He considered SDI as effectively giving the United States the monopoly that it had in 1945. That is not maintaining a balance in strategic forces.
  Secondly, the President undertook that the deployment of a system related to the SDI— in view of the obligations that America accepted under the ABM treaty —would have to be a matter for negotiation with the Soviet Government as a fellow signatory of the ABM treaty, and with America's allies. President Reagan was clear about the matter. On 6 November last year, in answer to questions, he said that if Russia did not agree to amend the ABM treaty to permit the deployment of a space-based defence system, he would go ahead and deploy it anyway. When asked by journalists whether he would permit the Soviet Government a veto on deployment, he said, "Hell, no."
  Mr. Weinberger made the same point in less colourful language. A year ago he stated:
  "I am ruling out the possibility of giving up on strategic defence, either in the research stage or if it becomes feasible in the deployment stage."
  He refused to give up the possibility of deploying SDI under any circumstances if it proved feasible.
  As the House will recall, it was that refusal even to consider negotiations that blocked all progress at the recent Geneva summit on disarmament of strategic nuclear forces. That in turn makes nonsense of the fourth undertaking, that East-West negotiations should aim to achieve security with reduced levels of offensive systems on both sides.
  Both sides are now planning to increase greatly the number of their offensive systems and to increase new types of defensive weapons. There is no chance of progress on strategic nuclear disarmament unless the United States is prepared to negotiate about the abandonment of the strategic defence initiative. The tragedy is that that has become clear just at the time when the new Soviet proposals for disarmament—perhaps engendered to some extent by the fear of the SDI deployment—represent major concessions in the Soviet position, not least on intermediate nuclear forces, where the Soviets have accepted the zero option, which was first put to the Russians by my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) and myself when we met Mr. Brezhnev in 1981. It was also put forward by President Reagan on behalf of NATO in discussions with

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  the Soviet Union about a year later. Since the war there has never been a time when the prospects for progress on disarmament have been more propitious. There is now a real chance of doing that to which the American and Soviet Governments committed themselves when Mr. Shultz and Mr. Gromyko agreed a year ago to end the arms race on earth and to prevent an arms race in space.
  The Prime Minister's excuse for supporting the SDI as a research programme is that it is impossible to monitor or verify a ban on research and that the Soviet Union is carrying out research into ballistic missile defence in any case. As I pointed out when we previously debated this subject during the debate on the Queen's Speech in November, although research carried on inside people's heads or inside laboratories is impossible to monitor without access to those laboratories, such research cannot go far without physical tests, or "demonstrations" as the Americans call them. Tests of components in a possible system that take place outside laboratories can be monitored by satelite photography and other means and are continuously monitored by the American and Soviet Governments at present. The Russians have at last offered to draw a distinction between research in laboratories and brains and the type of tests outside laboratories that can be monitored, without which such research cannot proceed very far.
  The Americans have listed such tests as having been carried out by the Russians. They have described some of the preparations that they say the Russians are making to produce a ballistic missile defence. However, I understand that their interpretation of the Krasnoyarsk radar—their prime exhibit—is not shared by the British Government. I hope that the Secretary of State will come clean on that matter in his reply. Evidence given to the Defence Committee by some officials made it clear that we do not endorse the American interpretation of Krasnoyarsk. The Russians have agreed to dismantle the Krasnoyarsk system if Britain dismantles similar systems at Fylingdales and Thule. Many people believe that they are as contrary to the ABM system as is the Krasnoyarsk radar.
  Mr. Michael Heseltine: The right hon. Gentleman was responsible for many years for Fylingdales. Was it part of an ABM system?
  Mr. Healey: No, it was not then, but the right hon. Gentleman and his Government agreed to develop Fylingdales as a phased array radar of a type very similar to that at Krasnoyarsk. That is a new development which the Russians have already claimed is contrary to the ABM treaty, on exactly the same grounds as the Americans claim that Krasnoyarsk is contrary to the treaty. I am glad to see that the right hon. Gentleman does not dispute that fact.
  Mr. Heseltine: Perhaps I would if the right hon. Gentleman gave me the chance. I was deeply involved in the matter. The purpose of the modernised Fylingdales is no different from the purpose over which the right hon. Gentleman presided.
  Mr. Healey: That is precisely what the Russians argue about Krasnoyarsk: that its purpose is to track objects in space, not to—[Interruption.] Mr. Deputy Speaker, I would love to conduct a seminar because I know that education and instruction is widely required by Conservative Members.
  Mr. John Wilkinson rose—
  Mr. Healey: No, I have dealt with the question of the right hon. Member for Henley (Mr. Heseltine)—
  Mr. Heseltine: The right hon. Gentleman is getting carried away. The essential difference is that Fylingdales existed before the ABM treaty and Krasnoyarsk did not.
  Mr. Healey: Of course Fylingdales existed before the treaty, but it is being developed in a way that is incompatible with the treaty. That is precisely the complaint made by the Soviet Government. If the right hon. Gentleman is sensitive about his complicity in the matter, and if he believes, like the Americans, that the Krasnoyarsk radar violates the treaty, let the British Government agree to the Soviet proposal to cease development at Fylingdales, Krasnoyarsk and Thule, which seem to be a perfectly sensible proposal that would not harm Western security and would relieve many people of what I believe to be legitimate anxieties.
  If the West is really worried about Soviet research into ballistic missile defence or anti-satellite systems, where in some respects the Soviet Union is further advanced than the United States, it could kill those systems stone dead by accepting a ban on observable tests. None of the Government's excuses for supporting such tests hold the slightest amount of water, since they are fully capable of being monitored.
  The strategic defence initiative has become the major obstacle to stopping the arms race. It is widely agreed that it would be possible with existing means to monitor a comprehensive test ban, especially since the Soviet Government have agreed to on-site inspection. But the SDI requires nuclear tests underground of X-ray laser bombs, some of which have already been carried out in Nevada. Mr. Miller, a top scientist at Livermore, has argued in public that even the non-nuclear components of the proposed SDI require testing in a nuclear environment which can be produced only by the explosion of nuclear weapons.
  The tragedy is that this opportunity to stop the arms race may be the last unless we can pop this genie back in the bottle now. What must worry many hon. Members is that the major obstacle to a reduction in strategic weapons is the American attachment to the SDI, just as the major obstacle to accepting the Soviet proposal for the zero option on intermediate nuclear forces is the British Government's determination to go ahead with the Trident programme, although there is growing opposition even in the services to continuing that programme, since, as the right hon. Member for Henley will recall, one reason why our forces cannot afford helicopters produced by Westland is that, in a few years' time, 30 per cent. of the new equipment budget will be taken up by Trident.
  Her Majesty's Government and the American Government together have erected a massive road block on the way to peace. All this has been compounded during the past few months by the grubby conspiracy of the British Government to encourage British scientists to leave vital British programmes of civilian research, such as the Alvey programme, and work instead on SDI research for the American Government. It is yet another sell-out to American pressure— one of vital importance to the future of British industry.
  My right hon. Friend the Member for Llanelli (Mr. Davies) will deal at greater length with some problems surrounding the agreement made by the Secretary of State

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  for Defence, which General Abrahamson was pursuing during his recent visit to London. I hope that he will tell us a little more about the agreement, since I understand that he met General Abrahamson yesterday.
  The memorandum of understanding that the Government signed with America on this matter is scarcely worth the paper on which it is written, because such memoranda can be overridden at any time by the American Congress, as Congress overrode the wartime agreement to share nuclear technology when it passed the McMahon Act, and as the Americans overrode another agreement when they cancelled the Skybolt project on which an earlier Conservative Government were relying to replace the aging V bombers. As the right hon. Member for Henley may remember, a few years ago, the Americans unilaterally broke the memorandum of understanding to produce an airfield attack weapon, the JP233. Indeed, it may have been before his time. That memorandum was signed by his predecessor, the right hon. Member for Cambridgeshire, South-East (Mr. Pym) whom he has joined on the Government Back Benches. They seem to be a depository for former Defence Ministers.
  But even if the memorandum of understanding is not overridden by the United States, it is vital that the House should know what its provisions are. We know only one thing about the memorandum: that the former Secretary of State completely failed in his stated objective to guarantee $1,500 million-worth of work for Britain. We must rely entirely on leaks, most of which are coming from the United States. However, some have come from the familiar source—the Department of Trade and Industry —which let it be known during the negotiation of the agreement that it was unhappy about the right hon. Gentleman's failure to obtain satisfactory assurances on intellectual property rights and on technology transfer.
  Connoisseurs of British politics will be intrigued by the fact that there was what psychologists call role-reversal on that occasion. The right hon. Member for Henley was trying to sell out to the Americans, and his comrade in adversity, the former Secretary of State for Trade and Industry, was trying to protect European technology. I agree with the right hon. Gentleman that circumstances alter cases, although I found his posing as a great European odd when I considered his record on the memorandum of understanding on the SDI and his position on the purchase of the Trident missile.
  We have been told by leaks that the Department of Trade and Industry was immensely unhappy about the provision to enable British scientists to use the knowledge which they acquire in this research and to produce products which can be transferred to other countries in commercial sale.
  No information is available to the House about the provisions. There are no military security grounds for denying the House this information, and there is every reason for its having the information. Is it the case, as one of the American leaks has claimed, that intellectual property rights and technology transfer will have to be settled case by case in company-to-company contracts, and therefore the British Government have acquired no guarantees whatever in this field which will protect British interests?
  The Government of the Federal Republic of Germany have said in advance— they have not yet signed the
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  memorandum of understanding—that they will not cough up any of their own money. One of the leaks I have read says that Her Majesty's Government have agreed to provide one third of the money for any Government-to-Government contracts from the British Treasury. That is a matter of immense importance to the House. Hon. Members have every reason to be told the truth, yet we are denied it.
  We are also told that there are penal cancellation clauses in this agreement in an attempt to bind any future Government to implement its provisions. I am certain that any future House of Commons will demand the same right as the American Congress has often exercised, to override a memorandum of understanding about which it has been given no information whatever.
  The central issue on this agreement is a general and simple one. We all know that Britain has a substantial lead over the United States in some of the new technologies, particularly those relating to fifth and sixth generation computers which, it is hoped, will have artificial intelligence and be capable of learning. It is essential—I hope the right hon. Member for Henley agrees, in the light of his recent speeches—that we should use this unique advantage in high technology to build a European base so that Europe can compete on equal terms in these areas with the United States and Japan.
  We should not sell out to the United States, and particularly to American defence interests from which there will be only a small commercial spin-off, even if we are allowed under the agreement to make use of the spin-off. I noticed the other day that the assistant head of research at IBM, who can be regarded as a fairly independent authority on these matters, says that the right word is not "spin-off', but "drip-off." The amount of commercial advantage which even the Americans will get out of this diversion of research and development from civilian to military research will be small compared to the colossal resources which it is planned to invest in it.
  In an earlier debate my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) said that to make these points is not to be anti-American; it is anti-British not to make them. It is time that this Government got off their hind legs and started putting Britain first. The Prime Minister and the Government as a whole have shown a feckless indifference to British interests. That has characterised the whole of their industrial policy, which we have been debating at length in recent weeks, and it threatens the very survival of the manufacturing side of our economy. Feckless indifference to the interests of peace by supporting the SDI is even more dangerous.
  I ask the House to vote for the motion. At least it is one means of stopping the sell-out to American pressure which is corrupting every area of our public life, both at home and abroad.
  4.56 pm
  The Secretary of State for Defence (Mr. George Younger): I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof:
  'takes note of the extensive Soviet research effort in ballistic missile defence; agrees that the Strategic Defence Initiative research programme is prudent in the light of this effort; and welcomes the participation of United Kingdom industry and research institutions in that programme.'.
  Until the right hon. Member for Leeds, East (Mr. Healey) got well into his speech I was somewhat puzzled

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  by the vague and indeterminate nature of the motion that he put down for today's debate. I now see that it has provided an excellent and perfect background for the splendid extravaganza with which he has delighted us, and it has given him plenty of scope to paint a colourful picture of his own that bears little relationship to the facts. Having built up that picture, he spectacularly knocked it down with one flick of his wrist.
  I should prefer to spell out as clearly as I can the facts about where we start in this important debate and why the Government have taken the line they have about their particpation in the research activity associated with the SDI programme. As the House will know, the central purpose of British security policy over the last 40 years has been to maintain deterrence within a framework of stability in international relations. This basic approach has stood the test of time, and it is the approach that provides the surest road to continued peace, but on whichever side of the House we sit we must recognise that neither time nor technology will stand still.
  As circumstances change, and as new technical horizons are opened, we must be ready to review the way in which we execute our basic policy and, if necessary, to make adjustments to take account of the new situations in which we find ourselves. There is nothing radical, extraordinary or new about that. The right hon. Member for Leeds, East played a valuable role, which I well remember, in the debates that resulted in the reformulation of the basic NATO strategy in the 1960s. Those debates, resulting in the policy of flexible response, reflected the fact that circumstances had changed since the 1950s when nuclear weapons had first come to play a central role in the security policies of the NATO Alliance. The Alliance properly took account of the changed situation and the strategy which emerged provided a sound basis for Alliance policy thereafter. In my view it has done so, and will continue to do so for many years to come.
  The debate about the strategic defence initiative is about a further evolution in our strategic thinking to take account of changes since then, both in the scale and capability of offensive nuclear forces and in the technologies available for possible defences.
  Mr. Tam Dalyell: Does the Secretary of State agree that, unlike previous systems, there is no way in which this system can be tested? What reply has the right hon. Gentleman to those at the department of artifical intelligence in Edinburgh and at Imperial college who say that, in the absence of a spare planet, this system—which involves space-controlled automatic weapons—can never be tested? That is the difference. It is not evolution at all.
  Mr. Younger: The hon. Gentleman is entitled to his view on that, and so, indeed, is Dr. Thompson, whom he has often quoted. Dr. Thompson has his views on the matter, but it is worth noting that after he expressed his views, Edinburgh university made it clear that they were not necessarily the views of the university, but were Dr. Thompson's personal views. I have no objection to that. If the hon. Gentleman listens to my argument as a whole, he will get an answer to the whole question of the rationale of why we have to take account of the reality of what is happening, and not the situation as we might wish it to be.
  The essential question is whether defensive systems have a role to play in maintaining deterrence and ensuring
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  strategic stability, or whether we should continue to deter strategic nuclear attack solely by the threat of retaliation. This issue is, of course, not new. Both the USA and the USSR worked on defensive systems in the late 1960s. It became clear that the technology then available would not provide cost-effective defences against the weight of attack which the super powers could pose against each other. The right hon. Gentleman touched on that point. Both sides accepted a different twin-pronged approach—numerical constraints on offensive sytems, coupled with strict limits on defensive deployments. That resulted in the signature of the 1972 SALT I and ABM treaties. Each side relied for its security against strategic nuclear attack on the threat of retaliation from its own nuclear forces, which were themselves virtually immune from preemptive attack.
  Those treaties have provided the strategic framework under which we have lived ever since. They make up the concept known as mutual assured destruction or, as my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs more accurately and realistically described it, mutual assured deterrence. The Government attach great importance to the integrity of the SALT and ABM treaties, which marked a real achievement in an agreed approach to ensuring a stable and peaceful world.
  It follows that we believe that their terms should be strictly complied with by all the parties to them. That is why we very much welcomed the US commitment to pursue its SDI research programme in accordance with a strict interpretation of the ABM treaty and not to undercut the unratified SALT II agreement as long as the Soviet Union exercised equal restraint.
  It is, of course, entirely to be expected—indeed., it is all too typical—that the focus of the Opposition motion should be on the United States strategic defence initiative. We shall hear much today—we have already from the right hon. Gentleman —of how it is the United States that is upsetting the approach agreed in the 1970s. We shall, perhaps, be left with the impression from some speakers that the Soviet Union, on the other hand, has respected that approach and wants nothing to do with strategic defences. The reality is very different.
  It is demonstrably not the case that the Soviet Union has eschewed the possibility of strategic defences. It was the Soviet Union that chose to make full use of the provision for the limited deployment of such systems permitted under the ABM treaty by deploying an ABM system around Moscow — a system which it is currently modernising and expanding to the extent allowed by that treaty. In the days when those on the Opposition Benches were still being really serious about defence, it was precisely that Soviet deployment that led them — responsibly and properly — to proceed with the Chevaline programme for our strategic nuclear deterrent. The right hon. Gentleman's famous memory was not quite correct today. Although it was a Conservative Government who decided to go ahead with Chevaline, it was a Labour Government who made the arrangements and allocated funding. He cannot get away from that.
  Perhaps this limited ABM deployment might at first have been explained away as a hangover from the earlier Soviet R and D effort in the 1960s, but it is now being upgraded. Above all, we have to address the long-standing Soviet research programmes into the range of technologies

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  relevant to ballistic missile defence — lasers, particle beam and radio frequency weapons, kinetic energy weapons, surveillance and target detection and so on.
  My right hon. Friend the Minister of State for the Armed Forces placed in the Library on 26 November 1985 a paper on that Soviet programme, which I commend to the House and to hon. Members who have not read it. The facts that it sets out are, I believe, not in dispute. The key point is that this is not a new Soviet programme; it is not a response to the SDI— far from it, it long pre-dates it—it is not something peripheral to the Soviet effort in defence research; it is a key component of it.
  Mr. Healey: Of course the Russians have been carrying out that research. Indeed, the right hon. Gentleman has confirmed that their research experiments have been monitored by means available to the West—just as the Russians monitor ours. Therefore, a ban on observable tests would be feasible.
  Has the United States not been spending money in that area, at least since 1965? It did not stop after the signing of the ABM treaty; it did not have to. Indeed, this is the first year of its research into those systems when spending has risen above the average for those years —the second year of SDI. Both sides have been pursuing research in those areas, but neither had even conceived the possibility of developing the sort of system in which the Americans are now engaged.
  Mr. Younger: I cannot agree with the right hon. Gentleman. He is using the same technique as he used earlier. It is no part of my case to say that the Soviet Union has been investigating these matters but the United States has not. I have not said that, I do not believe that, and I do not think that it is a tenable position. Nor is it any part of my case that either the Soviet Union or the United States is, at this stage, intending to go beyond anything allowed by the ABM treaty. Research is, of course, allowed under that treaty.
  I am making the case—and I am sure that the right hon. Gentleman will agree with it—that there is no ground for saying that the Soviet Union has not been investigating the whole question of strategic defence. It has been doing so, and it is doing so. It is also suggested that the United States may be doing so.
  Mr. Wilkinson: Is it not true that official published American sources from the highest quarters of the Government have made it clear that the Soviet Union is spending more than 50 per cent. of its budget on strategic defence systems? The largeness of its armoury in offensive systems makes us realise how great is its commitment to strategic defence systems.
  Mr. Younger: My hon. Friend is right. We have made that point clear. It is now agreed between both sides—which is important to my argument — that both the Soviet Union and the United States of America have been indulging in that form of research. They have not even contended that they are not doing so. It is not a peripheral matter—it is a key component of what the Soviet Union is doing.
  The explanation for that is, I believe, self-evident. The Soviet Union wishes to explore the scope that new technologies might offer for an effective, active defence
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  of the Soviet homeland against nuclear attack—defence against ballistic missiles which would complement the substantial effort which, unlike the West, the Soviet Union has already been putting into civil defence and defence against aircraft.
  Let me emphasise that I am not arguing that the Soviet Union is about to deploy such a defence or that there is an intention at this time to do so in the future. It is, perhaps, simply a question of it keeping its options open. What is incontrovertible is that the Soviet Union has not accepted for all time the existing relationship between offensive and defensive forces at the nuclear level.
  Mr. Dick Douglas: Will the right hon. Gentleman address his mind to the statement by the President of the United States on 23 March 1983, that if research went ahead and reached fruition the United States would be willing to share the fruits with the Soviet Union?
  Mr. Younger: Indeed, that is one of the remarks made by the President. However, that is not the subject of our debate, which is on whether it is right, or wrong, for the United Kingdom to participate in the research programme associated with SDI. With great respect to the right hon. Member for Leeds, East, a large part of what he said this afternoon was addressed not precisely to that question, but to the possible results of a complete deployment and development of weapons systems which might or might not result from future research into that sort of technology.
  Mr. James Wallace: The Secretary of State has just repeated the crux of his argument—that today we are dealing purely with the research programme. Does he accept the point made by the Home Secretary, that research programmes tend to take on their own unstoppable momentum? Therefore, is it not appropriate that we should examine the possible consequences of such research programmes?
  Mr. Younger: That is appropriate. There is nothing wrong with looking forward to that, but it is not appropriate to make the assumption that because the research programme has finished and has proved it can do certain things, we can proceed with development and deployment. It has been made clear that not only is that miles off in time, but that it may never happen. In any case, neither we nor the United States would intend to do anything without consultation with allies and negotiations with the Soviet Union. That is a clear dividing line which we must have before us when we consider the big issues which are raised by the whole matter.
  Mr. Healey: Does the right hon. Gentleman not take seriously the statement by both President Reagan and Secretary Weinberger that if they cannot get the Russians to agree to change the ABM treaty they plan to deploy in any case? Does he not take that threat seriously? Is it not inconsistent with the undertaking given to the Prime Minister in December 1984?
  Mr. Younger: I thought that that was fairly well answered in the television programme in which the right hon. Gentleman appeared on Sunday. It was in answer to a question that the President made that remark. He was being asked whether, if the whole thing fell apart and the Russians refused to discuss the matter, he would just roll over on his back and say, "I cannot negotiate further." In any event, the right hon. Gentleman knows very well that that is a well-known debating trick. He is trying to draw

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  a conclusion from asking the old question, "When did you stop beating your wife?" If the President had given another answer he would have gone into any negotiation which might eventually take place, having given away every card in the pack. The right hon. Gentleman knows that and must accept it.
  How then should the West react to the Soviet effort which we, like the right hon. Gentleman, believe is in existence? Should we bury our heads in the sand and pretend that it does not exist?
  Should we at the other extreme decide now to abandon the existing concept of mutual deterrence which, as I have said, has served us well? The answer surely is that we, too, should explore these technologies and that we, too, should address, just as the Russians do, the benefits and the drawbacks of alternative approaches to strategy. That is precisely the approach which the British Government have adopted in addressing the implications of the strategic defence initiative.
  The strategic defence initiative is not a strategy or an operational concept which is about to be implemented. It is a research programme looking at the feasibility of developing cost-effective strategic defences. It is above all a prudent hedge against the substantial Soviet activity which I have just described. It is for that reason that the Government support the SDI research programme. It would be irresponsible to do otherwise.
  As for the outcome of SDI research—an outcome which will not be apparent for many years—neither the United States nor the United Kingdom Government have formed or could form at this stage any judgment. Indeed, it would be premature to do so. We do not know, nor can we know, what sort of results will emerge, or what sort of conclusions might be reached. The United States Government have made it clear that they have no preconceived notions about the defensive options the research may generate and that they would not proceed to development and deployment unless the research were to indicate that defences met strict criteria of survivability and cost-effectiveness. Even then they would do so only after close consutation with their allies and negotiations with the Soviet Union.
  There has already been much debate on both sides of the Atlantic about the possibilities for placing a greater reliance on defensive rather than offensive systems. That debate will certainly continue, and it is right that it should. The issues are of paramount importance. For our part, the Government believe that the current structure of mutual deterrence provides a sound and effective basis for providing that degree of stability in international relations which is an essential prerequisite to continuing peace and security.
  Mr. D. E. Thomas: Will the right hon. Gentleman accept that he is making basic assumption throughout his whole argument that the concept of deterrence is somehow a stable concept? In reality, throughout the development of weapons systems has there not been an in-built tendency to make the systems much more sophisticated? Is riot the latest SDI research programme yet another contribution to the instability of deterrence itself? Is not the combination of a defensive system and an offensive system making invalid the mutual deterrence which he has projected?
  Mr. Younger: I am not sure on which side of the argument the hon. Gentleman is. We are discussing the
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  development of a defensive system and whether that destabilises the balance that we have been used to. The deterrent system that we have been following has secured an acceptable balance for some time. Of course, anyone with such systems will try to modernise them and make them more sophisticated. The question is, do we ignore that and pretend that it does not happen, or do we take our part in it to try to keep the balance of deterrence which is so important?
  Any step towards changing that essential framework should be taken only after all the implications have been fully thought through and carefully weighed. My right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs outlined in his lecture to the Royal United Services Institute last year the issues which need to be addressed.
  The Government's approach continues to be guided by the four points which were agreed by the President and the Prime Minister at their meeting at Camp David in December 1984 to which the right hon. Gentleman referred. First, the United States and Western aim is not to achieve superiority, but to maintain balance, taking account of Soviet developments. Secondly, SDI-related deployment would, in view of treaty obligations, have to be a matter for negotiation. Thirdly, the aim is to enhance, not to undermine, deterrence. Lastly, East-West negotiation should aim to achieve security with reduced levels of offensive systems on both sides.
  Mrs. Ann Clwyd: The right hon. Gentleman has stressed the defensive nature of the SDI. Has he read the report by R and D Associates of Los Angeles, which is an influential think tank on defence matters? It made the point that laser weapons being developed as part of the SDI are more likely to be used to incinerate enemy cities than to defend cities in the United States.
  Mr. Younger: The hon. Lady will perhaps read in Hansard that her right hon. Friend mentioned that. The only point I make is that presumably that might be examined. The question is not whether that happens, but whether we have any control over it. That is the key point.
  From the four points that I have outlined it will be seen that the Government attach great weight to the arms control implications of strategic research and possible deployments on both sides. Whatever the eventual outcome of such research, it is clear that, for the foreseeable future, Western security will depend upon the maintenance of nuclear deterrent forces. The immediate task, therefore, is to try to get reductions in the levels of these forces while maintaining strategic stability. That is the Western aim at the negotiations in Geneva.
  The Soviet Union, however, continues to seek to hold agreement in this central area of strategic reductions hostage to a ban on the SDI, or a ban on space strike arms, as it terms it. The Soviet Union has mounted a major campaign to try to cast doubt on the motivation behind the SDI, notwithstanding its own research activities in related fields, and to foster alarm in the West about the consequences of pursuing it. We have seen these scare tactics before, over cruise missiles prior to their deployment in 1983. We have seen the benefits which a firm response can bring. We will continue to take a more balanced view, and will encourage the Soviet Union to do the same.

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  Research work on ballistic missile defence will continue on both sides as it has since the 1960s. Nothing that we say today will alter that. There is no reason why this work has to be a stumbling block to arms control agreements if both sides do not wish it to be so. The United States has made it clear that the SDI research programme will be conducted in full conformity with the provisions of the anti-ballistic missile treaty. The United States has also made it clear that if SDI research yields positive results it would, after consulting the allies, consult and negotiate with the Soviet Union, in accordance with the terms of the ABM treaty, on how deterrence could be enhanced through a greater reliance by both sides on defensive systems.
  If the Soviet Government want more certainty before committing themselves to arms reductions, they should take up the United States' invitation to discuss in the Geneva negotiations the relationship of offensive and defensive systems. In this way, each side could establish sufficient confidence in each other's intentions and in the framework of their security relationship to enable mutual reductions to be made in their massive strategic arsenals. The right way forward is through such discussions, but so far the Soviet Government have refused to go down this path.
  It is within the framework of the four points, including our clear commitment to strategic stability and to arms control, that the British Government have viewed the question of participation in SDI research. As I have pointed out, this research, on both sides, covers technologies of relevance not just to ballistic missile defence. It embraces technologies which will be widely applicable in the battlefield of the future. Neither the British Government, nor our high technology companies, could afford to stand apart from such research. Nor have they done so. Within our defence research establishments and within other research institutions outside the Government, work has been under way in areas relevant to the SDI because these are areas relevant to our own defence effort and to the civil economy in the future.
  We could have chosen as a Government to stand aside altogether from the SDI. Had we done so, we would have forgone the opportunity of an information exchange with the United States of immense potential benefit to our future defence programme. We could have abandoned the approach of Anglo-American defence co-operation which, under successive Governments, has served us so well. We could not, of course, have prevented British companies or universities from participating in the SDI if they had wished to do so, but they would inevitably have had to do so solely on United States' terms.
  Instead, we have chosen the path of regulating and formalising our participation in a way which will provide a substantial opportunity for British companies and institutions to compete on equal terms with their United States counterparts. This was the approach enshrined in the memorandum of understanding signed by my predecessor, my right hon. Friend the Member for Henley (Mr. Heseltine), and Mr. Caspar Weinberger in December. This memorandum and the detailed agreements under it set out procedures for the participation of British institutions in United States funded work in a way which enables them also to use the fruits of this work for our benefit. It also facilitates a wider information
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  exchange. Of course — and properly — it provides arrangements to safeguard security on both sides where this is necessary. It would be quite wrong and wholly unrealistic to proceed otherwise.
  The United States Administration have emphasised their wish that there should be substantial British participation in United States-funded work. While they can provide no guarantees of the scale of our participation, their commitment is clear. What is now needed is a response for British companies, with the help of the British Government, fully to exploit this opportunity. We for our part have established within the Government an office to support SDI participation. We are anxious to work in partnership with industry and I am delighted that a presentation this week on opportunities for participation was over-subscribed twofold. It is early days in the programme, but some contracts have already been placed, including two in optical computing. Discussions are well advanced on a wide range of further opportunities for early British participation in the programme.
  I maintain that the Government's approach is firmly based on the reality of the present situation—the reality of the need to take account of Soviet actions as well as of Soviet public statements and the reality of the need to take account of technologies which are not only of potential relevance to our future conventional defence effort but open up new possibilities, no more than that, for the relationship between strategic offence and defence in the long term. It is right that we should address those realities properly and fully, and it is right that we should ensure that this country has a research base capable of underpinning both its defence effort and the civil economy of the future.
  It is inevitable, I suppose, that the Opposition should have sought to tackle these issues by focusing in a one-sided and anti-American way on the strategic defence initiative. If we were to follow their path, we should isolate ourselves from reality and weaken our capacity to work towards a safer and more secure world for all—both in the East and in the West. For those reasons, I urge the House most strongly to support the Government's amendment.
  5.24 pm
  Mr. Michael Foot: The Secretary of State for Defence has attempted to reply to the devastating opening speech of my right hon. Friend the Member for Leeds, East (Mr. Healey), but no one hearing both speeches could imagine that he has succeeded. The Secretary of State has not applied his mind to any of the immediate points that my right hon. Friend put to him. He has not attempted to explain why the understanding with the American Government about how British participation is to take place should remain secret. Nor has he explained why so many infringements have been permitted of the original terms agreed between the Prime Minister and the United States President. To the extent that he has sought to do so, it has been by repudiating the words of the United States President, who has said on a number of occasions, as have many of his supporters, that he intends to go ahead with the programme in any event.
  If the claims for the strategic defence initiative programme were fundamentally correct, there would be a case for that claim, but the British Government clearly do not accept that. It seems that they still retain some fondness for the Foreign Secretary's criticisms of the original proposal. In this context, it would have been

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  proper for the Foreign Secretary himself to reply to the debate, just as the Government should properly have provided the time for this debate and for the Foreign Secretary to deal with the profound issues that he has emphasised. If the Foreign Secretary's criticism—it is no use trying to pretend that it was not criticism—of, for example, the impossibility of making a distinction between research and development because if the research went ahead the pressure for development would become overwhelming was a substantial criticism, it remains so today.
  The Government have not made the slightest effort to discuss in the House or in the country the serious arguments made not just by the Opposition but by the Foreign Secretary himself. That speech by the Foreign Secretary was widely regarded as a most valuable contribution to the debate. I wonder whether that debate was transferred to the Cabinet or whether it followed the course so frequently adopted by the present Administration whereby major issues which should be debated in Cabinet are hurried through, hushed up or pushed into secret agreements so that debate in Cabinet and in the House is prevented.
  The whole way in which the Government have dealt with these matters exposes their failure to discuss the issues in the country. At times, the Secretary of State for Defence talks as though the strategic defence initiative is just a minor logical development of what has gone before, but everyone knows that it is something quite different. The American President and Defence Secretary have presented it as something quite different. That being so, the whole matter should have been debated in the House. The only contribution that the Secretary of State for Defence has made will be to ensure that the discussion will proceed on very many future occasions.
  The Secretary of State for Defence talks about reality and the way in which the Opposition approach these matters. I wish to make only a short speech, but I should like to quote at some length the comments that have been made about this, brought up to date not by the Opposition —although they vindicate all that my right hon. Friend the Member for Leeds, East has said — but by Lord Zuckerman, chief scientific adviser to the British Government for several years and a man whose integrity, intelligence and copious knowledge of these matters no one has ever dared to question. He probably knows more about combined military, defence and scientific implications than anyone else on the face of the planet. He has always tried to give his views as clearly and openly as he as he can. He describes the reality of which the right hon. Gentleman spoke somewhat differently.
  Lord Zuckerman has described how many of these matters featured in the debates that took place before the signature of the ABM treaty in 1972. One reason why Professor Zuckerman is so worried is that what is happening will destroy that treaty. Very few treaties prevent the world from going ahead full speed in the nuclear arms race. He is worried that the ABM treaty will be destroyed just as some of those treaties, such as the nonproliferation treaty or the comprehensive test ban treaty, are also in jeopardy. The American Government are injuring and tearing up the ABM treaty, and the British Government are helping them. All the right hon. Gentleman's pious words about his desire to sustain that treaty are disproved by the reality of what has happened.
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  What happened in 1972? They had a discussion about defensive systems. That is why they came to the ABM treaty and why it was so important. That process is described by Professor Zuckerman in a recent article. He wrote:
  "The result was the ABM Treaty of 1972, a treaty that limited ABM deployment to two sites only—later changed to one—in each country. The treaty did not bar development work that improved the radars, computers, and defensive missiles deployed within the two sites, but specifically prohibited the development of any type of space-based ABM system. Stability was then the order of the political day."
  It is that stability that is now being threatened and broken by the course recommended by the American Administration, which, tragically, is approved of by the British Government.
  Professor Zuckerman examined the arguments. The main argument that has been put today, and which is incorporated in the Government amendment, is that the Russians have been doing it anyhow, so we should do it. If that were true in the precise terms in which they say it, it would be a very powerful argument. I have not the slightest doubt that the Government will rely on it to the maximum. That is why Professor Zuckerman, who knows a good deal more about these issues than the Government, has dealt with the matter. He says:
  "One major justification continues to be heard: that the Russians are engaged on work that corresponds to different elements of the SDI program, and that in many ways they are ahead of the United States. We have also been told that some Russian actions have already breached the terms of the 1972 ABM Treaty. Specific violations are spelled out in impressive brochures.
  The Russians counter by pointing to American actions which in their view are breaches of the treaty. They have even offered to suspend work on the much spoken of, and highly vulnerable, vast phased-array radar system which they are building at Krasnoyarsk if the United States abandons its program to modernize the radar complexes which it has at Fylingdales in the United Kingdom and Thule in Greenland. Their spokesman argue that these modernization plans, and particularly the rebuilding of Fylingdales as what is rumored to be a 360 degree phased-array radar complex, is far more questionable than what the USSR is doing at Krasnoyarsk."
  This is Professor Zuckerman examining the facts—the realities to which the right hon. Gentleman referred. He continues:
  "A further accusation by the administration is that the USSR has committed a far greater investment of plant space, capital, and manpower to advanced BMD technologies than the US has. This extravagant claim is not borne out by a CIA document about Soviet efforts which was presented to the Armed Services Committee of the Senate on June 26, 1985. Indeed, the document expresses doubt about the applicability of even a network of Krasnoyarsk systems— regarded as the most serious breach of the 1972 treaty — for widespread ABM deployment. Dr. Garwin, in a follow-up to testimony presented to a congressional study group on October 10, 1985, has also pointed out that the better part of the large Soviet program on strategic defense is devoted to the upgrading of its anti-aircraft defense system."
  This is not a judgment given by a partial mind. It is given by Professor Zuckerman, and is concerned with developments that have already taken place. Of course he is horrified at the possibility that we shall see destroyed one of the very few treaties that works — the ABM treaty. The right hon. Gentleman said that he wants to preserve it. Professor Zuckerman continues:
  "It was therefore unfortunate that immediately before the Geneva summit, Robert McFarlane, then the head of the National Security Council, declared that no aspect of the development of space-based BMD components is prohibited by the 1972 ABM Treaty, and that what was intended about testing and

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  development merely implied a shift from the technology that was available at the beginning of the 1970s to what can be undertaken today."
  What Professor Zuckerman underlines most of all in his article—indeed, it is the conclusion of his article—is that it is absurd, it is highly dangerous, for Britain, the United States and other Western countries to weaken the 1972 agreement, and to make it capable of more flexible interpretation. The amendment puts exactly such an interpretation on the treaty. Professor Zuckerman accuses the American Administration of weakening enormously the way in which the ABM treaty is applied and can be applied. If the SDI programme goes ahead, the ABM treaty will be torn up altogether.
  This is the situation at which we have arrived. Professor Zuckerman concludes his article with some very serious words. There have not been so many treaties that guard against the pace of the nuclear arms race. There have not been so many treaties that have actually worked, but there have been a few and some of them are now threatened. Unless the British Government wake up and do something at the last moment, the comprehensive test ban treaty may go. The non-proliferation treaty is also threatened. The British Government do not appear to have done anything about that. The ABM treaty is now threatened, and the right hon. Gentleman's words will not do anything to protect that treaty, particularly if they conflict with the deeds — and the deeds are the signatures which the British Government put to the secret agreement with the United States. Why did they want the British Government to come along and sign on the dotted line? That has been used by the American Administration to support not only the first next step along the road, but the whole programme that they are seeking to carry through, which would involve the destruction of one of the very few treaties that guard against the renewal of the race in the most intemperate and dangerous manner.
  Mr. Younger: Does the right hon. Gentleman's case not completely collapse when one recognises that the ABM treaty clearly and specifically and in so many words makes it clear that research is perfectly compatible with full adherence to that treaty?
  Mr. Foot: The right hon. Gentleman should study what Professor Zuckerman has said. His advice is available to the Government—
  Mr. Wilkinson: Read the treaty.
  Mr. Foot: I will read the treaty. I will also read Professor Zuckerman's comment on this aspect of the treaty. I know that Conservative Members do not want to hear it. Here is the point about whether the treaty has been broken:
  "Adhering to the strictest interpretation of that treaty has therefore become a vital consideration for all of us—not some so-called liberal intepretation of the way its terms were drafted, however legally argued, not some new version, as Gerard Smith has put it, but the treaty in the sense in which it was negotiated by the two sides. Were some demonstration test of a novel BMD component by either side to result in a unilateral breach, it would be but a short step to the abrogation of the few other treaties that have been so painfully negotiated in order to try to stem the spread of nuclear weapons."
  The accusation that the Government are engaged in a breach of the 1972 treaty comes not only from the Opposition but also from Professor Zuckerman, and it is
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  backed by supporting evidence that is available. It is an outrage of the first order that at such a critical moment in the world's history the British Government are more interested in money than in how new treaties are to be made. Money is the only thing that counts, and the Government are more interested in making a deal than in achieving a proper supranational agreement between nations that will stop the nuclear arms race altogether. The secret understanding that the Government have made—which will eventually be dragged out into the light of day —will not assist in obtaining a proper agreement. It is a dangerous and wicked diversion that will be exposed in the end.
  5.41 pm
  Mr. Ian Lloyd: The right hon. Member for Blaenau Gwent (Mr. Foot) in a sense demeaned himself by suggesting that the Government have gone down this path solely because they are interested in money. That lowered the level of the debate to a deplorable standard.
  This is an issue of the utmost importance, and there are sound and considerable reasons why a view may be taken on whether the right hon. Gentleman's argument is right or wrong. However, I am sure that money is not one of the reasons.
  In that context, the Marshall Institute of the United States—a very respectable and independent organisation —in response to the question, "Does SDI violate the ABM Treaty?"
  said:
  "SDI is a research program whose stated goal is research on ABM defenses. However, the ABM Treaty does not limit goals. It only limits certain activities. The Department of Defense experiment that successfully demonstrated the 'smart bullet' concept at Kwajalein last June was in accord with the ABM Treaty because the Treaty allows ABM tests from areas specified as missile test ranges and so designated by the parties. (Article III.) The United States has designated Kwajalein as a missile test range."
  The Marshall Institute concludes—this is relevant to the argument of the right hon. Member for Blaenau Gwent:
  "We may bump up against the Treaty in three or four years —if, for example, we begin to test space-based components. But for the next several years there is no conflict between SDI and the ABM Treaty. The Soviet 'Star Wars' program will also bump up against the ABM Treaty soon. Some experts say it has already done so."
  That is the answer to the right hon. Member for Blaenau Gwent.
  There is an exception to almost every rule in life, and on this occasion I am happy to be able to say that I welcome the Leader of the Opposition's choice of subject for debate. Instead of the usual "Who done what and when" saga, we have an opportunity—alas, all too brief —to debate what is to my mind the most important decision facing the West today. Indeed, it faces both super-powers, because I also take the view that a fundamental Western interest is the survival of the Russian people as a whole long enough for them to understand, evaluate and eventually escape from the yoke of their self-imposed tyranny. That is in the interests of the civilised world.
  The perspective of this decision on SDI on both sides extends well into the next century and clearly embraces that possibility. Our purpose is not merely the survival, but ultimately the legitimate enlargement, of the free world by the voluntary actions of convinced peoples.
  The decision is not ours to make. It has been made by the United States, and inevitably our decision is merely

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  one of participation. But it is important that both should be right and fully justified. Both are decisions not only of greater importance but also of greater complexity than any which this House has addressed for many years. It is quite ludicrous that we should devote a mere three hours to a subject that could well justify a two-day debate. Once again our priorities reflect the lamentable unwillingness of this House to involve itself in scientific and technological decisions of great moment, partly because we do not understand them, and partly because we are so badly briefed.
  Virtually all the briefing of any weight or consequence is, alas, American. There has been much discussion, but most of that—until General Abrahamson arrived in the United Kingdom this weekend — has been in the technical press. I have with me—it is a document that I commend to the House as an outstanding example of technical briefing— the report on anti-satellite weapons and counter-measures and arms control prepared for the United States Congress by the OTA. It is both a formidable and formidably important analysis, and there is one conclusion to which I draw the attention of the House.
  After examining the seven major policy options—not just the one to which the right hon. Member for Blaenau Gwent referred—the OTA concluded:
  "The opportunities and risks that might result from developing or not developing ASAT weapons or from pursuing or not pursuing ASAT arms control cannot be simply stated … the choices will require a delicate balancing of strategic economic and political interests. Reasonable persons can and will disagree as to the most appropriate nature of this balance."
  That is a central conclusion to this debate. I support the objective and the programme, but I have serious reservations, some of them technical and some political.
  My technical reservations are based fundamentally on what are known as the Parnas memoranda. Professor Parnas, who resigned from the SDI software panel, has in a series of formidably powerful papers argued that neither the software nor the hardware will prove sufficiently powerful, reliable or effective. His case is that the goal is unattainable.
  I have seen no really convincing or persuasive reply to those memoranda. I should like to see such a reply, because nothing is more damaging to the reputation of science or technology, be it in the military or any other sphere, than attaching to it a series of expectations that are thought to be wildly unrealistic. We should reflect for a moment on what the computer system has to do.
  Mr. Dalyell: A considered reply to the Parnas memoranda ought to be placed by Defence Ministers in the Library of the House within a month if there is to be a sensible discussion of this issue.
  Mr. Lloyd: I accept much of what the hon. Gentleman says. A considered reply is certainly needed, as is a full debate. The discussion is too important to be glossed over. I have not yet seen a reply. There are others who believe that it exists. If it does, we should have it so that we can argue the case.
  There are also a number of other quite fundamantal matters about which reasonable persons can and will disagree. I want to concentrate on four. The first is the potential of the technology. The second is the character of what is today called C3I— command, communication control and intelligence. The third is the 100 per cent. criterion —whether it should be 100 per cent. successful if it is worth doing. The fourth is the spin-off justification.
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  I am powerfully persuaded by the documentation that I have seen — especially that of the OTA — that the technology has advanced to the point where the President is justified in attempting an ordered retreat from the "MAD" scenario — mutual assured destruction. The acronym is most appropriate, and the retreat if successful would be a triumph for the human race. However, I am convinced that even if a 100 per cent. layered defence proves finally to be unattainable, it is perhaps worth spending $60 billion to $ 100 billion to ensure that nine tenths of the human race survive the onslaught of a nuclear catastrophe.
  My concern does not end there. The decision can never be left even to a 100 per cent. perfect computer system, however much it may depend on both. In this context we have most disturbing evidence from no less a person than Richard Beal, who until his death in 1984 was the senior director for crisis management systems in the White House.
  At the Harvard conference on this subject, Mr. Beal made the following revealing reservations:
  "We have very few analytic tools for the very high-level people. There are at most 20 people in the whole of the USA who can understand and cope with the complex decision systems in crisis management … I would describe crisis-decision making as organised anarchy … in a crisis, your tools become unclear to you, their uses become unclear and you apply them inappropriately. The crisis decision-maker can never say 'keep your eye on the meatball' because he doesn't know what the meatball is. My proposition to you is that, in all probability, whether it is the Secretary for Defense or the Secretary of State … he's wrong … you have to operate on the premise that when you are in a crisis decision, he is likely to be wrong."
  Mr. Beal goes on to say that when the crisis is nuclear
  "All the factors are a quantum jump. The magnitude of the data categories you have to deal with just gets staggering."
  That is a profoundly disturbing commentary, but it is the heart of the system, and the situation is not very reassuring. Will we solve this problem by spending $60 billion on SDI, or whatever it takes? I think not. Other solutions are also required and will have to be sought. Without those solutions not even a 100 per cent. effective anti-ballistic missile system will guarantee the survival of our society or civilisation.
  Therefore, I am not confident that a 100 per cent. defence is within sight. The only thing that will offer that is a sane world in which the pursuit of truth is given priority over the pursuit of power. That remains a distant goal. Is it worth pursuing 90 per cent.? The answer to that must, I think, be yes, or if, as a result of any serious collapse of stability or judgment, the system ever had to be used, that 10 per cent. would mean the difference between the collapse and survival of our civilisation. There is no high enough insurance premium that we can pay to achieve that objective. Moreover, I accept the powerful logic of the argument that no super-power would launch a pre-emptive strike in the certain knowledge that 90 per cent. of its missiles would not reach its targets.
  Finally we come to the spin-off argument, the main justification so far for British participation. In my judgment, this has a limited validity — there will undoubtedly be a spin-off, but it is uncertain and capricious. The spin-off from our own massive defence research and development is lamentably small, however significant it may be in relation to the total expenditure involved. I see no reason to expect that it will be significantly greater with SDI.

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  Therefore, we must base our decision to participate on a much more secure basis—a profound confidence that the decision of the United States Government is soundly based— but we cannot neglect what we know of similar work in the Soviet Union. Everything that I have read reinforces my opinion that what is happening in this sector in the Soviet Union cannot be neglected or ignored by any reasonably objective person. If there is to be an option, we would prefer that option to be in the hands of the saner, more responsible half of the world. Even if that is not wholly successful, a limited success will increase the effectiveness of the West's defence, re-arm democracy and reduce our vulnerability to the pre-emptive strike. The option, the window of opportunity, will not remain open indefinitely, and we should seize it with both hands.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. This is a short debate and many right hon. and hon. Members are seeking to catch my eye. Brief speeches would be greatly appreciated.
  5.53 pm
  Mr. James Wallace: Like the hon. Member for Havant (Mr. Lloyd), I welcome the opportunity presented by this debate. Up the corridor in the other place, there are many more opportunities to discuss this matter, often at the instigation of my noble Friends. I do not mean to criticise the Labour party when I say that I regret the timing of the debate, for we do not have an opportunity because of the absence of the Foreign Secretary, to hear him speak. We would have looked forward, had he been present, to hearing his critique of the SDI.
  I do not wish to devote too much time to the technical difficulties or even the impossibilities of the project to which the hon. Member for Havant has referred. Nobody seriously talks about the possibility of a shield that would be 100 per cent. effective. However, I find talk in terms of 85 to 90 per cent. efficiency worrying. People seem to think of 85 per cent. success as being an achievement, and become blasé about the fact that one bomb, let alone 1 per cent. of 15 per cent., would devastate our civilisation.
  Many people in academic and scientific life have fundamental doubts about the feasibility of producing a successful anti-ballistic defence on the scale imagined. Not only are there feasibility problems, as the hon. Member for Linlithgow (Mr. Dalyell) has pointed out, but there is the unique problem that SDI is incapable of being tested. For many people in academic and scientific life, an ethical problem is posed, if they use research funds to pursue an object that, in all honesty and good faith, they believe to be unattainable. It is also a moral challenge to us if such vast resources are to be channelled into chasing what could turn out to be an illusion, when so many earthly problems could be alleviated by spending only a small fraction of the $26 billion earmarked for this research.
  What alarmed me most about the response to the amendment moved by the Secretary of State for Defence was the way that he boxed in the issue to purely a research project. We cannot look at this research in a vacuum. It proceeds inevitably against a political background and
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  inevitably it will influence the political environment. It is important that we address some of the problems of political strategy now.
  In my intervention in the speech of the Minister, I quoted the words of the Foreign and Commonwealth Secretary, which I shall repeat. In his March speech on the SDI he said:
  "The history of weapons development and the strategic balance shows only too clearly that research into new weapons and study of their strategic implementations, must go hand in hand. Otherwise, research may acquire an unstoppable momentum of its own, even though the case for stopping may strengthen with the passage of years. Prevention may be better than later attempts at a cure."
  Lord Zuckerman has already been prayed in aid by the right hon. Member for Blaenau Gwent (Mr. Foot). In a debate in the other place Lord Zuckerman said:
  "We must remember that the nuclear arms race is, and always has been, a race in R & D. The technological people who work in weapons laboratories … are not going to slow it down. The race can be slowed down and monitored only by political decision." — [Official Report, House of Lords, 30 January 1985; Vol. 459, c. 697.]
  That is why it is important to address, as the right hon. Member for Leeds, East (Mr. Healey) did, the implications of this research project.
  If we proceed with research and go on to develop and deploy SDI, it could have a destabilising effect, and could cause an effective barrier to arms control. Proponents of the system have argued that the West must deploy SDI research because equivalent Soviet research is going on apace. That point has already been made today. However, if the argument is that SDI will enhance stability and deterrence, what is wrong with the USSR unilaterally deploying such a defence shield? We know the answer because we had it from the hon. Member for Havant. He said that the Russians might use the security of the shield to hide behind and launch a first strike attack on the West.
  It is said that the West would not use that advantage if it deployed SDI. That point has been reinforced by the agreement between the Prime Minister and President Reagan at Camp David, particularly in that part which said:
  "The United States and the Western aim is not to achieve superiority but to maintain balance, taking account of Soviet developments."
  Some scepticism has been expressed on this side of the Atlantic and in the House as to how genuine an expression of intention that is, but what we think is irrelevant. The critical issue is the perception of the Soviet Union. If it thinks, as it appears to do, that we would hide behind the shield and launch a first strike, and that the United States is trying to re-establish the power that it had when it had a monopoly of the atom bomb, almost inevitably it will make a response.
  At the very worst the Soviet Union could respond by trying to make a pre-emtive strike in anticipation of a possible deployment, but more likely it would seek ways of countering the perceived threat. The Russians could seek to deploy a similar space defence system, although I doubt whether the Russian economy could withstand the enormous cost involved in that. More likely, they would try to defeat the objective of strategic defence by using technical means such as those already referred to by the right hon. Member for Leeds, East in reducing the boost phase in a missile launch, developing new kinds of decoy missiles or developing a means of taking out some of the shields' space installations. Perhaps most obviously of all,

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  they could increase their missiles to saturation point to ensure that a good number would successfully penetrate space defences — a response which also has the attraction of being cheaper than the parallel defence initiative and which would cost the United States more to keep up.
  Dr. Robert Bowman of the Institute for Space and Security Studies, writing of his experiences when he was in charge of the Defence Advanced Research Projects Agency in the 1970s, said:
  "Every time we designed a dollar's worth of defence, we found it could be neutralised with a nickel's worth of offence."
  As the Secretary of State said, one of the criteria for judging the success of SDI will be its cost-effectiveness. If that is one of the tests, it will have a difficult job in passing that test. It is largely accepted that it is cheaper to deploy missiles of offence rather than meet the enormous costs involved in this defence inititiative.
  In the meantime, what incentive is there for the Soviet team in Geneva to negotiate deep cuts in strategic weapons if they fear that at some stage in the future they will have to build them up as a possible means of overcoming or getting round an American space shield? Supporters of the SDI project claim, with some justification, that it was the research programme which brought the Soviet negotiators back to Geneva. It would be a tragic waste of an opportunity to find an arms control agreement if an unwillingness to make any significant move on SDI became the rock on which the talks foundered. I agree with Professor Laurie Freedman that it
  "would be easier to get Soviet agreement on a straightforward arms reduction than to the construction of a complicated new balance between offensive and defensive systems."
  Opportunities are available to us today for successful arms reduction talks which could well be imperilled if there is no significant move on SDI.
  Coming now to British participation in the project, I accept that there are great fears that we shall lose some of our unique advantage in computer technology. An article in this week's issue of Jane's Defence Weekly by Mr. Paul Walton must give us some concern about restrictions which could be imposed on possible further developments in research projects in Britain if they were linked with SDI. There has been no great evidence of any important civil spin-offs. We all fear—Opposition Members, anyway—a misuse of resources, both financial and intellectual, at a time when we should be crying out for civil research and development to find a new base on which we can recreate our manufacturing industry and also, in the military field, to develop emerging technologies as a means of enhancing conventional defences in Europe.
  I also complain of the Government's attitude vis-à-vis the United States. We are becoming increasingly tired of a number of events which suggest that they adopt a "me, too" attitude — that what is good for America is inevitably good for Britain, with no critical analysis of the issues involved. It is not even that we are being dragged along on the United States' coat tails. Rather it appears that from time to time the Prime Minister is running to catch on to them. It is not anti-American to say that we have had enough of it.
  In the context of SDI, one can legitimately ask what it offers Britain. If we believe, as my party does, that we should be building up the European pillar of NATO, a United States oriented project offers us little or nothing. It could weaken NATO. We have already seen that our
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  Prime Minister has rushed into an agreement while some of our European NATO allies are hesitating more. If the stage of possible deployment is reached, that could put even further strain on the NATO Alliance. As the Foreign Secretary said last March,
  "how would protection be extended against the non-ballistic nuclear threat, the threat posed by aircraft or cruise missiles, battlefield nuclear weapons or, in the last resort, by covert action?"
  How would it give protection to the very threats to which western Europe is most exposed?
  If Britain has a role to play in all this, it should not be as the hanger-on trying to catch a few crumbs from the rich man's table, but rather as an old and candid ally of the United States, pointing out the potential dangers of the path that it is going down. That is an opportunity that we should be taking, not waiting for the end of a research phase when, as I have said before, the momentum might have become unstoppable.
  Mr. Younger: Before the hon. Gentleman sits down, will he do the House the honour of making it clear whether he, the Liberal party and the SDP are for or against British participation in the SDI research programme?
  Mr. Wallace: The right hon. Gentleman pre-empted my final sentence. For the reasons that I have given, my right hon. and hon. Friends will support the motion tonight and show our objection to the strategic defence initiative.
  6.5 pm
  Sir Patrick Wall: My right hon. Friend the Secretary of State said that we are debating British cooperation in SDI research, and that is what I intend to do. I shall not make use of highly selective quotations as produced, by the Opposition. However, I understand that the Federal Republic of Germany is about to follow our example by signing an official agreement, so we are riot alone.
  I want to bring the House back to what is happening. First, what is the SDI? It is basically a non-nuclear form of defence against ballistic missiles. As has been said, it is a research programme. Surely a non-nuclear defence programme should be supported by the Opposition, the Left and CND, but, unfortunately, it is not supported by any of them.
  The hon. Member for Orkney and Shetland (Mr. Wallace) virtually asked whether it would work. During recent discussions in America I found that people who believe in SDI say that it will work and those who do riot believe in it and think that it is a bad idea say that it will not work. If the Americans can put a man on the moon they can achieve what they want in SDI, and in a much shorter time than my right hon. Friend seems to think. I have heard four or five years suggested by some experts.
  How is the research proceeding? This is important. First, there must be surveillance satellites to have a look at the whole picture and there is no paticular difficulty in that. Secondly, there is the boost phase lasting about two to five minutes when the maximum heat is generated. There, the research is on chemical lasers and electromagnetic rail guns from satellites. Thirdly, there is the post-boost stage, lasting seven to 10 minutes. That is when the boosters fall away and the 10—or fewer—MIRVs are deployed together with the decoys, possibly up to 100. At that time the ballistic missile is about 125 miles up. Research there is concentrating on pop-up X-ray laser

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  missiles from submarines. The right hon. Member for Leeds, East (Mr. Healey) is right to say that that is the only nuclear aspect. The boost for this missile, about 125 miles up, is a small nuclear generator which produces the laser. That is the only nuclear part of the programme.
  Fourthly, there is the mid-course phase, which lasts 20 to 26 minutes, and experiments are taking place on ground-based lasers or particle beams reflecting from mirrors in satellites. Lastly there is the re-entry, or terminal, phase when the missile is 30 miles up, which will last two to three minutes. The F15 and the "Smart Rock" missile have already been experimented on successfully and experiments on flechettes and particle beam electromagnetic guns are proceeding.
  I have mentioned those experiments because we in Europe, and certainly we in Britain, are ahead of America in many specific issues of that experimentation. For example, we are ahead on electro-optics. We are ahead on some aspects of radar particle beams and lasers and on the reflection from mirrors. On all those issues, Europe, and Britain in particular, is ahead of America. Therefore the Americans want to co-operate with us just as much as we want to co-operate with them. The Americans are spending $3,500 million in the 1986 financial year on the SDI and the Soviet Union is I am told, spending 10 times as much. I remind the House that the Soviet Union started its programme in the late 1960s, so it has a good lead.
  I shall go briefly through some of the arguments. Star wars is nothing to do with SDI. Its about anti-satellite satellites, and there the Soviet Union is well ahead of the West. It has been argued that SDI provides protection for America, not for Europe. An intercontinental ballistic missile fired from central Russia may be targeted on London, Rome or New York—no one knows. If ICBMs are stopped during the boost phase, Europe and America are protected. The experts have informed me that this system is designed to bring down long-range rockets but that short-range rockets are easier to bring down, for various technical reasons. This means that the terminal phase would have to take place in Europe because short-range rockets would be fired against Europe.
  It has been argued that the SDI is destabilising. The USSR has been experimenting since 1966 on forms of the SDI. What would happen if the USSR achieved a perfect defence system and the West did not? The West would be open to nuclear blackmail to which it would have no answer. That point has not been brought out in the debate. The USSR could have achieved a perfect defence system before America but, now that America has woken up and is doing something, she will get there first. She deserves our generous co-operation. If the SDI strengthens the deterrent in America and Europe, I do not see how it can be destabilising. The Soviet Union is experimenting with anti-satellite systems and has 10,000 surface-to-air missiles. Its air defence system is stronger than any other country's. It has been argued that the SDI is decoupling. If it strengthens both America and Europe, it cannot be decoupling. The SDI would be de-coupling, and therefore be the end of both of us, only if the USSR got there first.
  The hon. Member for Orkney and Shetland referred to 100 per cent. defence. The experts have told me that it is highly unlikely that 100 per cent. protection will ever be achieved. It is also highly unnecessary. A 50 or 60 per cent. defence capability is enough. A country that knows
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  that 50 per cent. of its missiles on each target will be brought down is unlikely to start a nuclear war. Therefore, we do not need a 100 per cent. defence, and no one expects it to reach that level.
  Arms control has been mentioned. Recently, I visited Geneva and talked to various organisations attending the conference on disarmament. I believe that the Soviet Union will make concessions on intermediate nuclear forces to split Europe from the United States. The Soviet Union will then say, "We shall implement these concessions only if the Americans drop the SDI." I believe, following discussions in the Pentagon and on the Hill, that it is impossible for the Americans to drop the SDI. They will go ahead whatever Europe does. There is, therefore, a danger that the Russians will use this blackmail to try to separate the United States from Europe.
  The non-proliferation point has been argued, but the SDI is non-nuclear and that point is not of concern in this debate. I believe, despite what some hon. Members have said, that the technological fallout will be high. I do not believe that any country that wants to be in the first rank in terms of technology can avoid co-operating in this scheme.
  I shall not refer to the 1984 Thatcher-Reagan agreement because reference has already been made to it. All I will say is that the Americans and the Europeans are extremely grateful to my right hon. Friend the Prime Minister for starting off the project with some important rules.
  The strategic defence initiative with a non-nuclear defence will lessen the threat from ballistic missiles and will eventually enable most ballistic nuclear missiles to be abandoned. Surely that is what we want. The main debate during the North Atlantic Assembly's plenary session in October in San Fransisco was on SDI. A composite resolution was tabled which catered for most tastes and therefore allowed people to vote who otherwise might not have done so. The eighth and operative paragraph of the resolution stated:
  "To support US research in SDI consistent with the provisions of the ABM Treaty."
  The vote on the resolution was 91 in favour, 12 against, with 28 abstentions.
  6.14 pm
  Dr. John Gilbert: I congratulate the right hon. Member for Ayr (Mr. Younger) on his first speech as Secretary of State for Defence. Although I do not agree with everything he said, I think that he gave a competent performance.
  I am opposed to development and deployment of SDI, but on grounds that differ greatly from those so far advanced by my colleagues. I should like to make it clear that I reluctantly support the United States' research programme and participation by British companies in that programme, if possible.
  As the debate has shown, there are many concepts of the strategic defence initiative— for example, that it will be available only for silo protection, that it will be available for city protection, and that it will be available for complete protection, which is the 100 per cent. umbrella concept. No one knows what will emerge. The hon. Members for Havant (Mr. Lloyd) and for Beverley (Sir P. Wall) are highly sceptical that there will be anything like a 100 per cent. umbrella.
  Hon. Members have quoted various sources. In addition, distinguished former American Secretaries of

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  Defence such as Mr. Harold Brown and Mr. James Schlesinger take that view. I dissent to some extent from the view put by the hon. Member for Beverley because I believe that anything less than a 100 per cent. shield would be an appalling waste of resources. I would not want 10 per cent. or 15 per cent. of the Russian warhead inventory landing on NATO countries. That would be the end of civilisation as we knew it.
  The 100 per cent. shield would involve not just the SDI but the Americans in reconstituting defences against the manned bomber and creating, ab initio, defences against submarine-launched cruise missiles. That is the element of the threat about which the Americans are most concerned. The cost of creating a threefold defensive system of that sort will be not hundreds of billions of dollars but thousands of billions of dollars—an obscene amount.
  I am unhappy about the Reagan concept of the 100 per cent. shield because it is incompatible with the concept of nuclear deterrence. I believe in that concept. That is not a fashionable view in my party at the moment, but I see no reason to change my mind. If one could create an impermeable shield around the United States there would be considerable implications for Europe's defence.
  It has been said that it might be possible to create an effective defence against incoming ballistic missiles for western Europe. I am even more sceptical about that than I am about the possibilities of creating such a defence for north America. It is far more difficult to defend Europe against the manned bomber or cruise missiles than to defend the United States. A manned bomber that wanted to reach cities in Canada, let alone those in the United States, would have to cover 4,000 miles of tundra. Nothing could be easier to find in thousands of miles of tundra where the only other warm presence is a polar bear and where there is nothing else metallic. Of course, the fog of war in western Europe would be totally different from war in North America. The Secretary of State knows that it is impossible to guarantee the defence of these islands against attack by manned bombers. I am glad that he has acknowledged that.
  It has been argued that SDI is destabilising. I tended towards that view at one time, but I am no longer so sure. It would certainly be true if one envisaged a scenario in which on one day the United States had no effective defence against ballistic missiles and then a short time afterwards had something very close to an effective defence, but that is not likely to develop. As we have heard today, and as everybody knows, Soviet research has been taking place for years in those areas.
  In my judgment, it is almost certain that Soviet capabilities lag behind American capabilities, but their capabilities will develop just as the Americans' have. I find it inconceivable that the Americans will be able to produce an effective system of this sort and the Soviet Union will be left with the cupboard bare. I do not think that the accusation of destabilisation is a very powerful argument to use against the SDI programme.
  I am a strong supporter of the ABM treaty. I am glad that my right hon. and hon. Friends have acknowledged that in the past. I believe that it is the best way to preserve the principle of deterrence. If we lose that treaty, which we might, the principle of deterrence falls by the wayside.
  Several things have been said today about President Reagan's views on these matters. However, we can all take comfort from the fact that President Reagan will not be around for the final decisions, or for more than a couple
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  of years—at least as President. It is certain that funding in the United States will be doubtful after 1988. So far, only one of the likely presidential candidates in 1988 is committed to the programme—Mr. Bush. As far as I know, none of the others has committed himself to the programme, and certainly the members of the Congress with whom I have discussed the matter are extremely reluctant to contemplate the huge amounts of money that would be involved, not only in continuing the research programme but going forward to full development.
  I am glad that my right hon. Friend the Member for Leeds, East (Mr. Healey) has come into the Chamber, because I was about to say something about Krasnoyarsk. I would not want to say anything in his absence and I certainly would not want to give him a seminar on any subject, but the difference between Thule, Fylingdales, and Krasnoyarsk is not necessarily what is contained in the phased array radars but the siting of them. Thule and Fylingdales are on the periphery of the territories they are protecting and Krasnoyarsk is in the middle. That is a considerable strategic difference.
  Mr. Healey: Of course; that is why Krasnoyarsk is a technical breach of the treaty, and I said that. The American argument is that it is intended for the control of a space defence system of the type the Americans are trying to develop. As I understand it, that is not a view held by the British Government, who have refused to endorse the American view. Many people doubt that even the Americans could master the computer technology required for their system, and the idea that the Russians could master it is preposterous.
  Dr. Gilbert: I am glad that once again my right hon. Friend and I are in total agreement. I hope that the new Secretary of State will be more forthcoming on the matter of Krasnoyarsk than his predecessor, despite several appearances to be questioned by the Select Committee on this matter.
  I am totally opposed to the deployment of the SDI. I think that it would be a most appalling waste of resources. It could make the world less safe. Fortunately, I think it is most unlikely to fulfil President Reagan's vision. But I must say that I support American research in that area. In present circumstances, I do not see that the Americans have any choice. It would be nothing but irresponsible of any American Administration to abandon their research while faced with continuing Russian research. It does not matter who started it; the important thing is where we are now.
  If the Americans are to continue with the research, I see no reason why British companies should not share in it. There are obviously problems with respect to property rights and COCOM and they are matters which I hope will be investigated by the Select Committee on defence. It had already started investigating those matters before it was side-tracked by other recent matters. All of those things need to be considered with the greatest concern. We should not support the development of prototypes and every effort must be made to negotiate away any further development in that area. As of now, I must say that I think that the United States has no choice but to proceed with the research.
  6.25 pm
  Mr. John Wilkinson: I am glad that the right hon. Member for Dudley, East (Dr. Gilbert)

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  put the right hon. Member for Leeds, East (Mr. Healey) right on Krasnoyarsk. It was more than a technical error in his speech; it was a fundamental flaw. It was actually even worse, because the Krasnoyarsk radar is situated away from the periphery where it would be well located for battle management were such a capability to be in existence. It is its proximity to potential targets that is so important. A technical breach of the treaty, as the right hon. Member for Leeds, East calls it, is a very serious matter. Building a major facility of this kind in a place which is clearly and demonstrably against article 6 of the ABM treaty is a matter which the United States must take into account when making its assessment of Soviet intentions.
  I think that the more awesome the weapons of massive destruction that are targeted against us, the more important it is for us to seek a defence against them. It is a moral dimension to the argument, something which the President of the United States has always preached. It is not just a technical matter or a matter of keeping up with the Soviet Union. There is a clear will on President Reagan's part, and on the part of his Administration, to try to remove some of the awesome threat that hangs over mankind. The mutual balance of terror has assured the peace, but we cannot be certain that it always will. If by accident or miscalculation the deterrent broke down, I would much rather have 85 or 90 per cent. of defence, or even 50 per cent. as my hon. Friend the Member for Beverley (Sir P. Wall) said is effective, than none at all. No one can convince me that total vulnerability enhances deterrence. The reverse is the case.
  When the manned penetrating bomber was the main instrument of Western deterrence, we thought it appropriate and wholly right, as did the then former Secretary of State for Defence, the right hon. Member for Leeds, East, to seek a measure of defence against it with our fighter forces, and we still do. Yet, strangely, in his speech he criticised the SDI because, he said, it was a means of defending missile silos and launch sites and not populations. The fighter forces, in the days when Fighter Command sought to protect the V bomber bases, did just that. However, if the SDI is fully implemented—that is, if the research programme proves to be successful and the technology is found to be attainable and we can move from point defence systems to a full panoply of multilayered space-based defence systems—we shall have a global system of defence which will protect populations as well as launch sites. It will protect not only our friends and allies, but neutrals and other countries which could be subject to ballistic missile attack. It really is a very exciting prospect.
  As we have devoted so much energy and such huge sums of money to developing offensive systems of mass destruction, would it not be better if, in these days, we used at least part of our intellectual energy and part of our resources to see whether we can use our new technologies to defend populations? We could not achieve 100 per cent. defence, but the SDI will greatly minimise the prospect of pre-emptive attack, which is what we most fear. As my hon. Friend the Member for Beverley made clear, no potential aggressor will ever be certain that he can destroy any particular target. In other words, the capability for retaliation will remain and deterrence will be enhanced.
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  As was so well explained by my hon. Friend, who is so expert on these matters, the alliance has long depended upon the United States' nuclear guarantee. Without it we should have been naked and there might conceivably have been aggression against western Europe as there has been against Afghanistan and other neutral countries bordering the Soviet Union. It is the certainty of United States' nuclear retaliation on our behalf that has preserved the peace.
  If our American friends feel that by invoking a nuclear response in defence of western Europe they are not, as a consequence of that retaliation on our behalf, ensuring the incineration of their cities, the more likely it will be that they will be prepared to go nuclear and defend western Europe. If, however, the United States feels that the destruction of the North American homeland is certain if it invokes nuclear retaliation on our behalf, the United States President would be unlikely to invoke the response that we need. That is why the United States nuclear guarantee is enhanced by the SDI.
  We come to the question whether the SDI will accelerate the arms race and diminish prospects for arms control. It is my belief, as it is the belief of the hon. Member for Orkney and Shetland (Mr. Wallace), that the Soviet economy will be less able than NATO to sustain an arms race, if that is the way it wants to go.
  It is my earnest hope, and that of the United States Administration and my right hon. and hon. Friends in Government, that this prospect is too awesome to contemplate. Rather than proliferate offensive systems and maximise the penetration potential of its strategic weaponry, it would be better for the Soviet Union, in the face of strategic defence, to seek to build down its offensive armoury. There could then be a genuine prospect of a breakthrough in arms control.
  We have been waiting for that breakthrough for a long time, and it has not happened. After NATO's deployment of cruise missiles, the Soviets walked out of the Geneva talks. It was only when the President insisted on going through with SDI, and was not diverted from its purpose, that was it clear to them that they had better come back and talk.
  I wholly applaud the clear exposition of my right hon. Friend the Secretary of State for Defence, who said that there were good grounds for my right hon. Friend the Prime Minister and her Government to support the United States Administration in the endeavour of the SDI. It is an allied endeavour. In the sphere of strategic deterrence, arms control and the balance of power it is a small world. In space terms, this planet is a very small globe. People must learn to think in different terms from those with which they were brought up.
  In last year's debate on the Royal Air Force I urged it to place much greater emphasis on a space-based defence systems than it does at present. The United States Air Force has a space command. We must move in that direction, not to increase the arms race, but to increase our joint defence potential.
  I whole-heartedly support my right hon. Friends' reasoned amendment.
  6.34 pm
  Mr. A. E. P. Duffy: It is important that we understand what has moved the United States to undertake a close examination of the possibilities

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  of strategic defence. We should examine them critically and decide whether we support tonight's motion which challenges them.
  President Reagan's decision seems to have arisen from several factors. The first was the deterioration of the strategic balance that has occurred since the signing of SALT I in 1972. It was then our hope and assumption that, with the stringent limits on defence against ballistic missiles embodied in the treaty, the negotiation of significant reductions in strategic offensive nuclear arms would be possible. That has not proved to be the case.
  The number of warheads on Soviet strategic ballistic missiles today is four times greater than when SALT I was concluded. Furthermore, the Soviet capability to destroy hard targets quickly has increased by a factor of 10. That growth in offensive capabilities is contrary to what the House of Commons expected in 1972.
  At the same time, the Soviets have been pursuing major efforts on the defensive side. Over the past 20 years, they have spent about as much on strategic defence as they have on their massive offensive nuclear build-up. They have deployed extensive air defences and the world's only operational ABM and anti-satellite systems.
  Moreover, the Soviets have for many years devoted extensive resources to investigating many of the same technologies that are now being brought together in the SDI research programme but without the public debate that we are having today.
  The aggregate of Soviet offensive and defensive activities since 1972, some of which are in violation of, or raise troubling questions about, compliance with existing arms control agreements, is persuasive evidence that they did not accept the concept of stable mutual deterrence on which the House believed the ABM treaty to be premised.
  A second factor leading to the SDI was the technological advances which have taken place since 1972. Great strides have been made in effectiveness and cost reductions in many areas relevant to ballistic missile defence, such as microelectronics, data processing and sensors. They may now make possible defensive systems that were beyond the reach of the technology of 15 years ago. Technology is thus opening new possibilities for strategic defence and may offer survivable and cost-effective defensive systems.
  The third factor behind the SDI is the current requirement by the West to undertake a profound reevaluation of the basis of its defence thinking in the nuclear age. Soviet force levels are now superior to those of NATO in each component of the triad on which Western defence policy is based—conventional arms, INF and strategic nuclear arms. The maintenance of stability through arms control and agreement in Geneva has been rendered even more difficult given the assymetries of force structures and levels on both sides.
  When new technologies offer the West a way out from under the shadow of that new threat —one in which deterrence would be based more on the ability to defend rather than to retaliate with predictably tragic devastation —and when it might be possible to offer a better and brighter vision for the future, we have an obligation to search for it. But what if the SDI continues to get in the way of East-West agreement? What if it proves to be destabilising, given the vital importance of strategic balance in maintaining deterrence?
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  What if the SDI leaves western Europe much more exposed militarily, and thus leads to decoupling? What if the SDI becomes politically devisive as the Soviet Union seeks to exploit unease within the Alliance, as she did over the deployment of cruise missiles? What if the SDI induces a Maginot line mentality in space, as the Foreign Secretary has apprehended? What if the SDI gives added impetus to the French Eureka programme? What if the convenient arrival of certain technologies and the prospect of billions of dollars sloshing around in defence procurement have gravely affected our thinking and judgment? Would it not then become a classic case of technology driving policy rather than the other way around?
  That is borne out by the widespread fear that high spending on strategic defence may result in less money being available for conventional forces. Paul Nitze has argued on behalf of the United States that a shift of only 1 per cent. in resources is involved. Does that not give a misleading impression, because the gap between resource allocation and force planning remains ominously wide?
  Only 70 per cent. of NATO force goals are realised in national programmes, yet across the Alliance there are budgetary constraints ahead. The most serious deficiency at present is in sustainability, as the Supreme Allied Commander, General Rogers, has frequently given public utterance to. It is in ordinary bread and butter items, such as ammunition stocks, hardened aircraft shelters, improved reception facilities for reinforcements and so on. Therefore, it is not only the impact of a vast lavishly financed space-based programme on conventional arms programmes that is of concern, but the shift of priority that it may indicate.
  Conventional insufficiency has the most serious implications for the nuclear threshold, as every hon. Member 'knows. Might not the enormous sums that are being allocated to the SDI be better employed to enhance deterrence than to risk undermining it?
  Stripped of technical jargon and sophisticated language, the appeal of the SDI for the layman lies in the possibility that it might at long last enable us to bottle the nuclear genie. To shift from mutually assured destruction to mutually assured security has an irresistable appeal for us all. To achieve even the transitional stage of a mix of offensive and defensive systems with a diminishing nuclear content is an alluring thought. However, doubts and worries are widespread, not only in Europe, but in the United States. Some of the questions raised during the debate may defy answers at present, but they are of such critical importance that they must be faced. We cannot shrug them off as the Secretary of State did today.
  6.42 pm
  Mrs. Anna McCurley: Last autumn I spent some time in the United State and met some scientists, including Dr. Richard Gavin and Dr. Sydney Drell. who were sceptical about the SDI. It was more the technical than the strategic problems which held the attention of the majority.
  We do not know yet whether the SDI will work and whether 15 systems can combine in perfect harmony. The point of the research programme is to find a way in which it can work. It is said that physics may not be without limits, but the ability of human genius to overcome obstacles is so far unlimited, and the will to do something is always important in finding solutions. This massive and

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  imaginative programme needs political will, not carping discouragement or hard judgments based only on speculation.
  The SDI is the challenge of all time. It is an exciting new challenge to render nuclear weapons obsolete, to have defensive defence which kills other weapons but does not destroy civilians and industrial targets as offensive nuclear weapons can, and which poses a probability problem for a hostile power, which could never claim to know that it could achieve its military objectives.
  The SDI is sometimes known as the great experiment. The question whether it will work on a systems level and whether it can work as a strategy is important. Every strategy depends on treaties and co-operation for control, and no system can be 100 per cent. effective. Everything that the hon. Member for Orkney and Shetland (Mr. Wallace) said could happen, might happen, but at present, if deterrence fails, there is nothing to stop USSR missiles from reaching their targets.
  Mutually assured destruction is a precarious balance for the world to operate on, and the number of nuclear weapons has mushroomed dangerously since the war. We must call a halt to that increase and to the intellectual impasse which has been created in its wake. General Abrahamson has said that if only a few nuclear missiles land it is very different from 8,000 landing, and that a defensive deterrent is fail safe, whereas an offensive deterrent is fail deadly. That is the profound difference in concept.
  One of the major objections to the 15 major experiments that are planned is that the programme may violate the ABM treaty signed by the super-powers in 1972. The treaty was an acknowledgement by both sides of the futility of building terminal stage intercept systems to guard against warheads delivered by ballistic missiles. At the time it seemed to be a major step towards stopping the arms race, since the offence would no longer be required to saturate the defence.
  The treaty permitted each side to build defences on a single site. The USSR chose defence around Moscow, and the United States chose defences in North Dakota, which I visited while in the United States. The treaty allows for research into ABM systems, but prohibits the building of new components. Amendments and reviews are permitted under the treaty and the strategic defence initiative. In its present form the SDI is technically compliant. A decision on development will be made by the United States within the confines of the ABM treaty. The Soviets, who have been in this area for many years, seem to be in danger of flouting the treaty, but the United States has offered to share the new technology and monitoring with the Soviets. I believe that the SDI programme has helped to achieve that, and that the peace initiative was prompted by the SDI.
  Finally, the major criticism is: why should Britain wish to protect the United States alone? My hon. Friend the Member for Beverley (Sir P. Wall) gave sound reasons for our participation in the programme, and already the initiative for the defence of European aerospace has been mooted for approval in Europe. It is a valuable consequence of the SDI, and it could also help to overcome the limitations which we might face on the transfer of technology through export controls, despite the memorandum of understanding with the United States. We
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  have been promised a share in the $26 billion, and we should ignore that at our peril as it is a great challenge and stimulus to British technology. If firms can compete and win, it is to our benefit.
  We must go ahead to see whether the system will work. In the fulness of time scientists will make the technology work, but politicians must make the strategy work. It is our only hope of releasing ourselves from the present capricious game of nuclear stockpiling. Britain's involvement is a must, both in the United States system and in a programme for Europe, which would enhance our security in western Europe.
  6.48 pm
  Mr. Gavin Strang: When President Reagan made his televised address on 23 March 1983 it had an enormous impact on the American electorate. It was designed to do so because at that time Americans were becoming increasingly worried about the effect of nuclear war, and increasingly appreciating that the survivors would envy the dead, and that the idea of fighting a nuclear war was unthinkable. Increasing numbers of Americans were supporting the freeze movement. In essence, that address was an excellent piece of political propaganda. It influenced the American electorate to advance the idea that the American Government could develop a system that rendered nuclear weapons obsolete and meant that in future Americans would no longer have to fear the effect of a nuclear attack. The first question that must be asked is whether there is any realistic prospect of achieving a so-called shield that would render the United States invulnerable to nuclear attack. The answer is no.
  A measure of how skilful the propaganda has been is the tendency that exists to forget that we are talking only of long-range ballistic missiles. As my right hon. Friend the Member for Leeds, East (Mr. Healey) said in his opening remarks, that technology has no relevance to cruise missiles. Even if the system were effective in providing the protection that its advocates suggest, would it render long-range ballistic missiles impotent and obsolete? Again, the answer is a categorical no. I do not speak out of arrogance, because of my knowledge on those matters, but on the basis of statements by leading scientists in Britain, Europe and the United States. Those leading scientists are agreed. Professor Jack Ruina, professor of electronic engineering at Massachusetts Institute of Technology, who previously worked for the American Defence Department, stated clearly that the whole idea was absurd. The system cannot achieve the objective laid down by President Reagan.
  Throughout Europe and the United States there is much interest in the money that will be invested in the huge programme. British scientists are interested in the money. I pay tribute to those British scientists who have taken a principled stand and who are not prepared to accept the money or to continue with the research, because they would be a part of the SDI programme. However, many scientists take a different view and would accept the money.
  I am worried about the enormous impact of American defence money on Britain's research and technology base. One reason for Britain's relative industrial decline has been the fact that far too high a proportion— 53 per cent. and rising—of Government-funded research and development is in the military sphere. It is a mistake to increase that percentage even further. I fear the

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  consequences of greater American funding, influence and control over Britain's basic scientific research and development. I cannot believe that that would be in Britain's interest.
  There is much concern about the secrecy aspect and the fact that Americans will impose conditions on the results of the research, thus making it less available to benefit British industry.
  Obviously, results will be achieved from all that money and tremendous advances will be made in scientific and technological work that has been funded by the programme, but will that make nuclear war more or less likely? All the evidence shows that nuclear war would be more likely. Time does not allow me to develop all the arguments to substantiate that statement. However, I have often argued that the whole philosophy of mutually assured destruction is being undermined by the development of new accurate weapons, which are designed to destroy not populations but military installations and command centres. The development of partial protection for missile sites will enhance instability.
  We must recognise the likely Soviet response. If necessary, the Soviets will deploy more offensive weapons and they will develop less vulnerable ballistic missiles by such developments as shortening the boost phase and incorporating more decoys. The Soviet Union and the United States will soon have the capability to destroy satellites and thus attack a defensive system. SDI is a destabilising development.
  I wish to discuss the impact on arms control. I respect the statement of the Secretary of State for Defence. I am sure that he is committed to the 1972 ABM treaty. However, the SDI is not a continuation of research in the United States and the Soviet Union. The SDI is a massive programme with a special goal. It is hard to believe that it will be stopped in the 1990s. There will be too much pressure to go forward. It has already been said that the United States will not give the Soviet Union a veto. Having done all the research and having acquired some capability to provide some protection, there will be enormous pressure to go further and begin deployment.
  Instead of the Government being in the lead in Europe in relation to the SDI, they should be in the lead in getting a positive response from the United States to Mr. Gorbachev's latest proposals, which came out of discussions between the United States Government and the Soviet Government. Those proposals are enormously important. It is sad that notice has not been taken of the significant concessions that Mr. Gorbachev has built into those proposals, which are tailored to objections put forward in the past by the United States and Britain.
  My right hon. Friend the Member for Leeds, East referred to zero option, which is the removal of intermediate range weapons and not only moving SS20s into the Asian sector but destroying them. The Soviet Union accepts that if Britain and France do not modernise, they can keep their nuclear weapons without them being counted in. The extension of the nuclear unilateral moratorium on nuclear tests, the commitment to new verification procedures and the suggestion, I think, that research on SDI will be allowed to go ahead provided that it is no more than that, are important concessions.
  If we are serious about making progress and reducing the threat of nuclear war, instead of going down the road of the SDI we should make the maximum effort to bring maximum pressure to bear on the Soviet and American
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  Governments to negotiate on the basis of the latest proposals, so that we can achieve real reductions in their nuclear arsenals.
  6.56 pm
  Sir Geoffrey Johnson Smith: I support the view of my right hon. Friend the Secretary of State. I congratulate him on making such a fine presentation of the Government's case. I am delighted that a Foreign Office Minister is to sum up, because some of my comments are addressed more to the Foreign Office than to the Ministry of Defence.
  I hope that my right hon. and hon. Friends agree that our support for the Government's position should not stop us expressing concern about the implications of SDI and the need to face the problems arising from those implications. Anxiety has been expressed today and by members of the North Atlantic Assembly whom I met in Brussels during the weekend about whether there will be a genuine two-way transfer of technology, less money for conventional defence, the effects of strategic stability and for Britain, the impact of the extension of strategic defences on the effectiveness of the French and British nuclear deterrent and the defence of western Europe.
  Reports from Geneva suggest that, as a part of the package of disarmement proposals, the United States would agree to remove all its medium-range nuclear weapon systems from Europe and that the Russians would withdraw their SS20s behind the Urals and would not in the initial stages insist on immediate reductions leading to the dismantling of the French and British nuclear forces. However, the understanding is that there would not be any steps taken by the British and the French to modernise their nuclear deterrent forces. For Britain, that means goodbye to the Trident programme, on which work has already begun.
  I recognise that the United States' prime objective in the negotiations is to seek immediate cuts in offensive strategic forces with no restrictions on defensive research. I hope that the British Government will make it clear to our American allies that there can be no question of our deterrent being used as a bargaining chip least of all in the early stages of disarmement negotiations. We shall wish to see firm and verifiable evidence of the Soviet build-down before our nuclear forces can be the subject of negotiation.
  The mind boggles to contemplate the withdrawal of intermediate nuclear forces from Europe after all the fuss of installing cruise and Pershing in western Europe. The Duke of York's experience was nothing on this. The withdrawal of medium-range SS20s behind the Urals does not preclude their redeployment west of the Urals directed at western Europe. Nor should we forget that such an arrangement would leave intact the SS21 missile and the SS23 missile, which has a range of up to 500 km.
  That highlights an anxiety in western Europe, which has been expressed especially in West Germany. It is well known that our conventional forces are insufficiently strong to resist a Soviet conventional attack. At best, they could not prevent conventional Soviet forces from overrunning all of West Germany and extending into the Netherlands. At worst, we would lose such a war, which is one reason why Conservative Members and a few Opposition Members recognise the need for nuclear

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  weapons which, by their presence, would deter an attack. The use of tactical nuclear weapons would stop a conventional attack in its tracks.
  I hope that the Government will continue to make it clear to the United States that, in its desire to achieve a build-down in nuclear strategic weapons on the way to a better balance of offensive and defensive systems, which is what SDI is about, it should be careful not to weaken prematurely the present delicate balance of military power, with its mix of nuclear and conventional forces, which has been the cornerstone of nuclear strategy for the past 30 years. Nor in the negotiations should the United States forget that a nuclear-free Europe would not be a chemical-free Europe. We in Europe have no chemical capability; the Russians have.
  Although I understand why research into SDI must and will continue—there is no way of stopping it and I would not wish to stop it—on our way to a nuclear-free world, I hope that my right hon. Friend the Secretary of State for Defence will do all that he can to minimise the destabilising effects that SDI may have on the defence of western Europe, not least in the context of the Geneva negotiations.
  7.1 pm
  Mr. Denzil Davies: In view of the limitation on time, right hon. and hon. Members will forgive me if I do not deal with all of the points that have been raised by hon. Members on both sides of the House in this short debate.
  The short history of the Government's endorsement of SDI and their over-hasty involvement in its commercial and industrial implementation is shameful and humiliating. Once again, the Government have demonstrated their subservience to American defence and foreign policies and to American commercial and industrial interests. They have acted in a manner that far transcends Britain's proper duties and obligations to a major NATO ally.
  The sorry tale started on 21 December 1984 when the Prime Minister, at Camp David, hitched Britain's tottering and tattered wagon to star wars. As always on such occasions, there were fine words to mask exactly what was being done. The agreement was ridiculously and pompously described as the Camp David accord. Many nice phrases and words such as "research" and "enhanced and extended deterrence" were used—phrases that had hardly been heard before and some of which had not been dreamt of before. But that is the history of the nuclear arms race. The words, phraseology and philosophy—if it can be called that—follow the technological decisions.
  The Secretary of State for Defence talked about the flexible response debates in the 1950s and 1960s. I remind him that there has been no consultation on SDI. No other NATO country was consulted before President Reagan announced the initiative. Indeed, it had not even been thought of in those other countries. To equate the present position, where decisions were taken unilaterally, with what happened in the past is a travesty of the history of that period.
  After the Camp David accord, the message in Washington was clear: Maggie had been squared and the poor old Brits were in. In the New York Times on 16 March 1984, about a speech by the Prime Minister to Congress
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  in February—the House will remember that she told the President that we in Britain thought he was wonderful—a reporter said:
  "Mrs. Thatcher's speech was widely interpreted as offering almost unqualified backing to SDI."
  From then on, with the honourable exception of one speech by the Foreign Secretary—the speech, and the Foreign Secretary, were promptly squashed—no attempt has been made to analyse, debate or confront the enormous military and strategic implications of SDI. All the talk now is about money, contracts and dollars.
  In fairness to him, I should say that the Foreign Secretary tried. On 15 March last year, he produced a courteous but devastating criticism of the strategic defence initiative. He said that research could acquire an unstoppable momentum; it has done so repeatedly throughout the nuclear arms race. He said that political decisions could be pre-empted by technology; they always are. The technology comes first and we sit here and try to rationalise and fit the technology into a political or military strategy. He said that offensive weapons might increase to overwhelm defences; that will certainly happen unless people sit down soon and negotiate a treaty to prevent it. He said that SDI could cause strains within the NATO Alliance.
  However, well before the ink was dry on that speech, a ton of bricks fell on the poor Foreign Secretary's head. It started with The Times on 18 March, which called the speech
  "muddled, mealy-mouthed, luddite and ill-informed."
  It pompously told us of the anger of the inner circle of the American Administration. The Times clearly has a hot line to the White House and the Pentagon. But worse was to follow. The American ambassador called at Carlton gardens and, a few days later, at a conference in London of the loony Right—a conference that was welcomed by the Prime Minister and President Reagan—Mr. Richard Perle, who is I believe a Pentagon apparatchik, made an astonishing attack on the Foreign Secretary of a major NATO ally. He arrogantly said of the speech:
  "Length is no substitute for depth."
  That was that. No member of the Government defended the Foreign Secretary, as far as I am aware. There was no statement from the Prime Minister defending her Foreign Secretary—
  Mr. Healey: She apologised.
  Mr. Davies: She apologised, as my right hon. Friend has said. Indeed, the Foreign Secretary did not defend himself, and has said little, if anything, about SDI ever since. At that point, the humiliation and the capitulation were complete.
  The drama moves to 23 June last year, when the right hon. Member for Henley (Mr. Heseltine) went to the Pentagon. I remind the House that the former Secretary of State for Defence was, at that time, homo Americanus. He had not yet evolved into his new phase of European man. Perhaps there were stirrings deep in the forest. He went to get some contracts from his friend Caspar. His intention was to get £1·5 billion-worth of contracts, but, as we all know, he came back completely empty-handed. No matter. There was no pride left by then and in December the Government rushed to sign with Mr. Weinberger what has been called a memorandum of understanding.
  Mr. Weinberger got almost everything he wanted from that agreement. He got access to British research and

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  technology which, we understand, will probably be classified by the Pentagon and, if it is useful and valuable, it will disappear for ever behind the wall of the star wars programme. In the Pentagon there is a gentleman called Hoppler and he has a list, not a little list, called the military critical technologies list. He classifies whatever he wants to classify and he will classify any research and technology that he needs for star wars.
  Why cannot the memorandum by published? Why can it not be placed in the Library so that we can decide for ourselves whether there is any protection for British intellectual property rights and other rights? Quite apart from classification and far more important, Mr. Weinberger got Britain to become the first country to sign on the dotted line of the star wars programme. No other country has followed Britain's lead, although I understand that the Federal Republic of Germany may sign fairly soon.
  In this debate much has been said about research. It has been said that star wars is all right and is all about research, that in 10 years there may be a problem but everything is all right now and everybody is in favour of research. "Research", as Dylan Thomas might have said, is a comfortable and cosy word. It conjures up nice warm images of slightly dotty chemical teachers and pipettes and bunsen burners and litmus papers being dipped into beakers. I am told that there is no litmus paper at the Lawrence Livermore laboratory in California. I have checked and found that the laboratory carries out laser lethality tests. The researchers fire particle beams which destroy matter itself and they or their cohorts detonate hydrogen bombs or certainly nuclear weapons—six have been detonated already—to experiment with one of the star wars systems. The researchers or their cohorts fire rockets to destroy rockets.
  I accept that it may not be possible to draft a treaty to control fundamental scientific research in this field. I am the first to concede that no treaty could stop the manic outpourings from the mind of Dr. Edward Teller. I wish that that were possible, but it is not. Equations are of no use without technology, and technology is of no use unless it is tested and developed to find out whether it works. Instead of rushing into an endorsement of star wars, the Government and our European allies should have brought pressure upon the Americans to sit down with the Russians to negotiate a treaty to stop the tests, demonstrations and developments. As the Foreign Secretary said, they should be stopped before they gather an unstoppable momentum. With good will and application, it is possible to create by negotiation that kind of treaty, and a start could be made by agreeing to a comprehensive nuclear test ban treaty. That would not stop the star wars programme, but at least it would deal it a heavy blow. The Government do not even want a comprehensive nuclear test ban treaty.
  President Reagan has spoken of the immorality of nuclear weapons, and in that famous speech he said they should be made impotent and obsolete. That was the dream, but it rapidly became a nightmare. SDI has become star wars. To what are the Government committed? Are they committed to the dream? Do they believe that nuclear weapons are immoral? Do the Secretary of State for Defence and the Prime Minister believe that nuclear weapons should be made obsolete and impotent, or are the Government merely going along with the nightmare in order to make a few dollars and a few pounds?
  368
  We have heard little over the past months about the dream or the morality or the necessity to make nuclear weapons obsolete, but we have heard much about contracts and money and dollars. Unless a treaty is negotiated, soon there will be a development on both sides of offensive and defensive systems. The Americans will build their imperfect defence and no doubt the Russians, in their own way, will follow. The Americans will build offensive systems to get around the imperfect. Russian defence and no doubt the Russians will build offensive systems to get around the imperfect American defence. President Reagan's nightmare will become a reality.
  The Government stand condemned because they have abandoned the high road—if they were ever on it—and have taken the low road. They stand condemned because they meekly acquiesced in agreeing to a system and a strategy about which they had no prior notice and no consultation within NATO and with our allies. The Government stand condemned because all they can do now is grub around on their hands and knees on the sidewalk scratching about for a few soiled and tainted greenbacks.
  7.16 pm
  The Minister of State, Foreign and Commonwealth Office (Mr. Tim Renton): In the midst of what is agreed to be an important and serious debate, I was astonished to hear the overblown language of the right hon. Member for Llanelli (Mr. Davies). It is clear that on the Opposition Front Bench we have not one, but two Welsh windbags.
  The right hon. Member for Blaenau Gwent (Mr. Foot) asked about the absence of my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs. I know that he would have liked to take part in this important debate, but he is accompanying Her Majesty the Queen on her state visit to Nepal, and that date was in his diary long before the Labour party decided to have this SDI debate.
  The right hon. Member for Leeds, East (Mr. Healey) implied that three of the four Camp David points agreed in December 1984 between President Reagan and the Prime Minister, which remain the basis of the Government's policy and which have recently been reaffirmed by the State Department, have already been broken. That is not so. The United States research programme and our participation in it is at the heart of the debate. The first Camp David point, which the State Department subsequently reaffirmed, is that the United States and Western aim is not to achieve superiority, but to maintain the balance, taking account of Soviet developments. It underlines the need to continue the research effort in the West in order to match and to hedge against the well-established Soviet programme.
  The Soviet programme is long-standing and extensive. There has been research by the United States over the same period, but it is a simple fact, which the House will recognise, that scientists will continue to investigate new technologies. The human mind cannot be prevented from thinking, inventing, exploring and expanding the potential of the future. Perhaps this potential will never be realised, or perhaps it will be fully implemented to the greater good of the international community, but in any case the process will continue. Surely, in a democratic system like ours, our people and our researchers and scientists cannot be prevented from being involved.
  Mr. Dalyell: Will the hon. Gentleman give way?
  Mr. Renton: No. Another debate is about to begin. It would be the wish of hon. Members on both sides that I should not give way. The only reason why I do not give way is that a Labour-inspired debate is about to begin.
  The technology that we are debating is at the forefront of knowledge. My hon. Friend the Member for Beverley (Sir P. Wall), in his powerful speech, said that the United Kingdom must be involved in this type of technology if it is to remain an advanced industrial nation. We certainly should not underestimate the benefits of such research for contracts and jobs for this country. Two SDI contracts have already been concluded following signature of the memorandum of understanding, and others are nearing signature. I have to tell the right hon. Member for Llanelli that, for reasons of confidentiality, the House will understand why I cannot go into further detail.
  The contract signed by Ferranti, Heriot Watt university and other organisations in the future will undoubtedly foster the prospects of additional jobs in high technology industries. I was surprised and pleased to hear the right hon. Member for Leeds, East say during a television broadcast at the weekend that he would not object to British researchers becoming involved in the US programme. Precisely a year ago my right hon. Friend the Prime Minister expressed the same sentiment, although perhaps more enthusiastically, to the United States Congress. Why, then, does the right hon. Gentleman cavil today at the Government's approach? I realise that a great soul like him—Emerson's words—has simply nothing to do with consistency.
  Mr. Healey: We cannot and should not try to prevent companies or individuals from working in the American programme if they wish to do so. However, I object to the Government encouraging British scientists to leave programmes, such as the Alvey programme, which are vital to our future, to work in American defence industries, where the results of their researches may not be available for commercial use.
  Mr. Renton: That is an area in which the right hon. Gentleman's little knowledge is very dangerous. We are at the beginning of an interesting phase in which involvement in the development of this technology—whether or not it comes to anything beyond the research stage—is important for key British companies. I am grateful for the support of the right hon. Member for Dudley, East (Dr. Gilbert), who is an ex-junior Defence Minister. I wish that he could persuade the ex-Secretary of State to his view.
  The Government's approach is favoured by our allies. I must tell the right hon. Member for Leeds, East and the hon. Member for Orkney and Shetland (Mr. Wallace) that the Germans and the Italians are already well advanced in considering participation. A German team, led by the Economics Minister, was recently in Washington, and they are moving towards a decision. Equally, the French have made it clear that while they do not wish to participate as a Government, private companies are free to do so.
  The hon. Member for Dunfermline, West (Mr. Douglas) asked about technology sharing with the Soviet Union. The Americans have spoken of such collaboration, and President Reagan has envisaged technology being shared at an appropriate stage as offensive forces are reduced. The right hon. Member for Leeds, East dismisses
  370
  that idea as impracticable. He is entitled to his opinion. The President has been steadfast in his view, and, given the choice between the right hon. Gentleman's judgment and belief in the President's sincerity, I know which I would choose. Of course, that stage has not yet arrived, and may not be reached for many years. However, to dismiss it as impracticable is a sad reflection of the traditional ostritch-like tactics of the Opposition.
  The Americans have made an equally far-sighted offer that the two sides join in an open laboratory arrangement and provide information on their research programmes and facilities for mutual benefit. The Russians have not yet responded, but we hope that they will. As many who have spoken in the debate have said, the time is ripe for new initiatives. That approach could lead to a breakthrough on verification—one of the core elements in any successful arms control agreement.
  The hon. Member for Orkney and Shetland said that the SDI could be the rock on which the disarmament talks founder. That is clearly the Soviet position. The USSR says that if the United States does not abandon its research programme it may not agree to cut its nuclear forces. Is that acceptable, or even logical? I believe that it is neither. For years, while research into ballistic missile defence-related technology has been taking place in both countries, neither side has postulated that force reductions were dependent upon stopping such research. The Russians signed and ratified SALT I and the ABM treaties in 1972. In 1979 they welcomed and signed the SALT II agreement. They re-entered negotiations — albeit belatedly—on nuclear forces in the 1980s. Yet during all that time, research continued. Did they, on those grounds, refuse to participate? They did not.
  There can be no reason in principle why the work by both sides, which has been in progress for some time, should suddenly, at the Soviet whim, become a stumbling block to arms control agreements. For its part, the US has made it clear that the SDI research programme will be conducted in full conformity with the provisions of the ABM treaty and other legal obligations.
  I thank my hon. Friend the Member for Havant (Mr. Lloyd) both for his important speech and for his statement —with which I agree—that there is no conflict between the SDI and the ABM treaty, at least for the next few years and while research continues. If the SDI yields positive results, the United States will, after consulting its allies, consult and negotiate with the Soviet Union. Its aim in those exchanges would be to establish how deterrence could be enhanced through a greater reliance by both sides on defensive systems.
  If we are to move towards a mix of offensive and defensive systems, the Americans want any transition to be a co-operative process with the Russians—hence the importance of negotiating about deployments. However, the results of research, and therefore of any such negotiations, may well be many years away. At Geneva, in the meantime, the Americans have already called for bilateral dialogue about the way in which offensive and defensive forces relate. The Russians appear reluctant to take up that offer, but if they seek more clarity about the strategic future that dialogue could help them.
  I stress that the purpose of the Western alliance remains wholly defensive. We have pledged ourselves never to use any weapons other than in response to an attack. Those weapons exist to deter the potential aggressor. Given our overall defensive purpose, the attractions of a world in

  371
  which defences may come to play a greater part in maintaining deterrence are understandable. That point was well and clearly made by my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson). The results of US and Soviet research will not be known for many years. The debate on stategic stability and defence will, meanwhile, continue. We accept and welcome that. There are questions to be asked and, at the appropriate time, to be answered.
  Mr. Gorbachev's recent proposals are disappointing in some areas, because part of his position remains unchanged. However, there may prove to be new and interesting elements, and at least the Soviet leadership may now be prepared to do business at Geneva. That is where its intentions must be tested and its rhetoric converted into concrete results. I shall be going to Geneva next week to address the conference on disarmament. I expect to meet both the US negotiating team and the Soviet representatives. I shall tell them that the Government applaud their efforts and look forward to their success.
  The hon. Member for Orkney and Shetland said that the Liberals would vote against the Government amendment and for the Labour motion. What will the SDP do? Its Members have been conspicuous by their absence. However, the right hon. Member for Plymouth, Devonport (Dr. Owen) said on 12 June:
  "Let us have research and development by all means."—[Official Report, 12 June 1985; Vol. 80 c. 936.]
  It will he interesting to see whether there is a split in the alliance over its defence policy. If so, it will not be the first time, and it will not be the last.
  The other thing that has distinguished the debate is the virulent anti-Americanism of the Labour party. The right hon. Member for Leeds, East implied that the SDI research was in some sense anti-British. What has come over instead has been the typical anti-Americanism of the Labour party. In a speech to the Dutch Labour party last Friday, the leader of the Labour party reaffirmed his total opposition to the deployment of cruise missiles in Holland, thus rejecting that part of the offensive nuclear shield which has been NATO policy since 1979. Today the Labour party will vote against research and defensive systems. If it were to have its way, that would indeed be the shameful and humiliating position for the United Kingdom of which the right hon. Member for Llanelli spoke. If Labour were ever to be in government again, Britain would indeed be left to go naked into the conference chamber. It is for that reason that I hope the House will vote overwhelmingly against the motion.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 202, Noes 272.

  Division No. 79]

  [7.30 pm

  AYES

  Abse, Leo

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

  Adams, Allen (Paisley N)

  Bermingham, Gerald

  Alton, David

  Bidwell, Sydney

  Archer, Rt Hon Peter

  Blair, Anthony

  Ashdown, Paddy

  Boothroyd, Miss Betty

  Ashley, Rt Hon Jack

  Boyes, Roland

  Ashton, Joe

  Brown, Gordon (D'f'mline E)

  Atkinson, N. (Tottenham)

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

  Bagier, Gordon A. T.

  Brown, Ron (E'burgh, Leith)

  Banks, Tony (Newham NW)

  Buchan, Norman

  Barron, Kevin

  Caborn, Richard

  Beckett, Mrs Margaret

  Callaghan, Jim (Heyw'd & M)

  Beith A. J.

  Campbell, Ian

  Benn, Rt Hon Tony

  Campbell-Savours, Dale

  372

  Canavan, Dennis

  Leighton, Ronald

  Carlile, Alexander (Montg'y)

  Lewis, Terence (Worsley)

  Carter-Jones, Lewis

  Litherland, Robert

  Cartwright, John

  Livsey, Richard

  Clark, Dr David (S Shields)

  Lloyd, Tony (Stretford)

  Clarke, Thomas

  Lofthouse, Geoffrey

  Clay, Robert

  Loyden, Edward

  Clelland, David Gordon

  McCartney, Hugh

  Clwyd, Mrs Ann

  McDonald, Dr Oonagh

  Cocks, Rt Hon M. (Bristol S)

  McGuire, Michael

  Cohen, Harry

  McKay, Allen (Penistone)

  Coleman, Donald

  McKelvey, William

  Conlan, Bernard

  MacKenzie, Rt Hon Gregor

  Cook, Frank (Stockton North)

  Maclennan, Robert

  Cook, Robin F. (Livingston)

  McNamara, Kevin

  Corbett, Robin

  McTaggart, Robert

  Cox, Thomas (Tooting)

  McWilliam, John

  Craigen, J. M.

  Madden, Max

  Crowther, Stan

  Marek, Dr John

  Cunliffe, Lawrence

  Marshall, David (Shettleston)

  Cunningham, Dr John

  Martin, Michael

  Dalyell, Tam

  Mason, Rt Hon Roy

  Davies, Rt Hon Denzil (L'lli)

  Maynard, Miss Joan

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

  Meacher, Michael

  Dixon, Donald

  Meadowcroft, Michael

  Dobson, Frank

  Michie, William

  Dormand, Jack

  Mikardo, Ian

  Douglas, Dick

  Millan, Rt Hon Bruce

  Dubs, Alfred

  Morris, Rt Hon A. (W'shawe)

  Duffy, A. E. P.

  Morris, Rt Hon J. (Aberavon)

  Dunwoody, Hon Mrs G.

  Nellist, David

  Eadie, Alex

  Oakes, Rt Hon Gordon

  Eastham, Ken

  O'Brien, William

  Evans, John (St. Helens N)

  O'Neill, Martin

  Ewing, Harry

  Orme, Rt Hon Stanley

  Fatchett, Derek

  Owen, Rt Hon Dr David

  Faulds, Andrew

  Park, George

  Field, Frank (Birkenhead)

  Parry, Robert

  Fields, T. (L'pool Broad Gn)

  Patchett, Terry

  Fisher, Mark

  Pavitt, Laurie

  Flannery, Martin

  Pendry, Tom

  Foot, Rt Hon Michael

  Penhaligon, David

  Forrester, John

  Pike, Peter

  Foster, Derek

  Powell, Rt Hon J. E.

  Foulkes, George

  Powell, Raymond (Ogmore)

  Fraser, J. (Norwood)

  Radice, Giles

  Freeson, Rt Hon Reginald

  Randall, Stuart

  Garrett, W. E.

  Redmond, Martin

  George, Bruce

  Rees, Rt Hon M. (Leeds S)

  Gilbert, Rt Hon Dr John

  Richardson, Ms Jo

  Godman, Dr Norman

  Roberts, Allan (Bootle)

  Golding, John

  Roberts, Ernest (Hackney N)

  Gould, Bryan

  Robertson, George

  Gourlay, Harry

  Robinson, G. (Coventry NW)

  Hamilton, James (M'well N)

  Rogers, Allan

  Hamilton, W. W. (Fife Central)

  Rooker, J. W.

  Hancock, Michael

  Ross, Ernest (Dundee W)

  Hardy, Peter

  Rowlands, Ted

  Harrison, Rt Hon Walter

  Ryman, John

  Haynes, Frank

  Sedgemore, Brian

  Healey, Rt Hon Denis

  Sheerman, Barry

  Heffer, Eric S.

  Sheldon, Rt Hon R.

  Hogg, N. (C'nauld & Kilsyth)

  Shore, Rt Hon Peter

  Holland, Stuart (Vauxhall)

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

  Hoyle, Douglas

  Skinner, Dennis

  Hughes, Dr Mark (Durham)

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

  Hughes, Robert (Aberdeen N)

  Smith, Rt Hon J. (M'ds E)

  Hughes, Roy (Newport East)

  Snape, Peter

  Hughes, Simon (Southwark)

  Soley, Clive

  Janner, Hon Greville

  Spearing, Nigel

  John, Brynmor

  Steel, Rt Hon David

  Johnston, Sir Russell

  Stewart, Rt Hon D.(W Isles)

  Jones, Barry (Alyn & Deeside)

  Stott, Roger

  Kaufman, Rt Hon Gerald

  Strang, Gavin

  Kennedy, Charles

  Straw, Jack

  Kinnock, Rt Hon Neil

  Thomas, Dafydd (Merioneth)

  Kirkwood, Archy

  Thomas, Dr R. (Carmarthen)

  Lambie, David

  Thompson, J. (Wansbeck)

  Lamond, James

  Thorne, Stan (Preston)

  Leadbitter, Ted

  Tinn, James

  373

  Torney, Tom

  Williams, Rt Hon A.

  Wainwright, R.

  Wilson, Gordon

  Wallace, James

  Winnick, David

  Wardell, Gareth (Gower)

  Woodall, Alec

  Wareing, Robert

  Wrigglesworth, Ian

  Weetch, Ken

  Welsh, Michael

  Tellers for the Ayes

  White, James

  Mr. Sean Hughes and

  Wigley, Dafydd

  Mr. Ron Davies

  NOES

  Adley, Robert

  Dorrell, Stephen

  Alexander, Richard

  Dover, Den

  Alison, Rt Hon Michael

  Dunn, Robert

  Amess, David

  Dykes, Hugh

  Ancram, Michael

  Emery, Sir Peter

  Arnold, Tom

  Evennett, David

  Ashby, David

  Eyre, Sir Reginald

  Aspinwall, Jack

  Fairbairn, Nicholas

  Atkins, Rt Hon Sir H.

  Fallon, Michael

  Atkins, Robert (South Ribble)

  Farr, Sir John

  Atkinson, David (B'm'th E)

  Favell, Anthony

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

  Fenner, Mrs Peggy

  Baker, Nicholas (Dorset N)

  Finsberg, Sir Geoffrey

  Banks, Robert (Harrogate)

  Fletcher, Alexander

  Batiste, Spencer

  Fookes, Miss Janet

  Bendall, Vivian

  Forman, Nigel

  Benyon, William

  Forsyth, Michael (Stirling)

  Best, Keith

  Forth, Eric

  Bevan, David Gilroy

  Fowler, Rt Hon Norman

  Biffen, Rt Hon John

  Fox, Marcus

  Biggs-Davison, Sir John

  Franks, Cecil

  Blackburn, John

  Fraser, Peter (Angus East)

  Blaker, Rt Hon Sir Peter

  Freeman, Roger

  Body, Sir Richard

  Fry, Peter

  Bonsor, Sir Nicholas

  Galley, Roy

  Boscawen, Hon Robert

  Gardner, Sir Edward (Fylde)

  Bottomley, Peter

  Garel-Jones, Tristan

  Bottomley, Mrs Virginia

  Gilmour, Rt Hon Sir Ian

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

  Glyn, Dr Alan

  Bowden, Gerald (Dulwich)

  Goodhart, Sir Philip

  Boyson, Dr Rhodes

  Goodlad, Alastair

  Braine, Rt Hon Sir Bernard

  Gorst, John

  Brandon-Bravo, Martin

  Gow, Ian

  Bright, Graham

  Grant, Sir Anthony

  Brinton, Tim

  Greenway, Harry

  Brown, M. (Brigg & Cl'thpes)

  Gregory, Conal

  Bruinvels, Peter

  Griffiths, Peter (Portsm'th N)

  Bryan, Sir Paul

  Grist, Ian

  Buchanan-Smith, Rt Hon A.

  Ground, Patrick

  Buck, Sir Antony

  Gummer, Rt Hon John S

  Bulmer, Esmond

  Hamilton, Neil (Tatton)

  Burt, Alistair

  Hampson, Dr Keith

  Butcher, John

  Hannam, John

  Butler, Rt Hon Sir Adam

  Hargreaves, Kenneth

  Butterfill, John

  Harris, David

  Carlisle, John (Luton N)

  Harvey, Robert

  Carlisle, Kenneth (Lincoln)

  Haselhurst, Alan

  Cash, William

  Hawkins, Sir Paul (N'folk SW)

  Chalker, Mrs Lynda

  Hawksley, Warren

  Channon, Rt Hon Paul

  Hayes, J.

  Chapman, Sydney

  Hayward, Robert

  Chope, Christopher

  Heath, Rt Hon Edward

  Churchill, W. S.

  Heddle, John

  Clark, Dr Michael (Rochford)

  Henderson, Barry

  Clark, Sir W. (Croydon S)

  Heseltine, Rt Hon Michael

  Clarke, Rt Hon K. (Rushcliffe)

  Hickmet, Richard

  Cockeram, Eric

  Hicks, Robert

  Colvin, Michael

  Higgins, Rt Hon Terence L.

  Conway, Derek

  Hind, Kenneth

  Coombs, Simon

  Hirst, Michael

  Cope, John

  Holland, Sir Philip (Gedling)

  Cormack, Patrick

  Holt, Richard

  Corrie, John

  Howard, Michael

  Couchman, James

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

  Critchley, Julian

  Howarth, Gerald (Cannock)

  Crouch, David

  Howell, Rt Hon D. (G'ldford)

  Currie, Mrs Edwina

  Howell, Ralph (Norfolk, N)

  Dickens, Geoffrey

  Hubbard-Miles, Peter

  Dicks, Terry

  Hunt, John (Ravensbourne)

  374

  Hunter, Andrew

  Norris, Steven

  Irving, Charles

  Ottaway, Richard

  Jackson, Robert

  Page, Richard (Herts SW)

  Jessel, Toby

  Parris, Matthew

  Johnson Smith, Sir Geoffrey

  Patten, Christopher (Bath)

  Jones, Gwilym (Cardiff N)

  Patten, J. (Oxf W & Abgdn)

  Jones, Robert (Herts W)

  Pawsey, James

  Jopling, Rt Hon Michael

  Peacock, Mrs Elizabeth

  Kellett-Bowman, Mrs Elaine

  Percival, Rt Hon Sir Ian

  Kershaw, Sir Anthony

  Pollock, Alexander

  Key, Robert

  Porter, Barry

  King, Roger (B'ham N'field)

  Powell, William (Corby)

  King, Rt Hon Tom

  Powley, John

  Knowles, Michael

  Prentice, Rt Hon Reg

  Knox, David

  Price, Sir David

  Lamont, Norman

  Proctor, K. Harvey

  Lang, Ian

  Raffan, Keith

  Latham, Michael

  Raison, Rt Hon Timothy

  Lawler, Geoffrey

  Rathbone, Tim

  Lawrence, Ivan

  Rees, Rt Hon Peter (Dover)

  Lawson, Rt Hon Nigel

  Renton, Tim

  Leigh, Edward (Gainsbor'gh)

  Rhys Williams, Sir Brandon

  Lennox-Boyd, Hon Mark

  Ridley, Rt Hon Nicholas

  Lester, Jim

  Ridsdale, Sir Julian

  Lightbown, David

  Rifkind, Rt Hon Malcolm

  Lilley, Peter

  Roe, Mrs Marion

  Lloyd, Ian (Havant)

  Rossi, Sir Hugh

  Lloyd, Peter (Fareham)

  Ryder, Richard

  Lord, Michael

  Sainsbury, Hon Timothy

  Lyell, Nicholas

  St. John-Stevas, Rt Hon N.

  McCrindle, Robert

  Shaw, Giles (Pudsey)

  McCurley, Mrs Anna

  Shepherd, Colin (Hereford)

  Macfarlane, Neil

  Shersby, Michael

  MacGregor, Rt Hon John

  Sims, Roger

  MacKay, John (Argyll & Bute)

  Skeet, Sir Trevor

  Maclean, David John

  Smith, Sir Dudley (Warwick)

  McNair-Wilson, M. (N'bury)

  Soames, Hon Nicholas

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

  Spence, John

  McQuarrie, Albert

  Spencer, Derek

  Madel, David

  Spicer, Michael (S Worcs)

  Major, John

  Stevens, Lewis (Nuneaton)

  Malone, Gerald

  Stewart, Allan (Eastwood)

  Maples, John

  Stradling Thomas, Sir John

  Marland, Paul

  Taylor, John (Solihull)

  Marlow, Antony

  Thompson, Donald (Calder V)

  Mates, Michael

  Thorne, Neil (Ilford S)

  Mather, Carol

  Thurnham, Peter

  Maxwell-Hyslop, Robin

  Townend, John (Bridlington)

  Mayhew, Sir Patrick

  Townsend, Cyril D. (B'heath)

  Mellor, David

  Trippier, David

  Merchant, Piers

  Twinn, Dr Ian

  Miller, Hal (B'grove)

  Vaughan, Sir Gerard

  Mills, Iain (Meriden)

  Viggers, Peter

  Mills, Sir Peter (West Devon)

  Waddington, David

  Mitchell, David (Hants NW)

  Walker, Bill (T'side N)

  Moate, Roger

  Walker, Rt Hon P. (W'cester)

  Monro, Sir Hector

  Wall, Sir Patrick

  Montgomery, Sir Fergus

  Waller, Gary

  Moore, Rt Hon John

  Wells, Sir John (Maidstone)

  Morris, M. (N'hampton S)

  Wheeler, John

  Morrison, Hon P. (Chester)

  Wiggin, Jerry

  Moynihan, Hon C.

  Wilkinson, John

  Mudd, David

  Wood, Timothy

  Neale, Gerrard

  Young, Sir George (Acton)

  Needham, Richard

  Younger, Rt Hon George

  Nelson, Anthony

  Neubert, Michael

  Tellers for the Noes:

  Newton, Tony

  Mr. Archie Hamilton and

  Nicholls, Patrick

  Mr. Tony Durant.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments) and agreed to.
  MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,

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  That this House takes note of the extensive Soviet research effort in ballistic missle defence; agrees that the Strategic Defence Initiative research programme is prudent in the light of this effort; and welcomes the participation of United Kingdom industry and research institutions in that programme.

  Private Tenants
  7.43 pm
  Mr. Jeff Rooker: I beg to move,
  That this House asserts the right of private tenants to a secure home in good repair at a reasonable rent free from harassment or neglect, the right to buy from a non-residential absentee landlord, the right to manage for both tenants and leaseholders of flats and the right collectively to buy the freehold for leaseholders of flats; calls for a review of rent regulation so as to close loopholes in the Rent Act; recognises the need to further improve privately rented property; and notes that the Government has savaged public housing programmes and now contemplates the end of socialist rent control.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): I should inform the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.
  Mr. Rooker: This debate will obviously be short and I shall not abuse the privilege of kicking off by making an excessively long speech.
  This debate is as much about decent housing, choice and fairness as the recent Second Reading debate on the Housing and Planning Bill. About 2 million families remain in private tenancies. Their rights are few and need to be strengthened. They should have the right to a secure home, but many have not.
  As an extension of choice, private tenants should have the right to buy from absentee landlords. By its nature, the scheme cannot be as uniform as that in the private sector, in which there are exceptions even today, but as in the public sector the majority of tenants will be included in the scheme.
  Minimum standards should be set in the private sector which, if not met, would give tenants the right to require a nominated housing association or in some cases a local authority to buy out the existing landlord — for the purpose of action, not inaction, as we are not interested in property passing from one landlord to another and remaining in a dilapidated state. The new rights, of course, would not apply to people letting all or part of their own home, but only to genuine absentee landlords.
  Private tenants who choose—I emphasise that word — to remain tenants should have the same rights as those that the Labour party proposes for council tenants to control the management of their homes, especially blocks of flats.
  Private tenants also require a new legal right to temporary accommodation while repairs or improvements are carried out. This should not be an aid to landlords to winkle out secured tenants but a positive legal right so that tenants have the security and certainty of knowing that they will be returning to their homes.
  If anyone doubts that that new right is required, I should make it clear that Rachmanism is alive and well in 1986 and being operated by Riverside Property Services, 16A Cazenove road, London N16. Late last year, that company purchased No. 38 Mirabel road, SW6, in the Fulham area of London. Two flats in the house were occupied by secured tenants. The property is now being improved with the aid of a council grant. The landlord persuaded the tenants of the first floor flat to leave, but Mrs. Edith Ashby, a 76-year-old widow whom I visited on Monday, and a secured tenant, is now having her home rebuilt

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  around her. There is no heating, no electricity, no bathroom and no security. Her furniture has been piled up in a room and covered with plastic sheeting.
  No offer of temporary accommodation was made to Mrs. Ashby and she was told that the work would take four days. That was three weeks ago. She was offered £5,000 to leave, but refused because she wanted to stay in her home, so the landlord simply left her there and sent the building contractor in—a classic case of harassment of an elderly lady to get her out of her secure tenancy.
  Mr. John Butterfill rose—
  Mr. Rooker: I know that I may antagonise and annoy Conservative Members, but this is a short debate and in the interests of others who wish to speak I do not intend to give way to anyone.
  After the intervention of Nick Raynsford, director of the SHAC London Housing Aid Centre, the landlord offered to let Mrs. Ashby put her bed in a room in the first floor flat. She now also has her cooker and television, but the conditions in which she is expected to live are obscene and a scandal in 1986. Potential buyers of the first floor flat are given the key to walk off the street willy-nilly into the home in which Mrs. Ashby is now trying to live. If ever there was an example showing that reform is needed, that is it.
  It is well known that there is widespread evasion of the Rent Acts. Evasion takes place daily, and there is evidence that more than half the re-lets fall outside the protection of the Rent Acts. When the Select Committee investigated four years ago, the evidence showed that private sector rents would at least double if controls were removed. I gave the Minister notice of this question a week ago. Is that assessment still valid?
  Ministers blame the Rent Acts for empty property, but they give no figures..In 1977, when there were 550,000 empty homes in the private sector — the figure is virtually the same today—research suggested that only 8,000 to 31,000 out of more than 500,000 empty homes were empty as a result of the Rent Act. After the infamous Rent Act 1957, which was supported by the Liberals at that time, homes for renting disappeared faster than before—250,000 in 1961 compared with 180,000 in 1956. We want the Rent Acts to be strengthened, not weakened.
  Mr. Butterfill:
  Mr. Rooker: Very interesting. I look forward to the hon. Member's speech.
  We want the Rent Act to be strengthened, not weakened. All tenants and licensees of non-resident landlords should have security of tenure, except when a genuine short-term let has been registered with a local housing authority, such as holiday lets and student lets.
  Before I come to Conservative plans to abolish rent control—they clearly exist—I shall deal very briefly with two aspects of our policy so that there can be no misunderstanding among those who wish to invest in rented housing.
  First, we support shared ownership where there is and can be an element of private renting. It was, after all, invented by a Labour local authority in Birmingham as a half-and-half scheme, but, like many good ideas from local government, it has been taken on board by central
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  Government and ruined. They also ruined enveloping. We want this form of tenure to flourish, and we would arrange the necessary guarantees to encourage investment. That is missing at the moment. The full opportunities of shared ownership, whether on a 50:50 or on a 25:75 basis have never been explored or exploited as a form of tenure by individuals or indeed by institutions.
  The second aspect is assured tenancies. They operate outside the Rent Acts, with a landlord approved by the Secretary of State. They apply now only to newly constructed dwellings. We have no plans to abolish this form of tenancy. Our policy document, "Homes for the future", makes no reference to assured tenancies and that can be taken to mean that we will maintain the system. Although it was brought in by the Conservatives, they, not the Opposition, have effectively killed it off with high interest rates, high land prices and, above all, the removal of capital allowances in the 1984 Budget.
  We would prefer for example, that the moneys from British workers' pension funds were invested in assured tenancy homes rather than exported to create jobs abroad. We would want homes to be built and rented under the assured tenancy scheme. I make that quite clear.
  Mr. Tony Marlow: Will the hon. Gentleman give way?
  Mr. Rooker: No.
  I make our stance quite clear so there can be no confusion outside. That is a point which was made last autumn and which I understand needs making from the Dispatch Box.
  Even with the evidence of the Rent Act 1957, the Government want to decontrol rents. When will they do it? Two million families have the right to know. We want to make it quite clear tonight that the Labour party will oppose the abolition of rent control. We will reimpose controls at the first opportunity.
  I shall quote some examples of attempts by the Conservative party to rewrite history and change opinion on this subject. I start with a quotation from the other place, which has been quite active on this in the past few years. On 23 June 1982, Tory peers were falling over themselves to call for the abolition of rent control. The Government spokesman at the time was sympathetic. A year later, on 10 October 1983, a Bill to abolish rent control was introduced and debated in the other place. Influential Tories such as Lord Harris of High Cross—it is no good anyone arguing that he is not an influential Tory—
  Mr. Ian Gow: He is a Cross Bencher.
  Mr. Rooker: Ah, but listen to what I have to say. In my book, being a Cross Bencher does not mean that one cannot be a Tory. Lord Harris and Social Democratic peers queued up to call for abolition, and the Government spokesman said:
  "The Government have some sympathy with the points of view expressed by … Lord Harris of High Cross and by other noble Lords"—[Official Report House of Lords, 10 November 1983; Vol. 444, c. 1028.]
  They were calling for the abolition of rent controls. Just one month later, at the Conservative party conference, the hon. Member for Eastbourne (Mr. Gow), as he will remember because he was then the Minister for Housing, spoke of the
  "need to re-examine the private rented sector".

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  A few months later, on 2 March, in a debate in this place on a motion proposed by my hon. Friend the Member for Norwood (Mr. Fraser), the Minister who is to reply tonight, the hon. Member for Ealing, Acton (Sir G. Young), was asked by my hon. Friend the Member for Walsall, North (Mr. Winnick) whether the Government would return to rent decontrol as it was under the 1957 Act. My hon. Friend could not get a straight answer from the Minister. All that we got was:
  "We are examining all legislation that affects private renting … We must try to establish conditions in which investors and landlords have the confidence … to commit resources".—[Official Report, 2 March 1984; Vol. 55, c. 553–4.]
  We are entitled to ask what has been happening since.
  On 9 October 1984, the nation got the personal manifesto of the chairman of the Conservative party at a fringe meeting of the Selsdon group. He said:
  "I think there is at least a good chance that the great inflation, like all its predecessors, is coming to an end. If that is indeed so —and we are brave enough at some time in the future to reform the Rent Acts—some interesting consequences might follow. Rented housing—homes for hire—might well compete with houses to buy. The latter would have lost their attraction as hedges against inflation. And positive real interest rates could narrow the rent/mortgage differential."
  What was that other than an invitation—
  Mr. Martin M. Brandon-Bravo: A good speech.
  Mr. Rooker: A good speech, yes, effectively calling for the abolition of rent control.
  In November that year, the then Secretary of State, at the annual conference of the National Housing and Town Planning Council, said that he wanted
  "a bipartisan reform of the Rent Act".
  Presumably the bipartisan approach to the state earnings- related pension scheme was still fresh in his mind. Later that month, the Minister for Housing, the hon. Member for Eastbourne, wrote to me saying:
  "we have been looking at ways we might stimulate the contribution of this sector".
  He continued:
  "Parliament would be informed in the usual way".
  That is the end of the bipartisan approach.
  In May 1985, there was an extremely interesting piece from the hon. Member for Horsham (Sir P. Horden) in the Daily Telegraph. It was long, well thought out and carefully argued. His final sentence read:
  "To repeal the Rent Acts would be the most important single measure the Government could take."
  He is a highly respected influential thinker on the Tory Back Benches. He knows what he is talking about when money is involved.
  Last summer, we got a string of leaks about the Queen's Speech. It was said in the Financial Times, the paper which reported most of the leaks best of all, that the hon. Member for Eastbourne had indeed convinced the Prime Minister that this was the course to follow. Other senior Ministers obviously prevailed. I have to put on record the telling paragraph in a piece by Mr. Peter Riddell, who wrote:
  "The discussion on the issue highlights the personal style of decision making in the current government which by-passes normal channels and the Cabinet structure."
  The Minister for Housing, Urban Affairs and Construction (Mr. John Patten): Ridiculous.
  Mr. Rooker: The Minister says that Mr. Riddell's assertion is ridiculous. We now come to the present Minister, and his very important speech of 9 February.
  Mr. Gow: Will the hon. Gentleman give way?
  Mr. Rooker: I have mentioned the hon. Gentleman twice and, as an act of courtesy, and only to him, I shall give way.
  Mr. Gow: I just want to correct the hon. Gentleman. I had the advantage of being present at these discussions, which was an advantage not conferred on the hon. Gentleman.
  Mr. Jack Straw: Or on Peter Riddell.
  Mr. Gow: The decision about this matter was taken perfectly properly and perfectly normally and there was a full discussion of it by the Cabinet.
  Mr. Rooker: So there was a discussion and we are told that the Cabinet threw it out. The Cabinet obviously looked over the abyss of rent control and said, "This is not a runner."
  I come back to the speech of the present Minister for Housing, Urban Affairs and Construction, who on 9 February said:
  "Reviving the private rented sector isn't going to be easy. We will need to gain the confidence of tenants and landlords. And it cannot be done now. There is little point in pushing forward major legislation halfway through a Parliamentary term, because of the destructive attitudes which the Labour party is sure to take. But I hope that we will remove the Socialist controls that keep rents at artificially low levels—for new tenants, not existing tenants".
  The word "But" indicates that this will happen before rather than after the next general election. That is the clear implication of what the Minister said. Initially he was saying that major legislation could not be introduced before the next election because my hon. Friends and myself could put the kybosh on it, and he knows it. However, he hopes to remove the Socialist controls that keep rents at artificially low levels for new tenants. The chances are that before the next general election we will have rent decontrol for new tenants.
  Two days after that speech there was an interesting supplementary question from the hon. Member for Northampton, North (Mr. Marlow), who asked:
  "In view of the fact that there is quite a lot of pressure now to improve the prospects in the private rented sector of housing"—
  hon. Members will be aware of the kind of pressure that I have cited—
  "to make new housing stock available to the general public, and as the Housing Bill is in Committee, would it not be a good idea if some amendments were put forward and that the Government agreed to them?"
  All I need say is that on the last amendment that was moved yesterday morning the Government were defeated by 12 votes to five.
  In reply to that question the Prime Minister said:
  "I recognise the importance of my hon. Friend's supplementary question and his desire to increase the stock of houses in the private rented sector. That is something to which we must give our attention. Whether this comes within the long title of the Housing Bill"—
  this is from a Member of Parliament of 30 years' standing—
  "is not for me to say."—[Official Report, 7 February 1986; Vol. 91, c. 781.]
  But Ministers can amend the long title of the Bill any time they want. In short, there is abundant evidence that the Conservatives are up to something in relation to rent control.
  Being another person's landlord for a crude commercial profit is an unacceptable way of earning a living, and that

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  is why rent controls are required. The Conservative Member who said that the abolition of rent controls would be fine in the long run but that in the short run no Tory MPs would be left in London was speaking the truth.
  The national average of private rented tenure is about 10 per cent.—it is now probably below that—
  Mr. Nicholas Lyell: Will the hon. Gentleman give way.
  Mr. Rooker: I shall not, because I am about to conclude.
  The top six constituencies in the private rented sector are all in inner London. Fulham happens to be in sixth place. Unfortunately—I say that because we all regret the death of Martin Stevens—Fulham has no one here to represent it tonight. But at 33 per cent., Fulham has three times the national average of constituents in the private rented sector. What are the Government planning for them after the next election that they are not prepared to say beforehand? The people of Fulham are in a unique position to test the popularity of the Conservative call for freedom to raise rents—perhaps to double or triple them —in the private sector. They demand an answer, and so does this House.
  8.3 pm
  The Minister for Housing, Urban Affairs and Construction (Mr. John Patten): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  "asserts the need for a healthy and reviving private rented sector with an adequate supply of sound homes to rent as being in the best interests of tenants and landlords and those looking for accommodation; further asserts the need for improved statutory safeguards to ensure proper management of privately owned blocks of flats; and notes that provision for capital expenditure on housing was increased in the Public Expenditure White Paper.".
  The hon. Member for Birmingham, Perry Barr (Mr. Rooker) made a characteristically forceful speech to which I enjoyed listening. In particular, I welcome what he said about shared ownership. Perhaps in Committee we shall be able to explore further exactly what he meant. He also gave a clear assurance on assured tenancies.
  My first principle is that any Housing Minister, from whatever party he or she comes, must surely want to see that all existing housing stock is as fully used as possible.
  Dr. John Cunningham: It depends on the condition.
  Mr. Patten: Of course it does. Empty homes, whether in the public or private sectors, are a waste. Local authorities estimate —these are the only estimates we have —that in England, 545,000 private sector homes were empty in April 1985. Nearly 100,000 of them were in London, where the problem of homelessness is greatest. Many of those homes, but not all—even some needing refurbishment—could be let to people who need them if landlords were not inhibited by the effects of the Rent Acts.
  The private rented sector once provided homes for the vast majority of the British people, but that sector has been in decline for about 70 years since 1914. As recently as 1951, there were 6 million privately rented dwellings in England. Now there are perhaps only 1·7 million, and the number is falling fast. While we and the country at large
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  welcome the huge rise in home ownership that has followed, it is a sad fact that in Britain alone of the major western countries there is no vigorous private rented sector for those who need it.
  For example, in West Germany 36 per cent. of households rent from private landlords. In France the figure is 32 per cent., and in the United States it is 33 per cent. In Britain it is just 9 per cent. In those other countries, private renting is not the major political issue that it is in the United Kingdom. We must ask why that is so. To me it seems wrong to concentrate in the United Kingdom on two forms of tenures—owner-occupation and council renting—with precious little in between. We may not be able to agree on how to fill that gap, but it is wrong. The reasons for the decline are complex, but statutory controls are one of the reasons why we face this problem.
  Mr. David Winnick rose—
  Mr. Marlow rose—
  Mr. Patten: I shall by and large follow the line of the hon. Member for Perry Barr and give way as little as possible. I shall give way to my hon. Friend the Member for Northampton, North (Mr. Marlow) on many occasions in Standing Committee tomorrow, just as I gave way to him yesterday in Standing Committee and shall no doubt do so on many occasions in the future—[Interruption.] My right hon. Friend the Secretary of State for the Environment tells me to steady on, and I shall do so.
  I recognise, of course, that in the past, the private rented sector has been a political football. The history of attempts to achieve a political concensus on the issue is not exactly encouraging. We are probably all at fault, and I would be the first to admit it. People will say—the hon. Member for Perry Barr did so tonight—that decontrol was tried in 1957 and that it did not work. They will say that the sector declined very fast and that Rachmanism grew. But in 1986 we must accept that history need not repeat itself. We can learn the lessons of post-1957—I am prepared to do so—one of which, incidentally, was that the accelerated decline of the private rented sector in the late 1950s was more the result of slum clearance than of rent decontrol. The hon. Member for Perry Barr is to some extent under a misapprehension. In 1986, the sector is very different from what it was in 1957. Most private sector tenants are now single people rather than families.
  Indeed, tenants are now much better protected by law against harassment then they were in the 1950s. No serious observer of the housing scene now believes that the public sector can provide all the resources necessary to tackle our housing problems. We must mobilise institutional and private resources as well to help meet housing need, particularly in our great cities. We should all try together to build at least that measure of consensus about the future of the private rented sector in which there is at least a role for building societies, major institutions, the Housing Corporation and the housing associations. If we can get that consensus that is a good start. There may also be a role for the private, responsible landlord, but if we could agree on the first measures, I should be happy to get that tonight.
  In response to the hon. Member for Perry Barr, I make it clear beyond any doubt that we have no intention of removing the protection enjoyed by existing tenants. That mistake was made in 1957. The removal of the statutory controls of existing tenancies at the top end of the market

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  led to widespread evictions by the involuntary landlords—those who were not landlords by choice and took the opportunity to obtain vacant possession and sell out. However, if in future we want to encourage the private sector to make unused accommodation available for renting and to invest in accommodation for rent, it is essential that, for new lettings, rents should provide reasonable economic returns.
  I hope that the hon. Member for Perry Barr will note what I am about to say because I am responding to his question. The Government have taken no decisions on what form any legislation to reduce controls over new tenancies should take. We are not proposing in this Parliament to introduce major legislation to recast the Rent Act. We are ready to listen and promote argument about what could and should be done. With that in mind, I was flattered to find my speech to the Young Conservatives gathered in Blackpool a couple of Sundays ago subjected to such interesting and close textual criticism and exegesis about what a comma here and a "but" there meant.
  It was a curious experience for me, for the first time in my life, to walk on to a political platform and find balloons going up, paper darts, chanting. I could not understand why my appearance was the cue for such excitment in the hall. I was then told that they were waiting for my right hon. Friend the Member for Henley (Mr. Heseltine), who is not with us this evening.
  I said in my speech about the Rent Acts:
  "The need for reform is clear from the degrading scramble for accommodation which young people suffer in London and other big cities. It is clear when the law makes it senseless for landlords to let property except under the most restrictive conditions. And it is emphasised by the need to avoid the bizarre and socially damaging polarisation in our society between owner occupiers, and tenants in council occupation."
  For some time, the Government have been concerned about the particular problems faced by the 500,000 or so households living in privately owned, long leasehold flats —two thirds of them are long leaseholders. Evidence has emerged of serious management problems in this sector, and that is why my hon. Friend the Member for Eastbourne (Mr. Gow), the former Minister for Housing and Construction, set up in February 1984 the Nugee committee — under Mr. Nugee QC — to examine the issues. The committee presented its cogent, coherent and important report in November 1985. It has confirmed that there are serious problems in a significant proportion of blocks and has made numerous recommendations on how the Government should get ahead and tackle the problems. It is a complex report that deals with complex issues with major ramifications for many parts of the law that cannot be dealt with by a little amendment here and there.
  The report throws up some interesting questions. First, what should the relationship between freeholder, tenants and managing agents be and what procedures should there be for appointing such agents? What remedies should the tenants have where the freeholder is not carrying out his obligations to maintain the block? Are there circumstances in which it would be right to allow long leaseholders collectively to buy the freehold, with for instance the important suggestion of a right of first refusal when the landlord wishes to sell? These are among the important issues raised by the report. I am considering them in consultation with my colleagues. One of our considerations is whether the reform of certain aspects goes far enough.
  Mr. John Wheeler: My hon. Friend is referring to the important 53 recommendations of the Nugee committee on which, as he knows, I had the honour and pleasure to serve. Does he agree that such recommendations must be brought into legislation as soon as possible, and will he refute the dishonesty of the Westminster, North Labour party, which says in a printed leaflet:
  "Worst of all, the Government has refused to implement even the modest recommendations of the Nugee report."
  Mr. Patten: I am happy to refute that — it is nonsense and has no foundation. The Government are looking at the recommendations of the Nugee committee, on which my hon. Friend served with such distinction, and we are intent on moving forward as quickly as we can in putting the most significant parts of the recommendations into effect and on some occasions perhaps even going further than the committee might have recommended.
  I emphasise the role that the private rented sector can play in meeting housing needs if it is given the chance to do so. A vigorous private rented sector would widen housing choice, increase mobility and help to reduce homelessness. Empty flats and houses, whether in the public or private sector, are an affront to the homeless. With the help of all the Opposition parties, we can achieve some of these goals.
  The hon. Member for Perry Barr and his colleagues have a particularly heavy social responsibility in looking at the future of privately rented flats and houses. I hope that we shall not have automatic immediate reactions with pledges to repeal this or that at the drop of a hat. The situation is far too serious for such a reaction. I hope that all Opposition Parties will open-mindedly join the debate, which I welcome because it is so important. However, even if they do, the Government cannot accept the motion.
  8.19 pm
  Mr. John Cartwright: I welcome the Minister's suggestion that we should try to reach as much agreement as we can about the future of private rented property. Both sides of the House are aware that there is a need for more private rented homes. Owner-occupation may be a wonderful system for a great many people, but we all understand that it is not possible for some people, on sheer financial grounds, and in any case it is not appropriate for everybody.
  In the Minister's famous speech on 9 February, I notice that he correctly pointed out that far too many young people are being pushed into owner-occupation far too early in life, simply because there is not enough rented property available. Equally, at the other end of the age scale, many elderly owner-occupiers would much rather be rid of the responsibility of owning their own homes if there were a rented sector into which they could move. We must provide more choice in housing.
  There is probably a broad agreement on another matter. Local authorities cannot be left to be the only providers of rented accommodation. The policy of municipalisation is dead. At one time I supported it, but I do not any longer because of sheer practical experience. It is that which has probably killed off the policy of municipalisation.
  There are the obvious management problems which many local authorities have in dealing with large numbers of properties. In any case, there is the problem of an unhealthy lack of choice if there is total monopoly in the

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  hands of the local authority as the only providers of rented accommodation. That involves the bureaucratic rationing system, which we all know about and which we want to get away from. So there is undoubtedly a case for providing an alternative source of rented homes.
  I part company from the Minister when he appears to believe that the solution is to try to breathe new life into the traditional private landlord system. First, the economics are against it as a means of providing any major improvement in the situation. To give developers a reasonable return on their capital investment would inevitably produce rents which would price the accommodation way beyond the means of a great many tenants, particularly those who are forced into private renting simply because they cannot afford to buy a home of their own.
  I and my colleagues in the alliance reject the call for the deregulation of rents. We cannot believe that it can produce a tremendous explosion in the availability of private rented property. In the short term it is much more likely to drive up rents and produce more problems of homelessness.
  Mr. Marlow: The hon. Gentleman is perhaps overestimating the price of new property coming on the market at unregulated rents, but will he take into account the fact that people would not be priced out of the market, because housing benefit would be available to the low-paid?
  Mr. Cartwright: I shall come to that in a moment. There is a cut-off level for housing benefit. One cannot simply decide to rent as expensive a property as one would like and let the housing benefit providers take up the slack. It does not work like that.
  The second problem of trying to revitalise traditional private landlordism is the general atmosphere that surrounds it. Again I pay tribute to the Minister for recognising that problem. In his much quoted, now required reading, "changing gear" speech on 9 February he said that the Conservative party in facing the problem would have to
  "win the battle to make renting and landlordism respectable again."
  I am glad that he recognises the difficulty. He will have an uphill struggle in trying to tackle that problem. It is not like the other campaigns on which his party has been successful. It is not like encouraging more belief in owner-occupation. It is not like getting the right to buy off the ground. Both those campaigns were flowing with the tide of public opinion, spurred along by the financial advantage of mortgage tax relief. The atmosphere surrounding private landlordism is a much more difficult one to break through.
  That does not mean that we should let the present decline continue. The numbers of houses available for private renting continue to go down. I suspect that that is not so much because of the Rent Acts as other factors. The attraction of the capital gains to be made by a landlord who sells for owner-occupation, for example, is a major factor in steadily reducing the stock of private rented homes. The sheer fact of slum clearance also reduces the numbers available. So the steady reduction in the number of private rented homes increases pressure on council properties and waiting lists at a time when they are in no position to take up the extra demand.
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  We know that there is a steady decline in the condition of private rented property, and there is an excessive use of loopholes — the holiday lets, the non-exclusive licences and all those other devices which are now more common than ordinary lettings and which make life so difficult for the young seeking private accommodation.
  There are alternative solutions, and one is the extension of the right to buy, which is mentioned in the Opposition's motion. When it comes to things like blocks of tenanted flats, which are often in a poor condition, I am not attracted by the individual's right to buy. That is not a credible way of tackling the problem. But I do not see why a housing association should not be given the right to buy from a private landlord if a majority of the tenants in the block of flats decide that that is what they would like to do. That might be a registered housing association, or the tenants in a block might get together to form their own housing association or co-operative.
  Mr. John Patten: Would the hon. Gentleman also welcome the involvement of building societies if they became progressively involved in private renting?
  Mr. Cartwright: I shall come to that in a moment.
  The idea of the right to buy for housing associations would involve little, probably no, public sector investment in terms of providing the capital. Perhaps these would have to be loans or loan guarantees, and certainly there would be a need for straightforward assistance on repair, rehabilitation and improvement, but it would provide a much better solution than trying to give individual tenants a right to buy or enabling tenants, in the Minister's words "to negotiate with their landlords about the level of their rents."
  I come now to the rather different approach which has been mentioned by both Front Bench spokesmen —building on the assured tenancy scheme. I thought that the assured tenancy scheme had the germ of a good idea. I welcomed what the hon. Member for Birmingham, Perry Barr (Mr. Rooker) said about the Labour party's attitude towards it, but there are three things wrong with that scheme. First, there is no effective Government investment in it. There was only the tax concession on the capital allowances and that, as we know, was removed in the Finance Act 1984, which effectively crippled the whole thing.
  Secondly, the assured tenancy approach was limited to new building, and there is a crying need to encourage new private investment in the repair and rehabilitation of the existing private rented stock. Thirdly, there was no real basis of protection for tenants under the assured tenancy scheme. There was no protection against unreasonable eviction or rent rises.
  However, there is a way forward involving the use of long-term index-linked mortgage arrangements. Building societies have found it possible to offer long-term index-linked mortgages and to on-lend the money at about a 4 per cent. real terms rate of interest. Index-linked mortgages offer an ideal way of funding that sort of activity, because rents tend to go up with the rate of inflation. Our calculations suggest that a £30,000 home financed in that way could be let at a rental of £44·50 a week. That is much higher than the fair rent level, but it is much less than the £70 a week or so which would be needed to service a £30,000 loan at a 12·5 per cent. interest rate. It is, however, clearly higher than the market can

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  stand, so there is a gap to be bridged between what is a reasonable return on capital for even long-term pension funds insurance money and things of that sort, and what fair rents can produce.
  I cannot see why the Government should not seek to bridge that gap. If the Government provided a subsidy of 25 per cent. of the interest costs in the example that I have given, the rent of £44·50 would come down to £36 a week. Again that is high, but it is not unreasonable in many parts of the country. Alternatively, the Government could subsidise initial capital construction, although that is a less flexible approach. Clearly, even under my proposals, there would be a need to extend the high rent provisions of the housing benefit regulations to bring that sort of expensive housing within the reach of low-income families in the housing stress areas.
  There is undoubtedly a cost to the Treasury in all this. I can see the Minister already nervously eyeing Treasury responses, but we already have public investment, through mortgage tax relief, in the owner-occupied sector. We already have substantial public investment in the traditional council sector. Therefore, I cannot see why there should not be some sensible public investment, used as leverage to obtain far larger private investment, in order to provide us with a new system of private rented accommodation. The tenants would have the benefit of approved landlords—housing associations, trusts and cooperatives and, yes, possibly approved private landlords if they could meet stringent standards of performance and ensure that they were treating their tenants decently and fairly. That does offer a way forward.
  There is a measure of agreement here across a wide political spectrum. The Minister would be far better advised to tackle the problem in that way than to put back the clock and recreate 19th century private landlordism, which is going, and which ought not to be rescued.
  8.28 pm
  Sir Geoffrey Finsberg: I had a problem tonight because I had a clash of interests. A major meeting is taking place on my constituency on the future management of Hampstead Heath. I chose to be here because private tenancies are a subject on which I have been campaigning for 16 years. I strongly believe in the rights of those who live in mansion flats. My parents lived all their married lives in mansion flats. I lived the first 40 years of my life in typical inner London blocks, with highly reputable landlords, such as the Prudential and London County Freehold and Leasehold Properties—the old key flats. The flats had equally reputable managing agents.
  Alas, that no longer happens. From about the beginning of the 1960s the position changed because of a combination of the effects of the Rent Acts since the first world war and other factors. On the scene came what I can only describe as disgraceful landlords, such as Freshwater, Mr. Stern and the Bergers, who had no concern for their tenants, and agents with just a concern for their fees. That feature is still very much with us. Tenants are concerned mainly about neglected maintenance and inflated and sometimes phoney service charges.
  I have followed this cause since I became a Member in 1970. My first opportunity to do anything practical was in 1972, in the Housing Finance Bill, when I succeeded in carrying a new clause against the wishes of my party, with the Opposition's aid. The Government decided that they
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  would insert a clause, in better terms than my measure, to help tenants especially, with respect to the auditing and inspection of service charge accounts. That was a start, but it was not enough.
  In 1974 we had an interesting and friendly Committee on the Housing Bill. Perhaps it was friendly because the Government did not have a majority on the Committee. We had long sittings. On 11 June 1974 the right hon. Member for Brent, East (Mr. Freeson) rebuffed my amendments. I told the right hon. Gentleman that I would refer to him in this debate, not in an unpleasant spirit, but in a spirit of chiding and regret. He said:
  "the kind of headings that I have indicated already would rank high in the review that I should wish to achieve with a view to future legislative and policy action." — [Official Report, Standing Committee B, 11 June 1974; c. 385.]
  The right hon. Gentleman, supported by Mr. Douglas-Mann, the then Labour Member who became an SDP Member, agreed in a further debate that it was necessary to improve the position. Unfortunately, after that short Parliament, Labour having won the election, nothing happened. Between 1974 and 1979 there was a substantial Labour majority, but nothing happened.
  It therefore fell to those of us who had a hand in drafting the 1979 housing legislation to do something. The right hon. Member for Brent, East pooh-poohed in a gentle way some proposals as being too difficult or needing further examination. My right hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley) and I were able to convince those who were advising us about drafting the Bill that these measures could be undertaken. Our provisions were therefore included in the Bill and we made a reasonable amount of progress on a variety of improvements.
  Mr. Reg Freeson: Does the hon. Gentleman recall that that part, like many other parts, of what became the Housing and Building Control Act 1984 was drafted by the previous Government, under whom I was Minister for Housing and Construction?
  Sir Geoffrey Finsberg: The right hon. Gentleman will recall that, in spite of having had the opportunity, he did little about service charges. Because I was not privy to the private papers of the Labour Government, I have no idea of exactly what happened. I can say only that the provision was not in a form that would have satisfied my right hon. Friend the Member for Tonbridge and Mailing or me that it would help tenants. I am not attacking the right hon. Member for Brent, East. I do so sometimes, but I would not dream of doing so when he is under threat.
  A variety of measures need improvement. We have heard of the need to set up a sinking fund, but the problem is who will look after it. Certainly many of the managing agents who manage some of these properties could not be trusted with the administration of sinking funds. They or the owners would do a quick moonlight flit and the tenants who had paid their money would be left with nothing.
  I begin to think that there is some co-operation throughout the House on the sale of blocks of flats. I have always believed that, if a landlord intends to sell his block of flats, the tenants should be given the right of first refusal. That provision is not yet law. Nugee talks about that, but pressure can make it actually happen.
  A large block of property in Belsize Park in my constituency, which included houses and flats, was owned by the Church Commissioners. They were about to sell the

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  property for about £3 million to, I think, a Luxembourg or Channel Isles registered company. The tenants came to me. I made representations to the Church Commissioners, saying that their action was wrong and that they should give tenants the opportunity to purchase at the same price. Following a certain amount of pressure and public aggravation, the Church Commissioners agreed. The properties are now owned by the Belsize United Tenants Association. The tenants are their own landlords, and life is much better and happier. There may be difficulties, and one must consider how to overcome them, but we should not wait too long before saying that this policy is accepted across the whole political spectrum.
  Tenants need to know the proper name and address of landlords and agents in the United Kingdom. I was unable to get that provision accepted. All too frequently, the landlord is abroad or there is a change of landlord or agent and the tenants cannot find the person on whom documents should be served. Nugee refers to that.
  We need better managing agents. Between 1942 and 1952 I worked for a London firm of estate agents managing commercial and residential property. In those days managing agents were reputable and experienced and they knew what should be done to look after and to reconcile the joint interests of tenants and landlords. Most of them did that. I welcome the code of practice which the Royal Institution of Chartered Surveyors has produced showing what responsibilities managing agents should have. Perhaps, like the Highway Code, one might need to make that code an adjunct to any legislation that results from Nugee's recommendations. We need tighter tendering for works so that tenants can match, if they wish, an estimate produced by the landlord.
  Mr. Nugee, who is one of my distinguished constituents, was asked to chair the committee of inquiry on which my hon. Friend the Member for Westminster, North (Mr. Wheeler) served. The Committee made some interesting and useful comments. I am glad that my hon. Friend the Minister for Housing, Urban Affairs and Construction made two points clear. He knocked on the head the lie that the Government have rejected Nugee's recommendations. My hon. Friend said that action will be taken after he has carried out the necessary consultations.
  I say to my hon. Friend the Minister: do not take too long. Too much thought paralyses action. He will find, if he has not already done so, that great barriers will be erected in the Department by officials and legal advisers. That is what happened in 1971, and since, and I suggest that the position has not changed. The officials will not act in this way for obstructive reasons. They will say, "Minister, this will be difficult." We have all seen such action. My hon. Friend should be his normal resolute self and state that this is the policy that he wants. It is amazing how quickly difficulties disappear and draft clauses appear once that is done.
  Mr. Wheeler: As my hon. Friend has referred to civil servants in the Department of the Environment, will he concede that the work of the Nugee committee, which took place over many months, involved the wholehearted service of members of the Department of the Environment, who provided the secretariat? He may agree that their
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  learning experience was such that perhaps the advice to our hon. Friend the Minister is now of such quality that early results may flow.
  Sir Geoffrey Finsberg: I am an eternal optimist. I was fascinated when I saw that we were to debate this subject. I realised that it would give my hon. Friend the Minister a chance to say something about the Nugee committee, and I hoped that there would be a useful exchange of views. I wondered why we were debating this subject in Opposition time. I thought perhaps the Opposition were at last concerned about private tenants. Alas, having been disillusioned on some occasions, I have been even more disillusioned today.
  I have a news release from Walworth road from the Labour party campaign and communications directorate. It is dated February 18 and says:
  "Fulham housing cases to be raised in Parliament."
  We are told:
  "Two cases of elderly women tenants living in appalling conditions, in privately rented homes in Fulham, will be raised during tomorrow's (Wednesday's) debate".
  We have heard about one of the those elderly women, and we are to hear about Mrs. Griffiths from the hon. Gentleman who is to reply for the Opposition. The hon. Member for Birmingham, Perry Barr. (Mr. Rooker) spoke about this matter being taken up by a Mr. Raynsford, who was director of the Shelter Housing Aid Centre. Unfortunately, the news release is not quite as coy as that. It calls him the prospective Labour candidate in the forthcoming by-election. The cat is let out of the bag. If he is to be the candidate at the by-election, that document may have started his election expenses running. I think that that needs to be watched.
  Those who live in Fulham or elsewhere know that the Labour party has done precious little for private tenants when it has had the chance. It had the opportunity on two occasions and did absolutely nothing. I hope that private tenants will not be conned—I do not think that they will be—into again thinking that the Labour party cares for them.
  It is a pity that the three distinguished Labour Members, the hon. Members for Perry Barr, for Norwood, (Mr. Fraser) and for Copeland (Dr. Cunningham), did not go to look at tenants living in deplorable conditions in Labour council flats and in flats where Labour councils have failed to spend the money allocated, such as Camden, which has squealed year upon year but which last year underspent its capital by £8 million and this year will underspend by £10 million or more.
  Mr. John Patten: Or indeed failed to collect the rents, which is a characteristic of boroughs such as Camden, or Walsall, which has such a wretched record outside London.
  Sir Geoffrey Finsberg: I agree with my hon. Friend and I hope that those matters will be put right on 8 May. I may have an entry in the "Guiness Book of Records" which I would like removed. It says that I am the only Conservative leader of the London borough of Camden. I should like to see that entry disappear on 8 May.
  I believe that if the public realised the hypocrisy of the Labour party's policy document and the crocodile tears they have shed, they would realise that the only party that has ever done anything practical, not just made speeches, for tenants is the Conservative party.
  8.44 pm
  Mr. Reg Freeson: I shall not follow the last part of the remarks of the hon. Member for Hampstead and Highgate (Sir G. Finsberg), but I would like to make one or two observations on the main part of his speech which related to the problems of tenants of what are mostly called mansion blocks. They are primarily located in certain parts of inner London, some in my constituency, many in the hon. Gentleman's constituency and in Paddington and Westminster.
  I think that the hon. Gentleman overstated his criticism of past failure to act on this matter. It is perfectly true that only limited legislative reforms were introduced in the Housing Act 1972 with the backing of the then Labour Opposition, as he readily acknowledged. Further changes were introduced in the Housing Act 1974 and some were published in a Bill before the 1979 election, which fell with that election but which were picked up again in the Housing Act 1980. Therefore, there were certain legislative changes.
  It is also true that when I was a Minister I found some of the difficulties of dealing with this area in law and in practice that have subsequently been experienced by Conservative Ministers. It is interesting to read and to hear references to the Nugee report. I welcome that report and its recommendations. I certainly hope that those recommendations will be built upon.
  I can reveal that a similar study was attempted in-house in the Department of the Environment while I was a Minister. We were not inactive, but I came up against the genuine complexities and the kind of cautionary advice and noises to which the hon. Gentleman has referred. That in-house report was nearing completion when the 1979 election was called.
  I had hoped at that time, and announced not long before the 1979 election was called, that we would formulate a policy and legislate as soon as possible for what I described as collective-tenant purchase, which has been referred to by the hon. Member for Woolwich (Mr. Cartwright). I should like to see the recommendations built upon. I have to say quite bluntly that, after all the thinking, all the work and all the advocacy — no matter how difficult this area is — it is about time that a policy decision was taken at a time during the Session when legislation could be introduced. That was not the position in 1979.
  The legislation should empower tenants to set up their own housing associations and at least have the first right of refusal when the property is up for sale, or empower them to commission a housing association with good management agents, experience and know-how to act on their behalf. I would take it further and say that if it is at all possible in law we should not leave it at the first right of purchase. It should be possible to build into the law the right of tenants, not just in mansion blocks but elsewhere, to purchase collectively the blocks of flats or groups of properties where there is bad management.
  If I may reflect on the history, that idea was set out as a policy objective — it was never achieved — in the Labour party's 1973 programme document which preceded the 1974 election. It was based upon a paper that I prepared at that time.
  I readily confess with hindsight —I have confessed long since—that what was then seen as a basic and sensible proposition posed many legal complexities. I
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  hope that those problems have now been dealt with and I urge that whatever else is done, the most radical measures would be to give those rights to tenants collectively, not just in mansion blocks, but elsewere too.
  I am tempted to say that a similar right should be given to tenants in publicly owned flats where there is consistently bad or inadequate management. Tenants of local authority estates should have the right to purchase or bring in managing agents or a housing association to act on their behalf. This is not the first time that 1 have put that point.
  If the Minister will concentrate on the general proposition put forward by my hon. Friend the hon. Member for Birmingham, Perry Barr (Mr. Rooker), which was supported by the hon. Member for Woolwich, and will build on the assured tenancy policy to deal with the supply side of housing and leave well alone rent regulation and security of tenure, the threatened confrontation that we have detected from Bills in the other place and from speeches of various members of the Conservative party can be avoided.
  I am not saying that there should be no reform of rent regulation and security of tenure; there is always scope for that. Confrontation emerges when there is an argument in favour of complete deregulation and, because of the reaction to that from the Opposition, there is a hauling into the trenches and the Government say, "Do not touch the Rent Acts because we fear a repeat of the 1957 experience." We must avoid that confrontation. There can still be argument, but it must be sensible and constructive.
  From some quarters of the Conservative party in the past two or three years and, more significantly, recently we have seen the threat of complete deregulation emerging. It lies with the Government to act and put forward proposals in response to the spirit in which my hon. Friend spoke. The Government should concentrate on the supply side and improve assured tenancies.
  If we were to rely upon anything remotely like deregulation of rents, we would have an increase in rents of three or four times in London — that is already happening in lettings which are outside the Rent Acts, which have been the most significant lettings in recent years. A great deal of evidence was presented to the Select Committee on the Environment in 1981 and 1982 to confirm what many of us suspected, that even if there were deregulation there would still be inadequate incentive for new investment in private sector rented housing. Witnesses came before us and some of them were strong advocates of decontrol. My hon. Friend the Member for Walsall, North (Mr. Winnick) will recall that, because he was a member of the Committee. Even the strongest advocates of decontrol, after our exchanges and the study of the papers they put to the Committee, accepted that even with such rent increases in the private sector, there would still not be the return required to solve the problem of bad conditions and inadequate supply.
  That view was so widespread that it was included in the report's conclusions. I shall not quote them because of lack of time.
  Mr. Butterfill: Does the hon. Gentleman agree that one of the reasons for lack of interest in investment is the fear that the Labour party might reintroduce controls? We must contrast our experience with that of other countries.
  Mr. Freeson: The hon. Gentleman is making the usual generalised point. That was not the reason that was given.

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  I am not saying that there were no criticisms. There were criticisms of the controls. I am examining the view expressed by those who strongly advocated complete decontrol and who projected the financial implications and the kind of rent levels. They were not considering what might happen five or 10 years later with changes in legislation. Those people accepted that the return would be insufficient to encourage investment, even if there were a completely free market.
  I make that point strongly because advocates of the free market often argue that deregulation would produce the desired results. There is little or no evidence to support that in London. I do not speak for other parts of the country because, in any case, the proportion of rented accommodation elsewhere is different from that in London, and I do not think that it is significant.
  The answer lies not in trying to go backwards but in trying to evolve new forms of ownership and management — housing associations — and developing the assured tenancy approach. Until the matter can be resolved with the Treasury, there will be no going forward. I said privately to my hon. Friend the Member for Perry Barr a moment ago that, apart from the rights and wrongs of decontrol, there is one main reason why the Government do not introduce changes along the lines he proposed. It is that the Treasury knows that if the Government were to try to do so they would be virtually compelled to change the housing benefit scheme to provide for a sharp increase in rents. A huge Budget provision would be required.
  The main obstacle to the proposals is not political; it lies with the Treasury. Let us consider the present position. Housing associations have been pleading with the Treasury for the past four years to be allowed to make up for the cuts in public expenditure by drawing private finance into investment in rented accommodation. I am not talking about the marginal new initiatives on part ownership, leasehold for the elderly and such schemes. I am talking about fair rent housing. There is a rule-convention which the Treasury applies. It says that if private money is brought in beside public money, then, because public money is involved, the remainder must be classified as public expenditure. Do not ask me to understand what is beyond understanding. That is wholly unintelligible. The Treasury is blocking the opportunity to put millions of pounds into the provision of rented accommodation via housing associations. It is preventing the spreading of investment.
  The only way to get confidence for the policy development outlined by my hon. Friend the Member for Perry Barr is to break the present blockage. If the Government would allow private resources to go towards the provision of rented housing now, to provide thousands of new homes now, we could be confident of the assured tenancy provisions and alternative forms of housing management and ownership which lie between local authority housing and owner-occupation, and we could develop such a policy. Despite detailed differences, we might find common ground. The responsibility lies with the Government immediately to remove the obstacle to private money coming to housing associations to provide more rented accommodation which is urgently needed in our inner city areas.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Sir Paul Dean): Order. Six hon. Members are still hoping to speak in the debate and time is getting short, so I appeal for brief speeches.
  9 pm
  Mr. Michael Lord: As someone who has played many sports at one time or another, I have learnt the hard way that it is essential to keep one's eye on the ball. Once a player takes his eye off the ball he is lost. In the context of this debate, the ball is the need to house the homeless.
  Let me say at once that I believe that the Labour party means well. Labour Members start with the right intentions and with their eyes on the ball, anxious to house those in need. Unfortunately, their views become clouded and twisted by other factors, such as their dislike of landlords, capitalism, the profit motive, or whatever, and they lose sight of the central issue—they take their eyes off the ball. They become more interested in hounding the rich than in housing the poor. Tenants and would-be tenants become pawns in a political game.
  A famous politician said:
  "You cannot strengthen the weak by weakening the strong. You cannot help small men by tearing big men down. You cannot help the poor by destroying the rich. You cannot further the brotherhood of man by citing class hatred."
  Those are the words of Abraham Lincoln, spoken well over 100 years ago, yet they are timeless. They are as true today as, they were then.
  Perhaps I could add to that quotation some words of my own: "You cannot provide more accommodation for those who need it by attacking those who provide it. You cannot force people, through legislation, to do things against their interest, because they will not do it. Nor should we expect them to, nor if they are honest with this House would any Member of the Opposition."
  More housing will be provided in the private sector only if tenants and landlords are allowed to benefit. Indeed, they can both benefit, providing the matter is approached reasonably. The word "reasonable" occupies a central position in the law of this land. Many cases are decided on what is judged to be "reasonable" in a given set of circumstances. At first sight, the word seems to be a vague one on which to depend for so much of our law-making, yet its meaning is well understood, and, by and large, that system works. It works so well that in my more idealistic moments I sometimes wish that that could be the only law that we needed to deal with each other in all the various aspects of life. If that is a flight of fancy—sadly, I am afraid that it is—I am sure that we should all agree that at present we have far too much detailed legislation.
  We are increasingly trying to legislate, not merely to provide a broad framework within which people can live and work, but to attempt in a detailed way to tell people how they should treat each other, behave towards one another and, almost, what they should think of each other. We are attempting the impossible, the unnecessary, the restricting and in many ways the deeply damaging. People just will not do it. They react against it and they are frequently repelled by the idea of being told by the state in such detail what they can or cannot do in circumstances where they rightly believe that they should be trusted to be reasonable. In those circumstances, people who would normally be reasonable, are not. Although that is sad, I find it difficult to blame them.
  Clearly, there will always be a minority of bad landlords just as there will be some bad tenants. But to put

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  the whole of the private sector into a straitjacket in an attempt to eliminate problems is a ridiculous state of affairs. We cannot legislate in that way, because it simply will not work.
  We must trust people to deal fairly with each other. Why cannot we do so? If we are saying that that is impossible, what a tragic state our country and our people must be in. I do not believe that to be true. I have more faith in my fellow countrymen than that, whether they are landlords or tenants.
  Perhaps what is needed is for this House of Commons to set an example, to say that we can trust people to deal reasonably with each other and to encourage them to do so within the broadest possible framework. Unless we can do this I am sure that too many landlords will leave their houses empty and that too many of the homeless will remain homeless. This House owes it to the homeless to keep its eye on the ball.
  9.5 pm
  Mr. David Winnick: It is not difficult to imagine the hon. Member for Suffolk, Central (Mr. Lord) making a similar speech during the passage of the Rent Act 1957. He would have used the same words about confidence in people and having fewer regulations.
  The Minister's remarks tonight have been interesting. He told us that no major legislation is intended in this Parliament. I am not sure what he means by "major", but we shall pursue the point on other occasions to see what is intended for the rented sector. If deregulation comes about in this Parliament or in the next, it may be limited to some types of rented accommodation, but that would be only a first step towards further action to free the rented sector from regulations, which the hon. Members for Northampton, North (Mr. Marlow) and for Suffolk, Central would wish to see.
  Last week's issue of The Economist referred to the escalation of deregulation and made the point that in time almost everything in the privately rented sector would be decontrolled. I am sure that that is the position. It is also interesting to note that the Minister spoke about the possibility of new tenancies being subject to such decontrol. That was part of the Rent Act 1957 and the reason why unscrupulous people, whose names are well known to us, did everything that they could through harassment and worse to get rid of existing tenants. Once the controlled tenant was out, the place could be sold or let on a decontrolled basis. It is hardly likely that the statement that only new tenancies will be subject to control will possibly satisfy us.
  It is a fallacy that rent control and security of tenure have been main factors in the decline of rented accomodation. I have never denied that they were factors, but they are not the most important. Slum clearance, arising not directly from the Rent Act 1957 but over a long period, has been an important factor. Other factors have been the public sector replacement of slums and the very large increase in owner-occupation with tax relief on mortgage interest. Those are the historical reasons for the sharp decline of the privately rented sector.
  My right hon. Friend the Member for Brent, East (Mr. Freeson) mentioned the evidence given in 1981–82 to the Environment Select Committee. The British Property Federation and other witnesses made it clear to the Committee that landlords would require a proper return on such rented accommodation if the dwellings were to be
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  provided. I would urge hon. Members to read the report and the detailed oral and written evidence given to the Select Committee. It showed clearly that the return expected by property companies and landlords would make it almost impossible for many people to afford accommodation in the rented sector.
  Paragraph 55 of the report mentions a 9 per cent. return on such dwellings, which was the figure given to us by the British Property Federation, and states:
  "On this basis, even if the proportion that tenants were expected to pay was increased considerably, rents giving a 9 per cent. rate of return would require a very large increase in public expenditure on rent allowances and supplementary benefit."
  It would indeed need an extremely large amount of public expenditure. It is interesting to note that Conservative Members, who usually criticise such spending, believe it right and proper to spend public money on subsidising property companies in that way.
  What worries many of us is the way in which private tenants continue to suffer harassment. In London and other large cities, companies and landlords try constantly to evade the Rent Act regulations.
  I wish to draw attention to the scandalous way in which the Berger property empire continues to operate. It is estimated that it has about 100,000 flats and houses in the United Kingdom, and the empire consists of a tangled web of almost 300 companies. I wrote to the Minister's predecessor, the hon. Member for Eastbourne (Mr. Gow), following some exchanges at Question Time. I supplied him with plenty of documentary evidence about the Berger property empire, and his reply was along predictable lines: that no ministerial action could be taken. The tenants of that company have long complained of the serious neglect of their properties. Maximum profits are being made by the Berger group while the minimum is spent on repairs, renovation and services. The company uses many methods to pressurise tenants into leaving through neglect of the property.
  It is disgraceful that the Berger property company should be allowed to operate in that way without action being taken by the Government. I am pleased that the tenants have formed an organisation to try to force the company to make repairs. I hope—I am not optimistic —that the Government will assist those tenants.
  The majority of people will undoubtedly resolve their housing problems through owner-occupation. The Labour party's position on that has been made clear repeatedly. From what some Conservative Members say, one would imagine that the Labour party was against owner-occupation. Far from it. I have illustrated in previous speeches the actions taken by Labour Governments to encourage people to become owner-occupiers and the assistance that has been given to many people who would otherwise be unable to own their homes.
  However, it is important to remember that a substantial minority of people—I believe that there will always be such a substantial minority—are not in a position to buy. In the greater London area, many people—even those earning average incomes — have no chance of starting on the ladder of owner-occupation. That is why we must have a rented sector. The private rented sector cannot supply the accommodation that is needed. I share the view of my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) that people should not profit from other people's housing needs. That is an important Socialist concept, for which there is no reason to apologise.

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  Therefore, for those who cannot become owner-occupiers, rented accommodation should be supplied through the public sector, genuine housing associations and housing co-operatives. That is the way in which adequate accommodation could be provided. The opposite is now the case because only a small number of council dwellings are being built, and authorities like mine have not been able to start any house building since 1979. It is wrong that so many people should be denied decent accommodation simply because Government dogma is curtailing building in the public sector.
  The Government's housing policy has caused much misery and hardship. As we have seen tonight, they are being subjected to a tremendous amount of pressure to deregulate privately rented housing and the Opposition have a duty to warn the electorate that, in the unlikely event of the Conservatives winning the next election, the type of operation carried out under the Rent Act 1957 will be repeated. A Tory victory at the next election could well mean that a large number of private tenants who at present enjoy security of tenure will have that protection taken away. That is a warning for the electorate of what will happen if the Tories win the next election.
  9.16 pm
  Mr. John Wheeler: The hon. Member for Walsall, North (Mr. Winnick) is clear in his warning to the public, but this House has another duty and it is to tell the truth about the policies and issues that concern the electorate. The hon. Gentleman suggests that there will be wholesale decontrol of privately rented houses. In his excellent speech, my hon. Friend the Minister for Housing, Urban Affairs and Construction, made it clear that he does not have that in mind, nor is it in the mind of any other member of the Government. It is certainly not what Members on the Government Benches would be prepared to support.
  Many of us have constituents who reside in the declining privately rented sector, and we know that those constituents, especially the elderly, must enjoy the full protection of the law. In many respects we want to see that law strengthened. This debate is not about taking away rights that tenants presently enjoy; it is about how vast numbers of empty houses in the inner cities might be brought into use.
  The debate began with the hon. Member for Birmingham, Perry Barr (Mr. Rooker) trailing, as it were, the coming by-election in Fulham and he appeared to concentrate on that. But at least there was some consensus in his speech and I welcome that. His commitment to shared tenancy schemes, of which there are 163 in operation, was welcome. That is one way forward. I believe I understood him to support the concept of shorthold, and that too is welcome.
  Mr. Rooker: I never mentioned shorthold. I have a firm commitment to homes for the future. We are not in favour of shorthold and would abolish it. I do not want the hon. Member to be under any misunderstanding. I spoke about shared ownership and assured tenancies.
  Mr. Wheeler: I am grateful to the hon. Gentleman. I misunderstood him because I thought he said shorthold.
  I welcome the hon. Gentleman's commitment to shared ownership, because that is certainly one of the most
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  important ways of helping young married couples and others with home ownership. It is popular in my constituency and I am glad that there is common ground on this issue. It is an important area of common ground that I am sure we would wish to strengthen and encourage.
  Shorthold creates a problem. Many of my elderly constituents live in large flats which they can ill afford to maintain. Sometimes those tenants are widowed and are trying to pay rent and all the other rates and service charges that arise these days. Such constituents would welcome the opportunity to share their homes, perhaps with young mobile workers who want to come into central London, but they dare not open the door to such people. I shared the enthusiasm of the hon. Member for Woolwich (Mr. Cartwright) when he referred to that problem. Surely, in the interests of common sense, this House should discover the acceptable boundaries whereby people may rent part of their homes or the properties in which they live.
  The Nugee committee produced an important report. It sat for many months and considered the complicated problems affecting the occupants, leaseholders or renting tenants in blocks of flats. It is true that the hundreds of thousands of people who still live in such blocks reside mainly in London, the south-east and the inner cities. They are often elderly and unable to change to home ownership or to find accommodation elsewhere. They are captives of the system. This House has a duty to protect them and to improve the quality of their lives.
  The hon. Member for Walsall, North referred to the Berger empire. It is indeed a bad property-owning company, with a total disinterest in the management of its properties and the quality of life of their unfortunate occupants.
  One recommendation of the Nugee report dealt with that point. It suggested that, in appropriate circumstances, there should be an interim procedure whereby the aggrieved could require the landlord to remedy any defect or any breaches in convenants; should this fail, the tenants would be able to apply to the courts. Indeed, the report recommended that this provision should be widened to include the county courts for the appointment of a receiver-manager.
  There are suggested remedies in the report to deal with some of those very real ills, which must be dealt with. I urge my hon. Friend the Minister to give some commitment on when we will implement them. I know that it is a complicated area, but we must have legislation to deal with such dreadful circumstances that inflict such misery on so many people.
  The report was concerned with the management of blocks of flats; it did not look beyond that. We have heard tonight about the right to buy. The Committee went so far as to say that, if a property company proposed to dispose of its assets, the existing occupants should have the first right of refusal under a fair purchase arrangement. I very much welcomed my hon. Friend's statement that he would consider going further than that. I hope that he does—
  Mr. John Patten: Does my hon. Friend appreciate that I was not in any sense criticising the committee or its distinguished chairman? They strove always to stay within the terms of reference.
  Mr. Wheeler: I very much appreciate my hon. Friend's point. The committee was made up of persons

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  with a variety of backgrounds, both professional and political. Indeed, it included a distinguished Labour councillor from Camden. All of its 53 recommendations were approved by all its members, so there was wide consensus.
  The committee was concerned only with management issues and did not consider the wider political aspects. I would welcome a collective right to buy for the majority of tenants or leaseholders in a block of flats. That would make a great deal of sense. However, it would not solve the complicated human relationship problems of management. There is immense concern in London about foreign ownership of residential tenanted property. That issue should be examined. The Government should also consider urgently what should be done about the enforcement of the existing law by environmental health officers in local authorities. In the city of Westminster a unit has been set up to provide advice to the private rented sector. It is working extremely well, but in many authorities that has not been done, with the consequence that people who require professional help and guidance to deal with bad landlord or management problems find that it is lacking.
  I welcome the words of my hon. Friend the Minister of State I urge upon him early acceptance of the Nugee committee recommendations. Once enacted, they will go a long way to resolving some of the problems. I welcome, too, the prospect of extending the principle to the collective right to buy in the private sector.
  9.25 pm
  Mr. Harry Cohen: There is a scene in the excellent film "My Beautiful Laundrette" where a tenant is summarily thrown out on the street. When asked about it, the Pakistani landlord says that he is not a professional Pakistani but a professional business man. Later in the film, he and his colleagues drink to the Prime Minister for making it all possible. Evictions are not about race, but about bad landlords of all races. Many landlords are highly impersonal private companies. They are not professional or even amateur home suppliers, but professional business men who want as large a profit as they can get. Her Majesty's Government have facilitated them. In the process, the rights of private tenants, which were inadequate in the first place, have been whittled down still further.
  Private tenants are a deprived social group. They lack security. Many have to pay exorbitant rents. They face harassment and illegal eviction. They live in substandard accommodation. About 42 per cent. of private rented dwellings are in substantial disrepair. Private tenants are four times more likely than other households to live in accommodation that is unfit for human habitation. One in four private tenants do not have exclusive use of a bath or toilet. How many Conservative Members would like to queue up for the use of a bath or toilet?
  Private tenants are also potential victims of speculators who make huge profits by buying tenanted property, removing the tenant by any means and selling with vacant possession. Private tenants do not get their fair share of public subsidy. In 1983–84, owner-occupiers received £7 billion. There was no such subsidy to private tenants, despite the fact that 70 per cent. of them had below-average earnings. Homelessness has worsened under the Tory Government. As I mentioned in a speech just before
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  Christmas, in my borough 150 people are homeless. That puts an immense burden on the local authority and affects the other people on the council's waiting list.
  The answer was set out as a charter of rights for private tenants drawn up by various organisations, including the Law Centres Federation, the Organisation of Private Tenants, the Campaign for Single Homeless People, Shelter—the National Campaign for the Homeless—and SHAC, the London Housing Aid Centre, which has as its chairman Nick Raynsford, the excellent candidate for Labour in the Fulham by-election. I shall be one of the first to welcome him to the House after that by-election. Those organisations have drawn up an excellent charter for private tenants which the Government should implement. Its emphasis is on local authorities helping private tenants. I shall refer to some of its principles.
  Councils should provide new services and change existing ones to promote the interests of private tenants. Tenants should be able to force local authorities to use their powers. Councils should consult private tenants individually and on overall policy. Different council departments should work together in the interests of tenants. Councils must seek out the worst private rented property and deal with it systematically.
  In addition to those general principles, the charter goes into detail about houses in multiple occupation, the council's role in regular consultation with tenants, tackling unfit premises on a worst first basis, and identifying landlords who consistently evade the Rent Acts. Exorbitant rents should be referred to the rent officer so that he can set fair rents. Local authorities should also provide a comprehensive housing aid service, including investigators where there is harassment, and provide legal support for tenants. The rights of private tenants should be publicised, including housing benefit rights, in a number of languages so as to reach the many ethnic minority tenants.
  The charter also deals with rents and subsidies, security, the need to strengthen the laws against harassment and illegal eviction and the need for a proper right to repairs to a minimum standard. It is an excellent charter, but there is also a role for central Government. The Government should be working in partnership with the local authorities and making available the means for local authorities to implement the charter, rather than rate capping them and cutting their housing investment programme. All this needs a far more sympathetic Government policy, but the Government are not sympathetic to private tenants because there is no profit in it.
  9.31 pm
  Mr. John Butterfill: I have been rather depressed by what I have heard today. [HON. MEMBERS: "Quite right."] It shows that the Opposition have not learnt what is the key to the provision of private sector housing. In other countries thriving private sectors fulfil the need. I accept what has been said about the evils of wicked landlords and Rachmanism in this country, but it is all due to one thing—the stupid controls which have created artificial markets, without which Rachmanism could never have existed in the first place.
  I am a partner in a firm of chartered surveyors which has managed private rented property for nearly 50 years. By and large, private landlords are not the greedy people that the Opposition describe. Most of those for whom my

  401
  firm manages property are elderly. Most have only one property, some have two. The best landlords for whom we act are family trusts, which have more properties. The family trusts do not sell off their properties. They re-let them. Family trusts are still good private landlords.
  The problem is that no one is encouraged to reinvest while the present system of control remains. We could overcome that problem if we had the political will to get rid of rent control. I accept that that would mean much greater subsidies from the Treasury. That political constraint has held all parties back, but it cannot be moral to expect private landlords to subsidise occupation which should be subsidised either by local authorities or by the state. If people cannot afford to pay the market rent, we should not expect private people to subsidise them.
  I cannot see why private landlords should be described as evil people. It is said that they make profits from other people's housing needs. I would sooner say that they invest to help others gain housing. There are many other forms of investment. Many landlords for which my firm acts could easily have sold their property and invested the money in building societies and got better returns. They have chosen not to do that, for purely philanthropic motives. Such people still exist.
  The hon. Member for Birmingham, Perry Barr (Mr. Rooker) talked about repairs and said that tenants should have the opportunity to be rehoused if repairs were being carried out. Where does the money for that come from when a landlord does not get sufficient rent even to repair the property? Who will subsidise that activity?
  Mr. Rooker: The local authority.
  Mr. Butterfill: I am pleased to hear the hon. Gentleman say that.
  Mr. Rooker: The local authority should be given a grant.
  Mr. Butterfill: It is a problem. Who should be subsidised? In deference to my hon. Friend the Minister, I shall sit down. I have said only part of what I had hoped to say. I hope that the Government will reconsider the circumstances of private landlords.
  9.36 pm
  Mr. John Fraser: A theme of the debate has been the status of leaseholders of residential flats. Let me make it absolutely clear, as I think that I have done on almost every piece of housing legislation and in every debate that I have been afforded the opportunity to do so, the time is grossly overdue when we should legislate for leaseholders of residential accommodation along the lines of the Leasehold Reform Act 1967 — which the Government of the day described as Rachmanism in reverse —to give leaseholders the right collectively to buy their freeholds and collectively to manage their property, and to introduce the other recommendations of the Nugee committee report. I shall say no more about that except to underline again our overwhelming support for such a measure.
  Today's debate has been about the least supported and most neglected families and householders in the country —the tenants in privately rented accommodation. One in six privately rented homes is unfit for human habitation and half are in a substantial state of disrepair. At the worst,
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  private tenants are subject to cruel, inhumane and degrading treatment which my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) and other Front Bench colleagues saw only this Monday in Fulham.
  The treatment can be degrading, but it is at its worst in bed and breakfast accommodation. Being an occupant of such property means disease, malnutrition and sometimes even death because of the dangerous conditions that people are expected to endure.
  Tory party policy to the rented sector has several trends, which have been seen recently. One is not to increase but to reduce income support for people with no access to owner-occupation. That is demonstrated by cuts in the board and lodging allowance, which caused so much concern among politicians and in the courts. It is also demonstrated by the prospective cuts in housing benefit, which have been forced on the DHSS by the Treasury.
  Another trend is a reduction in capital expenditure on repair and improvement grants for the private sector. Local authorities, especially those in the most depressed areas with the greatest amount of privately rented accommodation, now have so little housing investment programme allocation that they are barely able to keep up with their contractual commitments, so the money that is essential to improve and repair privately rented accommodation is no longer available.
  The cuts in capital expenditure have a second effect. They deny private tenants that which they would regard as paradise — the opportunity to be transferred from privately rented accommodation to a secure, safe and well-heated home owned by the local authority or a housing association. That particularly applies to the elderly, the poor and the vulnerable—of whom a large number are occupants of privately rented accommodation.
  The situation is so bad in London, Manchester and some other places that the only route from privately rented accommodation into public accommodation is that of homelessness. This debate has been far too polite. We should remind ourselves that last year, 100,000 families were accepted — many more applied — as being homeless. That is the equivalent of every family in the London borough of Hammersmith and Fulham having their roof taken away and being evicted. That is the scale of homelessness in the United Kingdom today.
  The fourth theme that the Tories adopt towards privately rented accommodation is that if a choice has to be made—and it is electorally safe—between landlord and tenant, property and people or community and corporation, they would choose the corporation, the property and the landlord. That is seen in the speech made by the Minister for Housing, Urban Affairs and Construction to the Young Conservatives conference.
  The last words of our motion underline the fact that in the next Parliament the Government are contemplating an end to what the Minister calls Socialist rent control, with rents being artificially low. Many private tenants in my constituency do not regard their controlled rents as being artificially low.
  Certain consequences will flow from decontrol and any repeal of the Rent Act 1977. The first will be that rents will rocket. Apart from the evidence of one's own experience, one need only look at the report of the Select Committee on the Environment in 1981, which talked of the very high rents faced by households that were trying to gain access to the private rented sector in areas of considerable housing stress. It stated:

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  "Rents quoted for lettings outside the Rent Act ranged from two to four times the registered rent."
  It also gave an example of the sort of accommodation that might be occupied by the single person to whom the Minister referred. We all know that a studio flat is practically a cubbyhole. For such a flat in Paddington, the registered rent was £30 a week, whereas the rent on the open market would have been about £90 a week. If translated to 1985–86 prices, such a rent would rise to between £100 and £120 a week.
  If the Minister thinks that decontrol will help the homeless, I cite the example of Mrs. Ashby of Fulham, who is temporarily occupying a flat that will go on to the market for about £55,000. A9 per cent. return on £55,000 is £4,950 a year—almost £100 a week. That is the kind of accommodation that the Minister says will become available to the homeless if there is decontrol in the next parliamentary term. It is absolute rubbish to think that decontrol will solve the problem of homelessness and housing shortage in London and other areas.
  Mr. Marlow rose—
  Mr. Fraser: I am very short of time and cannot give way to the hon. Gentleman.
  Secondly, the Minister also talked of landlords and tenants agreeing rents freely, as if there would be some kind of freedom to negotiate if there were decontrol. The only freedom that decontrol will create will be the freedom to exploit—the kind of freedom that exists between a warder and his prisoner, and the freedom of the oxen to wear a yoke.
  Mr. Marlow rose—
  Mr. Fraser: Thirdly, the Minister says that more accommodation will become available. That is absolute rubbish, as is shown by the experience following the Rent Act 1957. I took the trouble to read through the Milner Holland report to find out how much of the extra accommodation that was forecast by the right hon. Member for South Down (Mr. Powell) would be available. The report examined a period of 40 months from 1960–63 — a period of decontrol and absence of security of tenure. In that time, it was estimated that the loss of lettings was 14 per cent. in London. There is no evidence that decontrol brings properties on the market to rent—quite the reverse, it makes them available only for sale.
  Mr. Marlow rose—
  Mr. Fraser: I am sorry. but I have only a short time.
  The fourth proposition is that even if property becomes available for letting as a result of decontrol, one simple thing happens — as prices go up, the amount of accommodation available for a person to occupy goes down. The price rises and the square footage decreases. It leads to what it led to between 1957–64—to grossly overcrowded as well as overpriced accommodation, multiple occupation, insecurity and difficulty.
  When I gave evidence to Lord Scarman's inquiry, I wondered why some of my constituents behave in their 20s as they do, and I am sure that one of the reasons was the rotten, overcrowded nomadic existence through which they had to go during decontrol, particularly if they were using unfurnished tenancies. At the end of the day, the local authority has to pick up the tab for such behaviour.
  Mr. Marlow rose—
  Mr. Fraser: This is a short debate.
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  I shall end my speech with three pictures of the housing situation today and of what the Prime Minister cares to call "popular capitalism". The first is a retrospective picture from the Milner Holland report, written after seven years of decontrol. It says:
  "the prime cause of most of the hardship, misery and anxiety which we have described is the absence of any adequate security of tenure in the situation which prevails in London of a grave shortage of accommodation for rent at the lower end of the rental scale."
  Exactly the same thing will happen as a result of the decontrol provisions that are to be put forward for the next session. What was true in the Rachman years is as true today.
  The second picture of housing under popular capitalism is the picture of Mrs. Ellen Griffin, a private tenant whom I saw in Fulham on Monday. I do not think this is funny, although I see the hon. Member for Northampton (Mr. Marlow) laughing. Mrs. Griffin is 80 and frail and cannot even climb up to the gas meter to put in her money. For half a century, she has lived in conditions that we would all regard as intolerable. Her home is decaying around her. She has not enjoyed hot water for decades and her shared home is hopelessly outdated. She is in a top floor flat without light in the corridor. The roof leaks and in this weather her home is like a Siberian prison. I know from my colleagues that there are thousands of Ellen Griffins in Britain, who look for sheltered, warm and secure housing, which only the community or the state can provide, and which is denied to them because of the savage cuts in public housing investment which, for all the rhetoric that we have heard from Conservative Members, will take place again next year.
  My third picture of Tory values is one that I saw last night as I drove back from a meeting in Finchley. Outside Holborn underground station, two people lay on the pavement, one in a blanket, the other in a cardboard box. They were trying to benefit from some of the warm air coming through the grills from the underground station after it had been closed. They represented the ultimate state of caring Conservatism and popular capitalism. Under such a regime we are reduced to housing meaning a box in a blizzard on a pavement.
  I did not ask those two people last night whether they thought that decontrol of privately rented accommodation would help them. I did not ask. Mrs. Griffin if it would help her. I did not need to, because I knew the answer already. What we ask for tonight is the support of all parties in the House for the motion when the House divides in opposition to a housing policy which already divides the nation.
  9.45 pm
  The Parliamentary Under-Secretary of State for the Environment (Sir George Young): This has been a relatively short debate, but with one or two exceptions it has been a fairly reflective debate, with, on occasions, some glimpses of neutral territory or common ground appearing between the two sides. The hon. Member for Norwood (Mr. Fraser) criticised the debate for being too polite. That must have been a criticism of his hon. Friends rather than of mine, because my hon. Friends are always polite.
  Let me deal with an implication in the hon. Gentleman's speech that there has been a cut in improvement grants to landlords. I listened to what he said

  405
  about Mrs. Ashby and Mrs. Griffin. There was an implication that councils were giving less help to private landlords and tenants, but I must give him the figures. In 1979, 10,000 grants were given by local authorities to private landlords. In 1984, the latest year for which we have figures, there were 33,000 grants. The number of grants paid to private tenants has also trebled. Since 1981 local authorities have paid over 100,000 home improvement grants to landlords. Almost half of those were for conversion and improvement, and a quarter for essential repairs. Whichever way one looks at it, that is a sizeable commitment of public expenditure and it is a substantial increase over what was paid by the previous Labour Government. We intend to maintain that commitment and ensure that help is available to those who need it.
  If I do not have time to deal with all the points that have been made it is because the time available is inevitably restricted.
  The hon. Member for Woolwich (Mr. Cartwright) made a balanced speech and rejected the municipal solution. I think that he rejected the logical conclusion that comes from his premise, that there would have to be some movements in rents if one removes some of the controls, but I noted and welcomed what he said about the assured tenancy scheme.
  My hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) spoke about the Nugee report, and I pay tribute to the work that he did in the Department to improve the rights to leaseholders. He raised the intriguing point that the election expenses for the Labour candidate in Fulham may well have been started. I noticed that the hon. Member for Leyton (Mr. Cohen) referred to him not as the prospective parliamentary candidate, but as the parliamentary candidate. I wonder whether the costs of the debate, including the modest salaries paid to myself and my hon. Friend the Minister for Housing, Urban Affairs and Construction should be debited—
  Mr. Cohen: It was a slip of the tongue.
  Sir George Young: It may have been an expensive slip of the tongue.
  The right hon. Member for Brent, East (Mr. Freeson) spoke about extending the right of first refusal to long leaseholders, a point which was also raised by my hon. Friend the Member for Westminster, North (Mr. Wheeler). The Nugee committee recommended that where a landlord wished to dispose of his interest, the residents should have a right of first refusal to enable them to buy the block if they so wished. We are considering that proposal. We are also considering the wider question which my hon. Friend raised of whether residents should have a collective right to purchase in other circumstances. We are doing this as part of our reflection on the Nugee committee's findings. We are well aware of the urgent need to make progress. Large numbers of leaseholders are waiting for the Government to come to some conclusion, and we shall do so as soon as we can.
  I also welcome what the right hon. Member for Brent, East said about the assured tenancy scheme and the notion of extending more rights to tenants.
  My hon. Friend the Member for Suffolk, Central (Mr. Lord) raised the vital question of the homeless. That factor
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  was left out of many contributions. He put the housing debate in a slightly broader context and reminded us of the needs of those on waiting lists and others.
  The hon. Member for Walsall, North (Mr. Winnick) made a somewhat doctrinaire speech. It was clear to him that the private sector had no role to play in solving housing problems.
  Mr. Marlow: The hon. Member for Walsall, North (Mr. Winnick) implied that all Conservative Members favour doing away with rent control altogether. I think that the vast majority of Conservative Members believe that people in regulated tenancies have security of tenure and regulated rents, and that it would be totally improper to interfere with that system in any way. Will my hon. Friend point out to Labour Members that, on the continent, people are building accommodation for private rent? On the continent, people take that accommodation. They can afford it and it works. Why the blazes can it not work here?
  Sir George Young: I am grateful to my hon. Friend. Let me make it clear that we have no intention of removing the protection enjoyed by existing tenants.
  My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) gave us the benefit of his experience in dealing with property. He deplored the continuing restrictions on investment.
  The hon. Member for Birmingham, Perry Barr (Mr. Rooker) said that being a private landlord was an unacceptable way of living.
  Mr. Rooker: I did not say that.
  Sir George Young: I wrote the words down the moment the hon. Gentleman said them.
  Mr. Rooker: I was reading from my notes. I did not say that. I said that being another person's landlord for a crude commercial profit was an unacceptable way of earning a living. That is what I said. It is not what the Under-Secretary of State said.
  Sir George Young: The hon. Gentleman's comments will cause great offence to many landlords and landladies and to their tenants, who have a perfectly respectable and acceptable relationship with them. The hon. Member for Perry Barr said that that was an unacceptable way of living. That is one of the less thoughtful remarks that we have heard from him.
  Not so long ago, any debate on this subject would have led to a call from the Opposition to municipalise private landlords. I am not sure whether any of them still maintain that that is the right solution. If they did take that action, it would cost about £10 billion.
  The solutions put forward this evening by the Opposition will not work either. Some of my colleagues explained why the present regime is not working. In case their arguments fell on deaf ears, I shall quote three passages from last year's inquiry into British housing, chaired by Prince Philip, which had representatives from all political parties on it. The inquiry stated:
  "At present there is an almost total dependency on public funding for rented housing. This is restrictive and inevitably vulnerable to changes in housing policy".
  On rates of return, the inquiry stated:
  "These fair rent rates of return are inadequate to keep existing landlords in the market if they have the option of a sale with vacant possession for owner-occupation. Nor are these returns necessarily sufficient to provide an incentive to improvement or repair, and they certainly are insufficient to encourage new investment in property to rent".

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  On the Rent Acts, the inquiry said:
  "Looked at objectively, the protective legislation of the Rent Acts is either responsible all too often for diminution of supply, or is irrelevant as landlords exploit the various loopholes open to them. In either case, it is hard to see that current legislation is effective in protecting anyone's interests."
  The Tory party did not say that. The inquiry set up by the National Federation of Housing Associations, which included many housing experts, unanimously came to that conclusion.
  The first report of the Select Committee on the Environment stated:
  "The Committee concludes that a healthy private rented sector would require that commercial landlords were able to obtain a return on investment commensurate to that available on similar risk investments elsewhere and that tenants were able without hardship to pay rents on suitable secure accommodation The present system appears to meet neither of these requirements."
  That is the system which many Labour Members sought to defend. Why are they so wedded to a system which freezes out respectable institutional funding, which could help us tackle bad housing conditions? Many Labour councils are now collaborating with the private sector to turn around difficult estates. There can be no problem, therefore, about harnessing the resources of the private sector to meet housing needs.
  Mr. Allen McKay rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the original words stand part of the Question:—
  The House divided: Ayes 177, Noes 258.

  Division No. 80]

  [10.00 pm

  AYES

  Adams, Allen (Paisley N)

  Corbyn, Jeremy

  Archer, Rt Hon Peter

  Cox, Thomas (Tooting)

  Ashley, Rt Hon Jack

  Craigen, J. M.

  Ashton, Joe

  Crowther, Stan

  Atkinson, N. (Tottenham)

  Cunliffe, Lawrence

  Bagier, Gordon A. T.

  Cunningham, Dr John

  Barron, Kevin

  Dalyell, Tam

  Benn, Rt Hon Tony

  Davies, Rt Hon Denzil (L'lli)

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

  Davies, Ronald (Caerphilly)

  Bermingham, Gerald

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

  Bidwell, Sydney

  Dixon, Donald

  Blair, Anthony

  Dobson, Frank

  Boothroyd, Miss Betty

  Dormand, Jack

  Boyes, Roland

  Douglas, Dick

  Brown, Gordon (D'f'mline E)

  Dubs, Alfred

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

  Duffy, A. E. P.

  Brown, Ron (E'burgh, Leith)

  Dunwoody, Hon Mrs G.

  Buchan, Norman

  Eadie, Alex

  Caborn, Richard

  Eastham, Ken

  Callaghan, Jim (Heyw'd & M)

  Evans, John (St. Helens N)

  Campbell, Ian

  Ewing, Harry

  Campbell-Savours, Dale

  Fatchett, Derek

  Canavan, Dennis

  Faulds, Andrew

  Carter-Jones, Lewis

  Field, Frank (Birkenhead)

  Clark, Dr David (S Shields)

  Fields, T. (L'pool Broad Gn)

  Clarke, Thomas

  Fisher, Mark

  Clay, Robert

  Flannery, Martin

  Clelland, David Gordon

  Foot, Rt Hon Michael

  Clwyd, Mrs Ann

  Forrester, John

  Cocks, Rt Hon M. (Bristol S)

  Foster, Derek

  Cohen, Harry

  Foulkes, George

  Coleman, Donald

  Fraser, J. (Norwood)

  Conlan, Bernard

  Freeson, Rt Hon Reginald

  Cook, Frank (Stockton North)

  Garrett, W. E.

  Cook, Robin F. (Livingston)

  George, Bruce

  Corbett, Robin

  Gilbert, Rt Hon Dr John

  408

  Godman, Dr Norman

  O'Brien, William

  Golding, John

  O'Neill, Martin

  Gould, Bryan

  Orme, Rt Hon Stanley

  Gourlay, Harry

  Park, George

  Hamilton, James (M'well N)

  Parry, Robert

  Hamilton, W. W. (Fife Central)

  Patchett, Terry

  Hardy, Peter

  Pavitt, Laurie

  Harrison, Rt Hon Walter

  Pendry, Tom

  Hattersley, Rt Hon Roy

  Pike, Peter

  Haynes, Frank

  Powell, Raymond (Ogmore)

  Healey, Rt Hon Denis

  Prescott, John

  Heffer, Eric S.

  Radice, Giles

  Hogg, N. (C'nauld & Kilsyth)

  Randall, Stuart

  Holland, Stuart (Vauxhall)

  Redmond, Martin

  Hoyle, Douglas

  Rees, Rt Hon M. (Leeds S)

  Hughes, Dr Mark (Durham)

  Richardson, Ms Jo

  Hughes, Robert (Aberdeen N)

  Roberts, Ernest (Hackney N)

  Hughes, Roy (Newport East)

  Robertson, George

  Hughes, Sean (Knowsley S)

  Robinson, G. (Coventry NW)

  Janner, Hon Greville

  Rogers, Allan

  John, Brynmor

  Rooker, J. W.

  Jones, Barry (Alyn & Deeside)

  Ross, Ernest (Dundee W)

  Kaufman, Rt Hon Gerald

  Sedgemore, Brian

  Lambie, David

  Sheerman, Barry

  Lamond, James

  Sheldon, Rt Hon R.

  Leadbitter, Ted

  Shore, Rt Hon Peter

  Leighton, Ronald

  Short, Ms Clare (Ladywood)

  Lewis, Ron (Carlisle)

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

  Lewis, Terence (Worsley)

  Skinner, Dennis

  Litherland, Robert

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

  Lloyd, Tony (Stretford)

  Smith, Rt Hon J. (M'ds E)

  Lofthouse, Geoffrey

  Snape, Peter

  Loyden, Edward

  Soley, Clive

  McCartney, Hugh

  Spearing, Nigel

  McDonald, Dr Oonagh

  Stott, Roger

  McGuire, Michael

  Strang, Gavin

  McKelvey, William

  Straw, Jack

  MacKenzie, Rt Hon Gregor

  Thomas, Dafydd (Merioneth)

  McNamara, Kevin

  Thomas, Dr R. (Carmarthen)

  McTaggart, Robert

  Thompson, J. (Wansbeck)

  Madden, Max

  Thorne, Stan (Preston)

  Mallon, Seamus

  Tinn, James

  Marek, Dr John

  Torney, Tom

  Marshall, David (Shettleston)

  Wardell, Gareth (Gower)

  Martin, Michael

  Wareing, Robert

  Mason, Rt Hon Roy

  Welsh, Michael

  Maynard, Miss Joan

  White, James

  Meacher, Michael

  Williams, Rt Hon A.

  Michie, William

  Winnick, David

  Mikardo, Ian

  Woodall, Alec

  Millan, Rt Hon Bruce

  Morris, Rt Hon A. (W'shawe)

  Tellers for the Ayes:

  Morris, Rt Hon J. (Aberavon)

  Mr. John McWilliam and

  Nellist, David

  Mr. Allen McKay.

  Oakes, Rt Hon Gordon

  NOES

  Adley, Robert

  Blaker, Rt Hon Sir Peter

  Alexander, Richard

  Body, Sir Richard

  Alison, Rt Hon Michael

  Bonsor, Sir Nicholas

  Amess, David

  Boscawen, Hon Robert

  Ancram, Michael

  Bottomley, Peter

  Arnold, Tom

  Bottomley, Mrs Virginia

  Ashby, David

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

  Aspinwall, Jack

  Bowden, Gerald (Dulwich)

  Atkins, Rt Hon Sir H.

  Boyson, Dr Rhodes

  Atkins, Robert (South Ribble)

  Braine, Rt Hon Sir Bernard

  Atkinson, David (B'm'th E)

  Brandon-Bravo, Martin

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

  Bright, Graham

  Baker, Nicholas (Dorset N)

  Brinton, Tim

  Banks, Robert (Harrogate)

  Brown, M. (Brigg & Cl'thpes)

  Batiste, Spencer

  Bruinvels, Peter

  Beaumont-Dark, Anthony

  Bryan, Sir Paul

  Bendall, Vivian

  Buchanan-Smith, Rt Hon A.

  Benyon, William

  Bulmer, Esmond

  Best, Keith

  Burt, Alistair

  Bevan, David Gilroy

  Butcher, John

  Biffen, Rt Hon John

  Butler, Rt Hon Sir Adam

  Biggs-Davison, Sir John

  Butterfill, John

  Blackburn, John

  Carlisle, John (Luton N)

  409

  Carlisle, Kenneth (Lincoln)

  Holt, Richard

  Cash, William

  Howard, Michael

  Chalker, Mrs Lynda

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

  Channon, Rt Hon Paul

  Howarth, Gerald (Cannock)

  Chapman, Sydney

  Howell, Rt Hon D. (G'ldford)

  Chope, Christopher

  Howell, Ralph (Norfolk, N)

  Churchill, W. S.

  Hubbard-Miles, Peter

  Clark, Dr Michael (Rochford)

  Hunt, John (Ravensbourne)

  Clarke, Rt Hon K. (Rushcliffe)

  Hunter, Andrew

  Cockeram, Eric

  Hurd, Rt Hon Douglas

  Colvin, Michael

  Irving, Charles

  Conway, Derek

  Jackson, Robert

  Coombs, Simon

  Jessel, Toby

  Cope, John

  Johnson Smith, Sir Geoffrey

  Cormack, Patrick

  Jones, Gwilym (Cardiff N)

  Corrie, John

  Jones, Robert (Herts W)

  Couchman, James

  Kellett-Bowman, Mrs Elaine

  Crouch, David

  Kershaw, Sir Anthony

  Currie, Mrs Edwina

  Key, Robert

  Dickens, Geoffrey

  King, Roger (B'ham N'field)

  Dicks, Terry

  King, Rt Hon Tom

  Dorrell, Stephen

  Knowles, Michael

  Dover, Den

  Knox, David

  Dunn, Robert

  Lamont, Norman

  Durant, Tony

  Lang, Ian

  Emery, Sir Peter

  Latham, Michael

  Evennett, David

  Lawler, Geoffrey

  Eyre, Sir Reginald

  Lawrence, Ivan

  Fairbairn, Nicholas

  Lawson, Rt Hon Nigel

  Fallon, Michael

  Leigh, Edward (Gainsbor'gh)

  Farr, Sir John

  Lennox-Boyd, Hon Mark

  Favell, Anthony

  Lester, Jim

  Finsberg, Sir Geoffrey

  Lightbown, David

  Fletcher, Alexander

  Lilley, Peter

  Fookes, Miss Janet

  Lloyd, Ian (Havant)

  Forman, Nigel

  Lloyd, Peter (Fareham)

  Forsyth, Michael (Stirling)

  Lord, Michael

  Forth, Eric

  Lyell, Nicholas

  Fowler, Rt Hon Norman

  McCrindle, Robert

  Fox, Marcus

  McCurley, Mrs Anna

  Franks, Cecil

  Macfarlane, Neil

  Fraser, Peter (Angus East)

  MacKay, John (Argyll & Bute)

  Freeman, Roger

  Maclean, David John

  Fry, Peter

  McNair-Wilson, M. (N'bury)

  Galley, Roy

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

  Gardner, Sir Edward (Fylde)

  Major, John

  Garel-Jones, Tristan

  Malone, Gerald

  Gilmour, Rt Hon Sir Ian

  Maples, John

  Glyn, Dr Alan

  Marland, Paul

  Goodhart, Sir Philip

  Marlow, Antony

  Goodlad, Alastair

  Mates, Michael

  Gow, Ian

  Mather, Carol

  Grant, Sir Anthony

  Mawhinney, Dr Brian

  Greenway, Harry

  Maxwell-Hyslop, Robin

  Gregory, Conal

  Mayhew, Sir Patrick

  Griffiths, Sir Eldon

  Mellor, David

  Griffiths, Peter (Portsm'th N)

  Merchant, Piers

  Grist, Ian

  Miller, Hal (B'grove)

  Ground, Patrick

  Mills, Iain (Meriden)

  Gummer, Rt Hon John S

  Mitchell, David (Hants NW)

  Hamilton, Hon A. (Epsom)

  Moate, Roger

  Hamilton, Neil (Tatton)

  Monro, Sir Hector

  Hampson, Dr Keith

  Montgomery, Sir Fergus

  Hannam, John

  Moore, Rt Hon John

  Hargreaves, Kenneth

  Morris, M. (N'hampton S)

  Harris, David

  Morrison, Hon P. (Chester)

  Haselhurst, Alan

  Moynihan, Hon C.

  Hawkins, Sir Paul (N'folk SW)

  Mudd, David

  Hawksley, Warren

  Neale, Gerrard

  Hayhoe, Rt Hon Barney

  Needham, Richard

  Hayward, Robert

  Nelson, Anthony

  Heath, Rt Hon Edward

  Newton, Tony

  Heddle, John

  Nicholls, Patrick

  Henderson, Barry

  Norris, Steven

  Heseltine, Rt Hon Michael

  Ottaway, Richard

  Hicks, Robert

  Page, Richard (Herts SW)

  Higgins, Rt Hon Terence L.

  Parkinson, Rt Hon Cecil

  Hind, Kenneth

  Patten, Christopher (Bath)

  Hogg, Hon Douglas (Gr'th'm)

  Patten, J. (Oxf W & Abgdn)

  Holland, Sir Philip (Gedling)

  Pawsey, James

  410

  Peacock, Mrs Elizabeth

  Smith, Sir Dudley (Warwick)

  Percival, Rt Hon Sir Ian

  Speller, Tony

  Pollock, Alexander

  Spence, John

  Porter, Barry

  Spicer, Michael (S Worcs)

  Portillo, Michael

  Stewart, Allan (Eastwood)

  Powell, William (Corby)

  Taylor, John (Solihull)

  Powley, John

  Thorne, Neil (Ilford S)

  Prentice, Rt Hon Reg

  Thurnham, Peter

  Price, Sir David

  Townend, John (Bridlington)

  Proctor, K. Harvey

  Townsend, Cyril D. (B'heath)

  Raffan, Keith

  Trippier, David

  Raison, Rt Hon Timothy

  Twinn, Dr Ian

  Rathbone, Tim

  Waddington, David

  Rees, Rt Hon Peter (Dover)

  Wakeham, Rt Hon John

  Renton, Tim

  Walker, Bill (T'side N)

  Rhodes James, Robert

  Wall, Sir Patrick

  Rhys Williams, Sir Brandon

  Ward, John

  Ridley, Rt Hon Nicholas

  Wells, Sir John (Maidstone)

  Ridsdale, Sir Julian

  Wheeler, John

  Rifkind, Rt Hon Malcolm

  Whitfield, John

  Rippon, Rt Hon Geoffrey

  Wiggin, Jerry

  Roe, Mrs Marion

  Wood, Timothy

  Rossi, Sir Hugh

  Woodcock, Michael

  Sainsbury, Hon Timothy

  Young, Sir George (Acton)

  Shaw, Giles (Pudsey)

  Shepherd, Colin (Hereford)

  Tellers for the Noes:

  Shersby, Michael

  Mr. Donald Thompson and

  Skeet, Sir Trevor

  Mr. Michael Neubert.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments):—
  The House divided: Ayes 228, Noes 150.

  Division No. 81]

  [10.19 pm

  AYES

  Adley, Robert

  Carlisle, John (Luton N)

  Alexander, Richard

  Carlisle, Kenneth (Lincoln)

  Alison, Rt Hon Michael

  Channon, Rt Hon Paul

  Amess, David

  Chapman, Sydney

  Ancram, Michael

  Chope, Christopher

  Ashby, David

  Clark, Dr Michael (Rochford)

  Aspinwall, Jack

  Clarke, Rt Hon K. (Rushcliffe)

  Atkins, Rt Hon Sir H.

  Cockeram, Eric

  Atkins, Robert (South Ribble)

  Colvin, Michael

  Atkinson, David (B'm'th E)

  Conway, Derek

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

  Coombs, Simon

  Baker, Nicholas (Dorset N)

  Cope, John

  Banks, Robert (Harrogate)

  Corrie, John

  Batiste, Spencer

  Couchman, James

  Beaumont-Dark, Anthony

  Crouch, David

  Benyon, William

  Currie, Mrs Edwina

  Best, Keith

  Dickens, Geoffrey

  Bevan, David Gilroy

  Dorrell, Stephen

  Biffen, Rt Hon John

  Dunn, Robert

  Biggs-Davison, Sir John

  Durant, Tony

  Blackburn, John

  Emery, Sir Peter

  Blaker, Rt Hon Sir Peter

  Evennett, David

  Body, Sir Richard

  Eyre, Sir Reginald

  Bonsor, Sir Nicholas

  Fairbairn, Nicholas

  Boscawen, Hon Robert

  Fallon, Michael

  Bottomley, Peter

  Farr, Sir John

  Bottomley, Mrs Virginia

  Favell, Anthony

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

  Fenner, Mrs Peggy

  Bowden, Gerald (Dulwich)

  Finsberg, Sir Geoffrey

  Boyson, Dr Rhodes

  Fletcher, Alexander

  Brandon-Bravo, Martin

  Fookes, Miss Janet

  Bright, Graham

  Forman, Nigel

  Brinton, Tim

  Forsyth, Michael (Stirling)

  Brown, M. (Brigg & Cl'thpes)

  Forth, Eric

  Bruinvels, Peter

  Fowler, Rt Hon Norman

  Bryan, Sir Paul

  Fox, Marcus

  Buchanan-Smith, Rt Hon A.

  Franks, Cecil

  Bulmer, Esmond

  Fraser, Peter (Angus East)

  Burt, Alistair

  Freeman, Roger

  Butler, Rt Hon Sir Adam

  Fry, Peter

  Butterfill, John

  Galley, Roy

  411

  Gardner, Sir Edward (Fylde)

  Mather, Carol

  Garel-Jones, Tristan

  Mawhinney, Dr Brian

  Gilmour, Rt Hon Sir Ian

  Mayhew, Sir Patrick

  Goodhart, Sir Philip

  Mellor, David

  Goodlad, Alastair

  Miller, Hal (B'grove)

  Gow, Ian

  Mills, Iain (Meriden)

  Grant, Sir Anthony

  Mitchell, David (Hants NW)

  Greenway, Harry

  Moate, Roger

  Gregory, Conal

  Monro, Sir Hector

  Griffiths, Sir Eldon

  Montgomery, Sir Fergus

  Griffiths, Peter (Portsm'th N)

  Moore, Rt Hon John

  Grist, Ian

  Morris, M. (N'hampton S)

  Ground, Patrick

  Morrison, Hon P. (Chester)

  Gummer, Rt Hon John S

  Moynihan, Hon C.

  Hamilton, Hon A. (Epsom)

  Mudd, David

  Hamilton, Neil (Tatton)

  Neale, Gerrard

  Hampson, Dr Keith

  Needham, Richard

  Hannam, John

  Nelson, Anthony

  Hargreaves, Kenneth

  Neubert, Michael

  Harris, David

  Newton, Tony

  Haselhurst, Alan

  Nicholls, Patrick

  Hawkins, Sir Paul (N'folk SW)

  Norris, Steven

  Hawksley, Warren

  Ottaway, Richard

  Hayhoe, Rt Hon Barney

  Page, Richard (Herts SW)

  Hayward, Robert

  Parkinson, Rt Hon Cecil

  Heddle, John

  Patten, Christopher (Bath)

  Henderson, Barry

  Patten, J. (Oxf W & Abgdn)

  Heseltine, Rt Hon Michael

  Pawsey, James

  Hicks, Robert

  Peacock, Mrs Elizabeth

  Higgins, Rt Hon Terence L.

  Pollock, Alexander

  Hind, Kenneth

  Porter, Barry

  Hogg, Hon Douglas (Gr'th'm)

  Portillo, Michael

  Holland, Sir Philip (Gedling)

  Powell, William (Corby)

  Holt, Richard

  Powley, John

  Howard, Michael

  Prentice, Rt Hon Reg

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

  Proctor, K. Harvey

  Howarth, Gerald (Cannock)

  Raffan, Keith

  Hubbard-Miles, Peter

  Raison, Rt Hon Timothy

  Hunt, John (Ravensbourne)

  Rathbone, Tim

  Hurd, Rt Hon Douglas

  Renton, Tim

  Irving, Charles

  Rhodes James, Robert

  Jackson, Robert

  Rhys Williams, Sir Brandon

  Jessel, Toby

  Ridsdale, Sir Julian

  Johnson Smith, Sir Geoffrey

  Rifkind, Rt Hon Malcolm

  Jones, Robert (Herts W)

  Roe, Mrs Marion

  Kellett-Bowman, Mrs Elaine

  Rossi, Sir Hugh

  Kershaw, Sir Anthony

  Sainsbury, Hon Timothy

  Key, Robert

  Shaw, Giles (Pudsey)

  King, Roger (B'ham N'field)

  Shepherd, Colin (Hereford)

  King, Rt Hon Tom

  Shersby, Michael

  Knowles, Michael

  Skeet, Sir Trevor

  Knox, David

  Smith, Sir Dudley (Warwick)

  Lamont, Norman

  Speller, Tony

  Lang, Ian

  Spicer, Michael (S Worcs)

  Latham, Michael

  Stewart, Allan (Eastwood)

  Lawler, Geoffrey

  Taylor, John (Solihull)

  Lennox-Boyd, Hon Mark

  Thurnham, Peter

  Lester, Jim

  Townsend, Cyril D. (B'heath)

  Lightbown, David

  Trippier, David

  Lilley, Peter

  Twinn, Dr Ian

  Lloyd, Ian (Havant)

  Viggers, Peter

  Lord, Michael

  Waddington, David

  Lyell, Nicholas

  Wakeham, Rt Hon John

  McCrindle, Robert

  Walker, Bill (T'side N)

  McCurley, Mrs Anna

  Wall, Sir Patrick

  Macfarlane, Neil

  Wells, Sir John (Maidstone)

  MacKay, John (Argyll & Bute)

  Wheeler, John

  Maclean, David John

  Whitfield, John

  McNair-Wilson, M. (N'bury)

  Wiggin, Jerry

  Major, John

  Wood, Timothy

  Malone, Gerald

  Young, Sir George (Acton)

  Maples, John

  Marland, Paul

  Tellers for the Ayes:

  Marlow, Antony

  Mr. Donald Thompson and

  Mates, Michael

  Mr. Peter Lloyd.

  NOES

  Adams, Allen (Paisley N)

  Ashton, Joe

  Archer, Rt Hon Peter

  Atkinson, N. (Tottenham)

  Ashdown, Paddy

  Bagier, Gordon A. T.

  412

  Beith, A. J.

  Janner, Hon Greville

  Benn, Rt Hon Tony

  John, Brynmor

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

  Johnston, Sir Russell

  Bermingham, Gerald

  Jones, Barry (Alyn & Deeside)

  Bidwell, Sydney

  Kaufman, Rt Hon Gerald

  Blair, Anthony

  Kennedy, Charles

  Boyes, Roland

  Kirkwood, Archy

  Brown, Gordon (D'f'mline E)

  Lambie, David

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

  Lamond, James

  Brown, Ron (E'burgh, Leith)

  Leighton, Ronald

  Buchan, Norman

  Lewis, Terence (Worsley)

  Caborn, Richard

  Litherland, Robert

  Callaghan, Jim (Heyw'd & M)

  Livsey, Richard

  Campbell-Savours, Dale

  Lloyd, Tony (Stretford)

  Canavan, Dennis

  Loyden, Edward

  Carlile, Alexander (Montg'y)

  McCartney, Hugh

  Clark, Dr David (S Shields)

  McDonald, Dr Oonagh

  Clarke, Thomas

  McGuire, Michael

  Clay, Robert

  McKay, Allen (Penistone)

  Clelland, David Gordon

  Maclennan, Robert

  Clwyd, Mrs Ann

  McWilliam, John

  Cocks, Rt Hon M. (Bristol S)

  Madden, Max

  Cohen, Harry

  Mallon, Seamus

  Coleman, Donald

  Marek, Dr John

  Conlan, Bernard

  Marshall, David (Shettleston)

  Cook, Frank (Stockton North)

  Martin, Michael

  Cook, Robin F. (Livingston)

  Mason, Rt Hon Roy

  Corbett, Robin

  Maynard, Miss Joan

  Corbyn, Jeremy

  Meacher, Michael

  Cox, Thomas (Tooting)

  Meadowcroft, Michael

  Craigen, J. M.

  Michie, William

  Crowther, Stan

  Mikardo, Ian

  Cunliffe, Lawrence

  Nellist, David

  Cunningham, Dr John

  O'Brien, William

  Dalyell, Tam

  O'Neill, Martin

  Davies, Rt Hon Denzil (L'lli)

  Owen, Rt Hon Dr David

  Davies, Ronald (Caerphilly)

  Parry, Robert

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

  Patchett, Terry

  Dixon, Donald

  Pavitt, Laurie

  Dobson, Frank

  Penhaligon, David

  Dormand, Jack

  Pike, Peter

  Dubs, Alfred

  Powell, Raymond (Ogmore)

  Duffy, A. E. P.

  Prescott, John

  Dunwoody, Hon Mrs G.

  Radice, Giles

  Eadie, Alex

  Randall, Stuart

  Eastham, Ken

  Redmond, Martin

  Evans, John (St. Helens N)

  Richardson, Ms Jo

  Ewing, Harry

  Roberts, Ernest (Hackney N)

  Fatchett, Derek

  Robertson, George

  Faulds, Andrew

  Rooker, J. W.

  Fields, T. (L'pool Broad Gn)

  Short, Ms Clare (Ladywood)

  Fisher, Mark

  Skinner, Dennis

  Flannery, Martin

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

  Foot, Rt Hon Michael

  Smith, Rt Hon J. (M'ds E)

  Foster, Derek

  Soley, Clive

  Foulkes, George

  Spearing, Nigel

  Fraser, J. (Norwood)

  Steel, Rt Hon David

  Gilbert, Rt Hon Dr John

  Stott, Roger

  Godman, Dr Norman

  Strang, Gavin

  Golding, John

  Straw, Jack

  Gourlay, Harry

  Thomas, Dr R. (Carmarthen)

  Hamilton, James (M'well N)

  Thorne, Stan (Preston)

  Hancock, Michael

  Torney, Tom

  Hardy, Peter

  Wallace, James

  Harrison, Rt Hon Walter

  Wareing, Robert

  Haynes, Frank

  Welsh, Michael

  Heffer, Eric S.

  Williams, Rt Hon A.

  Hogg, N. (C'nauld & Kilsyth)

  Winnick, David

  Holland, Stuart (Vauxhall)

  Woodall, Alec

  Hughes, Dr Mark (Durham)

  Wrigglesworth, Ian

  Hughes, Robert (Aberdeen N)

  Hughes, Roy (Newport East)

  Tellers for the Noes:

  Hughes, Sean (Knowsley S)

  Mr. David Alton and

  Hughes, Simon (Southwark)

  Mr. John Cartwright.

  Question accordingly agreed to.
  MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,

  413
  That this House asserts the need for a healthy and reviving private rented sector with an adequate supply of sound homes to rent as being in the best interests of tenants and landlords and those looking for accommodation; further asserts the need for
  414
  improved statutory safeguards to ensure proper management of privately owned blocks of flats; and notes that provision for capital expenditure on housing was increased in the Public Expenditure White Paper.

  Prevention of Terrorism
  10.29 pm
  The Secretary of State for the Home Department (Mr. Douglas Hurd): I beg to move,
  That the draft Prevention of Terrorism (Temporary Provisions) Act 1984 (Continuance) Order 1986, which was laid before this House on 30th January, be approved.
  We are debating tonight how a democratic society can legitimately respond to the use of indiscriminate and brutal violence for political ends. Terrorism is a fearful phenomenon of our age, because it seeks to turn one of democracy's greatest strengths, the openness of our society, inward against us. In replying to the threat of terrorism, we must jealously protect our traditional liberties, but we must be realistic about the threat that is posed to our free society by terrorism. Society has a right to defend itself, to protect innocent citizens and to give to the police and the Executive carefully defined exceptional powers, subject to the regular approval of Parliament.
  The purpose of the order is to renew the 1984 Act for a further 12 months from 22 March. It is the best weapon that we have against the continuing menace of terrorism. I regard its renewal as a sad but necessary step. During the past year, the police have had notable successes in countering and preventing terrorism. Those have demonstrated both the continuing nature of the threat that we are facing and the effective use that can be made of the special powers that the Act provides. When I became Home Secretary I studied these matters carefully, and reached the conclusion that the only responsible policy in present circumstances was to continue the Act in force.
  Briefly, in relation to terrorism connected with the affairs of Northern Ireland, the Act provides powers to proscribe terrorist organisations; to exclude terrorists from a part, or the whole, of the United Kingdom; and to detain for questioning persons suspected of involvement in terrorism. The latter power is also available in relation to international terrorism. The Act also establishes offences of supporting proscribed organisations, breaching or helping to breach exclusion orders, contributing to acts of terrorism and withholding information about terrorism.
  I think that the House would agree that the Act makes substantial inroads on ordinary civil liberties. The Government accept that it should not be kept in force longer than is necessary. Each year Parliament reconsiders the need for its renewal, and an essential part of the argument must be the level of recent terrorist activity.
  The 1974 Act followed closely upon the Birmingham bombings, which killed 21 innocent people. The introduction of the 1984 Act came shortly after the Harrods bomb and was followed a few months later by the attack on the Conservative party conference in Brighton. Fortunately, there have been no similar terrorist outrages in Great Britain in 1985. The core of our argument, however, is that without the vigilance of the police, using the powers that this Act confers, the story might have been very different.
  In June the police made a number of arrests under the Act in Glasgow and elsewhere. As a result, eight people were charged with conspiracy to cause explosions, one of whom has also been charged in connection with the Brighton bombing. Following the arrests, the police found and disarmed a bomb planted by the IRA in the Rubens
  416
  hotel in London. The House will remember my predecessor's statement, which gave details of a conspiracy to plant bombs in a number of seaside towns, timed to explode at the height of the holiday season. We owe it to the perseverence and professionalism of the police that that plan of violence did not succeed. The Prevention of Terrorism Act was used on that occasion.
  On 11 November, two large bombs that had been placed outside Chelsea barracks were fortunately discovered and made safe before they could explode. A number of arrests followed and two men have been charged with conspiracy to cause explosions. The Prevention of Terrorism Act was used on that occasion.
  Two weeks ago in Manchester, two men who pleaded guilty to planning a bomb attack on a retired army officer were convicted and sentenced to long terms of imprisonment. A third was convicted of an offence of withholding information under section 11 of the Act. I know that the police, because of their power under section 12 of the Act, were able to arrest those concerned earlier than would otherwise have been possible. All those incidents, of which none fortunately produced a fatal result, took place in Great Britain. However, I do not need to remind the House of the continued scourge of terrorism in Northern Ireland.
  Because part of the Act now covers international terrorism, I should warn the House of a new anxiety concerning terrorist activity here connected with the affairs of India. Since November last year several prominent members of the Sikh community have been attacked, apparently by other Sikhs of extreme views. The most recent attack resulted in the death of the victim, Mr. Tarsem Singh Toor, who was well known as a moderate. One person who had been arrested under the Prevention of Terrorism Act has been charged with conspiracy to murder Mr. Toor and two other people. So the Prevention of Terrorism Act was used on that occasion. Last October four Sikhs arrested under the Prevention of Terrorism Act in Leicester were charged with conspiracy to murder the Indian Prime Minister during his visit here. We intend to be vigilant in dealing with This danger and vigorous in pursuing those who resort to violence in order to further a political argument about the future of Punjab.
  Sir Eldon Griffiths: As vice-chairman of the Indo-British Association may I say to my right hon. Friend how much it is appreciated by the Indian community, not only here but in the Punjab, that he should have stated his position on the matter so well at the annual dinner the other night and how encouraging it is tonight to hear him carry the matter forward under the Prevention of Terrorism Act?
  Mr. Hurd: I am grateful to my hon. Friend. As he knows, we have to spend a good deal of time on the matter. My purpose in bringing it in tonight was to illustrate how wise the House was to agree to Lord Jellicoe's recommendation that the Act should in that respect be extended to cover terrorism other than in Northern Ireland.
  Mr. Jack Straw: The right hon. Gentleman has mentioned the number of Sikhs who have been detained and subsequently charged. Can he say something about the number of Kashmiris who have been detained? He knows of a case with which I have been concerned involving Mr. Chaudry Siddique. Kashmiris have been detained, in some cases on two occasions, on

  417
  what they believed to be fishing expeditions by the police, and have not been charged. Will he make observations on the fact that that has led to very deep concern in the Kashmiri community as a whole about the activities of the police?
  Mr. Hurd: The hon. Gentleman was kind enough to draw my attention to his worries. There is no question of fishing expeditions in the use of the Act. In the cases he mentioned the police were acting on specific information. Having looked into them as a result of his representations I believe that the police acted correctly within the letter of the Act. I am glad to have the opportunity to make that point clear.
  The case for retaining the powers of the Act rests on the judgment that it helps to limit terrorism. We accept the view of Lord Jellicoe who recommended:
  "if special legislation effectively reduces terrorism…it should be continued as long as a substantial terrorist threat remains".
  I do not see much likelihood of the Act becoming unnecessary in the near future, because of the kind of incidents I have just enumerated. The annual renewal procedure helps to remind us that the powers are exceptional and helps to prevent them from becoming an accepted feature of our criminal law. Our consideration of the case is materially helped by the report of Sir Cyril Philips on the operation of the Act in 1985. He carries out admirably his role of providing the House with a snapshot picture of the way that the Act works in practice, with particular emphasis on any indications that the powers are being abused. He submits himself to an exhausting programme of visits and discussions and is given wide access to Home Office papers on particular cases, including any where a complaint has been made about the way in which the Act operated. I am deeply grateful to him, as I am sure all hon. Members are.
  The right hon. and learned Member for Warley, West (Mr. Archer) and some of his colleagues criticised me courteously in correspondence for, in their belief, failing to publicise the fact that Sir Cyril's review was in progress or announcing its publication. I think that they are a little unfair and I have replied to the right hon. and learned Gentleman in some detail. Since last year's renewal, it had been public knowledge that Sir Cyril would again carry out a review this year. I announced this in answer to a question on 14 January, but I accept that it would have been sensible to make the announcement a little earlier. Nevertheless, it allowed time for hon. Members to make representations to Sir Cyril if they wished. I received Sir Cyril's report on 27 January and on 30 January I announced that I had placed copies of it and of my reply in the Library and the Vote Office, so this year—as opposed to last year—there was ample time between the tabling of Sir Cyril's report and this debate.
  Sir Cyril suggested that Parliament should pay special attention to the exclusion powers under sections 4 and 5 of the Act. Those sections provide power to exclude British citizens from either Great Britain or Northern Ireland if the responsible Secretary of State is satisfied that they are concerned in the commission, preparation or instigation of acts of terrorism connected with the affairs of Northern Ireland. It has sometimes been described as a power of internal exile, but that is misleading because exiles are forced to leave their homes, whereas sections 4
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  and 5 cannot be used to exclude a British citizen from a part of the United Kingdom in which he or she has been ordinarily resident for the last three years.
  I know that the police in Great Britain and Northern Ireland continue to find that exclusion is valuable in the containment and prevention of terrorism. Terrorism thrives on movement. The mobility of the terrorist increases the circle of those who can be drawn into terrorist activity and it deepens public anxiety.
  Sir Cyril Philips points out, accurately, that the exclusion power considerably infringes normal civil liberties. That is why Lord Jellicoe recommended that the possibility of abolishing this power should be kept under regular review and that it should be one of the first to be repealed. I accept that entirely, but our assessment of the security situation persuades us that it would not yet be safe to abandon this power. I will give the figures so that the House can judge for itself. At present, 240 exclusion orders are in force, most of them excluding people from Great Britain. A great many of those orders were made under the previous Acts and were therefore indefinite. In 1979, we began the practice of reviewing all exclusion orders of more than three years' standing.
  Since the passage of the 1984 Act, which established a three-year time limit for new exclusion orders, the review of old orders has been accelerated, but in a significant number of cases exclusion has had to be maintained to protect the public. Last year, 58 orders were reviewed and exclusion was maintained in 25—just under half—of those cases. As we continue the review, it is probable that we shall identify a hard core of committed and active terrorists whom it would be dangerous to readmit to the territories from which they are excluded. I am therefore driven to think that the power of exclusion should be retained for the present. Sir Cyril suggests that the review process should continue and that the power to maintain the exclusion in some cases might be preserved. I think that that is right and I hope that the House will agree.
  Sir Cyril makes another suggestion which I am not able at the moment to accept—that the Government should undertake not to make any new orders against persons who have not previously been excluded. He argues that the declining use of the exclusion power indicates that it is no longer necessary to make new orders. Having looked into the matter, I do not feel that that is yet the case. Last year, seven new exclusion orders were made, six of which are still in force, and that was four more than in the previous year. We are able to use the powers more sparingly than in the past, but I do not think that that undermines the justification for the few new orders that are now made. The power is reserved for the most serious cases and I am sure that the possibility of exclusion also has some deterrent effect which restricts the movement of a great many active terrorists. I think that Sir Cyril's proposal will be helpful if and when there are definite signs of a decline in the terrorist threat, but that moment is not yet with us.
  I have no desire to heap powers on the police for the sake of doing so. The standing of the police in the community is so important that they should not have powers which they do not need and which only attract criticism to them. The protection of the public is the test, and in this case it is the protection of the public against terrorism. I hope that the House agrees that we have to be cautious about demolishing powers when the threat of terrorism is so active and, in some respects, increasing. It

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  would not be right to buy a nod of approval from the Opposition or a word of praise from The Guardian if the price is that terrorists can go about their work with a greater sense of ease and security.
  It is essential that the Prevention of Terrorism Act be renewed again this year. This is familiar ground. It was first introduced by the Labour Administration in 1974. It is a weakness that our common approach to this problem has not been maintained. I believe that to argue that the legislation is no longer necessary is to ignore the plain facts, some of which I have set before the House.
  Having some acquaintance with him, I think that, if the right hon. Member for Manchester, Gorton (Mr. Kaufman) were in my position, he would need these powers and come to the House and ask for them. He would defy those pressures which oppose the powers, because he would then have a responsibility which forced him to seek them and very occasionally, and reluctantly, to use them. If that is so—I am sure in my own mind that it is—it would be better if the right hon. Gentleman could come to that point now as the spokesman of the main opposition party.
  It is in that sentiment that I ask the House to support the renewal of the Act. I call on Opposition Members to think very carefully before they oppose the motion bearing in mind the terrorist threat that I have described. I hope that the House will act what I would regard as a responsible part when the House deals with this matter of vital national interest.
  Mr. Tony Marlow: On a point of order, Mr. Deputy Speaker. Several minutes ago the House was subjected to an outbreak of the most appalling behaviour. The reason for that behaviour was to gain publicity. Is there any way in which the House can prevent the cause from being given publicity?
  Mr. Deputy Speaker (Mr. Ernest Armstrong): There is nothing that I can do about it.
  10.47 pm
  Mr. Gerald Kaufman: The whole House is united in its resolute and implacable hostility to terrorism. The question is not whether we should fight terrorism but how. What special powers, if any, are needed to fight terrorism? What civil liberties are we ready to sacrifice—what civil liberties is it right to sacrifice—to fight terrorism? The question is also whether substantial inroads into civil liberties caused by anti-terrorist legislation are themselves a victory for terrorism.
  A prime aim of terrorist groups is to secure the contraction of civil liberties in the societies which they attack and to bring the authorities, especially the police and security forces, into conflict with the community. By doing so, terrorists hope to secure a larger number of passive sympathisers—more people to shelter them or to deny information to the police. They may even hope to recruit more active members. Above all, they hope to exploit a climate of abnormality and emergency in which to weaken general public confidence in the administration of the state.
  When Parliament gives up part of our normal civil liberties, it risks giving terrorism a victory. From the day when the first version of this Act was introduced into Parliament, on behalf of the then Labour Government, by
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  the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), it has been acknowledged by successive Home Secretaries that the legislation erodes civil liberties.
  Home Secretaries in this Government have acknowledged—and each of the phrases I now use is a quotation from statements by Conservative Home Secretaries since 1981—that the powers these Acts contain
  "infringe our shared concept of civil liberties … make a considerable inroad into the civil liberties of which we are justly proud … make sad inroads into our cherished traditions of civil liberties … are intensely undesirable".
  When the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) moved the Second Reading of the current Act, he said that its powers were
  "exceptional, not to be taken for granted, and to be exercised only with the greatest care and consideration".
  He acknowledged that
  "In other circumstances"—
  he—
  "would regard them as wholly unacceptable". —[Official Report, 24 October 1983; Vol. 47, c. 52.]
  Tonight the present Home Secretary agreed that this Act makes substantial inroads into ordinary civil liberties.
  That is why this Act is limited to a five-year life and must be renewed annually. This is why each year it is not the Opposition who have to make the case for annulment but the Government who have to make a conclusive case for renewal. The Home Secretary failed to make that case tonight, and the facts that he failed to provide for the House demonstrate clearly why that case cannot properly be made.
  In terms of preventing terrorism, this Act is a failure. Terrorism continues horrifically. The presence of the Prevention of Terrorism Act on the statute book, most unhappily, prevented neither the atrocity at Harrods nor the abomination at Brighton. Indeed, the very statistics published by the Government themselves demonstrate how little effectiveness this legislation delivers in return for the inroads it undoubtedly makes into civil liberties.
  The Government statistics published only last month demonstrate that starting from the introduction of the legislation in 1974 to the end of last year—less than six weeks ago—92 per cent. of those detained in Britain have not been subject to any charge. In other words, they are innocent in law. Moreover, only 3 per cent. have been charged with offences under the legislation, and one third of those have been charged only with failure to co-operate with examination at the port—a charge that could be made only because those subject to it were detained in the first place.
  Of those charged with offences under these Acts, only 2 per cent. of those detained were found guilty of any offence whatsoever, and only a half of 1 per cent. were found guilty of offences meriting more than one year's imprisonment. Of those charged with criminal offences under other Acts, only 4 pet cent. of those detained were found guilty of such offences, and fewer than 2 per cent. received prison sentences of one year or more. All told, fewer than 2·5 per cent. of those detained were found to have committed offences of any substantial seriousness. Therefore, the Act, both as creator and apprehender of serious offences, is an almost complete failure.
  Mr. Hurd: I gave the House particulars of various terrorist attempts in this country during 1985 that were frustrated, so that no one was killed, and I said that in each

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  of those cases the Act was used. Does not the right hon. Gentleman think that that amounts to a strong case for renewal?
  Mr. Kaufman: The right hon. Gentleman says that the Act was used. He does not say whether those attempts would have been stopped had the Act never existed and had other powers, already available, been used instead. The Act has been used, and is being used. The question is whether it is needed to apprehend and deal with those who seek to commit terrorist acts.
  Lacking information that the right hon. Gentleman may or may not have available to him, he has not presented a convincing case for anything except that an Act on the statute book has been used. I have demonstrated conclusively from his own figures that almost all the use of the Act for detection is detention of innocent persons who have not been charged with any offence.
  The Act as an apprehender of perpetrators of offences that existed before the Act was passed is only a little more successful. It is impossible for the Government to demonstrate that the 71 people convicted of serious crimes after being detained under this Act since 1974–71 out of the more than 6,000 who have been detained—would not have been caught if the legislation had never been passed.
  Sir John Biggs-Davison: In the cases that my right hon. Friend the Home Secretary mentioned of murderous acts having been frustrated by the use of the Act, what alternative powers would the right hon. Gentleman have used if he had been Home Secretary to frustrate such terrorist deeds in the absence of this Act?
  Mr. Kaufman: I shall be coming to that point, and I request the hon. Gentleman to continue listening to what I have to say.
  It is certain that 95 per cent. of those detained under this legislation have been completely innocent of anything, however trivial. That failure rate—or success rate, if one cares to put it that way—is scarcely a vindication of powers that Ministers in the present Government have described as "intensely undesirable" and "wholly unacceptable". Perhaps that is why, lacking any really convincing justification for the legislation, Ministers have been driven to make strange claims for retaining these powers.
  When the right hon. and learned Member for Richmond, Yorks moved the Second Reading of the Act two years and four months ago, he called in aid, as an example of terrorism, the shooting of a former Israeli ambassador in London—an assassination attempt for which, he claimed, those responsible are now serving long sentences. However, those terrorists and would-be murderers were apprehended without any recourse to the powers under this Act, and were sentenced for offences not contained in them.
  A year ago, when he moved the renewal of these powers, the Minister of state cited as an example of the necessity for continuing these powers the murder of WPC Yvonne Fletcher. That was indeed a dreadful killing of a courageous young woman, and I have twice had the sad opportunity of meeting her bereaved parents and extending my sympathy to them. However, the legislation has done nothing to apprehend or to punish those who murdered
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  WPC Fletcher. Despite the continuing presence of the Act on the statute book, her killers went, and remain, free. Indeed, one Libyan present in the People's Bureau at the time of the murder is now living placidly in Wiltshire, courtesy of the Home Secretary.
  Although terrorism unhappily continues, despite the continuance of this Act, the legislation is not only mostly activated in vain, but is too often activated in a highly questionable manner. In March of last year, 10 so-called hunt saboteurs were detained at Daventry police station and told that they were being held under the Act. That the Act was being used to hold them was confirmed to the National Council for Civil Liberties by the superintendent of the station. Three of those detained were charged with public order and theft offences, but those charges were subsequently dropped. Whatever were the police doing holding such people under the Act?
  Five months ago, Mr Shapua Kaukungua, chief representative of SWAPO for the United Kingdom and western Europe, was held for examination at Heathrow airport under the Act. The Foreign Office has acknowledged SWAPO as an important and legitimate organisation yet when my hon. Friend the Member for Hammersmith (Mr. Soley) wrote to the Home Secretary drawing attention to the treatment of Mr. Kaukungua, the right hon. Gentleman replied on 30 January stating that this incident
  "does not in any way reflect on the Government's attitude towards the status of SWAPO",
  and saying that what he called this "tiresome procedure" had to be suffered by hundreds of travellers each year.
  But the Home Secretary's response was both inaccurate and disingenuous, because the Home Secretary's own statistics show that last year not hundreds of travellers but only 22 persons were examined for more than one hour under that part of the Prevention of Terrorism (Temporary Provisions) Act relating to international terrorism. Mr. Kaukungua, the acknowledged representative of an acknowledged organisation in good standing with the Government, was one of those 22. The simple question that we have to ask is, why?
  Last year, during the debate on the renewal of the Act the Minister of State, in a state of high indignation, declared:
  "It is quite outrageous to talk about random arrests."
  under this Act. He insisted that
  "there is no question of random arrests."
  Yet on 5 May last year councillor Sheena Clarke, the deputy chairman of Sheffield city council housing committee, returning after a housing conference in Belfast, was detained at Manchester airport under the Act, as the week before had another person from Sheffield who attended that conference. A spokesman for Greater Manchester police said later that the two detentions were routine,
  "like going through customs, a random one or two might be stopped."
  That goes clear against the Minister's undertaking and is a deplorable misuse of an Act that the Minister himself last year in the same debate said represented
  "a very considerable infringement of the civil liberties normally enjoyed by individuals in this country."—[Official Report, 21 February 1985; Vol. 73, c. 1299–1304.]
  How can the Home Secretary claim, as he did tonight, that there is no question of fishing expeditions under the Act when Greater Manchester police say that they stop people
  "like going through customs, a random one or two"

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  under the Prevention of Terrorism Act?
  The fact is that in so far as the detention powers under the Act were ever needed, their continuation in England and Wales at any rate cannot be justified now even on the Government's own terms with the implementation of the powers under the Police and Criminal Evidence Act 1984, under which those suspected of a serious criminal offence can be detained without charge for up to 96 hours.
  If one takes the figures for Great Britain for last year, the Police and Criminal Evidence Act would have allowed the detention for the full period during which they were held of all but 10 of the 193 people detained in Great Britain under the Prevention of Terrorism Act and not charged. To justify the seven-day power in any way, the Home Secretary should tell us how many of those detained for more than 96 hours were charged and how many were convicted on evidence obtained after 96 hours in detention. That information is simply not available, but it is very important.
  Apart from the detention power, the most controversial power under the Act is the power of exclusion; and this year we have Sir Cyril Philips' report on the exclusion powers. Last February in the debate on the renewal of the Act the Minister of State was full of praise for Sir Cyril. In the 1985 debate he expressed gratitude to Sir Cyril and thanked him for producing an independent report which was, he said, "both clear and helpful". That, of course, was because 12 months ago Sir Cyril was, as the Minister put it,
  "broadly satisfied that the Act is being used properly".
  This year the reaction to Sir Cyril's review has been rather different and it has to be said that that is because this year Sir Cyril clearly, from the Government's point of view, was not helpful. In his report he recalled that Lord Jellicoe in his review of 1983 stated:
  "the power to exclude should remain available to the Secretary of State in extreme cases … and the possibility of abolishing it should be kept under regular review, without prejudice to the Act's other powers."
  He added:
  "it should be one of the first powers in the Act to be repealed".
  The report by Sir Cyril Philips continued:
  "In the debates leading to the Act of 1984 Parliament accepted that the power to exclude was in many ways the most extreme of the powers in this Act, the most severe in its effect on civil liberties, the most divergent from the normal criminal process, and that it had aroused substantial resentment even among many, particularly in Northern Ireland, who may well support the aims and content of the remainder of the legislation.
  There is no question that this power is objectionable in principle as being inconsistent with the right of the citizen to reside in and travel freely throughout the territory of the state of which he is a citizen and as operating to deprive a person of an important civil right without a judicial hearing."
  Sir Cyril recommended:
  "For these reasons the time would appear to be right for Parliament to take this opportunity of considering afresh the need for sections 4 and 5. I understand the legal position to be that if these sections are not renewed, existing exclusion orders made under them will cease to have effect. A first prudent step might well take the form of an undertaking not to make any exclusion orders under sections 4 and 5 against persons who have not hitherto been subject to such an order".
  The Home Secretary in his letter of reply to Sir Cyril admitted that exclusion orders
  "very considerably infringe ordinary civil liberties",
  but he curtly rejected Sir Cyril's recommendation, as he has done again tonight. But that recommendation was all the more powerful because it reminded the Home Secretary—something to which he has not referred—
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  that he now has powers to discontinue only part of this Act. Lord Elton, speaking for the Government in the other place when this legislation was being passed, promised that it was by no means a foregone conclusion that every section would be renewed.
  The Home Secretary justified his decision by drawing attention to continuing terrorist activity. He has done that again tonight. But, on that basis, this legislation, passed in urgency to deal with a special situation and retained on the statute book with repugnance, will never be repealed, for it is hard to speculate when terrorism will be defeated. It is certain that terrorism continues despite the continuance of this legislation on the statute book. We are faced with the paradox that this Act's signal lack of success is cited as the reason why it should be continued.
  Terrorism is a horror and a plague, and we should unite in using all legitimate weapons to combat and defeat it. The Opposition have no reason to criticise the illiberality of this Act when the condemnations by Ministers of its invasions of civil liberties bestrew the pages of Hansard. This Act is obnoxious and unsuccessful. We have not been offered any convincing evidence to justify its continuing presence on the statute book. That is why we shall vote against it.
  11.8 pm
  Sir Eldon Griffiths: I am sorry that the right hon. Member for Manchester, Gorton (Mr. Kaufman) and the Labour party will once again divide the House on this matter. They must know what will happen if they throw out the whole of the Act; for example, section 6, which provides the power to exclude non-citizens of Great Britain and Northern Ireland, including the very people about whom the right hon. Gentleman is so concerned. Those people might, for instance, be from Libya. That power is contained in the Act. I put it to the right hon. Gentleman that he would be throwing away a power which he has been urging my right hon. Friend the Home Secretary to use.
  Ms. Clare Short: Will the hon. Gentleman give way?
  Sir Eldon Griffiths: I shall give way later. Many other hon. Members wish to speak.
  I want to make four main points. First, it is essential to have the Act. If anyone doubts that, he only needs to read the Jellicoe report or discuss the operation of the Act with those who are in the front line—the police—and who have to operate it. The Act is designed ultimately to protect the innocent, and it does have that effect. I would say without hesitation that there are innocent men and women who are alive today who would be dead if the police had not been able to exercise their powers under the Act.
  On the matter of the exclusion orders, I ask my right hon. Friend the Secretary of State, or the Minister who is to reply to the debate, to confirm that he personally reviews these cases as they come up. It is important for the House to know that such a review is carried out by a Minister in each case.
  Laws, however, are not enough. We can pass the continuance order, as I hope we shall, but the police need something more. They need to be properly equipped and trained to meet the threat, and they are entitled to the support of both sides of the House when they do this.
  It

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  is in that specific connection that I want to comment on the appearance of police officers at Heathrow carrying sub-machine guns in order to carry out their anti-terrorist duties. I confess to being troubled by this. It is a new phenomenon in Britain. I have spoken to my right hon. Friend about it, and to senior members of the metropolitan police force and, just on balance, I have been persuaded that, regrettably, it is necessary.
  There are, however, two matters that trouble the Police Federation and I think that I should put them on record. I can do no better than quote the chairman of the Police Federation and some remarks from the Police magazine. Mr. Curtis, the chairman, said:
  "It is totally absurd to make a high profile public announcement that a police unit, permanently armed, will perform anti-terrorist duties at Heathrow and, in the same announcement, to attempt to reassure the public by pointing out that the automatic weapons carried by these police officers may only be fired by them using the single shot operation, and that they must be fired from the shoulder."
  He continued:
  "To put the entire responsibility for outshooting terrorists on the police, and at the same time to withdraw the special army units at Heathrow, looks to me like a weakening, not a strengthening of airport security."
  I have to say to my right hon. Friend that I do not agree entirely with Mr. Curtis in all his criticism. But it would be useful if the Minister would address that matter when he replies to the debate.
  The equipment that has been issued for this duty is the so called Heckler and Koch MP5 gun. I am advised that the weapon is a bad choice for such duty. I shall quote from the Police magazine, from an article written by a person who I believe is a firearms expert. He gets it right when he says:
  "As a fully automatic weapon of 9 mm calibre the Heckler and Koch MP5 was a bad choice … It is over penetrative, prone to ricochet and lacks stopping power."
  I ask my hon. Friend, if not tonight, on some other occasion, to address that matter, because it is of real concern within the police service.
  My next point concerns the Royal Ulster Constabulary. The RUC is not in any doubt that it needs the Act and the other emergency powers that are available to it in Northern Ireland in order to protect innocent lives. Those hon. Members who have visited Ireland, as I have from time to time, will be conscious of the fact that in the face of the carnage that is committed by terrorists, the police need extraordinary powers with which to tackle it. But the RUC needs the support of the House in other ways. I am disturbed that the RUC's morale has been severely damaged by the attempts of its Chief Constable to gag its spokesman and prevent him from examining its views.
  Mr. Clive Soley: On a point of order, Mr. Deputy Speaker. I do not wish to stop the hon. Gentleman from making important points, but this debate lasts for only one and a half hours and it should focus on the Act and its renewal. I ask you to rule that other issues, however important, should not be dealt with in the limited time available.
  Mr. Deputy SpeakerI am listening carefully. The hon. Member must relate his remarks to the order.
  Sir Eldon Griffiths: I am willing to do so, Mr. Deputy Speaker. It would have been wiser for the hon. Gentleman to let the Chair decide these matters rather than presume to decide them himself.
  I return directly to the order. The argument of the right hon. Member for Gorton was based on a fallacy. He said that because my right hon. Friend the Home Secretary could not set out in enormous detail examples of where the Act had resulted in offenders being brought to book, it was not effective. But it is the pre-emptive action by the police which is possible under the Act that frequently prevents people being killed. It is that pre-emptive aspect of the Act to which the right hon. Gentleman has not addressed himself.
  There is increasingly a need for international co-operation to tackle all kinds of terrorism. I was delighted to hear my right hon. Friend say that under the powers available to him he has been able to extend his ability to exclude to deal with terrorists from the middle east, and perhaps now to deal with those few members of the Sikh community who cause terrorist problems in this country.
  That is good news, but it is not sufficient. It is necessary for the international conventions on terrorism to be pursued more vigorously. I shall shortly be sending my right hon. Friend a number of suggestions about how that could be done.
  It is a tragedy that the Opposition are again voting against the renewal of the Act. I understand their reasons. They do them no credit. They fail to recognise that our fellow citizens live constantly under a threat and that the members of the police service, whom we ask to risk their lives to protect us, need this power and should not be denied it by the Opposition for political reasons.
  11.17 pm
  Mr. Alex Carlile: We in the House who are revolted by terrorism in the United Kingdom and regard terrorists within our shores as the most despicable of our fellow creatures must recognise that there remains a need for some legislation to protect us from the terrorist scourge. Despite repeated and recent outrages, much has been achieved—some within the legislative framework that we are considering, and some outside it. It would be wrong to allow a debate on this subject to pass without repeating a tribute to those who bravely work, in and out of uniform, to rid us in the United Kingdom of that terrorist scourge.
  The recent Anglo-Irish agreement, whatever its constitutional prospects—I do not wish to dwell on them tonight because the debate it is not about them—has shown us that co-operation between the British and Irish Governments can be developed within the context of the prevention of terrorism at least.
  I welcome the recent meeting between Ministers responsible for justice and security in the two countries. I also welcome the breadth of their discussions, if the reports of them are reasonably accurate. Those discussions should be viewed as a beginning rather than as an end in themselves. I hope that in due course, and where necessary, we shall see legislation aimed at the prevention of terrorism and the detection of terrorists being enacted in like terms and at the same time here and in the Dail.
  I welcome the Government's acceptance, which they signalled in 1984, of the need for far more effective monitoring of the operation of the prevention of terrorism provisions than had previously been the case, especially

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  bearing in mind the Government's acceptance in 1984 that it was to be regarded as a temporary and expedient Act rather than as a permanent unwelcome feature of our law. Indeed, I have been troubled—this is an observation, not a criticism—by the pessimism of the Home Secretary's prognosis earlier in the debate.
  We now have the advantage of seeing and have had the time to consider carefully the second report by Sir Cyril Philips, the independent person—indeed, nobody could be more independent than he—appointed by the Secretary of State's predecessor to monitor the operation of the Act. Sir Cyril makes many deeply persuasive and cogent points which, while they do not go to the whole root of the legislation, deserve less of a brush-aside response than they have received from the Government.
  As the Home Secretary has recognised and, indeed, as is provided for under statute, it is possible to review parts of the Act while still renewing the remainder. It is regrettable that the Government have not at least given the House the opportunity to review separately the continuation of exclusion orders under sections 4 and 5, that is those relating to the United Kingdom.
  The Home Secretary made a realistic assessment in his reply to Sir Cyril Philips on 29 January. He said that exclusion orders, which are a form of internal restriction, if not of internal exile, in the United Kingdom
  "very considerably infringe ordinary civil liberties."
  The right hon. Member for Manchester, Gorton (Mr. Kaufman) was right to remind us of Lord Jellicoe's comment that the possibility of abolishing the power to exclude should be kept under regular review, without prejudice to the Act's other powers. The Government should have offered the House that possibility tonight.
  Sir Cyril Philips, in his report earlier this year, reminds us of four important changes in practice which have taken place since 1984, and it is right that the House should be reminded of them. First, he tells us that new exclusion orders have become less and less important as an effective means of preventing terrorism, and are of diminishing significance. That is his independent judgment, and we should pay proper respect to it.
  Secondly, in the context of increasing emphasis on the need for general and co-ordinated action against terrorism, the strategy of transferring suspected terrorists from one part of the United Kingdom to another appears to have diminishing relevance and application. In other words, we should not be shunting terrorists from one part of the United Kingdom to another, because that achieves nothing. We should be, and have been, achieving the prevention of terrorism itself—a far more useful and important objective.
  Thirdly, the police now have all the powers given to them by the Police and Criminal Evidence Act 1984, which came fully into force on 1 January 1986. Those powers enable the police to detain and question suspected terrorists effectively in the context of criminal procedure and codes that apply equally to all of us. If possible, it is important that those who are suspected of terrorism should be questioned and detained within the same context as is applicable to the rest of us.
  Fourthly, sections 4 and 5 are now available only against people who have not ordinarily resided in Great Britain and Northern Ireland continuously since 1982. Sir Cyril Philips believes that the high level of revocations in the current review demonstrates that the police are far
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  better informed and equipped than used to be the case. Exclusions which formerly appeared necessary are no longer deemed to be so.
  For those reasons—this is not a whim of mine—Sir Cyril Philips recommended that Parliament should take this opportunity of considering afresh the need for exclusion order provisions and that as a first step the Home Secretary should give an undertaking to make no fresh orders. That is objective advice, and nothing could have been more.
  Leaving aside Sir Cyril Philips's objective judgment, regrettably there is evidence in some cases of doubtful subjective factors. Doubtful judgments by individual police officers and officials have been given the status of truth without evidence to support them. The case of Mr. Guilfoyle, of which the Home Secretary is aware, is a worrying example. He was thrown straight back at his old associates, despite his declared desire to start a new life. It is a credit to the Home Office that the order against him was eventually revoked, but it is no credit to the Home Office or the police that the revocation was necessary. The original exclusion order made upon his release from prison was based on incorrect information. Because of the nature of the procedures under the Act, Mr. Guilfoyle had no opportunity to challenge the factors upon which the order was based until after his exclusion had been effected, and only because his solicitors in the Republic of Ireland worked unusually and especially hard and succesfully on the case.
  Cases such as Mr. Guilfoyle's demonstrate that there is a danger of exacerbating the perception that the availability of exclusion orders constitutes anti- Irish legislation, thus worsening the risk of more and more terrible terrorist acts. The substantive law outwith the Prevention of Terrorism (Temporary Provisions) Act 1984 is now stronger than it was in 1984. I confess readily to having been one of those who believed that the substantive law as contained in the Police and Criminal Evidence Act went too far. However, now that we have the Act, I do not hesitate to make proper use of it.
  I share Sir Cyril Philips's view that the substantive law's strengthened state is sufficient not only to render exclusion as alien to our concept of justice as ever it was, but also otiose. I am surprised that the present Home Secretary does not give Sir Cyril the credit that his report deserves by putting it to the test, especially in relation to sections 4 and 5, by allowing them separate consideration.
  11.29 pm
  Mr. Barry Porter: As a solicitor, I have listened with some interest to the legalistic arguments from hon. Members on both sides of the House. The Police and Criminal Evidence Act 1984 should have provided us with the opportunity of considering these provisions afresh and objectively, but I must say reluctantly that I share the Home Secretary's view that it is not yet the time to abandon the provisions. I hope that the Opposition will consider the timing, not in a legalistic sense, but in a political sense. I shall restrict my remarks entirely to the effect that not approving the provisions would have in. the Province of Northern Ireland.
  This is not the time or the place to discuss the details, justifications, attributes or otherwise of the Anglo-Irish agreement, but it is a proper time to show how that agreement is perceived in Northern Ireland by the two polarised parts of the community. Republicans, whether

  429
  constitutional or terrorist, see it as a toe in the door to ultimate Irish unity. Equally, the non-constitutional Unionists perceive it to be exactly the same thing.
  On Easter Tuesday the marching season will begin in the Province of Ulster. If by that time there has been no arrangement between the constitutional Unionists—I regret their absence from the Chamber this evening—and the Government in relation to the agreement, the probability is that there will be violence, and not necessarily only from the provisional IRA. We must now start to consider the probability of violence in a big way from the Protestant paramilitaries. I am sure that the hon. Member who has recently been elected to represent Fermanagh would not disagree with my forecast.
  If there is even a scintilla of truth in what I say, there is no reason at this stage to abandon the provisions of the Act and not to approve their continuance. Regardless of whether they are effective—there are arguments on both sides—and regardless of their effect on civil liberties, their abandonment would be seen as an abandonment by the House of its determination to defeat terrorism, whether it be republican or loyalist.
  That is my fear. Let us consider the provisions during the coming year and let us see what happens, but in view of what is likely to happen in the Province, let us not abandon them now.
  11.33 pm
  Mr. Martin Flannery: I hope that the hon. Member for Wirral, South (Mr. Porter) is as wrong about what he has just said as he was about the constituency of my hon. Friend the Member for Newry and Armagh (Mr. Mallon).
  We have heard almost no politics in the debate so far. The process is so mechanical. Many of us have been here since 1974 and have heard every melancholy renewal, enactment and re-enactment. The Act will run until 1989, and if we are still here in 1989, we know that we shall hear the same things. Ireland is a political problem, not a security problem, important though security is. Children in Northern Ireland have never known anything else; they were born in trouble. The reality is that Britain has never been able to hold down Ireland without armed force. Trouble was bound to break out again as long as the border remained. It is certain that it will continue for as long as it remains.
  There is no doubt that the synthetic division of Ireland forced upon an unwilling people is at the root of it all, and until we handle that politically the problems will continue. The Act deepens and exacerbates the situation. It is and will continue to be the cause of a great deal of the killing. That is why I have always voted against it. The Labour party did not always vote against it and it was a long time before the bipartisan policy began partly to work itself out. People with an Irish background and especially with an Irish accent are suspect and feel threatened as a result of the Act. If they work in the trade union and Labour movement and are involved in legitimate actions such as struggles and strikes, they are particularly suspect. If they are relatives or friends of a detainee they are suspect.
  Let us look at the matter of the excludees and the orders that they have to obey. As has been said, they have to leave Great Britain or be subject to criminal charges. They are not told the evidence against them, which is appalling, and
  430
  they have no opportunity to cross-examine those who are making the charges against them. They have no form of trial and no right of appeal.
  During the debate on the Bill in another place Sir Cyril Philips was appointed to report to Parliament. In paragraph 20 of his report he says, and it is worth repeating:
  "There is no question that this power is objectionable in principle as being inconsistent with the right of a citizen to reside in and travel freely throughout the territory of which he is a citizen and is operating to deprive a person of an important civil right without a judicial hearing."
  The Home Secretary said what a good man Sir Cyril Philips was. As my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) said, when Sir Cyril went a little farther and was really critical and asked for the power of exclusion to be removed, the Home Secretary changed his mind about him. When Sir Cyril Philips asked for that power to be removed, he described it as having "diminishing relevance of application." He argued:
  "The time would appear right for Parliament to take this opportunity of considering afresh the need for Sections 4 and 5 (exclusion of United Kingdom citizens)"
  with the intention of getting rid of them. That is just not going to happen. The Home Secretary wrote back within two days and said:
  "Exclusion powers very considerably infringe ordinary civil liberties"
  But he said that he would do nothing about it.
  There are many examples of injustice, and even the review procedure has inbuilt injustices. For instance, the exclusion order lapses after three years, subject to renewal. But life intervenes and the reality is that many of the people who are excluded have moved house in that time, and many of them think that three years ends the whole thing. But renewal could take place and they would not know about it. That makes them criminals and they could be subject to imprisonment. That is one of the things that the National Council for Civil Liberties brought to our attention, particularly in the last day or two. If the order had been renewed, such people are in grave difficulty. We must look at that, and I hope that in his reply the Minister will give us some guidance.
  It is almost impossible to prove that this Act has done any good, but it causes the perpetration of appalling injustice and is fraught with inbuilt miscarriages of justice. Two dreadful cases come to mind immediately and were the subject of early-day motions. The first case is that of Dr. Maire O'Shea. I knew her some 30-odd years ago when she used to baby-sit in my home when we had our first boy. I was staggered when she was tried. We put down an early-day motion. This good doctor, this psychiatrist who worked in our local hospital and who was beloved in the area, was found to be innocent.
  The other case involved the Maguire family. It gave me immense pleasure to read the early-day motion in the names of the hon. Members for Westminster, North (Mr. Wheeler) and for Epping Forest (Sir J. Biggs-Davison). They realised what a terrible and brutal injustice had been done to that whole family. Lord Fitt visited the family in gaol when Guiseppe Conlan was dying. Mr. Conlan told him that he was innocent. The evidence on which that family were gaoled was appalling. That is the sort of thing that happens under the Act.
  I shall vote against the order, as I have always voted against it. The Act is a draconian and unjust measure that

  431
  intensifies the problems facing us all. It is a provocation. People are angry that such an injustice is perpetrated. The Act will continue the killing, not prevent it.
  I hope that my hon. Friends will vote against this terrible measure tonight.
  11.40 pm
  Mr. David Ashby: I speak now, as I have spoken since the introduction of the Act, in expressing a deep regret, which I am sure is felt by all in the House, that this Act is necessary. We have always appreciated that it is a denial of some of the basic human rights that this House has done so much to preserve. It is only in the most extraordinary circumstances that we have agreed to its continuance.
  I was pleased that my right hon. Friend the Home Secretary echoed the words of his predecessor and welcomed the fact that the Act is always subject to annual review. When it was introduced, that was not the intention. During its Standing Committee stage, a number of us pressed for an annual review, and the then Home Secretary readily agreed. It is necessary to look on the Act as a temporary measure, which should be abolished at the first opportunity. I accept, however, that that opportunity is not here today.
  I do not think that there is any validity in the comment that exclusion orders are a hardship and burden on those subject to them. I suspect that those concerned are in the forefront of politics and are well aware of the order and its effects on himself and his family. However, I find exclusion orders abhorrent, and I echo the words of Sir Cyril Philips on that.
  We must remember that Sir Cyril conducts an annual review. He is a worthy gentleman who carries out an independent review. I should like to think that the burden of proof is always upon the Government, not upon Sir Cyril. He is the independent person who has investigated the workings of the Act. He produced an excellent report, in which he said that exclusion orders were a power that should be removed and that their phasing out should start now. The burden is on the Government to show that there is a need for the orders. I hope that a great deal of thought is given to that part of the report with a view to implementing it during the next year.
  I am mindful that much is said about the impact of the Act which, as Sir Cyril has shown in his report, is not true. Last year, the right hon. Member for Manchester, Gorton (Mr. Kaufman) said that it was a convenient way of removing political activists from the streets. He said that its powers had been used against South African nationalist groups. Sir Cyril examined that carefully; he was satisfied that the powers under the Act had not been used inappropriately and that there had been no breach of the assurances that had been given by Ministers.
  Sometimes one feels that extravagant claims are made. I do not know whether the claim about the hunting fraternity of Daventry was extravagant, but I find it worrying. I hope that the right hon. Member for Gorton will refer all the facts to Sir Cyril so that they may be part of his review this year. I hope that he will be able to satisfy us. If the Act has been used in that way, it is regrettable.
  I repeat that there is an independent review, and it is important that we should have it. It is necessary to continue the Act, but where the independent review finds
  432
  that a power should be abolished, the burden is on us to disagree because the independent review prima facie is a failure.
  11.45 pm
  Mr. D. N. Campbell-Savours: If there is one aspect of the Act's implementation which exposes the hollow rhetoric and patent insincerity of the Government it is their inability to implement sections 10 and 11. Reference has been made to the few prosecutions that there have been, but a considerable number of prosectuions could have been brought against insurance companies in the City who sell kidnap insurance where the moneys paid go to the Irish Republican Army, for whatever purposes.
  Section 10(1) reads:
  "If any person—

  (a) solicits or invites any other person to give, lend or otherwise make available, whether for consideration or not, any money or other property; or

  (b) receives or accepts from any other person, whether for consideration or not, any money or other property,

  intending that it shall be applied or used for or in connection with the commission, preparation or instigation of acts of terrorism to which this Part of this Act applies, he shall be guilty of an offence."
  I submit that control risks represent soliciting and inviting other persons to give money to the Irish Republican Army and, therefore, are in default of the Act and should be prosecuted. I ask the Minister to prosecute them.
  Section 10(2) provides:
  "If any person gives, lends or otherwise makes available to any other person, whether for consideration or not, any money or other property, knowing or suspecting that it will or may be applied or used for or in connection with the commission, preparation or instigation of acts of terrorism to which this Part of this Act applies, he shall be guilty of an offence."
  I submit that the words "whether for consideration" in that subsection relate to the release of kidnap victims. Therefore, the insurance companies who are selling the insurance policies in the City are in default of section 10(2) under "Miscellaneous offences" in part III of the Act and should be prosecuted. The authorities refuse to prosecute them. They know they are breaking the law. The Government are being selective in their implementation of the law.
  When the young men we send to Ulster—
  Ms. Clare Short: Northern Ireland.
  Mr. Campbell-Savours:—Northern Ireland are shot at, the public in this country should know that the funding of the munitions that are used by the Irish Republican Army comes in part from insurance companies in the City of London. The loss of lives is being funded by British institutions which should be prosecuted.
  11.49 pm
  Mr. Clive Soley: The speeches and actions of the Home Secretary and of the hon. Member for Bury St. Edmunds (Sir E. Griffiths) show how easy it is for those who see themselves as convinced democrats to end up eroding the very democracy that they seek to defend. I shall not go at length into the speech of the hon. Member for Bury St. Edmunds, because much of it was out of order, but I have yet to hear him do anything other than come down—on balance, as he would say—against the extension of the erosion of the democratic rights that

  433
  we have seen eroded over the years. He is always on the wrong side of the scales and the Home Secretary has joined him there.
  In his opening comments, the Home Secretary said that this Act was of desperate seriousness to our democracy. If that is so, why are we debating it, yet again, for just one and a half hours between 10.30 pm and midnight? The Home Secretary said when he wrote to my right hon. and learned Friend the Member for Warley, West (Mr. Archer) that he rejected Sir Cyril Philips's suggestion that exclusion orders should be dropped. That recommendation was central to Sir Cyril's report. Therefore, as the hon. Member for Leicestershire, North-West (Mr. Ashby) said, it is up to the Government to prove that it is necessary to continue with exclusion orders.
  In his letter to my right hon. and learned Friend, the Home Secretary made it clear that he had not given sufficient warning to Opposition parties in allowing only 10 days for us to give evidence to Sir Cyril Philips. The Home Secretary regretted that fact in his letter to my right hon. and learned Friend, and in a further letter he rightly corrected another error. The Member of the House of Lords whom he had described as a member of the Labour party was in fact an independent peer, Lord Henderson. I do not make that as a cheap point. I make it because the Government at no time made it clear to the Opposition parties in this House that they were to be given just 10 days in which to give evidence.
  If the Home Secretary really regards the Act as so desperately serious, will he ensure that in future the Opposition are given proper notice of the latest date by which representations must be made to Sir Cyril Philips so that we may treat the matter with the seriousness that it deserves?
  In the very limited time available, I make just a couple of key points. In so doing, I can do little better than to reiterate one or two of the points made by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) in his opening comments.
  The Government argue that they need the Act to get information on people whom they can later convict as a result of the Act. In other words, they recognise what many of us have recognised for years—that this Act should really be called the Collection of Information Act. Inasmuch as the Government can point to 32 people whom the courts since 1974 have found guilty and seen fit to sentence to more than a year's imprisonment, the Government have that part of the argument on their side. They can say that the 32 people who committed acts serious enough to warrant more than a year's imprisonment are evidence that the Act is working, although, as my right hon. Friend the Member for Gorton pointed out, it is not good evidence or hard evidence.
  Against that, however, we must set the fact—the Government never address themselves to this—that no fewer than 5,324 people out of a total of 6,098 have not been proceeded against in any way at all. The important point is that those 5,324 individuals have families, friends and contacts in the rest of this country and in Ireland. By alienating them from the forces of law and order, the Government are doing more to undermine the fight against terrorism than they achieve by using the Act as a means of collecting information.
  434
  Even leaving aside the underlying arguments in the context of Ireland, which I do not have time to cover today, the whole philosophy of any paramilitary unit operating in the way in which the Republican and, to some extent, the Unionist ones operate is to seek to represent those people whom they can alienate from the state that is seeking to win their loyalty.
  This is not just a matter of collecting information; it is a battle for hearts and minds. To win that battle, we must address ourselves to Northern Ireland and our view of what position it ought to have in the future and to the people, their relatives and friends, who are so alienated from the forces of law and order that they feel that they cannot commit themselves to the forces of law and order in the fight against terrorism.
  Much more needs to be said, but I shall end on this note. If we were facing only international terror from other countries, we would never consider this Act to be necessary. I cannot believe that even this Government would continue with the Act if that were so. We are doing it because of Northern Ireland. Until we address the causes of that problem, and until we address how we are alienating so many of the people whose support we need to resolve that problem, we will continue to get ourselves in increasing difficulty. Above all, we will continue to erode the democaracy of which this country was once proud.
  The Home Secretary said that the exclusion order was not internal exile. In all but word, it is. It is a power that has not existed in Britain since mediaeval time. It is time that we got rid of it.
  11.55 pm
  The Minister of State, Home Office (Mr. David Waddington): This Act helps the police to fight the evil of terrorism. It helps to prevent terrorism. One need only examine the use of the powers last year and the successes of the police last year—with the Rubens hotel bomb and the threat to our seaside resorts—to know that it helps.
  The contentions of the right hon. Member for Manchester, Gorton (Mr. Kaufman) were quite extraordinary. He said that the Act is a failure because terrorism continues. I cannot imagine a more ludicrous proposition. One might just as well say that the criminal law is useless because crime continues. Acts of terrorism have been prevented.
  The right hon. Gentleman compounded his folly by making this ridiculous remark: the Act is being used, but that does not prove that it is needed. I remind the right hon. Gentleman that 20 per cent. of those detained under the Act in 1985 were subsequently charged. There were 94 extended detentions—detentions as a result of the decision of the Secretary of State—and only 30 of the people involved were not charged. Who, in the face of those facts, can say that the Act did not help in the fight against terrorism?
  The need for legislation is regrettable. We must not underestimate the inroads on ordinary civil liberties which the Act makes, but we have to keep a sense of proportion. In asking not just for the exclusion powers but for all powers to go, the Opposition have lost all sense of proportion.
  To answer the question asked by my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths), the exclusion powers are exercised by the Secretary of State personally. The Government accept Lord Jellicoe's view

  435
  that exclusion should be the first power to go. It is an objectionable power and we shall continue to do all that we can to keep down the number of orders and ensure that they are made only in the most serious cases. It is our job to protect innocent people from the murderous attacks of cunning and vicious terrorists.
  I have to tell my hon. Friend the Member for Leicestershire, North-West (Mr. Ashby) that the Government are reluctantly, but firmly, convinced that exclusion orders will remain, for at least the next 12 months, an essential instrument of protection. Seven orders were made last year. That is not many, but an increase on the previous year. If the power were discontinued just now, we would be issuing a warm welcome to this country to more than 200 evil people who have been—
  It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).
  The House divided: Ayes 169, Noes 109.

  Division No. 82]

  [12 midnight

  AYES

  Alexander, Richard

  Durant, Tony

  Amess, David

  Emery, Sir Peter

  Ancram, Michael

  Evennett, David

  Ashby, David

  Eyre, Sir Reginald

  Aspinwall, Jack

  Fairbairn, Nicholas

  Atkins, Rt Hon Sir H.

  Fallon, Michael

  Atkins, Robert (South Ribble)

  Favell, Anthony

  Atkinson, David (B'm'th E)

  Forsyth, Michael (Stirling)

  Baker, Nicholas (Dorset N)

  Forth, Eric

  Batiste, Spencer

  Franks, Cecil

  Beaumont-Dark, Anthony

  Fraser, Peter (Angus East)

  Benyon, William

  Freeman, Roger

  Bevan, David Gilroy

  Galley, Roy

  Biffen, Rt Hon John

  Gardner, Sir Edward (Fylde)

  Biggs-Davison, Sir John

  Garel-Jones, Tristan

  Blackburn, John

  Goodhart, Sir Philip

  Boscawen, Hon Robert

  Gow, Ian

  Bottomley, Peter

  Greenway, Harry

  Bottomley, Mrs Virginia

  Gregory, Conal

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

  Griffiths, Sir Eldon

  Bowden, Gerald (Dulwich)

  Griffiths, Peter (Portsm'th N)

  Boyson, Dr Rhodes

  Ground, Patrick

  Brandon-Bravo, Martin

  Gummer, Rt Hon John S

  Bright, Graham

  Hampson, Dr Keith

  Brinton, Tim

  Hannam, John

  Brown, M. (Brigg & Cl'thpes)

  Hargreaves, Kenneth

  Bruinvels, Peter

  Harris, David

  Buck, Sir Antony

  Hawkins, Sir Paul (N'folk SW)

  Bulmer, Esmond

  Hawksley, Warren

  Burt, Alistair

  Hayes, J.

  Butler, Rt Hon Sir Adam

  Hayward, Robert

  Butterfill, John

  Heddle, John

  Carlisle, John (Luton N)

  Hind, Kenneth

  Carlisle, Kenneth (Lincoln)

  Hogg, Hon Douglas (Gr'th'm)

  Cartwright, John

  Holland, Sir Philip (Gedling)

  Cash, William

  Holt, Richard

  Chapman, Sydney

  Howard, Michael

  Chope, Christopher

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

  Clark, Dr Michael (Rochford)

  Howarth, Gerald (Cannock)

  Clarke, Rt Hon K. (Rushcliffe)

  Hubbard-Miles, Peter

  Cockeram, Eric

  Hunt, John (Ravensbourne)

  Colvin, Michael

  Hurd, Rt Hon Douglas

  Conway, Derek

  Jackson, Robert

  Coombs, Simon

  Jones, Gwilym (Cardiff N)

  Cope, John

  Jones, Robert (Herts W)

  Couchman, James

  Kellett-Bowman, Mrs Elaine

  Crouch, David

  Kennedy, Charles

  Currie, Mrs Edwina

  Key, Robert

  Dickens, Geoffrey

  King, Roger (B'ham N'field)

  Dorrell, Stephen

  King, Rt Hon Tom

  Dunn, Robert

  Knowles, Michael

  436

  Lang, Ian

  Page, Richard (Herts SW)

  Latham, Michael

  Patten, J. (Oxf W & Abgdn)

  Lawler, Geoffrey

  Peacock, Mrs Elizabeth

  Leigh, Edward (Gainsbor'gh)

  Percival, Rt Hon Sir Ian

  Lennox-Boyd, Hon Mark

  Pollock, Alexander

  Lester, Jim

  Porter, Barry

  Lightbown, David

  Portillo, Michael

  Lilley, Peter

  Powell, William (Corby)

  Lloyd, Ian (Havant)

  Proctor, K. Harvey

  Lord, Michael

  Raffan, Keith

  Lyell, Nicholas

  Raison, Rt Hon Timothy

  McCrindle, Robert

  Rathbone, Tim

  McCurley, Mrs Anna

  Rhodes James, Robert

  Macfarlane, Neil

  Rhys Williams, Sir Brandon

  MacKay, John (Argyll & Bute)

  Ridsdale, Sir Julian

  Maclean, David John

  Sainsbury, Hon Timothy

  Maclennan, Robert

  Shepherd, Colin (Hereford)

  Major, John

  Sims, Roger

  Malone, Gerald

  Skeet, Sir Trevor

  Maples, John

  Soames, Hon Nicholas

  Marlow, Antony

  Stewart, Allan (Eastwood)

  Mather, Carol

  Thompson, Donald (Calder V)

  Mawhinney, Dr Brian

  Thurnham, Peter

  Merchant, Piers

  Townsend, Cyril D. (B'heath)

  Miller, Hal (B'grove)

  Waddington, David

  Mills, Iain (Meriden)

  Wakeham, Rt Hon John

  Moate, Roger

  Wall, Sir Patrick

  Morris, M. (N'hampton S)

  Wheeler, John

  Morrison, Hon P. (Chester)

  Whitfield, John

  Moynihan, Hon C.

  Wood, Timothy

  Nelson, Anthony

  Young, Sir George (Acton)

  Neubert, Michael

  Nicholls, Patrick

  Tellers for the Ayes:

  Norris, Steven

  Mr. Archie Hamilton and

  Ottaway, Richard

  Mr. Peter Lloyd.

  Owen, Rt Hon Dr David

  NOES

  Adams, Allen (Paisley N)

  Foster, Derek

  Archer, Rt Hon Peter

  Foulkes, George

  Ashley, Rt Hon Jack

  George, Bruce

  Atkinson, N. (Tottenham)

  Godman, Dr Norman

  Banks, Tony (Newham NW)

  Hamilton, James (M'well N)

  Benn, Rt Hon Tony

  Hardy, Peter

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

  Hattersley, Rt Hon Roy

  Bermingham, Gerald

  Haynes, Frank

  Blair, Anthony

  Heffer, Eric S.

  Boyes, Roland

  Hogg, N. (C'nauld & Kilsyth)

  Brown, Gordon (D'f'mline E)

  Holland, Stuart (Vauxhall)

  Brown, Ron (E'burgh, Leith)

  Hughes, Robert (Aberdeen N)

  Buchan, Norman

  Hughes, Roy (Newport East)

  Caborn, Richard

  Hughes, Sean (Knowsley S)

  Callaghan, Jim (Heyw'd & M)

  Hume, John

  Campbell-Savours, Dale

  Janner, Hon Greville

  Canavan, Dennis

  Kaufman, Rt Hon Gerald

  Clay, Robert

  Leighton, Ronald

  Clelland, David Gordon

  Lewis, Terence (Worsley)

  Clwyd, Mrs Ann

  Litherland, Robert

  Cohen, Harry

  Lloyd, Tony (Stretford)

  Coleman, Donald

  Loyden, Edward

  Cook, Frank (Stockton North)

  McDonald, Dr Oonagh

  Cook, Robin F. (Livingston)

  McGuire, Michael

  Corbyn, Jeremy

  McKay, Allen (Penistone)

  Cunningham, Dr John

  McKelvey, William

  Dalyell, Tam

  McNamara, Kevin

  Davies, Ronald (Caerphilly)

  McWilliam, John

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

  Madden, Max

  Dixon, Donald

  Mallon, Seamus

  Dobson, Frank

  Marek, Dr John

  Dormand, Jack

  Marshall, David (Shettleston)

  Dubs, Alfred

  Martin, Michael

  Duffy, A. E. P.

  Maynard, Miss Joan

  Eadie, Alex

  Michie, William

  Eastham, Ken

  Mikardo, Ian

  Evans, John (St. Helens N)

  Nellist, David

  Ewing, Harry

  O'Brien, William

  Fatchett, Derek

  O'Neill, Martin

  Fields, T. (L'pool Broad Gn)

  Parry, Robert

  Flannery, Martin

  Patchett, Terry

  Foot, Rt Hon Michael

  Pavitt, Laurie

  437

  Pike, Peter

  Spearing, Nigel

  Powell, Raymond (Ogmore)

  Stott, Roger

  Prescott, John

  Strang, Gavin

  Radice, Giles

  Straw, Jack

  Randall, Stuart

  Thomas, Dr R. (Carmarthen)

  Redmond, Martin

  Thorne, Stan (Preston)

  Richardson, Ms Jo

  Wareing, Robert

  Ross, Ernest (Dundee W)

  Welsh, Michael

  Sedgemore, Brian

  Winnick, David

  Sheerman, Barry

  Woodall, Alec

  Short, Ms Clare (Ladywood)

  Skinner, Dennis

  Tellers for the Noes:

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

  Mr. Mark Fisher and

  Smith, Rt Hon J. (M'ds E)

  Mr. Lawrence Cunliffe.

  Soley, Clive

  Question accordingly agreed to.
  Resolved,
  That the draft Prevention of Terrorism (Temporary Provisions) Act 1984 (Continuance) Order 1986, which was laid before this House on 30th January, be approved.

  European Community (Energy Objectives)
  12.10 am
  The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): I beg to move,
  That this House takes note of European Community Document No. 7163/85 and endorses the adoption of new Community Energy objectives for the period to 1995 as references for the guidance of Member States.
  This is the second opportunity that the House has had in recent weeks to debate Community energy issues. The Scrutiny Committee has rightly identified two documents as being of sufficient interest to put before the House as a whole. The first of these, the proposed new rules governing state aids for the coal industry, was debated on Wednesday 6 February. The second, before us this evening, addresses a general framework for the development of all energy resources and offers guidance on the way member states' energy policies might develop over the next decade.
  The document before us is entitled "New Community Energy Objectives". It starts with a summary of the changes that have taken place in the availability of energy supplies since the Community agreed in June 1980 on the energy objectives for 1990.
  Attention inevitably focuses on the radical changes in the oil market over the past five years. Since the last oil crisis, two trends have become apparent. First, the demand for oil is considerably less, and this reflects a greater medium-term responsiveness to price than anyone expected five years ago. That responsiveness has been marked by the successful introduction of improved energy efficiency technology, and continued switching to other fuels, notably gas in the domestic sector and nuclear and coal in electricity generation. Secondly, oil production in non-OPEC countries has continued to increase, enhancing the availability and diversity of supplies on the world market.
  As a result of those changes in the energy market, the objectives outlined for 1990 have already largely been achieved. Oil imports into the Community have been cut by half over the past 10 years. Energy efficiency measures have ended the automatic relationship between energy consumption and economic growth. At the same time solid fuels and nuclear now account for over three quarters of Community electricity generation. The degree of energy self-sufficiency within the Community has increased significantly.
  Despite those achievements, the document fairly warns against complacency. It argues that oil demand may once again threaten to overtake available supplies. Therefore, our long-term security of supply must continue to depend upon a diversity of sources of energy, traditional as well as new. The potential for a broad spread of economic investment needs to be maintained.
  It is against that background that the Commission proposes that the Community adopt new objectives for 1995. The proposals fall into two categories—"horizontal" objectives, common to all fuels, such as greater integration of the Community energy market, a balance between energy and environmental needs and the promotion of technology; and "sectoral" objectives—a

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  phrase that I find easier to understand—covering each of the sources of energy, including the important matter of energy efficienty.
  It may be helpful if I set out briefly the Government's approach to the setting of those energy objectives. At one extreme there are dangers in having a central plan, a kind of blueprint, aimed at matching supply and demand, fuel by fuel, market by market, and so on for many years.
  Experience and history have proved to us that no such plan can ever pass the test of time. All attempts to forecast the energy future with any accuracy have inevitably turned out to be wrong. Grand designs have had to be abandoned. The energy market regularly confounds forecasters because it is, in part, increasingly international. It is extremely complex and, as recent events have proved to us, is subject to violent changes. If we allowed inflexible central plans to be imposed, it would involve high costs to the economy. Such plans would be extremely vulnerable to the unexpected. I do not believe that the task of energy management is well suited to government at national or at international level.
  The best mechanism for deciding the best use of energy and for coping with change is the market place. It consists of a myriad of transactions between customers and producers. It is able to adapt to new circumstances far more quickly and efficiently than any bureaucracy. The Government do not therefore believe in attempts to predetermine artificially the energy balance. That should be decided by competition in the market between the various fuels. But it is important that fuel prices should reflect the true economic costs. The market should be as free from price distortions as possible, or customers will not be able to maximise the efficiency with which they use energy. There is also a need to pay heed to external costs, such as social and environmental factors.
  Against that background, the Government have always regarded the Community objectives—those agreed in 1980 as well as those under discussion now—as points of reference informing one of member states' own energy policies. The objectives are not intended as binding commitments or as targets which must be reached. The energy resources available to member states and the pattens of consumption within each country differ too widely for uniform goals to make sense for the Community as a whole.
  The United Kingdom for example, benefits from indigenous availability of all the major sources of energy—coal, oil, gas and nuclear. Not only can we supply our own needs, but we are substantial exporters to our Community partners. Our energy conservation and renewables programmes are well advanced, reflecting our role as major consumers as well as producers of energy. Other member states, such as the Netherlands, are also significant energy exporters. That is perhaps the one Community country with which we can draw the nearest parallel to Britain. But others still are without resources of their own and rely heavily on imports from within and without the Community. Given this diversity, there cannot be one common objective equally applicable to all member states. Therefore, we need a set of agreed objectives that provide a qualitative assessment of energy priorities. That is an approach that has been fully endorsed by the Energy Council when it last met in November to discuss the objectives. My right hon. Friend the Secretary of State said then that the objectives should act as a helpful set of
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  references for discussing the polices of member states. They are also an indication of the trends which are developing in the Community as a whole.
  Mr. Martin Redmond: I am at a loss. The hon. Gentleman talks about the benefits of objectives and then says that there is no intention of taking any notice of the objectives if the needs of the national interest prevail. If that is the case, why are we here at this hour in the morning discussing objectives when, at the end of the day, they will be thrown through the window?
  Mr. Buchanan-Smith: The hon. Gentleman is not following what I am saying. They are important objectives against which we can test our policy. I said that it does not make sense to have a single common policy when energy supply and demand is so varied throughout the Community. I talked about objectives for such things as greater self-sufficiency, less reliance on imports from outside the Community, the development of other resources such as renewables and so on. They are all objectives but the degree to which they are achieved is bound to vary in different member states. I think that that can be easily illustrated, as I will attempt to do.
  Having dealt with the horizontal aspects, I shall deal with the sectoral objectives. Those suggested in the document seek to break down the trends of general policy into their component fuels. Some figures are suggested, including a possible level of net oil imports and a ceiling on oil use in power stations. Those quantifications are illustrative and can be helpful as markers against which to judge market movements and the relevance of the objectives over time.
  It would be wrong, however, to attach importance to any particular figures or to regard them as significant in any policy sense. As I said to the hon. Member for Don Valley (Mr. Redmond), an example of where this could be misleading is the attempt to set a target figure or range, for example, in nuclear generating capacity. A figure of 40 per cent. has been suggested by the Commission. That is no more than a crude averaging of different nuclear capacities across the Community. France has twice this capacity, the United Kingdom less than half, and five member states have no nuclear generating capacity at all. To try to quote such an unrepresentative average is liable to be misinterpreted as a national objective for each member state. The Government do not therefore think it appropriate to illustrate the nuclear sectoral objective in that way.
  The proposed objectives by their nature seek to take a long-term view of energy developments in what we all know is an uncertain world. I hope that I have outlined the advantages of the objectives as well as the dangers of discussing such a document. Provided that Governments avoid the trap of believing that their forecasts will be realised, there is advantage in looking at the range of energy options and the directions the market might take over the next few years.
  The opportunity to debate the objectives is not only valuable but timely. The Council of Energy Ministers has already discussed them twice. Discussion in Brussels is focussing on the key issues and the Council is likely to be called upon to decide a final text within the next couple of months. This short debate gives the House the opportunity to express its views. I welcome that opportunity, and I commend the document to hon. Members.
  12.25 am
  Mr. Stanley Orme: As the Minister of State said, we are debating proposals for an EEC energy policy and its objectives, even though the Government have no coherent energy policy. That is the debate's starting point. We are talking about an energy plan—a blueprint—which the Minister has rejected. That makes nonsense of the document.
  Britain is in a unique position with regard to energy requirements and production within the EEC, because we are the only country that produces its own oil, gas and coal. As the Minister said, other countries produce some or none of those commodities.
  I have read, as the Minister probably has, the last debate on the EEC directive in 1979, which led to the 1980 discussions with the EEC. In the 1979 debate the House was considering what the position would be in 1985, which is just a few weeks ago. The forecast bore no relation to what happened in 1985 and what we face in 1986. I am worried, because if the EEC had its own way we could end up with an energy policy which could be as damaging to Britain as the common agricultural policy is. We must guard against that.
  The document does not address itself to the position in Europe, which is faced with falling oil prices. Will recent events be discussed when the Council of Ministers meets, and if so, what line will the Government take? We are entitled to know, because tonight's debate is to enable us to give the Government our views in time for the meeting of the Council of Ministers. I am not clear, from what the Minister said, what the Government's attitude will be, not least because oil prices will be an important factor.
  Britain is an oil producing country with a substantial energy surplus. I am worried about British refining capacity. It is being closed on a large scale, not least because of some of the actions of our EEC partners, for example, in Rotterdam. That is having an effect on refineries in Wales, Scotland and elsewhere. It is undermining the industry's ability to export added-value downstream products. Given its indigenous oil supplies, the United Kingdom should be exporting refined products to the rest of the Community and elsewhere, rather than merely refining for the British market. Instead, large amounts of North sea crude oil are being exported to be refined outside the United Kingdom. Much of it then returns to Britain as refined oil or added-value products.
  The EEC proposals advocate greater interconnection between gas and electricity systems and increased trade. Because of the privatisation of the gas industry, we have been asking the Government for some considerable time what their attitude is to the import and export of gas. Will the Minister tell us the Government's attitude to the EC proposals? Will he advise the House of the Government's position on the crucial issue of depletion policy for both gas and oil?
  A major aspect of the document, and one of the only relevant firm figures in it relates to nuclear policy. I was pleased to see that the Minister rubbished that. The document proposes that nuclear generation of electricity should be almost doubled by the year 1995, providing 40 per cent. of our electricity. We are worried about that. We are self-sufficient in coal, and we oppose the development of the pressurised water reactor. We believe that the proportion of electricity generated by nuclear power in the
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  United Kingdom should not increase. We oppose the document's proposal, and, indeed, the Minister made nonsense of it.
  Five countries in the EC do not have any nuclear power. France has 80 or 90 per cent., and we produce about 20 per cent. During the miners' strike that was increased to 25 or 28 per cent. Although the document may be for consideration only, there may be pressures in the EC to develop nuclear power and to impose that type of development on countries, such as the United Kingdom. I put our opposition to that firmly on the record.
  Recently, we debated the EC proposals for the coal industry. It is impossible to discuss European energy objectives without referring to coal. The document continues to accept the importation of coal into Europe, while advocating the restructuring of our industry, and maintains that the price of imported coal will continue to be set by competition in the world market. As my hon. Friend the Member for Midlothian (Mr. Eadie) pointed out on 5 February, coal imported from South Africa, Poland and Colombia is being dumped in Europe at prices that bear no relation to market forces. We cannot accept that. At the Council of Ministers' meeting the Minister must put that point firmly.
  The document also calls for a 25 per cent. improvement in energy efficiency. I would have thought that the Minister would want to say something about that, especially as his Department has embarked on Energy Efficiency Year, and perhaps he will do so when he replies.
  The document promotes the increased use of fluoridised bed combustion and other technologies which would make coal burning more environmentally acceptable. That is an interesting proposal, and I should like to hear the Government's attitude to it. Will the Government put money into such a development? What about developments in coal gasification and liquefaction which the document advocates? If there is a member state which can develop those two processes, it is the United Kingdom, with its large surplus of coal. That is where the future of coal lies.
  The EC document advocates the continuing promotion of research and development and the demonstration of new technologies and renewables. Will the Minister assure the House that the so-called hot rocks experiment in Cornwall will continue to receive funding from the Department of energy, and that the expertise developed there will not be transferred to the United States because the Government are unwilling to continue support? That is another matter that should be raised in the Council of Ministers. The people involved in the development in Cornwall, which is an area in need of employment, are threatened with unemployment because of the removal of subsidies and support.
  Combined heat and power is another idea that should be developed. We should say to the EC that that is what we are doing, and what we will continue to do, and that we do not accept a policy that binds us in an impossible position to other member states.
  Although the document discusses a framework for coherent national energy policies, it is not feasible. As I have said, the Government do not have an energy policy. They do not develop a policy or intervene to propose a policy.
  We believe that the debate is important, but we ask the Government to protect British interests in the EC. That is

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  their job. When they protect British interests, they protect hundreds of thousands of jobs in the United Kingdom energy industry. We await the report from the Council of Ministers, and we hope that the Secretary of State will take note of the points made by the Opposition this evening.
  12.37 pm
  Mr. Malcolm Bruce: It is typical that we are debating this subject in a packed House at peak viewing time, given that Britain is the most energy-rich country in Europe and that how we manage our energy resources is the most significant and important basis of our economy. I am not surprised at the hour, because the timing of the debate is in accord with the Government's general attitude to this important industry and its importance to the British economy. It suits the Government's book very well to have a debate when nobody is listening and nobody can take on board the irresponsibility of the Government's policy.
  The Minister moved the motion in the following terms: we should take note of the document, pick out what suits us, leave out what does not suit us and allow the market to sort out everything. As the right hon. Member for Salford, East (Mr. Orme) has said, for the Government to take any view on a European energy strategy or policy they would first be required to have a policy of their own. No such policy exists and the Government pride themselves on that fact.
  The background to the debate of events this week highlights more than ever the need for an energy strategy. The oil price has collapsed from a peak in 1979 of just under 40 dollars a barrel to about 15 dollars a barrel and it is still falling. The implications of that are extremely significant, not least to the coal industry. In the short term, a free marketeer might be able to say, "Coal is no longer a competitive fuel. It is no longer viable. Indeed, perhaps we should be burning more oil and producing less coal." Taking the logic forward, he might say, "We need to close even more collieries, it may be time to convert existing coal-fired power stations to oil and we should build new oil-fired power stations." Why do we not do that? Presumably, in the short term, the Minister will say, "This is an aberration in the market, and we must see whether it is a long-term trend."
  That uncertainty requires the Government to take a strategic view over a long period of approximately what mix of fuels we should use and how we should handle them. What should be the role for coal, oil, nuclear power and gas? Any responsible Government would do that. It is not a matter of saying, as the Minister tried to suggest, "We the Conservative Government believe that the market can sort it all out, and those terrible Socialists want to plan every detail." We need a framework within which at least broad planning is considered while recognising the factors of the market, but not the short-term volatility which is based on completely unpredictable and uncertain events. The Government must have a much more coherent policy for all our energy requirements.
  The EC document states that the objective for the 1990s is that oil production in the Community should be less than one third of energy consumption from oil imports. If that is the case, we are entitled to ask whether our present level of production is compatible with that objective. If the Government's objective is to rip as much oil out of the North sea as fast as possible, regardless of the price, what will happen in 1998 when there is less oil left? Does that not contradict the Community's objectives? What
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  happened to the objective of net self-sufficiency? Last year, we produced 37 million tonnes more than our self-sufficiency requirements, and the amount is increasing.
  It is worth taking account of what has happened in the oil market during the past six months and what the implications are for the United Kingdom economy. In 1985, the average price of oil was $29 a barrel. Our average production was about 2·5 million barrels a day, and the pound was worth, on average, $1·25. The average daily value of oil production in 1985 was £58 million. The packed Galleries show how important that is to the British economy.
  However, the price or oil is now $15 a barrel. Production is still at that peak—for the calculation, let us say that it is still 2·5 million barrels a day, although it is slightly higher. The dollar is falling against the pound, which is an added complication. We used to be able to console ourselves when the oil price fell by saying that the exchange rate would substantially compensate us for that. That is not happening now. On the contrary, the pound is strengthening against the dollar, further aggravating the effect of the falling oil price. The average daily value of oil production is now only £27 million—a reduction of £31 million—or 53 per cent. in a few months.
  No wonder the Chancellor is worried about his Budget. No wonder the Government's whole economic strategy threatens to fall to tatters against that kind of change. Against that background, the reaction of the Government is total and abject unconcern and complacency. They say, "It is nothing to do with us: is is entirely a factor for the market and there is nothing we can do about it." This is the single most important product of Britain. Its price and production level is crucial to the basis of our economy, yet the Government says it has nothing to do with them.
  As recently as yesterday the members of OPEC launched another appeal to the non-OPEC countries to meet and discuss the implications of the falling oil price and current levels of production. I tabled some questions to the Government asking what representations they had received from OPEC and Saudi Arabia and what responses the Government had given. The reply that I got was none and none. I asked, were the Government prepared to meet and discuss the matter and the answer was one word, no. The Government are not prepared even to discuss the matter. That is an absurd position. Even if the discussions are not clear, and even if the outcome is not certain, to refuse to talk seems utterly unbelievable. That stance is in direct conflict with the document we are debating. Paragraph 28 on page 15 says:
  "It is therefore right that the Community should continue with its policy of establishing good relations with countries and inter-governmental bodies in this region"
  that is, the Gulf region. It goes on:
  "The long-standing relations with the OAPEC should be further strengthened, and arrangements for exchanging information with OPEC should be established."
  It is difficult to see how that Community objective could conceivably be achieved by a Government that are not even prepared to discuss or admit that any contact can or should take place with these organisations. That is an absurd position that most people outside this country cannot comprehend and regard as complacent irresponsibility.
  The right hon. Member for Salford, East touched on the issue of nuclear power and the objective that the Community should aim for 40 per cent. of its electricity generation from nuclear power. In Scotland, a new nuclear

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  power station is to be commissioned at Torness. Before that power station comes on stream, we in Scotland already derive 40 per cent. of our electricity from nuclear power, and the Government are anxious to stoke it up even further. The Minister told us that perhaps he did not wish to object to the 40 per cent. objective. Why do we in Scotland have to be singled out as the only part of the Community that has not only achieved but exceeded that percentage?
  Nuclear power is topical at the moment, perhaps regrettably. The nuclear power industry is beleaguered, and everybody I meet in that industry is demoralised and on the defensive. We have established nuclear power stations over the years, and when we embarked on this new nuclear technology, the objective was to get into the peaceful application of a technology that was developed for warlike uses. In the 1950s there was a great deal of enthusiasm for that peaceful objective and a great deal of money was put into it. But after decades of investment in the industry, we have not got the results that we might reasonably have expected from that substantial investment.
  Worse than that, it might have been well argued by any Government that, taking a long view, we possibly ought to be in this technology, that by definition oil was a finite resource and that most of our basic energy resources would eventually run out, and perhaps in one or two generations we would inevitably have to make more use of nuclear power.
  That argument would be extremely cogent if we were developing British technology, but all that we shall do in the meantime is import American technology with which the Americans themselves are not prepared to continue. Given that we have oil, gas, coal, wind, wave and an opportunity for greater energy efficiency, I cannot understand why we are going ahead with the development of an expensive nuclear power station using imported technology.
  Mr. James Wallace: My hon. Friend has mentioned some of the alternatives open to us. Is he aware that the firm James Howden Ltd. recently won considerable export orders from the United States for wind turbines? Indeed, the development of wind energy in my constituency and other parts of the United Kingdom is showing great potential. In view of the small amount of investment in the development of wind energy compared with the vast amount put into nuclear energy, especially the fast reactor, over many years, would it not be a better investment of public funds if more resources were chanelled into alternative energy sources rather than continually feeding the nuclear energy industry?
  Mr. Bruce: I agree with my hon. Friend. On more than one occasion in this House I have said that if the alternative technologies were given an investment comparable to that for nuclear power, we might make more rapid progress and go some way towards meeting the EEC's objectives.
  Mr. Peter Hardy: I have a great deal of sympathy with the hon. Gentleman's view. I am concerned that, although the Liberal party is usually consistent on this matter, the other half of the alliance appears to take an entirely different view.
  Mr. Bruce: I am surprised that the hon. Gentleman has the temerity to make such an intervention in the week when the Labour party spokesman on the environment is taking a diametrically opposite view to his party on what is happening at Sellafield.
  My position has been, and remains, consistent. I think that, in the long term, we are likely to need nuclear power. However, I wish to make it quite clear that the nuclear industry has had a great deal of investment, but, as yet, has failed to solve many of the problems or to produce the advantages and advances that were promised. If we are not developing British technology—which we will not be doing if we opt for the PWR—it is time that we switched our investment into other areas of energy that show greater potential.
  I will go further than that. After the problems at Sellafield, there is a total lack of confidence among the public in the industry's ability to handle reprocessing technology. Against that background, it would be crass foolhardiness to go ahead with the reprocessing facility at Dounreay when there are so many troubles at Sellafield. It will not be possible to persuade the people of Scotland that that development will be in their interests. Indeed, Sellafield should be shut down until there is a full inquiry into its safety.
  In the process of forcing the pace, the Government may well endanger the survival of Dounreay as an entity because they will draw attention to the whole industry and its problems. That would be a pity because, as I have said, in the long run we may well need that technology. If we pull out of the development altogether, we may regret it. The Government are not acting as a friend of the industry; they are forcing the pace in a way that is contrary to the clear will of the public. That is both unnecessary and unjustified. Now is the time to call a halt and to put our investment into areas where there will be a much greater productive return.
  I do not apologise for taking some time to speak. I feel—although the Government clearly do not—that this is a subject of vital importance that needs to be debated more fully. It is the difference between bankruptcy and survival for this country, yet the Government try to duck and dodge their responsibility, and have done so ever since they came to power.
  The market cannot be left alone. There must be some strategic input from the Government about what the right energy mix should be. The EEC, even if we choose to differ on one or two points, acknowledges that a strategic objective is necessary for the Community.
  For the Government to come here and make the comments that they have, especially given their record, is a piece of cheek. I, for one, am sick and tired of hearing the Government's explanation for the lack of an energy policy and their unwillingness to acknowledge that in the real world responsible Governments would at least take a responsible view, especially in volatile and uncertain situations where the market can destroy long-term strategic opportunities. It cannot be allowed to take its full toll regardless of any of the implications.
  I welcome any opportunity to advance thinking on energy planning. Last week I was at an open seminar organised by the alliance and attended by some people who are not members of any political party but who are actively involved in the energy industry. One person who was anxious to point out that he was not a member of a political party said that we will not get a realistic advance

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  on energy policy and energy planning which will utilise our rich resources until we get rid of this Government. That has to be our objective. Although the Minister will no doubt attack me and try to tear me to bits, I believe that he and his Government are an obstacle to the good management of our crucial resources.
  12.55 am
  Mr. Peter Hardy: I agree with much of what the hon. Member for Gordon (Mr. Bruce) said, particularly in his concluding remarks. I am glad that I did not attend the alliance seminar on energy policy. Anyone who was not directly involved must have left it in a state of bewilderment, if not political schizophrenia.
  The hon. Gentleman was right to deplore the time at which this debate is taking place. The Minister might like to sleep, but he will subscribe to the view that it is in the interests of the Government that serious debates are better held late at night when they escape attention.
  It is interesting that the Community can claim to be in sight of the achievement of its 1980 agreed objectives. Possibly they were sufficiently imprecise as to facilitate achievement. My right hon. Friend the Member for Salford, East (Mr. Orme) was right to offer criticism and to suggest that some of the commitments may originally have been too sweeping. Nevertheless, one might view the current state of energy policy in the EC as in some ways being a little more intelligent than our own. The objectives of the EC are imperfect, and perhaps imprecise, but there is a positive aspect to the approach. The document before us demonstrates that on balance it is better to have a policy. Unfortunately, we do not seem to have had any discernible or intelligent policy.
  Obviously the Community's assessment is broadly based. We may differ from, and need to challenge, some of the objectives, but I trust that the target of a further 25 per cent. improvement in energy efficiency will be reached. The United Kingdom should make a marked contribution after six years spent largely on brutal reliance upon pricing as the principal determinant of conservation.
  One advantage of the Community's approach is that it does not depend upon a hand to mouth response to movements in oil prices. If Her Majesty's Government were to allow oil price levels to determine long-term policy, the national advantage could be enormous. It is timely, therefore, for Europe to maintain the view that imports of oil must be reduced and reliance upon oil must contract. I hope that that view will have some influence upon our Government, because they need, and have needed for some time, to examine urgently their depletion rate and to curtail the now less profitable but still excessive level of oil exports.
  It would be stretching charity too far to refrain from commenting that the oil trade, with its too high place in the world oil trade league, has not served us well, since the yield has contributed to short-term requirements, while at the same time our levels of industrial investment have been dreadful.
  Investment in coal has been upped and maintained—the Government have frequently boasted about that. That has created an opportunity which logic suggests should be grasped in full to accord with the EEC's objective of maintaining or increasing the share of energy consumption commanded by coal. I am not sure that the Government have fulfilled their obvious obligation to remind Europe firmly of the staggering achievements of the coal industry.
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  The closure of high-cost capacity has created sharp distress in the coalfields, but it has reduced costs. Unfortunately, the Community does not seem to be fully aware of the change.
  There is an urgent need for Ministers to correct any wrong impression such as that implied in paragraph 31, which refers to production costs exceeding imported prices. That misconception must be challenged. The Government must stress that the Community cannot expect coal to be produced in Europe at below the price at which it is sold in Europe, which may in turn be below the price at which it is produced abroad. We must insist that some priority is given to indigenous energy and not allow a substantial dependency to develop upon dumped coal from abroad.
  United Kingdom coal prices are now not far off, or are, perhaps just about the same as, the cost of imported coal. It must be accepted that that is a substantial achievement and provides grounds for further consideration of the matter in Brussels. At the same time, the point that I made the other day must be strengthened and acted upon. Our French partners must be advised that they cannot pretend to command the diplomatic initiative in deploring conditions in South Africa, while at the same time developing businesses to enhance the trade of South African coal in Europe.
  Paragraphs 46 and 53 are very important, in that they relate to the development of technology to show that the environmental impact of fossil fuel combustion can be dramatically changed. For this reason, we should hesitate before indulging in any obsessive concentration on nuclear development. I believe that the economy, the environment and the international interest could be very well served if new coal-fired generating capacity is developed embodying the latest available technology in fluidised bed and low nitrogen combustion, as a sign of good faith to our Scandinavian neighbours, which may well have substantial commercial advantages. That would also assist: the industrial base, which needs orders, and maintain a capacity which would continue to be internationally significant.
  Given the wealth of our energy self-sufficiency the United Kingdom does not need to go far along the road towards a 40 per cent. contribution from nuclear power, especially in view of the need to avoid the huge costs involved in such development and the reliance on the present generation of nuclear reactors. As I have said, we must have industrial orders, and a full and vigorous programme of CHP would be welcomed. There should also be further development of renewable reserves, which merit a higher place in the Government's assessments.
  The national interest has certainly not been so well served in Britain as in Europe. Too much has been left to market forces. My right hon. Friend the Member for Salford, East recognised this when he reminded us of the astonishing and dreadful ebb of United Kingdom refinery capacity. The figures reveal the stark horror of that decline. In 1979 we produced 77 million tonnes of oil offshore, and we refined 84·5 million tonnes. In the first 11 months of 1985 we produced 117 million tonnes—an enormous increase—but the amount refined in United Kingdom refineries fell to 65 million tonnes. That appalling decline makes a mockery of the oil policies pursued by the Government, who surrendered responsibility and sat supinely by while the effect of cartels developed enormously to the nation's disadvantage.

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  It is time that we expressed a firm view in Europe, but it is also time that we expressed a firm attitude to policies here. If we served our interests as well as Europe seems to have served its own interests, this country would be better off. Perhaps we should emulate the priorities that Europe proposes. It is astonishing that with all the energy self-sufficiency that we enjoy we have become the sick man of Europe while our oil reserves have been extracted to a fantastic extent. In the mid-1970s, or even in the late 1970s, no one could have imagined that Britain would be brought to the sorry pass in which it is now placed. One reason for that is that the Government have demonstrated that they are not competent to operate an energy policy. They have not even tried to follow one.
  1.4 am
  Mr. Michael Welsh: The general point of the document can be summed up briefly. It is that energy should be provided when required at an acceptable cost. It is also important to have a secure supply of resources to stop the threat of shortages that eventually affect the quality of life and undermine the economy. More specifically, the document speaks of strengthening the internal market and transport policy and securing the development of industry and job creation.
  I should like to ask the Minister some questions relating to solid fuel, because that is the type of energy with which I am involved. The Commission would like to
  "maintain and if possible increase, the market share of solid fuels"
  because, since 1973, Community coal production has fallen by 16 per cent. while coal imports have doubled to 20 per cent. That must be considered. The statement seems all right at first, but it could be altered slightly. I hope that the Minister will bear that in mind in Europe in a few weeks' time. I believe that by inserting the words "Community-produced" before "solid fuels", the sentence would be a little clearer and it would satisfy me, if not others. The sentence would then read:
  "maintain and if possible increase, the market share of Community-produced solid fuels"
  That is vital for Britain and the coal mining industry. Paragraph 73 of the document shows that Community production has fallen by 16 per cent. The real use of coal has dropped by 5·5 per cent. Why will we allow, as paragraph 29 says:
  "imports of coal … from third countries … to increase"?
  Is not an increase of 189 per cent. in imported coal during the past 10 years enough? Is that not terribly high for a country that sits on coal? Will the Minister accept paragraph 29, or put it in for discussion?
  What effort have the Government made to assist corporations that are trying to develop new technologies which can cope with the tighter environmental standards that we all subscribe to? What has been done to assist those experimenting with coal-water mixtures? That is a vital matter.
  In 1980, the Prime Minister attended the Venice summit. Paragraph 12 of the communiqué said:
  "Together we intend to double coal production and use by early 1990".
  What has happened to that prediction? According to paragraph 80 of the document,
  "Solid fuels will play a key rôle in the electricity sector … the consumption of solid fuels in this sector could increase by 40 million tons of coal equivalent by 1995."
  450
  What measures are being taken to ensure that that is Community-produced coal rather than imported coal? Its source is not stated clearly. That, too, is vital. If no provisions are made, and the majority of the increase goes to imported coal, will the market be in the same situation as in the early 1970s, but relying on imported coal rather than oil? Will we be in a similar position if we do not depend on the production of our own solid fuel?
  There are different ways of fulfilling this increase in tonnage, but the only correct way—even though it may not suit the Government's philosophy—is to plan ahead. Coal cannot be obtained overnight. It cannot be produced in a factory. It now takes 10 to 15 years to open a mine. We must therefore plan well ahead. Market forces do not come into it, because without proper planning one cannot produce to satisfy demand. There is nothing wrong with Britain supplying the extra 40 million tonnes in Europe, but that means planning ahead.
  Equally, it is no good our saying that we shall increase productivity. There is such a thing as price, and an increase in productivity without an increase in production will solve nothing. In a capital-intensive industry such as mining, increased productivity and decreased production is likely to increase unit costs unless all the capital is written of. Therefore, there must be increased productivity and increased production at the same time so that unit costs are kept down. That is essential.
  We should allow the British mining industry to produce more tonnage. If the Government give the industry the money that it needs to invest, it can give Europe all the energy it desires without the necessity of going to the Third world. I hope that the Minister makes those points when he goes to Europe.
  1.12 am
  Mr. Martin Redmond: I did not intend to speak, but I asked the Minister a question about the objectives of the EEC and the objectives of the United Kingdom. I listened intently to what he said, but he did not answer the question to my satisfaction. Has this debate been a charade, or does the right hon. Gentleman intend to pursue the objectives that he outlined?
  If the Government have objectives, they must get shot of market forces. Alternatively, if they allow market forces to dictate to this country, there can be no objectives because market forces fluctuate over the years if not month by month. If market forces are to determine the size and shape of the United Kingdom's energy policy, the Minister must convince me that it is worth while following these EEC objectives.
  The only common policy in the EEC seems to relate to agriculture. Perhaps the right hon. Gentleman should have a word with his gaffer to see whether aspects of farming policy can be incorporated into energy policy. If we had such co-ordination, no one would criticise the Government.
  I have heard the words "forward planning" on a number of occasions, but I am afraid that it is a foreign language to the Government. They are incapable of forward planning. If they had forward planning, they would not be squandering the oil reserves and other of our energy reserves, but would be making sure that our capacities are used in a planned way without any outside interference from market forces. Will the Minister tell us whether he

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  intends to let the market forces determine our energy policies, or whether he will have objectives to determine the energy policy?
  1.16 am
  Mr. Buchanan-Smith: With the leave of the House, Mr. Deputy Speaker, I shall respond immediately to the hon. Member for Don Valley (Mr. Redmond) by assuring him that the Government are committed to objectives in an energy policy. I thought that I had earlier made it clear that the Government are not, and do not believe that it is common sense to be, committed to a detailed policy in the form of a blueprint. As the right hon. Member for Salford, East (Mr. Orme) said, the objectives laid out at the time of our last debate do not bear comparision with what has happened since then. We subscribe to many of the objectives, but it does not make sense to try to apply a detailed policy.
  We pay attention to debates such as this, and the points that are raised will be considered by my right hon. Friend the Secretary of State and myself and, where appropriate, we will make sure that they are represented in the Council of Ministers. A number of detailed points have been raised that I shall want to consider further before the Council meets.
  The right hon. Member and the hon. Members for Wentworth (Mr. Hardy), for Doncaster, North (Mr. Welsh) and for Don Valley referred in particular to the problems of the coal industry. This was a subject of another debate, and was dealt with in much more detail by the hon. Member for Midlothian (Mr. Eadie). I know that my hon. Friend the Parliamentary Under-Secretary took on board the arguments and views set out.
  We are committed to the objective of utilising properly our indigenous resources—in the European Community we are the country most blessed with them. Here, I refute what the hon. Member for Gordon (Mr. Bruce) said about a lack of strategy. We should not be putting the money that we are into the coal industry, if we did not believe that there was a long-term future for that industry, but, as he and the House know, our resources of coal extend not into decades longer but probably centuries longer than our resources of oil. We should be foolish to ignore that. If the Government had no strategy, we would not be putting resources into coal to the extent that we are, and we would not have the commitment to create a viable coal industry. That is our commitment, and we hope to be able to succeed because we believe that it is in the country's interests to exploit those resources for those who work in the industry in the most effective way possible.
  A considerable number of other coal issues were raised, and I assure the House that in the Community we shall continue to stand up for the objectives of our energy policy, as we have in the past, and for the interests of our industry, particularly where funds have been available for development, whether they are of a social or other nature. When attending the Council of Ministers, I have argued to make sure that we get a share of what is available and ensure it reflects the importance and position of the industry. So often, self-sufficiency is considered in terms of oil and gas resources, but coal resources are equally important.
  Mr. Hardy: I would not challenge that, but many of us are worried about whether the Government are making it clear to Europe that it should respect the advance that
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  has been made in the British coal industry and recognise that it should not require British coal prices, which must reflect the costs of production, to be below the price of coal which is now being dumped in European markets.
  Mr. Buchanan-Smith: Coal has been discussed at meetings in Europe that I have attended and, although criticism has often been thrown at us about the average production costs of our coal, which by some standards appears to be high, I have been at pains to point out that production costs at our better pits and those under development are well below the European average. Therefore, we can demonstrate that Britain's coal industry has a long-term future and that we shall continue to support it. I take on board the hon. Gentleman's point.
  The fall in oil prices is a matter of interest to the Community. It has already been discussed with the Commission. It is interesting that it believes that the position must be watched and monitored but does not consider that any intervention by it would be appropriate at this stage. No doubt that matter will be discussed at the Council of Ministers. As the hon. Gentleman said, one must consider falling oil prices in relation to the effect that that has on the balance of the energy market and on other fuels.
  The hon. Member for Gordon dwelt on that subject more than others and he must remember, as other hon. Members do, that Britain is not only an oil-producing nation; we are a considerable energy-consuming nation and a considerable oil-consuming nation. One of Britain's most dramatic experiences was the hike in the oil price in the 1970s. It triggered off the world recession and Britain's trade and economic difficulties. People do not understand that a fall in the oil price is bad but that equally, as a consumer country, that brings benefit to many of our industries. It can bring benefit to employment and to consumers, domestic and otherwise.
  If one adopts the view that I regret the hon. Member for Gordon largely takes, that Britain is a producer country, that is to forget and ignore an important consumer interest. Britain and Norway have exactly the same view on this and their interests are not the same as those of the OPEC countries. Of course, we have informal contacts with individual OPEC members. There always have been and they continue. But to have any kind of formal dealings with OPEC in the way that the hon. Gentleman suggests would not be in the best interests of Europe or Norway. The Governments of both countries agree about that.
  Mr. Orme: Will the right hon. Gentleman confirm that he and the Secretary of State had a meeting with the Norwegian Minister for energy and that the United Kingdom's policy is absolutely in line with Norway's?
  Mr. Buchanan-Smith: My right hon. Friend and I met the Norwegian Minister during his visit yesterday to London, as was reported in today's newspapers. There is no difference in policy between Britain and Norway.
  Mr. James Wallace: The right hon. Gentleman said that Britain was also an oil-consuming nation and that consumers can enjoy advantages from a fall in oil prices. Does he agree that it would be regrettable if the Government sought to recoup some of the lost revenue resulting from decreased oil prices through increases in the duty on petrol greater than the increase as a result of index linking?
  Mr. Buchanan-Smith: I do not think that that will be a matter for the Council of Minister's when it meets in March. I have no doubt that my right hon. Friend the Chancellor will receive much advice on this and other matters between now and Budget day.
  The hon. Member for Gordon disagrees with the policies of this Government and the previous one in going for a fast rate of exploration and development of our resources. I make one point to the hon. Gentleman that was made in a recent letter to a newspaper—we have at least had the benefit of much of the oil produced over some years at a high price. Most importantly—unfortunately, the hon. Member for Gordon does not recognise the importance of this, but I note it from a constituency point of view—we have seen the development in Britain of the supply industry, providing the goods and services that the oil companies and industries require.
  Mr. Orme: And refineries.
  Mr. Buchanan-Smith: I shall come to that.
  Britain's industry is competitive with the rest of the world in a way that Norway's industry is not. Without our policies, we would not have had those benefits. I have no doubt from talking to the oil companies and the supply industries that they do not disagree with the policy that this Government and the previous Government have followed.
  Mr. Bruce: Of course I recognise the benefits we have had. Two points arise from that. First, if it was right for us to sell when the price was high, is there not an argument for holding back when the price is low until the price recovers? I recognise that the supply industry has benefited. Secondly, if the price collapses and stays down at $11 or $12 a barrel, might that not depress the industry's prosperity?
  Mr. Buchanan-Smith: The hon. Gentleman has not begun to understand what the oil industry is all about. Does he not realise that the oil industry made development plans, undertook exploration and invested billions of pounds on the understanding that the Government would not interfere in the commercial decisions the firms took? That has been the recognised policy from the beginning. If it is changed, we shall destroy one of the great assets we have in the North sea—policy stability. That means that there is little doubt that, no matter how serious conditions in the oil industry world wide become, our offshore industry will be attractive. I know from my contacts with the oil industry—I am sure that they do not differ from the contacts of the hon. Member for Gordon—that the United Kingdom's offshore industry is the most attractive in the world, not least because of our policies.
  I urge the hon. Member for Gordon to consult more closely with the supply side of the industry and the oil companies. I think that he will find that there is little support for the type of policies which he sought to advocate and which I do not believe will be in the interests of Britain.
  Mr. Redmond: During the discussions with the Norwegian Minister, did the right hon. Gentleman discuss the sale of Norwegian gas to Britain?
  Mr. Buchanan-Smith: So far as I know, Norway does not yet intend becoming a member of the European Community. Therefore, I do not think that that subject will arise at the meeting of the Council of Ministers.
  454
  I was interested in what the hon. Member for Gordon said about nuclear power. I think that the House and those outside will take note of the ambivalent attitude of the hon. Gentleman towards that. He tried to draw credit to Scotland by saying that Scotland has a higher percentage of nuclear generation than the rest of the United Kingdom and that it was much closer to the European objective, but he failed to say that that is one of the reasons why electricity in Scotland has tended to be cheaper than in other parts of the United Kingdom. There is no doubt that for both industrial and domestic consumers in Scotland that has been an advantage. I hope that industrial and domestic consumers in Scotland will note that the hon. Gentleman is against an extension of electricity generation which is to the benefit of consumers in Scotland.
  Perhaps what is most significant is that the hon. Member for Gordon is opposed to Sellafield and supports the closure of that plant on the north-west coast of England. I take note of that and I hope that those outside the House also take note. I shall say no more than that.
  The right hon. Member for Salford, East raised a number of points, and I apologise if I have not covered all of them. Some of them are certainly important. I acknowledge what he said about energy efficiency. It is correct that our objective of 20 per cent. is a little lower than the European objective and over a slightly longer time scale, but we believe that this country can achieve its aim. It is certainly an objective which my right hon. Friend, myself and my colleagues in the Department of Energy will pursue with considerable vigour.
  The hon. Gentleman also raised the subject of refineries. That concerns me because in Britain we have carried through a degree of rationalisation in the refinery industry which is as great as that which has taken place in almost any other country in Europe. One or two other countries which came slightly later to this area are having to carry that through now. That policy has been painful, particularly for jobs in certain areas, but it means that we have a more viable industry which is better able to compete in a very competitive world market.
  I am concerned about the threat of competition from imports of petroleum products from the middle east. We have discussed that in a relevant European context. It is important that we work with our colleagues in Europe and with our colleagues in the International Energy Agency to ensure that we meet any challenge fairly and share the burdens with our partners in Europe and in the IEA.
  We have had a useful debate. I have not covered all the points. As the hon. Member for Wentworth (Mr. Hardy) said, there is an element of schizophrenia in the discussion. I am criticised for my earlier remarks because it appeared that I was picking what suited Britain and leaving out what did not and yet I am told to stand up for British interests and ensure that the interests of British industry are properly represented. I believe that that is right. I worked for four years in agriculture and, as I said to the hon. Member for Don Valley, my experiences there do not encourage me to seek an extension of similar policies to energy.
  I assure the House that, where the objectives are in the interests of Britain and in the broader interests of Europe, we shall support them. At the same time, it is important fully to represent Britain's interests because of the importance of our energy industries to our interests which are not necessarily the same as the interests of other countries in Europe.
  Question put and agreed to.
  Resolved,
  That this House takes note of European Community Document No. 7163/85 and endorses the adoption of new Community Energy objectives for the period to 1995 as references for the guidance of Member States.

  Ijaz Ahmed Malik and Gurmail Singh
  Motion made, and Question proposed, That this House do now adjourn—[Mr. Lennox-Boyd.]
  1.34 am
  Mr. Stan Thorne: I am grateful to Mr. Speaker for giving me the opportunity to mention two constituency cases. The first case with which I wish to deal is that of Ijaz Ahmed Malik, who is a cousin of Robina Kauser, a constituent of mine, who is a British subject. Mr. Malik was originally from Jhelum city in Pakistan. Robina purchased a house in Preston so that she could marry Mr. Malik and settle down with him.
  Mr. Malik arrived on 14 January 1984 to visit an uncle, and clearly had it in mind to establish further contact with his intended wife. They were interviewed on 24 May 1984 in Preston, having gone through a civil marriage on 21 February, and a religious marriage in April 1984. That interview led to the Minister describing Mr. Malik as an illegal immigrant. Against that background the Minister had to decide about his removal.
  A child was born to that couple in April 1985, and is now about 10 months old. The marriage was arranged in accordance with Asian custom and practice. On 29 July 1985 Mr. Malik departed voluntarily taking with him his wife and child. His wife was in employment at the time, but she obtained leave to go to Pakistan with him. She subsequently returned and resumed her employment.
  I am interested in seeing that that family is reunited with the least possible delay. Representations have been made to the Foreign and Commonwealth Office. I understand that an application by Mr. Malik for re-entry is being considered on 1 April this year.
  The Minister is not directly involved in the entry certificate procedure, which is a matter for the Foreign and Commonwealth Office, but I hope that he will do whatever he can and exercise such influence as he may have to ensure that the family is reunited with the least possible delay.
  The second case is possibly more difficult. It is more pressing. It is the case of Gurmail Singh. He was engaged to Rabinder Kaur Geeta. Rabinder went to India on 12 April 1983. I emphasise that date because we are talking about a case that has some history. They married on 20 June 1983. It was a genuine marriage in accordance with their custom, and the husband and wife were interviewed on 12 March 1984. Unfortunately, because of the nature of that interview and some of the answers by Gurmail Singh to the questions put to him by the officer examining the case, he was subsequently refused entry. The wife returned to the United Kingdom on 2 April, and a child was born on 19 September 1984.
  The Minister has alleged in no uncertain terms that the primary purpose of the marriage was to gain entry to the United Kingdom. I have known the family for some time, although not for a long time. Clearly there is a strong bond of affection between the couple. Gurmail arrived on 3 November 1985, and on 15 November they were both interviewed in Liverpool. Unfortunately, during the interview the immigration officer asked Mrs. Singh whether I had told her to invite her husband for a visit to the United Kingdom on the basis that I would see what could be done to help them. Such a question is completely out of order. I certainly made no such suggestion to her, and I suspect that it may be a breach of privilege for

  457
  immigration officers to ask questions regarding the activities of Members of Parliament. The civil marriage took place on 9 January 1986.
  The Minister seeks to remove Mr. Singh, leaving his wife—a British subject—with their son, who is now 18 months old. It is a genuine marriage. Only a few days ago the local press carried a pleasant picture of the husband, wife and son, together with an interview given by Mrs. Singh, in which she stated that they were married three years previously because they loved one another, that they had a baby because they loved one another, but that now they must live apart. Clearly she feels strongly about that and so do I.
  The Minister may argue that the immigration rules have been followed, but a good family will be broken up. That is not the sort of policy to be pursued in a country which claims to be Christian. It is an illustration of man's inhumanity to man, and is in marked contrast to the case of Mr. Rabha, a Libyan, who was allowed to rejoin his family in the United Kingdom. He was present at St. James's square during the terrorist incident which resulted in the murder of WPC Fletcher. The Minister's decision was that he should not be readmitted, but subsequently an adjudicator took a different decision, and Mr. Rabha is now settled here with his family.
  Despite the immigration rules, the Minister should look at the case of Gurmail Singh compassionately and do what he can, even at this late hour, to ensure that the family remains united in Preston.
  1.43 am
  The Minister of State, Home Office (Mr. David Waddington): The hon. Member for Preston (Mr. Thorne) spoils his case and does not do himself justice when he drags in the case of the Libyan, which has nothing to do with the instant case. Mr. Rabha was refused permission to come to the United Kingdom by the Home Office but exercised his right of appeal and was allowed to come because an adjudicator found in his favour. This case deals with two people who do not qualify to come to the United Kingdom.
  Obviously, the cases are important to the people involved, but they are also of public importance because the public is entitled to expect our immigration laws to be enforced, and the rules approved by Parliament to be properly applied. These are both marriage cases and I cannot emphasise too strongly the importance of our immigration rules concerning marriage and in particular the primary purpose rule. I see that it is Labour party policy to abolish the rule—just one of the party's pledges that would drive a coach and horses through our control and, with its other pledges, increase immigration by tens of thousands. But it is not just a question of numbers. It is ridiculous that at this of all times the Labour party should be planning to make it easy for young men—many of them like Mr. Singh with no skills and never having had a job in their lives—to enter the country by using marriage as a device. Opinions may differ on whether parents should be encouraging children to marry boys abroad who have been brought up in an entirely different way rather than their contempories in British society. But the primary purpose rule is in the general public interest and those cases do not illustrate any defect in the rule, rather the refusal of people to accept
  458
  immigration requirements approved by a democratically elected Parliament. All too often a girl goes through a marriage and has a child and then the Home Office is asked to pick up the pieces when—this is certainly true in the case of Mr. Singh—anybody with a scrap of sense could have seen before the marriage that the man would not qualify to come here and would have no claim to come here.
  I shall deal with the cases and first with that of Mr. Malik. On 14 January 1984 he arrived in this country and sought leave to enter as a visitor. He said that he had three months' leave from his job in Pakistan and wanted to stay with his uncle. He said that he had no plans to marry here or in Pakistan, and on the strength of what he said he was given leave to enter for three months. Within little over a month he had married Miss Kauser and was asking to stay here as a foreign husband. In saying on arrival here that he had no plans to marry he was lying quite deliberately, because what unfortunately the immigration officer did not know when he admitted Mr. Malik but what we know now was that back in 1983 the hon. Member for Preston had approached me on behalf of Miss Kauser asking how she could obtain entry for Mr. Malik to come here as her fiancé. Far from the man having no plans to marry when he arrived in Britain on 14 January, the whole arrangement for marriage had already been entered into. At the interview which followed his asking to stay as a foreign husband, he lied again and so did Miss Kauser, because they both said that they had never met or even corresponded with each other before he had arrived in this country. That was nonsense, because the truth was that before his arrival the arrangements for the marriage had proceeded to such an extent that Miss Kauser had even bought a home for them to live in. One thing was certain; Mr. Malik had entered the country by deception and his entry was therefore illegal.
  When the hon. Member for Preston made representations to me on behalf of the couple I looked into the case most carefully, but it seemed to me that I could not overlook the deceit and allow Mr. Malik to stay here, without his having obtained entry clearance as the rules provide, when thousands of others were having to wait in the queue for entry clearance in the Indian sub-continent and when, to put it mildly, there were doubts as to his primary purpose in entering into the marriage.
  Mr. Malik is due to be interviewed on 1 April, which is good news for him. The case will be referred to me, and I can promise him that I shall consider it with great care and examine all the circumstances, including any compassionate circumstances that he may wish to advance. If he is refused entry clearance, he will have the right to appeal to the independent appellate authorities. However, I do not think that any rational person could say what the hon. Gentleman is quoted as saying in the Lancashire Evening Post: that Mr. Malik has been put in an impossible position because of a ruling by me. If ever a couple were the authors of their own misfortune, it is Mr. and Mrs. Malik.
  As to the case of Mr. Singh, in 1981 he applied in Delhi to come here to marry Miss Geeta. At his interview with the entry clearance officer in December 1982, Mr. Singh said that the marriage had been arranged by his uncle who knew of his desire to go abroad and better himself; and before the marriage had been arranged he had planned to go to Dubai or to Iraq to work. When asked whether the marriage had been arranged to enable him to go abroad to

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  work, he said yes. Miss Geeta, who was born in the United Kingdom, had not, at the time Mr. Singh applied to come, ever been to India. I remind the hon. Gentleman that, at the time of the application, she was only 16 years old.
  Mr. Singh's application failed and it failed because the entry clearance officer was not satisfied either that the couple had met or that the primary purpose of the proposed marriage was not to obtain admission to the United Kingdom. But despite that clear—one might say inevitable—finding, someone, presumably the parents, arranged for this young girl barely out of school, who I am sure they expected to live in this country for the rest of her life, to go out to India and meet the man and marry him. Mr. Singh then made another application to come here for settlement, this time not as a fianće but as a husband. Almost inevitably, that application was turned down like his first one. Mr. Singh appealed to the adjudicator, but lost, and he was refused leave to appeal to the tribunal.
  That is the history thus far. What happened next was that on 3 November last year this man, who had twice applied for entry clearance and twice been turned down, turned up at Heathrow claiming entry as a visitor. His wife had by that time returned here and given birth to a child, and Mr. Singh said that he wished to persuade his wife to return to India with him. However, his wife said—this is scarcely surprising—that there was not the slightest prospect of her doing this. In considering Mr. Singh's application for leave to enter as a visitor, the immigration officer took into account all the relevant facts of the case, including the details of Mr. Singh's attempts to gain settlement in the United Kingdom. He concluded that he could not be satisfied that he was genuinely seeking entry for the period of stay as stated by him—two months. Leave to enter as a visitor was refused, but temporary admission was given while I considered representations made by the hon. Member for Preston.
  I have considered the case with care, but I cannot see how the immigration officer could possibly have been wrong in his decision. It is clear that Mr. Singh's intention
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  was not to pay a visit, but to do that which he has long wanted to do—settle in the United Kingdom. Indeed, that is now accepted by the hon. Gentleman, who is asking me to allow him to stay, not as a visitor, but permanently as a foreign husband.
  To insist that Mr. Singh should be removed from this country when he has now got here may seem hard, but if ever a person was the author of his own misfortune, it is Mr. Singh. If I were to allow him to stay I would be allowing someone to stay who quite clearly does not qualify to stay under the rules approved by Parliament, and I would be allowing him to stay when he must have known perfectly well and when his wife and her family must have known perfectly well at the time of the marriage that he did not qualify to settle here. It is, therefore, a step I am not prepared to take.
  It is the job of the Government to apply a control that is fair as well as firm. It certainly would not be fair to the vast majority of genuine applicants waiting abroad to be interviewed to come here if individuals like Mr. Singh were able to circumvent the control by just arriving here. At the moment there is not even an outstanding application for settlement. He is here just on temporary admission, having formally asked to come as a visitor. If he still wishes to press a claim to come here for settlement, he must go back to the Indian sub-continent and apply in the proper way.
  Those seeking settlement must go through the proper procedures. It must be made plain that those who pretend to the immigration service that they are merely coming, for a limited visit, and then, once in this country, seek to stay, help neither their own cases nor those of others who may be in a similar position. Being fair to others means that inevitably they must return overseas, unless there are indeed the most exceptionally compelling, compassionate circumstances. I am sorry for the girl, but I do not find any such compelling circumstances here.
  Question put and agreed to.
  Adjourned accordingly at four minutes to Two o'clock.

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  Mathematics, Science and Languages
  Mathematics, Science and Languages
  University Clinical Academic Staff
  University Clinical Academic Staff
  Remuneration of Teachers Act
  Remuneration of Teachers Act
  Teachers (Pay)
  Teachers (Pay)
  Teacher Training
  Teacher Training
  Higher Education
  Higher Education
  Schools (Capital Allocations)
  Schools (Capital Allocations)
  School Meals
  School Meals
EMPLOYMENT
  Community Programme (Employees' Wages)
  Community Programme (Employees' Wages)
  Labour Statistics
  Labour Statistics
DEFENCE
  International Military Services
  International Military Services
  Anti-tank Weapons
  Anti-tank Weapons
  Tanks
  Tanks
  RAF Establishments
  RAF Establishments
  Strategic Defence Initiative
  Strategic Defence Initiative
NORTHERN IRELAND
  Anglo-Irish Agreement
  Anglo-Irish Agreement
  Belfast Education and Library Board
  Belfast Education and Library Board
  Housing Budget
  Housing Budget
  Labour Statistics
  Labour Statistics
SCOTLAND
  Education Expenditure
  Education Expenditure
  Examination Markers
  Examination Markers
  Road Schemes
  Road Schemes
  Higher Education
  Higher Education
  Abortions
  Abortions
  Cervical Screening
  Cervical Screening
  Community Residential Places
  Community Residential Places
  Patient Statistics
  Patient Statistics
  Costains (Yorkhill Contract)
  Costains (Yorkhill Contract)
  Physics Teaching
  Physics Teaching
AGRICULTURE, FISHERIES AND FOOD
  Common Agricultural Policy
  Common Agricultural Policy
  Sweetening Agents
  Sweetening Agents
  Channel Tunnel
  Channel Tunnel
  Surplus Foodstuffs
  Surplus Foodstuffs
SOCIAL SERVICES
  Stanley Royd Hospital
  Stanley Royd Hospital
  Pharmacists
  Pharmacists
  Social Security Reform
  Social Security Reform
  Child Prostitution
  Child Prostitution
  Homelessness and Children in Care
  Homelessness and Children in Care
  North-East Thames RHA (Capital Works)
  North-East Thames RHA (Capital Works)
  Hospital Building Programme
  Hospital Building Programme
  Geriatric Care
  Geriatric Care
  Limited List Prescribing
  Limited List Prescribing
  Hospitals (Hygiene Standards)
  Hospitals (Hygiene Standards)
  Child Care Law
  Child Care Law
  Patient Statistics
  Patient Statistics
  Community Residential Places
  Community Residential Places
  Nuclear Defence Establishments (Diseases)
  Nuclear Defence Establishments (Diseases)
  Heart Disease
  Heart Disease
  Income Support
  Income Support
  NHS Expenditure
  NHS Expenditure
  Single Payments
  Single Payments
ENVIRONMENT
  Local Authority Employees (Overtime)
  Local Authority Employees (Overtime)
  Sunderland District Council (Housing)
  Sunderland District Council (Housing)
  Local Authority Housebuilding
  Local Authority Housebuilding
  Homesteading
  Homesteading
  Water Authorities (Privatisation)
  Water Authorities (Privatisation)
  Widdicombe Inquiry
  Widdicombe Inquiry
  Nugee Committee (Report)
  Nugee Committee (Report)
  Council House Sales
  Council House Sales
  Defective Housing (Repair and Replacement)
  Defective Housing (Repair and Replacement)
  Local Government Reform
  Local Government Reform
  Tenants' Charter
  Tenants' Charter
  "Paying for Local Government"
  "Paying for Local Government"
  Schoolchildren (Lunchtime Supervision)
  Schoolchildren (Lunchtime Supervision)
  Liverpool (Housing Programme)
  Liverpool (Housing Programme)
  Planning Consents
  Planning Consents
  General Development Order
  General Development Order
  Rugby Union
  Rugby Union
  Urban Environment
  Urban Environment
  Repair Grants
  Repair Grants
  Council House Rents
  Council House Rents
  Wildlife Inspectorate
  Wildlife Inspectorate
  Urban Programme
  Urban Programme
  Alexandra Palace
  Alexandra Palace
  Royal Palaces
  Royal Palaces
  Portsdown Park
  Portsdown Park
  Tobacco Sponsorship
  Tobacco Sponsorship
  Housing Improvement Programme
  Housing Improvement Programme
  Colliery Housing
  Colliery Housing
  GLC (Capital Receipts)
  GLC (Capital Receipts)
  Rating Reform
  Rating Reform
  Afforestation and Nature Conservation
  Afforestation and Nature Conservation
  Local Government Reform
  Local Government Reform
  Rate Support Grant
  Rate Support Grant
  Local Authority Capital Expenditure
  Local Authority Capital Expenditure
  Housing Investment Programme
  Housing Investment Programme
  Rating Reform
  Rating Reform
  Radioactive Waste Disposal
  Radioactive Waste Disposal
  Improvement Grants
  Improvement Grants
  Home Improvement and Repair Grants
  Home Improvement and Repair Grants
  Leasehold Flats (Management)
  Leasehold Flats (Management)
  Green Belt
  Green Belt
  Housing Sales (Basildon)
  Housing Sales (Basildon)
  Local Government Services (Privatisation)
  Local Government Services (Privatisation)
  Leasehold Property (Insurance)
  Leasehold Property (Insurance)
  Berkshire Structure Plan
  Berkshire Structure Plan
  Rural Environment
  Rural Environment
  Local Authority Expenditure
  Local Authority Expenditure
  Rent Arrears
  Rent Arrears
    LOCAL AUTHORITY RENT ARREARS (ENGLAND): 1 APRIL 1983—APRIL 1985
    LOCAL AUTHORITY RENT ARREARS (ENGLAND): 1 APRIL 1983—APRIL 1985

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

Royal Assent
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Atomic Energy Authority Act.

Unemployment Figures: Trends
2.37 p.m.
Lord Dean of Beswick: 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 conclusions can be drawn from the latest set of unemployment figures released.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, the latest unemployment figures are disappointing. Rises in the seasonally adjusted figures for the past two months have followed falls in the previous three months. However, it is too soon to conclude that the recent broadly flat trend has ended.
Lord Dean of Beswick: My Lords, I am grateful to the noble Lord the Minister for that reply. However, will he not agree that since the noble Lord's own stewardship commenced at the Department of Employment, one conclusion that can be drawn from the latest set of figures issued by his department is that the number of people unemployed has increased by over 130,000, and that perhaps the most dangerous and relentless trend is the increased number of people who can be classed as long-termed unemployed? Is not this one of the key figures within those latest statistics, and can the Minister tell us when he expects that particular figure to start falling?
Lord Young of Graffham: No, my Lords, I am afraid that I cannot agree with the noble Lord's conclusion. I am of course the Secretary of State for Employment and, as is well known, the number of those employed in jobs since March 1983 has risen by 711,000 up to September 1985. We have been living through a period in which the workforce has been increasing; last year it increased by over 540,000. I very much hope that we are now entering a period in which the number of those wishing to take up jobs will not exceed the increase in the labour market.
Lord Alport: My Lords, of the 700,000 who have come into employment during the last period, can my noble friend the Minister say how many are in full-time employment and how many are in part-time employment?
Lord Young of Graffham: My Lords, I do not think that we break down the figures in that way, but I should remind your Lordships' House that the surveys which we have carried out have shown that those in part-time work prefer to be in part-time work. There is nothing wrong or disgraceful about part-time jobs; to the contrary, we are moving into a period in which part-time jobs will become more and more evident, and you can increase earnings from part-time jobs. I shall not agree with any criticism of those who are happy working part-time and gainfully employed in so doing.
Lord Molloy: My Lords, is the noble Lord aware that the period about which he is talking is not the past few months? There has been a massive increase in unemployment for four years, year in and year out. Is he not aware that all sections of this House as well as in another place are becoming a little tired of these rancid answers and excuses? The president of the CBI has condemned them, as has the TUC, and I think that most people in the House would also condemn them. I appeal to the Government: let us have no more excuses; let us have action.
Lord Young of Graffham: My Lords, the last thing that I shall ever offer this House is excuses. Responsibility must lie where it needs to lie, and that is with people. It is people who create jobs. As regards the CBI, perhaps I may remind your Lordships' House that the CBI themselves have forecast that 460,000 new jobs will come into existence over the next two years. Again, I would remind your Lordships' House that not only are we creating more jobs than any other country in the European Community, but that for two years running we have created more jobs than the rest of the Community put together. Furthermore, last month unemployment in Germany increased by 250,000, I feel that we must look at a world in which unemployment is a European problem and not be insular. We must recognise the great advances which are being made by the British public in dealing with that problem.
Baroness Nicol: My Lords, can the noble Lord the Minister say whether the Government have any plans to increase the level of benefit for the long-term unemployed to the supplementary benefit level? Is the noble Lord aware that at the moment the difference is something like £12 a week, and that this can mean life or death to a man with a family? Have the Government any plans in this direction?
Lord Young of Graffham: My Lords, I am very well aware of the difference between in-work pay and out-of-work pay. It is a matter which greatly concerns me because I am concerned to see growth in employment in this country. We are sponsoring some very interesting pilot schemes into the long-term unemployed and ways in which we can help the long-term unemployed. I hope to be able to give informa-

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tion on the schemes in due course. I shall do anything to help the long-term unemployed obtain work, and I hope that in the not too distant future we shall be able to report on those pilot schemes.
Lord Nugent of Guildford: My Lords, is my noble friend aware that on this side of the House we all recognise that he has done a massive job in increasing employment in this country but that he has been struggling against the tide? Is my noble friend also aware that his reference to the position in other European countries reminds us that this is not only an English problem, it is an international problem? What help is the European Commission giving in this respect by way of advice or grants which may help solve not only our problem here but the problem in Europe as a whole?
Lord Young of Graffham: My Lords, I thank my noble friend for his remarks. However, perhaps I may say that the credit for the increase in jobs lies not with the Government but with those who create jobs: the people themselves. As regards the European Community, we have made advances in this respect, and last year, starting with a March meeting at which my right honourable friend the Prime Minister took the lead, we persuaded the Commission to look very carefully at the compliance cost, in employment and business terms, of new regulations that they are bringing out. We believe they have actually harmed the growth in employment, if not reduced it. I should remind your Lordships that the United States of America is a labour market of over 200 million people and so is Europe, and in 10 years the United States created 22 million jobs and Europe lost 2 million jobs. Those are the problems which those of us who live in Europe are facing.
Baroness Seear: My Lords, although the noble Lord has told us that we have created more jobs than the other nations in the European Community, will he tell the House how our percentage of unemployed persons compares with the percentage in those other countries in order to complement the figure?
Lord Young of Graffham: My Lords, I am quite happy to put in the Library of the House a schedule of figures. They are calculated on different bases. Our figures are higher than most countries in the European Community, though not as high as some. Our rate of employment is increasing at a slower rate than others. It is difficult to make comparisons, but in the 1970s we had under-employment; we do not have that today. We are creating new jobs and this time we all believe the jobs will last.
Lord Alport: My Lords, may I ask my noble friend whether he is aware that nobody is denigrating a part-time employment, which is very important to those who are able to undertake it? Would he tell me how many of those 700,000 are men, who are normally the breadwinners of a family, and how many are women, who go out to work to add to the family income if there is a possibility that they should be able to do so?
Lord Young of Graffham: My Lords, I regret that it is slightly off the particular Question to look at the
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difference between full-time and part-time jobs, but I am not in the slightest bit ashamed of the answer, which really is that of course many of the part-time jobs go to women. We should be very pleased at that. Of all adults of employable age in the United Kingdom, no less than 65 per cent. are in paid employment. The figure for France and Germany is 61 per cent.; in Italy it is 54 per cent. The reason is simple: many more women in our society work, and all of us welcome that.
Lord Glenamara: My Lords, the noble Lord told us last week that he had recently visited the North-East of England. Is he aware that in many parts of the North-East unemployment is now higher than it was in the 1930s? In South Tyneside, for example, it is 24 per cent.; and male unemployment in some parts of the North-East is 40 per cent. The noble Earl, Lord Stockton, called attention to it recently. The noble Lord's noble friend sitting on his right told the House yesterday that we are advancing on every front. It is a bit difficult to appreciate that in the North-East of England. We have had no riots in the North-East, but what must we do to call attention to the plight of the North-East of England? When are the Government going to take notice and do something to help that part of the country?
Lord Young of Graffham: My Lords, so far as I am concerned, when one man or one woman is unemployed the rate of unemployment is 100 per cent. for that individual, and it concerns me for each individual whether they live in the North-East or the North-West, or in the South. But we have to notice that the world has moved on: that no longer are we the world's largest supplier of bulk steel: no longer are we the world's largest provider of shipping; no longer do we have the same proportion of industrial output as we had in the early years of the century. We have to replace that with the new industries, and we have to encourage jobs to grow where they will naturally grow. The Government have long been seized of the difficulties of the North-East, and will continue to be so. We announced only last week an inner-city initiative to help part of the North-East. We have city action teams. I must tell your Lordships' House that each time I go to the Newcastle-Gateshead area—and I go three, four or five times a year—I come back encouraged by the progress I see being made there.
Lord Stoddart of Swindon: My Lords, the noble Lord said that he found the unemployment figures disappointing. Is he aware that we on this side of the House, and the country generally, believe that the unemployment figures are appalling, not disappointing? Does he realise that since January 1985 the long-term trend has been very much upwards, and that there are 86.000 more people unemployed this January than there were last January? There are 1,800.000 more people unemployed now than there were in 1979, and 41 per cent. of them have been unemployed for over one year. That is indeed an appalling situation. Will the noble Lord tell the House what he is going to do in Cabinet between now and the Budget to persuade the Government that they should put the matter of getting unemployment down before individual tax cuts?
Lord Young of Graffham: My Lords, I think unemployment is too serious a matter to play games with words. I said "disappointing" because we have had two months of increasing figures following a period of six months in which unemployment was flat, and indeed in the last three months was going down. Of course those of us on this side of your Lordships' House are well aware of unemployment. Long-term unemployment is going up, of course: it has been going up every year since 1979, as it has been going up in every country in Europe, because long-term unemployment is part of the increase of unemployment generally.
No government have taken the steps that this Government have taken. Next year we shall be spending over £1 billion in the community programme, bringing help to over 300,000 people who have been out of work for one year. As I have already referred to in your Lordships' House this afternoon, we are having pilot schemes in nine areas, with most encouraging results as to work that will help with the long-term unemployed. But let me remind your Lordships' House that you will never, never cure long-term unemployment by building roads or by building infrastructures, because those projects use machines and trained and skilled people. There are other ways, and we are finding them.
Lord Gisborough: My Lords, in view of the fact that for every £1 extra spent by everybody in the country per week on British goods rather than foreign goods, 100,000 people are put into work, will my noble friend take steps to encourage the further purchase of British rather than foreign goods?
Lord Young of Graffham: My Lords, I suspect that the answer to further employment in the manufacturing industry lies in the hands of those who are responsible for producing our own goods. It is not the Government's responsibility for goods to be produced of good design, and it is not the Government's responsibility for goods to be produced of good quality, or to time, or at the right price. That lies in the hands of manufacturing industry itself; and when we can produce the goods at the right time and at the right price then I suspect that we shall find more British goods sold at home.
Lord Rochester: My Lords, are the Government prepared to give consideration to the CBI's proposed building improvement programme designed on a costed basis to enable private contractors to give temporary employment to long-term unemployed in the areas worst affected by high unemployment?
Lord Young of Graffham: My Lords, my right honourable friend the Chancellor of the Exchequer receives many representations from all sides of industry, including, of course, the CBI, and I have no doubt at all that he is giving serious thought to all of them.
Lord Hatch of Lusby: My Lords, has the noble Lord read—
Noble Lords: Lord Stallard!
Lord Stallard: My Lords, will the noble Lord accept that nothing in his replies today will be of any consequence, or certainly will be of very little consequence, to the many thousands of unemployed youngsters and adults in the inner London area—the area about which he said just before Christmas that there was no problem? Since he has made that remark, unemployment has increased, particularly in Hackney, where it now stands at nearly 30 per cent. The noble Lord's complacency today, and his attempts to gloss presentation over these figures, will have made the situation much worse so far as those people faced with a really tragic situation are concerned. As he said, it is not a matter for playing about with words, but we want to know what action the Government are taking to do something about the situation in inner London.
Lord Young of Graffham: My Lords, the leader of Hackney Council said that the riots were caused by unemployed 14 to 18 year-olds. I replied that they should be at school until 16, and from next year would have a place in the YTS until they were 18. I stand by that remark and continue to stand by it. There is all the difference between the opportunities for young people in the North-East and the North-West and the opportunities for young people in the southern half of England, and that is entirely another matter.
Lord Diamond: My Lords, would the noble Lord be good enough to reconsider the answer he gave when I thought he was telling your Lordships that the employed numbers had increased every year since the Government took office?
A noble Lord: Rubbish!
Lord Diamond: That, indeed, would be rubbish, my Lords, if it were what the noble Lord said. I am giving him this opportunity to clarify the situation. Is it not the case that the numbers of employed fell by about l¾ million in the first two years, have recovered slightly but are still more than one million less than when the Government took office?
Lord Young of Graffham: My Lords, the figures I gave were for the period 1983 onwards, not for the period before then.
Lord Hatch of Lusby: My Lords, has the noble Lord read the Bank of England quarterly bulletin for last December, which states that, despite the figures given by the Government, the number of real jobs created since the last election is 24,000 and not 240,000, as has been claimed?
Lord Young of Graffham: My Lords, that Bank of England quarterly endeavoured to equate part-time jobs with whole-time jobs, and therefore reduced the figures. I do not think that those who have a part-time job would like to see it taken away and given to another to equate them with whole-time jobs. I am concerned with those in employment and whether it he full-time or part-time it should be what the individual wants.

Postal Addresses
2.53 p.m.
Lord Orr-Ewing: 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 how they view the refusal of the Post Office to reinstate pre-1973 county names into postal addresses after the abolition of the metropolitan counties.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, the question of postal addresses is very much an operational matter for the Post Office Board.
Lord Orr-Ewing: My Lords, will my noble friend draw the attention of the Post Office to the fact that now that three-quarters or more of the post is automatically sorted, it cannot be impossible to reprogramme the computers and the sorting arrangements so that traditional county names can be used by those who wish to use them rather than names which do not mean much? There would seem to be no disadvantage in retaining the old county names, of which everyone is very proud and which have existed for many hundreds of years. Can this matter be drawn to the attention of the Post Office, because the consumers are not now as well represented by POUNC as they were in days of yore?
Lord Lucas of Chilworth: My Lords, of course my noble friend's point will be made to the chairman and the board of the Post Office, but the Post Office consulted widely across the metropolitan counties and with POUNC and there was no concrete and firm expresssion of a change being necessary.
Baroness Burton of Coventry: My Lords, the Minister will probably rule my question as not arising out of the Question on the Order Paper, but am I correct in thinking that the present range of new stamps issued to celebrate Energy Year commenced at 17p? If that is so, does he not think that it should start at 12p—at the bottom? Is it not mean to isolate a large sector of the community and will he take up the matter with the Post Office?
Lord Lucas of Chilworth: My Lords, the noble Baroness has indeed anticipated my response. I fear that stamps are a little too wide of the original Question.
Lord Bruce of Donington: My Lords, is the noble Lord aware that we think it is very wise of him to decline to intervene in this matter with the Post Office, since the Post Office is a rather more permanent institution than Her Majesty's present Government? Is he aware that following the next election the position of the metropolitan counties, to which the noble Lord, Lord Orr-Ewing, referred, may suffer some considerable alteration as a result of undoing the mess the Government have created?

YTS: Two-Year Courses
2.57 p.m.
Lord Gridley: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is proposed in the two-year YTS to ensure the highest standards in training.
Lord Young of Graffham: My Lords, in addition to the regular monitoring of YTS programmes by the Manpower Services Commission, the standards of training on two-year YTS will be ensured by a number of specific measures including courses leading to qualifications, a new training standards advisory service and training by approved training organisations.
Lord Gridley: My Lords, while thanking my noble friend the Minister for that Answer, may I ask him in connection with this scheme, which is based upon employee status and a competence certificate at the end of training, whether it is not reasonable in regard to employee status to extend the provisions of this scheme to the Ministry of Defence when a £5,000 million contract has been signed between this country and Saudi Arabia? Does he agree that this will increase employment? Would it not increase employment in relation to everything that was said during the points raised on the first Question today?
Lord Young of Graffham: My Lords, the important part of the two-year YTS is to ensure that all young people who enter not only benefit from their time on the scheme but leave with a valid qualification, or a credit towards a qualification, which will help them build up their future lives. It matters little, I suspect, whether they take this training—provided that it is good—with an employer in the private sector, some employers in the public sector or even in the armed forces. There is an armed forces scheme which has not been over-subscribed in the past but the young people going through it will benefit from it.
Lord Mellish: My Lords, will the Minister arrange for Members of this House and of another place to be invited to the various centres now in operation so that they may inspect and see what is going on? Speaking as one who has been to a number of centres I believe that the standard of training is very high indeed, the equipment is absolutely first class, and it is about time that Members of this House and the other House were given a chance to see it. Why does not the noble Lord arrange something intelligent like that?
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Mellish. I gladly invite each and every Member of your Lordships' House to see youth training schemes anywhere in the land. Rather than choose for you, you choose for us, and we shall arrange for a visit.
Lord Molloy: My Lords, in addition to the YTS, which seems to be improving, can the noble Lord say what is the attitude of the Government to the joint

621
recommendation of the TUC and the CBI that there should be a package with relevance to the inner cities which would enhance the YTS but entail more spending? Is he aware that, according to the TUC and the CBI, that is preferable to cuts in taxation? Is that proposal under consideration?
Lord Young of Graffham: My Lords, I think we have demonstrated our concern for the inner cities in the inner city initiative that was announced last week. The other matters to which the noble Lord referred are matters more for my right honourable friend the Chancellor of the Exchequer.
Lord Stallard: My Lords, will the noble Lord accept that there are many reports in the inner cities, particularly in inner London, of abuse of the YTS schemes? Youngsters are being taken in and given no structured training at all but in many instances are being used as cheap labour. Has the noble Lord visited any of those establishments mentioned in the reports of many of the voluntary organisations who have also been monitoring the youth training scheme and receiving different results from those the noble Lord mentioned?
Lord Young of Graffham: My Lords, no. I totally refuse to accept that, for this very good reason. Each and every youth training scheme or the new YTS goes through an area manpower board, which is not under the control of my department but is a board on which sit five members from the CBI, TUC, local authority representatives and the world of education. Each and every scheme is monitored and can be closed down if any case of the kind referred to is proved, and indeed would be if such a thing happened. What I do know is that there are many young people in the inner cities who do not take advantage of the YTS, having gone through school systems which unfortunately bring them out into the world of work not prepared for it.
Baroness Masham of Ilton: My Lords, may I ask the noble Lord the Minister if there are domestic science schemes in the YTS, so that there can be a higher standard of people coming forward to work in hospital kitchens?
Lord Young of Graffham: My Lords, I have visited many schemes of industrial catering and variants on that. I suspect there may not be any in catering for hospitals because until recently the National Health Service was not prominent in YTS. However, I hope very much that this situation will be remedied in the future.
Lord Rochester: My Lords, will the noble Lord recall that many large companies with good training records run YTS schemes for social reasons and do not afterwards employ many of the young people involved? Is the noble Lord aware of the difficulties that some of these companies are reported to be experiencing in submitting for audit their schemes to the Manpower Services Commission?
Lord Young of Graffham: My Lords, the new YTS scheme starts in April and will receive the main influx of young people leaving school from June through to October. However, I am told that already today
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nationally over 87 per cent. of schemes are agreed and in place, and in parts of the North-East and North-West the figure is 93 per cent. My memory tells me that this is a far better position than that of three years ago when we were introducing the original youth training scheme. I therefore have every confidence that there will be more than a sufficient variety of places to cover all kinds of young people.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that we believe it is vital for this scheme to succeed? Therefore, I hope he will continue to put emphasis on the need for the scheme to be properly structured, and on training in modern skills leading to qualifications and permanent employment. Now, will he—
Noble Lords: Order, order!
Lord Stoddart of Swindon: I am sorry, my Lords, but this is a question which is important and which I feel sure the noble Lord, Lord Young—
A noble Lord: Question!
Lord Stoddart of Swindon: —will wish to answer. Therefore, I hope I shall be allowed to ask it without interruption. Will the noble Lord consider whether there is some difficulty about the attitude of young black people to the scheme? This is important. Will he also ensure that they, too, feel that they are part of the scheme and can take advantage of it?
Lord Young of Graffham: My Lords, I am very concerned if any young person does not avail himself or herself of YTS, because I believe it gives the best start to life. I am conscious that in many inner city areas there are young people of whatever colour who do not come into YTS, and we are determined to take all the steps we can to enable them to come in and to benefit from it.

Business
3.5 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Lucas of Chilworth will, with the leave of the House, repeat in the form of a Statement an Answer which is to be given in another place to a Private Notice Question on the disposal of BL subsidiaries.
With the leave of the House, I should like to say a brief word about the length of speeches in this afternoon's debate standing in the name of the noble Lord, Lord Barnett, to which your Lordships have agreed to apply a five-hour time limit. On the principle that the mover is allowed approximately 20 minutes and that the Minister should rise to reply not less than 25 minutes before the scheduled end of the debate, the number of speakers is not such as to require me to announce any formal time limit. It would, however, be in accordance with the spirit of these time-limited debates for noble Lords in the body of the debate to limit their speeches to a maximum of 15 minutes.

Education Bill [H.L.]
The Earl of Swinton: My Lords, I beg leave to introduce a Bill to amend the law relating to education. I beg to move that this Bill he now read a first time.
Moved, That the Bill be now read a first time.—(The Earl of Swinton.)
On Question, Bill read a first time, and to be printed.

Mersey Docks and Harbour Bill [H.L.]
Read a second time, and referred to the Examiners.
Plymouth City Council Bill [H.L.]
Read a second time, and committed to an Unopposed Bill Committee.

Economic Situation
3.8 p.m.
Lord Barnett Lord Barnett rose to call attention to the economic situation in the United Kingdom and in particular to the impact of the fall in oil prices on government revenues, the exchange rate and interest rates; and to move for Papers.
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I shall start in what I hope will be a non-controversial way—and even with the agreement of the Minister. I hope the House will agree that it is helpful to economic management to have a stable and lower interest rate, and that to have a stable exchange rate at a level which I shall discuss would be helpful to the economy. I hope it will also be agreed that stability would be helpful to those trying to run trading and manufacturing companies in Britain.
I hope it will be equally non-controversial to concede at once that it is not always in the command of government to ensure that we have such an ideal climate; but that is quite a different matter from saying that nothing at all can be done. In asking what can be done we need to look first, of course, at what is the present position, recognising that it could be very different this evening, tomorrow, in an hour's time, or even while I am speaking.
The first point to recognise is that oil prices are very low and are likely to remain so unless the Saudi Arabians, in particular, cut their oil production. It is a strange policy, because it results in the oil-producing countries receiving the same money for selling more oil as they would receive for selling less at a higher price. However, it is a strange world in which we live. It is an even stranger policy that the Government pursue, that in this vital area they leave it to the oil companies in this country to decide what should happen to oil prices.
The second point on which I hope there will be agreement is that the result of the oil price has been that the sterling exchange rate has fallen against the basket of currencies, according to the index, although
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not against the dollar, largely because of the weakness of that particular currency. The third point is that the real interest rate in this country is exceptionally high by any standards.
I should like to consider whether these facts are good or bad for our economy. These days we constantly hear that it is bad because the Chancellor will not be able to cut income tax (or, as I should prefer, increase capital expenditure) in his Budget next month. I hope it will be agreed that that is a shortsighted and narrow view to take. It is also a misinterpretation of the real economic consequences of the oil price fall and its effect on the exchange rate. Perhaps I may say this en passant, as it were, in relation to the question of what the Chancellor may or may not do in the Budget. I do not wish to interfere between the noble Lord the Minister and his right honourable friend, but I am sure it would be reasonable to ask him to give us an assurance that he, at least, being the Secretary of State for Employment, will be pressing the Chancellor that anything he has available will go in capital expenditure rather than tax cuts. That is given that there is virtually no disagreement that that would have a greater impact on employment than a tax cut. I look forward to the Minister telling us that he agrees with that.
We have seen, as I am sure have all noble Lords, a great deal of analysis of the likely economic and financial consequences of the oil price reduction. Of course, it is first important to understand that the Chancellor's decision next month in his Budget will not be based on the current price of oil or the current sterling exchange rate, but a much more hazardous assumption of what those rates will be throughout the whole of 1986–87.
One of the serious and carefully calculated analyses that I have seen was done recently by the London Business School, which is a highly respected body. It concluded that five dollars a barrel off the price of oil boosts output in the United Kingdom by 0.4 per cent. in 1986, and by 0.7 per cent. in 1987. It also cuts the rate of inflation in 1986 by 1.3 per cent. and a further 0.5 per cent. in each of the following two years. The London Business School reckons that, at 15 dollars a barrel, inflation falls to an average of 2·5 per cent. in 1986, and at 12.50 dollars it falls to 1 per cent. That assumes an index average for sterling of 72 and the last time I looked it was at about 74 against the average of 80 on the index in the last quarter of 1985. At 15 dollars a barrel, manufacturing exports grow between 5.5 per cent. and 6.5 per cent. annually over the next three years.
One is bound to conclude that low oil prices therefore, far from being a disaster for the British economy, give us a bonus, a chance to go for higher growth and lower unemployment without the risk of inflation taking off again; although even now the greatest risk to inflation and the whole strategy of this Government is not coming from oil prices or the exchange rate but rather from what is happening to the growth in earnings. The latest figure for the year to 31st December 1985 shows a growth of 8.9 per cent.—far and away in excess of the growth in the cost of living. That is of much more serious consequence than almost anything else happening in the economy at the present time.
Of course, there are some disadvantages from an oil price fall especially in the volatility of the oil price and the exchange rate and interest rate. I hope to return to that in a few moments. But may I reiterate that the cut in the Government's oil revenues is nothing like the disaster that we have been led to believe. It is true that at 20 dollars a barrel the oil revenue will be almost halved to £6.3 billion and, at 15 dollars a barrel, the total falls another £3.5 billion. On the other hand, personal disposable income benefits just as much from a fall in energy prices as it does from a cut in income tax; although of course the Chancellor of the Exchequer will not be able to get as much political capital out of that. But I imagine that we could live with that situation.
If we care about more than just ourselves in relation to the oil price, then of course we must also note the serious consequences for the poorer oil-producing countries, not to mention the shaky banking structure in the West. On the other hand, the poorer non-oil producers stand to gain from the fall and the wealthier nations of the world will be given the opportunity to help, which one must hope that they will take this time round.
I refer to the fact that a fall to 15 dollars a barrel, on the London Business School reckoning, would push up the growth of world output from 3.7 per cent. to almost 6 per cent. in 1987. I hope that the Government will accept that some of that growth, surely, must be used more productively than was done in the past to help the third world. These conclusions should not really be so surprising for if the huge oil price increases in 1973 and 1979 were economically disastrous, especially given the reaction at that time of most of the developed world to deflate their own economies, a reduction in oil prices surely should enable us in the West to do the very opposite now.
The various analyses, assumptions and conclusions could all turn out very different in the real world, not least for us if our Chancellor takes the wrong decisions. I particularly have in mind action on interest rates and on the exchange rate. Real interest rates, as I have said, are very high; but I congratulate the Chancellor, and maybe even the noble Lord the Minister for having supported him, in at least resisting pressure to increase the interest rates even higher. In other words, the Government now have an exchange rate policy: that of allowing the exchange rate to take the strain rather than interest rates. However, one cannot help but note that one of the consequences of that fall in oil prices is to show even more graphically than did our Select Committee in the House of Lords what will happen when North Sea oil production starts to run down; because the cut in the oil price of this magnitude is effectively very similar to what will happen when North Sea oil starts to run out. Indeed, astonishingly, as Mr. Bill Martin of Phillips and Drew said recently, the present level of oil prices could push Britain into a balance-of-payments crisis now. That is astonishing given the amount of revenue that the Government have received in recent years from North Sea oil.
It says a great deal about what the Select Committee said in relation to the Government's economic and industrial policy. Speaking for myself, I believe that the gentleman concerned was being somewhat alarmist. I do not think that the Government are going
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to hit a balance-of-payments crisis; although one is bound to note, as did the Select Committee, who rightly pointed it out, if action is not taken now it could become a serious problem. Certainly, it exposes to instant examination the point made by the Committee and then replied to by the Chancellor when he said that the drop in oil resources would be balanced almost inevitably by an increase in manufacturing industry. We shall see whether that turns out to be the case; but it is not easy to see, as the Committee themselves pointed out, how companies that have gone out of business are going to come back into business at a stroke, as it were, because oil prices have fallen.
I return to my opening question; namely, what can be done by Government with regard to oil prices, interest rates and the exchange rate? As I have indicated, I believe that the fall in the oil price and the exchange rate against the index is helpful to manufacturing industry and economic growth. But it is very much dependent upon the assumption that it will remain at those levels consistently throughout the period. There lies the problem. Huge fluctuations, huge volatility in these areas, are, as I have said, most unhelpful. Certainly, that sort of volatility makes it not only very difficult for the Chancellor to plan his Budget but also difficult for manufacturing industry to plan its production and sales. So that while a lower oil price and sterling is helpful, a more stable base, even at a slightly higher level, would be better than extreme volatility of the sort that we have seen in recent weeks.
I am only too well aware that achieving international co-operation on almost anything is, to say the least, somewhat difficult; and it applies particularly in the case of trying to achieve agreement with the OPEC countries where unfortunately they are unable to agree among themselves. But if international agreement is difficult, one must not throw up one's hands in despair especially when an agreement could provide the kind of vital stability that is essential certainly to this country and, I believe, to the world in this important area.
I cannot pretend to be optimistic but even a little international co-operation is surely better than none. I hope that the Government will at least talk to the OPEC countries and I should like to hear from the Minister that he has certainly not ruled out the possibility of holding some discussions in this important area; for even if Britain and Norway agree to only a modest cut in North Sea oil production, it could have an important psychological impact on OPEC and help to achieve the greater stability that we should all like to see. But, apart from anything else, if selling more oil for less money is an odd policy for OPEC, it is very much odder for the United Kingdom with finite resources in the North Sea.
I hope that the Minister will be able to tell us that he is not ruling out the possibility of some discussions. But if more stability is helpful to oil prices, it is even more important for the exchange rate. Again, international co-operation is better than no cooperation, and again I am only too well aware of the difficulties in this field.
I have in the past expressed a personal view that to this end our membership of the exchange rate mechanism of the EMS would be helpful. Not all my

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noble and right honourable friends, and not all noble Lords opposite, have agreed with me; but, on the other hand, many of my noble friends and others who have sincerely opposed our membership on grounds that it interfered with the Government's ability to pursue an independent economic policy without the constraints that bind members of the ERM must surely recognise now that it always was a fallacy, for a country like Britain can never really live in economic isolation from the rest of the world.
The present Government, and, indeed, the previous Labour Government, in which I was privileged to serve, never opposed membership in principle: they opposed it on the grounds of the time not being right, and those hallowed words have been adopted by the present Chancellor of the Exchequer as well. But it is not, and never was, an ideological issue. It has nothing to do with membership or non-membership of the Common Market. It is a decision to be taken on hard, practical grounds.
I have spoken to many who previously disagreed but who are now very much recognising that the time is right, or as right as it is ever likely to be. I have little doubt myself that at the current sterling rate it will provide for more stability in than out. That must surely be in the best interests of Britain. Again, while understanding the difficulties of the noble Lord the Minister, I hope he will at least be able to give me a sympathetic response as to how he is bending the Chancellor's ear.
I have tried to show that, far from the oil price drop being disastrous, it offers great opportunities, not least to manufacturing industry. I have tried not to be too controversial or to be too critical of the Government's management of the economy. I myself feel it is really unnecessary because in the context of this debate it is surely self-evident, even to this Government, that the huge increase in the exchange rate between 1979 and 1981 did enormous damage to manufacturing industry. At that time the Chancellor was positively encouraging the exchange rate to go higher; and it will be recalled that the Prime Minister boasted that it showed the world's confidence in sterling and in her wonderful management of the British economy. I do not know what she is saying today, or whether she has any time to think about it, but, for my part, making a fairly non-controversial speech, I will restrain myself in any desire to ask what the world thinks now about the Government's economic management.
I believe it is generally recognised that the decline in manufacturing industry in the last seven years owes much to that increase in the exchange rate of some 40 per cent.—the real exchange rate between 1979 and 1981—which did so much to cripple the industrial competitiveness of this country and brought a flood of imports which has never been halted. It decimated whole areas of manufacturing industry, although I concede at once that it was not the only reason, and certainly there was a decline in manufacturing industry which started before 1979. I willingly concede that; but it certainly accelerated at great speed, due in no small measure to the mistaken exchange rate policies of those years.
I have tried very hard this afternoon not to embarrass the noble Lord, Lord Young, the Secretary
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of State for Employment, because I know how easily embarrassed he gets. On the other hand, I am bound to say to him that I would congratulate him if he had any impact on the Chancellor in arranging for him to abandon the policy of leaving the sterling exchange rate entirely to the whim of the markets. In other words, the Chancellor now has an interventionist policy and, as I have said, he is allowing the exchange rate to take the strain rather than to increase interest rates even more. Indeed, we know that, together with the Group of Five, he has (rightly, in my view) been intervening and co-operating in this difficult area to try to ensure that there is a more stable system of exchange rates and a more sensible level of exchange rates throughout the western world.
But I trust it also indicates to the Government the follies of 1979 to 1981. I hope that they will put those behind them; and also that the noble Lord, Lord Young, will be able to assure us today that they will not lose this heaven-sent—or OPEC-sent—opportunity to expand the economy and start the vital task of rebuilding the manufacturing base of this country, especially as it will help the noble Lord and the country in the task of dealing with the most serious and urgent social and economic problems this country has ever faced—that is to say, the disastrously high level of unemployment that we face in this country. Given the kind of policy I have described, the Secretary of State for Employment, if he is able to persuade the Chancellor along those lines, could see a start at least to the reduction of the disastrously high level of unemployment. My Lords, I beg to move for Papers.
3.25 p.m.
Lord Young of Graffham: My Lords, I must first apologise for the fact that because of a long-standing engagement with a Select Committee in another place I cannot be with your Lordships for the full course of this debate. The Motion calls attention to the economic situation. The noble Lord, Lord Barnett, spoke with characteristic wit and moderation, but I have to say that I found little that I recognised in his account of the past, the present or even the future. The noble Lord painted a picture, from my point of view, of uniform pessimism. It simply just does not square with the facts.
Let us look at the facts. What has been happening since the trough of the recession over the five years since 1981? Our economy has grown at a healthy rate: the real GDP growth has averaged 3 per cent. a year. Investment has increased substantially, increasing by 4 per cent. a year. Profitability has improved—up from 6½ per cent. to 11½ per cent., to reach the highest level for 20 years; and better profits will lead to higher investment in the future. We are also more successful in the world economy. United Kingdom exporters have at long last halted the slide in their share of the volume of world trade.
All this sounds rather different from the threats of economic decline which the Opposition uttered at the last general election. Indeed, the general election victory has been followed by low inflation, substantial employment growth and sound economic growth—a combination not seen by this country for many years. Inflation has averaged 5·1 per cent. and the numbers

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in work have increased by about 600,000. We topped the European growth league in 1983 and we are expected to top it again in 1985, with a growth rate which is faster than even that of the United States of America.
These are real successes. And in case some of your Lordships are reluctant to accept my assurances—though I cannot think why you should be—let us look at what independent commentators are saying. The chief economic adviser to the National Westminster Bank said recently that only four other nations in the world can now match Britain for economic growth, price stability and a strong balance of payments. As he put it, we are now in the world economic super-league.
The OECD, too, in their 1985–86 survey of the United Kingdom economy, drew attention to the strength, duration and nature of our recovery, to the sharp fall in inflation, to the recovery in profitability, to the growth of employment and to the successive surpluses on current account. All these add up to an impressive performance in many areas of the economy.
The noble Lord's Motion refers specifically to oil and its place in the United Kingdom's economy. The recent sharp falls in the price of oil are bound to unsettle the financial markets to some extent, but it is too easy to exaggerate the importance of oil to this country. Oil accounts for only between 5 and 6 per cent. of our national income and for only 5 per cent. of our capital investment. Net oil exports make up 8 per cent. of our total exports and oil represents under one-half of one per cent. of total United Kingdom employment.
Of course, it is true that a sharp fall in the price of oil will have a substantial impact on tax revenues: that much is self-evident. But noble Lords will understand that I am not here to "second-guess" my right honourable friend the Chancellor of the Exchequer's Budget strategy: nor, for that matter, to satisfy your curiosity and disclose any discussions that I might have had or might still have with him. And, in any case, we must look at the wider economic impact of the fall in oil prices. Lower oil prices would benefit consumers and industry and would stimulate higher world trade and output. The overall effect on output and inflation should be broadly neutral or, if anything, slightly beneficial.
The noble Lord referred only at the very end of his speech to the question of unemployment. I will concede straight away that this is one area of the economy that has been disappointing. When last month's figures were published I said they did not make happy reading, and they did not. However unemployment is calculated—and there is plenty of room for argument about that—it is just too high. But bringing it down depends on producing goods and services which people want to buy.
What Governments can do, and what Governments must do, is to create the economic climate in which enterprise and employment can flourish and grow. Our economic success provides that climate. Our policies to encourage enterprise help firms to grow. Over 600,000 more jobs created since the last general election are evidence of the progress made by our industries.
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But economic success does not of itself guarantee that unemployment will fall immediately. First, the huge problem of overmanning in the 1970s is now being overcome. Manufacturing productivity has been growing at three times the rate experienced during the Opposition's years. Higher productivity and new technology costs jobs in the short term, but in the longer term our economy will be stronger and able to provide more real jobs. Secondly, pay increases well above the rate of productivity growth make our industries uncompetitive. They also make our industries determined to reduce their use of expensive labour. Thirdly, the rising number of people seeking work makes the task of lowering unemployment even harder.
But we are conscious of the need to help those most hit by unemployment. This year we are spending almost £2 billion on employment and training measures. This money is being spent in ways that will ensure that economic growth can be sustained by a properly trained and flexible workforce. More than 1 million young people have joined the YTS since it began in 1983. Up to 1,250 unemployed people are now being given a start in business each week through the enterprise allowance scheme, and this will increase until 80,000 new businesses a year are benefiting from the allowance in 1986–87.
The community programme currently has 174,000 filled places. By June the figure will be 230,000 and some 300,000 places will be available every year at a future cost of over £1 billion. In the current financial year 200,000 adults will have begun their training under our adult training programmes. Overall we are currently helping some 670,000 people through employment and training measures. This is compassion in action—action not words. And in the last few weeks we have started on two new initiatives designed to help those hardest hit by unemployment.
We are experimenting with a new three-part programme to help the long-term unemployed: first, an in-depth counselling interview to identify the needs and potential of each person who has been out of work for 12 months or more; secondly, a new short course designed specifically to help the long-term unemployed brush up their basic working skills; and, thirdly, a job start allowance of £20 a week for those who take jobs with gross earnings of less than £80 a week—a direct financial incentive for those with high benefit entitlement to re-enter the job market.
If these experiments are a success, we shall be looking to extend them as soon as possible. The greatest problem for the long-term unemployed is simply getting out of touch—out of touch with the job market and with the help which is already available to them. Our aim is to get them back in touch and to give them the help they need. In addition, only two weeks ago I announced a new initiative to bring together the efforts of government departments, local government, the private sector and the local community in eight inner city areas.
These are all positive steps that we have taken to stimulate employment and to help the unemployed back into work. They are worth more to the unemployed than wild promises to reduce unemployment by 1 million through a massive extension of the public sector. Let me remind the

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noble Lord, Lord Barnett, of some wise words spoken nearly 10 years ago:
"We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists and that, in so far as it ever did exist, it worked by injecting inflation into the economy. And each time that happened the average level of unemployment has risen. Higher inflation, followed by higher unemployment. That is the history of the last 20 years".
Those were, of course, the words of the last Labour Prime Minister, in whose Cabinet the noble Lord served, addressing his own party conference nearly 10 years ago in 1976. How does the noble Lord reconcile those words with the promises of massive increases in public expenditure which flow daily from the leaders of his party in another place?
Only the day before yesterday the right honourable Roy Hattersley, shadow Treasury spokesman in another place, was urging local authorities and the public utilities to prepare spending plans for an incoming Labour Government. He apparently said that money would be awarded on a "First come, first served" basis. How does that sound to a former Chief Secretary to the Treasury? We have costed the Labour Party's continuing commitments at £24 billion and this does not include all the costs. It does not include the cost of any re-nationalisation, nor of the recent invitation to local authorities and other public sector bodies to, "Cash in on Labour".
How is this massive increase in public expenditure to be financed?—not through income tax. Mr. Hattersley has given an unequivocal commitment not to increase the basic rate of income tax. The noble Lord, Lord Barnett, does not need me to tell him that taxing earnings above £30,000—as the Leader of the Opposition has promised—would not begin to yield the sums required, even if the tax was at 100 per cent. How then is the money to be found?—by increasing VAT by 26 percentage points to a rate of 41 per cent., or by inflating the public sector borrowing requirement from £7½ billion to £20 billion or more? What a disastrous effect that would have on interest rates, on Inflation and on the value of the pound. Forget, my Lords, about the price of oil.
For example, just look at what an increase in VAT up to 41 per cent. would do. It would increase inflation by around 13 per cent., so that the country would have to endure inflation of nearly 20 per cent. That would have an effect on wages which would cost jobs on a massive scale. What a way to cure unemployment! We saw the effect of the Opposition's policies in the 1970s. The noble Lord, Lord Barnett, has a wealth of experience. I almost felt like promising that I would not mention his book; but that book, Inside the Treasury gave us a vivid description of the crisis of 1976, of the resort to the IMF and of the swingeing expenditure cuts which accompanied it. He hears the promises of his party's leaders in another place.
I have a vision of Mr. Hattersley walking into the Treasury and thinking that he can walk down into the basement, open a vault and there in front of him would be gleaming £5 billion of the money which he said was locked up from the sale of council houses and waiting to be spent. I think that he should learn the difference between cash flow and what exists in the
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books. But, either way, it was said of the Kings of France—and we must all have this feeling of history repeating itself—that they had learnt nothing and forgotten nothing. I sometimes think that the Labour Party have gone one better: they have learnt nothing but they have forgotten everything.
Lord Hatch of Lusby: My Lords, will the noble Lord allow me to intervene? In his remarks about Labour Party policy, has he taken note of the words of his right honourable friend the Secretary of State for Energy yesterday in calling for greater public expenditure? Has he read the report of the all-party committee of another place also calling for greater public expenditure?

British Leyland Subsidiary Companies
3.39 p.m.
Lord Lucas of Chilworth: My Lords, with your Lordships' permission, I should like to repeat in the form of a Statement the reply to a Private Notice Question on British Leyland being made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:
"As I told the House on Monday other proposals for the future of the Land-Rover, Freight Rover and Leyland Trucks businesses, which are the subject of current discussions between British Leyland and General Motors, would be considered on their commercial merits. I named those who were willing to have their interests made public. Since then there has been no material change in the position.
"As I said on Monday, it is in the interests of all concerned in the industry that these negotiations should come to a successful end as soon as they conceivably can, so that damaging uncertainty can be removed. Accordingly, those companies indicating an interest in one or more of these businesses have been asked by the British Leyland board to indicate by 4th March whether they have a firm intention to make an offer".
My Lords, that concludes the Statement.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord for that reply to a Private Notice Question which was asked in another place. Is it not a fact that this deadline of 4th March to which the noble Lord referred was known as far back as 14th February last? Why could not the Government come to the House then and say what the deadline was? Will the noble Lord also confirm that these discussions with GM have been going along for nine months? Will the noble Lord say whether these matters have been brought before the full Cabinet during that period of time? My information is to the contrary. Will the noble Lord also confirm the statement made in another place only last evening by the Minister responsible? I quote:
"I have always understood that the House was sovereign; the House has total and complete control over what happens. If the House decides to go in a particular direction, that is the decision of the House".—[Official Report, Commons, 18/2/86; col. 291.]
Will the noble Lord therefore confirm, as was said in another place last evening, that before any decision is

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arrived at, and before anything is finalised, Parliament will be consulted and parliamentary consent will be obtained? While the noble Lord is pondering that, will he please bear in mind and convey to his colleagues in the Government that it is open to the next government by Act of Parliament to alter the 30-year rule in order that these murky matters over the past few months can be thoroughly exhumed?
Lord Ezra: My Lords, in thanking the noble Lord for his Statement, I should like to ask him whether the Government have fully realised the growing concern at these developments in relation to Britain's motor industry and to our manufacturing industry. This is in no way to suggest that when circumstances are right parts of enterprises should not be disposed of and, indeed, foreign interests could well be involved. But what is happening here seems to indicate that a serious weakness could result in the whole of the British manufacturing scene.
Can there not be more of a partnership in these arrangements to ensure that we safeguard British manufacturing interests as well as benefit from whatever foreign interests might bring to bear on the scene? The concern is that if these essential parts of British Leyland, and in particular the potentially very successful Land-Rover part of British Leyland, fall into the hands of a multi-national company, which for prefectly good reasons might vary the emphasis of its operations from year to year, from one country to another in which it operates, this could lead to serious difficulties for the British motor industry and its employees.
Without in any way restricting the commercial freedom of British Leyland I hope that the Minister can give us some assurance that these national interests are being considered, and that in any arrangement made for the disposal of these assets we shall be seeking to ensure that employees, management and the public in general will be safeguarded against the possibility of the dilution of a major segment of our manufacturing sector.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lord, Lord Bruce of Donington, and the noble Lord, Lord Ezra, for their receipt of this Statement. In response to the noble Lord, Lord Bruce, I can confirm that the General Motors negotiations have been going on for some time—something like nine months. Indeed I think there has been public knowledge of these matters, certainly reported in the press, for a considerably longer period. With regard to the deadline of 4th March, this is a matter which the board of British Leyland has decided upon as being in the best interests of its company, its dealers and its workforce—in fact, all those involved—so that any uncertainty may be limited.
I cannot answer the noble Lord, Lord Bruce, about what goes on in Cabinet because I am not privy to those matters. What I can say is that my Secretary of State in the Department of Trade and Industry has no proposals with regard to British Leyland at this time to put before his Cabinet colleagues. With regard to any decision in relation to General Motors or any other bidder for any part of British Leyland businesses, certainly those matters will be reported to Parliament.
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I am grateful to the noble Lord, Lord Ezra, who describes his view of a partnership in the motor industry. Perhaps I could remind the noble Lord that the United Kingdom motor vehicle industry has had a partnership since the 1920s with General Motors, and as I have reported on both 3rd February and 17th February both British Leyland and the Government will be ensuring that the very interests that the noble Lord mentions are taken care of in any negotiations with any company with regard to the acquisition of parts of British Leyland.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that in circumstances like this the one thing that is a killer is uncertainty? For that reason the suggestion to put a deadline on people who say they might be interested to make their decisions early in March is absolutely right. From the point of view of the workforce, the ownership of the shares comes second—a very poor second—to having an efficient, competitive industry with which to work, and in removing the uncertainty you are moving in that direction. People who are interested in delaying it for what are often pure party political reasons should be completely ignored.
Lord Lucas of Chilworth: My Lords, I am grateful to my noble friend Lord Harmar-Nicholls for underlining what I have sought to say, now for the third time since 3rd February. I am most grateful to him.
Lord Lloyd of Kilgerran: My Lords, having regard to the noble Lord's statement that what he indicates from the Government is in the interest of all industry, what measures do the Government propose to introduce to safeguard the interests—the very important interests, the international interests—in intellectual property rights not only belonging to the company but also in regard to the rights of employees? I apologise to the noble Lord the Minister for not giving him notice of my question, but if he cannot answer it today perhaps he can answer it at some other time.
Lord Lucas of Chilworth: My Lords, I understand the point made by the noble Lord, Lord Lloyd of Kilgerran. He will know very much better than I the safeguards for intellectual property rights. We seek in all negotiations assurances from General Motors in this case, and from others who are negotiating with British Leyland, with regard to British content, trade marks, names and the like. The noble Lord will himself know that in law there is a time limitation in respect of all such assurances.
Baroness Turner of Camden: My Lords, what arrangements are being made to consult the workforce, in view of the fact that the opinions of the workforce were held to be of significance in the Westland affair?
Lord Lucas of Chilworth: My Lords, as soon as British Leyland has reached some conclusion in this matter it will have something to discuss with the workforce. At the moment, albeit that negotiations are at an advanced stage with one company, there is nothing to discuss in detail with the workforce.
Lord Taylor of Gryfe: My Lords, accepting the point made by the noble Lord, Lord Harmar-Nicholls, concerning an early decision in this matter, does the Minister not accept that General Motors has been involved in negotiations for nine months? A deadline has been set for British and other interests to indicate their interests by 4th March. Will the Minister assure the House that there will be adequate time thereafter to assess and evaluate the bids that may be forthcoming from other interests?
Lord Lucas of Chilworth: My Lords, I am grateful to the noble Lord. As my honourable friend the Minister of State said in another place, the negotiations with General Motors are a long way down the track. That has not precluded other people, over many months, putting proposals to British Leyland, since it was a declared objective of the Government to return British Leyland to the private sector as soon as possible. The board has not set any time limit by which completion of its considerations shall be made, so there is adequate time for the board to give consideration to any offer that is made by 4th March.
Lord Molloy: My Lords, does the noble Lord not agree that there is consternation generally throughout the country, on both sides of industry, and in the City, about the large portions of British industry that are now passing into the control of the United States of America? That situation could be very serious for our future. If there should be any grievous slump, I cannot imagine for one moment that any responsible American would see to it that Americans will suffer first, before the British or anyone else.
Will the Minister explain the attitude of the Prime Minister, who, during the Westland issue, seemed to indicate that everything should be left to market forces, whereas she is now on record as saying that British Leyland should go to the Americans? Is the Minister aware that it is causing grave consternation that the head of the Government should be favouring another Government taking over control of a part of British industry?
Lord Lucas of Chilworth: My Lords, I have made it clear to the noble Lord, Lord Molloy, and to others in the exchanges that we have had that the long-term interests of the truck and bus industry in this country and of those who work in it are of major concern to us. So far as General Motors is concerned, it has demonstrated since 1920 its interest in being part of the British manufacturing scene. We seek long-term benefits for those employed in the truck industry, and we seek to do that by considering every offer made that will advance those interests.
Lord Hatch of Lusby: My Lords, will the Minister answer the question put by my noble friend Lord Bruce of Donington? If he cannot do so—and one sympathises with the Minister for having to speak without the knowledge required—then perhaps he will have a word with his neighbour, the noble Viscount the Leader of the House. Is he aware that this morning his right honourable friend the former Minister of Defence, Mr. Michael Heseltine, stated publicly that during his period in the Cabinet this issue was never once raised and that he knew nothing of it? How does
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it come about that negotiations concerning the disposal of a British company owned by the Government on behalf of the British people are conducted for nine months without the matter ever coming before the Cabinet?
The Lord President of the Council (Viscount Whitelaw): My Lords, since the noble Lord decided to put his question to me—and so did the noble Lord, Lord Bruce of Donington—then I am entitled to say this. Perhaps I am becoming increasingly old-fashioned, but I have always understood that what went on in Cabinet was a matter of confidentiality. That is a principle that I shall maintain as long as I live, and I intend to do it now.
Lord Hatch of Lusby: My Lords, it is not I who is breaking confidentiality. If anyone has broken it, surely it is the noble Viscount's ex-colleague as a member of the Cabinet. I was simply quoting a former member of the Cabinet who stated this morning that the question had never come before the Cabinet during the period of nearly seven years that he was a member of it.
Viscount Whitelaw: Very well, my Lords—that simply reinforces my point. I am not interested in what other people say. I am interested in what I myself believe to be correct and was brought up to believe, which is what Members in all parts of this House have been brought up to believe: that if one is a member of the Cabinet one treats its proceedings with confidentiality. That I shall do as long as I remain in public life, and long afterwards.
Lord Bruce of Donington: My Lords, as the noble Viscount has been so forthcoming, will he be kind enough to answer a question of mine that his noble friend did not answer? Is it still the position of the Government as a whole that, as stated by the Minister in another place last night, Parliament is sovereign in these matters and that Parliament will be consulted before a decision is taken? Is that still the position of Her Majesty's Government?
Viscount Whitelaw: My Lords, my noble friend answered that question. He said that naturally any such decision will be reported to Parliament. It is perfectly obvious that if a decision is reported to Parliament then it will be open to Parliament thereafter to take any such action as it may wish to take. That has been the position for a long time, and it must remain so.
Lord Diamond: My Lords, is the Leader of the House aware that as far as all of us on these Benches are concerned we wish to support him to the end, utterly and completely, in the attitude that he has just expressed with regard to the disclosure of Cabinet discussions in the interests of good government? Having regard to that, and on a much less serious note. I invite the noble Lord the Minister to reconsider his answer when he said that he could not disclose what went on in Cabinet because he was not privy to it. I hope that it was only in the interests of not detaining the House at length that the Minister did not go on to say, "Nor would I if I were!".
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lord, Lord Diamond.

Economic Situation
3.58 p.m.
Debate resumed.
Lord Ezra: My Lords, I wish to express my particular appreciation to the noble Lord, Lord Barnett, for introducing the Motion that is before the House today. I do so on two grounds. First, because of the extreme timeliness of the question that he has put forward for debate; secondly, because he has exposed the issues with his customary moderation and constructiveness.
Having heard the noble Lord, Lord Barnett, introduce the Motion I was waiting with great interest to hear what the noble Lord, Lord Young of Graffham, would say on the subject. I must say that I was disappointed. I thought that he would address himself to the issues that had been raised, but instead of that we had, with his customary oratorical eloquence, a defence of current government policy. But that is not what we are debating. What we are debating today is that there has been a massive change in the world oil scene which has led to serious potential perturbations or advantages in different countries.
What we want to explore is the potential impact upon this country of that change; but we did not get that from the noble Lord the Minister. I hope that his noble colleague, when he replies to the debate, will give us the views of the Government on that subject because I presume the Government have addressed themselves to it. Such a massive reduction in our revenues, on the one hand, and the potential advantages to manufacturing industry, on the other, must presumably—without in any way wanting to infringe on what may go on in Cabinet—have occurred to the Government as a subject for consideration; and that is what we wish to debate today.
Therefore, if I may be permitted to do so, I should like to put this subject in its context following on the introduction that we have had from the noble Lord who tabled the Motion. Oil has played a dominant part in the affairs of the world, and particularly this country, since 1974. There were, first, the two oil shocks of 1974 and 1979, the latter of which introduced the most serious recession since the end of the war. In addition, so far as this country in particular is concerned, we found and then with great skill exploited the resources in the North Sea and we have now become one of the major oil producers in the world. This has gained us an enormous amount of financial benefit. We now have a situation where what is called the third oil shock has occurred with a massive reduction in the price of oil.
It was only a few weeks ago that oil was being quoted at about 25 or 26 dollars a barrel and it is now round about 16 dollars a barrel. We are entering the doldrums of the summer period—we shall presumably sooner or later get there in spite of this harsh weather—when oil prices are likely to decline still further for seasonal reasons. Therefore, 15 dollars a barrel is not unlikely and it could be even lower. So I
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think that it is very proper that in this House, which is used to objective, intellectual deliberation, we should consider the possible impact of those developments and the various options which are open to us as a country.
I should like to group my remarks under two heads. First, I believe there is an energy impact from these developments and, secondly, a wider economic impact. As regards energy, we now have the problem to which the noble Lord, Lord Barnett, referred, that there is currently a world surplus of oil. We are a major oil producer but we know that our reserves in the North Sea are finite. Therefore, the question arises: what should we do about that situation? Should we go on producing at top rate with a prospect of adding to the lowering of price and, therefore, of our revenues? Or should we seek to limit, to some degree, that production? I have no doubt that we should be looking at ways in which we could, on the one hand, moderate the pace of production but, on the other hand, continue to stimulate the pace of exploration.
What we need to do is to have the maximum amount of future oil from the North Sea that we possibly can, and that depends on the exploration effort. However, it does not seem to be particularly to our commercial advantage to be maximising production at the present time. I realise all the difficulties there might be in this and I realise the position of both the oil companies and the Government. Nevertheless, I would be most obliged to the noble Lord, Lord Brabazon, when he replies, if he could give us the Government's thinking on this issue.
Not only is the energy impact related to oil: it is, of course, related to other energy sources. We as a country are blessed with the fact that we have a plenitude of energy sources at our disposal. The issue that we face in relation to these other energy sources is what view we take about the long-term position on oil prices and availability. If we were to believe that the present reduction in the price of oil is something that is to subsist for a very long period and that we could depend on adequate resources of oil whether from our own sources or elsewhere for that sort of period, then, of course, we would have to adopt a policy of cutting back on our other energy sources because there would be no point in wasting those assets.
On the other hand, if, as I think it would be prudent to believe, this could be a relatively short-term issue, and that when we move into the 1990s the situation could change, then I think we ought to make sure by our energy policies that we maintain our capability in the other energy sources. I have always believed that in the matter of energy over-insurance is better than no insurance. Therefore, I think we have to consider very carefully what we do in relation to the coal industry which is another major source of fossil fuel available to us.
As we heard recently in answer to a Question, the coal industry is now doing very much better. Productivity has improved and performance is moving ahead, but it is caught up in the slipstream of the massive reduction in oil prices. There is the risk that, if oil prices go much lower, on a purely short-term commercial basis it could pay the electricity industry in this country to switch significantly to oil generation rather than coal generation.

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Having had some experience of these matters I would counsel caution before that was done. I would say that we ought to maintain a substantial quantity of coal going into the power stations, bearing in mind, on the one hand, the progress made in the coal industry at present and, on the other hand, the uncertainty about future supplies. Equally, we are now, due to the enterprise in particular of the Secretary of State for Energy, moving into a massive campaign for energy saving. I hope that that will in no way be diminished by the changes in the price of oil because, again, this is something of long-term significance and bound to pay us, almost whatever the price of energy. Therefore, I hope we can have an assurance in that connection.
Equally, we need to be assured that for other energy sources, particularly renewables, the effort will not be diminished. It has been my experience, stretching over many years, that in energy as in other walks of life there are short-term reactions and that if it appears that there is a surplus and prices weaken then longer-term efforts are diminished. I hope that will not be the case in the energy strategy of this country.
I now move to the wider economic implications and options resulting from the changes in oil prices. For this country there are minuses and pluses. What we obviously must do is minimise the minus impact and maximise the plus impact. The minus, of course, is that our revenues will be affected. According to the latest views of the Treasury, as reported in the newspapers, the estimate made last March of the net benefit from oil in the forthcoming financial year was of the order of £11·5 billion. It now estimates that it could be around £6 billion. So this is a massive drop. And it is not only that: of course, this also affects our overseas earnings on oil.
Your Lordships will undoubtedly recall that over the past three years we have only been able to show a surplus on balance of payments on current account through what we have earned on oil account. A substantial diminution in the oil earnings on overseas account is bound to call in question whether we can maintain that overall surplus. I think it would be useful to the House if the Minister could indicate to us the current Government thinking on this point. This indeed is a matter to which they surely must have addressed themselves. It is said that there will be a reduction of something in the order of £2 billion—it may be more—in our overseas earnings on oil in the coming year if present prices continue. What impact will that have on our overseas balance? I think that this is a fair question for us to ask.
I come now to the positive aspect of the matter, which is that the costs of oil as an energy source will be diminished and therefore it must be our endeavour to make sure that that effect works its way through the economy. One way it will not work its way through the economy is if the Government were minded to tax away the advantage. There have been rumours of what they might do in relation to petrol. I shall not be so bold as to ask the noble Lord, Lord Brabazon, to indicate to us what his colleague might do in relation to the Budget, but I should like to express the opinion that I think it would be quite wrong if the benefit that the economy is likely to derive from the oil price reduction were to be taken away by act of government
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through increased taxation, because that would minimise this positive benefit.
However, in order to obtain the full benefit from the situation, in my opinion wider policy decisions need to be taken. I was present last night at the annual dinner of the Engineering Employers' Federation at which the Secretary of State for Energy was speaking. Obviously it is his opinion, but he expressed grave concern about the way in which our economy could develop if different policies were not undertaken. In particular he said that he could see Britain possibly becoming—I took these words down as he was speaking—"a low wage subcontracting service economy".
There is a risk of this happening, and your Lordships' Select Committee on Overseas Trade, over which the noble Lord, Lord Aldington, presided and to which I had the honour of belonging, drew attention to this risk, not with the intention of being gloomy but with the intention of indicating the difficulties ahead, in order to ensure that we pursue policies which avoid that dire situation. So it is necessary for actions to be taken at the present time, when we have the positive impact on general costs of the reduction in oil prices, to make sure that the benefits are carried through the economy.
When those of us who were pressing for rather more capital expenditure in the public sector were making our case, when oil prices were high, we were told that the impact would be inflationary. Now we have a much lower oil price with a deflationary impact. I would have thought that the time has come when we ought to give a filip to the economy by a combination of measures to add to capital investment in essential public sector areas, such as putting right the quality of housing—which we have many times debated—on the one hand, and suitable tax reductions on the other. Let us hope therefore that we can get a combination of those policies together with the benefit of oil price reductions which flow unimpeded through the economy.
The other important issue raised in the Motion that is put to us by the noble Lord, Lord Barnett, concerns the related questions of the exchange and interest rates. The exchange rate is something which has bedevilled our economy for some time. The evidence which we received in the Select Committee on Overseas Trade showed that there was a virtually unanimous view on the part of the industrialists who spoke to us that the fluctuations in the exchange rate were particularly debilitating. We are now in a situation where we could bring greater stability.
I shall repeat the arguments which we often hear from these Benches in favour of our going fully into the EMS, on which subject the noble Lord, Lord Barnett, has also expressed his opinion. I should like just to quote, if your Lordships would bear with me, the remarks recently made by Dr. Wilfried Guth, who is chairman of the Deutsche Bank, and a good friend of this country who was over here on the 11th February. He said:
"Britain would benefit by entering the full EMS at the present stage because the pound would fluctuate less and the burden of defending it when necessary would be shouldered by all the central banks within the system."
If we could get a degree of stability in the pound at the present rate in relation to the other European

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currencies, this surely would be a big advantage to the country. We now have an exchange rate with the deutschemark which is way below 3.50 (which was at one time quoted as being excessive). It is now in the 3.30s and this is bound to be a very great advantage.
In conclusion, I believe that we are presented with a very great opportunity through this change in the oil prices but it will only be converted into an actual benefit if we buttress what has happened with positive and determined policies.
4.18 p.m.
Lord Soames: My Lords, I want very much to follow the line taken by the noble Lord, Lord Barnett, when he introduced this interesting Motion. I do so because I think it is important that in this House the international ramifications of our economic policies should be well considered. That is the topic on which the noble Lord concentrated—wisely and well, if I may say so. It is to that matter and to two of the points which he made much of that I should like to address myself this afternoon.
My first point concerns the volatility of exchange rate movements. In the last six years we have seen the exchange rate of the pound with the dollar vary from a high of 2.70 to almost parity and then again rising to the middle 1.40s. As your Lordships will know well, money is meant to facilitate the movement of goods and services. That is what money is about. But if we have totally uncontrolled swings in exchange rates, far from facilitating that, money becomes a malign influence. We have all seen that to our cost. We have seen it; the Americans have seen it. The question is, what sort of balance can we strike between, on the one hand, totally fixed parities as set out in Bretton Woods and, on the other hand, the totally floating currencies that we have seen since the demise of Bretton Woods?
If I may, I will be so bold as to quote to your Lordships a few words that I said three years ago, on 23rd March 1983, at col. 1114 of Hansard:
"There can be no doubt that the volatility in exchange rates … has been a malign factor militating against international trade. Violent changes in parities have been far greater, far more frequent, and far more uncoupled and disconnected from real economic factors than was ever anticipated a decade ago, when the disciplines of the Bretton Woods monetary system were jettisoned in favour of a floating rates system.
"Surely, whatever may have been the case in the past, it would now be in the interest of the United States, as it certainly would be for the rest of the world, for the United States Government to be prepared to take some measure of joint responsibility, along with others, for the level and structure of exchange rates. I am not suggesting that there should be any question of defending any particular rates; or of commitment to any substantial intervention. But simply the decision that the pattern of world exchange rates was to become a matter of shared concern and the implied acceptance by the major countries jointly that they no longer regarded it as desirable or inevitable that their authorities should be passive in the face of any exchange rate movements—that alone could not fail to make an important contribution to stability".
Those remarks did not find favour with the United States Administration at the time. Indeed, I remember seeing President Reagan on television saying what the noble Lord, Lord Barnett, said that he had heard the Prime Minister say about the pound in 1981–82: the fact that the dollar was riding so high showed clearly how good were the economic and fiscal policies of the United States and his Administration. In fact, it had little to do with that, as noble Lords know full well. I
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would just say that where the Prime Minister is concerned the reason why we had to keep interest rates up in the early 1980s was the level of inflation. It was the need to get inflation down which, alas, made it necessary for us to have such high exchange rates.
As I say, the American Administration, for a long time when the dollar was riding so high, made the world believe that they thought that it was "good news" (in inverted commas) that the dollar should be so strong. We are now seeing what it did to the dollar. We have seen how American industry could not cope with such a high exchange rate. We have seen built up a current account deficit such as had never been thought of before in the United States, and that in turn has built up a desire among industrial interests in the United States to see protectionist policies pursued. I noticed that most forcibly when I was in the States in the summer. There were something like 300 Motions on the Order Paper of Congress urging protectionism in various industrial areas. That was purely because the dollar was so high and so strong, encouraging a flood of imports.
We have now seen a change. The idea of having a meeting of the Group of Five in New York—the Plaza Meeting—originated with the United States Administration. It was they who suggested it. That must be going in the right direction. It has been effective. It has shown that it is possible for governments if they get together to act upon exchange rates. It is not something that one government can do alone. I doubt whether there has been all that much intervention. Speculators in particular have realised that it was no good trying to force the dollar up. That was not going to happen because the whole of the Group of Five and others were agreed that it should not.
But now what? The dollar has come down about 15 to 20 per cent. in relation to sterling since then. But I wonder very much whether it will have gone far enough and in time to put away all evil thoughts of protectionism in the United States Congress from now on. It would have been infinitely better had they acted three years ago. What will happen now? I suppose that the temptation is to say that it has been good, it has had an effect, the dollar will not soar again and we can all sit back and enjoy it. But this is the time, when things are comparatively stable, that details should be agreed among the Group of Five, or preferably the Group of Seven, as to how together they can act to ensure that it does not happen again.
That is what I would plead. What was originated in the Plaza Meeting and underscored again in the meeting comparatively recently in London should be made much of, as it were, and not be left to rest there. Surely we have all learnt of the damage that can be done to the world economy and particularly to developing countries by such dilatoriness in taking action.
That leads me to my second point, which is the indebtedness of developing countries. What has been proposed by Mr. Baker may be followed through and a lot of extra money may be found for the developing countries, but in no way will that resolve the problem. My thinking is this. There are enough factors as it is affecting the interest rates of the governments of the countries of the developed world without adding this problem. In other words, we should be seeking low

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interest rates perhaps, but for different reasons. If interest rates ought to be high, we should not be trying to put them down merely because of the indebtedness of the developing world.
I wondered whether the developed world could not work out a scheme rather like the one that we have had in this country with developing countries on the line of a double taxation relief clause. If a bank lends money to Malaysia for a development project, Malaysia has to pay only 80 per cent. of the interest, because 20 per cent. is deemed to have been taken there in taxation. The bank that receives the 80 per cent. does not suffer because its corporation tax is consequentially reduced. Could that not be adapted in some way for the whole of the developed world to operate in regard to the indebtedness of the developing world? It would, of course, mean the taxpayer in the developed world suffering somewhat, but that will not be necessary if everything turns out for the best and the problem is resolved.
I fear personally that, far from being resolved, the difficulty is likely to get worse. I do not see how Mexico can conceivably pay 10 billion dollars in interest on its debt this year. It will have to borrow just to pay the interest. I do not think that this problem will go away on its own. If we leave it too late and it erupts, then that could be disastrous for the banking system of the whole Western world.
Lord Diamond: My Lords, will the noble Lord give way?
Lord Soames: My Lords, yes, but the noble Lord must take it off my time.
Lord Diamond: My Lords, I agree. As we are on the point about Mexico, will the noble Lord say what is his view of oil prices, as Mexico depends on high oil prices to pay the interest?
Lord Soames: My Lords, one does not fix the world price of oil according to the advantages or disadvantages to any one particular country. I do not wish to be drawn into that matter. I was not going to talk about it and, if I do, I shall go well over the top time-wise.
I wish to follow up what has been said by the noble Lords, Lord Barnett and Lord Ezra, about our becoming full members of the EMS by joining the ERM. There has been reference to a quotation of the chairman of the Deutsche Bank that I have not had the advantage of seeing. It is, however, obvious that what he said is right. The situation has never been so attractive as it is today. I must confess that I have been wrong in the past, in that I have always wanted us to join the EMS. We are in a better position to do so today than we would have been had we joined when I last suggested it. I honestly do not envisage a better situation than exists today with the exchange rate of the deutschemark in the area of 3.33, and sterling inevitably low, with low oil prices, but still holding its own with the dollar because the dollar is moderately weak.
I should have thought that in this situation, in which, despite the weakened oil price, we are holding our own with the dollar, we should really go in. I know
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many people in important places who used to oppose this step but who now agree that they would like to see it taken. The only conceivable reason that I see against it is that we might be forced, in a new realignment of the currencies of the EMS, into a position in which sterling appeared to be being devalued. But then what was happening when it was coming down from 2·70 to parity at one dollar?
We should not now be frightened of this. It was a considerable political event when devaluation occurred under Bretton Woods in 1947 and again in 1967. But, to be quite honest, I do not believe that it should have been a political point—unless it could be proved that the reason for sterling coming down was incompetent economic policies. Perhaps that was the case then. It certainly could not be so now. I hope, therefore, that we seize this most valuable opportunity, with everything going in our favour, to join ERM. If not, we shall miss a very important opportunity.
My time is up. We are living in a world that is growing increasingly interdependent in trade, in commerce and in economics. The economic policies of one country can have an enormous effect upon the world as a whole. It is important that this should be taken into account to a proper degree by any British Government formulating their economic policies.
4.35 p.m.
Lord Kaldor: My Lords, somewhat to my surprise I find myself far more in agreement than I had anticipated with almost all previous speakers on both sides of the House. In some ways, this is a very happy circumstance. In other ways, it means that many of the remarks that I have prepared for the debate could sound rather repetitious. I must try to avoid that happening.
Most people, it seems to me, are agreed that oil, for all the financial benefit that it gave to the balance of payments, has been a rather mixed blessing. It was not a pure benefit. Why do I say that? The reason is that there were all kinds of secondary consequences. It put the exchange rate very much higher than it otherwise would have been; and it made our manufacturing industries much less competitive than they otherwise would have been. It contributed very greatly to the decline—the relative decline and, to some extent, the absolute decline—of our manufacturing industries. Instead of having an export surplus in manufactures which traditionally was always a counterpart of our net imports of food and raw materials, our manufacturing trade went increasingly into deficit. This was possible because of the extraordinary revenue from the sale of oil.
Oil provides no employment whatever. It is a source of foreign earnings, but nothing else. It does not enable a Government to pursue full employment policies in any sense, and so avoid unemployment. Manufacturing industry does. I would much rather see Britain revived as a great manufacturing nation and a manufacturing exporter than become a great primary producer, however valuable a commodity oil is. If we had always been a primary producer, Britain would be a different sort of place from what it is now. It would not have large cities; it would not have large industries. It would not have the population that it now has. The

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whole scene would have been different. It is therefore important that conditions should be created by which we can regenerate our manufacturing industries and put the country back on to the path of full, growing prosperity again.
From that point of view, various questions arise in connection with particular issues, already raised in the debate, such as our full membership of the EMS by joining the so-called ERM. I believe that the exchange rate that we now have is conditioned by our present structure of foreign trade in which oil, until recently, played an important role. Owing to the 50 per cent. fall in oil prices compared to a year ago, and the 33 per cent. fall in the last six weeks, oil will have a very diminished share. That has to be made up by other items. The overall surplus is very small. It can only be made up by reviving our manufacturing industries and making them more competitive, which, in turn, means price competitiveness as well as competitiveness in other ways. This, in its turn, means that our exchange rate, which looks very favourable by historical standards in respect of joining the EMS, is still considerably over-valued.
In order to obtain the kind of export surplus in manufactures that we need, the domestic use of imported manufactures has to be considerably reduced in relation to domestic products. At the same time, our export of manufactures has to increase, meaning that the foreign use of British manufactures must go relatively to others. In order to achieve that we need a very considerable change in relative prices. I know of estimates which say that from that point of view our exchange rate is still 20 per cent. over-valued; in other words, at present relative prices we need a 20 per cent. devaluation in order to get the kind of export surplus in manufactured goods that we would need if we did not have the benefit of oil.
The benefit of oil is now diminishing on account of the fall in the oil price, which was referred to earlier by a noble Lord.
Lord Soames: My Lords, leaving aside oil, does this mean that the noble Lord foresees the proper exchange rate of the dollar to the pound being about parity?
Lord Kaldor: My Lords, I have not worked it out, but I think it is possible that that is the numerical implication of what I said. I must have some notice of that question. On existing estimates of economies concerning the elasticity of exports and imports with respect to relative prices, that would be the kind of price reduction we would need in order to have a surplus in manufactured exports with a reasonably full employment level of output. Of course, it is always possible to obtain a surplus at a sufficiently low level of output. By creating sufficient unemployment and by diminishing domestic consumption we would reduce our propensity to import, and in that way we could obtain an export surplus. However, that is not what I had in mind.
It was clear to many of us during the post-war era that sooner or later our poor performance in manufacturing production would lead to a crisis which would compel a radical change in industrial and general economic policies. But just then North Sea oil came to the rescue. Everyone was prophesying that
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something terrible would happen, and then North Sea oil turned up and nothing terrible happened. We carried on much as before, with comparative ease.
A lot has been written—some by your Lordships' Select Committee on Overseas Trade—of what will happen and how we shall adjust when North Sea oil runs out. The recent fall in the oil price means that this issue must be faced that much sooner. As a result of Mrs. Thatcher becoming Prime Minister, our economic progress was rudely interrupted. Between the second quarter of 1979 and the second quarter of 1981 we faced two disastrous years of economic decline. From then on the economy started growing again, but it is only fairly recently that our gross domestic product surpassed its 1979 level. In terms of manufacturing output we are still 6 per cent. below the 1979 level.
Mrs. Thatcher's policies have been dominated by two preconceptions which in my view are both false. The first is that inflation is the source of all evil. We all agree that inflation is a great evil: we do not agree that to cure inflation will work miracles. If we cure inflation, instead of improving the economy becomes more stagnant than it was before. The second misconception is that inflation is merely a matter of the money supply, and provided we can control the money supply we can control inflation. To control the money supply means that we do not have to print notes to cover our budgetary deficit, which again is a rather naive view.
Therefore, we followed policies of economies in expenditure and higher taxation irrespective of the economic situation, while the bank discouraged borrowing through high interest rates as well as securing highly overvalued exchange rates. According to the calculation of the International Monetary Fund, our exchange rate during that two-year period, measured by labour costs per unit of output in terms of common currency, was at least 60 per cent. overvalued.
As a result of these policies, in the first two-year period of office of the present Government manufacturing output fell by 17 per cent, and industrial production as a whole fell by 13.5 per cent. That was between the second quarter of 1979 and the second quarter of 1981. The GDP was 20 per cent. below its trend level. This took place before the depression spread throughout Europe and other countries, and I believe that our own balance of payments may have played an important causal role in what happened in the rest of Europe. In fact, with the sole exception of America in the two years following the Wall Street crash in 1929, I do not know of any instance in history when production, manufacturing output or a nation's income decreased so rapidly.
However, in 1981 the Government quietly abandoned these deflationary policies without any public announcement, and economic growth was resumed at the old trend rate. This means that after five years our gross domestic product is only modestly above its level of seven years ago; in other words, since Mrs. Thatcher came to office, over seven years there has been an average annual growth rate of 0.8 per cent. I do not think that there is any comparable seven-year period in British history which averaged an annual growth in domestic product of 0.8 per cent.

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In terms of economic criteria, therefore, this has been the least successful Government.
Lord Wolfson: My Lords, I am sorry to interrupt the noble Lord, but can he indicate to what extent he thinks the second oil price explosion was responsible for the very large drop in manufacturing output, which did not occur only in this country?
Lord Kaldor: My Lords, it did not occur only in this country, but in this country it went very much further. I am afraid that I do not have the figures in my head, but nowhere was there a fall of 17 per cent., or anything like it, in manufacturing output in a matter of two years.
Lord Diamond: My Lords, I only interrupt the noble Lord because I do not want a single word of the noble Lord's wisdom to be missed, and it is not very easy to hear everything he says because of the arrangements here. Will he kindly say precisely over how many years the 0.8 per cent. increase in GDP occurred?
Lord Kaldor: My Lords, it occurred in the seven lean years between 1979 and the end of 1985.
As regards oil, I have just a few words. I am sorry I have spoken for 15 minutes, but I think I have a right to deduct the interruptions.
Lord Skelmersdale: My Lords, may I make a point to the House? I think it will be in the interests of all if I say that if everybody deducted the interruptions we would get into a fine mess by 8 o'clock. I hope that perhaps this habit will not be continued too long.
Lord Kaldor: In that case, my Lords, I think I shall finish my speech.
4.50 p.m.
The Earl of Lauderdale: My Lords, in seeking to congratulate, and join with others in congratulating the noble Lord, Lord Barnett, on his choice of subject—and it is indeed timely—I must couple that congratulation with regret. He happens to have chosen the night of the annual dinner of the Institute of Petroleum. It means that a number of people interested in the subject are, or shortly will be, absent from this House, including myself. I hope that the noble Lord and others will accept my sincere apology for the fact that I was committed to hosting guests at that dinner several months ago. On the other hand, I was pressed very strongly to take part in this debate.
The contribution of the noble Lord, Lord Barnett, was as always bewitching and beguiling. In a sense one cannot but listen to him to one's own advantage. But on the subject of oil prices I had thought we would have rather more—and rather more constructive—suggestions to make than we actually got. So far as I could make out, what we were told was that for the sake of stability Britain and Norway should agree to cut back production and discuss it with OPEC.
I take it that the noble Lord, Lord Barnett, whose reading is always so extensive when it comes from the London Business School, does not always read the
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information available in the oil industry's publications. In fact he might like to know that eight days ago Mr. Arild Rodland, deputy oil minister of Norway, announced that that was the very one thing that Norway was not—repeat not—going to do.
It may be worthwhile if I give a short snapshot of the state of the industry. In some 15 years the free world's energy demand as a whole doubled, and during the last five years the free world's proven oil reserves rose only about 7 per cent. You might therefore expect that to be a factor leading to higher rather than lower prices.
However, over the last 10 years productive capacity has increased to the extent of about 7½ million barrels a day, which is equivalent to about one-fifth of the total OPEC output. Energy intensity—that is the amount of energy used per unit of GDP—has risen something like 13 or 14 per cent. over the same period, and of course world-wide there has been extensive substitution.
It is therefore scarcely surprising that 1984 saw a free world output fall of some 20 per cent., and the reversal of OPEC's fortunes surely demonstrates that the power of market forces is there and real, and it is futile to deny them or oppose them. We had a quotation a little earlier by the noble Lord, Lord Barnett, from the economic adviser to, I think, the National Westminster Bank. Perhaps I have the identification wrong. Anyhow, I noticed that Dr. David Lomax, the economic adviser to the NatWest Bank, did, in the February issue of The International Review, say:
"The events of the past 12 years have indicated that for oil producers to take advantage of their short-term market power to hold the rest of the world to ransom sets up market forces which are ultimately against their own interests".
I find the Opposition policy on all this baffling. There are calls for cutbacks in British and even Norwegian production. But let us just consider British production. We are invited to cut back when this production already provides some 6 per cent. of the gross domestic product; we are invited to cut it back when it is 8 per cent. of our total exports; we are invited to cut it back when at any rate hitherto it has produced 8 per cent. of our total revenue; we are invited to cut it back when the industry provides something like 10 per cent. of the non-housing private capital investment of this country; we are invited to cut it back when it contributes about £20 billion a year to the balance of payments, or did so in 1984.
Then I come to the classic remark of the noble Lord, Lord Kaldor, which I heard with interest—perhaps it is unfair to single it out out of context, and I apologise to him if I am doing that—that oil has produced no jobs. Of course, he was talking in the context of the danger of Britain being a primary producing country, and this would not be to our advantage. But let me say finally that it is proposed that we cut back oil production when in fact there are 100,000 jobs that have been created out of this industry since the continental shelf began to be developed.
We are really being invited to cave in and behave as full members of a wholly-restrictive international cartel which has already plunged the world into a depression, and to do so when that is a producers' cartel and we are consumers as well as producers.

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We are also asked to cut back production at a time when the first victims of a falling oil price are exploration and development budgets. These are the first sufferers in operational cash flow margins. I was interested to notice that the noble Lord, Lord Ezra—whose views one always listens to with great respect—mentioned that if we were to cut back production we must do it in such a way that there was no disincentive to further exploration investment. This of course is part of the dilemma.
Indeed, we are invited to make this cutback when Petroleum Information told us only the other day that United Kingdom sector drilling activity already shows a slight falter. It is doing so when Danish and Netherlands appraisal and development drilling is up, and when in Norway, Germany, France and Ireland it is stable.
Finally we are invited to cut hack when the present fall in price is likely to affect the development of any field under 100,000 barrels. The brokers, Capel, the other day estimated that an 18 dollar a barrel price would imperil developments on the United Kingdom continental shelf amounting to production of 20 million tonnes a year, or 400,000 barrels a day, and if the price came down to 10 dollars it would imperil about 600,000 barrels, or 30 million tonnes a year.
That is the context in which we are invited to cut back. It is worth mentioning that on these calculations—and the oil industry has been busy doing its sums, and all the analysts in the City and elsewhere have been doing likewise—there are three fields which are now picked out as likely victims for deferment of development; namely, the Eider, the Ettrick, and the T-Block. Cutting hack means cutting Britain's 6 per cent. share of the world market. If we cut that out, anyone who thinks it would not be taken up by somebody else must be living in Mad Hatter land.
We are not told how this cut is to be accomplished, let alone accomplished fairly. A 10 per cent. cut across the board would be monstrous because no two fields are alike. In no two fields are conditions even similar for the recovery of capital invested. The impact could only be uneven, and of course the effect must be—and the noble Lord, Lord Ezra, was implying a reference to this—an appalling blow to investment confidence. No amount of new state investment banking, in which the noble Lord, Lord Williams, who will speak later, is likely to be interested, will alter that.
The price fall and the risk to exploration budgets raise a question (to which the noble Lord, Lord Ezra, alluded in a sidelong fashion) whether the Government are prudent in trying to milk the oil industry by taxing it upstream and downstream alike: upstream discourages production and downstream hits the motorist and, through the motorist, the motor industry at large.
The Treasury demand for exact quantification of benefits from easements of tax that have been sought is a permanent rod on the oil industry's back. With your Lordships' permission, it is worth quoting an extract from a letter sent by the United Kingdom Offshore Operators' Association recently to the Treasury which illustrates the difference of approach between industry and Whitehall. In that letter the association wrote:
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"UKOOA sees this as a challenge to get the long term fiscal climate right, so as to encourage the search for these incremental opportunities (many of them subtle, requiring intensive technical effort). It is, to a degree, an article of faith [within the industry] that the benefits will flow—there is not a large inventory of identified opportunity waiting to come forward in response to an adjustment of fiscal terms".
The letter continues:
"The Government side appear to have a much shorter term focus, searching for a stock of already identified projects and attempting firm cost/benefit quantification which we regard as unrealistic and inappropriate".
There is a difference between Whitehall's grasp of the situation which is a mathematical grasp and the industry's grasp of the situation which is imaginative and entrepreneurial.
We were told about the benefit to the economy arising from this price fall and it would be superfluous now to quote again the London Business School which I should have quoted had there been more time and had it not had adequate attention from speakers already. It is generally common ground in this debate that the net effect of the oil price plunge may be neutral or marginally beneficial. One thing is quite clear: that there is a considerable balance of opinion in the City which believes that there is nothing to be alarmed about. I quote the opening words of the latest business forecast by the Charterhouse group which states:
"The fall in oil prices will reduce cost and price inflation and contribute to a general lowering of interest rates".
We have been told not once but many times over by the Opposition that our whole policy has been an absence of policy. We are told that we have squandered the produce of the benefits of the continental shelf. The fact is that the public sector borrowing requirement as a share of GDP has been reduced and this year's figures are encouraging (as witness today's Financial Times, the right hand column of the front page). We have repaid much overseas debt inherited from our predecessors—no names, no pack drill, for everybody knows who they are. We have acquired overseas assets now standing at a postwar record of more than £73 billion bringing in a yearly income of £3 billion, something that will stand us in very good stead when, or rather if—for it is not yet certain—the oil runs out. Oil has been described as a finite resource. It is finite only in the sense that as one goes further it gets more costly. The same is just as true of coal, but there is plenty of it and there is even more gas to be had, so to describe our hydrocarbons as a finite resource in absolute terms may be a mistake.
I find that the Opposition do not have much of a policy to propose when, ignoring the fact that we are consumers as well as producers, they argue that we should somehow get in among OPEC and do so with Norway, who will not play anyway. The muddle and the confusion in the name of preserving our resources that has emerged from those Benches and even once or twice from the bishops too—we sometimes expect them to intervene on the wrong side—reminds me of an old lady I once met canvassing near John O' Groats. She was 95 and when I went to see her she said, "A terrible thing happened the other day". I asked, "What was that?" She said, "A socialist came to my door". I asked, "Whatever did you do?" She said, "I listened and there was a long spiel. When he had

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finished I said, 'Young man, all these long years, and I am 95, I have heard the wind blow but I have never seen it yet'".
5.6 p.m.
Lord Parry: My Lords, in the late 1940s in another place, when a Labour Chancellor of the Exchequer had spoken at some length on the problems that he was facing in re-phasing the British economy from war time effort to peace, he gathered his notes together at the end of his speech and left the Chamber. The late great Sir Winston Churchill was heard to mutter, "There, but for the grace of God, goes God". Had he been in the Chamber this afternoon he could only have said, "There, but for the grace of God, goes the Kingdom of God or the Tory Party at Prayers", because everybody who has spoken so far from the Government Benches in this debate has left the Chamber and the noble Earl, Lord Lauderdale, has apologised because he is to leave shortly, having made a robust defence of his Government and having made a straightforward lobbying speech on behalf of the oil industry.
The debate initiated here this afternoon by the splendid speech of my noble friend was intended to raise the economic situation of this country, the price of oil and its effect upon that economic situation, the exchange rate and the way in which we might somehow achieve an improving economy for Great Britain at a time of great difficulty for it. In fairness, some Members of the House on both sides had addressed themselves totally to that issue.
When the noble Lord the Secretary of State for Employment sat down at the end of his little speech I thought that he was giving way to my noble friend Lord Hatch of Lusby. There could only have been one other explanation: that he had fainted. But he walked from the Chamber immediately afterwards and I was relieved at that because he is a nice man. I will give way at any time when he comes back, as I am sure he will, for he has apologised, when he wants to finish his speech; when he wants to come to the positive matters of this issue that we face.
When I rose in this Chamber to make my maiden speech some 10 years ago I spoke about the oil industry. I spoke about it in the context of the development of the great port of Milford Haven. I was able to quote from the words of the then Sir Harold Macmillan who had said that Milford Haven was about to become a major European oil port. It was an optimism that we all shared regardless of politics and we saw in it an opportunity to benefit from the sobering experiences of Suez, from the fact that France had been brought to within 24 hours of its economy grinding to a standstill for lack of oil, and because we knew that it could be possible to organise oil around the Ten so that we had a constant supply of it here to fund our industry. We knew that our industry had to contract because we could not continue after imperial preference had ended to pose as an economy that had the benefits of a worldwide supply of markets and an internal supply of fuel.
I do so agree with the noble Lord who formerly headed the coal board. If at the time of that
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redevelopment of the disposition of our oil industry in Britain—indeed in Wales, in the harbour of which I have spoken—as much attention had been given to, and as much capital had been invested in, the rephasing of the coal base in this country, then we might have had a policy that could have gone forward with the search for oil in the North Sea and in the Celtic Sea, which has not been mentioned so far, and with a redevelopment of our coal base which was more adequate than ever, despite the great efforts of the noble Lord who has spoken.
This country then found itself in a position where it had almost wantonly and willingly become dependent upon oil. Finding its own supply in the North Sea, it then proceeded to buy itself (what was the phrase?) a breathing space. However, having provided the breathing space, it did not go on with rephasing the other aspects of its economy in order totally to benefit from it.
We now have a situation which some of us predicted. During the three elections in which some of us fought, it was part of the exchange that there could come a time when the oil producers elsewhere in the world, fearing the emergence of Great Britain as a primary, front line, oil producing country, could then adjust their prices and their productivity in order to undercut our own. That is precisely what has happened.
I checked for a moment while we were debating here, and it is indeed what has happened. We now have a situation where we are caught in our basic economic policy and at the mercy of those exchange rates. The Celtic Sea will now probably find its investigations postponed. It will mean that another hope for the redevelopment of the productive base of the economy will be lost or at least postponed.
I want to say this. Although many times in this House I have argued that part of the recovery of Great Britain must be based on a service development of our economy, even tourism led, I have never seen it as a panacea. I have always believed it to be a nonsense to claim that tourism and the service sector could support this country on its own. It has always been essential that we should be investing money in those areas of Britain that for very long have been neglected.
I want to say a word about the imbalance within the British economy, about the fact that for a very long time indeed the real export of the peripheral areas of this country has been the best of its young people. It has always been a terrible problem in the part of the world in which I live, in which I have spent my life, that we have exported our young people because we have been unable to create employment there.
Indeed, when the oil industry came to the Milford Haven Estuary it enjoyed an investment of public and private capital. It was then respectable for the oil industry, developing as in the North Sea, to take £800 in every £1,000 of its development from the public purse. We did not hear much criticism then of the mixed economy and the mixed investment. When that oil industry took that money and developed that major port, we all thought that we were securing for 50 years a new opportunity, a new employment, and a recharging of the economy of Wales—and of course of elsewhere, in Scotland and indeed throughout Great Britain itself.

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I agree with the noble Earl, Lord Lauderdale. I think he misunderstood what my noble friend was saying. I think, if I did not misunderstand him, he was implying that a modern oil refinery employs very few people, but obviously the product of the oil refinery and the product of the oil industry sustains a great many. No one could argue with that. But where are those people today? Those people are working today in Holland, Malaysia and elsewhere because the oil refineries that were built, at great public cost and with great private expertise, are today discharging their skilled labour who are being re-employed by competitors of this country, sometimes within the very companies that had their oil refineries in Great Britain.
I merely wanted to inject into this debate my concern that when we talk about the benefit of the oil industry to the economy of Great Britain we also lay quite firmly the fact that the contribution that it has made has been sustained by a very large public contribution. Indeed, the licences granted in the North Sea were originally of so much benefit (and that was under a Labour Government) to the developing companies whose expertise we needed—and, there is an expert on the Cross-Benches—that the first act of an incoming Conservative Government following an election was to renegotiate those licences and to change the terms by which they were developed.
All this goes to say in this debate this afternoon that we have become so dependent on the basic price of oil and the index—which is what was talked about in relation to the exchange rate; the real index value—that we cannot make this a party political issue. We cannot look on this debate as being about something that can be changed simply by a change of Government. That is because the whole business has defeated continuing Governments of this country for the last 25 years. During those 25 years the oil complex on Milford Haven has been built and has all but died. Through Milford docks today we are exporting the remains of the oil tanks of the Esso refinery, which was the first refinery to be built in Milford Haven in the post-Suez period.
We are dependent on oil. But it is absolutely essential that notwithstanding our dependence upon it we realise that there are other things happening in the economy. It would be quite wrong of me to imply, certainly for party political purposes, that there are not optimistic things happening within the economy of Wales. We have seen a great many service developments. I have to say that there has also been a tendency for us to believe that high technology can get us out of our difficulties on its own. It cannot do that, either. There have been clouds and sunshine in "Silicon Valley". There have been great difficulties. I think many of us are disappointed in the ultimate achievements of the high technology industry, but of course the product of that technology, reapplied and properly concentrated, can still give us hope.
It is absolutely impossible for anyone, whatever his or her political commitment, to stand up in this House and to convey the impression that, because there is a percentage improvement here or there, or because the figures can be presented in such a way, one can say that our employment situation stands better now than it did. It is impossible for anybody to do that. The lesson of the post-war years has been that no government
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have been able to solve the creeping paralysis of unemployment, and that attempts to do it have very often accelerated the rate of fall-out.
For the best possible reasons the Government now in office won the mandate of the people, probably for the first time since 1945, to change the direction of the British economy. From 1945 to 1951 the Attlee Governments, on a similar mandate, moved this economy towards public enterprise, public responsibility, social services and social security. This Government interpreted their mandate and proceeded to implement a policy that for the first time swung the economy of Great Britain away from that path and in a direction that they considered they were right to do, that they were mandated to do, and which some of their members would defend their Government for doing.
It is the duty of Opposition to criticise and it is the duty of Members on the opposite side to defend. However, do not let your Lordships' noble House, which is at its best when it rises above specious politics, try to convey the impression that there is not a great and real crisis in the economy of this country.
We accept the Secretary of State for Employment's own feelings of frustration because the unemployment figures are not better, are not improving more rapidly. However, crucial to what we are saying this afternoon is this. There must be a degree of recognition that the oil base itself has not been able to secure for us a big enough breathing space; that some of the policies which are fashionable, but are happily currently now going out of fashion, have contributed towards the present situation. What I urge is that this House gives the message that it understands that in the future there has to be a change from the sterile policy of absolute monetarism to one in which public and private money together, properly invested, seek to give a new phase of development which can be acceptable philosophically to us all.
5.20 p.m.
Lord Wolfson: My Lords, as I am speaking at relatively short notice in this debate, which has been so eloquently and wittily introduced by the noble Lord, Lord Barnett, I shall be reasonably brief—a fact which I know your Lordships will welcome. I wish to apologise to the House that for family and personal reasons I may be unable to attend the late stages of this very stimulating discussion. I hope that your Lordships will forgive me.
Any major transition brings numerous problems in its train. We cannot underestimate their impact, but events are moving too rapidly to make a definitive judgment at so early a stage in a new economic cycle; for that is what we appear to be entering. I believe, however, that a sustained reduction in oil prices will have a positive and beneficial effect on trading activities in the western world, and, as a result, in the affairs of the third world, where renewed economic progress is a vital necessity. I am encouraged that there are so many expert views which have been quoted by noble Lords today to support that.
As several noble Lords have already, let us cast our minds back to 1974 and 1979, when we were faced with the two phases of the oil price explosion and the debilitating inflationary aftermath that so devastated

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industries whose expansion had been predicated on stable energy prices. The rapid escalation of these costs was at the root of the structural upheaval that damaged so many manufacturing companies and the prospects for those employed. The serious instability of exchange rates dates from that period, and the noble Lord, Lord Soames, has made a notable contribution on this subject.
In contrast, we see now a most encouraging reversal of the oil situation, and we should welcome the return to more equitable levels of commodity and energy prices. Indeed, as oil is priced at 17 dollars a barrel in mid-winter one can anticipate a further decline in spring and summer, as the forward market is indicating. Of course, this will place further emphasis on existing short-term problems. Exchange rates will in time adjust to appropriate levels, but, as your Lordships know, many financial loans have been made on the unhealthy assumption that oil prices would never cease rising, with all the enfeebling effects that this would have had on the world economy. The debts in question are in reality no worse today than they were six months or even a year ago. It still requires international co-operation at the highest level to restructure and convert them into longer-term instruments of repayment.
It is, of course, a most difficult and delicate task; but with the goodwill that exists it should not be completely beyond the ingenuity of governments and others to bring this about, and happily there is a genuine desire to do so. We know from bitter experience that the world prosperity is indivisible. Once a number of unsound positions have been built up on inflated expectation, I believe that they are outweighed by the long-term advantages arising from the lower energy prices, which must benefit the same economies that suffered most from their rapid escalation.
It is significant that stock markets throughout the world are anticipating just such an improvement. Investors look ahead, and we must all hope that they are right. As a businessman, I believe that the United Kingdom economy has more to gain from lower energy costs than it has to lose from lower oil prices provided that the budget allows most of the process to come to fruition. This process will bring with it a lower level of inflation, and in turn, reduced rates of interest world-wide, including our own too-high levels. These positive factors can readily be appreciated. While it is true that taxation receipts from artificially high petroleum revenues will decline, as in the long term they would inevitably have done, receipts arising from improved trading activities will perhaps compensate in large measure. The new pattern that emerges should provide more durable and better balanced arrangements for the future, while the national budget would not have to cater for such a large inflationary factor.
The sterling exchange rate has adjusted in large measure to the new circumstances, possibly too much so, for the benefit of new oil prices has yet to flow through the system. The balance of payments will continue to derive considerable income from our substantial overseas holdings, which have been financed to a significant degree by investing the surpluses arising from highly-priced oil. I agree with
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the noble Lords, Lord Barnett and Lord Ezra, that we should now consider joining the EMS.
I feel confident that businessmen will want to seize the exciting opportunities ahead. Lower fuel costs would make British goods more competitive both at home and overseas. With dynamic marketing, design and customer service we can add to our already substantial direct export performance, which is running at over £6 billion a month, one of the highest per capita rates in the world. I feel that we do underplay ourselves in many cases, and this is one of them.
Employment prospects should be enhanced, and this in itself is a most desirable potential benefit. As the noble Lord, Lord Ezra, has pointed out, the Government, in partnership with industry, might be able to consider an additional selective range of capital investment partly financed by equity capital, including that arising from privatisation issues and, as interest rates fall, partly from the bond market. I hope that future Budgets will differentiate clearly between capital investment and receipts and revenue items, which, of course, is normal business practice. Naturally, it is sounder to borrow for viable investment projects than for current expenditure.
The economy needs a shot in the arm, and I feel that lower energy prices will help to provide that stimulus. It could be a milestone in the search for better growth rates in world trade and investment. A good deal has been done to make company taxation competitive in world terms, and the overall package would be fortified by a personal tax infrastructure, particularly for lower and middle incomes, that would sustain expansion and encourage enterprise, as many of our leading competitors have done.
We could well be at the start of a challenging new phase in economic affairs. Whatever the short-term problems, the positive factors outweigh the negative ones, and we should be basically optimistic about the future. We must release human energies to create the wealth we require for the overall social needs of the nation. Britain is a highly talented and inventive country. We have the ability to succeed: we must have the confidence to do so. The more individuals are afforded the opportunity to have a direct stake in financial ownership, the more we shall prosper.
5.30 p.m.
Lord Donoughue: My Lords, I should like to begin by thanking my noble friend Lord Barnett for his excellent opening speech, with virtually all of which I must say I agreed and where the analysis I think and hope has spared us some repetition this afternoon. I should particularly like to support what he said about co-operation: co-operation on oil production to secure stability in oil prices and co-operation on the exchange rates—and there I must say that I now feel we really should very seriously consider joining the EMS. But I have to confess—which, since it may breach the Official Secrets Act, I can do with more courage now that the noble Viscount has left the Chamber—that in 1978 Downing Street I then advised the Prime Minister not to join. But I now feel that in changed circumstances the balance of advantages certainly points that way.

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As for the noble Lord, Lord Young, I feel that he produced one of his more trusty, tried and familiar speeches. We have tried, however unsuccessfully, to respond to that before. At the heart of the issues we are discussing is of course oil; and, frankly, nobody knows where the oil price will settle so there is absolutely no point in making firm forecasts based upon that. We expect that by the 1990s supply and demand will be more in balance and that the oil price will probably be stronger. But, looking over the next 18 months, that price could be anywhere between five dollrs and 25 dollars. My own guess is that it is likely to be nearer 15 than above 20.
The main question for the United Kingdom, of course, is whether that generally lower level of oil prices than hitherto is beneficial or, on balance, harmful. The whole thrust, I think, of much of today's debate, is that it must be helpful. After all, when prices rose that was bad and therefore when they fall it must be good. But economics, like life, is not always that simple. Marriage, indeed, may not be good for many people but it does not necessarily follow that divorce is automatically good for them if marriage is not. It depends what you were used to.
Obviously, in the long term, lower energy costs are helpful: they will stimulate growth and cut inflation. But, in the short term, I do not think we should ignore the complexity of the impact and I suspect that the optimistic consensus we have is perhaps a little too complacent. If we look at the impact on growth and inflation, the argument is that lower prices are wholly beneficial—which is almost certainly true in the Western world as a whole—but, if we look at the United Kindom, they depend very precisely upon the translation of these lower crude oil prices into refined petroleum product prices.
If we look at the reality of our world in Britain today, there has not been a great deal of that beneficial translation. Petrol prices are about 5 per cent. down, whereas the fall in crude oil prices would have justified a decline in petroleum prices of double that amount. If those prices do not fall further, then the benefits will not come fully through to the United Kingdom economy but will come through to the profit margins of the oil companies.
To that extent, the Chancellor is somewhat in the hands of the chairmen of the oil majors. In fact, so far, in terms of inflation, the damage from a lower sterling looks like being greater than the benefits from the lower energy prices we have had up to now, and I think a reasonable calculation would show that inflation would rise over the next 18 months by about one to one-and-a-half per cent. Perhaps one might also point out that, were the Chancellor to tax petroleum as has been discussed, those inflation benefits would be eroded accordingly. So, looking at inflation and growth, it seems to me that the prospects are promising but it would be wrong for your Lordships to assume that they are certain.
Turning to the current account, the balance of payments, I think the impact of lower oil prices is clearly damaging there. With oil forming 8 per cent. of our net exports, the reduction in oil prices so far at current exchange rates eliminates about half our recent oil surplus, bringing it down from just over £8
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billion to around £5 billion. Were it to settle at 15 dollars, at current rates we should lose about a further billion and move into current account deficit. So that is certainly not a plus.
However, Government revenue is the area of the most interesting impact: that is the area which causes flutters in the breasts of the Treasury. I think it is generally agreed that in the year ahead the direct revenue loss will be around £4 billion. That is for the coming year. Those figures could improve but they could also deteriorate, and I think that the Chancellor next month really would be imprudent to give away in advance in his Budget revenues that he does not have. I am sure he will not try to do that because he will know that these days in the City there are commentators who can see through creative accounting.
There is an issue here, of course, of the compensations. Those losses are direct losses, and the argument is whether the indirect compensations are sufficient to cancel them out and perhaps to produce net benefits and whether the higher economic activity it is assumed we shall get will more than make up for the lost oil revenues. It is, of course, tempting to believe so because we all wish to take the more optimistic and positive viewpoint. And it may be right: nobody actually knows. However, I think it would be fair to suggest that the compensations might well be smaller, certainly in the first year, than the £4 billion it is assumed is going to be lost. Also they will be later. They will be later because of the time-lag effect on the economy. They will be smaller and later.
There is then the question of whether the Chancellor may be able to supplement those lost incomes through other revenues. We hear rumours of the increased petrol excise duty which I mentioned, and also rumours that have caused some trepidation in the area where I work (somewhat east of here) that there will be a windfall impost on the new City millionaires.
As regards petrol, I would say there is no way that that can raise enough. About 10p on a gallon will raise about half a billion, and we have to remember that if that goes on and prices go up and are passed on by the oil majors to the customers, then the anticipated benefits with regard to inflation will not come through.
As regards the tax on the City, if I may just pause to declare two interests—as an employer and head of a department paying the new salaries, I naturally have an interest in them coming down, but I am also personally a beneficiary, so it gives me pause—what I would say there is that many of us—and I am thinking not only of those on this side of the House but also of people in the City—do regret and dislike the enormous disparities of pay that are now arising. It is relevant to this debate, because I think it must be as discouraging to the management working at the sharp end of industry as it is to the unemployed to see such enormous rewards. That is, of course, why some of us support an incomes policy, which is one way in which one might approach the problem. I am myself puzzled by the Prime Minister's attitude to that and by her indignation. I am sure that colleagues on the Front Bench will point out to her that if you introduce international free market conditions, as in the City of London, you will end up with international free market pay.

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In conclusion, I should like just to look a little to the longer term and ask the Front Bench opposite to do so, because in fact what we have experienced in recent weeks, as another noble Lord pointed out, is a foretaste of the future, of the time when oil revenues inevitably decline, with production—a time that will coincide with the end of asset sales. That is a major problem which faces this nation not many years ahead. What we have seen in recent weeks, and will see then, are three characteristics. I should like just to mention them and raise questions, because we shall then suffer, almost certainly, a lower exchange rate. Sterling is down against the basket about 6 per cent. since the New Year, and it will go down unless we have sky-high interest rates to hold it up, and I am sure none of us will want that. How do the Government suggest they will cope with the inflationary impact of that?
It is highly likely that we shall also suffer a higher public sector borrowing requirement. Without oil revenues of £7 billion to £10 billion now, without asset sales of around £4 billion, the current PSBR, in crude terms, would be approaching £20 billion. How would the Government avoid raising taxes in that situation, rather than making promises to cut them? We shall also, for reasons I have given, suffer a large current account deficit unless manufacturing expands to fill that gap.
I wonder whether noble Lords on the Government Front Bench would tell us if the Government agree with the recent statement that,
"There is no credible plan for the future of the British economy that does not accord a central role to a dynamic and innovative manufacturing sector."
That statement made yesterday by the present Secretary of State for Energy is one with which I agree. It picks up a theme that we discussed recently in the excellent debate on overseas trade. Again, I wonder what noble Lords on the Government Front Bench have to suggest to bring that about, and whether they believe that the disposal of the British motor industry to one of our main competitors is a serious beginning to that process.
Sadly, in recent years we have seen our North Sea oil revenues, mainly though not wholly—there are overseas investments which, in my view, will have many benefits in the future—spent on paying for the unemployed. I wonder whether we can have from noble Lords opposite tonight, or from the Chancellor in the coming Budget, some reassurance that the Government are planning for a post-oil Britain.
5.42 p.m.
Lord Vinson: My Lords, I hardly like to say it, but I too must apologise in advance because an inescapable appointment means that I may have to leave before the end of the debate. But at the rate we are going, all may be well. The Government are indeed to be congratulated on their clever use of interest rates to bring about exchange rate stability during this unprecedented period of falling oil prices and they have kept interest rates up for good reason. For the past two years, we have been told by the foreign currency dealers that sterling would remain extremely volatile until oil prices had fallen or stabilised. To a
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large degree, this must have happened and oil prices cannot now be far off their bottom level, so with any luck we can begin to look forward to a continuing period of currency stability and, with it, lower interest rates—all perhaps cushioned by joining the EMS. One just hopes that currency dealers will not scratch around to find yet another reason for sterling still not being out of trouble.
So all credit to the Government for maintaining sterling at approximately 1·40 to the dollar, while allowing it to drop slowly against other currencies with which it was hitherto over-valued—a point so well made by the noble Lord, Lord Ezra. This has enhanced our export prospects, particularly those of our manufacturing industry, and because most raw material prices are quoted in dollars it has stabilised import prices and through that, we hope, inflation.
However, the continuous use of high interest rates as the primary mechanism of controlling inflation is a mixed blessing. In economics, it is a mistake to be too categorical. But there is one absolute truth in economics, which is that there are very few economic hypotheses that look wholly watertight 10 years after they are fashionable. We all learn from our experiences.
I happen to be one of those people who believe that high interest rates are, in themselves, a motor of inflation. High interest rate levels, and the international policies that are fashionable and that dictate them, have insufficient critics because, sadly, we live in a lenders' world. Most of the organs of influence—the institutions, the City and the banks; I happen to be a proud director of one—actually benefit from high interest rates. It makes the margin between borrowing money and lending money more substantial. It is altogether more profitable. So it is not surprising that the contrary view is seldom put.
And can you altogether blame those institutions which have funds to lend if, at a time of very high real interest rates, they invest them in risk-free government bonds at 11 per cent. on the street, rather than in risk-prone wealth-creating industry at 5 per cent.? Indeed, this reverse yield gap must lie at the base of our poor Western world investment performance. I believe it to be true that the voice of the borrower is little heard, and it is certainly ill-represented in the corridors of financial power.
For all that, I am sure that it is indeed the Government's intent progressively to lower interest rates and get us back on to the virtuous money cycle of lower interest rates, lower mortgages and lower RPI, all helped by a lower oil price. We have indeed a golden opportunity.
Of course, one wholly accepts that interest rates in this country are, to a significant degree, inescapably conditioned by those in the United States. We are suffering from an international interest rates war and it would be sensible of the Government to join wholeheartedly with Germany and Japan in examining mechanisms that could, quite properly, be used to begin to stroke down international interest rate competition. Meanwhile, apart from those few and unrepresentative United Kingdom firms that are sitting on a mountain of cash, our smaller companies operate—however much the Government would wish

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them well—under an extremely harsh financial climate of very high real interest rates.
I am chairman of the Development Commission, England's rural development agency, and we deal currently at first hand with some 20,000 small firms. It is firms like these—the little men—that really suffer, and suffer in silence, when interest rates are excessively high. They quietly bleed to death, while their cash life blood is drained out of them to meet the interest charges on their inevitably high borrowings.
However, I am not being quite fair to the institutions, because the other day I heard a senior manager of the Halifax Building Society say that in his view the cost of mortgages was at an unsustainable and unsupportable level for the first-time borrower, who out of desperation had to take out a mortgage but simply could not afford it. I shall never forget the day when, as managing director of a company, one of my best men, a really good citizen, came into my office and burst into tears. He said to me that he simply could not afford to meet the rise in his mortgage and he must have a wage increase. It is not surprising that this country's most intractable problem—that of inflationary wage push—remains with us when mortgage rates are so high and, for whatever fiscal good reason, they are unprecedently high in real terms today.
High interest rates support and continue inflation in many other ways. To the builder who, not unreasonably, takes a year to build and sell a house, the present cost of money adds 15 per cent. to the cost of that house on top of the normal costs of bricks, mortar and land. It is not surprising, then, that the interest rate sensitive areas of the economy, particularly building and construction, have useful spare capacity.
Lower interest rates would mean higher activity in this sector, and it is a sector that can rapidly and effectively employ the United Kingdom's unemployed—another good reason why the quicker the interest rates fall, the better. Meanwhile, to the shopkeeper turning over his goods every four months, the cost of money at present levels adds 5 per cent. to his prices, before even beginning to cover his own expenses and to make a profit.
Last, but not least, for our industrial companies, when attempting to compete in overseas markets, to give six months' credit on the sale of goods will cost them 6 per cent., while it will cost similar Japanese companies only 2 per cent., giving the Japanese an immediate price advantage of 4 per cent. on the financial arrangements. Some argue that interest rates are insignificant in relation to labour costs and are thus not important. I can only say that I believe this shows a profound misunderstanding of the opportunity cost of borrowed money.
In conclusion, there is another overriding reason to hope that we shall see a rapid decline in interest rates now that oil prices have fallen; namely, that one of the real success and growth area of employment in the economy is in self-employment and small businesses. These are not of course by themselves likely to be the exclusive economic salvation of this country. We need as many medium and large sized companies as we can get. But there is little doubt that the vitality of both the Japanese and the German economies is due to the
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prosperity of a buoyant and efficient small manufacturing sector.
In Japan, they have low interest rates and a tax regime giving rapid cost recovery; or to put it in the jargon, accelerated amortisation. In this country, we have very high real interest rates and have just moved to a tax regime of retarded amortisation. Hardly a way to emulate Japanese success. Let us hope that in the forthcoming Budget the Chancellor will recognise the predicament of this sector in particular.
It is not unreasonable to anticipate—thanks to the fact that oil prices have now fallen—that we shall enter a period of greater currency stability and with it the opportunity for the Government to lower interest rates. I am sure that they would wish to do this sooner rather than later. High interest rates are grit in the wheels of economic recovery. By lowering interest rates as quickly as possible. the Government could begin to put us on to a virtuous cycle of lower costs and lower wage demands. They could crown in this way the success of their anti-inflationary policies to date.
5.52 p.m.
Lord Hatch of Lusby: My Lords, on 3rd December last, at the end of our debate on the report of the Select Committee on Overseas Trade, the noble Lord, Lord Young, had this to say in answer to the noble Lord, Lord Weinstock, and myself. Speaking first to the noble Lord, Lord Weinstock, he said:
"The noble Lord gave us a lecture on economics which I must confess that I did not follow, but I shall read Hansard. The point that disturbed me was immediately approved by the noble Lord, Lord Hatch, and so I shall read both speeches with considerable worry!"—[Official Report, 3/12/85; col. 1291.]
The noble Lord did not answer the questions I put to him this afternoon at the end of his speech; nor has he answered the speech that I made during that debate. Nor has any noble Lord representing the Government ever answered the consistent queries that I have been putting forward and the policy that I have been proposing as an alternative to the policy of Her Majesty's Government. It is a pity that the noble Lord, Lord Young, is no longer present, but I am glad to see that the noble Viscount the Leader of the House is with us. No doubt if the noble Viscount feels it necessary he will speak on behalf of his noble friend. But that is the responsibility of the noble Lord, Lord Young. He made the opening speech, and I did not see any necessity to warn him that I would be picking up what he had said at the end of the debate on the Select Committee report because I assumed that he would be with us for the rest of the afternoon.
The principal issue that is raised by this debate is not whether the reduction in the price of oil is going to stimulate the economy of this country and the economy of the world but whether the opportunity which the reduction in the price of oil gives can be taken. This was precisely the issue which I put forward in the debate on the Select Committee report and which the noble Lord, Lord Young, did not find himself able to answer at the end of the debate. So I shall put it to him again—or, rather, I shall put it to Members of the Government—perhaps in simpler terms.
My fear—and the whole thrust of what I have to say is based on this fear—is that though the Government

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have been telling us (telling us in front of the Select Committee, telling us in this House and telling us in the other place) that the time would come when the economy would turn and that the Government could only provide the conditions for the turning of the economy, and though that opportunity has now come, the policy of this Government has been such, I suggest, that they have deprived the industry of this country of that opportunity to any great extent. I shall say why.
The Government's policy as I understand it and as I have laid it out before—and it has never been questioned by the other side—rests on a number of theses. The first is that if we control the money supply inflation will drop and there will be an opportunity for economic growth. The money supply has now been wildly exceeded, and the Government, without saying so, have dropped that test. They have discarded the test of the money supply, and no longer is it a plank in their policy. But at the end of that, before they dropped the test of the money supply, unemployment in this country had risen to between 3 million and 4 million, probably more than 4 million in real terms.
The second of the Government's planks was that they would free the private sector to invest and to produce, and so create wealth, and that they would reduce the burdens of the Government on the private sector. But taxation has increased under this Government by something like 5 per cent. since 1979, except for the very rich, and that burden of taxation has been borne by industry. What has been the result? We have had to squeeze out of the Government an admission, which we had this afternoon, that investment in manufacturing industry in this country is now 18 per cent. less than it was in 1979. They like to say that investment has increased, but when you pin them down to manufacturing industry you find that investment is 18 per cent. less than it was when they came into office.
As was revealed, I think accidentally, by one of the noble Lords on the Back Benches yesterday, who obviously did not know the answer when he put down the Question, output in manufacturing industry is 5 per cent. less today than it was in 1979. That is seven years ago. This is what happens when, as the Government would say, you free the private sector to invest and produce. Perhaps even more worrying, productivity is today declining in relation to our competitors. Unit costs in this country have gone up by 5 per cent., whereas those of our competitors have fallen over the past year by 1 per cent. to 2 per cent. That is not very hopeful for the future of British manufacturing industry.
The third plank in their platform was, "We must cut public expenditure". One has only to read through the evidence given by Ministers and officials to our Select Committee—"We cannot do that because our policy is to cut public expenditure as a proportion of GNP". Public expenditure as a proportion of GNP has gone up under this Government. It is higher now than it was in 1979. That policy has failed despite the fact that, in order to hide as much as they can of the reality, the Government have included in the reduction in public expenditure what they have received from selling national assets. This is not put down as revenue; it is put down as a reduction in public expenditure. Despite
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all that, public expenditure is still higher as a proportion of GNP than it was in 1979. This, again, had to be squeezed out of the Government. It had to be squeezed out of the noble Lord, Lord Young, by my noble friends Lord Bruce and Lord Molloy. First, the noble Lord was going to try to conceal it. Then it was squeezed out and he had to admit that fact.
What has been the result of what they have done with public expenditure? One has only to talk to the people in our hospitals and to the people in the schools; to look at the roads and to drive on the roads; to look at the amount of public housing that has been started during those seven years; and to look at the transport system. The deterioration in all those aspects of our public life is the result of cuts in public expenditure.
The next plank in the Government's platform was, "We will roll back the state". That was their great rallying cry: "We will roll back the state and set the people free. We shall have a free market and market forces will determine everything". Free market forces may determine matters, except where it is in the interests or prejudices of the government for the government to intervene. I have not seen many market forces determine matters in the case of agriculture. I did not see market forces determine the future of Westland's. I did not see market forces enabling Ford to threaten to take over Austin-Rover. I have not seen that it is market forces that are giving General Motors the opportunity of taking over Land-Rover.
Those deals have been done behind the scenes without the market place being open to all contenders. As we have heard this afternoon, it has been claimed by a former Minister who was a member of the Government until 9th January that the General Motors deal was never even put before the Cabinet during the whole nine months of the negotiations. That matter was handled in a secret, hole-in-the-corner way while the assets of this country were being sold overseas.
The Earl of Lauderdale: My Lords, I am grateful to the noble Lord for his courtesy in giving way. Seven or eight minutes ago, the noble Lord said that he would repeat a question that he had put to the Government in a previous debate, and which he had tried to put again this afternoon, but which the Government had evaded. I am still waiting to hear what that question is.
Lord Hatch of Lusby: My Lords, I did not say that I was going to put a question. In the previous debate on the Select Committee report I put a theme and asked the Government to answer that theme. They have not done so. They did not do so when I challenged them on part of that theme this afternoon.
The Earl of Lauderdale: My Lords, I am trying to follow the noble Lord but I am not clear what is the question he is trying to ask.
Lord Hatch of Lusby: My Lords, I am not trying to ask any question. I am trying to get the Government to argue their case against the contrary case that I have been arguing for the past seven years. I have never got the Government to meet that case. Nor did I get them to meet it when their Ministers appeared as witnesses

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before the Select Committee of which I was a member. I tried again in question and answer to get the Government to meet, not the case that I was putting, but that which a whole range of industrialists had put to the Select Committee. If your Lordships will read the report of that Select Committee and the evidence you will see what I am talking about.
There is one field of economic activity where the state has been rolled back and where the market forces do apply. As has already been mentioned by my noble friend Lord Donoughue, that place is the City. We are told that in the City there are six-figure salaries for people in their early 20s. That is where they will make their money. Although, to be fair, there are members of the Government who have deplored that situation, it still continues. That is what happens when one opens the field to market forces. It is no use moaning about it afterwards. If one is going to leave matters open to market forces, people will go into the City rather than into industry. As one industrialist after another told us, in this country young people will go into the City because there they will get two or three times as much as they will in industry.
What are the results of the Government's seven-year economic policy? Manufacturing industry has been demolished. Above all, its capacity for recovery has been removed. That capacity has been reduced by at least 20 per cent., so that when the opportunities come—if they come—many industries will not be able to take advantage of them. Unemployment is at a record figure. It is above that of all our competitors. Inflation is much higher than that suffered by any of our competitors. Interest rates are at a higher level than ever before, and our competitiveness is decreasing. All that is in spite of the fact that this Government have had the benefit of massive oil revenues over that seven-year period.
We are now seeing what has been rightly described this afternoon as the situation we foresaw on the Select Committee. As the price of oil declines, we are seeing a projection of what we anticipated was bound to happen as the quantity of oil declined. Now we are seeing the price decline. We wait to see whether the Chancellor's theory as he put it to us holds good; whether, as oil revenues decline, manufacturing will automatically increase. We wait to see, but I doubt very much whether that can or will happen.
Where the Government are now challenged, as the price of oil declines, is in respect of their economic or industrial strategy. Again, we on the Select Committee tried desperately to find out what it was. In that respect we found that the Government were virtually completely bankrupt.
It would appear that the reaction of the Government to that new challenge is simply an hysterical sale of national assets; the destruction of our industrial future; the mortgaging of that industrial future in giving ownership and control to foreigners; and, as we saw the Prime Minister admit on Monday night, the priority of commercial profit before the interests of this country. Apparently the success of capitalism takes priority over British interests.
I could summarise all that in these words. We have blown North Sea oil. We have sold the assets. We are a society too anxious to consume and an economy too
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reluctant to invest. I could make that summary but if I did so, it would be plagiarism because that is the summary made by the right honourable gentleman who was Minister of Defence, and a colleague of the noble Viscount the Leader of the House, until 9th January. He made that summary last week in New Society:
"We've blown North Sea oil. We've sold the assets. We're a society too anxious to consume and an economy too reluctant to invest".
I do not need to claim authorship of that summary because it has been given to us. Neither can I be accused of being prejudiced. That summary was made by a former member of the Government who have conducted the policies in question.
At the same time, it is no longer any use the Government saying that there is no alternative. The CBI have put an alternative, the TUC have put an alternative, and the All-Party Committee of another place has put an alternative. The Labour Party also has put an alternative. There is a common thread that runs through them all, and it is that more Government initiative is needed to support industry.
I have one last point to make. I do not like the kind of roulette economy that we are now seeing in the City, in the mergers and take-overs. I was interested to see that the secretary-general of the Institute of Directors agrees with me in his comments last week. With regard to that merger process, one comment has been made this week that I should like to quote to the House. It will again show that I am not alone in one of the themes that I have consistently put to this House as an economic policy for this country. Sir Hector Laing of United Biscuits had this to say this week, in relation to the future of his company and what he is trying to do in the merger with Imperial:
"The future for all of us is in the third world where standards of living will rise quite rapidly especially with lower oil prices. I think there should be a British company capable of competing on the world stage".
I agree. I have previously quoted, in support of that contention, one after another of the major industrialists and manufacturing leaders of our country as they appeared before our Select Committee.
I suggest to this House that although, as my noble friend Lord Barnett said, there are difficulties for some of the third world countries such as Venezuela, Mexico and Nigeria who are major oil producers, in other parts of the third world the lower oil price is an opportunity for expansion and we should be there. But this Government do not have the vision to see the opportunities which are lying in that half of the world where the market is closed.
Therefore, what are the elements of the policy of this Government so far as increasing our trade with the third world is concerned? They have cut overseas aid by 6 per cent. per year. They have reduced the budget of their own institution, the British Overseas Trade Board, and they have reduced the number of commercial attachés in our foreign and commonwealth offices abroad. We are way behind our competitors in government support for the expansion of industry in the world. The Japanese support their industry 40 times as much as we do and the French 20 times as much.

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That is the theme which I have put time without number to the Government Benches. I have consistently put it forward in the Select Committee. Your Lordships have seen in the evidence of the Select Committee the number of industrialists and manufacturers in this country who support this view. We have not had an answer at any time from this Government. The Government have told us over and over again that there is light at the end of the tunnel. I suggest that there is no light at the end of the tunnel that the Government are holding out to us. It is a long dark tunnel which is leading to a black hole for the future of the British people.
6.12 p.m.
Baroness Turner of Camden: My Lords, I welcome the opportunity this afternoon to participate in the debate on the economic situation. Other noble Lords have dealt in detail with the technical questions relating to the fall in oil prices and the matter of exchange and interest rates. I wish to address myself to what I see as some of the consequences of current government policies and I am emboldened to do so by the statement made earlier this afternoon by the noble Lord, Lord Young of Graffham. I do so because we are frequently being told—and we were told this afternoon by the noble Lord, Lord Young—that things are improving, that we are on the upturn, that it is simply a matter of staying with it as we are on the right road, that new, real jobs will be created and that popular capitalism, I think it is called, will see us through.
It is because I do not believe this that I should like to make a few observations this afternoon. Unemployment currently stands at a record 3.4 million people, of whom 1.35 million have been out of work for more than a year. All the indications are that these people would work if there were jobs for them to do. There is exceptionally high unemployment in two groups—those over 50 and school-leavers. One of the Sunday papers last weekend carried the story of a skilled professional man—unfortunately, a fairly typical case—who had been made redundant in his 50s. He and his wife pooled their resources, including his redundancy money, and set up a small business. That was absolutely in accordance with Government ethos. However, the small business had failed. I regret to say that there is a very high rate of failure among small businesses and no doubt high interest rates, as my noble friend Lord Hatch said, play a part in such failures. Clearly this is a major social problem, and almost everyone who has spoken in the debate would agree with that.
Last year the British Medical Journal published a series of articles entitled Occupationless Health. The articles commenced with the statement that Britain's young fear unemployment more than they fear the bomb. Among 18 to 19 year-olds the unemployment level last year was 26 per cent. More than half the unemployed under 25 have been without jobs for more than six months, a third for more than a year and 14 per cent. for more than two years. The article commenced with this quotation:
"It is only when you lodge in streets where nobody has a job, where getting a job seems about as probable as owning an aeroplane and much less probable than winning in the Football Pools, that you begin to grasp the changes that are being worked in our civilisation".
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That is a quotation form George Orwell's The Road to Wigan Pier written in the 1930s. Unfortunately, there are areas of our country where this is now once more true; and we had thought that those days had gone for good. In those circumstances, it is hardly to be wondered that when it is said that things are improving many people find this difficult to grasp. Indeed, the claim is greeted among many with incredulity. Even the economic forecasts are now that growth will slow down in 1986 to 2½ per cent.
The Government's answer to these problems is to claim that the answer lies in deregulation, increased competition and lower wage costs; and if only people would work for less we should be able to compete abroad and that would assist our problems. However, it seems to me that it is only one sector of the population that the Government are thinking about when they talk of lower wage costs. One sector the Government are plainly not thinking about are those employed on providing investment advice in the City of London: the prospect of the so-called Big-Bang in the City has led to incredibly high earnings for this class of person. Salaries of £150,000 a year and even as much as £300,000 have been referred to. Instead of golden handshakes we have the "golden hello" and "golden handcuffs". How this appears to the long-term unemployed, to the many millions on low wages, to workers at present covered by wages councils—but where the Government are considering emasculating wages council protection—can be readily imagined. It is bound to deepen the divisions in our society between those who have in abundance and those who have not.
In case it should be claimed by the Government—as it probably will be—that the Big Bang and all that follows from it is outside Government control and that they can do nothing about the explosion in earnings that has taken place, and is continuing to take place, I would point out that so far as concerns trade unions, the Government appear to be quite proud of their record of instituting controlling legislation. There are now substantial brakes put upon what unions may do and on what, in many countries, is legitimate trade union activity. The full panoply of the law has been introduced in regard to unions, together with powers to the certification officer to oversee what they do.
However, when it comes to financial services the Government apparently believe that the City can control and supervise itself. The Financial Services Bill envisages not control from outside as with the unions but a series of self-regulating organisations. Plainly this is totally inadequate and we shall perhaps have the opportunity of saying so when the Bill comes before your Lordships' House.
Moreover, the rash of mergers that has taken place, or is in process of taking place, has thrown up one practice which in other countries is simply not possible. I refer to the practice where a much smaller company can take over a much larger company on the basis of borrowed money and then can simply strip the larger organisation of its assets; including, of course, making the workforce redundant. The views of the workforce are not held to be of any worth at all, it seems, unless they assist a particular bidder. Indeed, it is not felt necessary for the workforce to be consulted. Yet, as I said earlier, the Government are apparently proud of giving unions back to their members and to

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union members the right to decide on union executives and union policies. How much more important it is that the workforce should have some say on what happened in the event of mergers and takeovers that may affect their future employment prospects.
Finally, I should like to draw your Lordships' attention to an interesting article which appeared in the Daily Telegraph on 7th January. It is headed:
"City firms set for the Big Bang and challenge from the East."
It says that Japanese banks are poised to seize chances and it sets out in some detail a number of very interesting facts about banking operations in the City. It says that Japanese banks in Britain now have £169 billion in assets compared with British banks which have £274 billion, and the assets of Japanese banks are growing. As I have indicated, the article says that the Japanese banks are poised to seize the opportunities that will exist when the London Stock Exchange is derestricted this year.
I cannot believe that all these machinations are in any way connected with the health of our economy. I believe very strongly that we need to have intervention in order to protect the interests of our economy and the workers in our economy. I am a supporter of an interventionist policy and I regret very much that so far as concerns the Government, they seem prepared to sit back and let things take their course. If they continue to do that, it is my belief that, irrespective of whatever benefit we may derive from reductions in energy costs, we shall find ourselves in a much worse situation next year and with unemployment problems of quite appalling proportions.
6.20 p.m.
Lord Diamond: My Lords, it falls to me to try to pick out from the various comments that have been made some of the major themes on which we have centred and to which we should like the Government to reply. I must start at the beginning and say that, though we are grateful to the noble Lord, Lord Young, for coming when he could to deal with this debate—and we fully understand that he could not stay—I find it difficult to believe that his speech was a courtesy to the noble Lord, Lord Barnett, who introduced this debate, gave notice of it and made it clear in the wording of the Motion that is down on the Order Paper that what your Lordships would be invited to discuss and what the Government would be invited to answer were questions relating to policy on oil production, interest rates and exchange rates.
What did we get? We had the usual knockabout defence of the Government's economic policy, which was not particularly under challenge. The noble Lord, Lord Young, totally misinterpreted the mood of the House. When a Motion goes down on the Order Paper asking for Papers, we all know what will happen. The House does not divide, and the Motion is withdrawn. It is the wording which is used when it is desired to discuss sensibly and in a fairly non-partisan way problems which are thought to be vital to the country's welfare and which the Government do not seem fully able to grasp. I regret having to start in that way, and I hope that the noble Lord the Minister who is to reply will fill in the gap. It is a pity that it should be filled in at the end of the day (and we all understand that it is
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much safer that way, of course) and that we did not have the opportunity of thinking over the views of the Government at an earlier stage.
I am bound to take issue with the Government on the constant repetition by the noble Lord, Lord Young of Graffham, of his highly selective statistics about increases in the number of jobs, and a variety of other things. I shall not say we have now got to the stage when we are bored, but I shall say that his words are totally non-persuasive. He forgets the figures that he has previously given to us. Today he told us how productivity was increasing. A very short time ago he gave us the figures showing how productivity in this country had slipped back in relation to our main competitors, who are, as we all know, Japan, Germany, the United States and France. Of course we know that.
When the Government were acclaiming their advance in productivity, they were making the bland assumption that every one of our competitors was going to sit on its haunches and do nothing whatsoever to increase its own productivity. Of course productivity goes up naturally year by year in every country as industry replaces and improves plant, manufacturing methods and management. The unfortunate thing is that, in the race in which we are all involved in order to make a living for our country, the United Kingdom finds itself slipping ever further backwards.
So I ask the noble Lord, Lord Young, to look at his figures in a more objective light, and to remember that he represents the Government. As the noble Lord, Lord Kaldor, pointed out, the increase in the gross domestic product for the whole period of office of this Government up to this last year has been at a fantastically low rate. If it did not increase in one year from such a low base, there would be something very peculiar about it; but overall we still lack the wealth that would have been produced if this country had merely gone on the basis of a normal and historical 2½ per cent. per annum increase in productivity. At this present day we are miles behind it.
I do not think that there is anything in what the noble Lord has said which gives us any comfort at all. He continually referred to these figures of new jobs created since 1981, and of course we are glad that new jobs have been created since 1981; but it would have been a little more objective and would have put the matter in context if he had told us that the new jobs created since 1981 are but a fraction of the jobs lost prior to 1981. They are only a fraction of them. There were 1¾ million jobs lost, and there were about ½ million or so jobs created. So we are still over 1 million jobs worse off. I am not talking about unemployment: we all know about the 4 million plus unemployed. In terms of jobs created we are still worse off than when the Government came into office.
I hope, of course, that the Government will do something about this, and that there will be some improvement; but I think it is pointless for the Government continually to come forward and repeat these figures. It gives us the anxiety that if the Government can be so complacent when the situation is obviously so bad, then what expectation do we have that they are really putting their minds to these difficult issues with a view to improving them?

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The figure for the unemployed is over 4 million—because we now know that the claimants number 3½ million, and with the non-claimants added it makes over 4 million people who want work if it is available but which is not. If the Government are prepared to live with such a figure, then I am bound to say to the Government not that they are heartless but that they have their priorities wrong. They are still living in a time when their total and exclusive consideration lies in trying to keep down the level of inflation, and they are giving unemployment second place at most.
All I can say is that, after an enormous dip in the first two years and some recovery, we have now reached the stage when in a number of ways we are back to where we were at the start, which means five or six totally wasted years. I was referring to the actual achievement of the Government in comparison with what the noble Lord, Lord Young, from time to time tries, not very successfully, to stuff down our throats.
Perhaps I may turn now to the debate. The noble Lord, Lord Young, did not do that, but the rest of your Lordships have done so and it has been a very interesting and valuable debate. The noble Lord, Lord Barnett, is to be congratulated on choosing a subject which is timely, full of topical interest and so important for our people.
We all agree about one thing, which is that in terms of interest rates and exchange rates what we are seeking is stability. About two years ago, I think it was, I had the privilege from these Benches of raising a debate on that very topic. It was on one of our allotted days. We are all trying to achieve that, and the Government will not say what their policy is and whether they are with us or not. Previously they said that the matter should be left to market forces. They have not exactly said that they do not recognise their responsibility, as a government in that area, but I find it difficult to discover their policy when they are continually saying that matters should be left to market forces, as against my view that they feel that it is too difficult and so they just ignore it.
Of course some of these issues are difficult, but that is what governments are there for. We are all agreed about that; and nearly everybody agrees that one way to secure a measure of stability is to complete the ERM. The noble Lord, Lord Donoughue, made a most interesting speech and divulged his change of view. That must account for the fact that as I came into the Chamber I heard tinkling noises well above the roof. They were sounds of rejoicing!
I apologise for repeating this, but one cannot rub it in too often. The high rates from which we are suffering are historically record high real interest rates. The corollary of seeking to keep inflation down is that one can then keep interest rates down. With high inflation, interest rates are bound to go up; the real rate earned is negligible or a minus quantity, as it has been over recent years. But if the whole policy is directed to reduce the rate of inflation, the amount to be deducted from the nominal rate of interest is small. With a nominal rate of interest of 12½ per cent., or whatever it may be, and an inflation rate of 5 per cent., or whatever, the real rate of interest is enormous.
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As has been pointed out from all over the Chamber, that is highly damaging. The noble Lord, Lord Vinson, made a number of important points about that. High rates of interest damage small businesses and new enterprise. How can a person start a new enterprise when he knows that, however good the idea, it has to show something like a 25 per cent. return before he can approach it? There are not many projects like that around. If a man has to borrow the money and pay that rate of interest, before he can rely on an attractive return he needs to have an extraordinarily valuable profit-making idea which, curiously enough, nobody else has ever thought of. That is not very likely. The high rate of interest is highly damaging to what the Government are doing in trying to encourage new enterprise and small businesses.
I come now to oil. It has been made absolutely clear that anybody who would plump solidly for an increase or a decrease in the rate of extraction in an endeavour to affect its price would be foolish. There are powerful arguments both ways which have been rehearsed by a number of speakers in the debate, including the noble Lord, Lord Soames. It is almost impossible for anybody outside the Government to have all the necessary information and advice to formulate a policy on oil extraction and what should be done to encourage or discourage it. I have no need to repeat all the arguments. My noble friend Lord Ezra made the points clearly.
I add only one point which does not seem to have been underlined by many noble Lords. To a simple person like myself, living for another day also has its attraction. There is no need to get all the oil out today; tomorrow is another day. The Government do not think about that. They try in every way to sell assets wherever they can find them and use the money to keep themselves afloat. The policy suggested by my noble friend is the only one that could successfully be followed, but it has to be approached tentatively. We cannot go to all the producers and say, "Please do this". The impact on different producers will be different. The approach must be through discussion and by a certain amount of leaning on various people. But that is all possible. It is all part of government, and that is what governments normally do. But there has been no sign, and a total absence of any sign in the speech of the noble Lord, Lord Young, that the Government have thought through the problem of oil production and decided what their posture should be. I do not know whether they have one.
I see that 15 minutes are shown on the clock. If the Government cannot satisfy me that they have a policy other than selling, I can only come to the conclusion that, inasmuch as they are doing everything that they can to get their hands on cash from wherever they can get it, that is also their policy for oil, and that does not spell a bright future for the country.
6.36 p.m.
Lord Williams of Elvel: My Lords, I should like to join the noble Lord, Lord Ezra, in saying that this debate has come at a particularly opportune moment. Since November we have had a preview of what I would call—and I mean no disrespect to the noble Lord, Lord Aldington—the Aldington nightmare, in which declining North Sea oil production produces a

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gaping hole in our balance of payments and government revenues. It is only a preview, of course, because in this case it is not declining North Sea oil production but it is rather a fall in the world oil price. But the effect, as a number of noble Lords have pointed out, is largely the same. And, as a number of noble Lords have also pointed out, the real damage will come not in 1986 but in 1987, when production will start to decline quite sharply. If the Treasury forecast reproduced in the report of your Lordships' Select Committee turns out to be correct, that damage will be compounded if, as the noble Lord, Lord Donoughue, expects, the oil price does not significantly climb back to where it was when Lord Aldington's committee reported.
In addition to those problems, the noble Lord, Lord Soames, raised what I think may well become a really major problem for all of us in 1987, which is the problem of international debt. I have been involved in international banking for quite some time and I still am in part of my activity. I agree with the noble Lord that we have to find some mechanism, particularly—as I think the noble Lord, Lord Diamond, pointed out in an intervention—with countries like Mexico, Venezuela and Nigeria, which are severely hit by the reduction in the oil price and whose debt will be insupportable compared with their gross domestic product if the oil price really does stay at its present level.
In face of all those problems, it is quite clear that the Government have to decide what they are going to do. It is useful to have this preview because it allows us to prepare action in time for the run of the main film, which I think will probably start some time in the course of next year. The Government, of course, may decide to do nothing on the grounds that the fall in oil prices on balance is good for Britain and that there will be, in the words of the Treasury evidence to the Select Committee, an automatic and inevitable adjustment process that will compensate for the loss of the oil surplus. Or they may decide that such an adjustment is not automatic and inevitable and that a new set of policies is necessary to deal with a new situation.
I confess that I was rather disappointed with the speech of the noble Lord, Lord Young of Graffham, partly because I had heard more or less the same speech made by the Chief Secretary to the Treasury in another place last Wednesday when replying to my right honourable friend Mr. Roy Hattersley. There is nothing particularly wrong in that. I should, however, like to ask the noble Lord, Lord Young, whether he will in future, if possible, give some statistics that start not at 1981 or 1982 but perhaps at 1979. I also ask the noble Lord if he will very kindly read the speech made on 12th July to the Financial Times Conference on the City Revolution by my right honourable friend in another place, Mr. Roy Hattersley, dealing with the Labour Party's attitude to Government borrowing. Finally I ask, perhaps somewhat frivolously, that, in quoting my right honourable friend the former Prime Minister in another place, he should get the quotation correct.
However, the burden of what the noble Lord, Lord Young, said shows that he puts himself fairly and squarely in the market forces school. He believes that there will be adjustment and that, once the conditions
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are met, there will be an automatic process by which various things will happen which will make up for the loss of oil revenues.
The Opposition have three major difficulties with this view. In the first place, we believe that the noble Lord has an altogether rosier view of the underlying strength of the economy than we have. After all, industrial production, which includes North Sea oil production, has only just reached the level of the fourth quarter of 1979. Total investment is indeed at a record level but in real terms it is only 4.3 per cent. up on the 1979 figure. As a percentage of gross domestic product, it is running at a lower level than in each of the years between 1970 and 1979. The current rise in total economy productivity is still below the trend for the post-war period from 1946 to 1980. By comparison with our international competitors, we are doing much worse. In the league table of five countries—the United States, Japan, West Germany, France and ourselves—during the period from 1979 to 1984, we came bottom on growth of output, bottom on unemployment, bottom on growth in public investment and consumption, and next to bottom on inflation. And now France has pushed us to the bottom of that table as well.
Not only is our economy weaker than the Government claim but it is clear that the real beneficiaries of the fall in the oil prices are those countries that produce no oil. And those are, of course, precisely our main competitors, other than the United States, although the United States will have a substantial advantage because it is a major oil importer. West Germany, for instance, will see its already strong balance of payments made stronger and its inflation rate down to below 2 per cent., and some people think that it might be down to zero, with real output growth running at well over 3 per cent. or perhaps at up to 4 per cent. As for the Japanese, they are almost embarrassed by how well they will do, if, indeed, the word "embarrassment" is appropriate in the circumstances of that country.
Our third difficulty with these co-called market forces is that they have failed signally in the past to deliver the benefits that were claimed for them. My noble friend Lady Turner was very eloquent on this point. I shall not bore your Lordships with another recital of the failure of monetarism to live up to the advertisement that, by strict monetary control, inflation would be brought down without significant loss of output. I do not believe that that happened. I do not believe that 3·5 million unemployed—or whatever the true figure is—does not result in a significant loss of output. The latest failure, for which, of course, market forces are again responsible, is the restraint of real earnings of those at work. If the Government claim that that is a problem then it is a problem where their economic policy and their monetary policy have failed entirely to act. Again, my noble friend Lady Turner drew our attention, as did my noble friend Lord Donoughue to the imbalances that have arisen precisely as a result of the operation of market forces in this area.
The last reason why we do not believe in this whole market force approach is that it was clear from the report of the Aldington Select Committee that no one with serious industrial experience believed in the

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automatic and inevitable adjustment process. The evidence to your Lordships' Select Committee was very strong on this point, the president of the CBI saying, for instance, that he did not accept the premise in any way. Nevertheless, we have to accept that market forces do operate internationally. The noble Lord, Lord Vinson, was interesting in his analysis of interest rates. The noble Lord joined the noble Lord, Lord Soames, in saying that international rates go across frontiers and that we live in the international community. We have to accept that the oil price has fallen. We have to accept that the trade weighted exchange rate has fallen.
The noble Earl, Lord Lauderdale, asked what Opposition policy was on oil prices and put the question, "How do you achieve any sort of stability?" My answer is simple. For some time now, the Chancellor of the Exchequer has—rightly, in my view—been sitting with the Group of Five to try to get some stability in the dollar exchange rate. This does not seem to be something that the noble Earl, Lord Lauderdale, objected to. I see no reason why some similar arrangement should not be made in the case of oil prices. If it is right to do it for money, why is it not right to do it for oil? The fact that the Government, at the moment, may not be able to do it is probably the result of their policy of handing over the rate of production of North Sea oil entirely to private companies and depriving themselves of the possibility of setting a proper depletion policy.
If the exchange rate conditions for an automatic and inevitable adjustment are there, are conditions for such an adjustment in domestic energy prices also there? My noble friend Lord Donoughue made an interesting point. He said that it was all very well to say that crude oil prices were coming down but that it was not necessarily true to say that this would be translated into domestic energy prices. Indeed, he quoted some figures of gasoline prices at the petrol stations that would lead one to believe that this is not happening. However, it is not only oil prices—fuel oil prices, gas oil prices, naphtha prices and gasoline prices—that have to come down to reflect the drop in crude oil prices but it is also the knock-on prices that follow through from those, such as electricity prices, gas prices and coal prices. I do not see any sign of the Government taking powers to reduce those prices in line with the oil price. Indeed, I thought that they were trying to push them up. That was the last I heard.
The exchange rate is one thing. I am sorry that my noble friend Lord Kaldor is not satisfied with the extent of the exchange rate devaluation. He would like a further 20 per cent. That may come, or it may not come. I am not myself convinced that the exchange rate will achieve the level that my noble friend would like. I believe that it might if the interest rate policy of the Government was changed. Here, we get a dilemma that the Government have to face—that the managing of the sterling-dollar rate is done through the differential between sterling interest rates and dollar interest rates. If they bring sterling interest rates down, as the noble Lords, Lord Vinson and Lord Diamond, argued they should, then they will have to accept that the consequence will be that the sterling-dollar rate will come down. That will, I think, have the sort of
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inflationary impact to which my noble friend Lord Donoughue was referring.
Your Lordships will by now be clear as to where the views of the Opposition lie in this matter. We do not believe in automaticity or inevitability. We accept the analysis of your Lordships' Select Committee. Our economy is too fragile. Our institutions are too ossified. Our attitudes are too diffident. Above all, non-price competitive factors in terms of quality, marketing, service and product development are very much against us.
In short, we believe that a stronger set of policies needs to be applied. This is not the time to go into these policies in detail, but I believe that they are well summed up in a quotation from a NEDO paper which the noble Lord, Lord Benson, gave in his evidence to your Lordships' Select Committee on Overseas Trade. The noble Lord said that we need, first:
"continuity and stability of policy. Second, concentration of effort—that is to say, a package of different measures which are mutually reinforcing. Third, careful planning of long-term industrial priorities. Fourth, selectivity in industrial policy as opposed to blanket measures. Fifth, investment in human resources, in short a higher quality of technical and vocational education and training. Lastly, consensus and commitment at national and company level by all those engaged in the industrial process".
I also find myself in agreement with the right honourable gentleman, in this case the Secretary of State for Energy, when he said to the Conference of Young Conservatives:
"Not everything can be left to market forces. If other governments stand shoulder to shoulder with their industries then we have no alternative but to do the same."
I particularly liked his expression: "We have no alternative".
For, in truth, as the noble Lord, Lord Kaldor, pointed out, the Thatcher experiment, as it has been called, adds up to a very extraordinary catalogue. The Conservative Government came to power in 1979. They have been given tens of billions of oil revenues (leaving aside the proceeds of privatisation), and have left industry either no better off or, in the case of manufacturing industry, worse off than when they started. They entered office knowing, as we all knew, that those billions were about to roll in, and promising to reduce the burden of taxation, and yet, after six and a half years and all those billions, only a small and privileged minority are paying less tax. They undertook to reform and improve the welfare state, and yet, in spite of those same billions, they have reduced the average public capital spend in real terms by over 15 per cent. and brought our social services to near collapse both in physical stock and in personnel morale. It is an astonishing record.
Bonanzas like the North Sea only happen once. Such a piece of good fortune will not come our way again, and we must now start the melancholy task of picking up the pieces and clearing up the mess after the party. This is why this debate has been so opportune, since the time to start is really now. I cannot resist saying that I very much suspect that it will be for our side of this House to take on that task. Heaven help us with it, because the legacy will be horrific.
6.53 p.m.
Lord Brabazon of Tara: My Lords, we are all grateful to the noble Lord, Lord Barnett, for having

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moved his Motion this afternoon, and a very intersting debate it has been. Having looked at the Motion on the Order Paper and seen that it was to do with the fall in oil prices, my mind went back to 1974 when they dramatically quadrupled in one year. I was reminded that at that time we also had a coal strike and a general election looming. Things are better now.
The noble Lord, Lord Barnett, suggested that we should perhaps open talks with OPEC and restrict output, as did the noble Lord, Lord Ezra. Yet it is precisely the fact that the North Sea has developed in a free market that has led to its success. Government imposed cuts in production would damage the confidence on which the development was based and the propsects for oil production in the 1990s. The noble Lord, Lord Ezra, suggested that somehow we could moderate production and stimulate the pace of exploration. I find it difficult to see how the oil companies could find a government-imposed ceiling an encouragement to expand their exploration activities, and my noble friend Lord Lauderdale gave a very powerful speech arguing against any such cut-back. My noble friend also reminded us of some of the benefits which the revenue from North Sea oil has brought us, such as a reduction in the PSBR and an enormous increase in our overseas investments.
The noble Lord, Lord Barnett, followed by nearly every other noble Lord who spoke, advocated that we should join the exchange rate mechanism of the European monetary system, and several of those who spoke admitted that they had been recent converts to this theory.
Lord Diamond: My Lords, is that all that the noble Lord is going to say about oil? Will he not give us any idea of what is the Government's policy with regard to oil production? Is the noble Lord saying that the Government will just stand by and let it rip, or what?
Lord Brabazon of Tara: My Lords, I have said what we intend to do, which is to leave production as it is at the moment. I was referring to those who spoke about the possibility of us joining the European monetary system. The noble Lord, Lord Barnett, said that to join was not a matter of political ideology; it was a decision to be taken on hard practical grounds. I could not agree more. Indeed, if noble Lords look at the speech of my right honourable friend the Economic Secretary on 29th January in another place, they will see that he used virtually the same words: The Government's position is unchanged; it is a matter we keep under continual review.
The noble Lord, Lord Ezra, said that my noble friend Lord Young of Graffham had not discussed the wider economic implications of falling oil prices in his opening speech. I submit that in fact he discussed them in some detail. To summarise, he said that the overall impact on output and inflation, as the noble Lord said, should be broadly neutral or, if anything, slightly beneficial. The noble Lord, Lord Ezra, also asked me about other energy sources. On Monday we had a Question on the encouraging coal production figures, and the noble Lord urged caution about whether the Central Electricity Generating Board should burn more oil. I agree that the Central Electricity Generating Board should be cautious in this matter.
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Of course, if it did decide to burn a great deal more oil, that would only put up the oil price again.
The noble Lord also asked whether the Government's campaign on energy saving would in any way be diminished by the fall in the oil price. The answer to that is certainly not. I think I said at Question Time the other day that the savings which could be achieved were some £7 billion a year. That figure might indeed be reduced a bit, but a very significant saving could still be made.
My noble friend Lord Soames spoke powerfully of the growing protectionist forces in the United States. I am sure the House would agree with my noble friend on the dangers of such forces. A new GATT round is due to start towards the end of 1986. It is one of the Government's aims in those negotiations to offset the pressures for protectionism in the United States. My noble friend also spoke of the indebtedness of the third world, and particularly of the problems facing Mexico and the other oil producers, as did my noble friend Lord Wolfson and the noble Lord, Lord Hatch. The indebtedness of the oil producers is indeed a problem, but I should point out to noble Lords that overall the debt of the oil importers is around twice that of oil exporters.
The noble Lord, Lord Kaldor, claimed that the Government's economic policies were underpinned by the fallacy that inflation is the root of all evil. It is not the root of all evil, but it is the root of a great deal of evil. The noble Lord dismissed the Government's achievements, but I think that many noble Lords would not be so dismissive of a policy that has brought inflation down to an average increase of 5.1 per cent. since June 1983.
Lord Kaldor: My Lords, did the noble Lord compare this figure with what happened in other countries? It is true that our inflation has come down a lot, but it has come down everywhere. We were not, so to speak, all alone in this.
Lord Brabazon of Tara: My Lords, it has indeed come down and it must come down more in this country. The noble Lord, Lord Kaldor, and many other noble Lords including the noble Lord, Lord Parry, also spoke about our manufacturing base. The House of Lords Committee on Overseas Trade said that our manufacturing base was so weak that it could not fill the gap when the oil ran out, and various noble Lords this afternoon have echoed that sentiment, including particularly the noble Lord, Lord Hatch. However, that is to ignore the facts.
Over the last five years manufacturing industry has been transformed. Following seven years of stagnation manufacturing output has increased by 13 per cent., and has now enjoyed the longest period of uninterrupted growth since 1971. Export of manufactures grew by 11½ per cent. in 1984 to reach an all-time record; a record that was beaten by a further massive 8½per cent. growth last year; and since 1981 our manufacturers have increased their share in the volume of world trade. My noble friend Lord Wolfson said that we too often underplay our performance on exports. I quite agree with him.
Profitability of manufacturing industry, bogged down for so long, has recovered and is now at its

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highest level since 1973. And investment has recovered. It was stagnant under the previous Government. It has increased so far by 26 per cent. since its trough.
Lord Hatch of Lusby: My Lords, will the noble Lord give way? He has been giving these figures. We have heard them all before from the noble Lord, Lord Young. He always starts from 1981. Why not go back to 1979 when this Government took over? Is it not the case, as I stated in my speech—and as has been proved reluctantly by noble Lords on the Front Bench opposite during just this week—that manufacturing output is 5 to 6 per cent. below what it was in 1979, and that manufacturing investment is 18 per cent. below?
Lord Brabazon of Tara: My Lords, it is perfectly true to say that between 1979 and 1981 there was a dramatic fall. The noble Lord has probably forgotten that we had an oil crisis at that time, when the price of oil doubled—or was it trebled? I cannot remember. That recession took place all over the rest of the world as well. It certainly was not only in this country. Output also declined under Labour. As I remarked earlier, it has revived rapidly since 1981. I would rather look to the future, and see what is happening now, than continually go back to 1979.
Lord Kaldor: We are importing—
Lord Brabazon of Tara: My Lords, I am not going to give way again. I have given way often enough as it is.
The revival of manufacturing is seen perhaps most dramatically in the increase in productivity. Manufacturing industry suffered from inefficiency and overmanning for decades, but since 1981 productivity has increased by an incredible 33 per cent.; an average growth of 6 per cent. a year. I have to tell the noble Lord, Lord Diamond, that productivity in the whole United Kingdom economy in the years 1980 to 1985 has grown at an average of 2¾ per cent.; better than the l½ per cent. of France, the 1½ per cent. of the United States, and the 1¾ per cent. of Germany. These are not indicators of a depressed manufacturing sector.
There is no room for complacency, however. Manufacturing output is expected to continue its steady growth this year, but its wage costs are rising three times, or more, faster than those of our major competitors. The noble Lord, Lord Barnett, pointed out today's earnings figures, which have just been released, of an increase of 8·9 per cent. I believe the increase in fact to be an underlying increase of 7½ per cent. However, that is still more than it need be. I would remind noble Lords that a 1 per cent. reduction in real wage increases could create over 100,000 jobs. With wage restraint and flexible working practices, the future of manufacturing industry would look very good indeed.
The noble Lord, Lord Donoughue, asked what would happen when the oil ran out, and what planning the Government were doing. It is first worth noting that most recent estimates suggest that the United Kingdom will continue to be self-sufficient in oil until
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at least the mid-1990s, if not to the turn of the century. we are peering into a fairly distant future.
As oil production declines we expect to see a gradual return to a more traditional pattern of trade. As the noble Lord said, manufacturing will play a key role here. I have already spoken of its achievements since 1981, and the dynamism he spoke of has already shown itself. But I must take issue with him on the need for a plan. The Government's approach is to encourage the economy to operate more efficiently: to remove obstacles to growth. This is worlds removed from the planning put forward by the party opposite.
The noble Lord also talked about City salaries, as was mentioned by the noble Lord, Lord Hatch, and the noble Baroness, Lady Turner of Camden. Indeed, there are some cases of very high salaries at the moment. I cannot resist quoting just a small item from today's Times, which the noble Lord may have seen, regarding yesterday's PSBR figures, and indeed the figures which were out earlier this month, and how they caught the analysts in the City on the hop:
"By making the analysts look foolish twice so far this month with their forecasts, the mandarins are making a point about high City salaries far more subtly than the rumblings from No. 10".
I suggest that in fact market forces there will prevail, and that in due course City salaries will become more normal.
The noble Lord, Lord Hatch, accused us of, I think he said, reducing expenditure on roads since 1979—these are 1979 figures; let us get this clear now—and reducing figures on spending in the National Health Service. He is quite wrong. Since 1979 capital spending on motorways and trunk roads has increased by a quarter in real terms, and on the health service capital spending is up by 21 per cent. in real terms. I have more figures here which I could show the noble Lord afterwards, perhaps.
The noble Baroness, Lady Turner, spoke about small businesses, or a particular small business which had failed. Of course, one has great sympathy with that sort of incident, as I am sure the whole House has. But it has to be remembered in the story of small businesses between 1980 and 1984—the latest years for which figures are available on the basis of VAT registrations—that there were about 140,000 more business starts than stops; an average of 550 a week. Nineteen eighty-four was a record year with 700 net starts a week. The noble Baroness said that she would like to go back to an interventionist policy. I submit that those policies were a disaster, and I personally hope that we do not do so.
The noble Lord, Lord Williams of Elvel, decried market forces. But he also quoted the case of the economies of the USA and Germany. Does he share their distaste for market forces? Even France has become more market orientated than in the earlier days of the present administration over there.
I should like to end by reminding the House of a few key facts about what the Motion calls our "economic situation". Over the period 1983 to 1985 the United Kingdom topped the growth league of major European Community countries despite the coal strike. Over the previous decade we were bottom of that league. In 1985 the United Kingdom is expected to have grown faster than any other country in the

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Community and the United States, an achievement unimaginable in the time of the previous Administration.
Lord Diamond: My Lords, I am grateful to the noble Lord for giving way. He has challenged me on figures, and it is a courtesy I much appreciate that he should allow me to respond. He is talking about 1985. May I ask him quite specifically: is he prepared to contradict what the noble Lord, Lord Young of Graffham, told me on 29th October 1985, that in 1985 there had been a rise in unit costs—which is what matters in productivity—in this country of 5 per cent. compared with a fall in Germany of 3 per cent. and in Japan of 6 per cent.? So the margin was widened by something like 8 to 11 per cent. in one year.
Lord Brabazon of Tara: The noble Lord, Lord Diamond, is talking about unit costs. They have gone up compared with our competitors and those were the figures that I was talking about when I urged restraint on wage settlements. That is not the same as productivity. Productivity has risen by the figures that I mentioned.
We all regret the present level of unemployment. I do not think that there is anyone who regrets it more than my noble friend the Secretary of State. In his speech he gave a long and full explanation of the measures that the Government are taking to counter it. But that does not mean that we should denigrate other more positive aspects of the British economic performance since 1979. The Government have kept downward pressure on inflation, have freed up markets and the economy has responded. The economy will continue to respond.
Lord Barnett: My Lords, it only remains for me to say a personal thank you to all noble Lords who have spoken in this debate. They have already been referred to by the noble Lord the Minister in his winding up and by my noble friend Lord Williams of Elvel in what I thought was an excellent speech, as did many of my noble friends in the debate today.
The only thing with which I disagree in the Minister's winding up was his reference to his noble friend the Secretary of State for Employment when he said he gave a "long reply" to the debate on one aspect of it. I hope on reflection that the Minister will think about his brief reply. I understand and appreciate that he could not tell us what the Chancellor will say next month. But I hope that he will appreciate that much of today's debate was an excellent one as everybody will agree, especially all those who took part in it, and that speeches from Ministers from the Front Bench in this kind of debate, which is not overtly party political, would be better for being a more serious contribution to our discussions. I know that the noble Lord has not been here, but he will read some of the contributions that have been made, especially by the noble Lord, Lord Diamond, and some of my noble friends commenting on the way he dealt with the serious subject. I hope on reflection that he will realise that he did not fully reflect what needed to be said in what is a serious matter. It remains for me to thank noble Lords for references to my contribution and I now beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Peterhead Harbours (South Bay Development) Order Confirmation Bill
Brought from the Commons; read a first time, and to be printed.

Farmers in Green Belt Areas
7.15 p.m.
Lord John-Mackie Lord John-Mackie rose to ask Her Majesty's Government whether they are aware of the difficulties of farmers in green belt areas, who in response to exhortations wish to diversify their operations.
The noble Lord said: My Lords, it is a pleasant light in this Chamber from what it has been this past hour or two and I welcome it very much indeed.
In putting this Question to Her Majesty's Government I must first declare an interest. I farm and live in the metropolitan green belt and I had an application before Epping Forest District Council to allow four young men to occupy some buildings for industrial purposes. These buildings were no longer required for my farming, but represented only 8 per cent. of our total buildings. Since the application has been turned down it has received some publicity. I have been approached by neighbours and others about the position in which they find themselves when applying for a planning permission in the green belt, not only around London but in other areas as well. I believe the noble Lord, Lord Stanley, will confirm this when he speaks.
I believe wholeheartedly in a green belt policy. We simply cannot allow our huge conurbations—London, Birmingham and Glasgow, to mention the largest—to sprawl over the surrounding countryside. I should like to point out that this is not the case of a few farms here and there. The impression I have from those to whom I have talked is that half a dozen farms here and there are affected. There are four and a half million acres of green belt land in the country. My own Epping Forest District Council alone has 75,000 acres.
It is difficult to find the figures of how many farms this represents. About 80 per cent. of green belt land is farmed; the rest is forests, downs and so on, but on my own observation these farms are larger than the average in the country (the average is only 150 acres) but there are few really large scale units. One can perhaps quarrel with my calculations, but I calculate that this probably represents between 15,000 and 18,000 farmers, plus their wives and families and their employees and their wives and families.
I make no bones about it. I want to emphasise that the management of the landscape, wildlife and recreational resources of the green belt depend on the prosperity of these people. I cannot emphasise that too much. I have said before that unless the actual business of farming, with perhaps some diversification, is profitable, no amount of grant will persuade farmers to plant trees or hedges or to take any other major conservation measures. That must be emphasised.
We have seen much written about farming incomes lately. They fell by 43 per cent. last year. This was not spread evenly, I readily admit, and I venture to suggest

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that the mixed farming, which is common in green belt areas, fared badly. This may be arguable but suffice it to say that I have access to figures of cereal farming in the Eastern counties and those farmers have survived better than a 43 per cent. drop in spite of wheat prices being over £20 a tonne lower than two years ago.
The point I must make is that, apart from the devasting 43 per cent. drop in incomes, this year one can hardly lift a farming paper or some of the responsible national papers without being given warning of the future situation. I have cuttings before me. One from Big Farm Weekly says:
"EEC plan will slash incomes … beef … 10–15 per cent., wheat by 10 per cent. and barley by 15 per cent."
The Farmers Weekly a couple of weeks ago said:
"Cereal producers could face price cuts of double figures".
This week's Farming News says:
"A time-bomb ticks".
That is a quote from Mr. Andriessen at the Farmer's Club last week. I could go on but at the same time as our prices are being slashed—my returns for wheat this year showed a drop of nearly £24 per tonne from the figure of two years ago—our costs are continually going up. I cite them—fertilisers, electricity, telephone, gas, wages, machinery, rents, interest rates. I emphasise them because they are a very heavy burden on agriculture. The only thing that has come down a little because of oil prices is the petrol for our cars, which are generally believed to be Rolls-Royces by the farming bashers.
What do we do about it? I quote David Richardson in another farming paper:
"How do we deal with a situation which is heading inexorably towards lower or non-existent profit on arable farms?"
There is no lack of advice and exhortation: do not rely on farming alone. Be like your European counterparts, diversify: tourism; bed and breakfasts; turn your old farm buildings into small industrial units; open up your farms to the public; farm shops; pure food produced without fertilisers and sprays, etc.; provide fishing, riding, shooting, all country sports. The list is legion. There is no lack of advice. The centre page of the Farmers Weekly last week shows just what is being done as regards turning old farm buildings into something different, and it heads it, "Old house, a new start".
A land agent's brochure heads an article on the same subject, "Improving future prospects", and shows what can be done. Only this week I received notice of a seminar organised by CoSIRA, which I presume everyone knows is the Council for Small Industries in Rural Areas. It is an offshoot of the Development Commission. The seminar is on old buildings and new opportunities. It is to be held at Brentwood, practically on the edge of the metropolitan green belt.
These warnings and exhortations are not new; they have been going on for a long time. People farming in the green belt areas wonder just where they stand. There is no question that they are really disadvantaged. Practically any application for change of use of anything in the way of buildings, or almost any of the diversifications for which farmers ask, is almost immediately automatically turned down. It is all very
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well to say, "Well, you can appeal", but it is amazing how many farmers feel that it is not worth the trouble, expense and so on going to an appeal which may fail.
I should like to give just three examples of which I personally know. A farmer not far from me had a small old barn which was a listed building. It was really no use for farming in this day and age. He had a plan made to convert it into a dwelling house, making sure that the old oak beams would not be covered, so as to preserve the character of the old barn. That application was turned down. A small fruit farmer near me had a not very large building which he did not require. He let it to a man who started a business making specialised footwear. He was not allowed to continue. Another smallholder waited for about four years for permission to carry on a bed-and-breakfast business.
I happen to know of these cases. In my opinion, not one of them would in any way have done any harm to the green belt. In fact, if one presses the planners on the subject they will admit this, but they maintain that their hands are tied. I have had discussions with them. They are reasonable people, but they point out that they have to obey their instructions and the various orders and instruments that they receive under town and country planning Acts, and so on.
However, at the Oxford Farming Conference a month ago the honourable William Waldegrave, a Minister of State from the department of the noble Lord the Minister, the Department of the Environment, made this statement in the body of the speech that he gave:
"As planners—and this is not always popular—we must not let Green Belt or wider rural planning policy block the small-scale additional housing, the conversion of redundant farm buildings, and the light industrial developments which will be needed to sustain this improvement"—
that is, the improvement of life in the countryside.
Also, in answer to two questions which were asked because of that statement, he replied:"
"We do want to stand firm against the wholesale destruction of the Green Belt, for example, by mammoth new housing developments. There may be particular cases that are special but in general we want the structure to remain what it is. But please District Councils"—
and I think it was a county councillor who asked him the question—
"do not intrepret that as meaning that in every case where somebody comes to you for a building conversion or a particular small-scale housing development, as part and parcel of a village, you are being asked by us to give way every time to the lobby that says, 'No developments of any kind whatsoever'".
Then, in answer to another question, he said:
"That is one of the messages I wanted to use this platform here today for to say to these District Councils, you are being asked to preserve the Green Belt, right, and we will stand by you with that. You are being asked not to allow urban and industrial sprawl in general but you are also being asked to do that and have the sensitivity at the same time to allow the necessary development to keep the villages and small towns alive, a much more difficult task because it is not saying no to everything".
I do not know whether that is the policy of the Department of the Environment, but the Minister himself, the Secretary of State, also had a long article in the Sunday Times of two weeks ago headed, "Green Belt [is] not a green museum". I think that that should be very true.
I think the statement made by Mr. Waldegrave was an eminently sensible statement by an eminently

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sensible man. In fact, it was so much so that somebody at the conference suggested that he should be moved to the Ministry of Agriculture. Frankly, somebody else got up and said, "That would be a mistake. If we have a friend at the Department of the Environment, let's keep him there", and I think that is very wise. I can only hope that the planners will take note of what was said there.
Perhaps I may sum up the situation. Farmers' incomes are being drastically cut. They are being exhorted to diversify to maintain their incomes. In an area of 4½ million acres farmers are inhibited in their doing this because of the rigid application of planning laws. They are being asked to maintain the environment. They cannot do this without sufficient income.
I have been accused of wanting sympathy: just another farmer moaning, wanting charity. Sir Richard Bodey, if you please, suggests that each farmer should be given £10,000 to conserve the countryside. I have the cutting here, and I hope he is correctly reported. I am not asking for sympathy and I am not asking for charity. I never have and never will. What I am asking the Government to do is to understand the situation of probably 15,000 of my fellow farmers. I look forward to hearing what the Minister has to say.
7.28 p.m.
Lord Winstanley: My Lords, it is an immense pleasure to follow the noble Lord, Lord John-Mackie, and his very important Unstarred Question, and perhaps add one or two questions of my own. It might perhaps have been a greater pleasure to have followed the noble Lord, Lord Stanley of Alderley, rather than have him follow me: I could perhaps then have done to his speech what he may hope to do to mine after I have sat down. We can but wait and see so far as that is concerned.
As for the noble Lord, Lord John-Mackie, I had the honour to be chairman of the Countryside Commission at the time that the noble Lord was chairman of the Forestry Commission. At that time, although we were doing very different jobs, I think we were in part engaged in a similar job. We both had responsibility for national assets in the countryside—in my case the countryside per se and in his case forestry. We both had the responsibility of resolving a very important conflict in relation to those national assets. It is a very clear conflict—namely, the dispute which arises between those who seek to use those resources for recreational purposes and those who are responsible for those resources in so far as productivity is concerned.
It is an important conflict and I think it is right to say that the Forestry Commission, under the guidance of the noble Lord, did a great deal to resolve it. They were able to go on with productive forestry and at the same time to accommodate and adapt to the increasing demand for recreational use of the land controlled by the Forestry Commission. I think it is also true that over the years the Countryside Commission has done a great deal to resolve those conflicts. It is those conflicts about which we are concerned in this Question. We are concerned with the green belt.
Let me say at the outset that I and my noble friends on these Benches are wholly committed to the
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preservation of the green belt. However, I must also say that we believe, and believe very strongly, that the green belt can be preserved in an acceptable and desirable form only by the preservation of profitable farming in green belt areas. On that, I think we are wholly agreed, that if land and urban fringe land which is largely agricultural land is under-farmed, it decays rapidly, falls into disuse and I think ceases to be of real value. We have seen in recent years in the urban fringes—and it is urban fringes that we are talking about; for urban fringe decay is not uniquely an English problem; it is a problem that has to be faced all over the Western world—agricultural holdings fragmented into smaller and smaller pieces; we see little pieces left idle and unfarmed, perhaps in the hope of planning consent for different kinds of development later. Hope springs eternal in the landlord's breast. I am afraid that some of that land lies doing very little for a very long time. I want to emphasise that at the outset. My commitment and that of my noble friends on these Benches to the green belt is also a commitment to preserve the green belt by preserving profitable farming in urban fringes. I think that is the way to do it.
The noble Lord's Unstarred Question draws our attention to the problems of farming profitably in some of those areas. I recognise some of those problems. I have responsibility, as chairman of the Groundwork Trust set up by the Department of the Environment, to try to restore urban fringe land in the Merseyside area. One of our major problems there has been to restore farming. The particular situation there is that much of the land which is under-farmed there is, in fact, Grade 1 agricultural land, of which there is not a great deal in the North West of England. It is a tragedy to see that lying under-farmed; and much of it has been under-farmed because of the pressures of trespass, of vandalism, of litter and problems of that kind.
One of our principal jobs—and we have managed to do it very largely as a result of the secondment to the trust of a senior civil servant from the Ministry of Agriculture, Fisheries and Food, who has been working very closely in the trust and who has managed to work very closely with the farmers in order to reconcile the conflicting interests involved—is to get the farmers to understand that they somehow have to allow some kind of access to townspeople who wish to use that land for recreational purposes and, at the same time, to encourage townspeople to understand the needs of those who occupy that land and depend on it for their living. I think that experiment has been outstandingly successful.
I accept that upland farming, of which I have more experience, but not very directly, is very difficult and that it is difficult indeed for farmers in upland areas to make an adequate living without some kind of subsidy. Many of them have other jobs. My land in Cumbria, such as it is, is farmed by the landlord of my local pub, which has certain advantages. It illustrates the point that, so far as upland farming is concerned, it cannot exist on its own. It is perhaps rather news to me that these kinds of difficulties are arising to the same extent in the green belt areas. That has been my impression, and I know very little about the economy of farming save that it seems more and more to have

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become a matter of accountancy and making sure that one is able to attract the right grants from the EEC and so on.
I know one farmer (and I will mention no names) who on one day got a substantial grant for going out of dairy farming while on the same day his wife got a substantial grant for going into dairy farming on immediately adjacent land. So I merely say that it is sometimes a matter of accountancy. But I am now led to understand by what the noble Lord has said and by what other people have said that there are these very real difficulties.
For a long time we have been actively encouraging farmers in upland areas to diversify and to enter into activities which we hope on the whole have been agriculturally related and which will enable them to continue to farm their land. Should they not continue to farm that land, it would decay and go into disuse. I have seen many examples of that acting in practice even in national parks. I accept that we are not talking about national parks; we are talking about green belt. When you go into a farm on Exmoor, I think that farmers there farm under some difficulties because they farm under contraints in relation to conservation requirements. This particular farmer has started a boat-building enterprise which has been very successful. Although his farm is well inland, he has had no planning difficulties.
I recall having very few planning difficulties with the national park authority in the Yorkshire Dales, where an arrangement was made whereby dilapidated farm barns, which were potentially attractive buildings in that rural area, were converted with the help of grants into sleeping accommodation for walkers, who could book them in advance, as it were, and go on the trail from farm barn to farm barn, thereby bringing in an income to the farmers of the dales and assisting them and supporting them to continue farming in that area.
I now understand that in certain green belt areas farmers require some kind of diversification in order to continue to farm profitably and that impediments so far as planning permission is concerned are being placed in their way. That may be so or it may not. The noble Lord, Lord John-Mackie, said that the planning officers and planning departments were very reasonable people. They may be; but it is my experience that they act very differently in different areas and they act very much in response to the mood at the particular time or what they take to be the mood of those in Whitehall who are not perhaps actually their masters but whom they sometimes feel they have to consider very carefully.
I think there is no doubt, as the noble Lord has said, that there are occasions when farmers in green belt areas have wished to diversify in some ways and where planning consent could perhaps have been given without any damage to the green belt. That planning consent might have assisted the particular farmer to farm more profitably and perhaps thus have guaranteed the perpetuation of that area of green belt land.
This is a different matter from the question of planning consent in relation to agricultural buildings, and perhaps I could return to that for a moment. Had
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the noble Lord, Lord Melchett, been speaking, he might have talked about the need for planning mechanisms to be applied to agricultural buildings. I am not making that appeal for a moment, but I say this to the noble Lord, Lord John-Mackie, who farms quite close to an area with which I had some connections—a designated area of outstanding natural beauty, the AONB at Dedham Vale. The NFU and the farmers there entered into a splendid voluntary arrangement with the planning authorities whereby proposals for agricultural buildings are submitted quite voluntarily to the planning authority for approval and advice. As a result, agricultural buildings erected in that part of the country are erected in a way which is compatible with the countryside. That has been to the very great adavantage of the area and I do not think it has been onerous to the farmers, but it has been wholly voluntary.
Planning consent for diversification into some kind of activity which I would hope would have some relation to agriculture is one matter, but I think one has to say at the same time that some of the agricultural buildings that farmers are occassionally able to erect without planning consent really do very grave damage to the green belt, just as they have done grave damage to designated areas of the countryside. I think I am right in saying—and I hope he will forgive me for mentioning this—that the noble Lord, Lord Stanley of Alderley, who is to speak shortly, built without planning consent, because planning consent was not required, a silo of a kind to which he later took exception himself and took it down. I am merely making a point that had the agricultural community been a little more sympathetic to the needs of others in the community in relation to buildings for which they do not require planning consent, some people would perhaps display a more sympathetic attitude to their present requests.
Lord John-Mackie: My Lords, perhaps I can tell the noble Lord a story which Mr. William Waldegrave told us of a Nissen hut that had been erected during the war and has been listed. It shows that people get accustomed to buildings. If the noble Lord, Lord Stanley, had just kept his silo a bit longer, the neighbours would not have wanted it knocked down because it had been there too long.
Lord Winstanley: My Lords, I note the point the noble Lord is making but he notes, too, that there are conflicts. We are dealing with conflicts. I should like to feel that everybody in your Lordships' House feels that such green belt as we have must be preserved if possible. Countryside land at the moment is in very short supply in Great Britain and under ever-increasing demand. Once lost, the cost of restoring it would be absolutely prohibitive. Therefore we must do what we can to protect it. I do not believe that we are protecting green belt land by applying planning restraints to farmers in such a way as to imperil the profitability of their activities on their land. We must understand that if we genuinely wish green belt land to be preserved in a form which is desirable, in a form which is valuable to other citizens living near it and around it, then we must do everything we possibly can to see that profitable farming is maintained and sustained in those areas.

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In this matter, as in some others nowadays, I think we have a lot to learn from what has been happening in recent years in West Germany, where the diversification of farming in certain areas has been going on apace. I believe that that is a matter upon which the noble Lord, Lord Sandford, could speak: certainly he has drawn attention to it on other occasions.
7.40 p.m.
Lord Stanley of Alderley: My Lords, I should like to thank the noble Lord, Lord John-Mackie, for raising this Question tonight, for it poses the unpleasant question of whether the Government's left hand, in the form of the Department of the Environment, understands the implications for them of the problems of the right hand—the combined hands of the Ministry of Agriculture and the Secretary of State for Employment. Sadly, I cannot find much fault with the speech made by the noble Lord, Lord Winstanley, and I would support the remarks made by the noble Lord, Lord John-Mackie. We have a certain problem, not just in the green belt but throughout the agricultural industry, in making farming profitable: thereby hangs the problem.
So far as this particular Question is concerned, the problem is simple. Since the formation of the green belt and the structure plans the rural economic situation has turned a somersault; indeed it has done that during these last two years. Farmers are told by Government and by the European Community to stop producing food and to diversify, as the noble Lord, Lord John-Mackie, has said. They say that our efforts should be put into small-scale tourism or into larger ventures such as co-operative grain stores or indeed into straw-processing plants.
This message, as the noble Lord, Lord John-Mackie, told us, was given very clearly by my honourable friend William Waldegrave at the Oxford farming conference. I am delighted that the noble Lord, Lord John-Mackie, quoted his speech, because now I shall not have to do that myself. But it was a very valid point, and a very valuable speech.
Similar support came from the Secretary of State for Employment when he addressed the Institute of Directors on 10th December last. But despite these remarks, I have to tell my noble friend Lord Elton that this message has not yet got down to the green belt planning authorities or indeed to some others—only some, I agree—outside those areas.
The noble Lord, Lord John-Mackie, has given some examples in his area and, for this evening, I will give just one concerning my own village, where my family and I have farmed for over 32 years now. The village is in the Oxford green belt and it is a village which my noble friend Lord Elton knows well and has perhaps known for longer than I have. Here a recent request to convert a derelict set of farm buildings into self-catering flats was turned down by the planning authority and also by the Minister's inspector, despite the support of the tourist board and the Society for the Protection of Ancient Buildings.
Is it all a confidence trick? The Government know as well as I do that there is a farming crisis ahead—indeed it is with us now—and it appears to me and obviously
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also to the noble Lord, Lord John-Mackie, that these pleas for diversification and conservation are merely worthless sops. I hope that my noble friend Lord Elton will assure me that they are not.
Of course, my noble friend has a problem—who has not? He has much difficulty in overruling a planning authority, whose members are elected by those who live in a green belt. Because of the tremendous expense of housing in such areas, the great majority of those who live there are retired or they commute. And if there is one thing which they dislike near their homes—and this applies to myself and to other noble Lords as well—it is any form of activity, employment or industry. That often includes farming. Certainly I had to give up livestock many years ago and my son's self-pick operation has come under criticism for filling the village with outsiders—outsiders, my Lords, coming into the village! The criticism has been made, even though the operation has provided a great source of local work.
The green belt policy is now many years old. It has served a useful purpose: I agree entirely with the noble Lord, Lord Winstanley, on that. Most certainly I do not want to see the greenness go. That greenness is our livelihood. Indeed, I like to see my noble friend Lord Elton running around my fields chasing hares. I am sure it refreshes him, and others. Certainly it does not harm the hare, who I must say always seems to get away—he seems to be faster on foot than my noble friend. But the policy of green belt and structure plans originated before the farming slump and the unemployment problem arrived, and I hope that my noble friend will say he will do all in his power to support diversification in farming and employment, and that such an objective will not be achieved by the rigid planning policy that is being exercised in the green belt.
I want to see our country villages, inside or outside the green belt, live again and not become just places for commuters and retired people. If need be, I should like to see muck on the road again and indeed corrugated tin sheds, as advocated in a recent hilariously funny article by Miles Kington in The Times, which I will give to my noble friend for his bedtime reading. It will at least make him laugh.
However, if such a revitalisation is to take place my noble friend will have to take a radical look at the structure plans and not least at the infrastructure needed to service our villages. If we really want our farmers to diversify and our villages to live and not be just dormitories, if we really want to reduce the unemployment queue, we here and elsewhere, who are fortunate to have jobs and to live in quiet little villages, must be more charitable and accept the dust, dirt and noise of work. My Lords, you cannot make an omelette without breaking the odd egg and I ask my noble friend Lord Elton to produce the saucepan.
7.47 p.m.
Baroness Nicol: My Lords, I, too, am grateful to my noble friend Lord John-Mackie for giving us the opportunity to discuss this subject, if only to learn that it is possible to make the noble Lord, Lord Elton, chase hares. I have been trying to do it for months, without any success at all.
The Minister of State, Department of the Environment (Lord Elton): My Lords, on a biological point, I think they are usually red herrings.
Lord Stoddart of Swindon: Or March hares.
Baroness Nicol: Before I go on to my main remarks on a more serious note, my Lords, I wonder whether I might make it clear that when I refer to planning considerations I agree with my noble friend Lord John-Mackie that unreasonable planning controls are not acceptable and that an unreasonable time taken for planning controls is not acceptable. It is something which I think we have all been working to eliminate, and indeed some progress has been made in the last few years. We must see that that progress continues because, as I hope to show later on, I think we have a need for planning controls. But they should not interfere with the livelihood of people, particularly with that of the farmer, and he should not be unduly held up by them.
The noble Lord, Lord Winstanley, mentioned the need to extend some of the planning controls. I go along with him. I have not seen Lord Stanley's silo, and I probably would not like it if I did—
Lord Stanley of Alderley: My Lords, I must interrupt the noble Baroness. I did not like it either and I knocked it down—which is more than the planning authority might do.
Baroness Nicol: My Lords, if only to protect other farmers from the expense of having to knock down buildings they do not like, I think we shall have to reach the stage where there is some planning control over farm buildings. But that does not interfere with tonight's debate—
Lord Winstanley: My Lords, may I interrupt the noble Baroness? I did not myself ask for planning controls to be extended. What I did say was that I knew of an area in which planning control had been applied voluntarily by the farmers and the planning authority: that seemed to me to be advantageous. However, I was not recommending—and I should not like to be reported as doing so—the application of planning controls to agricultural buildings as a whole.
Baroness Nicol: My Lords, I am grateful to the noble Lord. I will make my own position clear as I go along. May I first say that, because I felt that I needed to know more about the up-to-date situation, I consulted with the National Farmers' Union, with the Countryside Commission, with Serplan, with the Town and Country Planning Association and, to a lesser extent, with the Conservancy Council. It seemed to me that it was necessary to get a few outside views on what we were discussing tonight.
The National Farmers' Union makes very clear the difficulties that farmers are suffering at the moment. They point out that agricultural problems do not stop at the edge of the green belt and that green belt farmers are more likely to suffer disruption and damage from the proximity of urban populations. I am sure we accept that and sympathise with the situation of farmers in the green belt on that account. But it is probably fair to say that up to now, at least, individual
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problems have been best left to the local authorities who know the area. I say "up to now" because we may have to move on from that point.
But what we must first consider is whether the difficulties which are now being experienced by farmers are greater than those of farmers outside the green belt. After listening to the noble Lord, Lord Stanley, in particular, it seems that the problems are widespread and are very much the same whether you are in the green belt or out of it. They are problems of over-production, of changed grant systems and of many other things, about which I am sure I do not need to tell your Lordships, which affect the whole of the farming industry and not just farms in green belts.
The Countryside Commission are not convinced that conditions on green belt activities are more onerous for farmers than for anyone else. They point out that everyone who lives in a green belt, whatever his occupation, is subject to more restrictions than if he lived outside, and I think that is fair comment.
The Town and Country Planning Association point out that farming is the only land use that has enjoyed preferential treatment through all the decades of the existence of the green belt. Farmers do not need planning permission for most purposes, though it is true that if they want to change to factory farming they need planning permission. But I understand that they are entitled to build up to two houses for essential workers, which is a very useful provision, and for which I understand permission is not needed. On the whole, farming throughout the country is less subject to planning restrictions than other industries, so it is not surprising that farmers do not take kindly to refusals when they get them.
But I am advised that many of the applications that are refused would be unacceptable in other situations, as well as in the green belt, on the grounds of public health, noise, poor road access and other potential public nuisance. For example, I was quoted an application by a farmer who wished to build a knacker's yard in the centre of a village. Not unnaturally, the residents of that village resisted it very strongly and that application was lost. So there are some applications that are legitimately turned down under other law and not simply because they are in the green belt.
I offer no comments on the examples given by my noble friend, because I do not know his area in particular. I know, however, that he is a very considerate farmer who has tried to follow the needs of conservation on his own farm, and I suspect has often been financially disadvantaged because of it. I give him full credit for that.
The green belt prohibitions are much the same as those for national parks, and very much of what we are saying tonight could apply to applications made by farmers in national parks. The call to diversify has emphasised the fact that farmers generally are less used to planning controls than the rest of the community. We have learned to live with them; the farmers, of course, have not.
At this point, I must say that it would be too easy to stray into a general discussion on rural conditions, which I do not want to do, in spite of the excellent report which the noble Lord, Lord Sandford, sent me

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earlier today, because I think we should stick as far as we can to the problems of the green belt, as that is what we are here for.
The public attitude to green belts was illustrated in 1983, when the Government attempted to change the conditions of green belts. Your Lordships may remember that there was a circular which proposed relaxations and that it had to be withdrawn because there was widespread opposition to any change in the laws. What is worrying me now is the backdoor approach which seems to be being adopted on green belts.
My noble friend quoted the Minister, William Waldegrave, when he spoke to the Oxford Conference, and the National Farmers' Union also quotes him. I cannot remember whether this was the same sentence, and perhaps your Lordships will allow me to quote it again. He said:
"We must not let Green Belt or wider rural planning policy block the small-scale additional housing, the conversion of redundant farm buildings and the light industrial developments which will be needed."
Looked at from the point of view of a conservationist, or one who protects the green belts, whether or not one calls him or her a conservationist, that is a very dangerous statement in the light of what happened to that earlier circular.
My noble friend also quoted the Secretary of State, who made a rather similar statement, and, if your Lordships will look at Chapter 3 of Lifting the Burden, which has widespread implications for the planning system, I think it will be realised that we need to be very careful that what we are not seeing is a quiet changing of the green belt planning control by a number of small methods, not as direct as the circular which went round and which was challenged. I am sure the Minister will have something to say about that when the time comes.
I am sympathetic to farming problems, but I am determined equally that green belt protection shall not go by default. We need evidence of the extent of the problem. We have had a number of accusations thrown around tonight about planning refusals and difficulties encountered, but we have no evidence other than individual cases. We have no general evidence. I should like to suggest to the Minister that it is well within the capability of, for example, SERPLAN, within their region, to produce a limited study—I am not suggesting a public inquiry or anything enormous that will take a long time—which would give us some facts on which to base our attitudes to what is happening to farmers in the green belt. The SERPLAN area is the one which is most under pressure, and it would be a useful exercise if they would do it. From my consultations with them, I believe that they would. I understand that nothing like it has been done, but there seems no reason why it should not be. Will the Minister consider this suggestion, which is a serious one?
We owe it to the farmers who are responsible for so much of these, admittedly, very important lands—important to very large numbers of the population and much more so than the farms that are out in the truly rural areas. We ought to listen to their complaints and to do what we can to help them. Because of the large amount of land which is involved, the potential for the
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good or ill of farming in the green belt is simply enormous, and we must have a positive policy for it. I do not think it is enough simply to react to discussions such as this and to individual cases. I think that the Government owe it to us to produce some coherent policy for farming in the green belt.
7.59 p.m.
Lord Sandford: My Lords, I must start by humbly apologising to the noble Lord who initiated this debate, and to those who have taken part in it, for not being here when he began. It was pure inadvertence and very rude and I am most apologetic. It leaves me guessing a little at what he said, though this is an issue which I have, of course, encountered quite a few times already, and I have had the benefit of hearing what my noble friend Lord Stanley said which was more or less on par.
I should like to be able to express a note of sympathy for the farmers, but I really cannot bring myself to see that it is merited. I should particularly like to express a very sharp note of criticism to the Ministry of Agriculture, but it is hardly worth doing that when the Front Bench is occupied by my noble friend the Minister of State at the Department of the Environment. So the temper of what I have to say will be more even than it otherwise would have been.
Lord Elton: My Lords, may I ask my noble friend if he will be kind enough to be entirely frank and free in what he says as I enjoy the most excellent relationship with my noble friend the Minister in the Department of Agriculture, who I think ought to be able to consider these matters with me?
Lord Sandford: My Lords, indeed I very much hope he will.
I should like to start, speaking to some extent as the chairman of SERPLAN, about the sanctity of the metropolitan green belt. Of all the planning tools there are, this is the one that has been in place longest, is most clearly understood, and its firmness and solidity is most appreciated. If any of your Lordships, and particularly the farmers, are now nourishing any illusions about that, just have a look at what happened when in one of their deregulatory fits some time ago, and before my noble friend was at the Department of the Environment, a consultation paper was issued suggesting that the metropolitan green belt should be somewhat relaxed. An absolute furore broke out from all over the place, and instantly.
I took the occasion to write in my capacity as chairman of SERPLAN to all the 200 Members of Parliament with constituencies in the metropolitan green belt area. I had not a single dissentient voice to the effect that SERPLAN was being too harsh and unreasonable, was restraining growth and so on and so forth. They got to work on Ministers, and Ministers produced a circular which was more or less the same as the original. I hope that I shall not hear anything from my noble friend which will lead to any doubt about that.
The fact that there is, and has been for years and years, for decades, a really firm green belt around the whole of the London metropolitan area does not mean that things cannot develop. One has only to think of

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the number of roads and railway lines that go through it. It is an area in which sand and gravel are extracted in large quantities from all sorts of sites. While that is going there is a massive impact on the environment. It is a place where several cement works operate because the cement is found in the green belt. That has a massive impact on the environment. It is a place where the raw materials——the sand and gravel—for building thousands of houses a year are found. The extraction of those in the metropolitan area has to be balanced, and is balanced year by year, against the transport of crushed rock from the Mendips or the dredging of sand and gravel from the sea.
The most recent activity in which I have personally been engaged is ensuring that the oil industry, of all things, can explore for and extract oil and gas from the metropolitan green belt, an area stretching from Wytch Farm in the Wareham area of outstanding natural beauty right across all the southern counties of London. When the M.25 is completed there will be a very strong case for using that to revive and develop the economic life of the area east of London, but of course restraining such development to the west.
A great deal of activity far more intrusive than farming is going on in a controlled, regulated and agreed way throughout the area. Of course, there are conflicts from time to time with the builders and with the sand and gravel operators; but these are resolved, studies are done, figures are agreed, land is brought forward at a faster or slower rate and the whole thing goes forward in a proper way.
About 10 years ago it was quite clear that we could not go on with the common agricultural policy as it was. I remember the House of Lords Select Committee which looked into the effect of the access of the Spaniards, the Portuguese and the Greeks. It was quite clear that we were heading for a situation which was quite untenable. One of the things that had to be done was that the farmers had to start to look around and see in what ways they could find an income from something other than producing a food which was already beginning to be in surplus. We have gone on for 10 years since then.
I have to give the Ministry credit for enabling us to have the Strutt Report. A very distinguished person, Sir Nigel Strutt, looked at a number of problems in which the environment and agriculture were related. He made clear recommendations that liaison had to be developed at the national level, at the regional level and at the local level to sort these matters out.
The Ministry of Agriculture did absolutely nothing about it. One of the obvious reactions to that was to increase the staff of ADAS devoted to diversification and particularly the staff expert in that field, known as the socio-economic advisers. The Ministry did nothing about it. If my noble friend can tell me that they have now increased the number of socio-economic advisers from the pathetic figure of six, which it was then and I believe still is now, that would be very good news because they would be able to give farmers some of the advice they need.
Three years later we came to the Wildlife and Countryside Bill. I took it upon myself to introduce in Clause 41 a statutory duty on the Ministry of Agriculture to provide advice for farmers who wished to do
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better in conservation and to diversify. I do not think the Ministry has done anything about it. I have not looked at the relevant Bill which is in the Commons at the moment because we have been busy with the Shops Bill and the Local Government Bill; perhaps now they are doing something but it is far too late. Farmers are now in a desperate situation, with one lot of quotas already in force and. I should have thought inevitably, another lot coming.
Of course, it is natural that farmers should want to diversify, but you cannot expect a farmer to sit down in his farmhouse and think out a pick-your-own scheme, a woodland planting scheme, a school visiting scheme, a cheese processing scheme, or about the use of some of his redundant buildings for workshops, and expect whatever he dreams up first time to be acceptable for planning authority. It is ludicrous to think it can be done like that. You have to start a negotiation and discussion—this was what the Strutt Report was all about—and learn how to work the system. The builders work the system; the sand and gravel operators work the system; the cement manufacturers work the system; the oil companies work the system. The farmers have not taken any significant step towards learning how to do so. They cannot blame the planners if, now that they really want to get into the business, there are some difficulties.
I cannot hold out any hope that there will not be considerable difficulties for some years to come. All this has now to be worked through, and in a hurry. It can be done. Just a few ADAS officers have managed to do it. Just a few NFU county secretaries have managed to do it. Just a few CLA members have done it. But it is not yet part of the general philosophy of farming. This has to be done as a preliminary move. When it has been done I can assure noble Lords who farm that the planners will be as ready to work with them as they are with everybody else.
8.8 p.m.
Lord Northfield: My Lords, I am delighted to speak after the eloquent speech of the noble Lord, Lord Sandford, with much of which I agree, and I shall return in a moment to some of the things he said. First of all, like my noble friend Lord John-Mackie, to whom we are greatly indebted for this debate, I want to declare an interest in that I am involved in a planning appeal for development in the metropolitan green belt. I shall not refer either to that appeal or to its subject, which is housing. I have rather wider principle and consideration to put before your Lordships this evening.
Of course, we are all in favour of the green belt, but have we realised what has actually been happening? The noble Lord, Lord Sandford, touched on this. First, we must remember as regards the metropolitan green belt that between 1955 and 1957 the really big circulars were issued, mainly by the noble Lord, Lord Duncan-Sandys, when he was Minister. These have been the foundation since then of our approach to the green belt. He was saying at that time that a green belt around London of seven miles to 10 miles ought to be sufficient. In fact, we now have a green belt of 12 miles to 15 miles which has crept up in the intervening years. We are all madly supporting it, and I am not against it. However, one has to recognise how all those problems

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have been growing. As the NFU remind us, it is now a matter of one acre in eight of farmland. So we must begin to think more carefully about it.
The consideration that I want to put before your Lordships this evening is this. The problems about the use of the green belt have been catching up on us unawares. They will get worse, as noble Lords who have spoken earlier have said. The time is now very urgent for the Government to give clear guidance on the positive use of green belt land to match the admirable circulars that we have been receiving over the years about actually defining green belt land. We have just gone along assuming that because we have defined it then everything is okay and we need not worry too much; that we now have as sacrosanct that 12 to 15 mile band around London. However, we have never made clear, or received Government guidance about, what should or should not be permitted in that green belt.
I can understand the Government's view in all this, in the sense that they have relied very happily on the increasing sensitivity that there is about the environment in our community, and I am glad to see it. As the noble Lord, Lord Elton, knows, I am beginning to suffer from it even in my new town. I started with thousands of acres of dereliction, have made it very beautiful, and now the townspeople do not want me to touch any of it, even for creating new jobs. I understand the growing sensitivity of people about the environment but other considerations are not important.
The Government can also rely on the fact that we wanted the maximum use of every acre for food output. So long as it was nice green farmland producing agricultural crops, then the Government could sit quietly by and say, "We do not need to define what happened in the green belt. Let it go on being used for farming. That is all we need to say".
We might first look at the difficulties of my noble friend Lord John-Mackie and his farming friends in the light of the traditional objectives of the green belt. Its objectives have been carefully defined in circular after circular under three headings. First, to check further growth of built-up areas—to stop sprawl; secondly, to prevent neighbouring towns from merging into each other; and finally, to preserve the special characteristics of a particular town. Those are hallowed objectives. What my noble friend wants falls happily within them. His farming enterprises would not cause urban sprawl. They would not cause neighbouring towns to merge with each other, and they would not harm the special character of a rural town. Therefore, judged by all the hallowed tablets that we have had over the years, we should be allowing that which my noble friend wants.
On top of that, we had all the circulars, starting with that issued by Michael Heseltine in 1979–80, saying that the Government wanted farm buildings and redundant buildings of all kinds to be brought into use; that such would have their support and that they wanted local planning authorities to take that into account. But have we reckoned up what has been happening since? Noble Lords have touched upon that aspect.
First, there has been a great change in farming prosperity. I was told yesterday that eminent
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agricultural consultants reckon that 14 per cent. of our land will have to go out of production. The noble Lord, Lord Stanley, says more. If we are in that situation then we must look at what happens to some of the Grade III land and other land in the green belt if it is going out of agricultural production—when, as I have said, that has been the reason for saying nothing about that land for all those years by letting it happily continue as farming land and not give alternative uses a fair definition.
Looking at this matter a little further, I wonder whether your Lordships have read the evidence that Dr. Richard Munton gave to the House of Commons Environment Committee. Dr. Munton is probably our best-known academic expert on land use of the kind in question. In his evidence to the committee, he pointed out—and I shall quote it because it bears reading out—that:
"It can be seen from Table 2 that nearly 30 per cent. of all the farmland … on a sample of 185 farms covering over 14,000 ha (and this is land that is returned in the June Agricultural Census as being in agricultural production) is not being maintained in such a way as to ensure its continued full, productive potential. And a further five and a half per cent. … lies derelict or semi-derelict with little or no agricultural value in its present state".
I accept immediately that some of that land, even if it is in the agricultural census, is what is called hope land; bought, and left derelict in the hope of getting planning permission. However, that is not 30 to 35 per cent. of the land in the green belt.
If 30 to 35 per cent. of the land is verging on dereliction and underuse, and another 14 per cent. or more, according to the noble Lord, Lord Stanley, is going out of production as agricultural policy begins to bite even further and reduce the need for British production of food, then we will be faced with the absolute need to start defining positively for what we want that green belt land to be used as an alternative to farming.
I therefore press the Government most strongly to recognise that the time for being passive about the green belt's use has come for an end. The time has come to match the circulars about the objectives of the green belt with a new circular. That cannot be done in a hurry—and I shall return to that point in a moment—but we should begin positively to define what alternatives to farming we must now accept.
The position generally is not quite so bad as my noble friend perhaps made out. Some counties are very progressive about this matter. It is worth looking at the evidence given to the Environment Committee by Cheshire County Council. Cheshire has nearly half its land in green belt, but it said, "This is the policy we are going to follow". It would have accommodated my noble friend. The council say that it is time we all reached more agreement on pursuing such policies on the future of the green belt. The council quotes all the pious statements that have been made by Ministers over the years in trying to back it up. We know of course that they have not had much effect on many other counties.
When I plead for a more positive approach by Government in defining uses for the green belt, I am not alone. Dr. Richard Munton himself, in his evidence, clearly states that:
"It follows that central government must be actively encouraged to promote a new set of clearly-defined priorities for Green Belts that

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goes beyond what is contained in the revised version of the draft circular".
Most of the other evidence to the committee hints at the fact that we have wandered on hoping that it could be left as green farming land and that everything would be all right—but suddenly we are beginning to realise that we must start to define alternative uses.
The noble Lord, Lord Sandford, might argue that all this can be settled through planning appeals. I see the noble Lord nodding his head, but that is a monstrous suggestion. I shall quote to the noble Lord—and I apologise for using one particular expert, but he is a very eminint one—what was said by Dr. Munton about settling these matters by planning appeals. He stated:
"This will represent an ad hoc, responsive and even unaccountable approach to implementing policy based on reacting to developers' attempts to obtain planning permission".
We shall not know the rules, and we shall be continuously spending money. The appeal in which I am engaged—and I am not complaining about it—will cost hundreds of thousands of pounds. We cannot go on like that without some clearly-defined usage that we can all begin to agree upon.
Lord Sandford: My Lords, the very last thing that I would want the noble Lord to attribute to me is the suggestion that a new policy, which may well be needed in some parts of the green belt, should be established by a series of planning applications and appeals. That would be the worst possible way of setting about it. What is needed is a fresh look at a number of policies in discussion, as we already do it with the builders, with the sand and gravel extractors, and with the oil companies. From those discussions a new policy emerges that affects the structure plans and the local plans. But planning applications and ad hoc appeals is the last way of dealing with the matter.
Lord Northfield: My Lords, I am sorry if I attributed that to the noble Lord; I thought that he nodded his head. I understand what he is saying, but I am saying that in order to enforce it on recalcitrant councils—some of them are recalcitrant, and the conservation lobby has become hysterical and is simply in favour of preserving the status quo at all costs—then we need clear guidance from the Government, based on the consensus that the noble Lord says he can extract from consultation. That is what we now need above everything else.
I join with the noble Lord, Lord Sandford, in criticism of the Ministry of Agriculture. One of the tragedies, as we have said—and the noble Lord and I and the noble Lord, Lord Stanley, have debated this issue many times—is that the Ministry of Agriculture is the Ministry responsible for food production; and it has never moved beyond that. The Strutt Report had no effect. Even worse, if I may relate this almost anecdotally, when we had the inquiry into the ownership and occupancy of land, which I chaired on behalf of the Government, one of the facts I discovered was that there is no department within the Ministry of Agriculture which has this responsibility. That is the way that the Ministry of Agriculture has let this matter go on.
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Now, perhaps happily, may I say in conclusion that the responsibility for the environment has passed to the Department of the Environment. They have grabbed it. Good luck to the department! We changed the thinking of Ministers about taking environmental considerations into agricultural policy with the report we prepared in your Lordships' House. I hope that one day we shall also change them on this issue; that we can force the Government to stop sitting on the sidelines about the positive uses of the green belt and work out by consultation a policy which can then become a new circular.
8.21 p.m.
Lord Wise: My Lords, I must apologise for not putting down my name to speak, but I thought that I would not be in the House this evening. However, I want to make only one small plea. It is for farm dwellings within green belt areas.
We know that there are anomalies regarding building in so far as it is permissible to erect certain types of farm buildings without planning permission but there are very strict regulations regarding dwellings—and probably rightly so to a degree. However, I think there is a case for the relaxation of these regulations in some instances. I have in mind one particular case involving a 140-acre grassland farm situated within a green belt area upon which there is no farmhouse. This was sold off independently at the time of the sale of the land and the farm. One cannot blame the vendor because I understand that it made about £250,000—in fact, appreciably more than the land.
The present owner of the farm badly needs to be living on the farm so that he is on the spot to diversify his enterprises in order to retain and, he hopes, improve its viability. He went to see the planning officer of the district concerned for what he hoped would be a helpful preliminary discussion before he submitted his planning application. Alas, in this instance he was told very curtly that he could have his refusal then or after he had applied.
As we know, planning committees take great heed of the advice of their officers and some, as the noble Lord, Lord John-Mackie, said, may be more favourably disposed towards the needs of agriculturists than are others. But I feel there is a need for more direction from the Government on this score. I am sure it would be welcomed by all who have to make the final decisions. It could eliminate many appeals to the Secretary of State, with all the acrimony and expense that these incur.
The amenities of this particular farm to which I refer are greatly enjoyed by the general public. The land is criss-crossed by bridle paths and public footpaths which are used constantly and extensively. That is good, but it is not the means and the livelihood of the farmer. It seems to me iniquitous that he is trying to earn his living from the land but is prevented from living upon it so that he can increase its viability, keep it in good order and enhance its beauty for all who use it, simply because it happens to be situated within a green belt area. I consider that the regulations concerning agricultural dwellings could be made a little easier, and that I should very much like to see.
8.25 p.m.
Lord Elton: My Lords, I am most grateful to the noble Lord, Lord John-Mackie. The green belts are, of course, of very great importance not only to those who farm them but to a great many others besides. I am, therefore, grateful to the noble Lord for an opportunity of looking at a matter of considerable importance both to farmers and to their neighbours in green belt country. It is a matter of interest, I may say, to myself and to my noble colleague on the Front Bench on many occasions, my noble friend Lord Belstead.
The initial purpose of the green belts was, as has been repeatedly said this evening, to check expansion of large built-up areas and to prevent neighbouring towns from merging one with another. That is as valid today as it was when the first Act was passed in 1938 to cover land in and around London. The general policy guidelines we now observe were set out in 1955 by the Minister of Housing and Local Government of the day, who was, as the noble Lord, Lord Northfield, reminded us, the then Duncan Sandys.
However, when we returned to office 24 years later in 1979, less than half the green belt had been fully approved. We made it a priority to get the rest formally approved. We achieved that in just six years. As a result there is, I agree with the noble Lord, a lot of green belt land for farmers to farm. We now have a green belt round Nottingham and Derby of over 200,000 acres. There is an extension around Sheffield and the other South Yorkshire towns of 800,000 acres. The West Midlands green belt covers 650,000 acres and is 40 per cent. larger than it was 10 years ago. The Tyne and Wear green belt has been doubled to 200,000 acres and the green belt around London now extends to 1·2 million acres, which is an area greater than the whole of Hampshire.
The effect of designation as a green belt is to create a general presumption against inappropriate development, and that means taking great care to ensure that, except in very special circumstances, permission is not given for development for anything other than a limited range of purposes appropriate to rural areas—and I shall return to those in a moment. It means defining long-term boundaries to ensure the area's future agricultural, recreational and amenity value. I do not need to tell your Lordships, I am sure, of the very great importance attached by the public at large to this means of preserving rural England from all the ills of urban spread.
The circular on green belts issued by the Department of the Environment in July 1984 reaffirmed our commitment to this long-term protection and gave advice to local authorities on defining their boundaries. The noble Lord, Lord John-Mackie, directs our attention to the problems faced by farmers in these green belt areas who wish to diversify their operations. The Government recognise their difficulties. We do not wish to turn green belts into green museums—to use my honourable friend's metaphor—and there are, of course, many small-scale industrial activities that can be fitted into rural areas, providing much needed employment opportunities. There are also redundant buildings in the green belts which farmers quite understandably feel should not be left to deteriorate or become a financial encumbrance.
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This is particularly true of listed buildings. This issue is important to farmers who may sometimes feel that the planning system gets in their way if their land and buildings lie within a green belt area.
I think I should say that our planning system is a good deal more flexible and accommodating than it is sometimes given credit for. Within green belts, as elsewhere, each planning application has to be decided on its merits. It cannot simply be dealt with on autopilot. Of course, planning authorities must take green belt and other national planning policies as well as all other material considerations fully into account. Those policies, which have been expressed ever since 1955 and most recently in Circular 14/84, have always made room for changes of use of existing buildings to uses appropriate to a rural area. The definition which the noble Lord, Lord Northfield is seeking has existed in a form—which he may regard as satisfactory or not—in Paragraph 5 of Circular 42/55. The noble Lord is nodding his head in a way which suggests that he is familiar with it. That sets the parameters of what is acceptable without there being special reasons for allowing a development of any other sort.
I must also tell the noble Baroness, Lady Nicol, that she is wrong in one of her assumptions. Farmers need consent to put up any dwelling. I think I heard her say that they could erect without permission up to two dwellings, provided that they were for essential workers. It may indeed be easier for them to obtain the permission if they can show that the dwelling is required to house an essential worker for a full-time agricultural unit. But I should also point out that only the smaller farm buildings of 465 square metres or less are exempt from planning controls. The larger buildings require consent as do buildings of any size over 12 metres in height. This of course allows a good many farm buildings to be put up in the green belt without specific application which I am sure that my noble friend Lord Sandford has not failed to note.
My Lords, I have created a jigsaw in my papers which I cannot entirely follow. However, let me continue by saying that planning authorities are perfectly free to grant planning permission for any development in a green belt if they think it is appropriate and compatible with green belt objectives. If this is not reflected in Britain in the same way as it is in Germany, no doubt this is in great part due to the fact that in Germany there is a rather different agricultural tradition. The structure of farming is different there in that the farm unit is smaller on average and there is a much stronger tradition of part-time farming there than in this country—though I recognise that there is such a tradition in this country. Therefore, your Lordships may think that a part-time farmer on a smallholding is in a better position to diversify, and indeed is less dependent upon diversification, than is his English equivalent.
The detailed development control policies applying in the green belts are of course contained in structure and local plans, and even here I have to say that the system is flexible and subject to appeal and modification. I think it is becoming clear that we are looking at an extremely complex system, the complexity of which is not entirely dependent upon Government structures but on the forces which those structures are intended to contain and balance; and the

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force with which the noble Lord, Lord Northfield, and my noble friend Lord Sandford and other noble Lords expressed themselves makes that very clear. There is very nearly a head-on conflict of interest between the need of development on the one hand and the need for conservation on the other.
The resource is finite, the need for development is acute and there is consequently a cash nexus which leads to land becoming exceedingly valuable. The decisions taken on planning are of very great consequence to the people concerned who own the property or who wish to develop it, and there must not simply be a slick administrative bureaucratic machine but a careful quasi-judicial system which places me, for one, in all the difficulties of having things, as it were, sub-judice, because so often cases—and some have been mentioned today—may come before me on behalf of the Secretary of State as the appellate authority.
I do not think that we can do without such a system. Your Lordships are discussing whether it cannot be made more expeditious. The fact is that both shoes pinch; both the farmer's foot and the developer's foot are pinched by the need to balance their interests, but can we do something to stretch the leather so that the feet are more comfortable? Is it the analogy, my Lord—?
Lord Stanley of Alderley: My Lords, would the noble Lord give way for a minute? I see entirely what he means but I wonder whether he would change one word. To my mind—and I think that the noble Lord, Lord Northfield, would agree with me—the conflict is between the developer (if you call me a developer) and not the conservationists but the preservationists. I do not know whether my noble friend will take that suggestion. I think that the noble Lord, Lord Northfield, will take it.
Lord Northfield: My Lords, moreover, the problem is that what we really need in order to keep everyone in a game that they understand are clearer guidelines. We are all asking for that. Then we shall stop making so many appeals.
Lord Elton: When I am allowed, my Lords, to rejoin the game, I shall say that I am entirely content with the sentiments of my noble friend Lord Stanley of Alderley because he is merely using another phrase to describe what my honourable friend William Waldegrave at the Oxford Farming Conference called a green museum.
I accept—and shall say again when I reach it in the prepared text of my speech no doubt—that the survival of a healthy and therefore a beautiful and a preserved—no not a preserved, a conserved—green belt, is dependent on it being economically healthy. I do not know why I am getting into these metaphors. It is difficult to be healthy in a straitjacket, I was going to say. I suppose that is true and I think it is a good simile, but perhaps I had better get back to what I had intended to say all along before I get too florid.
I think I have already made it clear that there is a genuine concern, ably expounded by my noble friend Lord Sandford and felt also throughout the country, to
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preserve our environment and to protect our rural heritage, which we fully share and to which we are fully committed. We recognise the needs of the farmers to diversify in order to counteract the pressures on income from their traditional products, and we also recognise that the natural beauty of the countryside and the green belt depend to a very large extent on the continuing success of farming and farmers. That was the passage I was anticipating.
The noble Lord, Lord John-Mackie, made the point very effectively early in his speech, and I agree with him and the noble Lord, Lord Winstanley, on this matter. I also have to agree that the drop in average farm incomes of 43 per cent. last year was a very severe one. I think that for the record I ought to point out that it came immediately after a year in which there had been an average rise in farm incomes of 35 per cent., so we are actually looking at a fluctuation around a mean which is not disclosed by any of those statistics. It goes to show that the weather still has as much to do with farming as it did in the days when I was farming in Leicestershire.
Lord John-Mackie: My Lords, perhaps the noble Lord will be gracious and give way. If he takes that 35 per cent. and compares it back to 1978 I think that he will find that it was not a very spectacular rise at all. Earlier this evening we had a lot of argument about what date one takes for these things and the noble Lord has taken a date which is germane to his argument; but I could go back a little and spoil it very successfully.
Lord Elton: My Lords, the noble Lord chose 1985 alone. I chose 1984 alone. I cannot see that we have used different rules for this contest at all.
I think I ought to say that farmers do not only get the sympathy which the noble Lord says they should have from the Government, but they also get a great deal of help. Perhaps I may briefly list some of the things which the Government are doing to help them, particularly the smaller farmer whose need for extra income is greatest. I start by saying that we have encouraged local planning authorities to give sympathetic consideration to planning applications for small businesses in rural areas and for conversion or adaptation of redundant farm buildings.
Two circulars issued by my department, Nos. 22/80 and 16/84, set out our position on this subject very clearly and I would point that out to my noble friend Lord Wise, as the background to this discussion. They actively promote the idea of new uses for redundant buildings and a sensitive development, and provide guidelines for local planning authorities. I understand that the noble Lord, Lord Northfield, wanted us to elaborate on this.
Next, we are about to issue both a new circular aimed directly at the planning needs of small firms and a useful booklet giving practical advice on how to cope with planning procedures. Those planning policies are backed up by an appeals system which enables dissatisfied applicants to appeal to the Secretary of State if, for instance, it is felt that those policies have not been given due weight in the local authority's decision. The decisions at these appeals take full I account of those policies.

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As for the practice of some optimistic speculators of buying up and breaking up holdings in the hope that after many fallow years they may yield a bountiful crop of houses, the noble Lord, Lord John-Mackie, will recognise that the very difficulty of getting planning consent in a green belt area is a considerable deterrent to that process, which can, I agree, be as bad for the landscape as it is for agriculture.
Most of us now in the Chamber, I think, are very much aware of the special problems of farmers on the urban fringe, which of course quite a number of green belt farmers necessarily are. For a long time the incomprehension of the "townies" of anything to do with the land was regarded as an immutable handicap. I am grateful to the noble Lord, Lord Winstanley, who spoke of the vandalism and litter that has often been the hallmark of that ignorance, for his recognition of the useful begining that we have made in changing the attitudes of the urban public on the rural fringe by means of the groundwork initiatives.
Seven groundwork trusts have been established as charitable bodies, each serving a small area. Their function is to stimulate efforts both by private individuals and by organisations to improve the environment on the fringes of major conurbations. The Countryside Commission, to which I pay all due and grateful respect, has, it is true, been encouraging local authorities to improve land on the urban fringes for many years. The difference between that and the groundwork approach is that the groundwork approach is to the communities themselves, and they are being encouraged to take a direct interest, and indeed a pride, in their own local countryside. The Secretary of State has provided substantial funds to the commission to support that initiative. Most of the trusts are at present in the North-West of England, but the programme is now steadily expanding to other parts of England and Wales.
The Ministry of Agriculture also offers a full range of practical advice on alternative sources of income through ADAS. It uses both its regional socio-economic advisers and its special interest advisers in local offices. I should tell my noble friend Lord Sandford that the six regional socio-economic advisers—I believe that he said six and I think that he is right—are between them backed up by about 70 special interest advisers in local offices, and they provide a full range of practical advice on alternative sources of income and a valuable link with other organisations prepared to offer further help.
ADAS also collaborates with other organisations to encourage diversification—for example, through the establishment of farm holding bureaux in association with the English Tourist Board—and it is involved in the setting up of rural development programmes with the Development Commission. The agriculture improvement scheme provides capital for investment for a wide range of items including new buildings, fencing, drainage schemes, electricity supply and so on. There are qualifying requirements to receive aid from the scheme, but there is no reason why farmers in green belts should not be eligible just like anybody else.
I have already mentioned the groundwork schemes. The only other thing that I would say in rising to my
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noble friend's bait on this issue is that the reason that farmers have not come forward to work the system (I think that was the term that he used) in the way that people in some other industries have is that farming is very different and farmers are very different from industrialists. The majority of farmers are in a much smaller way of business and do not have smoke-filled boardrooms in which to take a close look at the machinery and how it can be exploited. That is why we think they need help.
Lord Sandford: My Lords, I do not think I want my noble friend to get away with that. I cannot think of any industry that is better served at the national level than farming by the CLA and the NFU. If there was the drive from the department to make a move in that direction, there are heaps of people who should be ready to respond.
Lord Elton: My Lords, I take the careful note of my noble friend's remarks which I always take, and which I take especially when they are friendly in their intentions. As I say, I shall pass to my noble friend in the other department the views that have been expressed; in fact, I shall pass him the whole of Hansard.
ADAS is, as your Lordships know, the farmer's own advice service and has a specific remit to promote farm diversification. But it can and does call on other agencies to help and advise on specialist developments through a number of organisations, including the English Tourist Board.
I ought also to mention the close co-operation which exists between ADAS and COSIRA. COSIRA is an agency of the Development Commission and sponsored by my department. It advises on all aspects of small business development in rural areas. Working with ADAS can be especially helpful to farmers who want to move away from the more traditional forms of agriculture, particularly as it also adminsters a grant scheme to encourage the conversion of redundant rural buildings to industrial and commercial use. I understand that farmers are taking good advantage of the grants that the scheme makes available. It appears that the publicity has not yet reached my noble friend, but I am beginning to detect the flavour of the letter that he will doubtless get from my other noble friend in due course.
The recently introduced agriculture improvement scheme is not aimed specifically at green belt areas, but it provides capital investment grants for a wide range of projects including buildings, field drainage and fencing. Farmers in the green belts are equally entitled to that. The eligibility conditions are easier to meet in the case of proposals most beneficial to the environment, such as hedges, stone walls and waste disposal equipment, and the grant rates on those items are the highest under the scheme. It incorporates now 25 per cent. grants for tourism and craft projects in designated less favoured areas.
I am nearing my end. Your Lordships will, I think, allow me a little injury time, so I shall not be too ruthless in my editing. The items eligible under this scheme include conversion of farm buildings for tourist accommodation, including holiday lets, and for craft production, laying on a range of necessary

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services to those buildings (I am reading this note very badly), provision or improvement of caravan and camping facilities on farms and provision of certain facilities for recreational projects. Through this programme the Government are providing money and resources where they are most needed. All of this is, I have to remind the noble Lord, Lord John-Mackie, against the background of an increase in public expenditure in the United Kingdom on agriculture this year of £500 million or a total of £2·2 billion. I hope that that will go some way to help the difficulties of all farmers.
But I must return to the noble Lord's specific concern which is for the difficulties that farmers in the green belt face in diversifying their activities. I am most grateful to the noble Lord, Lord Winstanley, as well as to my noble friend Lord Sandford for their wholehearted recognition that planning controls are vital to the preservation of the open and rural character of the green belts. I, like they, must accept that they have to be applied with good sense. I stress that the remarks of my honourable friend William Waldegrave at the Oxford Farming Conference reflect, of course, our approach to the use of redundant buildings and small-scale development within existing settlements in the green belt. I do not think that anything that my honourable friend said can be represented, as the noble Baroness, Lady Nicol, sought to represent it, as a threat. The provision is intended to enable farmers to do what my noble friend Lord Sandford said with great vigour and force they ought to have started doing long ago.
My noble friend Lord Belstead would have made a more satisfactory and expansive answer to the points made in particular by my noble friend Lord Sandford and by the noble Lord, Lord Northfield. I shall nonetheless draw their concern to his attention, as I apologise to him for perhaps doing insufficient to put the undoubted good work of his department in the best light to your Lordships.
I conclude by saying that our policy offers considerable scope for a flexible approach by local planning authorities. It is perfectly possible within the necessary constraints of green belt policy to accommodate small business in appropriate circumstances. We have indicated a proper sense of priorities to planning authorities. The appeal system exists precisely for putting things right where they seem to have gone wrong. Noble Lords and the friends of the noble Lord, Lord John-Mackie, ought not to need that recourse too often, but it is there when they do.
House adjourned at ten minutes before nine o'clock.

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