Sitting of 7 July 1986

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

PRIVATE BUSINESS
CLIFTON SUSPENSION BRIDGE BILL [Lords]
Read the Third time, and passed, without amendment.
LONDON DOCKLANDS RAILWAY (CITY EXTENSION) BILL
As amended, considered; to be read the Third time.

Oral Answers to Questions
  ENERGY

    Oil Exploration (Merseyside)
    Mr. Wareingasked the Secretary of State for Energy if he will make a statement on the present position in respect of onshore oil exploration in the Merseyside area.
    The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): In the recent onshore licensing round I awarded four new petroleum exploration licences in the Merseyside area. These are in addition to the three exploration and three production licences already in existence.
    Mr. Wareing: Can the Minister tell me the names of the constituencies in which these licences have been granted?
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    Are they progressing well in terms of permissions from the landowners, occupiers and local authorities? Is he able to say when employment possibilities are likely to arise on Merseyside as a result of these developments?
    Mr. Buchanan-Smith: The whole of the Merseyside area is covered by the existing and new licences. If the hon. Gentleman would like further information I shall be happy to provide it. I understand that exploration work is proceeding, but unless some discovery is made one cannot tell what activity may flow from the exploration.
    Mr. Patrick McNair-Wilson: As further developments in Merseyside or elsewhere are likely to be affected by the continuing fall in oil prices, is my right hon. Friend aware that the industry is becoming increasingly anxious about the tax regime and especially about the ring fencing of oilfields? Has he had discussions with the Chancellor of the Exchequer about this urgent matter to ensure that further inducements exist for continued exploration and development?
    Mr. Buchanan-Smith: I am certainly aware of the problems of the falling oil price. There is no evidence that any existing activity or any developments recently approved or developments at an advanced stage of consideration by my Department have been inhibited by the current tax regime. If activity is hindered, 1 assure my hon. Friend that I and my right hon. Friend the Chancellor will look carefully at it.

    Coal Imports
    Mr. Lofthouseasked the Secretary of State for Energy what are the latest available figures of imports of coal into the United Kingdom and from what sources.
    Mr. Evansasked the Secretary of State for Energy if he will list the countries from which the United Kingdom imports coal; and what proportion of United Kingdom enegy needs are met by coal imports.
    The Secretary of State for Energy (Mr. Peter Walker): The latest available figures for imports of coal into the United Kingdom cover the period January to April 1986.

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    I shall publish the information in the Official Report. On a primary fuel input basis, 4 per cent. of United Kingdom energy needs were met by coal imports in 1985.
    Mr. Lofthouse: Now that the Foreign Secretary is not going to South Africa, does the Secretary of State think that a good response from him would be to ban all imports of this blooded coal? Does he appreciate that the continued import of coal is a kick in the teeth for the mining communities and the miners? The Secretary of State is aware that there is to be a rundown of miners' jobs. Will he assure the House that any miners made redundant after March 1987 will under a new scheme receive benefits equivalent to those that they receive now?
    Mr. Peter Walker: As the hon. Gentleman knows, the European leaders have agreed upon an approach to South Africa which after three months would include action on a number of materials, including coal. That is the right approach and I hope that it will have some influence on negotiations in the coming months. The hon. Gentleman asked about benefits for miners. The present scheme ends in March 1987, and if further redundancies are required it will be the responsibility of the Coal Board to decide what measures are needed.
    Mr. Evans: Will the Secretary of State explain to the British people why, when we have massive coal reserves and over 4 million people unemployed, we need to import coal, especially from countries with regimes like that in Poland, which has no free trade union movement, or South Africa, which has no freedom? Surely this is one case where sanctions against South Africa would be of benefit to Britain and Britain's work force?
    Mr. Walker: I understand the hon. Gentleman's point of view. Figures that I shall publish in the Official Report will show that in the past six months Britain imported far more coal from Poland than from South Africa. However, during the period of the last Labour Government pits were being closed and unemployment increased, and imports from South Africa and Poland continued throughout the whole of that period.
    Sir Trevor Skeet: Is my right hon. Friend aware that a recently negotiated agreement between the Central Electricity Generating Board and the National Coal Board makes little provision for imports, the result of which is likely to be that the public will be deprived of the opportunity of cheap coal from countries other than South Africa, which would be greatly to their advantage?
    Mr. Walker: On the other hand, the CEGB wants continuity of supply and our coal industry to continue to provide the volume of coal that is necessary to meet electricity demand. It is perfectly reasonable therefore for it to enter into long-term contracts to ensure that that supply continues to be available.
    Mr. Neil Hamilton: Does my right hon. Friend agree that were it not for the activities of the private sector in coal production, imports would be higher than they are? Given that the private sector is anxious to expand its operations, does it not make sense to strike off the restrictive shackles that have been placed upon it so that it can expand its output and thereby cut our import bill still further?
    Mr. Walker: If we look at the totality of coal production, we must recognise that under the present
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    system of nationalisation there is a very substantial coal industry in which this Government have invested heavily. It is providing very substantial yields of coal, with much better productivity figures. No Government can ignore those factors.
    Mr. Mason: Is the Secretary of State aware that for every 1 million tonnes of coal imported 1,000 jobs are lost in the British coal industry and in supporting industries? Over 12 million tonnes of coal were imported last year, which means that 12,000 British jobs have been lost. Where does the Secretary of State's interest really lie? Does it lie with South Africa and those countries which export cheap coal to Britain, or does it lie with the British miner and the British coal industry? In view of continuing low-cost oil imports, 20,000 more jobs in the British coal industry are threatened. That is another reason why all coal imports should cease.
    Mr. Walker: If the right hon. Gentleman really believes that last year's figures were so important for unemployment, I should point out to him that the reason for the enormous rise in imports was the disastrous strike led by Arthur Scargill, supported by the Labour party. The reason for the rise in unemployment is completely, in my view, to be laid at the feet of Arthur Scargill and nobody else. As for imports, the right hon. Gentleman also knows, as a former Cabinet Minister, that every Government of which he was a member closed pits and also imported coal.
    Mr. Redmond: On redundancy payments, is the right hon. Gentleman saying that this Government will make finance available to the Coal Board if it wishes to continue to make the same kinds of payments?
    Mr. Walker: We shall discuss, as would any Government, the financial requirements of the Coal Board in the years that lie ahead and the public expenditure that it requires. Because of his great interest in the coal industry, the hon. Gentleman knows that the scheme that has been operated by the Government was a temporary scheme, and it was announced that it was a temporary scheme to bring about the considerable transition in the coal industry that was necessary. When that major transition ends, it is perfectly reasonable that that responsibility should be returned to the Coal Board.
    Mr. O'Brien: Is the right hon. Gentleman aware that the European Commission that is concerned with coal believes that imports into member states are necessary? If so, what will be the influence of the EEC's policy on the size and output of the British coal industry?
    Mr. Walker: Imports over the past six months were about 4 per cent. of our coal requirements, and some of those imports were of specialist coals, some of which are not available here. Had we not had the disastrous strike, there would not have been such a rise in imports. I hope that now, if there is stability in the industry, we can reduce imports.
    Mr. Orme: Is the Secretary of State aware that last week I met the president and general secretary of the South African National Union of Mineworkers, who impressed two points on me? The first was about the imprisonment and internment of trade unionists in South Africa, including members of the South African NUM. The second was their desire to see the imports of South African

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    coal into Britain stopped. I note what the Secretary of State said about consideration by the EEC. That is insufficient.
    Mr. Walker: I remind the right hon. Gentleman that during the whole period that he was a Minister, the regime in South Africa was just as intolerant to the position of the blacks, and imports from South Africa came in every year.
    Following is the information:

    Coal Imports January-April 1986

    (thousand tonnes)

    Country

    Coal Imports

    Australia

    1,361

    United States

    1,139

    Poland

    493

    South Africa

    196

    F R Germany

    184

    Canada

    143

    Netherlands

    115

    Belgium

    47

    Columbia

    35

    Others

    65

    Total

    3,781

    (Figures may not add to total because of rounding.)

    Energy Efficiency
    Mr. Andy Stewartasked the Secretary of State for Energy what is his estimate of energy efficiency savings so far achieved by Government Departments; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): All Government Departments have been made aware of the need to establish and implement effective energy management practices during Energy Efficiency Year.
    Mr. Stewart: I recognise the valuable work that my hon. Friend has done during Energy Efficiency Year, but is there not still a shocking waste of energy in Government Departments and offices, particularly here in the offices in the Palace of Westminster?
    Mr. Hardy: Hot air.
    Mr. Stewart: Will my hon. Friend give me an assurance that he, as the Minister, will set an example for the rest of industry to follow?
    Mr. Hunt: My Department's energy manager has already cut the consumption of electricity under his control by about 10 per cent. My hon. Friend is right to emphasise the considerable savings that can still he made. As to the Palace of Westminster, I hope that the hon. Member who shouted "Hot air" will realise that I am not an expert in these matters. I understand that there is a great deal of surplus heat in the Palace of Westminster and I know that the Accommodation and Administration Sub-Committee would greatly welcome any practical suggestions as to how best it could usefully be re-cycled.
    Mr. Rowlands: In addition to savings in Government Departments, does the hon. Gentleman recall the Public Accounts Committee report, which said that huge savings could be made in the National Health Service which could be used for better patient care? How much progress has been made towards the targets that the PAC said should be set?
    Mr. Hunt: The hon. Gentleman has made a good point. He will be aware that I and my hon. Friend iat the Department of Health and Social Security launched a major initiative with all the regional health authorities, and he will be aware of the publication of the Encode, which has gone to all managers in the Health Service. I hope that we shall soon see those ambitious but, nevertheless, necessary targets being met.
    Mr. Rost: Is my hon. Friend aware that the enormous savings in the Health Service, Defence Department and all other parts of the public sector will not be achieved until he persuades the Treasury to remove the stupid restriction that prevents private enterprise third party financed energy management companies from offering services to the public sector without it being added to the public sector borrowing requirement, even if the investment is financed from outside by the private sector?
    Mr. Hunt: I shall convey my hon. Friend's views to my right hon. Friend the Chancellor of the Exchequer.

    Coal Industry
    Mr. Leighasked the Secretary of State for Energy what are the latest productivity figures for British Coal; and if he will make a statement.
    Mr. Gerald Howarthasked the Secretary or State for Energy how the latest productivity figures for the coal industry compare with those in 1978–79; and if he will make a statement.
    Mr. Peter Walker: British Coal's average deep-mined revenue productivity for the week ending 21 June was 3·25 tonnes, the highest weekly figure achieved so far. This compares with an average of 2·24 tonnes during the financial year 1978–79. This further growth in productivity reflects a continuing effort by all concerned to reduce costs, which provides the industry with its only sure route to a viable future.
    Mr. Leigh: Will my right hon. Friend congratulate the management and work force of British Coal on achieving the best productivity figures ever? In view of the progress being made by the industry towards achieving improvements in productivity, would it not be madness for Arthur Scargill to attempt to foment further industrial action? Does my hon. Friend agree that it would be the action of a madman, such as Arthur Scargill has proved himself to be, to put so callously and pointlessly at risk the future of the industry and its work force?
    Mr. Walker: Alas, it is not the actions of Mr. Scargill that concern me, but just his words. Every time he makes one of those speeches, a number of industrialists who are contemplating converting to coal decide that while such speeches are being made they cannot take the risk. That is doing real damage to the industry.
    Mr. Howarth: May I add my congratulations to the management of British Coal to those of my right hon. Friend? May I invite my right hon. Friend also to congratulate the western area of British Coal, which has achieved record productivity of 3·49 million tonnes per man shift, which is 9 per cent. up on the record of the preceding month? Does my right hon. Friend agree that if such progress continues throughout British Coal we shall see it breaking even by 31 March 1988?
    Mr. Walker: Yes, Sir. I should like to see that target achieved. British Coal has the added problem of lower oil prices and the competition which has resulted from that, which means that it will achieve somewhat lower revenue than it anticipated. Certainly the improvements in productivity at last show after all these years some return on the enormous investment by British taxpayers in the industry.
    Mr. Hardy: In response to those impressive figures, will the Secretary of State ensure that the importation of coal from dumping countries is deterred in Europe and prevented in Britain? Also, in response to that performance within the industry, will he advise the NCB to extricate itself immediately from its international arrangements which involve the promotion of and trading in South African coal?
    Mr. Walker: The action on South African coal has been agreed by the European Community, and we must see the effect of that in the negotitations that will take place in the coming months. One of the great factors of the improved productivity is that it will genuinely eradicate the potentality of coal imports.
    Mr. Douglas: Will the Secretary of State reflect on the productivity of the Castlehill mine in my constituency which is in existence only because two men who have been victimised by the NCB stayed underground to save the mine? Without them the high productivity there would not exist. Further, will he reflect on the deal between the South of Scotland Electricity Board and British Coal which was concluded last week and which reduced the coalburn to 3·6 million tonnes a year at a time when the SSEB is having a high oilburn and is promoting a high nuclear content in its operations?
    Mr. Walker: It is a matter for negotiation. As the hon. Gentleman will know, the obligation placed on the electricity industry by a statue introduced by a Labour Government for the nationalisation of electricity makes it clear that the boards must provide the cheapest possible electricity.
    Mr. Portillo: Is my right hon. Friend not also impressed by the productivity in the private sector mines, although they must pay royalties to the NCB on their production? Has the time not come to review the procedures for licensing private sector coal mines to put them on the same footing as the NCB?
    Mr. Walker: No, Sir. If the NCB is put on the same footing, which would mean that for each highly productive pit it could charge one price and for the others it could charge a higher price, that would be absurd. Obviously the licensing system is constantly reviewed, but at present it is working satisfactorily.
    Mr. Rogers: Will the Secretary of State join me in congratulating the miners of the south Wales coalfield on achieving all the productivity targets set for them during the past year as a result of their having, for the first time, their proper share of capital investment, especially in heavy duty face support development? In doing so, will he ask the director of the NCB in south Wales to stop moving the goal posts in setting targets over and above and beyond what they are at present achieving, which will result in even more closures, as the Secretary of State well knows?
    Mr. Walker: I welcome the substantial improvement in productivity in south Wales. The problem for the NCB
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    management is that, without its desiring it, the goal posts move because a sudden massive drop in the price of its major competitor affects it.
    Mrs. Currie: Does my right hon. Friend agree that it is important to maintain these good productivity figures into the future? Is he yet able to make a statement about the proposed development at the Cadley Hill colliery in my constituency, which my hon. Friend the Parliamentary Under-Secretary of State visited on 20 June which, if agreed, will enable me to go on representing in the House efficient coal miners into the next century?
    Mr. Walker: I know how much my hon. Friend the Parliamentary Under-Secretary of State enjoyed his visit to that coal mine, but obviously, as my hon. Friend the Member for Derbyshire, South (Mrs. Currie) knows, decisions on these matters are for the NCB.
    Mr. Eadie: Yes, the miners deserve congratulations on their increased productivity, but is the right hon. Gentleman aware that a crisis of confidence is emerging in the mining industry? He will be aware that on Saturday the Fraser of Allender institute said that 4,000 mining jobs in Scotland would go west, with a total of 8,000 as a consequence. Does the right hon. Gentleman not realise that such stories will affect productivity and that the message in the mining industry will be that the harder one works the more pit closures and redundancies there will be?
    Mr. Walker: In giving his congratulations, and with his considerable knowledge of this industry, the hon. Gentleman should reflect that under "Plan for Coal" money was poured in for 10 years but productivity agreements were never implemented. Instead of achieving 4 per cent. productivity per annum outlined in "Plan for Coal", 4 per cent. was achieved over 10 years. Thank heavens, for the future of that industry, at long last improved productivity is taking place.

    Energy Efficiency Year
    Mr. Spencerasked the Secretary of State for Energy if he will make a statement on the progress so far of Energy Efficiency Year.
    Mr. David Hunt: Energy Efficiency Year continues to make a strong impact. The "Monergy" logo, and the slogan "Get More for Your Monergy" are well established, and over 800 "Monergy" events have already take place. To reinforce the strong tide of interest, we shall be running a major autumn campaign of television and press advertising to coincide with the start of the heating season.
    Mr. Spencer: Does my hon. Friend agree that in Energy Efficiency Year it would be a great breakthrough if he were able to accept the proposals of the combined heat and power consortium in Leicester?
    Mr. Hunt: I am very grateful to my hon. and learned Friend for his constant lobbying and support for the consortium. Aware of the significance of this subject, I await with interest the consortium's report, which I understand is likely to be the first of the lead city consortia to complete work.
    Mr. Evans: Will the Minister acknowledge that the prospects for Energy Efficiency Year would be greatly

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    improved if local authorities had more finance available for loft insulating grants? Is he aware, for instance, that the St. Helen's authority is already informing its citizens that it can accept no more applications for such grants because it has no money left?
    Mr. Hunt: I am very surprised to hear that, and I shall follow up that case immediately. As the hon. Gentleman will be aware, the history of the homes insulation scheme is, sadly, one of underspend. Indeed, the arrangements made by the Department of the Environment this year were primarily laid down to ensure that no local authority would run out of money. I shall, of course, investigate the point that he has made.
    Mr. Speller: Does my hon. Friend not agree that for commerce and industry, Energy Efficiency Year is, frankly, the flattest of flat pancakes?
    Mr. Hunt: The targets and the potential for industry and commerce are so enormous that any assessment of progress so far must of necessity be something of an anticlimax. But we have already been able to identify the fact that industry and commerce have been able to make savings of £500 million as a result of my Department's programmes.

    Electricity (Privatisation)
    Mr. Deakinsasked the Secretary of State for Energy whether his Department has had any discussions on the privatisation of the electricity industry.
    The Parliamentary Under-Secretary of State for Energy (Mr. Alastair Goodlad): There have been no recent discussions on this subject. The Government have no present plans to privatise the electricity supply industry,.
    Mr. Deakins: Will the Minister confirm that the Government have no objection in principle to privatising the electricity supply industry, which has the largest holding of state assets in western Europe? Will he also confirm that the Government will seek to ensure that this is a manifesto commitment for the next general election?
    Mr. Goodlad: I cannot give the hon. Gentleman that undertaking.
    Mr. Proctor: Will my hon. Friend take steps to privatise the electricity industry as soon as possible, in view of the fact that it is not sensible to have the gas industry in private ownership and the electricity industry in public ownership because of the unfairness of that situation to the electricity industry?
    Mr. Goodlad: I note my hon. Friend's view, but as I said earlier, the Government have no present plans to privatise the electricity supply industry.
    Mr. Bruce: The House might welcome that, but it is a less than complete assurance. Will the Minister acknowledge that there would be great anxiety about the privatisation of the electricity industry, as that would involve the privatisation of nuclear power, which he may have something to say about later? Will he also acknowledge that there is a great desire to decentralise electricity in the public sector, and will he undertake to give more discretion to regional boards and less control to the Central Electricity Generating Board?
    Mr. Goodlad: The Government have already encouraged a more open market in electricity supply by
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    removing the legislative and institutional constraints on private generation and establishing a framework for fair dealing between private generators and electricity boards.

    British Gas
    Mr. Greenwayasked the Secretary of State for Energy if he will make a statement about the terms on which he expects shares in British Gas to be made available to the corporation's customers.
    Mr. Peter Walker: As I announced on 18 June, we shall be making special arrangements for gas consumers and other small investors to purchase shares in British Gas. Domestic gas consumers who register their interest in advance will be guaranteed to receive a certain number of shares when they apply. Full details will be announced before the sale.
    Mr. Greenway: Will my right hon. Friend confirm that upwards of 16 million households will be entitled to buy shares in British Gas under the privatisation proposals? Will he take steps to ensure that those shares are not confiscated by a possible future Labour Government, as the Labour party proposes to confiscate the shares of the 1·5 million shareholders in British Telecom by nationalisation under another name?
    Mr. Walker: The 16 million customers of British Gas will, for the first time, have direct participation in the industry of which they are customers. As for the Labour party's plans, I must confess that I am torn between deploring the morality of the proposals and being delighted at the political advantage that they will give to the Conservative party.
    Mr. Wrigglesworth: When does the Secretary of State expect British Gas to come on to the market?
    Mr. Walker: This autumn.
    Mr. Portillo: Does my right hon. Friend recognise that the privatisation of British Gas offers a remarkable opportunity to extend share ownership to the many millions of British Gas customers? Does he agree that it will be more successful than the privatisation of British Telecom? Will he ensure that the terms sufficiently reflect those interesting possibilities?
    Mr. Walker: I am delighted at the possibility of large numbers of customers, employees, small invest ors and pension schemes having direct participation in the industry. I look forward to successful privatisation taking place this autumn.
    Mr. Orme: Is the Secretary of State aware that his noble Friend has created some confusion over the proposed sale of the shares? Will he clear that up for the House? May we now have the details of how the shares will be launched, the number and at what time they will be made available to the public?
    Mr. Walker: On the latter point, I should have thought that the right hon. Gentleman would declare his personal interest in the matter. We will let him have the details, and I will send him a special form as soon as possible. As for the House of Lords, my noble Friend is coducting matters with immense care. I do not think that there is any misunderstanding.

    Gas Prices
    Mr. Hannamasked the Secretary of State for Energy when he next expects to have a meeting with the chairman of British Gas to discuss gas prices.
    Mr. Buchanan-Smith: Prices are a matter for the commercial judgment of the British Gas Corporation.
    Mr. Hannam: With regard to industrial gas prices, when my right hon. Friend meets the chairman of British Gas, will he discuss different gas prices for consumers on interruptible contracts, who receive good, competitive price charging, compared with those on long-term firm contracts for gas supply, whose contracts are still subject to price increases far out of touch with the present energy position?
    Mr. Buchanan-Smith: My hon. Friend is right. There has been a considerable drop in the price of interruptible gas. The price for the supply of firm gas by contract is a matter for each contract commercially negotiated by British Gas. I understand that some planned increases have been cancelled and in some cases there have been reductions.
    Mr. Rogers: When the Minister meets the chairman of British Gas to discuss prices, will he ask him how they will be affected by the flotation of British Gas shares, especially as most will go to foreign investors and British Gas customers will own a very small percentage of the shares that will be sold?
    Mr. Buchanan-Smith: The hon. Gentleman knows that privatisation of itself has no effect on the price of gas. As for the availability of shares, I simply ask him to await the details. A real opportunity will be given to many millions of people—who recently, for the first time, and under a Conservative Government, have enjoyed having shares in industry—as a result of this exciting and enterprising flotation.
    Mr. Peter Bruinvels: Is my right hon. Friend aware of the sterling work carried out by energy cost analysis companies, which have negotiated very reasonable prices for gas all over the country? Does he agree that there is now an opportunity to promote some of these private arrangements so that other major companies can benefit from a tariff analysis which is fair to them?
    Mr. Buchanan-Smith: For interruptible gas, many companies already enjoy very favourable tariffs from British Gas. I note what my hon. Friend said about the opportunities provided by consultancies and others. No doubt they will make their services available to those who find them useful.
    Mr. Rowlands: As the Government plan to raid British Gas accounts to the tune of £2·5 billion on privatisation, to collect nearly £500 million in the gas levy and still leave British Gas with a large profit, instead of trying to benefit some gas consumers with some shares, why not benefit all gas consumers by reducing gas prices?
    Mr. Buchanan-Smith: We are trying to give the British public, for the first time, a genuine share in the ownership of one of our greatest industries. Many people outside now realise how the hon. Gentleman and the Labour party would deny them an opportunity of which I know many people will avail themselves.

    British Gas
    Mr. Sackvilleasked the Secretary of State for Energy when he last met the chairman of the British Gas Corporation to discuss the terms of the privatisation of the corporation.
    Mr. Peter Walker: I regularly meet the chairman of the British Gas Corporation.
    Mr. Sackville: Does my right hon. Friend agree about the importance of reaching a good and effective code of practice for the elderly and disabled?
    Mr. Walker: Yes, Sir, and that will be done.
    Mr. Douglas: When the Secretary of State meets the chairman, will he be kind enough to explain to him why it is wrong for the Gas Corporation to have drilling and exploration activities when it is in the public sector and right for it to have drilling and exploration activities when it is in the private sector.
    Mr. Walker: There is no need to explain it. He is delighted about going into the private sector, for that reason.
    Sir Dudley Smith: When my right hon. Friend sees the chairman, will he tell him that a fair minority of my constituents look forward to privatisation and even now would be prepared to pay the going rate for gas if only they could get connected to it? Is he aware that they are increasingly irritated by the splendid television advertising of the virtues of gas? Is it not a scandal that they are asked to pay prohibitive connection charges?
    Mr. Walker: The problem with connection is that the cost of linking places to gas, especially in rural areas such as my hon. Friend represents, has been difficult. Under the process of nationalisation, there has been a clear basis according to which British Gas has had a statutory duty to connect potential consumers. That basis will continue unchanged after privatisation. The difference is that, after privatisation, if other groups wish to take on areas which British Gas has not taken on, they will be free to do so.
    Mr. Bruce: When the right hon. Gentleman meets the chairman of British Gas, will he explain that, although British Gas has got away lightly in the Gas Bill in terms of the lack of effective regulatory control, if it abuses its monopoly in the private sector, a future Government, which might be a Conservative Government, will have no hesitation in imposing stronger regulators?
    Mr. Walker: In view of the policies and differences in the alliance at the moment, I do not imagine that the hon. Gentleman will have any influence on any future Government.

    Nuclear Installations Inspectorate
    Mr. Hardyasked the Secretary of State for Energy if he remains satisfied that the Nuclear Installations Inspectorate has the staff and the resources to fulfil the responsibilities in respect of which it reports to him to appropriate standards of competence and expedition.
    Mr. Goodlad: The Nuclear Installations Inspectorate is able to meet its essential commitments. The Health and Safety Executive is now seeking to recruit over 20 per cent. more well qualified inspectors to deal with further work.
    Mr. Hardy: Is the Under-Secretary of State aware that I recall his categorical and emphatic response to a question

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    that I asked on 14 April, when he assured me that there were no deficiencies in the staffing and resources of the inspectorate? Does he accept that that answer was an extremely grave example of misleading the House on a matter of great importance? Can we be absolutely sure that the Government's responses to our questions will be accurate in future, especially when we are dealing with a matter of such importance and concern?
    Mr. Goodlad: There were and are no deficiencies in the Nuclear Installations Inspectorate. As the hon. Gentleman knows, matters about the strength and recruitment of nuclear inspectors are for my right hon. and learned Friend the Paymaster General. As I said to the House, the Health and Safety Excutive is to start a recruitment exercise this month to recruit up to a maximum of 20 more inspectors. In addition, discussions on the pay of nuclear inspectors are going forward.
    Mr. Richard Page: I thank my hon. Friend for that encouraging reply. Is it not true that the supply of energy has a price? Every year in the coal mining industry tens of people are killed, 400 are injured and thousands suffer from lung-related diseases, and in addition we have problems with acid rain. Of course, that is an improved safety record compared with a few years ago. Therefore, would my hon. Friend like to compare that with the safety record of our nuclear industry? Would we not need a Chernobyl incident every three or four years if we were trying to match the safety record of the coal industry?
    Mr. Goodlad: My hon. Friend is right. The safety record of the nuclear industry compares favourably with other forms of electricity generation.

  THE ARTS

    Merseyside
    Mr. Wareingasked the Minister for the Arts what recent discussions he has had with the Arts Council about funding of the arts on Merseyside; and if he will make a statement.
    The Minister for the Arts (Mr. Richard Luce): I have discussed the Merseyside situation with the chairman of the Arts Council, and my officials have been in constant touch with officers of the Arts Council and the Merseyside Arts Association. I am very pleased that a satisfactory settlement has been reached, which secures the future of all the major arts organisations on Merseyside.
    Mr. Wareing: Bearing in mind that it took eight months of intense negotiation to reach a settlement for the performing arts, I do not think that the people on Merseyside can be as glad about the situation as the Minister's answer suggests that he is. Is he resisting the attempts of the Treasury to cut the Arts Council's budget? Does he realise that not only the voluntary sector on Merseyside will be at stake, but that institutions such as the Philharmonic Hall could still be threatened with closure next year if the budget is cut and the Government's contribution is any less than it was this year?
    Mr. Luce: The people who live on Merseyside have every reason to be pleased that there is now a conclusion to the long negotiations. I am glad that the Arts Council, which contributed over £1 million, and the local authorities are playing a positive part in that settlement.
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    It is the last of the areas to reach a settlement. I believe that there is a positive long-term future for all the major arts bodies on Merseyside.
    Mr. Ottaway: When my right hon. Friend was considering Arts Council funding for Merseyside, was he aware of the large sums being made by Sir Peter Hall and Trevor Nunn, which could well be used on Merseyside and in the east midlands?
    Mr. Luce: I note what my hon. Friend has said. As I have already made plain, as has the chairman of the Arts Council, the question of the guidelines for the terms and conditions of directors of organisations, such as the National theatre and the Royal Shakespeare company, have been referred to the Cork inquiry, which is looking into the future of subsidised theatre.
    Mr. Alton: I thank the Minister for the personal help he has given this year in securing funding for many of the arts institutions on Merseyside. Has he had a chance to consider the representations made to him about the "Act Now" venture, which he saw earlier this summer, and will he be able to provide any funding for that in the future? Will he also comment on business sponsorship for the arts on Merseyside and how successful that can be?
    Mr. Luce: I have already had a meeting with representatives of those who have been behind the "Act Now" venture, and I have great admiration for the work that they have done. I am considering the points that they made to me and I hope to have a meeting with them in Plymouth next week during meetings of the Council of Regional Arts Associations.
    On sponsorship, the Digital Equipment Company has come in with support to the tune of just under £400,000, supplemented by extra sponsorship and awards from the Government, which makes a total of £500,000 for dance and ballet throughout the country, not just in London. That is a supremely good example of what businesses can do to help the arts. I hope that businesses on Merseyside will play their part in this.

    Parthenon Marbles
    Mr. David Atkinsonasked the Minister for the Arts what recent representations he has received from his Greek counterpart on the future of the Parthenon marbles.
    Mr. Luce: There have been no formal representations from the Greek Government on the future of the Parthenon marbles since Her Majesty's Government's reply to the request for their return through UNESCO in October 1985.
    Mr. Atkinson: Is my right hon. Friend aware that the Parthenon marbles are housed in nine museums in six countries? Does he agree that the Greek representations would be a little more credible, and the Labour party's response a little less pathetic, if similar requests were made to the Governments of all six countries in which the marbles are housed?
    Mr. Luce: My hon. Friend is right, to the extent that the British museum possesses only about 50 per cent. of all the Parthenon sculptures. Apart from some in Greece, the rest of them—at least nine — are placed in other European centres. My hon. Friend is right on that. However, I must also ask whether the Opposition have

    15
    considered the precedent that would be set if the marbles were returned. What would be left of the British national collections in many areas?
    Mr. Robert Sheldon: Is the right hon. Gentleman aware that if the marbles were to be returned to the Parthenon that would be one matter; but, as that is not practicable, to move them out of one museum and put them into another does not make much sense? Is the right hon. Gentleman further aware that if we were to pursue that line of cultural apartheid many works of art might leave our shores, and all that we would get in return would be a few statues of Queen Victoria and possibly old London bridge?
    Mr. Luce: The right hon. Gentleman puts the point most effectively. That would set a precedent, which would lead to a major reduction in our great national collections, in which all the objects, including the Elgin marbles, have been acquired legally. The right hon. Gentleman should also put that question to his hon. Friend the Member for Paisley, South (Mr. Buchan), who appears to be committed to the return of the Elgin marbles.
    Mr. Jessel: As it is clear that the British museum has looked after the Elgin marbles very well for 150 years, can my right hon. Friend say what sort of care was given to them by the locals when the marbles were in Greece?
    Mr. Luce: It would not be right for me to comment on that in detail, but I can say that the museum looks after the marbles magnificently. It has an excellent conservation service. Moreover, what is really important is that they were acquired legally, and it would require an Act of Parliament to change the position to compel the trustees to return them. I do not believe that that would be the wish of this Parliament.
    Mr. Buchan: Rather a lot of rubbish has been talked, and it will be difficult to deal with all the rubbish in a short reply. May I point out, in the form of a question as a reply to the Minister, that when it is argued that the marbles were legally acquired, in fact they were sold by an occupying country? In other words, would the Minister say that the pictures that were removed by the Third Reich from Holland, Belgium and France, which, among other things, had been acquired by Goering, had been legally acquired? We said that they should have gone back to the countries of origin. In the same way, we believe that the marbles properly belong to Greece and that more British people will see them in Athens than in London. We unswervingly adhere to the proposition that they should be returned.
    Mr. Luce: It is firmly established that the Elgin marbles were legally acquired under the sovereignty of the Ottoman empire as it was at that time. In 1816 the British Parliament passed an Act of Parliament that gave the authority to the British museum to retain the Elgin marbles.

    Public Libraries (Loan Charges)
    Mr. Murphyasked the Minister for the Arts if he has any plans to introduce legislation to require local authorities to introduce charges for the loan of books from public libraries; and if he will make a statement.
    Mr. Luce: I have no such plans. The Government intend to maintain the present arrangements for freel
    16
    ending of books and other basic library services for individuals, but I encourage library authorities to develop other sources of revenue.
    Mr. Murphy: I appreciate my right hon. Friend's support for the library service. Does he agree that the opportunity might be given to libraries to charge for fiction loans so that the extra resources can be used within the library service in the same way as charging for records already takes place?
    Mr. Luce: My hon. Friend's point is perfectly legitimate. I know that other countries, including New Zealand, have a distinction between fiction and nonfiction. I have come to the view that, on educational grounds, it is difficult to draw a distinction between fiction and non-fiction. Therefore, it is best to retain the great traditions of a free lending service. It is possible for libraries to make charges in other areas, and a number of libraries do so with a great deal of enterprise.
    Mr. Freud: I thank the Minister for his reply and welcome what he said. Will he steadily remember the importance of free access to books, whether fiction or nonfiction, for those studying.
    Mr. Luce: I am grateful to the hon. Gentleman. I have already made it plain that I intend to maintain that service. At the same time, I reinforce the view that I think there is scope for libraries to raise revenue in other ways, and they should be encouraged to do just that.
    Mr. Buchan: The Minister has taken something of the sabre away from his answer. We want a firm response that in no circumstances will libraries be permitted to charge for the loan of books. The Government are trying to do that with museums. I believe that they are also trying to do it in other aspects of libraries. We want a clear and unequivocal statement that in no circumstances will that happen.
    Mr. Luce: It would be good news if the hon. Gentleman would listen to my answers sometimes. I have made it plain that we have no intention of changing any of the existing plans to maintain a free basic library service.

  CIVIL SERVICE

    Unions (Meetings)
    Mr. Soleyasked the Minister for the Civil Service when he last met representatives of the Civil Service unions; and what was discussed.
    The Minister for the Civil Service (Mr. Richard Luce): have had no formal meetings with the Civil Service unions, but I did meet them informally on 25 March, and I attended the dinner of the First Division Association on 14 May. Topics of mutual interest were discussed informally.
    Mr. Soley: When the Minister next meets the unions, will he raise with them the future of the Crown Suppliers and confirm the decision of the review staff that to privatise the Crown Suppliers would be against the public interest? Will he assure the House that he respects that decision by his own review team? Will he publish the supplementary report by the central purchasing unit that seems to be causing Ministers some embarrassment and is at the moment hidden from public view?
    Mr. Luce: I shall look at the latter point that the hon. Gentleman raised. I am not absolutely clear that his first point is within my remit. I shall look into the matter and let the hon. Gentleman know.
    Mr. Wrigglesworth: Next time the Minister meets the trade unions, will he consider with them the damage that has been done by the Government's actions over GCHQ to industrial relations, to GCHQ itself and to the position of staff at GCHQ? In the light of all that, will the Minister reverse his decision and restore trade union rights at Cheltenham?
    Mr. Luce: The position at GCHQ has been made clear repeatedly by my right hon. and learned Friend the Foreign Secretary, and I have nothing further to add.
    Mr. Leigh: In the light of the election of a Militant. supporter to the general secretaryship of the CPSA, will my right hon. Friend reflect on the sadness of the fact that he and his colleagues on the Treasury Bench did not accept the amendment put forward by myself and other colleagues of his in favour of secret postal ballots?
    Mr. Luce: I note my hon. Friend's views. As my right hon. Friend the Prime Minister made plain last week, the election of officers of a trade union is entirely a matter for the membership itself. We have a long tradition of impartiality, professionalism and loyalty in the Civil Service. I hope and believe that that tradition will continue.
    Mr. Terry Davis: Does the Minister think that it would he a good idea, when he next meets representatives of Civil Service unions, to discuss the need for more training for equal opportunities officers?
    Mr. Luce: There are designated officers in each Government Department who look after the problems of equal opportunities. I am satisfied that that is working well.

    Employment Qualifications
    Mr. Peter Bruinvelsasked the Minister for the Civil Service if, pursuant to his answer of 16 June, Official Report, column 743, to the lion. Member for Leicester, East, he will list the groups regarded as subversive for the purpose of prohibition on employment on work vital to the security of the state.
    Mr. Luce: No, Sir.
    Mr. Bruinvels: Will my right hon. Friend include members of the Militant Tendency and its supporters who, I believe, are subversive? Does he recall that it was Militant that organised the great dispute at the DHSS office in Newcastle, costing the taxpayer £170 million? Does my right hon. Friend realise that John Macreadie's election is a danger to this nation's security, is anti-democratic and involves an organisation that seeks to undermine our valid Parliament? Surely something should be done urgently to purge Militant from the Civil Service.
    Mr. Luce: I understand what my hon. Friend says, but I must point out that the general secretaries of these unions are union officials, not civil servants. Therefore, they have no more access to the Civil Service than an ordinary visitor, and the ordinary security precautions prevail. I repeat what I have said before to my hon. Friend:
    "No one is precluded from employment in the Civil Service because of membership of a particular organisation. However, no one may he employed on work vital to the
    18
    security of the state who is or has recently been a member of a Communist or Fascist organisation or of a subversive group whose aims are to undermine or overthrow parliamentary democracy by political, industrial or violent means," [Official Report, 16 June 1986; Vol. 99, c. 743.]
    Mr. Soley: Is there not a case for looking again at Lord Denning's wise judgment, that "subversion" should be defined as undermining the state by unlawful means? That would enable people, including the hon. Member:for Leicester, East (Mr. Bruinvels), to give evidence to the police, or else deal with the matter in the normal way.
    Mr. Luce: The criterion is well established. It was established in 1975 by the former Labour Government, and I am content to stick to that.
    Sir Anthony Grant: Is my right hon. Friend aware that the worrying aspect of this infiltration is that, if it increases, there will be an increased tendency for Ministers, whatever their party, to bring into government their political nominees, and we shall thereby lose the benefits, which we have had for many years, of an impartial Civil Service?
    Mr. Luce: I strongly reinforce my hon. Friend's comments on the need for an impartial Civil Service. The heart of the stability of our system is that we should have an impartial Civil Service which is loyal to any elected Government. We are entitled to that, and I believe that we have a Civil Service which, broadly speaking, is impartial, loyal, dedicated and professional.
    Dr. MacDonald: Is the Minister aware that, despite his statements about the need for an impartial Civil Service and the fact that that is what we have—I entirely support those sentiments—the Government have worsened relationships between the Civil Service and the trade unions by their ban on trade union membership at GCHQ? Will he confirm, or deny, today's press reports that the director of GCHQ, Sir Peter Marychurch, has been asked to stay on until June 1988. one year after he is due to retire? Does he agree that the Government are perhaps hoping thereby to ensure that management at GCHQ is able to persuade an incoming Government to maintain the trade union ban'? Will he take on board the fact that the Labour party, when it takes office after the next general election, will do nothing whatsoever of the kind and that it will reverse the Government's decision and allow trade union membership to continue at GCHQ?
    Mr. Luce: I have already said on several occasions that the question of GCHQ is a matter for my right hon. and learned Friend the Foreign Secretary. It is wrong to take the view that the Government have not taken account of conditions in the Civil Service. The latest pay settlement shows that we are taking fully into account movements in the pay sector outside the Civil Service.
    Mr. Gow: Will my right hon. Friend reconsider his earlier answer, when he said that the conduct of elections of trade union officials is a matter for the trade union? Does he agree that there is a wider and legitimate national interest in securing that elections for office in trade unions are conducted in every respect with scrupulous fairness and integrity?
    Mr. Luce: I entirely agree with my hon. Friend.

    Permanent and Deputy Secretaries
    Mr. Wainwrightasked the Minister for the Civil Service how many permanent secretaries and deputy

    19
    secretaries at the present time are members qualified by examination of a United Kingdom chartered professional body.
    Mr. Luce: This is not uncommon. Detailed records are not held centrally.
    Mr. Wainwright: Is the Minister aware that my question was about the number ofpeople in top jobs in the Civil Service who have professional qualifications? Will he answer it?
    Mr. Luce: We do not have a specific record, but, if it is any help to the hon. Gentleman, roughly one in six of all those who are permanent secretaries or deputy secretaries have professional qualifications.

    Early Retirement
    Mr. Wattsasked the Minister for the Civil Service what are the cost implications of negotiations to facilitate early retirement from the Civil Service.
    Mr. Luce: The negotiations are intended to secure more flexible early retirement arrangements within the Civil Service. The intention is that the average cost of early retirement will not increase.
    Mr. Watts: Can my right hon. Friend confirm that civil servants will not be able to retire on full pensions at the age of 50, as has been reported in recent press articles?
    Mr. Luce: I can confirm that there has been inaccurate press reporting of the matter. The proposal, which is part of a comprehensive package which is still being discussed,
    20
    is that civil servants should be given the right to retire on actuarially reduced pensions at no extra cost to the Exchequer.

    Non-departmental Public Bodies
    Mr. Dickensasked the Minister for the Civil Service how many non-departmental public bodies have been (a) abolished or (b) reformed since May 1979.
    Mr. Luce: Between 1979 and 1985 a total of 756 non-departmental public bodies were abolished, rationalised or substantially reduced. During that period 242 new bodies were set up, resulting in a net reduction of 514.
    Mr. Dickens: Can my right hon. Friend confirm that the Government's quango hunt has not run out of steam?
    Mr. Luce: I can confirm that. In the past year, in which there has been a review of the number of quangos, there has been a continuing net reduction.
    Mr. Tony Banks: Does the Minister believe that when non-departmental bodies are set up by the Government, particularly when they replace democratically elected bodies — I am thinking specifically of the residuary bodies that were set up to replace the democratically elected Greater London council and the metropolitan county councils — Ministers should have the guts to answer questions about the activities of those non-departmental bodies?
    Mr. Luce: I think that we are referring here to transitional bodies. The criterion whether a new quango should be set up is whether it can be proved to be the most cost-effective means of fulfilling Government policy.

South Africa
3.31 pm
Mr. Denis Healey(by private notice) asked the Secretary of State for Foreign and Commonwealth Affairs whether it remains his intention to visit South Africa, and if so what are his plans.
The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): I intend to make an early start on the mission entrusted to me at the recent European Council meeting in The Hague. I accordingly proposed last week to the Governments of Zambia, Zimbabwe and South Africa that I should visit them in the period 9 to 11 July on the first stage of the mission. The Zambian authorities have confirmed that a visit this week is convenient. The Zimbabwean authorities have given a similar indication, but we are still waiting for confirmation. The South African Government have made it clear that they are ready to receive me, but have proposed alternative dates. These are now under consideration. I shall therefore proceed with the visit to Lusaka and Harare, leaving from Strasbourg tomorrow evening, and plan to visit South Africa later in the month. Further visits to and within the region are, of course, not excluded.
Mr. Healey: I thank the right hon. and learned Gentleman for his statement. Does he agree that, following the refusal of black leaders in South Africa to see him, the humiliating snub from President Botha confirms all his initial doubts about the wisdom of his mission? Will he use this example to persuade the Prime Minister that she is not always right and that the Foreign Office is not always wrong?
The Opposition welcome the Foreign Secretary's visit to Zambia and Zimbabwe this week. The Government have left a lot of fences to be mended in those countries and there is a real risk of the Commonwealth breaking up unless he takes advantage of his mission to take more notice of the views expressed by those countries than the Government have taken so far.
Does the postponement of the Foreign Secretary's visit to South Africa mean that he intends to meet the conditions set for his visit to President Botha and, if so, what are those conditions? Can the right hon. and learned Gentleman assure the House that he is not seeking to delay matters until after the Commonwealth summit?
Does the Foreign Secretary accept the view expressed by President Mitterrand and the Prime Minister of the Netherlands and Denmark that the Government are committed to sanctions if his mission fails and does not secure the unconditional release of Nelson Mandela and the unbanning of the African National Congress? Incidentally, will the Foreign Secretary take the opportunity, while he is in Lusaka, to visit the ANC, as emissaries of President Reagan have been doing over the past few days?
Finally, do the views expressed by the Prime Minister to Mr. Malcolm Rutherford and set out in last Friday's Financial Times now represent Her Majesty's Government's policy, in particular, that the unconditional release of Nelson Mandela will depend. as the article says, on the threat of sanctions and that the Government are prepared to go to the Security Council for mandatory sanctions if his mission fails?
Sir Geoffrey Howe: I accept no responsibility for answering the right hon. Gentleman's more fanciful inquiries based on newspaper articles, for which neither my right hon. Friend the Prime Minister nor I have any responsibility. Nor do I intend to respond, in the spirit in which the right hon. Gentleman put it, to suggestions of snubs or anything of that kind.
The position—I should like the right hon. Gentleman to understand this—is that I have been entrusted by the Community with a mission of some importance and outstanding difficulty. I intend to pursue it with patience and determination to see, so far as I can, all those whom I ought to see in discharge of the objective of trying to promote an opportunity for dialogue to take place.
I am not yet able to say when the mission will come to a conclusion. I intend to pursue it patiently and as far as I can.
As my right hon. Friend the Prime Minister told the House in her report on the meeting at The Hague, certain measures have been taken in the past against South Africa and certain other contingencies are being studied in the terms set out in The Hague communique.
If it turns out to be convenient and possible. I shall certainly be prepared to consider an opportunity of meeting representatives of the ANC, because it is important to urge them as well as others of the need, above all, to turn away from violence in southern Africa and try instead to go down the path of dialogue, negotiation and conciliation.
With regard to broken fences in South Africa. I shall try my best to repair those which the right hon. Gentleman has destroyed.
Mr. Tim Rathbone: Will my right hon. and learned Friend accept that the good will and good wishes of every sensible person in Britain and in Europe will go with him in his attempts to bring an increasingly tragic state of affairs in southern Africa to as speedy an end as possible?
Will he also accept that many Conservative Members, I hope all, believe that his visit is necessary in order to counterbalance the impression created by the right hon. Member for Leeds, East (Mr. Healey), the Opposition spokesman on foreign affairs, and many other Members of the House?
Thirdly, will he accept that many people in the House, and most people in the country, will welcome his readiness to meet the ANC when he visits Lusaka?
Sir Geoffrey Howe: I am grateful to my hon. Friend for each of his three comments. I appreciate that on almost every aspect of this case it is not easy to do anything that commands universal assent. Subject to that, I am most grateful for his support.
Mr. David Steel: Is the Foreign and Commonwealth Secretary aware that we on these Benches wish his series of missions all success and hope that he will be able to talk to all those whom he wishes to see, but does he recognise that his chances of doing that will be greater if he stresses that he is going as President of the Council of Ministers of the European Community, and that as such he will not be handicapped by the public foot-dragging on sanctions of the Prime Minister? Will he also make it clear to the South African Government that the question is not whether white

23
minority rule changes, but when and how, and that most of us would prefer it to be sooner and peacefully, rather than later and violently?
Sir Geoffrey Howe: The right hon. Gentleman made some observations for which I am grateful, but he spoilt his intervention by a rather graceless reference to my right hon. Friend the Prime Minister. The important point that he makes, which I want to underline, is the extent to which one must try to build on positions that are common as far as possible. President Botha has said that apartheid is an outmoded system and that he looks forward to a system that will be without domination by any race. All those things are pointers in the right direction and will help me in the difficult search for a way to dialogue.
Sir Anthony Kershaw: Are not these matters rather too serious for the juvenile debating points that are all that the right hon. Member for Leeds, East (Mr. Healey) has in his armoury? Will my right hon. and learned Friend make it clear that he goes with the support not only of this Government but of that of the 11 other almost most important Governments in the world?
Sir Geoffrey Howe: I am grateful to my hon. Friend for underlining that point. It is important for it to be understood, and I think it is, that I am going as the Foreign Minister and the current President of the European Council of Ministers, and that I am supported by the other 11 Governments.
Mr. Tom Clarke: When the Foreign Secretary eventually visits South Africa, will he accept that the release of Nelson Mandela, long overdue as it is and universally welcomed as it will be, will not in itself be enough? Does the Foreign Secretary recall that in an interview with a British newspaper last year Nelson Mandela said that his own freedom and the freedom of his fellow citizens are indivisible?
Sir Geoffrey Howe: The hon. Gentleman has made an important point and it is in line with the point made in the statement by the European Council at the Hague, which said:
"This dialogue cannot take place as long as recognised leaders of the Black community are detained and their organisations are proscribed."
It is plain that a furher amplification of the scope for democratic dealogue is important. Most people recognise that the prospect of the release of Nelson Mandela is far and away the most important key, if there can be a key.
Mr. Cranley Onslow: Is my right hon. and learned Friend aware that the tone of the questions by the right hon. Member for Leeds, East (Mr. Healey) and what he has been saying in the media and elsewhere make it doubly clear that his principal objective is to try to sabotage the Foreign Secretary's mission before it starts? That is sheer mischief making. On this occasion, is it not right that every responsible hon. Member who wishes not to jeopardise the prospects of the success of this mission should not press my right hon. and learned Friend too hard? Mr. Speaker, these exchanges need not be prolonged indefinitely.
Sir Geoffrey Howe: As far as I can, I acknowledge the force of the points made by my hon. Friend. I hope that the wisdom that exudes from his present important position will penetrate at Leeds, East.
Mr. David Winnick: Does the Foreign Secretary realise what a farce this has become and that he was right in the first place to have many reservations about his trip to South Africa? When will he persuade the Prime Minister that there is no effective alternative to sanctions against the apartheid regime and that trips to South Africa or anywhere else are no substitute for such action? The Foreign Secretary may know that such action was advocated last night by his Minister of State on a television programme.
Sir Geoffrey Howe: I wish that this problem could be resolved as easily as the hon. Gentleman so readily implies. He knows, or he ought to know, that it is far too superficial to argue that this long-standing and difficult problem can be resolved by the mounting of comprehensive sanctions against South Africa. The position set out last week by my right hon. Friend the Prime Minister is the position adopted by my hon. Friend and by me. Over the years certain measures have been taken against South Africa. Certain contingency plans outlined in The Hague communiqué are being made.
"We do not think that threatening further sanctions immediately or automatically will help to bring about the negotiations that we desire".—[Official Report, 1 July 1986; Vol. 100, c. 822.]
That was said by my right hon. Friend the Prime Minister, and it represents the position of the Government.
Mr. Hugh Dykes: Does my right hon. and learned Friend realise that his mission is bound to get the good will and support of all people of wisdom and common sense in every European country, but particularly in Britain, in view of his position as President of the Council of Ministers? Over the weekend there was an outburst by the South African Foreign Minister against sanctions. Does my right hon. and learned Friend draw an optimistic, or pessimistic, conclusion from that stance, which appears to be a change of line on the part of the South African Government? It is not a wish not to have sanctions imposed. They are defiantly saying, "Come and get us, we do not care."
Sir Geoffrey Howe: I am grateful to my hon. Friend for the first part of his question. As for the second part of it, it is tempting in circumstances of this kind to feel obliged to comment on almost every statement that is reported in the newspapers or elsewhere, but I do not think that that is helpful, even though I understand why my hon. Friend has made that point.
Mr. Norman Buchan: The right hon. and learned Gentleman has stressed that he is going to South Africa to represent the EEC as well as this country. Will he keep in mind the circumstances that give rise to his visit—that sanctions are wanted immediately, but that he and the Prime Minister want sanctions, if they are to be imposed at all, to be postponed? Will he keep in mind that the bulk of his fellow Ministers in the Community favour sanctions, not because they or we believe that sanctions are the only solution, but because they are a necessary solution to bring home to the South African white regime that it must come to terms and an agreement on the basis eventually of one man, one vote?
Sir Geoffrey Howe: I shall bear in mind my own assessment of the views formed and the advice given by the other members of the Council of Ministers. I shall certainly bear in mind that the Heads of Government of

25
a number of other countries took the same view as Britain and that many of those who considered the matter carefully were increasingly impressed with the need to adopt a patient and cautious approach to this matter. That is why the conclusion set out in the communique was unanimous.
Sir John Biggs-Davison: Would not sanctions, as called for by the Opposition, have a catastrophic effect upon some of those other countries that my right hon. and learned Friend is about to visit, with our goodwill? Does it not also show a misunderstanding of the South African Government and the Afrikaners generally to suppose that sanctions will bring about any desirable effect? It is not important to encourage as well as to warn?
Sir Geoffrey Howe: There is real force in both of my hon. Friend's points, and I endorse the last part of his question.
Mr. John Evans: If Britain's Foreign Secretary, who is President of the EEC Council of Ministers, has not been snubbed and humiliated by the South African Government, will he tell the House the date of his rearranged visit to South Africa and whether it will take place before the Commonwealth summit? Will he also make it a condition of his rearranged visit to South Africa that even if he does not see the President and the Minister of Foreign Affairs of South Africa, he must see Nelson Mandela?
Sir Geoffrey Howe: I shall tell the House of the date, or dates, of my further visits when those are clear. I told the House in my original statement that they are still the subject of further discussion. Those whom I shall hope to see certainly include all those who were mentioned by the hon. Gentleman.
Sir David Price: Will my right hon. and learned Friend accept that he goes to South Africa with the total goodwill not only of this House but of the whole of Europe? Will he also explain to those who are criticising his mission that this country started this century with nearly 500,000 men-at-arms against the Afrikaners, that 22,000 perished in South Africa at the beginning of this century and that our track record in opposing the Boers is impeccable?
Sir Geoffrey Howe: I am always grateful to my hon. Friend for the depth and breadth of his historical analysis, and I shall hear in mind what he said, but I shall also try to bear in mind more recent events than that.
Mr. Laurie Pavitt: In view of the Foreign Secretary's understandable request for patience and time, has he seen the announcement in this morning's edition of The Guardian, which reminds us that more or less the same thing was said in 1963, 25 years ago? Does he have in mind a shorter time span than 25 years?
Sir Geoffrey Howe: I have no doubt that the longer the unresolved policy of apartheid has continued in South Africa, the harder has become the task of its removal, but in making that kind of assessment one should take account of the steps that have been taken in the last year or two. I know that it is fashionable to discount them completely. They should not be so discounted. We have to try to start from where we now are and move as quickly as possible towards a solution that is founded on dialogue, not on violence.
Several Hon. Members rose——
Mr. Speaker: Order. I have to bear in mind that this is private Members' day and that this is a private notice question. I shall call two more hon. Members, one from each side of the House.
Viscount Cranborne: Would my right hon. and learned Friend's task be made any easier if the buccaneering tendencies of the right hon. Member for Leeds, East (Mr. Healey) could be restrained, as he is increasingly behaving like the Captain Morgan of foreign policy?
Sir Geoffrey Howe: I am always content to accept my hon. Friend's judgment on the performance of' the right hon. Member for Leeds, East (Mr. Healey).
Mr. Frank Field: Will the Foreign Secretary's bargaining position be strengthened, or weakened, if it is clear that the European Community will take further action should his mission fail?
Sir Geoffrey Howe: The position of the European Community is clearly stated in the communiqué to which I have referred the House. It is clearly to the effect that further measures that might be needed are now the subject of contingency planning, as my right hon. Friend the Prime Minister told the House last week.
Several Hon. Members rose——
Mr. Speaker: Order. I have endeavoured today to give priority to those hon. Members who were not called on previous exchanges, and I hope the House will think that that is fair.

STATUTORY INSTRUMENTS, &C.
Ordered,
That the Local Authorities' Cemeteries (Amendment) Order 1986, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Fireworks (Safety) Regulations 1986, be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Hovercraft (Civil Liability) Order 1986, be referred to a Standing Committee on Statutory Instruments &c.
That the draft International Finance Corporation (1985 General Capital Increase) Order 1986, be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Malone.]

EUROPEAN COMMUNITY DOCUMENTS
Ordered,
That European Community Documents No. 4092/85 and 4058/86, a proposal for a Regulation laying down measures to discourage the release for free circulation of counterfeit goods, and a proposed Amendment to the draft Regulation be referred to a Standing Committee on European Community Documents.
That European Community Document No. 4044/86 concerning a proposal for a Council directive on the protection of workers from the risks related to exposure to benzene at work be referred to a Standing Committee on European Community Documents—[Mr. Malone.]

PUBLIC TRUSTEE AND ADMINISTRATION OF FUNDS BILL [Lords]
Ordered,
That the Public Trustee and Administration of Funds Bill [Lords] be referred to a Second Reading Committee — [Mr. Malone.]

Future of Manufacturing Industry
3.51 pm
Mr. Kenneth Carlisle: I beg to move,
That this House agrees that manufacturing industry has a central part to play in the future prosperity of the United Kingdom, and, that, in order to succeed in a fiercely competitive world, it must use the most modern manufacturing methods, and market its products with skill; notes further, that the importance of manufacturing must he recognised by society generally and by schools and colleges in particular, so that industry can surmount the present shortage of skills; and believes finally that success in manufacturing can only be won in any enterprise through the united efforts of all the workforce.
I feel very fortunate in having won the ballot for a motion today. When I became a Member of Parliament I was told that the chances of any private Member winning the ballot for a private Member's motion during his time in Parliament were so remote that if he did so he could well become a statistic.
I want to debate the future of manufacturing industry, because I know that our success in manufacturing is central to our future prosperity. Some say that we can earn our wealth in other ways and give the impression that the decline in manufacturing is inevitable, and even tolerable, and that service industries, financial earnings, tourism and raw materials can plug the gap. Sadly, they are badly wrong. Although we need a balanced economy and services have a great role to play, manufacturing industry is the engine of our prosperity and generates that essential spark that gives vitality to the rest of our economy.
The Italians were the first bankers in Europe just because they were at the hub of medieval commerce. Insurance and the vast network of wealth that spread from it were born in this country because of our growing commercial dominance, and our tremendous success in the service industries flourished in the wake of our manufacturing prowess in Victorian times. In the same progression we can be sure that Japan, with its present industrial strength, will be the centre for services in the next century. If we cannot reverse the trend in our manufacturing decline, our services will sink in tandem.
To resuscitate and expand manufacturing is a national priority. It is our lifeline to the future. Right now, manufacturing supports one quarter of all our jobs, that is, 5·5 million people. It creates one quarter of our annual wealth and still contributes nearly half of our overseas earnings. The picture and history are grim. This is a story of decline over many years, and its statistics are felt in every household and high street in Britain.
In 1964 we made 14 per cent. of world manufactures, but the figure for 1986 is half that. Our balance of trade in many key sectors, such as motor vehicles and electrical and electronic engineering, has turned from surplus to deficit, and we all know the sad story of our once proud motor bike industry. However, we have a duty also to praise what has gone right. In the past five years huge efforts have been made to reverse the trend. Our steel industry has been saved from extinction and is now one of the most efficient in Europe. Our motor industry has struggled to overcome the despair of the 1970s, and what we do best—our Jaguars and Rolls-Royces—has kept the name of British car making alive in the world. Since 1982 productivity in manufacturing has grown by one quarter.
Mrs. Elaine Kellett-Bowman: Does my hon. Friend think that there is cause for concern in the Bank of England's bulletin for June 1986, issued today, which states that our labour unit costs rose by only 0·2 per cent. in 1983, but that in 1985 by rose by 3·1 per cent., thus making our competitive position that much more difficult?
Mr. Carlisle: My hon. Friend is right. We cannot regain our position in the world unless we are truly competitive. However, there are outstanding individual successes.
In my constituency of Lincoln, Ruston Gas Turbines is at the forefront of turbine technology. In the past eight years its output has nearly trebled, 90 per cent. of which is for export. During that period it has created a new business in its control equipment department, which now employs 120 people and designs sophisticated controls for turbines. It has invested heavily in plant and technology, and needs people of great skill to hold its own. Although its production has trebled the number of people employed has remained roughly the same, about 2,500. The lesson is clear: to sustain employment in manufacturing in an age of technology a business must be both competitive and expand its sales. There are successes, but we have still not reversed the general historic trend of decline, and we must do that.
In this debate we should all accept that for manufacturing to flourish we need a stable, healthy economy and that, as exporters, we need markets for our products. The Labour party's extravagant plans for a ruinous binge of spending offer no comfort, and its trade policy, which yearns for protection, is not a policy but a mirage of a policy which offers no future for industry.
A crucial task of any Government is to face reality, insist that trade should be fair, fight for an open trading system, which in the end, as a trading nation, we need. It must analyse the reasons for the decline in manufacturing and construct a policy for success.
Mr. David Winnick: I congratulate the hon. Gentleman on winning the ballot, but before he turns his arrows to Labour party policy, would it not be wise to deal with the way in which British manufacturing industry has been decimated in the past seven years and the fact that mass unemployment has returned to areas such as the west midlands which was once the most prosperous area in the United Kingdom, but where unemployment is now higher than the national average? Moreover, in parts of the west midlands, such as in my constituency, during the past three years unemployment has been running at about 17 per cent. or more.
Mr. Carlisle: As usual, the hon. Gentleman exaggerates his case. I was arguing that manufacturing has no chance unless the economy in which it functions is stable and has some hope for the future. We all know that under the Labour party's plans the economic structure within which industry would operate would indeed be dicey.
All the recent studies of manufacturing, including the Finniston report on engineering and the House or Lords report on trade, point to a kind of cultural weakness in Britain. In Germany the engineer is revered. Here he has no particular status. His pay is too low, and that of the banker, whose very existence depends on him, is too high. That cultural failing is now recognised in this country, and it must be a major strand of Government policy that such a failing should he reversed from the earliest age in education.

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In truth, there is no career finer, more constructive or more valuable for this country than one of making products that one's fellow humans want and need. It is not enough to say that— we must act on it. Much depends on the quality of education and the relevance of our training. We are facing a famine of people with the right skills, and it is a terrible paradox that even at a time of unemployment there are growing skill shortages.
In 1980 Finniston said:
"We genuinely fear a chronic shortage of engineers over the last decade of the century unless in the meantime there is a major increase in the proportion of young people opting for an engineering career".
We now produce 9,000 engineers a year, but if we trained them in the same ratio as Japan, we would have between 30,000 and 40,000 new engineers each year. Our industries spend about 0·15 per cent. of their sales turnover on adult training, but overseas the figure is often between 2 and 3 per cent.
Mr. Eric S. Heffer: The hon. Gentleman is clearly referring to professional engineers rather than to engineers who are apprentices. Is he aware that in certain parts of the country apprenticed engineers have finished their apprenticeships but have no hope whatever of employment — for example, on the northeast coast and on Merseyside? Incidentally, even if they manage to get the odd job, they can find nowhere to live.
Mr. Carlisle: I was referring to professional engineers coming out of our colleges of higher education and universities, but I accept the hon. Gentleman's point. There is also a great need for highly skilled engineering workers. Our training must also be directed towards that section, because there is a genuine need. However, the solution is complex and it must grow from a partnership between the Government and industry. Each must do more.
Much has already been done. For example, one welcomes the growth of the TVEI programme in schools, the expenditure of £43 million on the engineering and technology programme to create an additional 5,000 graduates, and the effort of industry in the Information Technology Skills Agency, but we cannot be complacent. We must increase our efforts. We must ensure an adequate supply of mathematics and physics teachers, even though the measures required do not fit snugly into accepted educational thinking. Schools must have strong and working links with local industry. Local colleges of technology must have the necessary facilities, and training relevant to local industry. In higher education, we must reinforce the recent trend to give better support to science and engineering.
Industry must also shoulder its share of responsibility for training. We should aim to make matters more favourable for those companies which do train than for those which do not. We should also insist that in their annual reports companies explain what they are doing about training.
Just as six years ago the Finniston report called for a transformation in training, so recently the Coopers and Lybrand report on training was entitled "A challenge to complacency". On all sides the message is clear —without the skills we cannot succeed. But even if we magically acquire a legion of highly skilled workers, only one fraction of the problem would be solved. It is like a
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car with one wheel. We must also have good management, rigorous and skilful marketing and investment in new technology.
In the last five years the Government's general industrial support for new technology in industry has more than doubled, after allowing for inflation, but I still believe that we can —and must—refine and extend this, not merely to sustain industry, but to act as a spur and a support in the harsh world of new development. Clearly targeted support is more productive than general regional subsidy.
Mr. Edward Leigh: Does my hon. Friend consider that employment in both our constituencies has been helped by the fact that Scunthorpe, with development area status, is siphoning off employers?
Mr. Carlisle: Clearly the proximity of a development area acts as a blight on the regions next door. One of the problems is that four years ago the development areas were more clearly defined. My hon. Friend speaks of a real problem from which we suffer in Lincolnshire.
Management also has a key role to play in the crucial area of human relations in industry. Marks and Spencer always talks about human relations in industry, not just about industrial relations. That is a major reason for its success. However, as a nation we have for too long been locked in an abyss of industrial relations, and we must break out of it before we are left with no relations at all.
Teamwork and involvement are vital. More manufacturers should adopt the use of quality circles, and more still should embrace profit sharing. Only some 550 companies have profit-sharing schemes under the Finance Act 1978, despite the added incentives that our Government have given. It is crucial for good human relations in industry that all the work-force should share in the success of their company, just as they must share the burden of difficulty and failure. Teamwork involves unity of purpose between management and unions for the benefit of both business and work-force. We must add to the incentives for profit sharing and ensure a major and rapid spread of these schemes.
I dare say that there is not a Member of Parliament who at some time in his or her constituency has not witnessed an example of the perilously high cost of these failures of human relations in industry. In my own constituency we are at a critical moment. We have a business called Clayton-Dewandre, which employs 700 people. It is a company of skill and good technology and is a major supplier of braking systems to the British truck industry. Yet that company faces disaster because for more than 20 years there has been a poverty of good human relations. Unless an agreement can be reached very soon to enable the business to face competition, that company will leave Lincoln to manufacture elsewhere, either in the United Kingdom or in Germany.
I am not here to apportion blame, but this is a desperately serious matter both for the people who work in the business and for the city. The root cause of the crisis is not lack of skill, but lack of unity, lack of teamwork and a lack of involvement in the business stretching back more than 20 years, the effect of which has bred distrust and a cynical view of the future. I appeal to all in that business to get together once again to keep it in Lincoln. Events here sadly show just how hard we must work to involve all in the success of their business.

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I feel deeply that as a country we have much to do to rebuild and sustain our manufacturing industry. We must radically change our cultural and psychological attitudes towards manufacturing. We need urgent action in education and training. Management must become more receptive, creative and professional.
Mr. Hugh Dykes: Will my hon. Friend give way?
Mr. Carlisle: No, I am sorry. Human relations in industry must become human, otherwise there will be no relations and no industry. I believe that the Government understand the problem and are seeking to redress it through a series of measures. I also believe that the Opposition recognise the problem, but they wish to implement policies which would remove us further and fatally from the world market place. The cost of that to the taxpayer would be intolerable, and the cost to the nation and its future incalculable.
Any Government can create only the framework. Without a true marriage with industry, we are doomed to even further decline. There is no greater challenge that faces this country, and therefore no greater challenge that faces this House. I hope that in this debate we can add our weight to the urgency and give an impetus to success.
4.10 pm
Mr. Roy Jenkins: The hon. Member for Lincoln (Mr. Carlisle) opened this debate with a reflective and interesting speech. The debate is certainly on an important subject and I congratulate the hon. Member for Lincoln on choosing this topic and I believe that we should have a worthwhile discussion on the matter.
Several fallacies have been accepted too freely recently about the position of our manufacturing industry in the balance of our economy. The biggest fallacy is the view that salvation lies in services, and only in services. The corollary to that is that it is inevitable and desirable that over the past two decades there has been a reduction of nearly 3 million in employment in manufacturing industry. That is a massive reduction and represents nearly 40 per cent. of the total in manufacturing industry over that time.
I do not believe that that should have been the case. That has been precipitate and dangerous and it has not been associated with an increase in productivity which has led to our maintaining our relative manufacturing position.
Between 1975 and 1984, Japan increased manufacturing output by 61 per cent.; the United States by 41 per cent.; West Germany by 16 per cent.; Italy by 22 per cent. and our manufacturing output actually fell by 4·5 per cent..
We already have the largest service sector of any large developed economy with the exception of the United States. One might say that that is fine. The United States is the richest economy in the world and has the largest service sector. As a natural development from that, we, as the second richest economy, should have the second largest service sector. Unfortunately, there is a snag in that logic: we are very far from being the second richest economy in the world. All the other advanced economies of comparable size have a substantially smaller service
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sector and a substantially bigger manufacturing sector than we have. That is especially so in Germany and Japan, and less substantially so in France and Italy.
Mr. Dykes: I agree with the right hon. Member. Does he agree that although the motion proposed by my hon. Friend the Member for Lincoln (Mr. Carlisle) is in every way excellent and effective, as he said, it is surprising that amidst all the references to the need for a much higher investment ratio and new public and private assets in this country, especially for high technology, the United Kingdom invests less than any of the other advanced OECD countries?
Mr. Jenkins: I do not wish to be committed to the terms of the hon. Gentleman's motion. He has opened the subject up by his motion, but I do not think that it contains a complete catalogue of recipes for our present ills in this respect.
Mr. Michael Fallon: Will the right hon. Gentleman give way?
Mr. Jenkins: No, I should like to make some progress.
It is impossible to sustain the belief that a large service sector is the symbol of success. In our case it is the reverse. We have already gone too far in that direction, although some movement in that direction was clearly inevitable and even desirable.
It is important to bear in mind that services are difficult to export. Some are almost unexportable. They can only be performed or consumed on the spot. Even when they can be exported, they are mostly operating—regrettably in many ways—in much more protected markets than goods. I hope that we can make progress to change that position, especially in the European Community. It would be a mistake to count Lord Cockfield's chickens before they are hatched. There is no doubt that services operate in a more protected market than does manufacturing industry.
The position is that 64 per cent. of our labour force is employed in services, which produces only one quarter of our overseas trading income. A little more than 20 per cent. still employed in manufacturing industry must produce the rest. That is a good reason why we should cherish that 20 per cent.
Mr. Fallon: The right hon. Gentleman has correctly concentrated on the large size of the service sector in the British economy. Does he accept that one reason why it is so large is that public sector service employment is included in that definition?
Mr. Jenkins: That is a factor, but it is by no means the only factor, and nor are we the only country with large public sector employment. For instance, Italy has a lower proportion in the service sector but has just as large a proportion of its population in public service employment as we have. The hon. Member for Darlington (Mr. Fallon) has made a valid point, but it does not explain the whole position.
Another fallacy about the balance of industry is that unemployment is essentially technological and therefore inevitable and incurable. I do not accept that, for several reasons. First, it is difficult to reconcile that proposition with the fact that both Japan and the United States—the two countries furthest into advanced technology—have the lowest rates of unemployment. Their rates are very significantly lower than ours. I also do not believe

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that that proposition has historical validity. The revolution of information technology has not had a greater effect on labour than the vast reductions in the numbers of those working on the land and in domestic services which were features of our changing employment demography over the past 100 years.
The devastating weakness of manufacturing employment and prospects in this country has been caused by a combination of four factors. First, in the past decade and a quarter from 1973 the whole industrialised world, with certain exceptions—the United States in 1983–84 and some of the countries of the Pacific basin—has found it much more difficult to maintain rapid and sustained growth than previously.
Secondly, the United Kingdom was less competitive in manufacturing industry than most other countries, and we still are after seven years of this Conservative Government.
Thirdly, we pursued a remarkably foolish exchange rate policy in 1980 and 1985 which was a very vulnerable period. That has had a permanent effect on manufacturing industry from which we have not nearly recovered. In fact, we are not pursuing a very wise exchange rate policy now, even though it is not as foolish as the policy to which I have referred.
The fourth point is related to demography. This has continued for longer than was expected 10 years ago and has continued to work against us in the sense that more people are seeking to come on to the labour market than come off it. That position should change by the early 1990s.
As a result of these factors we have suffered unnecessary and dangerous de-industrialisation. It is worth remembering as a sombre fact, in view of the other difficulties in the world, that in this country we have effectively twice the male unemployment rate of America, Japan, France, Germany or Italy. That is a pretty devastating criticism of the state of our industry.
One of the dangers of precipitate and excessive closing down of industry is that it is extremely difficult to reverse. Almost by its very nature it is an irreversible process. It is a new thing to look at the 1930s favourably, but it is instructive to consider the precedent of that decade. At the beginning of the decade, unemployment was at about the present level. It was somewhat worse in reality for a short time in relation to the size of the economy then—from 1931 to 1933.
An unemployed man in 1931 suffered far greater absolute poverty than does an unemployed man today, but his prospects of getting a job rapidly became considerably better than has happened in the 1980s. By 1935, unemployment was down to just below 2 million and, by 1937, it was down to 1·5 million.
Perhaps even more important was the fact that the capacity of basic industries was not then permanently destroyed. They had a very bad time in the first part of the decade. That was symbolised, perhaps, by the famous example of work on the Queen Mary at the John 'Brown yard at Clydebank, which was suspended for two and a half years because the Cunard company ran out of money. Work was started again with Government subsidies. The important difference was that the yard was not dismantled or closed. Steelworks, coal mines, heavy engineering plant and even textile mills survived and were available. They were called back into service, sometimes in a slightly different form, first with rearmament and then when the war brought rapidly soaring demand.
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I have come increasingly to the view that the Government stand back too much from industry. In my experience, they do so more than any other Government in the European Community. They do so more than the United States Government. We have to remember the vast US defence involvement in industry. They certainly stand back more than do the Japanese Government. To some extent, the motive is the feeling that we have had an uncompetitive and rather complacent industry which must be exposed to the full blasts of competition, and if that means contracts, even Government contracts, going overseas, we should shrug our shoulders and say that the wind should be stimulating.
That process has been carried much further in Britain than in any other comparable rival country. I am resolutely opposed to protectionism. I am sure that it diminishes the employment and wealth-creating capacity of the world as a whole. That would be the result of plunging back into that policy. I also believe, however. that this totally arm's-length approach in the relationship between Government and industry is something that no other comparable Government contemplate to the extent that we do. It is not producing good results for British industry and it is a recipe for a further decline in Britain's position in the Western world. The Government should examine it carefully and reverse it in several important respects.
4.22 pm
Mr. Cecil Parkinson: I congratulate my hon. Friend the Member for Lincoln (Mr. Carlisle) on his choice of subject. It is good that Parliament should debate such an important subject in the unacrimonious atmosphere of a private Members' day. Whichever party is in power, the manufacturing sector will remain vital. I do not regard today as a chance to score points. Rather, it is a chance to discuss a vital subject.
I am pleased to join the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) in saying that what is sometimes presented as a choice, but is not, between Britain being a manufacturing or a service country is utterly spurious. We must succeed in both.
I should like to pick up a point that the right hon. Gentleman made. He talked about our exchange rate policy in 1980–81. I was the Minister for Trade at the time and saw many industrialists who said that if the exchange rate was at $2 to the pound we could sweep the world. During that period the Government never charged the rate of interest that matched the rate of inflation. We never had a real rate of interest paid to savers. The Government did not offer a real rate of interest — they offered one substantially below the rate of inflation.
The Government had recently been elected on a sound money platform, following a Government who, until they were stopped by the International Monetary Fund, had followed a very unsound money policy. The world's money markets put a substantial value on sterling. The Government were committed to trying to protect sterling's value, and they were prepared to charge the borrower a higher rate of interest than had been charged before, but never a real rate. People who argue about our exchange rate policy in 1980–81 are saying that the Government should have perpetrated an even bigger cheat on the saver by having a rate of interest which was even further below the rate of inflation.

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People such as the right hon. Member for Hillhead are arguing that we should have continued to rob the saver so that we could support the borrower. Put in those terms, it is clear that such a view is not nearly as noble as saying in a rather sweeping way that the Government got their exchange rate policy wrong. I do not think that they did get it wrong. They were seen by the the financial markets as prepared to follow sensible policies and to charge a rate of interest which began to approach, but never got very near to, the rate of inflation. I do not accept the rather dismissive argument that everything can be traced back to the Government's exchange rate policy.
Nor do I accept the statements that are now made so often that they are almost accepted as true that Britain's manufacturing industry is in terminal decline. The facts do not support that thesis. Industrial production last year was clearly recovering dramatically from the low point of 1981. I know that Opposition Members say that 1981 was an all-time low, but if manufacturing was still in decline, the figures would continue to fall. We have reversed that trend. Manufacturing production is growing substantially. To the dismay of our opponents, it should achieve all-time record levels next year.
There is nothing to be complacent about, but the statement that our industry is still in decline is not borne out by any test which any fair-minded person would care to apply. Production has bounced back substantially and is continuing to rise. For the first time, exports of manufactured goods reached a value of £52 billion last year — £1 billion a week. Industry invested nearly £7 billion last year and nearly 6 million people were employed in manufacturing. If we constantly talk about our industry having no prospects, and if we write it off, we will help to produce just what we complain of. Who buys his car or anything else from a business which is about to close down and has no future? For us to dismiss the efforts of the 6 million-plus workers in our manufacturing sector as people who are somehow misguidedly dedicating their lives to trying to breathe life into a corpse is not only to mislead the world and the British public, but to cause damage where we need help and support.
Mr. Dykes: I am sure that we would all agree with that. However, does my right hon. Friend agree that the £7 billion figure that he gave is less than 2·5 per cent. of gross domestic product, the lowest figure of any advanced Organisation for Economic Co-operation and Development investing country?
Mr. Parkinson: That may be the case. However, my point is that to dismiss our manufacturing sector as something that people are not interested in and has no future is to mislead the country and the House. The market was prepared to invest £7 billion in its future in 1985. Perhaps we should be investing more, but £7 billion is a substantial sum of money, and it is put up by people who believe that they are investing in something that has a real future, and so do I.
Let us take the anecdotal evidence. For instance, a constituent came to see me on Saturday who is a director of MFI. He told me that in 1976 MFI imported 60 per cent. of everything it sold. That figure is now down to below 25 per cent. MFI is in fact using more and more British goods because they are excellent value.
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Goodness knows, as Minister for Trade I took part in many debates about the textile industry. Last year textile production was near to an all-time record high and textile exports were at an all-time record high. This year the British engineering industry will invest £850 million in computers and software, and a recent survey suggests that outside Japan the British engineering industry makes more use of high technology and engineering computers than any other engineering industry in the world. British industry was in decline for a time, but the decline has been arrested and the climb back has begun in real earnest. There is a very good prospect for Britain in an area which, far too often, we talk about dismissively.
If we apply the wrong tests to the statistics that emerge, we can turn success into failure and failure into success. For example, I heard the right hon. Member for Chesterfield (Mr. Benn) making an interesting speech about the steel industry. He said that we should look at the good old days when steel employed 250,000 people and it now employs only 100,000. To him that was proof that our steel industry was in a state of decline. However, when the steel industry employed 250,000 people it was losing nearly £3 million a day. We had a steel capacity which we simply could not use and which nobody wanted. Therefore, we had 250,000 insecure jobs. We have moved from that position to having the best and most efficient steel industry in Europe producing as much steel with 100,000 people as it used to produce with 250,000. With 250.000 employees losing £3 million a day it is a national asset by the test of the right hon. Member for Chesterfield; with 100,000 employees producing steel at a very competitive price it is a national problem. That is absolutely wrong.
Dr. Jeremy Bray: The right hon. Gentleman is making an interesting point about steel. Is he aware that an even more competitive steel industry in Japan, faced with a similar fall in orders and intense competition from Korea and other new producers, is maintaining its employment and diversifying in order to maintain a policy of lifelong employment? Does he not think that that kind of policy is more relevant in this country today?
Mr. Parkinson: It depends where one starts from. I shall give an example from a different industry in Japan, the motor industry. In 1978 the motor industry in Japan was producing 65 vehicles per employee on average, and we were producing in our worst company, five and a half. At that level of productivity one can start to think in terms of lifelong employment, because one starts at a high level of productivity. However, if one has an industry which is losing substantial sums of money and is unproductive, it is unrealistic to talk of ensuring lifelong employment. The hon. Member for Motherwell, South (Dr. Bray), who studies these things carefully, must realise that.
First, I am saying that it is wrong to talk as though British industry is still in decline. It is starting to recover. It is wrong to draw the wrong conclusions from the available statistics. Industry does not exist to create jobs; it exists to create products. The industries which are efficient at creating viable products produce the best insurance of long-term employment.
Secondly, we continually draw attention to the fact that we have a huge and growing deficit on manufactures. That is true, but the conclusion we draw from that is the wrong one. We say that we need more Government demand

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injected into our economy. The bigger the level of our imports, the more evidence there is that there are customers here who want to buy. The argument that a deficit on manufactures is somehow evidence of a need for further demand to be injected into the economy by the Government again seems to be drawing totally the wrong conclusion from the facts that stare us in the face.
It was interesting to read in The Times today that a survey of British management said that the first priority for a better industrial performance was to improve the product. I thought immediately of Jaguar. Jaguar is now a highly profitable company selling the same range of motor cars as it was selling six or seven years ago. It has moved from being a disaster to a success because it has improved the quality of its performance. The product is the same, the range has not changed, but the prospects for those in the company and for this country, as the country in which Jaguar is based, have changed. The reason is that the quality of the product has improved out of all recognition.
Far too often in the House, especially in our economic debates, we have arguments about whether an extra £1 billion or £2 billion of Government-injected demand would turn the economy round. If it was as simple as that I might he tempted to join the argument for reflation. However, I hasten to tell the House that I will not, because I think that it is distracting us from the fundamental problem, which is how does this country compete for the business which is there? At home there is a great demand for the whole range of manufactured goods. World trade in manufactures is expanding. The customers are there overseas as well, and the real question which the House, the Government and British industry have to address is how we get a bigger share of the business which is there rather than how we generate artificial demand.
I do not underestimate the difficulties of trade union leaders at a time of high unemployment having to persuade their members that the way forward may be to reduce employment in industries because with new technology and a whole host of advances we can produce more with less people. I recognise the enormous difficulties that that presents for trade union leaders. I believe that we should pay tribute to the many trade union leaders and members who have co-operated with management in improving productivity in British industry.
I end as I began. I believe that if we continue to talk down our prospects as a manufacturing country, and if we continue to talk about our decline as if it were terminal, we must not be surprised if people start to believe us and if we produce the results that we do not want. This country has bright prospects. Way into the foreseeable future, we shall have a very important manufacturing sector. We have a strong service sector. We are prolific earners of invisible earnings. We have substantial overseas investments. Although we talk about it as if it is a problem, we still have energy self-sufficiency.
This country has a very bright future to add to its glittering past, but we shall need, as a country, and especially within industry, to produce that cohesion, that co-operative attitude that is the source of the success of all our major rivals. The question for Britain is: how do we compete? One of the answers—such an obvious one—is: working better together. Britain's future as a manufacturer stretches ahead of her. She has a fine past, but a very promising and exciting future.
4.41 pm
Mr. Don Dixon: I add my congratulations to the hon. Member for Lincoln (Mr. Carlisle) on introducing this debate. I worked in the manufacturing industry from the time I left school at the age of 14 until I arrived in this place in 1979, I am one of the small band of Members of Parliament who has not only seen but worn a pair of overalls.
The right hon. Member for Hertsmere (Mr. Parkinson) said that union leaders had to be told that we had to have fewer men and more efficiency. But let me talk about the American motor car industry some time ago, when General Motors had just modernised one of its factories. The general secretary of the Automobile Workers Union was invited to come along and see the new automated factory. He was taken round the factory and shown the robots that were doing all the work that was previously done by members of his union. He was taken upstairs for a drink, after he had been shown round. He was told, "There you are. You have seen the factory. You will not be able to get any of those robots into your union." The general secretary of the union said to the manager of General Motors, "Nor will you be able to sell them any of your cars." The point is that if there are no workers,, what is the company to do with the manufactured goods unless it gives them away or gives people the money with which to buy them?
I should like to talk about the north-east. In spite of what has been said by some Conservative Members, we see it as a danger that this country's manufacturing base is being eroded. A survey of the north-east, carried out in the 1970s, showed that 28 per cent. of male employment in the region relied on heavy manufacturing industry. What has happened over the past 10 years — not just the past seven years — in the steel industry, for example? The number of people employed in the north-east has dropped from 22,000 to 7,600. There has been a loss of jobs of almost 21,000 in the north-east, an area that has had high unemployment for a considerable time.
In an intervention, it was said that Scunthorpe had got something at the expense of' Lincoln. I should like to tell the House that Scunthorpe has just got a new steel plant at the expense of Jarrow and Warrington. British Steel has closed its Jarrow and Warrington plants. A private company called Caparo Ltd. has decided to open a plant in Scunthorpe. I met the manager of Caparo and suggested that the company should try and do something in Jarrow. The workers and management in Jarrow were even prepared to carry out a buyout of the plant in Jarrow because it was economical. British Steel wanted nothing to do with that. The problem was not that the plant could not compete, but that there was such a thing as an EEC quota, and we could produce only a certain quantity of steel. When one talks about free competition and producing things economically, one has to take those things into consideration.
Therefore, there has been deterioration in the steel industry over several years. We have lost 21,000 jobs. The number employed in the coalmining industry has fallen from 35,000 to 18,000. It is said that we cannot keep uneconomic pits open. Uneconomic pits have been closed in Durham and Northumberland. Incidentally, it has never once been suggested that we should close uneconomic farms. They are still kept going with Government subsidies.

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The number of people employed in shipbuilding and ship repairing in the north-east has dropped from 31,000 to 10,000 — a loss of 21,000 jobs. That does not take into account the 2,600 job losses announced recently by British Shipbuilders or the 825 announced by Swan Hunter.
We talk about training for the future. Swan Hunter has decided to take on no apprentices this year, in spite of a request by the trade union. How shall we build boats in the future? If we have another Falklands dispute how will the Prime Minister get together another task force to go to the Falklands? There will be no one to build or repair the ships unless we have apprentices.
People talk about competition in the shipbuilding and ship repairing industry. A tender was put out recently. If the men in the shipbuilding industry had decided to work for nothing, they could not have undercut the price that the Koreans offered. So, how do we tell the workers in the shipbuilding industry that they should be more competitive? The industry is not competitive because for years there was no investment when shipbuilding was in private hands. It is no good the right hon. Member for Hertsmere shaking his head. I worked in the industry when it was in private hands, and when we had the Patten report in 1962, the Geddes report in 1966 and the Booz Allen report in 1972. Every one of those reports talked about the lack of investment in the British shipbuilding industry, so we do not need lessons about investment. The British shipbuilding industry is in the state that it is today because of lack of investment. While other countries were investing, the private builders in this country would not put a penny into the industry. They were prepared to pay 27 per cent. dividends. When I worked in Hawthorne Leslie, that is what the company paid to its shareholders.
The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) referred to the Queen Mary being repaired on Clydebank before the war. What he said is perfectly true. The workers in Clydebank were lucky. Because of overcapacity, an organisation called British Shipbuilding Security Ltd., which was a firm of merchant bankers, ship owners and shipbuilders, decided not to let ships lie up and rust in the dock, but to close down yards and put on a 40-year embargo. It came to Jarrow. Palmer's yard in Jarrow was one of the best enterprises in the world. The ships came in as iron ore and went out as complete ships. The workers used to roll their own steel, make their own bolts and rivets and put the ships together. They sailed up the Tyne as a complete entity.
In 1934 British Shipbuilding Security Ltd. came along and decided, because of over-capacity, that there had to be rationalisation. Palmer's yard was closed and a 40-year embargo was imposed. The company was embarrassed five years later when the second world war broke out and ships needed to be built and repaired. People who had been trained in the shipbuilding industry were needed to build the ships. They were needed very much. At that time if people worked less than the 47-hour week they were fined by a tribunal. That is how important the shipbuilding industry was when the war started. That is one of the reasons why we should be protecting our industrial base, which is rapidly becoming eroded. Unless the Government are prepared to take some action, we shall have no shipbuilding or ship repairing industry in this country. It will be like the motor cycle industry, which disappeared.
Mr. James Couchman: The hon. Gentleman is making much of lack of investment in the shipbuilding industry over many years. As I understand it, he is talking about a yard which closed 50 years ago. I suspect that may not be relevant to today's position. What proportion of blame would the hon. Gentleman ascribe to trade union demarcation disputes and the dreadful industrial relations which have pervaded shipbuilding for far too long?
Mr. Dixon: I shall explain the question of demarcation to the hon. Gentleman. I do not want to take up too much time. Many hon. Gentlemen think that demarcation was introduced by trade unions, trade union officials or work men. Demarcation in any industry arises as a result of management practice. I was a shop steward in the shipbuilding industry for almost 30 years. Demarcation occurred when the management decided, in view of past practice, that a particular trade was the best one to do a particular job. Demarcation disputes occur only when there is unemployment. There are no demarcation disputes when there is full employment. If a person who had served his time in a particular trade for five years and had worked on a previous ship found that some of his colleagues were out of work and the management had given the job to another trade, because it was more experienced, a demarcation dispute occurred. I agree that there were too many demarcation disputes.
Industrial relations in the shipbuilding industry were like a jungle. There was no such thing as industrial relations. The management did not care about trade unions. When I worked in the industry, we used to hold bits of steel on plates for the welders and the management refused to provide us with industrial gloves to protect our hands. Every night we used to go home with septic burns on our hands. We had to go to a tribunal in York so that we could get gloves for men who had to hold red-hot plates. That is what industrial relations were like in the shipbuilding industry. They did not exist. Management was interested only in profit. There were no industrial relations under private management.
I could speak for a considerable time on the shipbuilding industry. Listening to some Conservative Members, I think that a lesson on shipbuilding would be appropriate. Some Conservative Members know more about lying on a deck chair on the poop deck than building a ship. One of the problems in this House is that when we have debates on unemployment, views are put forward which would be more appropriately debated in universities than in the House of Commons whose Members are supposed to represent the unemployed.
A firm called N. E. I. Reyrolds in my constituency used to employ 13,000 people. It had over 2,000 apprentices. In fact, it had more apprentices a few years ago than it has bodies on the premises now. The firm is trying to compete overseas and it is trying to obtain orders. One of the problems is that there is no refurbishment or replacement of power stations. The Government should say to the CEGB, "Let us have a sensible programme for refurbishing and replacing power stations, so that we can keep our power industry." Otherwise, there will be no jobs left in that firm.
As well as expanding and improving manufacturing industry, we want a decent regional policy. We have virtually no regional policy. Since the Conservative party came to office in 1979, regional policies have been cut. It

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is no good the chairman of the Tory party telling people that they should get on their bikes and look for work. If they do, what will happen to the areas which young and active people have left? When people leave an area to look for work elsewhere, they do not take the community centres, old people's homes and hospitals with them. A disproportionate number of old people are left. The Government should have a regional policy and they should put the work where the people are. Unless they do that, we will not solve the housing, schools and hospital problems. If people move from one area to another to look for work, vacant houses wil be left. We require not only a boost in manufacturing industry, but a decent and sensible regional policy from the Government.
I thank you, Mr. Deputy Speaker, for allowing me to intervene briefly and make those few comments.
4.55 pm
Mr. David Knox: I congratulate my hon. Friend the Member for Lincoln (Mr. Carlisle) on his good fortune in the ballot, and, perhaps even more, on his choice of subject this afternoon. I do not think that the House discusses manufacturing industry nearly enough. Like the hon. Member for Jarrow (Mr. Dixon), before my election to this House I spent my working life in industry. I have a strong belief in the central importance of manufacturing industry to this country's economic prosperity. I reject absolutely the view expressed in some quarters that manufacturing industry no longer matters and that we should concentrate all our efforts on the service sector. I can think of nothing more damaging to the British economy than a further acceleration in the decline of our manufacturing base. Let there be no doubt that there has been a decline over the past 12 years.
A brief look at the statistics will show, first, that, although the number employed in manufacturing industry fluctuated a little, between 1960 and 1973 employment was fairly stable. Since 1973, employment has fallen by almost one third. Secondly, subject to minor fluctuations, manufacturing output rose steadily from the end of the war to 1973. Between 1973 and 1975, it fell back steeply. Between 1976 and 1978, it rose a little. Between 1979 and 1982, it fell back steeply. Since then, it has risen a little. The position today is that manufacturing output is not only lower than it was in 1979, it is still lower than it was in 1973.
Thirdly, until 1983, the balance of trade in manufactured goods showed a comfortable surplus. Since then, it has shown a deficit which, as output from the North Sea oil starts to decline, is worrying in the long-term. Fourthly, following disastrously low investment in manufacturing industry, in 1981, 1982 and 1983, there has been a welcome increase in the past two years. Nevertheless, investment in manufacturing industry in 1984 and 1985 was still lower than in any year since 1963, except for the 1981–83 period. The figures show all too clearly the decline in manufacturing industry in recent years.
I accept that a decline in the numbers employed in manufacturing is a feature of modern advanced economies, but a fall in output is not. I find that the decline of almost one third in the numbers employed and the fall in actual output over the past 12 years alarming. I find the deficit in the balance of manufacturing trade and the low level of investment equally alarming. For reasons already given by my hon. Friend the Member for Lincoln (Mr.
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Carlisle), a strong manufacturing base is essential to this country, if only because the export potential of the manufacturing sector is so much greater than that of the service sector—a point made by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins).
Why have things gone wrong? The blame should not be attributed to one source. It is true that in recent years the conduct of management and of the trade unions has left something to be desired, but so, too, has the conduct of successive Governments. I should like to concentrate on the latter. During the past 12 years, under Labour arid Conservative Governments alike, economic policy has not contributed to the expansion of manufacturing industry and, indeed, at times has seemed to discriminate against the expansion of the most efficient and modern parts of the manufacturing sector.
Over this period, Government economic policy has involved a continuing policy of demand deflation, with total effective demand in the economy as a whole being held below the economy's supply potential. Some of the reasons for that have been quite respectable, but the result has been to stifle the expansion of domestic demand for the products of manufacturing industry, especially for new products and the products of capital-intensive industries. Consequently, unit costs have been higher than those of some of our competitors and sales at home and abroad have suffered to the detriment of the British manufacturing sector. In addition, successive Governments have pursued high interest rate policies, largely to maintain the strength of sterling. At home, the effect has been to place a heavy burden of those who borrowed money to invest and to benefit those who put profits into fixed interest securities. That is hardly the way to encourage efficiency in the manufacturing sector.
In recent years, one of the most damaging aspects of Government policy on the manufacturing sector has been. the exchange rate policy. First, for most of the time during the past 12 years, and especially in the early 1980s, sterling has been at a much too high rate in relation to other currencies. The result has been to make British manufactured goods uncompetitive at home and abroad, to encourage imports and to discourage British exports. Secondly, there have been frequent and sometimes violent changes in exchange rates. This is a particular problem for those manufacturers whose primary functions are to design, manufacture and sell products but who rarely have an interest in finance and the financial implications of exchange rate variations.
My final point on the deficiencies of Government is the lack of an industrial strategy. I am not one of those who believe in detailed economic planning — so beloved of the Labour party in opposition and scorned by it in government — but there is much evidence that the industrial strategies adopted by the Governments of countries such as Japan and France enable their manufacturing sectors to perform better than does the British manufacturing sector. In the modern world I believe that we suffer because the Government have no manufacturing and industrial strategy.
We all want British manufacturing industry to expand and prosper. My hon. Friend the Member for Lincoln and others who have spoken in the debate have outlined the measures that they believe industry must take. I agree with many of their points hut, against my criticisms of the

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policies of successive Governments, I should like to suggest what the Government might do to help our manufacturing industry in the years ahead.
First, the level of total effective demand in the economy as a whole should be brought more into line with the supply potential of the ecomomy. This should be done by increasing public expenditure and by reducing taxation. Not all the extra demand will go into the manufacturing sector, but quite a lot will. Such an increase in domestic demand would enable unit costs to be reduced, would lead to an increase in the demand for British exports and would encourage investment in manufacturing industry.
Mr. Dykes: I apologise for interrupting my hon. Friend's excellent and compelling speech, with which I agree. Does he agree that the urgent need to increase public spending is even more important on capital account than on current account? Does he agree that on capital account once again there has been inadequate investment, which has been cut back much more easily, drastically and quickly than current account spending, which has increased because the rest of the economy remained truncated?
Mr. Knox: I agree with my hon. Friend. The emphasis should be on the capital side but, given the amount of slack in the economy, I see no reason why there should not be an increase in current expenditure as well.
I come to the second point to which the Government should pay attention — interest rates. They must be reduced below their present excessively high level. This would encourage investment by reducing the cost of borrowing money. It would have the added advantage of not giving support to sterling at an absurdly high level, which would be beneficial to manufacturing industry as well.
Thirdly, I believe that Britain should join the exchange rate mechanism of the European monetary system. That would bring exchange rate stability for about 60 per cent. of the country's trade and would remove the unnecessary uncertainty in Europe for our manufacturing sector—a point which is made to me repeatedly when I visit manufacturing firms in my constituency.
Finally, the Government should embark on widespread consultation with industry and the trade unions, perhaps through the National Ecomomic Development Council, with a view to developing an industrial strategy. This would show everyone the direction in which the Government believe the manufacturing sector should be moving. It would enable British manufacturing industry to move forward more confidently and effectively in the years ahead.
5.6 pm
Mr. George Park: It is clear that the right hon. Member for Hertsmere (Mr. Parkinson), who used to be a member of the Government, is still wearing his Government blinkers. To state the facts is not to talk the country down.
We are indebted to the hon. Member for Lincoln (Mr. Carlisle) for choosing this topic. A minority of 3 million to 4 million unemployed is simply not good enough. It is not good enough to point to the 6 million people in work
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in manufacturing industry when there are such numbers out of work. What does it take to make the Government realise, as the motion states,
"that manufacturing industry has a central part to play in the future prosperity of the United Kingdom"?
I suppose that it is understandable for the Government to brush aside Opposition protests as something to be expected from an Opposition, but a few days ago the West Midlands Engineering Employers Association met a group of Conservative Members of Parliament and left them in no doubt about the urgent need to halt the decline in that area. Perhaps the most pertinent point made by the association's chief executive was his comment: "If you do not want to lose votes, you must change your policies." He went further, and said, "You must stop pussyfooting around and do something to help ailing West Midlands industries." His feelings were underlined last week by a report by the West Midlands chamber of commerce and industry, which found a marked reversal of fortunes among the 435 firms which were sent a questionnaire. Orders at home and abroad are down, with little sign of new investment to create jobs.
Recently, several hundred people lost their jobs at GEC in Coventry. Last week, several hundred people at a Nuneaton factory lost their jobs. This week, Coventry Climax Forklift Trucks announced that another 90 jobs would go. Former busy factories in my constituency now stand silent and derelict, and in some areas of the west midlands unemployment is nearly 40 per cent. It is futile for the Chancellor of the Exchequer to imagine that service industries can take the place of manufacturing. Services must service something. Leaner and fitter has led to anorexia. The Government have said that they cannot create jobs. That is as may be, but they can do much to make trade fair. They can do something about unfair tariffs and special taxes, such as the 10 per cent. tax on cars.
Foreign Governments assist their industries by their purchasing policies. They do not place orders overseas for basic items of equipment needed in that country. They help industry by various means: in research and development, in energy costs, and, as has been mentioned, in the reduction of interest rates. The Government could do many things. It is ironic that companies say that there is a skills shortage. It would be negative of me to say that one of the first casualties in any recession is training, but it is painfully obvious that our competitors such as West Germany do not follow that course.
In appealing to the Government to revise their policies, there is considerable scope for improvement in industry's attitude to training. It cannot always expect to obtain its skilled labour by poaching. Increased wages, which is another favourite dolly shy of the Chancellor of the Exchequer, is not the reason for industrial decline in the west midlands, which has gone from the top to the bottom of the wages league, despite huge increases in productivity of about 30 per cent. in companies such as British Leyland and Peugeot. They rightly boast of that increase in productivity.
Manufacturing industry is the bedrock on which Britain's prosperity can rest. We cannot prosper by taking in each other's washing. If the Government cast that aside, they also cast aside their future. That does not greatly worry me, but I am worried that Britain is two nations

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—those in work and those out of work. I wish the latter group to be given some hope for the future and for the entire country to have a thriving manufacturing industry.
5.13 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): May I join all contributors to the debate in congratulating my hon. Friend the Member for Lincoln (Mr. Carlisle) on his choice of subject, on the timeliness of his choice of subject and on the manner in which he deployed his argument. He used vivid examples from his constituency to illustrate some significant points. He said clearly, and I agree with him entirely, that there is no inevitability about the decline of manufacturing industry. With other hon. Members who have spoken in the debate he has helped to scotch the myth that we in the Chamber take that view.
My hon. Friend gave a good example from his constituency of the successes and the dilemmas which are posed by success. He referred to Ruston Gas Turbines, which exports 90 per cent. of its output in key areas, but then he said — this issue, among others, exercises us tonight —that that company has had a static payroll but it has trebled the value of its production.
My hon. Friend immediately came to one central truth which should pervade the debate: that it is perfectly possible to crank up the engine of wealth creation, but not to obtain a commensurate increase in employment in the manufacturing sector. My hon. Friend then analysed sonic of the reasons for decline, and invited other participants in the debate — I assume that he also means representatives of the Department of Trade and Industry —to construct a policy for success.
I hope soon to reassure my hon. Friend that inside the Department of Trade and Industry we have matched the adjustments which have taken place in the economy during the past few years. We now have a suite of policies which are relevant for the latter half of the 1980s and the early 1990s, rather than a group of policies which borrow far too much from the prescriptions which failed in the 1960s and 1970s.
The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) spoke on an issue which has exercised all of us —the role of the manufacturing and service sectors and the fact that they are complementary, not competitive. The right hon. Gentleman asked for a catalogue of the recipes for success. I shall not be airing that before the House tonight, but I shall suggest some ideas in answer to the question, "Do we have an industrial policy?" If we have such a policy, is it correct to call it a strategy, or has the word strategy been discredited after the practices of the 1960s and the 1970s? Should we use other language to define our new, and—I hope that the House will agree —formalised objectives in industrial policy?
The hon. Member for Jarrow (Mr. Dixon) spoke passionately, as ever, in defence of the shipbuilding industry and in defence of utilising the skills of his constituents and of the north-east generally. I shall return to that issue in a moment. My hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) talked about the link between interest rates and the value of sterling, although he was careful to ensure that he reaffirmed the need to control public expenditure generally to give us more freedom to manoeuvre in interest rate policies. It is precisely that dilemma which constantly exercises the wits of successive Chancellors of the Exchequer.
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I begin my remarks by following naturally from the comments made by the hon. Member for Coventry, North-East (Mr. Park). In so doing, I am not trying to be controversial by responding to his remarks on employment. Rather, as I hope the hon. Member for Dunfermline, East (Mr. Brown) may concede, as a historian, I am seeking an area of consensus, in terms of our analysis of the problems, from which to proceed. I quote the hon. Member for Paisley, South (Mr. Buchan), admittedly from some time ago, but it has relevance today. In August 1978, the hon. Gentleman said in an article in the Glasgow Herald:
"The 1,500,000 unemployed is entirely due to an expansion of the workforce in Britain. And over the next decade, an additional 1,500,000 more will he in the labour force. That leaves us, even with improved growth in the economy, facing a possible 3 million unemployed by the end of the eighties. To try to blame this on the mishandling by any Government— Tory or Labour—doesn't get us very far."
That gave us a prediction of 3 million unemployed by the end of the 1980s.
Then I turn to a report in which the hon. Member for Dunfermline. East may have had a hand. I hope at least that he would have been consulted about it. It is a report put out by the Labour party's finance and economic affairs sub-committee in November 1976. I believe that there was an attempt to squash it, but the lion. Member for Liverpool, Walton (Mr. Heifer) will remember it clearly. He may recall that the report was not published because, from first reading, it appears to be a full-blown justification to the Labour party, perhaps not to others, for import controls and a massive increase in public expenditure. That will be grist to the hon. Gentleman's mill.
Let me return to the analysis and the projections for unemployment. I quote from Robert Taylor's article in The Observer:
"Unemployment at 2,500,000 by 1980 is predicted in a gloomy confidential paper produced by the Labour Party's finance and economic affairs sub-committee."
He then quoted from the report:
"'By 1981 the population of working age will have increased by more than 1,000,000. The actual number entering the labour force is sensitive to a number of assumptions, but the official figure of 774,000 is a reasonable estimate. Thus if the growth performance of 1964–1973 were repeated unemployment would he approaching 2,000,000 in 1980.'
The document suggests that this figure is an underestimate. It reckons private investment would need to grow by 8 per cent. a year just to maintain the 1964–1973 average growth of total investment of 3·5 per cent. a year. The document notes such a figure was achieved only once in that period … It also says the 'initial gain in competitiveness conferred by devaluation up to and including the first quarter of 1976 has already been eroded.'"
Opposition Members may be confortable with the conclusion of the report, which argues for import controls and a massive boost in public expenditure, but I hope that they will not dispute yet again the projection that, if those trends had continued, there would have been the prospect of 2·5 million unemployed in 1980. The authors of that report were not to know then that the worst world recession since the war was on its way. When one adds that factor into the balance, plus the structural defects in our economy that have been developing for decades, Conservative Members could say that those who blame the Government for all the 3·25 million unemployed are, to put it mildly, misguided, or if they are being deliberate, are

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mischievous. Jobs are the political imperative. I am sure that that was in my hon. Friend's mind when he launched the debate.
We are here to discuss the role of manufacturing industry as a wealth-creation engine so that manufacturing industry can be restored to health and have a multiplier effect on the rest of the economy, in the service sector as well as upstream manufacturing activities. This is a big area where my hon. Friend, some Opposition Members and I could agree.
Our share of world trade has undoubtedly plummeted. It went down from 14 per cent. in 1964 to 9 per cent. in 1979. It is now bumping around the 8 per cent. mark, but there is a sign— I am not in the business of counting chickens today—that at long last trade is starting to increase. The reversal of that decline in our share of traded goods and services is at the heart of the Government's job-creation programme. When the Government go on and on, as we do, about the right products at the right time at the right price and of the right quality, we are talking about the paramount importance of the job-creation programme.
One could argue that, in the 1960s and 1970s, policy was dominated by panacea politics. There was the white heat of the technological and industrial revolution. Does anyone remember that? Can anyone see its effects today? What happened during the 1960s and 1970s, exaggerated and exacerbated by the recession, was the development of a mismatched economy. Many people, and large amounts of plant and equipment, were dedicated to producing things for which demand was low, stagnant and falling, and not enough were dedicated to producing things for which demand was high, rising and dynamic. Our policies attempt to put right that mismatched economy, through either the Treasury or the Department of Trade and Industry, and to begin to tackle the unemployment problem.
Mr. Gerald Howarth: Does my hon. Friend agree that, at that time, because there was no real uplift in the new technologies, and because of the artificial restraint on wages in manufacturing industry imposed by the then Labour Government, many of our best brains and most able skilled people went overseas? Is there any talk of a brain drain today?
Mr. Butcher: There is evidence that managers are returning from, for example, the United States. Indeed, in talking to such people, we are complimented on the great changes that have taken place in British management during the past five years. Once again, British managers are being tough, professional, ambitious and competent. What is equally important is that the work force is being tough, ambitious, professional and competent. The partnership, which we should have been invoking for a long time, is at long last coming together. An example is the increase in productivity and the dramatic reduction in the number of working days lost through disputes.
I am grateful to my hon. Friend for raising that point and I can tell him that the brain drain is not the acute problem with which we had to contend some time ago.
I have been asked whether services and manufacturing are in conflict or whether they are complementary. Of course they are complementary, but I recall—my right hon. Friend the Member for Hertsmere (Mr. Parkinson),
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who was then my boss, will remember this— that for some time I asked the Department's economists for an answer to the question: "What proportion of manufacturing output is internationally tradeable, and what proportion of service sector activity is internationally tradeable?" The answer has been checked, rechecked and compared with the research of colleagues in Whitehall, and I can now report that, in general, 80 per cent. of manufactured output is internationally tradeable. By contrast, in general, 18 per cent. of service sector activity is internationally tradeable. There is, therefore, no choice, and this has not been disputed when I have spoken from the Dispatch Box: manufacturing must be at the core of our wealth-creation process. It earns a buck for United Kingdom Ltd's people. It is the way in which we pay our way in the world.
However, there is no gainsaying the fact that even in the teeth of the recession the service sector has been a magnificent job creator. About 700,000 jobs have been created in the service sector since 1981–82. It has done so imaginatively; and much of the activity which has been generated is internationally tradeable.
Although manufacturing may thrive again, as it is beginning to do, it may not create enough employment to make a major hole in the unemployment queues. Manufacturing can increase its share of world trade. It can increase its performance; and the income that it earns will disseminate through the economy, the market, the City, the payroll, through subsidiary companies and suppliers to generate jobs in other parts of the economy. That must be at the core of our appreciation of the role of manufacturing.
I do not wish to detain the House on the general issues that would normally come under the heading "Getting the climate right". I shall simply say that any hon. Member who had a conversation with industrialists in 1981–82, and who had that conversation 500 times, as I did during the west midlands initiative, was left in no doubt that their concern centred on inflation, interest rates, exchange rates and public utility costs. We must agree that the same conversation today would produce a less vivid account of the strength of the difficulties facing industrialists. The problems are coming under control.
Dr. Keith Hampson: On training, which is fundamental to improving the manufacturing effort, will my hon. Friend confirm, that, as was reported this weekend, the Government will set up a "College of the Air" using radio and television to help to retrain young people, and, indeed, adults, or is this simply an extension of the Open Tech?
Mr. Butcher: The best response that I can make to my hon. Friend's question is to extract the answer from my right hon. and noble Friend the Secretary of State for Unemployment — [HON. MEMBERS: "Hear, hear."]— the Secretary of State for Employment. That is not an issue with which the Department of Trade and Industry is involved, but I am sure that the record of this afternoon's debate will invoke that response.
Mr. Park: I should be interested to know what the Minister would say to the engineering employers and the chambers of commerce in the west midlands, because it is evident that the people he is meeting do not belong to those organisations.
Mr. Butcher: I attended the meeting with the Engineering Employers Federation four or five weeks ago and I maintain regular contacts with the federation. I value those contacts, as I do my contacts with the chambers of commerce, particularly those in Birmingham and Coventry. I read their surveys and their analyses of business confidence, and I note the factors that they list. In the next few minutes I shall list what I would say to the EEF.
Mr. Alan Williams rose——
Mr. Butcher: I will give way for the last time. I must press on.
Mr. Williams: I am grateful to the hon. Gentleman. A few moments ago he mentioned the need to consult the Secretary of State for Unemployment. Perhaps he will be kind enough to explain which Government Department he holds responsible for that function.
Mr. Butcher: There are times when giving way is unwise. I thank the right hon. Gentleman for making a fairly small point and I hope that he will accept that the Secretary of State for Employment is the Minister who appears to he leading on the question raised by my hon. Friend the Member for Leeds, North-West (Dr. Hampson).
Mr. Tony Baldry: Will my hon. Friend give way?
Mr. Butcher: I must press on. I hope that my hon. Friend will have a chance to speak in the debate.
Six objectives are incorporated in the Department of Trade and Industry's policy. They are designed to tackle the issues by my hon. Friend the Member for Lincoln (Mr. Carlisle).
The first objective is to support and disseminate best practice in getting world-heating products to the market. These are post-research and development projects; they are market driven and product driven. A number of my hon. Friends who have been studying the business and technical advisory services will know that our policies on design, quality, productivity and marketing are working. The clients who receive that support say clearly in post-study evaluations that they value the work done under those heads of account.
The Government do not say "'This is how to design a product'" or "'This is how to increase the quality of your product.'" Practitioners are well respected in the market, the schemes are administered by third parties and the taxpayer covers the costs. We can put the best people into virtually any company with fewer than 500 employees to implement best practice in those key areas. It is about products and market penetration; and that is where jobs will come from.
The second objective is to enhance the competitive environment. Where competition is impaired or does not exist, we introduce the minimum safeguards required to protect the consumer properly, while encouraging efficiency.
There is, of course, a comprehensive competition policy. We believe that competition is the driving force for wealth creation and that it safeguards the consumer and keeps company managements on their toes.
In the past few years, not enough attention has been paid to policy on regulating monopolies, whether in the private or the public sectors. My right hon. Friend the
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Member for Hertsmere will remember the excellent work done by Mr. Stephen Littlechild of Birmingham university who first brought us the RPI minus X formula, which is a magnificent way of regulating monopolies. We have discovered a way of encouraging British Telecommunications to maximise its return on capital, without putting up prices in its monopoly environment. The formula encourages efficiency and protects the consumer. It may have a big future when we consider other denationalisation proposals and deregulation schemes.
There is also an international dimension to competition policy. It is our duty to promote free markets, whether through the GATT or the EC. I see it as the cornerstone of the Department's efforts during the United Kingdom's presidency of the European Community that we should do all that we can to deliver the truly internal market in the Community.
But — and this is a major but—where international markets are defective, it is not for us to disarm unilaterally. Where necessary, we should secure the multilateral removal of barriers and, if necessary, provide support for British firms that must compete with companies that enjoy support from their own Governments.
The third objective is to tackle the regional legacy arising from the mismatched economy — the unhappy legacy of wasted human resources about which the hon. Member for Jarrow spoke with such fervour. I am sure that the hon. Gentleman agrees that DTI regional policy is not the only method of tackling the problem. There are other ways, including some of the measures recently introduced by the Secretary of State for Employment.
The hon. Member for Jarrow should welcome the changes made to regional policy. He may argue about the expenditure levels, but I hope that he will agree that we were right to concentrate on job creation and conservation as part of our review of regional policy which was implemented just over two years ago.
We have shifted towards selective assistance and away from automatic assistance. We made rigorous checks on the viability of products. It is no use throwing money into a company if the management cannot cope with the demands that companies have to meet in the market place or cannot manage innovation or production development. That is money down the drain.
We made checks to ensure that projects are viable. Those checks are carried out not by civil servants, but by people under the guidance of an industrial development advisory board which is made up of industrialists. We have also said that, under normal circumstances, there will be no simple job shifting from one part of the country to another. I know that that practice caused great discomfort to a number of hon. Members on both sides of the House.
Mr. Tony Favell: Can my hon. Friend assure us that one criterion in judging whether assistance should be given in an assisted area is the effect that it will have on competitor companies elsehwere?
Does my hon. Friend know that printers in non-assisted areas are very worried about new printing companies that are being set up in assisted areas such as Wales? The new firms could drive out of business other firms who cannot compete with the lower overheads of those in the assisted areas.
Mr. Butcher: Job displacement is one of the factors that assessors have to consider. I hope that my hon. Friend will

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draw some encouragement from the changes that we have implemented. In normal circumstances, simple job shifting will not take place.
However, I am sure that my hon. Friend agrees that there will be occasions when a bid from an assisted area represents the UK Ltd. bid for some inward investment. At that point we may have dilemmas to resolve within our economy, particularly if a United Kingdom competitor feels threatened. That is an excruciating difficulty, but it has to be faced.
The fourth objective is to achieve the maximum economic impact from the United Kingdom's aggregate research and development spending, in the light of rapidly changing markets.
Mr. Gordon Brown: Before the Minister leaves regional policy, will he agree that to appear to support regional policy, but then to deny areas that have been worst hit by the loss of manufacturing jobs—halving regional expenditure between 1979 and 1985 and halving it again between 1985 and 1989—is to deny the regions any chance of recovery?
How does the hon. Gentleman react to suggestions by former Ministers—the right hon. Member for Henley (Mr. Heseltine) and the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) — that the English regions need development agencies or bodies similar to the Welsh Development Agency and the Scottish Development Agency, which were set up in the 1970s?
Mr. Butcher: That is an interesting proposition, particularly in the context of solving some of the problems of urban dereliction, although I suspect that some members of the Labour party in various parts of the country would oppose such a move. I believe that there are signs of the Birmingham Labour party not being too enamoured of that proposition. I hope that, as a fair-minded spokesman for the Opposition, the hon. Gentleman will concede that one must look at a package of measures when talking about a shift in cash from the south to the north, not least when one looks at the rate support grant settlement and policies emerging from the Department of the Environment. There is nothing for the Government to feel defensive about in terms of resources deployed in the north.
In the time available I want to complete the six objectives. This is the first time in 1986 that we have had a chance to set out the Department of Trade and Industry's industrial policy. If I can do that, I shall resume my seat as quickly as possible.
Our fourth objective is to achieve maximum economic impact from the United Kingdom's aggregate research and development spend in the light of rapidly changing markets. All we are saying is that there is a legitimate role for pre-competitive research spending, but it is right that the Department of Trade and Industry's shift in expenditure should move closer to what the market wants —working with the grain of market forces. Therefore, it is our objective to add the second "D" to the R and D equation. Research, development and design should be the order of the day. That takes us closer to the markets.
The fifth objective is to change attitudes in order to improve the supply and quality of people available to industry and commerce in a world of increasingly international markets. We could argue at great length on
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why for so long our brightest and best have not been attracted into front-line commercial and industrial management. There has been an anti-enterprise culture, an anti-industry culture and an anti-training culture; but we have learnt through the information technology skills exercise, which I chaired on a multi-departmental basis, that it is possible to bring a new partnership to the business of training and to bring it into the heart of the higher education sector. Private sector companies are now welded into the decision-making process as to which courses in the new technologies, and engineering in particular, should be supported with a mix of public and private sector funds. It is interesting to see the recommendations that are now coming from all quarters that we should take that new partnership upstream into the further education sector. Some would even argue that that should occur in the statutory school sector.
The sixth objective is to secure the broader implementation of the public purchasing initiative. All hon. Members should be aware, if they are not already, that the public sector nationalised industries and Whitehall spend £40 billion a year on services and goods which are bought elsewhere. Some 90 per cent. of that is spent in the United Kingdom. Under the public purchasing initiative, by implementing enlightened purchasing policies we could produce a situation in which those national concerns buy British because it is best and has become best as a result of the implementation of the PPI. That is consistent with our commitments under GATT and the EEC and there is still much mileage available to us in obtaining value for money from that £40 billion.
I am delighted to report to the House that examples of that policy are already under way. We are discussing non-warlike purchasing with the Ministry of Defence. We are discussing supply questions with the Department of Health and Social Security on consumables and medical equipment and the Crown suppliers are already implementing good design policies.
Does that amount to interventionism? Is it a strategy? Not in the sense of industrial strategies of the 1960s and 1970s. There is no bureaucratic or detailed national plan. There are no sector or industry targets. There is no omniscient Department of Economic Affairs and no intervention-driven Ministry of Technology. Instead, we are operating in an environment of a demand economy rather than a comand economy. But there is an objective. It was reported to the House in a written answer on 28 February 1986 when I told my hon. Friend the Member for Crawley (Mr. Soames), who is in his place:
"The continuing aim of the Department is to increase the national production of wealth, to promote and enhance the vitality and competitiveness of British trade, industry and commerce within a proper regulatory framework and to increase the United Kingdom's share of world trade" —[Official Report, 28 February 1986; Vol. 92, c. 723.]
Our objective is to reduce or eliminate barriers which impede British companies' ability to sell goods and services in the international markets, and, secondly, where support is necessary, in terms of policy or spending taxpayers' money, to ensure that such support works with the grain of market forces and enhances rather than undermines the determination of companies to compete.
5.44 pm
Mr. Eric S. Heffer: The Under-Secretary of State concluded his remarks by saying that the

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Government have no plan, no command economy, no sector targets, and so on. He seems to be proud of that fact.
Mr. Nicholas Soames: Of course he is.
Mr. Heffer: Of course he is. But the other side of the coin is that, without any planning of any kind, without any real Government intervention, with the abolition of the National Enterprise Board and the changes that have been described by my hon. Friend the Member for Dunfermline, East (Mr. Brown) in relation to regional policy, we have the highest levels of unemployment in the Western world. Therefore, there must be some correlation between the two.
If we decide that there will be no planning of any kind, that there will be a completely free market, that competition will be rampant, it is not surprising, certainly to me, that there will be higher unemployment and the type of problems that we have at present.
One thing that the Under-Secretary of State said is absolutely untrue—that any sector of the Labour party has ever said that all unemployment in Britain is due to the Government's policies. Nobody has ever said that. What we have said is that the serious nature of the crisis in the Western capitalist world has been aggravated in Britain by the Government's policies. An already serious crisis has been made worse. We are not putting all the blame on the Government. Instead of the Government tackling the problem in an intelligent way, their policy of open and free competition has aggravated it. They have not tried to deal in a serious way with the needs of the British people and of industry.
I am grateful to the hon. Member for Lincoln (Mr. Carlisle) for instituting this debate. I do not endorse all his philosophical attitudes towards solving the problem, but is is clear that he is deeply concerned about it and has rightly raised one of the most serious issues facing Britain today. I agree with the right hon. Member for Hertsmere (Mr. Parkinson) that we want and must have an improved service sector economy, but that must not be at the expense of manufacturing, which is what has happened. We need a good manufacturing sector. We cannot rebuild and re-industrialise our economy unless we have a sound, serious manufacturing base.
Why has the decline taken place? In particular, why has it taken place since the end of the second world war? There are many factors. The first is that at that time we were no longer the workshop of the world. We came out of a most serious war, into which we had put everything, and we probably suffered more than those countries which had been defeated. We accepted the burdens in a way that other countries have not. That was one of the reasons. We also lost our cheap raw materials because, whether we liked it or not, stage by stage we had to agree to various colonial parts of the empire being given the right to self government. That meant that the prices of our raw materials went up and that we did not have the same pool as we had in the past, although it continued to be fairly good because we were members of the Commonwealth.
We also faced greater competition from countries which had previously not been able to compete with us. One of the reasons for that was that they began where we left off. Many of our manufacturers believed that their methods of manufacture were the best in all possible worlds arid that they did not need to change or improve
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or have new management. They thought they did not need to do things that it was necessary to do. Suddenly they discovered that other manufacturers were using the best of our traditions and leaving us behind.
We have heard many solutions to our problems. I have been in the House quite a long time and I have heard them all. Hon. Members on both sides of the House have told us how we can solve our problems. If I remember rightly, one of the solutions was the Common Market. The EEC was the panacea. We were told that if we got into that we would become more competitive and be able to deal with the problems of our people. We were told that we would have a new market and so on. We joined the NEC— [Laughter.]—the EEC. I have been on the NEC' for quite a few years. [Interruption.]The hon. Member has not had my advantages.
What happened when we joined the EEC? Unemployment did not decrease. I am sure that hon. Members will remember the arguments at the time about jobs for the boys. My God, unemployment has increased. The EEC is no answer to our problems.
There are many other factors. There are new modern things now. We are told that we have to follow the examples of various other nations, one of which is Japan. Have hon. Members read much about Japan? I am sure that many of them have been there and seen the way that the trade union movement in Japan is organised and seen the conditions of the work force. They will also have seen the way that many people live in Japan. If anybody wants to go there, they are perfectly welcome to do so. I am not advocating Japanese policies for our people. Those are not the way to deal with this problem.
We have come to the most fundamental stage in industrial development. This applies not only to us but to all Western capitalist societies. I am not asking Britain to accept all the Eastern European concepts, but I do suggest that there is one we could accept. In Eastern Europe there is a planned economy. East European countries do not have mass unemployment. It is true that the conditions of the workers are not as good as the conditions of workers in the West, and consumer products are not as freely available as they are in parts of the West. Eastern Europe does not have free and independent trade unions. However, we ought to learn from the good things it has and reject the bad, while at the same time rejecting the bad things in Western Europe.
If we are to rebuild our manufacturing base and economy, the way to do it is certainly not to have a command economy like that in Eastern Europe, but we need Government intervention. We need planning for the resources of the economy and an extension of public enterprise in many forms in order to be able to have real planning and not just indicative planning of the sort that we had under the George Brown plan. We need real physical planning so that we can ensure that we have the training, the engineers and the industrial investment that are required. That is the only way forward for British industry. We cannot deal with the problem in any other way.
As I said, I have been here a long time and I have heard all the arguments. Those arguments skim over the surface of the real problem: that we live in a society that does not produce goods for use but purely for profit. While that situation exists we can never genuinely rebuild the economy and create the type of society that is needed to give our people full employment.

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I do not argue against those who say that the new technology has so changed society that we will have unemployment. The combination of existing systems of society and new technology are bound to give rise to unemployment. We have to use the new technology as part of a different type of society. That raises the fundamental question: what do we produce for; what is the objective? Is the objective merely to have a profit-making system benefiting a few, or production which benefits the whole of society?
Mr. Couchman: Will the hon. Gentleman give way?
Mr. Heffer: No. My speech will be short. Often in our debates we talk about the skimming effects of one problem as they connect with other problems, but the fundamental question is not often asked and it needs to be asked in a debate of this kind. We have to create a society in which people will work fewer hours. By way of alternative work we can create new opportunities in many other spheres. Perhaps we can give people the opportunity to involve themselves in the arts on a scale that they have never had before.
There is much that could be done, but little is being done. We cannot continue to have a society in which only a small section works and an increasing mass of people do not work. We have to get everyone working and recognise that that means a change in the character of society. Only a democratically controlled, planned, Socialist economy can do that.
5.58 pm
Dr. Keith Hampson: I hope that Opposition Members will forgive me if I make a party point, which they know I am unaccustomed to making too blatantly. It is that we normally see an Opposition who proudly parade on their sleeves compassion and concern for the unemployed and for manufacturing industry. With the noble exception of the hon. Member for Liverpool, Walton (Mr. Heffer) and a few of his hon. Friends, today they wear the badge of shame, because there are only four Opposition Members in the House for this important debate.
I give credit to my hon. Friend the Member for Lincoln (Mr. Carlisle) for launching the debate. My point about the Opposition is not a petty one, because most of us constantly face a barrage of innuendo, criticism and abuse from Opposition Members on these very subjects.
I have only one point to make about the speech of the hon. Member for Liverpool, Walton. After the war, this country was the victor. It captured and took markets because it had an industrial base and was provided with cheap and easy to obtain raw materials from the empire. The tragedy was that our industrial structure and trade union movement became fossilised in the 1950s. They were fossilised largely by the Labour Government and their programme for state intervention and nationalisation after the war. The Labour Government were followed by Conservative Governments who then fossilised our trade union movement, because that was the period when Churchill and all the Cabinet agreed that there must not be any trouble with the unions. Therefore, the power and privileges of the trade union movement became entrenched in our industrial system. They went far and away beyond anything that was experienced by any of our competitors.
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It is absolutely right to say that in the 1960s this country needed the white-hot heat of the technological revolution, but the tragedy is that the Prime Minister of the then Labour Government who enunciated that doctrine failed to deliver. That is what this Government have had to deliver since 1979. It is a slander for Opposition Members to talk about 13 wasted years. The 1960s were wasted by a Labour Government. Now we are having to catch up.
We faced the fact that traditional industries in our industrial cities are running down massively and quickly because of world competition. At the same time new industries, often in the service sector, do not require so much labour. Modern and many older industries find that they can make do with part-time labour or with overtime instead of having to take on large numbers of new employees. At the same time, the birth rate has been increasing, with the result that many more young people are leaving school and wanting work, on top of which there has been a long-overdue demographic change, with women entering employment in greater numbers. That has happened, in conjunction with the world recession in trade because of spiralling oil prices. Therefore, this Government have inherited something that no Government could possibly have avoided. The missed opportunity, if there was one, was during the so-called swinging sixties. At that time, this country's industry was swinging on the gallows. We have yet to recover from it.
All right hon. and hon. Members agree that Britain's manufacturing base is fundamental to wealth creation in the country, but that is not necessarily the same as saying that it is essential for job creation. As my hon. Friend the Under-Secretary of State said, every modern economy, apart from the Japanese, has seen a more rapid rate of growth in the service sector than in the manufacturing sector, simply because structural changes of the kind that I have just outlined are taking place everywhere. That means that we must use our manufacturing base as the basis for wealth creation, but many more jobs, proportionately, must be created in the modern service sector, if we are ever to escape from the shadow of unemployment.
Where does that leave the traditional industrial cities of the north and, until recent years, successful areas like the midlands? My hon. Friend the Under-Secretary of State outlined one of the problems that the Government face. They are doing things, and they believe in what they are doing, but they are not prepared to boast about it. Even today we have played around with words. My hon. Friend asked whether we are dealing with industrial policies or an industrial strategy. Is it or is it not interventionism? Of course it is interventionism. There is no way of avoiding it in a modern economy. My hon. Friend gave many examples.
What is the Government's public purchasing initiative if it is not purchasing by the Government? What is the prospect for the helicopter industry or any major defence industry if the Government are not a major customer? How can we possibly play by the rules of free competition and free trade throughout the world when others do not? How can we—this is a crucial factor that my right hon. Friend the Secretary of State for Trade and Industry must hear in mind—possibly do without the degree of state involvement and protectionism that is afforded by the multi-fibre arrangement in areas like Yorkshire and Humberside?

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We are all too well aware that my right hon. Friend's Department—or forces within it —has argued, since the publication of the Silberston report, that the MFA provides a disproportionate subsidy to the textile industry —15 per cent. on clothing—that people otherwise would be able to spend on other goods, thus stimulating the economy. That is absolute nonsense and it is about time that we said that academic studies of that kind are nonsense. It does not follow that people would spend the additional money that would be available to them on British manufactured goods rather than on imports. The degree of dependence of certain limited parts of this country on a major industry is completely ignored. The textile industry is one of this country's major industries. In terms of added value, it is far more important than the aerospace or computer industries, or many of the other essential industries that we think of as being at the heart of the British manufacturing base. Therefore, the Government's role needs to be judiciously used. There is no way out of it.
I pay full credit to my right hon. Friends the Secretaries of State for Education and Science and for Employment for their technical and vocational education initiative. At long last they are trying to change the basic balance of the school curriculum and to make it more vocational in an effort to attract more young people into the world of work and to help them to appreciate that what they learn at school has a degree of relevance to the realistic world of employment that they will enter later.
Equally, we have tried to change the balance in further and higher education in an effort to attract more people into courses that will benefit industry. However, it has taken a very long time. The Finniston committee sat for four years. It began its work in the mid-1970s. A decade later we are still talking about it. An apparatus has been established, but how much influence has the Engineering Council had in trying to tackle the problem?
We have known about the problems and the degree of decline in our industrial cities for a very long time. It was left to my right hon. Friend the Member for Henley (Mr. Heseltine), who is now doing so much to refresh those parts of the Tory party that others cannot reach, to write his report "It Takes a Riot." However, five or six years later we are still conscious that problems remain not only in Liverpool but in other major industrial cities. The lessons are there and what needs to be done is perfectly clear, but we are not acting with the speed or on the scale that is necessary.
Task forces have been launched in eight cities. I am very grateful for the fact that there is a task force in the city of Leeds. However, it has only £1 million to spend and a junior Minister has only a vague responsibility for it. We need to learn the lessons of the urban development corporations and, above all, of the Scottish Development Agency. We need to learn more the lessons of the latter than of the former, because in most of our cities there is not the scale of the problem that is to be found either in London's docklands or in Liverpool. Nevertheless, there are major problem areas.
Therefore, an agency along the lines of the SDA needs to be established and provided with many resources. It needs to have the powers of land accumulation and planning permission. Also, it needs to work in conjunction and partnership with the local authorities. It must not work against them. All right hon. and hon. Members know that the urban development corporations have
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created resentment in docklands. However, in partnership with local authorities that body could be provided with the necessary resources to rejuvenate an industrial area that is in decline. Then it could move out again and put its resources into another city in another part of the country. That is the main task that must be tackled in the industrial cities of this country.
However, the Government must have the will to do it, just as the same kind of will is needed to tackle the industrial strategy. The very term "strategy" implies comprehensiveness. Our industrial cities need to be considered in terms not just of the environment — fundamental though that is if they are to attract new industry — but of the ramifications of our industrial policy. The Department of Trade and Industry does no such thing. It has no overview of industrial strategy. It has a strategy for individual companies. Therefore, no nationwide strategy is exercised by the DTI over helicopters. The strategy relates just to one company — Westland.
As for the European fighter aircraft, the DTI's view was essentially that of British Aerospace. The Department of Defence was trying to pull in other European partners, and the Department of Trade and Industry was doing its best to frustrate those efforts.
I am sorry that my right hon. Friend the Member for Hertsmere (Mr. Parkinson) is no longer present, because he might have pursued the best line, but in his short time in office, he had the major task of trying to merge the two huge Departments of Trade and Industry. However, from the tenure of my neighbour, my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) — who simply did not believe that there should he such a thing as an intervention policy or even a Department of Industry — we have had Secretaries of State in the Department of Trade and Industry who have not had a conviction that there should be any industrial strategy.
Indirectly, an intervention policy has been pursued all other the place, but it has been piecemeal and there has been no effort to try to get a concerted and comprehensive approach. My hon. Friend the Under-Secretary of State made it clear that he had responsibility for some of the action, that other parts of the Department were responsible for others, and that there is also the Treasury. As we all know, the Treasury is far too dominant.
We have waited for the rebuilding and sustaining of our manufacturing base for a long time. It will not happen spontaneously. All our major competitor countries have Government intervention. Japan is the obvious one, but there is Germany with the purchasing power of its Government and France with its more centralised planning arrangements. Even in the United States—the most free enterprise economy in the world — it is the purchasing power, use and role of the Government that build up huge, powerful, multinational corporations, such as IBM, or the United Technologies Corporation, which bought Westland, and the rest.
In the modern world, we cannot pursue a hands-off, non-interventionist, free trade policy. It is fundamental that we have a comprehensive approach. The Department of Trade and Industry must take a stronger and more initiating lead within Government. Furthermore, we need a machinery, such as a Cabinet Committee, to look at industrial strategy in the way that we have for so long had

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an economic, but Treasury-dominated, Cabinet Sub-Committee and Committees on home affairs, overseas and defence matters.
6.11 pm
Mr. Gordon Brown: Both sides of the House will want to congratulate the hon. Member for Lincoln (Mr. Carlisle) on introducing the debate and on uniquely eliciting two Government responses. The first came from the Under-Secretary of State for Trade and Industry, whose list of industrial objectives seemed to get longer as the list of closures got longer, but whose industrial objectives seem to have one thing in common — that they would always cost the Government less money and not involve additional expenditure.
The second response came from the right hon. Member for Hertsmere (Mr. Parkinson), whose selective use of statistics, to say the least, concentrated on the silver linings and ignored the dark clouds that affect our industrial horizon. We should also congratulate the hon. Member for Lincoln on eliciting, in both interventions and speeches, with one notable exception, such a display of proposals for a change of Government policy that I almost thought I was at a reconvened meeting of the Conservative Centre Forward group.
The hon. Members for Leeds, North-West (Dr. Hampson) and for Staffordshire, Moorlands (Mr. Knox) both summed up the extent and scale of the problem that we face. The Government have presided over a decline in our manufacturing industry that is so general that we have lost 1·75 million jobs in the past seven years, 1·5 million of which were in the traditional industrial regions, many of which are now industrial no-go areas that cannot benefit from any expansion in prosperity or growth.
The decline is now so widespread and pervasive that, even on the Government's figures, the collapse of manufacturing investment between 1979 and 1986 is 20 per cent. The decline is so catastrophic that we have reached a unique position in our industrial history. Never before have we imported more manufactured goods than we export, nor sent more capital overseas to be invested in other people's industries than is invested in our manufacturing industries. Nor have we had entire areas of the country, such as the north-west, the north-east, Scotland, and Wales, where there are more people without a regular job because they are unemployed, in part-time employment or on temporary schemes than are employed in all our manufacturing industries, new and old, put together.
We have heard from the Minister, but particularly from the right hon. Member for Hertsmere, the former Secretary of State for Trade and Industry, some highly selective figures about productivity, investment and growth. He said that capital investment in manufacturing industry was at the highest ever level. He ignored the fact that, under his Government, capital investment in manufacturing industry is still markedly below that of 1979. He also said that we had the highest real level of exports last year than at any time in our history. He ignored the fact that, at the same time, we had the lowest proportionate share of world exports than at any other time.
The Government have told us, and the Minister said it again, that productivity is rising fast. It is true that
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productivity has been rising, but that is a function merely of the fact that employment has been falling faster than output and less is being produced by many fewer people. In other words, the rises in productivity for which the Government claim credit in almost every speech issued from the Department of Trade and Industry are a function, not of higher investment in the economy, because that is not the case in the manufacturing sector, but of higher manufacturing unemployment and a high level of redundancies.
If productivity was helping the economy so that it was at record levels, if investment was higher than it had ever been, if we were in the sixth year of the economic recovery that the Government have claimed, and if we had never had it so good, as the Secretary of State for Employment in the other place has been telling us, will Conservative Members answer a few simple questions? Why is it that, alone of our industrial competitors, our industrial manufacturing output is still 8 per cent. below what it was in 1979, when the Government came to power? Why is it that output in consumer goods is still 7 per cent. below 1979, in metals 26 per cent., in engineering and allied goods, which include electronics for this analysis, 5 per cent., and in other manufacturing industry 12 per cent. below? Why is it that output in these years has risen by 24 per cent. in Japan, in the United States by 14 per cent., and in all the OECD countries by 10 per cent., when in manufacturing industry in Britain it has fallen by 8 per cent.?
The Minister talked about an inevitable fall in manufacturing employment, but perhaps he should take note of the fact that during the years of this Government manufacturing employment has risen in Japan and some other countries, such as Greece, Finland and Turkey. It has fallen by about 1 per cent. a year in America and Canada and by about 2 per cent. a year in Germany, France and Italy. In this country it has fallen by 5 per cent. a year, and by about 25 per cent. during the period of this Government.
The Minister and other Conservative Members will tell us that this is a function of the shake-out, of the move from the traditional industries to the high-technology industries, and I see hon. Members nodding. They feel that the old industries are making way for the new, that the sunset is making way for the sunrise and that the sunbelt is taking over from the rustbelt. These are the things that we hear from Ministers and Conservative Members in their speeches at the weekends.
The truth is rather different. It is a case, not of the old industries making way for the new, but of the new industries making way for foreign imports. The Government have been stifling the new industries almost as quickly as they have been destroying our traditional industries. If in 1979 we had named one sector which might have been expected to do well because of the happy coincidence of oil being found in the North sea, we would have proposed petrochemicals and plastics. Yet, while in 1979 our trade deficit in plastics and synthethic goods was about £100 million, it is now nearly £200 million as a result of what has happened during the past seven years.
Mr. Butcher: The hon. Gentleman has stood at that Dispatch Box in other debates. He will be aware that we have never said that new industries would replace the old. We have often said that the so-called traditional industries become revitalised by the application of new techniques in

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making traditional products. We have not said that the reduction in employment in the manufacturing sector is inevitable. Indeed, if the hon. Gentleman checks the record, he will find that, unfashionable as it was then, I said that the continuing fall in employment in manufacturing was not inevitable and that with increased performance we could see increased employment.
Mr. Brown: I am grateful to the Minister for making the point that I have tried to make throughout the debate. If the traditional industries were being revitalised, we might expect something to be happening in steel, engineering and allied industries, consumer durables and other traditional industries to give us hope that those industries would increase output and exports, and contribute to our industrial recovery. However, there is no evidence that that is the case. Moreover, even in the new industries, where we should be leading the world, our trade deficits are such that we can look forward only to the prospect of a further erosion in manufacturing employment and further losses in competitiveness compared with the rest of the world.
Mr. Couchman: Will the hon. Gentleman concede that the United Kingdom's preoccupation with the old industries, the sunset industries as he describes them, has left us on the starting line with the sunrise industries, and with severe skill shortages? GEC Avionics is an important employer in my constituency and it wishes to take on 500 people this year. It must go to Australia and New Zealand to find people with sufficient skills for those jobs. At present it has a superb export order book.
Mr. Brown: The hon. Gentleman makes a different point, but I am happy to answer it. He talked about shortages of skills, which is mentioned in the motion tabled by the hon. Member for Lincoln. These shortages are a direct result of the neglect of training during the past seven years, when the Government should have known that skilled engineers, computer operators and manpower for information technology industries would be required. Indeed, the chairman of the Manpower Services Commission, who is an appointee of this Government, not of the Labour Government, has been extremely critical during the past few weeks of the Government's policy of abandoning industrial training boards and of other measures which hubs led to a decline in the number of manufacturing apprentices and trainees. Therefore, if the hon. Gentleman wishes to avoid a shortage of skills in future, he must persuade the Minister to change his list of industrial objectives in such a way that money will be spent on training at an advanced level.
Dr. Hampson: The hon. Gentleman must recognise that unprecedented sums are flowing through the MSC to those areas, despite what he says. The Labour Government talked about these matters but did absolutely nothing. Mrs. Williams tried to persuade the Cabinet to set up something like the youth training scheme and to get in-service teacher training in order to provide mathematics and physics teachers, whom we still desperately need.
Mr. Brown: I hope that the hon. Gentleman will agree that the Government made a grave mistake in abolishing the industrial training boards. I hope he will agree with the chairman of the MSC, who has talked about the absence of provision in the private sector and the ineffectiveness of the voluntary arrangements, in which the Government
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have placed great faith. On YTS and apprenticeships, I hope that the hon. Gentleman will note that in 1979 more than 250,000 young people were either apprentices or on training courses in manufacturing industry, whereas under this Government's policies the decline in training opportunities in manufacturing industry has been even greater than the decline in employment in manufacturing industries. Now no more than 100,000 young people are in training either in apprenticeships or on YTS in manufacturing industry. That will inevitably lead to skills shortages later, if and when our economy expands.
I hope that the Minister will say, either tonight or later, why it is, if the Government are on course and we are experiencing industrial progress and things have never been so good for 90 per cent. of the population, that we can look forward only to the prospect of ever-increasing trade deficits, even in the new industries. Does the Minister accept his figures, which show that not only in petrochemicals, where we might have expected to do well, but where we have done particularly badly, but in electronics, microelectronics and information technology our trade deficits and the surplus of imports over exports have been rising at a phenomenal rate over the past seven years? If we are to believe a survey carried out, not by Cambridge university, but by Cambridge Econometrics —a body whose calculations are usually accurate—those trade deficits will increase substantially during the next 10 years, and our manufacturing trade deficit, which is already high, could double.
In the face of those problems, surely the Minister's list of abstract objectives, which involve no specific commitments to any measure that would lead to the expenditure of money, must be reconsidered. If we are to lose the place, and if we are to be unable to compete in information technology, computers, petrochemicals and microelectronics, our future as a manufacturing nation is bleak.
We in the Labour party understand that the world of manufacturing has changed and will continue to change. We understand that a feature of that is that there is almost no manufactured item produced in the United Kingdom which is not also produced abroad, and so has a direct competitor abroad. We also understand that we should be most able to compete in precisely those new high value added, research intense, high skill and high technology industries. However, if we are to be able to compete, we cannot surrender spinelessly, talking about the supremacy of market forces, because no other country does that. We must look carefully and pragmatically at how investment in training, science and technology, research and development and plant and equipment can aid an industrial expansion in those industries which would secure the wealth that would enable us to have jobs in manufacturing industry and to see them spin off into the service industries. That is a question, not of abstracts, but of specific policies which the Government should pursue.
What will the Government do in areas such as research and development, and training, having seen it acknowledged by all the agencies, including para-Governmental organisations, that there is a crisis and steps must be taken? What can the Minister do to change the situation where only half our factories use micro-electronics and the other half have no plans to use them, and where three quarters of the firms in the modern world have no access to computers and computer equipment? How can he change the fact that in Japan robots are widespread in

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manufacturing industry, whereas in Britain not many are available? How can he change the fact that in information technology, acknowledged experts say that 7 million jobs will be created throughout Europe over the next 10 years, yet there is no guarantee that this country — through research, investment or training — will benefit in any substantial way?
How can the hon. Gentleman change the fact that we spend less on civil research and development than almost all our major competitors? In other countries, expenditure on science and technology has been rising by between 9 and 10 per cent. a year whereas here it seems to have been rising by about 1 per cent. Most of all, how can he change the fact that at present we cannot avoid skill shortages in the future and that we will not have the kind of trained and skilled work forces that will be needed if we are to have a successful manufacturing future?
I have mentioned what the chairman of the MSC—a direct appointee of the Government—has said about the abolition of the industrial training boards. He talked about the broken promises of industrialists to provide on a voluntary basis the training that was lost when the industrial training boards were compulsorily wound up. He has talked about the dearth of action by industrialists to cope with the vacuum that was left following the abolition of these industrial training boards.
An MSC study has shown that British companies are spending far less on training as a proportion of their sales turnover than are comparable companies in Japan, the United States and Germany. It has also shown that 69 per cent. of employees are at present enjoying no training and that 25 per cent. of the manufacturing establishments surveyed had no training opportunities on offer.
That is the real world of manufacturing industry, and those are the real problems. We do not need abstract lists of industrial objectives for some distant day in the future to tell us what the real problem is. It is a question of what the Government will do to ensure that the important new industries will win.
As the right hon. Member for Hertsmere should know by his selective use of them, statistics can tell us many things. Is it not astounding that the figures available show that twice as many people in South Korea are in training in higher and further education as in Britain? That is the state to which this Government have brought the country. Seven years ago we might have hoped to compete with the West Germans, but our best hope now is to try to keep up with the South Koreans. Seven years ago we might have hoped to compete with the Japenese, but now our best hope is to be able to compete with the Taiwanese.
Mr. Parkinson: The hon. Gentleman accused me of using selective statistics. I hope he is not denying that we had record exports in manufactures this year and that the decline up to 1981 has now been arrested. Those are facts. Whether we should be doing better is another matter. However, on what does the hon. Gentleman base his assertion that seven years ago we were in a position to begin competing with Japan? As I said, in 1978 Toyota was producing 65 cars per employee, whereas Leyland was producing 5·5. The hon. Gentleman says that in 1979 we were on the verge of being able to compete with Japan. In reality, we were on the verge of going under. If the hon.
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Gentleman bases the rest of his speech on the assertion that a few years ago Japan was within our grasp and that we have slipped behind, he is ignoring the real world.
Mr. Brown: The right hon. Gentleman would have heard me describe some of his selective statistics had he been present at the beginning of my speech. He again says that manufacturing exports are at a record level. He must accept that our share of world manufacturing exports is at its lowest level ever. That is surely a reflection of our ability to compete with other countries.
The right hon. Gentleman talked about the recovery that has been brought about by increasing investment, but in reality investment in manufacturing industries in the United Kingdom is still below the level of 1979. Will the right hon. Gentleman explain why, after seven years of this Government—after seven years of talk, promises and two elections—manufacturing output is still below the level it had reached when the Labour Government left office? If the right hon. Gentleman can explain that conundrum, he will be doing the House a great service.
Mr. Parkinson: When the Labour Government left office in 1979, certain industries were being maintained purely on the basis of colossal subsidies. At that time the Department of Trade and Industry was spending £2 billion merely on funding the losses of a selection of nationalised industries that were producing products that were incapable of being sold without huge subsidies. There was a substantial block of heavily subsidised production, and the hon. Gentleman's own Government had plans to reduce that capacity. It was not the Conservative Government who evolved the plan to reduce the steel industry to 15 million tonnes, it was the Labour Government, who did not have the guts to do it before the last election. Therefore, we had a lot of heavily subsidised production which the Labour Government were planning to cut out had they been re-elected, but they were not reelected.
Mr. Brown: The right hon. Gentleman has entirely missed the point that I have been making, and I wonder whether he was listening to what I said. My point was that if this Government's record was anything to write home about, we might have expected them to be doing well in the new industries. We might have expected this Government to have had record trade surpluses in areas such as information technology, computers, electronics and petrochemicals. Yet the trade deficit in these industries is worse than in many of the traditional industries which the right hon. Gentleman says must be run down because of outdated technologies.
Like the Minister, the right hon. Gentleman has not explained why under this Government manufacturing output is still below the level of 1979 and, indeed, the three-day working week of 1974. It is hardly a record about which the Minister should boast. No country has had the financial advantages that this Government had when they came to office as a result of North sea oil revenues——
Mr. Kenneth Carlisle: I apologise for interrupting the hon. Gentleman, but when I presented the motion I was hoping that every Back Bencher who wished to air his views could participate. I hope that the hon. Gentleman will bear that in mind.
Mr. Brown: I am grateful to the hon. Gentleman, but the Minister spoke at some length about the sixth point of

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his industrial objective. However, I have been deterred from completing my speech by the interventions of the right hon. Member for Hertsmere. I can assure the hon. Member for Lincoln that it is my intention to complete it now.
No Government have had the advantages that this Government have had as a result of North sea oil revenues. Those revenues should have gone into investment, training, research and development and science and technology. Instead, they have been wasted on funding ever-rising levels of unemployment, which in real terms shows no signs of falling as a result of Government policies. No Government have so systematically wasted the opportunities that have been placed before them. They have created an industrial desert. They have called it a recovery and have presented it as a triumph of monetarism.
The Opposition believe in the future of manufacturing industry. We will invest in it. We will pay attention to the needs of training, research and development, science and technology and the re-equipping of the vital industries that must win in the export markets if we are to succeed as an industrial nation. The country understands that, and it also understands that this Government have failed.
6.39 pm
Mr. Gerald Howarth: So far we have had a good debate which has perhaps been somewhat dominated by the Conservative Benches. However, we were all interested in the exchange between my right hon. Friend the Member for Hertsmere (Mr. Parkinson), a former Secretary of State, and the Opposition spokesman, the hon. Member for Dunfermline, East (Mr. Brown). Clearly my right hon. Friend scored all the points in that exchange.
Unfortunately, it appears that the Opposition have learnt nothing. We have heard only a minute's worth of their proposals although we have learned that they are now in favour of robots. It is a pity that it has taken them so long to reach that view. When our industries were under their stewardship, they were unable to invest for the future and in robotics for British Leyland. Robotics has saved British Leyland from extinction.
I join hon. Members from both sides of the House in congratulating my hon. Friend the Member for Lincoln (Mr. Carlisle) on securing this important debate and on the terms of his motion, which I entirely endorse. As an international banker, I am not paid as highly as popular rumour would have it. I believe that international bankers are paid a proper rate for the job and I should like to see higher pay in industry. I am worried at the attempts that have been made to polarise the United Kingdom economy into manufacturing and service industries and pitting the one against the other. We need both and we must, as a nation, excel at both
These days, in order to sell a power station to India or aeroplanes to Botswana, it is necessary to provide a potential purchaser with the finance. British architects earn valuable foreign exchange for services rendered to overseas clients and they enhance the opportunity for United Kingdom contractors to secure the follow-up business.
We can be justly proud of the achievements of our service industries in greasing the wheels of industry and in securing overseas business in their own right. London is the undisputed centre of the financial world with more
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than 500 foreign banks. Lloyd's is the principal insurance market, and foreign companies invariably seek to have their contracts governed by English law as they have the highest regard for our legal profession and for the administration of justice. I would like that spirit of enterprise, confidence and determination which is so evident in the service sector of industry now to pervade the industrial sector. Like my right hon. Friend the Member for Hertsmere I believe that we are approaching the new culture that we are trying to create.
Mr. Nicholas Winterton: I have been following my hon. Friend's argument, although it has been brief so far, very closely. I am one of the Conservative Members who has considerable reserve about the positive position of the City of London. Can my hon. Friend explain why the City of London finds it possible to devote hundreds of millions of pounds to takeovers which do not produce additional jobs? Will he, further, tell me why the City can find so much time and expertise to invest money in other paper money by way of foreign currency transactions rather than investing in manufacturing industry? That is the few making a lot more money for the few and ignoring the real needs of this country which lie in manufacturing industry. There is so much money in the City. Why is that money not coming out of the City and into manufacturing industry?
Mr. Howarth: As always, my hon. Friend is very vigorous in his remarks. However, he fails to understand that funds are available. There is no shortage of funding for anyone who has a good idea. To talk about the recent spate of mergers and takeovers is a complete red herring.
Mr. Winterton: No, it is not.
Mr. Howarth: It is. I must tell my hon. Friend who is becoming agitated that I support him in most things. However, he has a perverse deviation on this point.
Mr. Winterton: Perhaps I should ask my hon. Friend to withdraw that remark.
Mr. Howarth: I am unable to support my hon. Friend in that deviation. The banks are falling over themselves to lend funds for any good product or proposition. It is simply not true ——
Mr. Winterton: No, they are not.
Mr. Howarth: My hon. Friend says that they are not. If they are not, there are plenty of Government agencies which are willing to invest money. NCB (Enterprise) Ltd. in my constituency has £15 million at its disposal. It is anxious for anyone to come forward with a good idea which it can support.
Since entering the House in 1983 I have taken a close interest in manufacturing industry in my constituency and I have a special interest in the aerospace industry. Among the companies in my constituency there are Lucas Electrical, a major caterpillar dealer and a company which supplies sports boats around the world from a point which is the furthest from the sea in the United Kingdom—Fletcher International Sports Boats. The picture in my constituency and elsewhere in the west midlands does not accord with the description that I have heard from the Opposition Benches.
There is no doubt that industry has problems. However, there is, also good news and that point was most forcefully made by my hon. Friend the Member for

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Lincoln (Mr. Carlisle) who moved the motion. I have seen a textbook revolution taking place in my constituency. There was clearly overmanning on a massive scale when this Government came to office in 1979. Under previous Labour and Conservative Governments the unions had been allowed to dictate the level of manning. The result was that the unions, anxious to maintain short-run jobs, ensured that industry was overmanned to the extent that it was completely unable to compete. This 40 years of failure by previous Governments to allow management the right to manage, has been at the heart of our problems.
In seven years we have had to do what our major competitors have done over the past 40 years. That is, we have had to adjust manning levels to the requirements of industry and the needs of the market. This change has been traumatic. Every week hon. Members see the results of this traumatic change in their constituencies. However, I believe it is to the great credit of the Government that they have at long last bitten on the bullet and taken the necessary action to allow management to manage so that at last we can start to rebuild.
Those who say that our economy is now wholly dependent on North sea oil should remember that it constitutes only some 8 per cent. of gross national product. It is not the most dominant sector of our economy. I liken it to Dunkirk. Just as the British Expeditionary Force was fortunate to have calm weather when the little ships returned from Dunkirk, so I believe that the Almighty has smiled on the British economy. He has given us oil, the most valuable commodity of its time, out of the most inhospitable waters, from which we have been able to derive resources which are now providing us with the cushion of opportunity to correct the economy.
We were suffering from overmanning and that has largely been resolved. New union agreements have been made whereby the work force is more flexible in its agreements with employers. Investment has risen by 39 per cent. since 1980–81. The hon. Member for Dunfermline, East referred to robotics. No doubt he has visited Austin Rover where robotics have made a substantial contribution to the revitalisation of that company. Since Jaguar came under new management in the early 1980s, the amount of investment to which my hon. Friend the Member for Macclesfield referred, has been about £100 million. That investment is producing results. Initially that investment displaced men. The move towards the introduction of robotics which was so strongly resisted by the unions and the Labour party stood in the way of progress in manufacturing industry. It is the shackles which outdated manufacturing processes have placed on manufacturing industry which have created the problems.
These changes together with the new determination evident in the industry not to rely on captive markets as in the past but to provide the products at the right price on the right delivery date, is turning the British economy round. The managing director of Jaguar has said that he will go for a zero defect car. It is no good producing an expensive car if people have to take it back to the dealer so many times that they are put off. I salute Jaguar's work in setting an example for the rest of British industry.
I have firms in my constituency which were in difficulty but which are now quietly confident. That is most encouraging. They are taking on new labour, although they are not making a great song and dance about it
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because they do not want their competitors to know and because there is unquestionably a reluctance to believe that there is a boom ahead. We want quiet confidence—a boom would destroy the manufacturing base because it would immediately suck in imports, and our industry cannot respond to such an increase in demand overnight.
Some of the calls on the Government to take action are right. It is now time for interest rates to come down. They represent a substantial burden on industry. My right hon. Friend the Member for Hertsmere was entirely right about interest rates being unreally low. They are now unreally high. My authority for saying that is discussions with foreign exchange dealers in the City who firmly believe that falling interest rates would be regarded as a sign of strength in the British economy and would not result in sterling going through the floor, thus creating inflationary expectations.
The Government have managed to reduce energy costs to industry by 8 per cent. That achievement has gone unremarked on the Opposition Front Bench. The reduction is largely the result of the Government's action in regard to the National Coal Board — they have ensured that it has become much more commercial.
I urge my hon. Friend the Minister to re-examine the European Community directive on product liability. It is causing industry, especially manufacturing industry, great headaches. It will add to their costs and it is likely to benefit the importer rather than the domestic producer.
I urge my hon. Friend not to relax the green belt. There is plenty of available space in other parts of the country not far from the south-east where there is relatively cheap accommodation. The Government must reconsider rent decontrol, which is vital.
It is not entirely up to the Government or industry to put their houses in order. Industry can do a lot, but I put in a special plea to the fourth estate—our friends in the media. Please will they stop knocking manufacturing industry? Journalists in France and Germany, for example, do not knock their industries. There is far too much knocking of British manufacturing, and less would be greatly appreciated. My message is that industry is prospering under the Government and I hope that it will continue to prosper even more.
6.54 pm
Mr. Michael Fallon: Time is short. I make no complaint about that. I should have liked the hon. Member for Dunfermline, East (Mr. Brown) to have spoken longer as we did not hear enough about Labour's industrial policy. We heard very little, for example, of the extensive nationalisation that was promised in 1983. Has that now been jettisoned from the manifesto? We heard very little about the planning controls and agreements that were sought by the hon. Member for Liverpool, Walton (Mr. Heffer). I look forward to seeing how those discussions proceed. We also heard little about incomes policy and the present negotiations between the Labour party and the trade unions. We did not get quite the full picture of Labour's industrial policy that we expected.
Until the hon. Member for Dunfermline, East spoke, I thought that this had been a useful debate. I thought that it had finally dispelled two great myths about manufacturing industry—that it is doing badly and that the Government are not doing their best to assist it.
I cannot judge whether manufacturing is leaner or fitter than in the 1950s, 1960s or 1970s, but I know that it is a

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lot healthier than Opposition Members suggest. I know that capital investment of £6·7 billion was made in manufacturing last year — 21 per cent. higher than in 1983, when I was elected to this House. I know, too, that engineering output was up 6·5 per cent. last year, that machine tool exports have increased by 20 per cent. during the past 12 months and that there have been considerable and formidable improvements in productivity in the steel and textile industries.
In the north-east, despite high unemployment and what the hon. Member for Jarrow (Mr. Dixon) told us, scores of manufacturing companies are doing well and making good profits. If there were not, we should not be getting 25,000 people off the unemployment register every month, as happened last year in the north-east. The hon. Member for Jarrow gave two examples, both of which I want to take up. He mentioned steel. He might have seen last Sunday's edition of the Northern Echo which ran and article on the Darlington and Simpson Rolling Mills annual results under the headline:
"Huge profits add 100 jobs."
The company sells steel profiles across Europe and into the heart of America. Profits last year increased by £800,000, or 16 per cent. The profits of £6·7 million have been ploughed back into the company. At the beginning of the year for which it reports, the company employed 645 people. It now employs 737 and will employ 837 people next year.
The hon. Member for Jarrow also mentioned NEI Reynolds and its anxiety about power station work. It is far more worried about the threat to the nuclear power station programme posed by the Labour party's conference resolution at Bournemouth last year. Not many people in NEI will be voting Labour at the next election and seeing themselves put out of work as a result.
It is simply not true that the Government are not helping industry. Some 28,000 jobs have been created by the new regional policy in the north-east alone during the past two years, and a further 10,000 jobs have been preserved. The Department of Trade and Industry's spending is now much better balanced. We get more for the regional aid money that is spent, and we get better
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spread of support between the new and the old industries. We also have enterprise creation measures which we never had under previous Governments.
Radical government cannot stand still. As well as creating the right conditions of low inflation and helping with the economy, the Government should do two other things to assist manufacturing industry. First, they should target regional policy even more effectively. I understand that a mini-review is going on at the moment. There are still distortions, not simply between assisted and non-assisted areas, but between assisted areas — between development areas and intermediate areas.
The Government must also improve the efficiency of the labour market. An unemployment rate of 13 per cent. is neither tolerable nor efficient, but 23 per cent. male unemployment, as in the north-east, is simply unacceptable, especially when we consider the skills that are wanted in the south and which are wasted in the north. There are men in the north who want to work but cannot because they are trapped in the north in private houses that they cannot sell or council houses that they cannot exchange. I am aware that not all want to move, but it is much more difficult now for people to move than it was in the 1930s or the 1950s, as the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) said. If the Government do nothing else—there were signs last week that we will not do much else— they should radically improve the housing market by making it much easier, by decontrolling rents and relaxing green belt restrictions in the south, to provide opportunities for people in the north who are out of work and have skills to move to areas of the south-east where there are skill shortages.
Question put and agree to.
Resolved,
That this House agrees that manufacturing industry has a central part to play in the future prosperity of the United Kingdom, and, that, in order to succeed in a fiercely competitive world, it must use the most modern manufacturing methods, and market its products with skill; notes further, that the importance of manufacturing must be recognised by society generally and by schools and colleges in particular, so that industry can surmount the present shortage of skills; and believes finally that success in manufacturing can only be won in any enterprise through the united efforts of all the work force.

Press Gallery
6.59 pm
Mr. Eric S. Heffer: On a point of order Mr. Speaker. I have been sitting here throughout the debate. As hon. Members we are often criticised by the press for not being in our places. Throughout this important debate on the future of manufacturing industry in this country I could have counted on the fingers of one hand the number of people in the Press Gallery. Is it not possible to make some representations to the press to attend important debates of this kind?
Mr. Speaker: That is not among my many responsibilities. I think that I should confine myself to what happens on the Floor of the Chamber, not to what goes on behind me.

Tin Industry
Mr. Speaker: Before I call the Secretary of State to move the Prime Minister's motion, I must announce to the House that I have selected the amendment in the name of the Leader of the Opposition.
7 pm
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): I beg to move,
That this House endorses the Government's response (HC 457) to the Second Report from the Trade and Industry Committee on the Tin Crisis (HC 305-1); regrets the difficulties brought upon the Cornish tin industry, the International Tin Council's creditors and others as a result of the failure of the International Tin Council to reach agreement with its creditors, despite the considerable efforts made by the Government, and welcomes the Government's package of measures to help employment in Cornwall.
I invite the House to endorse the Government's reply to the Select Committee on Trade and Industry. I note that a surprisingly large number of hon. Members wish to speak in this important debate and, therefore, I shall try not to take up too much time and I shall come straight to the point.
It strikes me that there are three main issues on which I suspect that the House will wish to concentrate. As the House knows, under difficult circumstances, to which I shall refer later, the Committee has produced a report which raises a number of important questions. The three main issues are, first, the constraints under which the Government operated in giving evidence to the Committee, secondly, the conduct of the Government both before and after the collapse of the International Tin Council in October 1985 and thirdly, the effect on the Cornish tin industry. My hon. Friend the Minister of State will deal with the problems of Cornwall more fully when he replies to the debate.
I should like first to deal with the constraints which the Government faced in giving evidence to the Committee. I must, however, reject any suggestions that, in giving evidence. Ministers or officials withheld information except where required to do so by international obligations, legal considerations or established conventions relating to the disclosure of information to Select Committees. In fact, the Government made every effort to provide as much information as possible to the Committee. In the case of the papers and proceedings of the International Tin Council—to which confidentiality attaches under the international tin agreement and the ITC rules—our delegates twice requested the council to agree to disclosure. Both those approaches were emphatically rejected.
The Committee also criticised our refusal to depart from the principle that advice given to Ministers by officials may not be disclosed. I must make it clear that the instructions given by Ministers and followed by officials in the course of this inquiry were no different from the rules that are generally applicable when civil servants give evidence to Select Committees. These rules are set out in the memorandum of guidance for officials appearing before Select Committees. They make clear the categories of information which officials must not disclose to Committees including, in particular, advice to Ministers. The purpose of such a rule is clear and well understood. It is to preserve the basis of confidence between Ministers

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and their advisers. That is necessary for the effective functioning of Departments, and it underlies the basic principle that it is Ministers and not officials who are responsible to Parliament for the activities of their Department. Finally, we were constrained by the fact that the matters under investigation were the subject of legal actions in which the Crown may become involved.
Before I turn to the question of the conduct of the Government in the tin crisis, I shall tell the House the background to this debate.
In 1982, when the fifth international tin agreement expired, the Government had to decide whether to join the sixth agreement. There was considerable reluctance to do so, particularly as the two largest consumers, the United States of America and the Soviet Union, had announced that they would not join. So there was some question as to whether the consumer voice would be fully effective.
On balance, it was decided to continue as members of the ITC. I remind the right hon. Member for Swansea, West (Mr. Williams) that that was a decision the previous Government had equally come to in joining the fifth agreement. That decision was taken, first, because the Government at the time believed that it was in the interests of this country that there should be, as it was then seen, a stable international market in tin; secondly, because the majority of the Community member states wished to join; and, thirdly, it was thought that to refuse to join would have adversely affected our relations with the producing countries. There were also a number of subsidiary reasons in the Government's mind at that time, but it is fair to say that those were the three main reasons why, on balance, the difficult decision was taken to join rather than not to join.
Very early in the life of the sixth agreement the Government became concerned at the lack of information about the operations of the buffer stock manager. The Government made no secret of their concerns about the absence of proper control and accountability over the actions of the buffer stock manager. We tried hard, through the ITC, to establish proper accountability, but were not supported by other member countries. With between only 4 and 5 per cent. of the votes, our power to enforce proper accountability was limited. The nature of these efforts was explained to the Select Committee, and they are part of the published evidence.
The Select Committee was critical, in its report, of what it saw as the failure by the Government to insist on obtaining the necessary information from the ITC to enable everyone to understand what was going on. In my view the Committee was quite right to focus on the issue of accountability, which is one of the main lessons for the future to be learned from the tin crisis. However, with respect, it was wrong to lay the blame for the lack of accountability at the door of the Government. In this context I should like to refer to the Committee's assertion that either Ministers were informed about the crisis, in which case they should have acted, or were not informed, in which case they should have insisted on being so.
I believe that the view that it was within the power of Ministers to insist on having the information needed to foresee the impending collapse is based on a false assumption. It is perhaps not always fully appreciated that the ITC is governed by an international treaty between sovereign states. It therefore operates largely outside United Kingdom law. For example, the Companies Acts do not apply to the ITC. Therefore, it is not a body over
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which Her Majesty's Government could exercise control, nor even a supervisory function. International bodies of this nature are not subjected to such intervention by the Government of the host country.
The ITC made its own rules and within those rules our ability to obtain information was restricted. We tried hard to get the rules changed, but without success, and there was no way in which, unilaterally, as a member with between 4 and 5 per cent. of the votes, we could enforce our views on the council. Therefore, it was necessary to work on the basis of inadequate information. and the information which was available did not suggest impending collapse. Indeed the level of indebtedness declined between 1983 and mid-1985.
The members of the ITC did not, however, know that the buffer stock manager had been making substantial unpriced forward sales of tin. This meant that any reduction in the tin support price would have led to losses on these forward sales. It was not revealed until after the collapse of the ITC on 24 October 1985, that the buffer stock manager has contracted to sell forward 60,000 tonnes of tin on an unpriced basis.
Mr. Doug Hoyle: I find it difficult to follow the Secretary of State. Why did the Government not know about that when representatives were there and, apparently, the buffer stock manager was warning all the time of the impending crisis?
Mr. Channon: With respect to the hon. Gentleman, that is not exactly right. I have been trying to explain to the House the great difficulty that Government representatives had in obtaining adequate information from the ITC, although we made attempts to do so, in which we had little if any support from other member states.
ITC members were not informed about the buffer stock manager's unpriced forward sales contracts, nor were full details of the scale and nature of his operations revealed until alter the collapse on 24 October. Frankly, that is the crucial point. There was no way that we could discover what the exact position was. That would not have been possible unless the ITC had been prepared to release the information.
I should like to deal with some of the detailed criticisms of the Government's conduct in those affairs. I shall refer first to the warnings to the banks, brokers and United Kingdom tin producers. However, before doing so., I should like to refer to a wider issue that arose in this context.
I very much regret that the Committee thought it fit to criticise a named civil servant. However, I do not propose to discuss that issue today. It relates to questions of general principle, which are best considered in the context of the issues discussed in the seventh report from the Select Committee on Treasury and Civil Service, entitled "Civil Servants and Ministers: Duties and Responsibilities".
Mr. Robin Maxwell-Hyslop: He was useless, and proved that.
Mr. Channon: With respect to my hon. Friend, it is a little unfair for him, in the House of Commons, to attack a named civil servant who does not have the chance to reply. With respect to my hon. Friend, I feel very strongly about the matter. I resent that——
Mr. Maxwell-Hyslop: If my right hon. Friend had had the courtesy to instruct his Ministers to give full

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information to the Committee, the Committee would have been in a position to attribute blame to Ministers. As it was, he hid behind his civil servant and denied the Committee information to which it was entitled.
Mr. Channon: With respect, I do not agree with my hon. Friend's interpretation of events. I understand how strongly he feels about the issue. I have to say that, rightly or wrongly. I accept responsibility for my Department, and I continue to do so.
No warnings were given by the Government to anyone that the ITC was about to collapse. It would have been most improper to do so as we had no information to suggest, until shortly before the events of 24 October, that such a collapse was imminent. Even in September 1985 the producer countries were reported to have recommended to their Ministers the injection of additional funds in the agreement. Indeed, had the Government issued formal warnings to the banks, brokers and others, we would, by doing so, almost certainly have precipitated the collapse of the ITC. We would have been accused by all other members of sabotaging the agreement while moves to inject new funds into it were under active discussion. In such circumstances, most people would have believed that the Government had acted irresponsibly, and had brought about the collapse of the ITC deliberately.
What both the Bank of England and the Government did was, in response to concerns expressed by the London Metal Exchange, to warn that, if the ITC ran out of money, the brokers could not count on the ITC member countries stepping in to finance any shortfall. We also told the LME that we did not have adequate information about the financial position or the market activities of the buffer stock manager. In addition, in response to a question from the chairman of the London Metal Exchange in June 1985, Department of Trade and Industry officials made it clear that the United Kingdom Government would not unilaterally guarantee the LME brokers against a default by the ITC.
As I tried to explain earlier in referring to the unpriced forward sales, neither Her Majesty's Government, nor, I believe, any of the other member Governments, were aware of the potential scale of the ITC's default. For the reasons that I have given, it would have been entirely inappropriate to give warning either to the banks who were lending to the ITC—most of which were foreign owned— or to the Cornish tin producers. Indeed, Rio Tinto-Zinc has told us that it would have made no difference to its actions even had it been warned at the time when officials met the LME brokers.
I refer now to the Committee's suggestion that the Government's conditional agreement to contribute £50 million to help meet the costs of a solution to the crisis was not sufficient. I hope that the Committee will not mind me saying that I cannot accept that criticism and I find it difficult to understand the basis on which the Committee should describe the United Kingdom's offer as insufficient.
I must emphasise that the Government accept no legal liability for the debts of the ITC. We were prepared to contribute £50 million in addition to an amount proportionate to our original contribution to the buffer stock, which was about 4 per cent., in order to secure a return to orderly trading in tin. That would have been in
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the interests of all concerned, including the Cornish tin industry and the LME. We believed that, given the attitude of other ITC member Governments, a negotiated resolution to the crisis would not have been possible without a significant additional contribution by the United Kingdom. However, it would have been quite wrong to expect the taxpayer to provide a greater sum when the United Kingdom's share of the funding of the agreement was only 4 per cent. I must reject any suggestions of complacency on the Government's part. We are determined to draw what lessons we can from the failure of the ITC for other agreements of that type.
Even before the Select Committee reported, the Government had begun a study of their responsibilities to other international trading organisations and similar bodies. As a result we are reasonably satisfied that none is likely to develop problems such as those that occurred in the ITC, but they will all he kept under close review. It is not always easy to identify potential liabilities with precision in advance or to quantify the extent of the risk. which may change over time if the role or operation of the organisation changes. But our object must be to minimise those risks and avoid incurring fresh ones wherever possible. We intend to ensure that the operations of such bodies are reviewed regularly, and in considering our approach to future agreements of this nature, that will be one of the factors which will be very much to the fore in the Government's considerations.
The Committee, in its report and in its response to the Government's reply, draws attention to the importance of the tin mining industry in Cornwall. I fully understand —as I think the whole House does—the importance of tin to the Cornish economy, but the problem has to be looked at in the context of a fall in price in tin in recent weeks to well below £4,000 per tonne—less than half the price at which it was being supported under the international tin agreement. Those low price levels are the result of over-capacity and of the large tin stocks left in the market by the default of the ITC, and it may well take several years for the stocks to clear and for the price to rise to a level at which tin production capacity necessary to meet future demands can operate profitably. When considering applications for assistance, we have to make judgments about future market conditions, and we have accepted that decisions need to be taken about the future of the Cornish tin industry before the long-term price of tin is known.
Regrettably, we were forced to conclude that the proposals put to us by the Geevor mine did not offer sufficiently robust prospects of commercial viability to justify the unavoidable risks associated with any such project, particularly in view of the very large sums of public money that would have been required.
Mr. Dennis Skinner: Why do the Government seem to have adopted a different strategy to bailing out companies when they are in trouble from the strategy that they are adopting towards the tin mines? Why, for instance, in 1984 could the Government find £100 million of taxpayers' money to bail out Johnson Matthey Bankers without recourse to meetings other than the secret meeting in Threadneedle street? That was £100 million of taxpayers' money, with no guarantee of anything back in return. In the same year, the Government managed to find £250 million to bail out the bankrupt Common Market. On and on it goes. The Government

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seem to bail out the parts of the casino economy that suit them while they do not care tuppence about the few thousand miners who work in Cornwall. How do they manage to come to different conclusions? Is it because their friends in the City have to be looked after but they do not care about miners?
Mr. Channon: I hope that the House does not expect me to answer the detailed points regarding Johnson Matthey. They are wholly irrelevant to what we are trying to discuss in what is inevitably a short debate. I am trying to outline the considerations which we have had in our minds on the tin problem and the work that is going on. My Department has offered to fund a study aimed at seeing whether a commercially viable project could be identified.
The Government recognise that the further contraction or closure of the Geevor tin mine would increase the already high level of unemployment in the Penzance and St. Ives travel-to-work area. In addition to existing measures of assistance made available from 1 July in the Penzance and St. Ives TTWA, a slightly amended version of the business improvements service package of schemes of assistance to small businesses which is currently operated by my Department will be available. This will help the local economy to diversify into activities other than tin mining and tourism. As the House knows, £ 1 million will be made available for this purpose.
Mr. David Harris: Before my right hon. Friend reaches the issue that is of prime consideration to me and my constituents, I must say that we accept that the initial application was for a large sum of money, and we are grateful for the £1 million that is being made available under the business improvement scheme. However, have the Government closed their minds completely to a contribution towards care and maintenance of Geevor mine for a period of two years? I am told that it would cost £150,000. That would be £150,000 well spent to keep Geevor mine going—to keep the pumps going—so that there is at least hope for Geevor and the people of west Cornwall who depend on it. Will my right hon. Friend address himself to that issue?
Mr. Channon: My hon. Friend raises an absolutely crucial point for Geevor. I pay tribute to him for his efforts on behalf of Geevor and those employed at Geevor.
Mr. Maxwell-Hyslop: We should like the answer now.
Mr. Channon: I shall give the answer now, if my hon. Friend will allow me to do so. The proposal put forward so far, which my hon. Friend the Minister of State will deal with in more detail when he replies to the debate, does not satisfy us as to being able to provide future viability for that mine. As I said a moment ago, I have offered to fund a study aimed at seeing whether a commercially viable project could be identified. I hope that that offer will be taken up.
Mr. Maxwell-Hyslop: Before my right hon. Friend progresses to that, is he aware of a telex sent by an official of his Department which said that the Government would pay to keep the mine dewatered to the end of August? I have seen the telex. Has the Minister not seen the telex, or is he reneging on his own Department's telex? If not, will that money still be paid to keep the mine dewatered to the end of August?
Mr. Channon: My hon. Friend has not described the terms of the telex accurately. The best that I can do, on the
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whole question of Geevor, its viability and the study that I suggest should be undertaken, is to say that any detailed points which my hon. Friend or other hon. Members wish to take up will be answered by my hon. Friend the Minister of State in the course of the debate. He has been involved in the discussions.
Mr. David Penhaligon rose——
Mr. Channon: No, I shall not give way again. All I can say is that the interpretation of the telex to which my hon. Friend the Member for Tiverton referred is not one that I can accept, but let us deal with that in some detail.
Mr. Alan Williams rose——
Mr. Channon: I shall willingly continue to give way, but does the House wish me to finish or not?
Mr. Alan Williams: Does the right hon. Gentleman realise that the information for which he has been asked is central to the debate? Many Conservative Members in particular will not know what to say and will not know how to assess what the Government's position is until they have the information that we are now told is to he given in the reply. The Secretary of State should give the information now. Is he saying that he is so little briefed on that subject that he does not know the answer?
Mr. Channon: With respect, the right hon. Gentleman is lowering the tone. I have already answered the question. The telex to which my hon. Friend the Member for Tiverton referred does not bear the interpretation that has been put on it. I have described in some detail the Government's policy regarding Geevor. I have said that we have offered to fund a study aimed at seeing whether a commercially viable project can be identified. Let us hope that that study can go ahead, and let us hope that a commercially viable project can be identified. I cannot go further than that at this stage.
Mr. Penhaligon: I use this rare opportunity to ask the Secretary of State, as opposed to his deputy the Minister of State, a fundamental question which worries many people. Within hours, and certainly weeks, of the original sad collapse, the Government machine made a decision to offer up to £50 million to put the agreement hack together. I make no complaint about that. However, eight and a half' months later we still have no clear declaration from the Government that they are willing to put money into rescuing some of the tin mines. It is true that they have not said no to all of them. But even now, there is no clear declaration of the sort of money that the Secretary of State is talking about. Will he confirm at the Dispatch Box tonight whether, if the criteria are right, he is willing to give the miners of Cornwall half of what he offered the dealers?
Mr. Channon: In consultation with Geevor, Rio Tinto-Zinc and others, we must try to identify whether there are projects that would be viable. So far, no project put forward for Geevor has been proved to be commercially viable. I have said that we have offered to fund a study aimed at seeing whether a commercially viable project could be identified. The Government are also discussing with Rio Tinto-Zinc the possibility of providing financial assistance to enable its tin operations at Wheal Jane arid South Crofty, where about 1,000 people are employed, to continue. There are continuing discussions with Rio Tinto-Zinc to see whether a viable project can be identified.

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In addition, we are considering applications from smaller tin producers in Cornwall. We shall particularly take into account the employment implications and the level of financial assistance necessary in each case but, as in the case of Geevor, we shall need to be satisfied that tin operations in Cornwall would be viable.
I think that the House will agree that the events in the tin crisis have been traumatic for all those concerned—those in Cornwall, those outside Cornwall, those in the tin industry itself, and the communities concerned with tin production.
Mr. Maxwell-Hyslop: And for the Department of Trade and Industry?
Mr. Channon: I am sure that for my hon. Friend it has been. We believe it is essential that we should do everything to ensure that such a position cannot be allowed to develop again. I hope that the House will agree. This will govern our approach to all future potential commodity agreements.
I invite the House to support the Government's motion and to endorse their response to the Select Committee.
7.27 pm
Mr. Alan Williams: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
"rejects as utterly inadequate the Government's response (HC 457) to the Second Report from the Trade and Industry Committee on the Tin Crisis (HC 305–1); notes that the Select Committee highlights inherent faults of the International Tin Agreement which made it 'catastrophe prone'; considers that the Government failed to monitor these faults and so contributed to the failure of the International Tin Council and thereby to the consequential collapse of tin prices, to enormous losses by Tin Council creditors, to the closure of Geevor Mine and to the severe threat to the whole Cornish tin industry; and dismisses as derisory and pathetic the Government's so-called package of measures to combat unemployment in Cornwall."
With respect to the Secretary of State, the Government's response to the damning report that has come from a Committee on which the Government have a clear majority is pathetic. I recognise that the Secretary of State is not the person largely responsible for the events that we are debating. I know that he must accept the role of head of a Department, and we shall deal with responsibilities a little later. I accept that many of the problems with which we are dealing mere inherited rather than caused by the right hon. Gentleman, but I submit that the Department has caused many of those problems.
It may be improper to make the observation, but, as I look at the number of supporting officials that the Secretary of State has had to bring along with him this evening, I realise just how worried the Department must be. If the Secretary of State carries on like that, we shall soon need a double decker Box for officials. However, that is not surprising, having read the evidence, as most hon. Members have done. There is a three-year catalogue of buck passing, incompetence, inaction, lack of perception and lack of any sense of urgency. Having studied this exercise in ineptitude, I understand how the Department of Trade and Industry blundered into the Westland fiasco and the Leyland debacle. This is in the same category.
What are the consequences of the Department's three years of bumbling and bungling? The brokers and bankers
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stand to lose sums which cannot be quantified. The minimum is £160 million, but the City claims it will be as much as £600 million. The tin price and the tin market have collapsed. Already there has been the loss of the Geevor mine and we face the possible loss of the remainder of the 2,000-year-old Cornish tin industry. There is the urgent prospect of an extra 2,000 unemployed in Cornwall. Crippling damage has been done to London's reputation as a trading centre. All those consequences arise, in part, from the actions of the Department of Trade and Industry.
Two clear features emerge from an objective reading of the report. First, there has been the refusal, on an unprecedented scale, by a Department to supply information to a Select Committee. The Secretary of State must understand that those of a less generous disposition might feel that that savours of a cover-up or of an attempt to save someone's neck at the expense of another's. Secondly, the collapse need never have taken place. Ministers bear an overriding responsibility for the fact that it happened, as I hope to prove.
The Secretary of State referred to the suppression of information. I supported the setting up of the Select Committee system. I have never seen such a barricade of excuses to justify the refusal to give information which was essential to the work of one of our Select Committees. I shall give just a few examples of the excuses. We were told that the International Tin Council was covered by diplomatic immunity and confidentiality. We were told, "We cannot reveal the advice of officials to Ministers. We cannot give any information on the legal advice given to Ministers because it is wrong to disclose the advice given to clients."
We were told that some matters could not be discussed because they were sub judice and that others could not be discussed because they might be sub judice. Junior officials told us that the questions should be put to senior officials. Senior officials told us that Ministers had told them not to answer. Ministers said they had no intention of giving answers. One is left with the impression that even the luncheon vouchers in the Department of Trade and Industry are listed as classified documents. One could only wish that the Department had shown a less cavalier attitude when dealing with the odd letter or two from the Solicitor-General's office.
The permanent secretary acknowledged the embarrassment, answering question No. 697 by saying:
"I do not believe I have ever been under quite so many constraints in giving evidence to a Select Committee."
That is extremely serious when one considers the scale of the consequences.
Mr. Maxwell-Hyslop: They were self-imposed constraints.
Mr. Williams: Exactly. I shall come to that point. That led the unanimous report of the Select Committee, in paragraph 13.1, to observe:
"As a result, we have been effectively prevented from discovering all the facts about one of the principal facets of our inquiry: the role of the Government in the crisis."
What is a Select Committee for? The Select Committee system was set up to enable the House to investigate the Executive. It was the check for the legislature on the Civil Service and on Departments. That is what the system is all about.
When a Select Committee Chairman, backed by hon. Members on both sides of the House, tells us that the

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Select Committee was not able to obtain the information to enable it to draw proper conclusions on the Government's conduct, surely the House has a right and a duty to be concerned and to probe further. The concept of Select Committees is put at risk and is open to doubt if we allow the Department of Trade and Industry to get away with the absolute contempt with which it treated the Select Committee on Trade and Industry. It was extremely modest of the Select Committee to state:
"it seems unnecessarily obstructive of Ministers".
Even on the limited information revealed—we have been allowed only partial information, the worst hits having been swept under the carpet or kept in the cupboards—the Department and the Secretary of State have every reason to he cautious. In line after line of the evidence to the Select Committee they were pleading the fifth amendment. The evidence reveals without doubt that the Government are guilty of complicity by neglect.
The most damning evidence — that Ministers were aware of the risks before they entered into the agreement —has been endorsed by the Secretary of State. The right hon. Gentleman has given some of the reasons. In question No. 603 a civil servant gave this reply to the Chairman:
"I think the position is that Ministers in the very beginning were warned."
The Chairman asked:
"What is 'the very beginning'?"
The civil servant replied:
"The agreement came into force in June 1982, so before we entered into the agreement officials made clear to Ministers the risks that might he involved in entering it. Then subsequently they told them about the problems they had been having with the operation of the agreement."
That line was developed further by the permanent secretary, the Department's accounting officer, who, in answer to question No. 742, said:
"I think it was evident in 1982 before we even joined the Agreement: if was evident that if Brazil was not a member, and it was a low-cost producer which would be encouraged by the sort of tin prices at which the Agreement was aiming and it would be subject to no constraints in expanded production, it would place great strain on the Agreement. This was amongst the disadvantages of the Agreement which were known at that time."
If those facts were known at the time and it was known that there were grave disadvantages, what would hon. Members' sense of survival dictate if they were Ministers about to encourage the signing of such a treaty? Any Minister worthy to hold the title "Minister" would want to ensure that, having been warned of the risks, he protected the country, our traders and the Government from them. Why did Ministers sign up without obtaining a proper monitoring agreement? Where were the checks? Why did Ministers not demand a system of checks before signing the agreement? They had the muscle before they signed. Where was the requirement to be given adequate information?
The Secretary of State has said that they had much trouble in obtaining the information. As one who on various occasions has had to enter into agreements, I have wanted to be sure about their terms. I doubt that the Secretary of State would have entered into the agreement on its terms. It was incredibly irresponsible to act in that way. It is beyond belief that Ministers could have signed that document with that knowledge without taking safeguards.
In answer to question No. 714, the permanent secretary described the agreement as
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"a recipe for an ever-increasing buffer stock … it was necessary for … additional reserves to be made available"
He also stated:
"This agreement has suffered from its outset from an inadequacy of resources"
Surely it was suicidal for Ministers to enter into an agreement from which three major producers— Brazil, China and Bolivia—were absent, without ensuring that they built proper safeguards into the agreement. Yet Ministers of the day were not perturbed. Perhaps they should be here today at the Dispatch Box.
The ministerial guilt at the outset is further compounded when we consider the other warnings that came during the lifetime of the agreement. If ministerial alarm bells had not been ringing at the outset, it is bewildering that they were not alerted by what followed. Let us listen to the words of the buffer stock manager in a report which the Secretary of State refused to make available to the Committee but which it obtained from American sources. The buffer stock manager said:
"As we have reported over the last three years or so, the fact that hardly any cash was contributed to the Sixth Agreement was gambling on the good fortune of Buffer Stock operations, and so far the gambling by ITC members has fortunately paid off very well. It is mainly due indeed to our good fortune in the market, ie the increase in the US dollar. One may trust that the severe decline in the US dollar over the last two months will have clearly vindicated our message that the ITC should stop gambling on its good fortune in view of what is at stake, ie the fortunes of the entire tin-mining industry."
The buffer stock manager is saying that he had warned of the same hazards as some of the civil servants had warned at the outset. In that context it is remarkable, in view of what I shall mention soon, to read the evidence by the other Minister of State in the Department, who unfortunately is not here this evening, no doubt for good reasons.
Mr. Maxwell-Hyslop: Before the right hon. Gentleman makes that point, I would much prefer him to inquire whether the United Kingdom delegate, Mr. Lunn, passed the warning from the buffer stock manager to Ministers. It is all very well for Ministers to say that they take responsibility and that civil servants should not be criticised, but if they will not tell the Committee or the House whether the civil servants gave them the necessary information on which they could have taken action, we must assume that the civil servants were even more incompetent than they appear to be.
Mr. Williams: That is an interesting point, because the absent Minister of State had no compunction about trying to pass the blame down the line to his officials, however unconventional that is in terms of normal practices between Ministers and their officials. In answer to question No. 600, the Minister of State said:
"Ministers were not informed."
In answer to question No. 601, he said:
"I am not aware of particular occasions on which Ministers were informed."
In question No. 602, he was asked:
"Do you not find it unbelievable when this sort of financial risk and financial problem was becoming evident that Ministers were not informed? Is that not nearly beyond credence?"
The Minister replied:
"It certainly has proved to be unfortunate."
The Minister has a remarkable flair for understatement. He also seems to have a remarkable flair for inaccuracy or for inadequate memory.

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It is important to remember that evidence was submitted by the permanent secretary which rebutted that claim by the Minister of State. One is bound to ask where Ministers were when that information was coming forward. Do they not read their briefs, or, if they do, can they not understand them? Rip Van Winkle is alive and well and sleeping in the Department of Trade and Industry.
Mr. Simon Hughes: Perhaps he was in his castle.
Mr. Williams: He may have been in his castle. I suspect that that is where he is tonight and that the drawbridge is up.
The permanent secretary wrote a letter to the Chairman and, through the Chairman, to the Committee in which he rebutted, not once but 15 times, the evidence given by the Minister. On 15 occasions between 1 July 1982 and 24 October 1985, reports and briefs were provided for Ministers. It is interesting to consider how they break down. Eight were provided up to March 1984. That is an important date, and I shall return to it. The other seven reports were provided between June and October 1985. So what happened during the 15 months in between? Why did Ministers not receive any reports? If they say that officials did not send them, in view of what the Secretary of State has said about the alarm before they entered into the agreement and in view of the warnings they had already received in 1983 about the inability to provide information, why on earth did no Minister have the nous to ask? As a Minister, one has only to ask and it will be provided. That is the system, but it seems that it did not occur to anyone. Not one Minister, in one of the most overstocked Departments in Whitehall in terms of Ministers— in numbers not quality—bothered to ask. Someone else will pay up to £600 million as the bill for their failure.
Mr. Stan Crowther: My right hon. Friend must not overlook the fact that, although 15 papers were sent to Ministers by civil servants, the permanent secretary would not tell the Committee whether there was anything in them. I asked him more than once.
Mr. Maxwell-Hyslop: Were they in invisible ink?
Mr. Crowther: They may have been. Whether they were in invisible ink or not probably made little difference to the content. I did not ask the permanent secretary to tell the Committee what information was in the reports because of the confidentiality rule. I did not say, "We want to know what is in them." I said, "Will you simply tell us whether there was any information in them at all?" He replied, "Oh, no. That is not a piece of information that I can give to the Committee. That is confidential."
Mr. Williams: My hon. Friend does not appreciate the fact that Ministers set the tone of a Department. As they were not reading the brief, no one else thought it was necessary. The permanent secretary was not being reticent he was just reflecting the amount of attention that was shown by his ministerial masters. In answer to question No. 627, it was categorically said that Ministers gave no instructions about reports. Yet they had been informed and warned time and again. What were the Ministers of the day doing? The present chairman of the Conservative
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party was the Secretary of State at that time. What were they doing when all that was happening, when the entire system was rotting and they should have been aware that it was rotting? The tenor of the evidence that came from Ministers was not to deal with the fundamental questions, but contemptibly and outrageously to attempt to pass the buck down the Department, in most cases to the officials. In breach of the normal practices of Ministers, they apparently have never heard of ministerial responsibility.
Mr. lain Mills: The right hon. Gentleman has spoken for 20 minutes about Select Committee procedures and ministerial responsibilities. Will he make it clear whether, had there been a Labour Government in 1982 they would have signed that agreement? If they had, how would they have monitored the subsequent events and at what price would they have supported the price of tin? In view of his strident and sarcastic remarks, does he feel that in such a commodity market the Opposition would have coped any better?
Mr. Williams: I am sorry if the hon. Gentleman thinks I am sarcastic; I thought it was just fair comment. If anything, I am being slightly kind to a Department that has been guilty of unprecedented bungling. It is easy for the Opposition to stand here and say that we would not have signed it, but there is no way in which I would have accepted it. I have served in four different Departments and had the responsibility of making and standing by my decisions. I saved Wheal Jane, which is more than the Government did. I am telling hon. Members that I would not have been party to this agreement without adequate safeguards being built in before it was signed.
Mr. Hoyle: Does my right hon. Friend agree with Sir Winston Churchill, that the person who answers a hypothetical question is a bigger fool than the person who asked it?
Mr. Williams: I am not sure, but I shall plead the fifth amendment to that question.
In his opening speech, the Minister went out of his way to say that we could do nothing because we had little support from other member states, yet everything went quiet for 15 months from March 1984. In March 1984 the eighth session of the ITC, took place. The Canadian representative, Mr. Kepper, said:
"The Council, through a series of non-decisions and unwillingness to address essential issues facing it, has in effect given up control of key provisions in the Agreement. Two of these provisions concern the size of the buffer stock and its financing. The Council has effectively allowed the Buffer Stock Manager to redefine the size of the buffer stock through the use of forward transactions."
The Secretary of State implied that the Government became aware of the use of forward transactions much later. In March 1984, not only was this being pointed out, but the Government had what they said they did not have before — an ally. However, they went back to sleep again, deciding to keep a low profile. They not only had an ally, but they had been given a warning of the malpractice — the forward purchasing — of which they suggested in their evidence, they were unaware until much later.
What representations did Department of Trade and Industry Ministers make to other Departments? Did they alert other Departments at ministerial level, never mind at official level? Did anyone from the Department of Trade

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and Industry talk to anyone at the Foreign and Commonwealth Office, the Treasury or the Bank of England?
Mr. Barry Porter: One wonders whether the Foreign and Commonwealth Office ever talks to the Department of Trade and Industry. Because of the danger of entering into this agreement, when the storm signals must have been hoisted and when no information was forthcoming, I suspect that there must have been other reasons for keeping the agreement going and for the lack of activity. One can only believe that the Foreign and Commonwealth Office was saying, "Do not rock the boat," for other, wider reasons in connection with our relationship with purchaser countries.
Mr. Williams: If the Foreign and Commonwealth Office was saying, "Do not rock the boat," that was more communication between the two Departments than was shown anywhere in the evidence given to the Select Committee. I do not think that the Department of Trade and Industry knows where the Foreign Office is or what it is about, or vice versa. Ministers did not attempt to mobilise other Departments. Did any papers go to Cabinet Committees? Was any attempt made to alert the Government as a whole to the dangers that were present? Did Ministers make any approaches at international level to their counterparts to try to mobilise support? Was it all left to one official, who is now having to carry the can, to have discussions with other officials at a very low level?
Ministers should be ashamed of their record. They are trying to hide, quivering, behind their officials when there is no doubt where the constitutional responsibility lies. Why were no warnings given to those whose money was at risk? The Government, so they thought, were in for only £8 million, in a low-budget operation, and they made it clear that they intended to keep it as low as they could. Others, if we accept the evidence from the City, were in for nearly 100 times as much, yet nothing was done to alert them.
The Department of Trade and Industry's silence and the threat of alerting the other members could have been a sanction used by Ministers against the ITC. If they had gone to the ITC and said, "Unless you come to heel and give us the correct information, we will alert those who are funding the operation" —after all, it was someone else's money — they would have had greater leverage against the ITC. Yet, again, no one asked anyone or discussed anything. Instead, the Government, far from recognising that they are responsible, have tried in their evidence to pretend that they had some form of limited liability under the agreement. Unlike other international agreements in which limited liability clauses exist, no such clause was provided in this agreement. Anyone who has read the evidence would say that there is little doubt that the Government have a moral responsibility, which they should honour.
There is even a question about whether the London Metal Exchange was warned. The Department has changed its position on this. What happened in June 1985? An official said that the Department warned the LME to advise its members. The Department would not have advised them itself, but it suggested that the LME should advise its members that the Government would not stand behind and back any financial losses that occurred.
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The chairman of the LME said that that statement was imprecise and worthless. In answer to question No. 877, the Secretary of State said:
"I do not think it was an official warning from the DTI."
Was it an aberration? It think it was the beginning of fear in the Department, the first step in trying to get out from underneath. The Department wanted to have it on record that it had said something. The warm and friendly hand on the shoulder had a blade up its sleeve. The Department was pretending to alert the LME and at the same time to protect itself if the LME later said that it had received no warnings. That is an unbelievable saga of failure and of evasion of responsibility by the Department.
The Department abandoned the bankers and brokers without any misgivings and without any show of conscience. Whether the sum was £160 million or £600 million, it was a devastating blow to the LME. It was also a devastating blow to the credibility of other commodity agreements. What is more, as the report points out, it is an astonishing example to set now, when the debtor nations could take advantage of Britain's precedent and plead that their obligations should be treated in the same way. The Government will say that there are no obligations, but Australia does not agree. The Australian Minister has said that his Government would expect to meet their obligations under the treaty.
Finally, let us come to poor Cornwall, which was ignored until the moment of catastrophe. It is the most innocent party of all in this tragic and avoidable debacle. Cornwall must consider today's debate as a non-event. On 3 June, the Minister of State said that he hoped a decision would he taken on the Rio Tinto-Zinc mine within five or six weeks. That is this week or next week. So why are we having the debate today? Why could we not have it next Monday when the Secretary of State could tell us what he is going to do? Why could we not have the debate on the Monday after that? I am sure that the right hon. Gentleman will be able to tell us then what he intends to do. If I were in Cornwall, I should regard the timing of oar debate as ominous and disturbing.
We will not accept that the House should go into recess without a full statement about what the Government intend to do for the Cornish mines.
Mr. Maxwell-Hyslop: I may be able to help the right hon. Gentleman about the timing. The Minister of State said that he could not tell the House what future price he had assumed for tin while his decision on Rio Tinto-Zinc was outstanding. Clearly, knowing what price he has assumed is crucial to our judgment of the decisions for which the Government have called. By having the debate before the decision on RTZ is made, the Minister of State thinks that he can escape telling us what price he has assumed for tin. He would not be able to escape if the debate had been held after the RTZ decision. I hope that I am wrong, in which case my hon. Friend the Minister of State will tell us what price he has assumed.
Mr. Williams: I am reluctant to intervene in these internal doubts and questioning on the Government Benches. It is remarkable what the incident has done to the confidence of Conservative Back Benchers in their Front Bench. It is clear that the Back-Bench Conservative Members do not know what to trust or whether to trust; they do not know whether they are being conned or evaded. The timing of the debate leads me to think that a massive exercise in evasion is going on.

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In the meantime, Geevor has gone, when it need never have been at risk if Ministers had been alert. The rest of Cornwall's 2,000-year-old industry is at risk, teetering on the edge of a precipice, but the Government are not even willing to tell us what they intend to do or allow us to have the debate when we could discuss their decisions.
The Government seem oblivious to the fact that another 2,500 people may be made unemployed in Cornwall, although the cost of keeping them unemployed will be lower than the cost of keeping them at work. [HON. MEMBERS: "Higher."] I am sorry. The cost of keeping them unemployed will be higher than the cost of keeping them at work.
It is a nonsensical situation. The Government do not seem to care about the import substitution or about the impact that decisions will have on a community as isolated as Cornwall if they go wrong. Instead, the Government passed a begging bowl around the Departments and it came back virtually empty. A feasibility study and £1 million is the Government's offer to Cornwall as a sop for abandoning the county's oldest and most traditional industry.
Let there be no doubt that if the Government abandon the tin industry, Cornwall's communities will be destroyed. The young will leave, the skilled will leave and the decision will be a death sentence to many of Cornwall's communities. That is why I do not understand why we are having our debate before the Government are able to announce their decision.
The Select Committee report reveals an unprecedented and unremitting succession of errors of judgment and failures to perceive the obvious. Ministers should come to the House not just in penitence, but immersed in shame for what the Department of Trade and Industry has done. In the words of the buffer stock manager, the Government gambled with the future of the entire industry. The Government lost the gamble but the industry has been left to pay the bill.
8.4 pm
Mr. David Mudd: As I shall be following the right hon. Member for Swansea, West (Mr. Williams) into the Lobby, I hope that he will forgive me for not following his remarks. I wholly concur with all of them.
About 300 years ago a former MP for Falmouth was fed up with Whitehall because of its cavalier attitude towards Cornwall and the Cornish people. He stormed out of the Chamber and announced his intention of going straight back to Cornwall, where, he said
"I doubt not I shall find a good cause".
Tonight, a vital cause has come from Cornwall to the Chamber of the House of Commons.
Sixteen years ago, in my maiden speech in the House I accused successive British Governments of having created the best developed negative attitude of any nation towards its minerals industry. Tonight I use even stronger language. Despite the smug, camouflaged red-herring language of the motion, I suggest that there is abundant evidence that the Government were initially reluctant to acknowledge the local implications of the growing crisis in world tin, incapable of appreciating the magnitude of that crisis when it broke and unwilling to act as the economic
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and human holocaust moved onwards through Cornwall. The Government have been impudent, impotent and incompetent.
As applications from Carnon Consolidated, designed to keep 1,000 miners working at South Crofty, Wheal Pendarves and Wheal Jane, are still being considered, I shall say no more about those applications but that I hope that there will be a reversal of the refusal that has already cost 350 jobs and the death of Geevor.
I hope too, that the Department of Trade and Industry is now a little more geared up than it was on the unhappy afternoon of 14 May when I visited it. At that time Geevor was within three weeks of closure and protective notices had been served at the other three mines. When I asked at the meeting on 14 May what commitment the Government would give, I was told that it was hoped
"that the uncertainty could be talked through as quickly as possible."
I was told that, although the Government would come to their own conclusions, aid would have to fall within EC criteria. Yet 48 hours earlier, a report from the Community had written off the Cornish tin industry. When I asked the Department for the figures against which the possibility of aid would be considered, I was told that at that time — seven months into the crisis — no projections existed on what bracketing of best and worst possible prices aid would be assessed against.
The tin crisis and the tin industry are unique. The crisis, although it costs jobs in Cornwall, is not locally or even nationally inspired. No blame whatsoever can be levelled against the companies or the unions, or against the management or the men. No other British industry can claim to be wholly dominated by external factors, and no other industry can claim a closer and more consistent collaboration between employers, unions and men in cutting costs and in a constant search to increase efficiency and productivity.
Carnon Consolidated has already cut its break-even cost to just under £6,500 per tonne and will reduce that by another £250 per tonne within the next three months—with the possibility of another £1,000 per tonne off that price if it can get the support that it is seeking from the Department of Trade and Industry. In simple terms, £5,250 per tonne from the Cornish mines would undercut a very significant percentage of worldwide producers. South Crofty and Wheal Jane are already listed in the top 20 world ratings for contained tin.
Is there a world need for tin? If there were not, and if it were not a strategic mineral, the United States and the Soviet Union would not be hell-bent on increasing their stockpiles at the present rate. If there were not a need for tin, a demand for tin and a future for tin, I cannot believe that the Government of Malaysia would be using its Primary Industry Ministry as the banker to provide 6 per cent. loans to cover the difference between production costs and the realisation price of tin.
However, encouraging though it may be to look to the world future of tin, let me paint the House a picture of the record in Cornwall which the Government's motion seeks to conceal. Let me remind the House that that is against a local record of unemployment that has already engulfed one person in four.
My right hon. Friend the Secretary of State talked about turning attention to "smaller producers". Let us look at the smaller producers. Cornish Tin and Engineering at Tuckingmill developed a tin flotation

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process that made it possible to extract tin oxide from low grade feed materials. At the turn of the year that enterprise and innovation meant 24 jobs. Now the plant is closed. There are no jobs.
Concord Mineral Processors at Tolgus was on the verge of creating 120 jobs, subject to winning a technical appeal on discharges well out to sea. We shall not now see those jobs.
Just before Christmas Medway Tin at Brea was worth £1 million as a company. It developed a new technology to slash processing costs to be profitable even against a low price of tin. In December 1985 it was worth £1 million and had a direct work force of 35, plus 20 subcontractors. Now there are three in that company, including the managing director. The machinery is useless. There is nothing to process. It cannot be sold because mining equipment cannot be given away these days. For two years, against a prospect of nil activity, the company will continue to have to pay rent on the ground that it operates. From December 1985 to June 1986 the value of the company has fallen from £1 million to zero. Now, day by day, it inexorably slides further into the red.
Even Camborne School of Mines, for generations one of the world's greatest centres of research, development and training in new technologies, could become a phantom centre of excellence and academic promise in a landscape of moribund mineral activity.
Against that reality, we suddenly find the incompetent Department of Trade and Industry coming forward, with a new-found boy scout enthusiasm, with its latest helpful idea—one based on ethos rather than experience. It has come up with the idea that not much would be lost if the pumps were turned off and the mines allowed to flood for possible resurrection at some future date.
Mr. Dennis Skinner: What does the hon. Gentleman expect when three Ministers in the Department of Trade and Industry are millionaires?
Mr. Mudd: I am grateful to the hon. Gentleman, but I shall not follow him that closely. I am sure that he will reserve his observations for later in the debate.
If it is the considered view of the Department of Trade and Industry that the water can be allowed to rise in the mines to he pumped out one day and that all will be well, I can only assume that Methuselah is alive and well and is now the Department's special consultant.
The fact is that no major Cornish tin mine has ever recovered after flooding. In the tiny minority where reopening was achieved, it was in the olden days when a Cornish pump stood over the shaft and could be reactivated with comparative ease from the surface. Modern electrics and technological equipment are so many fathoms underground that they would be lost for ever were the waters allowed to cover them.
We Cornish people do not cry out for charity. We are too proud, too realistic and too individualistic for that. To us, employment, often at low rates of pay, is a badge of dignity and responsibility. Tear away that badge and there will be grief, disillusionment and anger. There will be the social consequences of drink, violence and broken homes.
The words that I find most appropriate tonight come from the German protestant pastor, the late Martin Niemoller. He summed tip eloquently what I am trying to say. He said:
"First, they came for the Jews. I was not a Jew. I was silent. Then they came for the Communists. I was not a Communist.
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I was silent. Then they came for the trade unionists. I was silent. I was not a trade unionist. Then they came for me … There was no one left to speak for me."
In the House there are no Cornish quarrymen, farmers or fishermen, no Cornish shipyard workers and no practising Cornish engineers. We have been silent as their jobs have been taken away. Now "they" are coming for what is left and we in Cornwall look to the House for help and protection before it is too late.
8.14 pm
Mr. David Penhaligon: As a non-practising Cornish engineer, it is particularly appropriate that I should follow the hon. Member for Falmouth and Camborne (Mr. Mudd).
If those of us who live in Cornwall, and feel, breathe and are a part of the community, were a long way down the other end of the line listening to this debate On the radio or television, we would have found the first hour of it quite remarkable. We have discussed what has happened and the background to it and I make no complaint about that. The one spark of anger, outrage and anguish that the Secretary of State showed—he may have been justified, I do not know — was when he turned on the hon. Member for Tiverton (Mr. Maxwell-Hyslop), who attacked an innocent civil servant. I know not the background of the argument. It may well be that the hon. Member for Tiverton was outrageous, but one innocent civil servant was given that level of defence by the Secretary of State.
We are talking here about hundreds of innocent Cornish miners. They are innocent to the point of naivety. They are hundreds of miles away from the origin of the crisis. Yet they have to look to the House to resolve their dilemma because they have no one else to look to.
A great deal was made of whether there have been prophecies regarding the collapse of the international tin price. The irony is that the whole strategy of those running the mines in Cornwall over the past three years has been based on the assumption that the international tin agreement could not survive for a great deal longer. Whether it was Geevor, Crofty, Wheal Jane or Pendarves —all in their own way were spending the profits that they were at that time generating on improving their mines so that they could compete in a free market. I do not believe that any of them expected the collapse to take place as suddenly or as far as it did, but the idea that no one was aware, at least at my end of the industry — I speak positively for my end of the industry in this debate—-that a collapse was imminent is simply not so.
Well, we are where we are. Eight and a half months have rolled on and at least two Members of the House have made so many speeches here about tin that it is difficult to think of something else to say.
There is a future for hard rock mining in my county. I cannot help but remember that in 1984, in sheer tonnage, we had the largest output of tin that we have had this century. The international price at the moment, of less than £4,000 per tonne, cannot provide the world with the tin that it wants and requires. Therefore, one can with some confidence predict that the price of tin will increase.
It would be interesting to ask the Minister—clearly the Government must have studied this by now in great depth, since a number of us have been shouting at them for about eight and a half months—what percentage of the current world tin output the Department of Trade and

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Industry believes is being mined profitably at the current international price. [HON. MEMBERS: "None."] I am willing to give way to the Minister. We have some time. What percentage of the world's tin is being mined at a profit? My friends in Cornwall are more modest than those who say none. They admit that there may be one or two mines somewhere staggering on at those sort of prices, but certainly the figures that I have heard suggest that the figure is less than 5 per cent. of the world's output.
Five per cent. of the world's output is currently profitable. Therefore, the international price for tin must increase substantially. 1 cannot say to the Minister that I know how far or how quickly, but since the Department did not seem to guess that the collapse would be anything like as far or quick as it was, I cannot be blamed for that.
The present mines cannot sustain their position for that much longer and my county wants to know whether the Government are willing to give some money or to provide a building block to re-establish the industry and give it another chance. May I spell out the cost of saying no? It is 1,500 men. By Cornish standards they are well paid, and I make no secret of that. As the hon. Member for Falmouth and Camborne said, the unemployment rate in the area is about 25 per cent. That is the level all the way from the west of Truro to Land's End. That means there are no other jobs for those men. Perhaps one or two may find work, but they will do that only by dispossessing other people.
Some 1,500 men out of work will cost the Government about £6,000 each a year in loss of tax and supplementary benefits. That gives a total of £9 million a year. Next year they will want another £9 million, because the first year's £9 million will have produced absolutely nothing. I know that the arguments are being presented to the Department of Trade and Industry by the companies that keeping the mines open is considerably cheaper than the costs of the first two or three-year closure. I do not know why a little more encouragement could not be given to the local applicants. It will cost the Government £9 million a year to say no, and of course the nation will inherit nothing.
It is worth spelling out what is produced. The mines produced 5,000 tonnes of tin, 7,000 tonnes of zinc, 750 tonnes of copper and 2·5 tonnes of silver in 1984, the last real mining year. That will be lost for a long time. If a mine floods, there is no law of logic which says that it can never be dried out. One thing that I have learnt in my 12 years as a Member of Parliament is that if one wishes to survive one never says never, but we are getting as near to never as I can possibly imagine.
In an odd way, the difficulties of drying out a mine today are more complex than they were 50 years ago. Clearly we have the technology to make it easier, but when the mine floods one destroys much more valuable equipment than was destroyed some 50 years ago. It will cost Rio Tinto-Zinc, the company that owns these mines, a lot of money to shut them. The one redeeming feature for Cornwall is that we know Rio Tinto-Zinc will not go bankrupt and will not renege on the commitments that the Cornwall mines place upon it. It will cost the company a lot of money to close the Cornish mines. I have heard various figures, but £10 million or £12 million is the sort of money that it will cost. The company is saying to the Government, "Why cannot we use that £12 million as a
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contribution towards giving the mines another chance, as opposed to giving the mines no future whatever?" That is the argument put to the Minister.
It is quite probable that once again the miners in my county will be willing to make a contribution towards saving their mines. Perhaps "willing" is an adjective that slightly stretches reality, but when the crunch comes, I suspect that the miners in my county will be willing to make a contribution towards saving their mines and their future. There is a commitment from the company and the work force, against whom no criticism can possibly he levied. Are the Goverment willing to put the third leg in the stool? The stool cannot stay up unless it has three legs. Two have been provided, but the Government Neill need to supply the third.
The Cornish mining industry is not looking for charity. The biggest mining company in my constituency —English Clays, Lovering and Poching, or English China Clays, as it is called now—does not mine tin. To be candid, the English part of the title grates on me, but last year that company made a profit of £75 million. I admit that not all that profit came from the claypits in my constituency, but certainly two thirds of it came from there. Some £50 million must have been generated by mining clay in my county.
All we are asking — I suppose that one has to say that, after eight and a half months, we are begging—the Government to do is to use some of that great tax income that they have had from the mining of china clay in one part of Cornwall to make a contribution towards alleviating the difficulties of miners in another part of Cornwall. It is not inconceivable that in 20 years the argument may be the other way round, because in the long run mining is an up-and-down world.
In his 30-minute speech that opened the debate, the Minister said little that was encouraging. The Minister of State, the hon. Member for City of Chester (Mr. Morrison) will sum up the debate and I hope that he will give us a few more details upon which to make a judgment. When I look at the three Ministers on the Front Bench, I wonder which of them is the poorest and which is nearest to the real poverty that my constituents are about to experience if the final collapse takes place.
Can the Minister give us a couple of sums? What does the Department believe the tin price will he in two years? If the Minister does not have a figure for the price in two years, what about three years? I am an optimist, and if the figures do not fit, I will settle for an estimate of the price in four years' time. The Minister must have a figure in his mind. He must have had a figure before he rejected the application for the Geevor mine. Let us hope the Department did not reject it without at least having some figure in mind upon which to base the rejection of that application.
Let us have a figure of what the Government believe the international tin price will be and a clear assurance from the Minister that after eight and a half months someone will have the courage to tell the House that at least half the £50 million that they were willing to give the tin dealers will be used to save the great historic hard rock mining industry in my county. Without that sort of money, the industry will die and will never be replaced. The history of the community will be destroyed, and in the long run Britain will lose an extremely valuable part of its economy.
8.27 pm
Mr. David Harris: The hon. Member for Truro (M r. Penhaligon) has repeated an inaccuracy and I believe that he knows that it is an inaccuracy. He said that the Government were willing to give £50 million to the tin dealers, but he knows perfectly well that that is not the case. In part at least, that money was to be used to ensure an orderly disposal of this wretched stock of tin that is overhanging the market and has cast such a shadow and brought such devastation to Cornwall. I hope that the hon. Gentleman will acknowledge that that is the position.
I should like to concentrate on the Geevor mine in my constituency, because throughout this crisis it has rightly been my preoccupation. I recognise the wider issues in the debate, but Geevor is my concern and, sadly, right from the outset, it was clear that that was the most vulnerable of all the Cornish mines. It was vulnerable on two grounds: first, because of the geological and mineral nature of the mine, and, secondly, because it was owned by a company that was standing by itself and with its shareholders. It did not have the mighty resources of Rio Tinto-Zinc behind it.
When the people from the media descended in their droves and the television cameras and the newspapers wanted folksy articles, they beat a track to Geevor. We welcomed that, because at least it focused attention on the plight of that mine and the community — that small isolated community of St. Just and Pendeen, just seven miles from Land's End. Apart from Geevor, there is very little else in that area. Now Geevor is to close.
My hon. Friend the Member for Falmouth and Camborne (Mr. Mudd) is wrong. Geevor is not dead. Geevor is closed. The pumps are still working in Geevor. My concern tonight is to try, with all the power that I can muster, to get it into the heads of my right hon. Friends on the Treasury Bench that those pumps must be kept going. That is what the argument is about. We have gone through the agony of the lay-offs. The day when the last shift came up was one fo the saddest days in Cornish history that any of us can remember. Subsequently Geevor's second application was rejected by the Government and the lay-offs were then converted into redundancies. The anguish and uncertainty of the last few months has caused untold pain.
I pay a willing and genuine tribute to the management and men of Geevor. First I pay tribute to the management, in particular to Mr. Ken Gilbert. At times he is not the easiest of characters, at least in his dealings with Ministers and civil servants. However, his only concern during the long months since 24 October when this crisis first burst upon us has been the future of the mine, the men and the community. The board has not done everything that I should have wished it to do, but it has acted from the very highest motives and from a desire to ensure that the mine survives, if it is at all possible for it to survive.
I felt that I could not criticise my hon. Friend the Minister of State when unfortunately he and the Government rejected Geevor's second application, and I should like to say why. The sum involved was very large. Although I wished that it could have been otherwise, I could not say, with hand on heart, that they were absolutely wrong in rejecting that application. However, what I desperately tried to do and what I shall continue to try to do is find a way through the crisis. I wish, as I have wished many times during the past few months, that
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the Department of Trade and Industry and Geevor could sit down around the table and that the DTI could say, "That is not on, but we might be able to try this, so let us try to do it this way." Throughout these long months that is what has been missing.
Geevor told me during the past week that if the Government will put up £150,000 — a piffling sum —Geevor, from its own resources — limited, goodness knows, as those are now—and from the activities that it will be able to generate, will keep the pumps going for two years. That is a bargain that the House and the Government should not reject. It is a very small sum, but it would keep hope alive for Geevor and for the community. Above all else, that is what the community of St. Just and Pendeen now want. Reluctantly and with a sense of resignation I believe that they have almost accepted that there will have to be redundancies, grievous though they are, as are the implications of those redundancies. I have already referred to the effect of redundancies on the community.
The vicar of St. Just has unfortunately had to carry a tremendous burden for his parishioners. That has played havoc—I hope temporarily—with his health. That is one example of the kind of stress that has been caused to the community and to the families of everybody who worked at Geevor. This House and the Government owe it to the community to ensure that every means is found to enable the pumps to be kept going for £150,000.
I pay tribute to my hon. Friend the Minister of State for his patience and for his efforts on behalf of the industry. He has come in for a great deal of unfair criticism tonight. I pay tribute to him for the many occasions upon which he has willingly seen me and everybody from Cornwall and for all the efforts that he has made. However, I am expecting something else from him tonight —£150,000 to keep the pumps going for two years. I do not care much how he does it. If he has trouble with the rules, regulations and officials, let him find another way round the problem. I am sure that if Governments have a will there is a way. I shall listen with the utmost care to my hon. Friend when he winds up the debate. Unless he can show good intentions and offer some hope to Geevor by providing that amount of money, I am afraid that I shall be unable to support the Government tonight in the Lobby.
8.35 pm
Mr. Stan Crowther: I listened with a great deal of sympathy to the speech of the hon. Member for St. Ives (Mr. Harris). I should feel the same sympathy for any hon. Member whose constituency had been so badly let down by a Government of his own party. In due course we shall see which way he votes. I feel that he may have to vote against the Government, because there is not much likelihood of any positive assurance coming out of tonight's debate. If such an assurance were to be given, I think that we should have heard about it at the beginning of this debate.
I am a sponsored member of the Transport and General Workers Union, which represents virtually the whole of the work force in the tin mining industry. I do not believe that Ministers, however much they may protest their innocence, can escape responsibility for the crisis that has now put all those jobs in jeopardy and, in the case of Geevor, has actually destroyed jobs.

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What makes the social consequences for this industry particularly serious is its geographical location, a matter to which the hon. Member for Truro (Mr. Penhaligon) drew our attention. Geography is so much against the area in which these mines are located that there seems to be little possibility of new industry being attracted to it and creating jobs on the kind of scale that would compensate for those that are now being lost. In my area of south Yorkshire, which has the geographical advantage of being in the middle of the country and at the heart of the motorway network and of having full development area status, we cannot attract new industry. The unemployment rate in the Rotherham-Mexborough travel-to-work area is 23 per cent. If my area, with all those advantages, cannot attract jobs, the future for parts of Cornwall is very bleak.
What has happened is nothing short of tragic. One of the points which came out most clearly in the Select Committee inquiry was the amazing dedication of the work force to the industry. It is proud of the industry, it is very knowledgeable about it and it is devoted to it. When representatives of the TGWU gave evidence to the Select Committee, I felt a great sense of personal pride because of the quality of that evidence. I was proud to be a member of the same union. It is wrong that the people they represent, who have made a great contribution to the country and who will do so again, if given a chance, should be placed in such appalling difficulties by the machinations of an international cartel.
After we had produced our report, I was somewhat dismayed to find that, even then, the management of both Geevor and the RTZ mines had still not submitted their proposals for Government assistance to the Department. While members of the Committee, trade unions and local authorities were working hard to try to find a way to save the industry, the management did not produce its own proposals for the consideration of Ministers. I was rather upset by what appeared to me to be their dilatoriness.
Mr. Harris: That is a serious point, but it should be said in defence of the management that its difficulty in framing its applications was the same difficulty of the Government in considering the applications, which was the uncertainty about what was likely to be the future price of tin. I have seen the Geevor applications, and I assure the hon. Gentleman that an enormous amount of work went into them. It was not simply a matter of preparing those applications, as some people think.
Mr. Crowther: I am sure that it is not a simple matter and I would not suggest that it is. However, I still think that the management took rather longer than it should have done.
As has been said, it was an extremely difficult inquiry because of the virtual refusal of the Government —Ministers and civil servants—to give us any information. We could not even discover whether they had any information to give us. We have found out many things since then. This is the first time that I have been involved in an inquiry in a Select Committee where we have discovered a lot more things since we produced the report than we did while we were holding the inquiry. For some reason, the publication of our report and the Government's response to it have stirred up something of a hornet's nest and people are now pouring in information that we did not have before.
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It is now crystal clear, as a result of information that has come to light, and that was held back from us before, that there has been a gigantic international fraud. I see no other word for it. It is a fraud in which the conspirators are not shady profiteers and speculators but representatives of supposedly responsible Governments. I find that astonishing. The tin mining industry, the brokers and the creditor banks have all been victims of a confidence trick, and one in which the British Government were either a knowing or unknowing participant. I do not know whether they knew. I find it difficult to believe that those who represented the British Government in the affairs of the International Tin Council were so ignorant that they did not know that a massive fraud was being prepared. I am saying that deliberately, and that is the inescapable conclusion from the information that has come to us.
In their observations on our report, Ministers have said things to us that they did not tell us when giving their evidence. Unfortunately, it appears that at least two of the new things that they have said are not true. For example, they say in paragraph 23 that the Bank of England
"advised the ME … that they"—
that is, the brokers—
"should not count on the ITC member governments standing behind the ITC if the Buffer Stock Manager were ever unable to meet his commitments."
The chairman of the London Metal Exchange has told us bluntly that that is not true. He has quoted information that we did not have before from confidential minutes taken at the time to prove that what Ministers have told us in their response is not true. That matter will have to be gone into again.
Supposing that it were true, and the Bank of England, on behalf of the Government, warned the brokers that they
"should not count on the ITC member governments"—
which means Her Majesty's Government, along with the others, standing behind the ITC—the ITC consists of its own members because it cannot consist of anybody else—
"if the Buffer Stock Manager were ever unable to meet his commitments."
In other words, if he went into contracts and finished up owing money that he could not pay or he was defrauding the people with whom he was doing business, they should not count on the member Governments to stand behind the ITC.
As I have said, the LME chairman says that that is not true, but if it were true why did the Government say that? The only possible conclusion is that they were already preparing for a fraudulent position to arise. What other implication can there be? They are saying that the Bank of England said to the brokers that if the buffer stock manager had signed contracts with the brokers that he could not honour, and finished up owing million of pounds, the ITC is not to be counted on to do anything about it, although it is his employer. Why should the Government say that, if such a position were not already being planned or at least forecast? We shall need to know about that.
Again, in their response to our report, Ministers claimed that the LME had access to all that was going on and had representatives with the DTI at the ITC meetings. Again, the chairman of the LME simply says that that is not true. I do not like Select Committees being told in Government statements things that are not true, and this will have to be exmined in some depth.

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My right hon. Friend the Member for Swansea, West (Mr. Williams) has already mentioned the rather remarkable statement from the Minister in answer to question 600 when he said that Ministers were not informed about what was going on. However, the civil servant referred to, Mr. Lunn, later on in the same sitting of the Committee said something different. He said that Ministers were frequently informed, especially the Secretary of State. It was difficult for us to discover the true position. It is hard to believe that Ministers did not know what they now tell us the Bank of England knew. If the Bank of England knew it, why did not Ministers know it? These mysteries remain.
When I heard about the debate, I thought that the Government would announce some assistance for RTZ. I thought that they would not have given us a debate in Government time unless they had some goodies to hand out. I now share the fear that has already been expressed that the fact that they have not announced any advantage to RTZ may mean that it will not get any assistance and it will go the same way as Geevor.
Sooner or later, the country must have a Government who will stop this endless running down of British industries, which has gone on for far too long. Sooner or later, we must have a Government who are prepared to adopt policies to stop this pattern. I fear that it will not happen before the next general election but it must happen then because it will be our last chance to be once again a great industrial nation.
8.48 pm
Mr. Kenneth Warren: What magnificent speeches we have heard from the men of Cornwall tonight. I was proud to be in the House when they made those speeches, from both sides of the House. I hope that my right hon. Friend the Secretary of State and my hon. Friend the Minister heard them not for the party politics but for the representations of how people feel about not just the tin industry but all industry and our concern for it.
The report from the Trade and Industry Select Committee was unanimous, and I ask my hon. Friend the Minister to understand that. It came after some careful hearings. When one seeks to catch your eye, Mr. Deputy Speaker, it is to make an apt speech that one wants to make. Tonight I do not want to make this speech, but I have to make it.
The Committee made the decision to investigate this matter of its own choice. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) was instrumental in making sure that we seized on the need to investigate the crisis, but it was my right hon. Friend the Prime Minister who said that the House
"recognises the competence of departmental Select Committees of the House of Commons to consider issues raised." — [Official Report, 15 January 1986; Vol. 89, c. 1090.]
So the endorsement of my right hon. Friend the Prime Minister is behind this inquiry, as it is behind every other Select Committee inquiry.
It is regrettable that we have seen the time bomb explode. The time bomb was built into the 1982 agreement which should never have been accepted by the Government. With Brazil, China, the United States outside the agreement, it was only a matter of time before it destroyed itself. Indeed, it is remarkable that in the
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Government's reply to the Select Committee report we were accused of obtaining documents from the United States Government under their freedom of information legislation. Unfortunately, that was not the reason why we got the information. It was because the United States' Government were still on the circulation list of the last tin agreement as nobody had bothered to cross them off. That which is marked confidential in the United Kingdom, is not confidential in the United States.
Difficult problems arise for me when I receive letters such as I have received today from an eminent City banker with a strong record of work and devotion to the Tory cause. He said:
"We are deeply shaken at the change in Her Majesty's Government's position from one of accepting obligations to help aggrieved parties to one of denying all issues, as has been made clear both in the Government's reply to the Select Committee and in private conversations this bank has had with the Government."
I turn to the broad problems facing the Department of Trade and Industry on the eve of the 'big bang'. I am worried that at best the Government's position appears not to be relied on to favour enterprise and a free market. At worst they tell the country that market forces rule and that if one lives to regret it, that is one's loss, whether it be one's job or savings. If that is not the case my right hon. Friend the Secretary of State must demonstrate in this one vital industry that he can rise above the mere dogma which too often appears to be behind Government policy. I cannot believe that the Governments of France, West Germany, Japan and the United States would allow one of their key industries to go to the wall as we are doing.
My right hon. Friend the Secretary of State may say that this is unkind of me, one who has loyally supported the Government for many, many years. I could not believe that they would come to this style of government regarding industry. I have had a lifetime in industry and I now believe that we are sapping the will of business and industry to succeed. This is a test case and we could easily devote limited resources to a cause which is essential to us. We must get tin from somewhere. In 18 months the buffer stock will have been used up. Where will the tin come from? What about import substitution? Are we willing to pay £25 million a year for that? Is it not better to do the sums and look across the the Departments of Health and Social Security, of Employment and of Trade and Industry to analyse how much it will cost in value terms to keel) those men in their jobs now? In 18 months we shall need every one of them to help us.
We should not believe that we cannot do anything. The Department of Trade and Industry is supposed to be a Department of enterprise. It is not acceptable that Ministers should have instructed their most senior civil servants—men of considerable ability such as Sir Brian Hayes, the permanent secretary, and Mr. Murray, both of whom have demonstrated their effectiveness—to appear before a Select Committee and not to answer questions. Mr. Murray had to remain silent while flanked by two Ministers who did not rise to defend him, and Sir Brian Hayes said:
"Whether or not I gave advice is advice itself",
and therefore would not answer the question. It was a parody of "Yes Minister" and a farce. Indeed, it was less funny than "Yes Minister".
It was not until we concluded our inquiry and people saw the standard of information that we had been given by the Government that information began to fall off the

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backs of lorries by the skipful. People said that they were fed up with confidentiality which was costing them their jobs and savings, and that they wanted to be heard. It is regrettable that the concept of the "word is my bond" of business and the City must be broken for the truth to emerge.
Indeed, warnings about the tin stock went back to 1982. The position was not new. It was not a case of the Government signing an agreement and telling everyone what the agreement was. One of the documents tells us — I am willing to place this before the Select Committee, if it chooses to reopen the inquiry, as it may do:
"We now learn from ITC documents that, because not all the countries invited to participate in the 6th ITA actually signed the treaty, the normal buffer stock was established at 19,666 tonnes … This important fact was never made public."
If it was not made public and people were invited to invest in the agreement, what were the standards to which the Government were working within that agreement? The document continues:
"you might think that the omission to publish that fact was a fraud on those who were engaged in business with the ITC."
I understand that that will be challenged in the courts.
The position was even worse than that. The statistics were manipulated and at best the member states did not understand and at worst, what they understood, they chose to ignore. Another confidential ITC document, the report dated 8 November 1985, which was prepared for the ITC by its auditors, Peat Marwick Mitchell, stated that the existing contracts of the manager were not for about 19,000 tonnes but for more than 63,000 tonnes. Unfortunately, the auditors did not know all the facts and the ITC's total risk position was 120,819 tonnes. That is ludicrous. There were 15 billet-doux or, as my hon. Friend the Member for Monmouth (Sir J. Stradling Thomas) said billet-don'ts. I am delighted that my hon. Friend is doing well after his recent accident and we look forward to welcoming him back. We shall never find out what they said.
One thing is certain—exposure of the Government is much greater than the Government appreciates. What was thought to be £100 million is probably £600 million. One wonders what happened to those billet-douxs and billet don'ts. Miss Edith Jones, an excellent lady who gave evidence to the Committee, was moved from her job. Why was she moved at a critical time when the Government were having trouble with Malaysia on international student fees? That strange country has featured in the newspapers during the past 24 hours most unfortunately. The previous Committee did a great deal to try to remedy the "Buy Britain Last" slogan of Malaysia by publishing a report on Trade in ASEAN. There has also been a battle over Concorde flying rights there. Were we listening to the Foreign and Commonwealth Office and not to the Department of Trade and Industry about the international tin agreement? Now we have neither Concorde flights nor an international tin agreement.
On 1 July the Governor of the Bank of England kindly wrote me a letter. I had written to him saying that the Government had told me, properly, that the Bank of England knew all about the matter and that I should ask it. The Governor replied:
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"we always work on the assumption that a Committee of the House of Commons will tell us if they want to see us or to receive evidence from us; indeed, we were not aware of any precedent for an organisation like us taking steps to initiate an appearance before a Committee."
I could tell him that the Kerrier district council and the TGWU in Cornwall heard the shouts of tin miners as they marched through the City and that if the Governor had had his window open, he too would have heard the shouts of those miners appealing for help. It is not at all satisfactory that the Government should place the Bank of England—and the Bank of England should seek to place the London Metal Exchange—in a position where it is all their fault but nothing to do with us.
The tin mines of Corwall are a strategic industry for this country. While all recognise that, why did not the Government tell the London Metal Exchange exactly what was going on? The Government's answer is that the LME must have known because two of its members were trotting around with the DTI into all the meetings of the International Tin Council. However, in these documents that keep coming to us in skipfuls, we discover that these two members were required to be there as advisers to the DTI and were not allowed to tell the LME what they heard. Furthermore, when money was mentioned, they were thrown out of the meetings.
Given the Government's reply, my right hon. Friend will understand the scepticism of the Select Committee through the words of hon. Members who have already spoken as well as others who will no doubt do so.
We should listen more clearly to the words of the London Metal Exchange. Mr. Jacques Lion wrote to us on 24 June in a document circulated to the Select Committee and said:
"If the DTI had fully appreciated the situation in June 1985 (and it claims to have done so even earlier) why were there not high level discussions and consultations taking place between the Government, Bank of England, LME and Banks to try to avoid or mitigate this disaster? It is absolutely incredible that the UK Government. with great influence and large resources at its command, simply issued a few delphic warnings and then sat back and waited for the time bomb to explode".
It may be argued, "Well, of course, there are no precedents." But a report on Concorde was published by the predecessor Committee of which I am now Chairman, in 1981–82. Paragraph 265 on page 68 showed that the Government accepted that it was far better to keep 3,000 Concorde workers in work than it was to put them on the dole. The sums were given, and all the arithmetic shows quite clearly that whatever the merits of Concorde, the Government of the day looked across the DHSS, the Department of Employment and the DTI and said that it was better to keep those men in work producing things that other people would need than to put them on the dole.
There were 3,000 of those workers— there are only 2,000 Cornish tin miners. The precedent exists. I hope that the Government will listen. As the hon. Member for Truro (Mr. Penhaligon) pointed out, it is cheaper to keep them at work than to throw them on the scrap heaps and slag heaps of Cornwall.
In a case such as this, one might ask what a commercially viable project is. In 18 months the world tin stock will have run out, and more will be required. I regret that tonight I doubt whether the Government will secure my support in the Lobby. But I appeal to my friends in the Government to look again and again at this sad and staggering situation. It goes far beyond the world of tin.

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I hope that they will see through the mists of silly secrecy in which this inquiry has been enveloped. They should understand that this House must have the truth from the Government at all times. Ministers must prove that civil servants are not hiding from the truth or from Ministers. The only and essential truth is that Ministers must go from the House and find for us all in Cornwall—in city and country—a method of bringing together the institutions and the people to make a success of the tin enterprise. This is a test case for the Government. They should hear those who are now crying to them, even if they do not support the Government in the Lobby.
9.3 pm
Mr. Doug Hoyle: It is a pleasure to follow the hon. Member for Hastings and Rye (Mr. Warren), who is Chairman of the Select Committee of which I am a member. On both sides of the House so far there seems to be a clear understanding that the Government have not given us all the information that they should have given. Indeed, I go further and say that if the Secretary of State's opening remarks are anything to go by, they have been very shifty. The right hon. Gentleman was either ill-briefed, or he was no more prepared to tell the truth now than he was during the Select Committee inquiry.
An important principle is involved — the work of future Select Committees. It cannot be stressed often enough that we were not after the advice given to Ministers or what they did about it. We wanted the information given to Ministers. That was refused to us, and that is the charge that we make against the Government.
If the Government are not prepared to be influenced by Opposition Members, I hope that they will be influenced by the number of Conservative Members who have said that they cannot support them. Some of them have gone even further and said that they will vote against the Government.
The reality of what we are discussing is known to us all — the crisis that has been created in the tin mining industry—and that reality comes home to us all when we talk about Cornwall. People in Cornwall are being thrown out of their jobs. As we have heard from hon. Members who represent constituencies in Cornwall, these people are suffering.
Why did this crisis happen? We have not received an adequate reply to that question. To find the answer, we must consider the level of the buffer stock. The ITC buffer stock was 30,000 tonnes and that was financed by contributions from member states. Therefore, we start with a basis of 30,000 tonnes. To that must be added 20,000 tonnes financed by the borrowing on the security of tin warrants or on Government guarantees. The total stock should therefore have been 50,000 tonnes. It is evident that that was not the position. It is also clear that nothing was done to correct that position. The council was allowed to make other arrangements to supplement these resources.
We heard in the Select Committee from the Department of Trade and Industry that the Government's contribution amounted to the cost of 19,666 tonnes. I suggest that the arithmetic is wrong. The figures do not add up. When we consider the Government's contribution of 19,666 tonnes, it is evident that 27,700 tonnes were bought from the buffer stock of the fifth international tin agreement. After that, there were only 11,900 tonnes to be
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bought. This is where the arithmetic does not add up. The buffer stock manager told the economic and public review panel that he had bought on the strength of the contribution for 19,666 tonnes. He therefore exceeded the limitation.
That is only part of the story. We now also know that it is almost certain that the buffer stock manager was not content with that. He was buying far more tin—arid this is the important point — than the ITC had funds for. Indeed, 120,000 tonnes was at risk including 50,000 tonnes sold on "unpriced sales". Obviously these stocks were not sold. In the light of that, the buffer stock manager said that the idea of buying only as much tin as there were contributions was both impractical and untenable. However, we know where this folly has led. It has led to the crisis and to some of the good people of Cornwall being put on the scrap heap.
Someone must answer for this. Someone must be responsible. The Government have said tonight that they did not know—we had no means of determining in the Select Committee whether they did or did not know—what was happening, but doubtless they knew about the shortage of subscriptions to the sixth ITA. We have heard that the Ministers did not know about the borrowing and lending activities of the buffer stock manager which I have just described. I find that difficult to believe. The facts that are available show that the possibility that the buffer stock manager was borrowing tin other than on tin warrants without authority from the council was, as the hon. Member for Hastings and Rye has said, suspected as long ago as 1982. It does not add up for the Government to claim that they had no knowledge of what was happening when it was suspected as long ago as 1982. Either the Government did not know what was happening in the Department or they did know and chose to ignore what was happening.
We know that the United Kingdom delegates were told not to press for more information as that might prove counter-productive. The hon. Member for Hastings and Rye has speculated on some of the reasons for that advice. Nevertheless, the information existed, so how can Ministers tell us that they do not know? According to Sir Brian Hayes, the Permanent Secretary to the Department of Trade and Industry, there were 15 reports to Ministers between 1982 and 1985. We do not know what was in them, but we know that they were made. I should have thought that it would have been prudent for the Government to have taken some action on the basis of those reports.
I do not believe that it is any use putting the blame on the London Metal Exchange. The Bank of England's advice was that the LME should not expect the Government to stand behind the International Tin Council if the buffer stock manager was unable to meet his commitments. A Bank of England letter said that, in the event of the buffer stock manager's funds becoming exhausted, it should not be assumed that any Government would step in with additional finance. We now have skip loads of such letters. They are adding to the rubbish that is part of the other clean-up campaign which the Prime Minister has initiated. We heard from the LME that it did not take the Bank of England's advice to mean that the Government would not stand behind the buffer stock manager's current contract. There is something gravely

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wrong there, and it should have been gone into. We now learn that the LME representatives were not representatives or party to some of the most important decisions.
This is a sorry tale. It will not do for the Government to shelter behind their civil servants, saying that they were given the wrong advice, that they knew nothing or that they should not be blamed because it is just one of those things. That is not the behaviour of a responsible Government. Somebody must accept liability. The Secretary of State did not try to provide any answers. In spite of the Select Committee's difficulties, it is clear that action should have been taken far earlier.
We cannot escape the fact that responsibility must lie with the Government. I am pleased that the Minister for Trade, who should bear responsibility for the dealing with the ITC, is on the Bench. I should like to hear his explanation. We know about the problems in his Department and that there have recently been resignations. I quite understand why it does not want any more, but he is the Minister responsible, and he should give us some explanation about his conduct. Why did he not act? Why did Ministers prevent civil servants from giving the Select Committee the information that it needed?
The Government should take on board the fact that the Select Committee report was accepted by all members of that Committee, Conservative as well as Members of the Opposition. I will go a little further than that. All the Members of the Committee felt that the special report, which was issued after the reply we received from the Department of Trade and Industry, was an inadequate response, had not been thought out and did not answer the queries we put to them. That should be worrying the Government. They should not be taking flippant regard of what the House is expressing tonight — I am not suggesting that they are—because it is serious. We are now facing a House of Commons in which it is said that nobody bears responsibility for this kind of crisis. That is not good enough. Ministers who are responsible should accept that responsibility.
I am sorry that we will not be hearing tonight from the Minister responsible for the civil servants who attended the ITC. I am sure that this is not the end of the matter. It cannot be washed away in this fashion. Sooner or later I hope that we will get the truth about what occurred and the truth as to why no action was taken sooner, why no warnings were given and especially why the tin producers of Cornwall were not warned. I am sure that if such action had been taken something could have been salvaged from the mess we find ourselves in tonight. We are facing the possibility that tin mining might be coming to an end. We cannot allow that to happen. The Government should take some action to help protect Cornish tin mines. Also, some Minister should be prepared to accept responsibility for the mess we find ourselves in.
Several hon. Members rose——
Mr. Speaker: If the four hon. Members who are now rising speak for about eight minutes each, I shall be able to call all of them and still leave adequate time for the Minister.
9.17 pm
Mr. Tim Smith: Since the buffer stock manager ceased operations seven months ago I have
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followed developments in the tin industry with growing concern. Important issues of principle are at stake. Apart from the legality of it, which is a matter for the courts, it is totally unacceptable that 22 member states should simply have abandoned the international tin agreement. As the Select Committee said:
"if prosperous countries walk away from their collective debts because of a cloak of immunity, there can be no reason for us to expect poorer nations to pay their debts."
The Government have said in reply that they would be concerned if the failure of the International Tin Council was to be taken as a precedent by any country. Of course it is a precedent. It is a precedent for every country and for every international trade agreement. It is also a thoroughly bad example to set the City of London.
Reading between the lines, I am clear enough about what happened. Before October 1985 all those concerned — the member states, the banks, the brokers and the producers — believed that the council had unlimited liability. If it ceased to trade, it would pay its debts. It was a gilt-edged agreement because sovereign Governments were parties to it. Its debts were sovereign debts.
I am sure that that was a widely held assumption. It was only after October that Governments backed away from it. If they had always taken the view that they had no liability, they should have said so earlier. In that case, the agreement would have been stillborn, for no one would have dealt with the manager. That is why it is so disingenuous of the Government to say that they warned the metal brokers via the Bank of England that they should not count on the member Governments standing behind the Council if the manager were ever unable to meet his commitments, but that they could not have given a similar warning to the banks or the Cornish tin industry because it would have precipitated a crisis and probably the collapse of the buffer stock operation. Had the brokers actually been warned—it is clear that they were not—they would have stopped dealing with the manager at once and the buffer stock operation would have collapsed.
The fact is that the operations of the manager had got completely out of control. He was in breach of the articles of agreement and he was gambling with other people's money. It was double or quits. For a remarkably long period he kept on doubling, even after his stock was exhausted. In the end he quit, leaving a trail of gambling debts behind him.
He was able to get away with it for so long because his operations were secret for good commercial reasons. There was no way in which those dealing with him could know that he was acting so recklessly. Had they known they would simply have stopped dealing with him and the crisis would have been precipitated that much earlier, but they would still have assumed that the council would pay its debts. They would have reached that conclusion after examining the public documents—the agreement itself, the headquarters agreement and the order of 1972. A study of those documents discloses that the council had legal personality, that the council enjoyed immunity from suit, and that the manager had authority to operate the buffer stock operation on behalf of the council.
The council existed under a United Nations treaty with the objective of carrying out the political, social and economic objectives of the member states, which declared their intent to support a minimum price for tin by a buffer stock operation. There was nothing in the agreement that limited the liability of the member states. It was a

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reasonable assumption that if member states, joined by international treaty, were determined to implement certain objectives, that were largely political, using a buffer stock operation, those member states would ensure that the resources and facilities of the manager were sufficient and adequate to carry out those objectives in a manner consistent with international commercial conduct and accepted international standards of sanctity of contracts.
Article 21 of the sixth agreement provided that the council was to maintain a normal buffer stock of 30,000 tonnes, funded at all times by Government contributions, and an additional buffer stock of 20,000 tonnes, maintained by borrowing. In other words, the paid-up share capital of the council was to be 30,000 tonnes of tin and the maximum borrowing permitted was to be limited to the amount required to purchase 20,000 tonnes. The gearing ratio was established at 3:2. Now we have heard from hon. Members on both sides of the House that, in fact, not only was the permitted buffer stock lower—it was 19,666 tonnes because not all the countries invited to participate in the agreement signed the treaty— but in any case the buffer stock manager easily exceeded the 50,000 tonnes of buffer stock on many occasions in the three years of the agreement.
The situation was made even worse because the member states did not proportionately reduce the borrowing power of the council to maintain the gearing of 3:2, but instead maintained the same borrowing level, which completely distorted the gearing ratios approved by the agreement. From the very outset, therefore, third parties dealing with the council had no idea that the gearing of the council was far worse that that authorised by the agreement. Notwithstanding the limitations imposed by the agreement on the total tonnage of the buffer stock, the buffer stock was allowed to exceed those limits on many occasions during the life of the agreement.
The overall picture of what actually happened discloses a lack of political will in the face of mounting evidence of financial collapse. The member states had to lower the floor price to a more realistic figure or provide the manager with additional resources, or proceed to an orderly closure. As they would do none of those things, in order to carry out the policy imposed upon him by the member states the manager had to resort to questionable trading practices and manipulation of statistics.
In a paper prepared for the European Community working group on commodities in December 1982 by the Department of Trade, there was an analysis of the obligations of the manager and the manner in which those obligations were being evaded or ignored. The paper requested the Community to instruct its spokesmen to put certain questions to the executive chairman of the council at the meeting to be held in December 1982. After describing certain operations conducted by the manager, the paper concluded:
"The manager has no powers to engage in it"—
the transaction—
"since the tin in question will not be tin forming part of the buffer stock and the operations will not constitute a buffer stock operation of a kind authorised under the agreement and he has no authority to purchase tin except for the buffer stock".
At the second meeting of the council, held in London in September 1983, the Australian delegate expressed concern about the
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"continual reports being received from the buffer stock manager indicating that the situation of buffer stock operations was very delicate and there was even a risk of total collapse".
At that same meeting the manager referred to previous reports in which he had requested the council either to give him new resources by new contributions or to provide resources in other ways. Also at that meeting, the delegate from Norway was reported as having said:
"The manager had time and again warned the council that unless … measures were taken, the very existence of the International Tin Council would be threatened."
The report of that meeting also records the fact that by September 1983 eight countries had still not paid outstanding contributions of £12·4 million. It is no wonder that the council was short of capital. That was another fact that was not disclosed to those doing business with the council.
Other examples have been recited during the debate of how, at meetings of the International Tin Council, the position was made entirely clear that the buffer stock manager was continually operating in extremely difficult circumstances. The member states knew that the manager was acting in excess of the authority given in the agreement. There was no attempt to curtail his activities. The member states knew what was happening and they allowed it to continue.
In the interests of time, I shall conclude without reciting the other examples that I had intended to recite which show clearly that the Government knew throughout, from the meetings of the International Tin Council, exactly what the position was. The council documents speak for themselves. All member states knew what the position was. They knew that the manager was exceeding his authority and that he did not have the money to pay his debts. That can mean only one of two things: either the member states knew and accepted that they would have to put up additional financing to meet the obligations of the manager as they fell due, or, alternatively, they knew that they would not or could not put up those funds, in which case the manager and the delegates had participated in fraudulent trading. There is no other answer.
When the manager ceased operations, the Government did try hard to secure agreement on refinancing. Ministers responded with commendable speed to the crisis. On I November last year my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) issued a statement in which he declared the objective of the United Kingdom Government to be
"to enable all legal commitments outstanding at 29 October 1985 to be met."
The implication was clear. The Government accepted a legal obligation to put up their share of the council's debts. I hope that they will now, once again, take the lead by accepting their responsibility in this regard and pressing other member states to do likewise. The EEC presidency offers an opportunity to take a lead. At a time when the Government are promoting higher standards in the City through the Financial Services Bill, nothing less will do. A precedent has been created and an example must now be set.
9.27 pm
Mr. Tim Brinton: I support so much of what my hon. Friend the Member for Beaconsfield (Mr. Smith) has said that I need not speak for long. My constituency is in Kent, not Cornwall. I have listened with

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admiration to the fluent advocacy of hon. Members from Cornwall making the case for the miners and the mines that are in such peril. A company in my constituency is very important to me. As an employer in my constituency, which has an unemployment rate of 18 per cent., Britannia Refined Metals Ltd., through a wholly owned subsidiary, burnt its fingers considerably. Some hon. Members may feel that those who chance their money are not in the same bracket as miners in Cornwall, but I remind hon. Members that without their money, my constituency will not have so many jobs if that firm fails.
I shall summarise what happened to the company Henry Bath and Son. On 24 October 1985 the company purchased, on behalf of the buffer stock manager, 2,000 tonnes of tin at an average price of £8,680 per tonne. At the LME "ring-out" price of £6,250 per tonne, the company is owed £4·85 million, plus loss of interest, plus costs. If the "ring-out" price is struck down in the course of next year, the debt owed by the ITC to the company will increase by a further £5·14 million, taking today's price for tin of £3,680.
If one were dealing commercially that could be accepted, but as a non-expert in such technical and highly skilled fields I have listened tonight to a story which I, as an amateur, can only describe as a story of carelessness and recklessness. Above all, it is a moral issue. The Government must bear moral responsibility, at least for their part in this disaster.
I am a free market man and I cannot for the life of me imagine why we thought of signing the sixth international tin agreement. It seemed to be outside the Government's perception, but we signed it. Information came and went. I have served on a Select Committee and know of the difficulties sometimes faced in obtaining information. It is clear from what I have heard tonight and what I have read that warnings were given and that the Government, the Department, Ministers, the Bank of England and almost everyone in the City concerned with this matter knew that something was rotten in the state of tin.
On 5 May The Times reported that the British representative at the United Nations, Sir John Thomson, said that it was not right for the United States or the Soviet Union to breach their international obligations by withdrawing part of their contribution to the United Nations budget. He said:
"It is not acceptable or right for the superpowers to set such a poor example."
Those words are appropriate tonight.
9.30 pm
Mr. Robin Maxwell-Hyslop: Three issues are before the House in only a three-hour debate—the fate of Cornish tin, the events leading up to the collapse of the international tin agreement and the Government's activity, or inactivity, and responsibility.
It is all very well for Ministers to say that critical references should not be made to civil servants but, beyond a shadow of doubt, Mr. de Koning, the buffer stock manager, was dealing fraudulently. It was evident to Government representatives that the buffer stock manager was trading outside any authority and beyond his resources. The Select Committee was entitled to know whether that was reported by the Government's representatives, Mrs. Jones and then Mr. Lunn, to
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Ministers. If Ministers want to exculpate their civil servants, instead of merely saying, "I accept responsibility" — a meaningless utterance — they must tell us whether they were aware that the buffer stock manager was trading fraudulently. Either they were or they were not —there is no third choice.
It is no good Ministers saying that they had 15 reports if those reports merely had the date at the top of the page and stated, "I attended a meeting on behalf of Her Majesty's Government," and were signed either my Mrs. Jones or Mr. Lunn. That is meaningless. The House needs to know whether the civil servants concerned reported to successive Ministers that the buffer stock manager was trading fraudulently and that he was entering into commitments which he had no resources to honour. If a company did that, its directors would go to goal. In doing that, the credit of tin producers was put at risk because they were selling metal at the London Metal Exchange price—the future price. They therefore borrowed money from their banks in the certainty, as they thought, that money for the tonnes of tin sold would be coming in at the LME price.
Mr. de Koning did not undertake his trading secretly. We received ample information, despite the Government's attempts to ensure that we did not, to show that the buffer stock manager was worried about what he was doing. He made sure that the representatives of the 22 signatory Governments, including the United Kingdom — Mrs. Jones and then Mr. Lunn — knew what he was doing. Either those civil servants reported the facts unambiguously to Ministers and ensured that they knew, so that they could take appropriate action or they did not do so. The Select Committee was entitled to be told whether they had done so. This is nothing to do with advice; this is about facts.
My right hon. Friend the Secretary of State referred to a memorandum. Hon. Members may care to look at the Procedure Committee report and compare that memorandum of guidance with civil servants to the memorandum given to the Select Committee by Sir Richard Barlas, whom many regard as an authority beyond question. Those of us who studied Sir Richard's performance right up to the time when he was Clerk of the House would have no hesitation in preferring his written evidence to that of an anonymous memorandum which does not constrain civil servants.
Moreover, Ministers have ample authority to release their civil servants from any constraints in the interests of a Select Committee, which is reporting to the House, ascertaining true facts, without which Select Committee reports can be misleading and unjust in their criticisms.
Only truth leads to justice. If truth is concealed by a Minister saying, "Only I will answer; I will not permit my civil servants to do so," and then refusing to answer, the House and the Select Committee will be frustrated in getting at the truth.
Many people know little of mineral mines. Some are apparently concentrated within the Department of Trade and Industry. They believe that mines flood with pure water. In fact, they flood with salt water—as in the case of Geevor—and they flood with highly acid water—as in the case of South Crofty, Wheal Jane and Pendarves —which will destroy the entire electrical systems of the mines and even destroy steel rails in next to no time.
There is no question of a mine filling up with water and being pumped out. Inundation renders the levels

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crumbling and unsafe. It cannot be pumped out so that men can be sent in. The men know that they have an excellent chance of being killed by collapses.
Anyone who goes to Geevor to see the model that shows the labyrinthine levels and the connections between them will appreciate that trying to block them off with concrete plugs, as the most senior placed idiot in the Department of Trade and Industry has recommended, is not a solution. To imagine that the levels can then be unplugged, having filled up with water and been rendered unstable, so that, yo ho ho, in five years' time mining operations can recommence is unrealistic. I wonder whether the people who give that advice would care to undertake such mining operations themselves.
Some mines have been reopened, but there have been hideous losses to human beings — hideous avoidable accidents, including drownings and cavings-in. We do not want that sort of future for Cornish mining.
It may be said that hon. Members on both sides of the House have agreed at various times to the closure of coal mines. Indeed we have, but we are talking now about the whole of Britain's remaining tin production, which is capable of meeting half Britain's needs for tin. We are not talking about closing peripheral areas; we are talking about heavy unemployment in areas of already heavy unemployment.
That is the position in a nut. The Government have a responsibility towards international integrity which they have not discharged. They have a responsibility towards the House which they have not discharged.
The collapse of the ITC was entirely predictable and it was a cartel where consequences were entirely predictable —that it would draw in new producers who were not members of the cartel and encourage tin users to use alternative metals such as aluminium. That is predictable of any cartel that sets out to raise and permanently support the price of whatever commodity is being dealt with above the cost of the marginal entrant or the marginal cost producer. That follows as night follows day. There is not news in that.
The ITC did not cause the collapse of Cornish tin. Cornish tin was due to be in difficulties when the world price of tin fell below the cost of mining it in Cornwall. But the Government could—as they have done with steel and British Leyland, where, incidentally, the Select Committee on Trade and Industry is due to go immediately after the Division tonight — as they are permitted to do under the EEC rules, supply refinancing to lower the cost of production so that which is not presently viable can become viable and sustain itself.
That is why we do not ask that Ministers should have a crystal ball which nobody in the world possesses. We do not ask that they should see the price of tin in three year's time when all the bankers have got rid of their tin warrants which secured the loans that they made to the London Metal Exchange while the ore which gathered at the pit heads and the other sources of production, while international trade was in disarray, is got rid of. That is the other rule of the equation.
What the price will be in three years' time we do not know and we do not expect Ministers to know either. What we do say is that the men will still be unemployed in three years' time. There is nothing else for them to do. It is a reasonable dedication of taxpayers' money to keeping the water out of the mines, including Geevor, and
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to putting them in a posture where they can move back into profitable production when the world price of tin has stabilised. That is what we ask of the Government.
The latest Geevor request is for only £175,000 to keep the water out for two years—part of the cost will come from the shareholders — and that is the absolute minimum that the Government should do. They should come to an agreement with Rio Tinto to refinance those mines which need reshafting and a considerable amount of other work so that their economic future, and the smelter at Capper pass, which depends on Cornish tin—it cannot use alluvial tin —is assured as well. That the Select Committee recommended after intensive hearings. That it still recommends to the House and it asks the House to assert that that is what the Government should adopt and execute as their policy.
9.43 pm
Mr. Iain Mills: I regret that so much of the time of the House tonight has been spent on sterile and caustic remarks about the Government's conduct during the tin crisis. Those are most unhelpful remarks, coming mainly from the Opposition. but, I regret, also from some of my hon. Friends.
What does society and the United Kingdom expect of the Government and Ministers in high-risk commodity agreements? Should the business of the House be talking about the minutiae of civil servants, minutes, Ministers and dates instead of about the valiant efforts to establish Newco and to find solutions? I hope that if Select Committees wish to be accepted as credible by hon. Members such as myself they will not get tied up in procedural matters on important occasions such as this on the eternal examination of the bones.
Let us get to the heart of the matter. Tin is a problem to my hon. Friends who represent constituencies in Cornwall, and they honourably put the case for their constituents. I back them in their efforts — [Interruption.] If Opposition Members do not wish to intervene, I wish that they would keep quiet. We are talking about an important matter that affects the life and livelihood of many people. Let us treat the subject seriously and talk not about procedures but about realities. Most people must have realised that after 1982 and the signing of the agreement this was a high-risk matter.
In an intervention I asked the right hon. Member for Swansea, West (Mr. Williams) what he would have done. He gave a slightly diffuse reply. According to my information, we signed the agreement along with Belgium, Canada, Denmark, Finland, France, West Germany, Greece, Ireland, India, Italy, Japan, the Netherlands, Norway, Poland, Sweden, Switzerland, Australia, Indonesia and many other countries. Let us not say that signing the 1982 agreement was foolish. The world had to have an agreement to control tin and what happened is now a matter of history.
Having signed the agreement, the Government made great efforts to secure reform and to make sure in discussions that those who were party to the agreement were trying to make it clearer and more communicative. There is no point in some hon. Members shaking their heads, because if they had signed the agreement along with all those countries they would have found that it is not just a simple matter of going in and blasting one's way through and making the agreement simple and easy to understand.

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This is a highly complex matter affecting consumers and producers throughout the world, and there are no easy answers. It is a shame that after the problems ensued the highly innovative solution of Newco, about which many of us were briefed in the House by the LME and by Mr. Kestenbaum and others, was not successful.
Credit is due to the Government and to our Ministers for supporting the Newco solution. Nobody has given the Government credit for that and I suggest that it is because most right hon. and hon. Members want to be negative about it. The Government tried to support Newco and had committed themselves to funds for Newco. It was not the fault of the Government that Newco failed: it was the fault of others. As a result of that failure, Cornishmen may lose jobs. I have to tell the House, because no other hon. Member has done so, that people in the City may also lose jobs. I supported Newco and did my best to lobby Ministers, as did some of my hon. Friends.
I pay tribute to hon. Members in all parts of the House who signed the letter jointly with me that we sent to Germany. At one stage, West Germany was not in favour of proceeding with Newco. The ambassador's No. 2, the Baron von Stein, sent me a letter which said that his Government would support Newco. At the end of his letter he said:
"Like most other signatories to the International Tin Agreement, the Government of the Federal Republic of Germany takes the view that the member countries are legally not liable for the ITC's obligations."
I wish to ask my hon. Friend the Minister of State a few questions. I do not expect him to answer them tonight, but I should be grateful for a memorandum that would help me to answer questions that are being put to me by those who have expressed an interest in these matters. The Federal Republic of Germany has said that it is not convinced that it has legal responsibilities. I ask my hon. Friend to let me know in writing what arc the legal obligations of members of the ITC, including her Majesty's Government, to meet in full the ITC's indebtedness.
What is Her Majesty's Government's view about the request for formal liquidation of the buffer stock, in accordance with article 26 so that the respective portions of the ITC's liabilities falling upon members may be calculated? Do her Majesty's Government distinguish between the failure of ITC members to meet the indebtedness of the ITC and its members and the failure of any other Government to meet their international loan obligations? [Interruption.] I was about to say that the crisis has led directly to the loss of 200 jobs. I am sorry that Opposition Members find that funny or amusing. Their hilarity and criticism is most suspect. I shall be grateful if my hon. Friend is able to say that the Government arc willing to consider an innovative approach in order to find a solution to this most difficult crisis.
9.51 pm
The Minister of State, Department of Trade and Industry (Mr. Peter Morrison): First may I say to the right hon. Member for Swansea, West (Mr. Williams) that there is nothing sinister about the timing of today's debate. He will recall that his right hon. Friend the Leader of the Opposition asked for a debate on several occasions during questions on the business statements. He has rightly
112
reminded me that by the time of the debate I had said that I hoped that I would be able to respond to all the applications relating to Cornish tin mines. I regret as much as he does that it has not been possible to make that response today.
I agree with the Chairman of the Select Committee, my hon. Friend the Member for Hastings and Rye (Mr. Warren) that there is nothing funny about the events of the past 12 or so months. As my hon. Friend the Member for Meriden (Mr. Mills) said, if we had not signed the 1982 agreement, many of the problems that we are discussing this evening would not have had to be discussed. However, as my right hon. Friend the Secretary of State for Trade and Industry explained in his opening speech, for reasons that he gave to the House it was decided at that time that on balance it was best to be part of the agreement. However, that decision did not affect the situation in Cornwall. Indeed, it could be strongly argued that because we were a member of the agreement we had more room for manoeuvre because of the effect of the agreement on Cornwall.
My hon. Friend the Member for Beaconsfield (Mr. Smith) said that no Government could have tried harder to resolve the crisis, once it broke. That is quite correct. My right hon. Friend the then Secretary of State for Trade and Industry sent personal messages to all other members of the agreement asking them to follow our lead. At that time we did everything that we possibly could to try to find a solution. We believed—and the House backed us—that an orderly return to trading in tin was the best way to proceed.
The hon. Member for Truro (Mr. Penhaligon) and my hon. Friends the Members for St. Ives (Mr. Harris) and for Falmouth and Camborne (Mr. Mudd) described the position in Cornwall. The hon. Member for Truro asked me why the Government did not do something immediately the tin agreement collapsed. The answer quite simply is that if we had done something, and subsequent negotiations had been successful, there would have been no need for us to do so. Therefore, we could not proceed until we had had an application and an application did not arrive in the Department until after the final collapse of the tin market.
The House knows that every effort was made to find a solution to the problem of the collapse in the price of tin and at that stage, in November and December of last year and the first two months of this, all our principal efforts were concentrated, although considerable thought was going into the likely impact on the tin mines in Cornwall, to see what we could do to ensure an orderly return to trading in tin.
I have said before that when those efforts failed, immediately our attention turned to see what can be done to help the Cornish tin mines. We have been told in vivid terms of the difficult unemployment situation in Cornwall. We are told that if the mines cannot re-open, what is a difficult situation becomes a very difficult situation, not least because of Cornwall's remoteness. I understand that alternative employment is not easy to find there, and that is why every effort was, and continues to be, made to see what can be done to assist the continuance of tin mining in Cornwall.
My hon. Friend the Member for St. Ives, in whose constituency Geevor is, will recall that it proved impossible to accept the first application. Against considerable difficulties and odds we were prepared to set aside what

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I agree is only a small amount of money, some £40,000, for care and maintenance so that the second application could be examined. As the House knows, I made a statement a few weeks ago that it was also not possible to accept that application. The reason is that a test of viability needs to be applied. One has to take into account the cost per job and the amount and proportion of taxpayers' money that is going in.
We also examined ways of giving an operating subsidy, but again it was not possible to give one. My hon. Friends the Members for Tiverton (Mr. Maxwell-Hyslop) and for St. Ives talked about care and maintenance, but this time round we were not able to give an offer for that. However, I am in close contact with my right hon. Friend the Secretary of State for Employment to see whether something can be done through a Manpower Services Commission scheme, and not on a normal basis. As my hon. Friend also knows, we are prepared to offer a sum of money for a consultant to study the future viability of the mine.
I agree with the points made by my hon. Friend the Member for Falmouth and Camborne about Carnon Consolidated and RTZ. I should like to be able to make an announcement but, as negotiations are still going on and the sums are substantial, it is not possible to do so at the moment. The right hon. Member for Swansea, West has raised his hand at me. I point out to him that the company has not yet made any point to me about delays. This is the right way to proceed. We shall want to help it as far as we can. The right hon. Gentleman will hear about these things in the normal way, and I was happy to inform the House about Geevor.
This has been a sad and sorry saga. The Government do not accept that they have a legal obligation to pay the debts of the ITC. As there are threats of writs, the House will understand that I cannot elaborate on that point now.
Question put, That the amendment be made:—
The House divided: Ayes 149, Noes 242

Division No. 244]

[10 pm

AYES

Alexander, Richard

Cohen, Harry

Alton, David

Coleman, Donald

Ashton, Joe

Cook, Frank (Stockton North)

Atkinson, N. (Tottenham)

Cook, Robin F. (Livingston)

Banks, Tony (Newham NW)

Corbyn, Jeremy

Barnett, Guy

Cox, Thomas (Tooting)

Beckett, Mrs Margaret

Craigen, J. M.

Beith, A. J.

Crowther, Stan

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

Dalyell, Tarn

Bermingham, Gerald

Davies, Rt Hon Denzil (L'lli)

Bidwell, Sydney

Davies, Ronald (Caerphilly)

Blair, Anthony

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

Boyes, Roland

Deakins, Eric

Bray, Dr Jeremy

Dixon, Donald

Brown, Gordon (D'f'mline E)

Dormand, Jack

Brown, Hugh D. (Provan)

Dunwoody, Hon Mrs G.

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

Eadie, Alex

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

Eastham, Ken

Bruce, Malcolm

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

Buchan, Norman

Evans, John (St. Helens N)

Caborn, Richard

Ewing, Harry

Callaghan, Jim (Heyw'd & M)

Faulds, Andrew

Canavan, Dennis

Field, Frank (Birkenhead)

Carlile, Alexander (Montg'y)

Fields, T. (L'pool Broad Gn)

Carter-Jones, Lewis

Fisher, Mark

Clark, Dr David (S Shields)

Foot, Rt Hon Michael

Clarke, Thomas

Forrester, John

Clay, Robert

Foster, Derek

Clelland, David Gordon

Foulkes, George

Clwyd, Mrs Ann

Garrett, W. E.

114

Gilbert, Rt Hon Dr John

Nellist, David

Godman, Dr Norman

Oakes, Rt Hon Gordon

Gould, Bryan

O'Brien, William

Gourlay, Harry

O'Neill, Martin

Hamilton, James (M'well N)

Owen, Rt Hon Dr David

Hamilton, W. W. (Fife Central)

Park, George

Hancock, Michael

Patched, Terry

Hardy, Peter

Pavitt, Laurie

Harrison, Rt Hon Walter

Pendry, Tom

Hart, Rt Hon Dame Judith

Penhaligon, David

Haynes, Frank

Powell, Raymond (Ogmore)

Heffer, Eric S.

Radice, Giles

Hogg, N. (C'nauld & Kilsyth)

Randall, Stuart

Home Robertson, John

Raynsford, Nick

Hoyle, Douglas

Redmond, Martin

Hughes, Robert (Aberdeen N)

Richardson, Ms Jo

Hughes, Roy (Newport East)

Robinson, G. (Coventry NW)

Hughes, Simon (Southwark)

Rogers, Allan

John, Brynmor

Rowlands, Ted

Jones, Barry (Alyn & Deeside)

Sedgemore, Brian

Kaufman, Rt Hon Gerald

Sheerman, Barry

Lambie, David

Sheldon, Rt Hon R.

Lamond, James

Shore, Rt Hon Peter

Leadbitter, Ted

Short, Ms Clare (Ladywood)

Leighton, Ronald

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

Lewis, Ron (Carlisle)

Silkin, Rt Hon J.

Lewis, Terence (Worsley)

Skinner, Dennis

Litherland, Robert

Snape, Peter

Lloyd, Tony (Stretford)

Soley, Clive

Lofthouse, Geoffrey

Spearing, Nigel

McCartney, Hugh

Steel, Rt Hon David

McDonald, Dr Oonagh

Strang, Gavin

McGuire, Michael

Thomas, Dr R. (Carmarthen)

McKelvey, William

Thompson, J. (Wansbeck)

MacKenzie, Rt Hon Gregor

Torney, Tom

McWilliam, John

Wainwright, R.

Madden, Max

Wardell, Gareth (Gower)

Marek, Dr John

Wareing, Robert

Mason, Rt Hon Roy

Welsh, Michael

Maxton, John

Williams, Rt Hon A.

Michie, William

Winnick, David

Mikardo, Ian

Woodall, Alec

Millan, Rt Hon Bruce

Miller, Dr M. S. (E Kilbride)

Tellers for the Ayes:

Mitchell, Austin (G't Grimsby)

Mr. Allen McKay and

Morris, Rt Hon J. (Aberavon)

Mr. Derek Fatchett.

Mudd, David

NOES

Adley, Robert

Bruinvels, Peter

Aitken, Jonathan

Bryan, Sir Paul

Alison, Rt Hon Michael

Buchanan-Smith, Rt Hon A.

Amess, David

Budgen, Nick

Ancram, Michael

Bulmer, Esmond

Arnold, Tom

Burt, Alistair

Aspinwall, Jack

Carlisle, John (Luton N)

Atkins, Rt Hon Sir H.

Carlisle, Kenneth (Lincoln)

Atkins, Robert (South Ribble)

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

Atkinson, David (B'm'th E)

Carttiss, Michael

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

Cash, William

Baker, Nicholas (Dorset N)

Chalker, Mrs Lynda

Baldry, Tony

Channon, Rt Hon Paul

Beaumont-Dark, Anthony

Chope, Christopher

Bendall, Vivian

Clark, Hon A. (Plym'th S'n)

Benyon, William

Clark, Dr Michael (Rochford)

Best, Keith

Clark, Sir W. (Croydon S)

Biffen, Rt Hon John

Clegg, Sir Walter

Biggs-Davison, Sir John

Cockeram, Eric

Blackburn, John

Colvin, Michael

Boscawen, Hon Robert

Conway, Derek

Bottomley, Mrs Virginia

Coombs, Simon

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

Cope, John

Bowden, Gerald (Dulwich)

Corrie, John

Boyson, Dr Rhodes

Couchman, James

Braine, Rt Hon Sir Bernard

Cranborne, Viscount

Brandon-Bravo, Martin

Crouch, David

Bright, Graham

Currie, Mrs Edwina

Brittan, Rt Hon Leon

Dorrell, Stephen

Brown, M. (Brigg & Cl'thpes)

Douglas-Hamilton, Lord J.

Browne, John

Dover, Den

115

Durant, Tony

Leigh, Edward (Gainsbor'gh)

Edwards, Rt Hon N. (P'broke)

Lennox-Boyd, Hon Mark

Eggar, Tim

Lester, Jim

Emery, Sir Peter

Lewis, Sir Kenneth (Stamf'd)

Evennett, David

Lilley, Peter

Eyre, Sir Reginald

Lloyd, Sir Ian (Havant)

Fallon, Michael

Lloyd, Peter (Fareham)

Favell, Anthony

Lord, Michael

Fenner, Mrs Peggy

Luce, Rt Hon Richard

Finsberg, Sir Geoffrey

Lyell, Nicholas

Fletcher, Alexander

McCurley, Mrs Anna

Fookes, Miss Janet

MacGregor, Rt Hon John

Forman, Nigel

MacKay, Andrew (Berkshire)

Forsyth, Michael (Stirling)

MacKay, John (Argyll & Bute)

Forth, Eric

McLoughlin, Patrick

Fox, Sir Marcus

McNair-Wilson, M. (N'bury)

Fraser, Peter (Angus East)

Major, John

Freeman, Roger

Malins, Humfrey

Gale, Roger

Malone, Gerald

Galley, Roy

Maples, John

Gardiner, George (Reigate)

Marlow, Antony

Gardner, Sir Edward (Fylde)

Mates, Michael

Garel-Jones, Tristan

Mather, Carol

Glyn, Dr Alan

Maude, Hon Francis

Goodhart, Sir Philip

Mayhew, Sir Patrick

Gow, Ian

Merchant, Piers

Gower, Sir Raymond

Mills, Iain (Meriden)

Greenway, Harry

Mitchell, David (Hants NW)

Gregory, Conal

Moate, Roger

Griffiths, Peter (Portsm'th N)

Montgomery, Sir Fergus

Ground, Patrick

Moore, Rt Hon John

Grylls, Michael

Morris, M. (N'hampton S)

Hamilton, Hon A. (Epsom)

Morrison, Hon C. (Devizes)

Hamilton, Neil (Tatton)

Morrison, Hon P. (Chester)

Hampson, Dr Keith

Moynihan, Hon C.

Hanley, Jeremy

Murphy, Christopher

Hannam, John

Neale, Gerrard

Hargreaves, Kenneth

Nelson, Anthony

Harvey, Robert

Newton, Tony

Havers, Rt Hon Sir Michael

Nicholls, Patrick

Hawkins, C. (High Peak)

Norris, Steven

Hawkins, Sir Paul (N'folk SW)

Onslow, Cranley

Hawksley, Warren

Oppenheim, Phillip

Hayes, J.

Osborn, Sir John

Hayward, Robert

Ottaway, Richard

Heathcoat-Amory, David

Page, Sir John (Harrow W)

Heddle, John

Page, Richard (Herts SW)

Henderson, Barry

Parkinson, Rt Hon Cecil

Hickmet, Richard

Patten, Christopher (Bath)

Higgins, Rt Hon Terence L.

Pattie, Geoffrey

Hill, James

Pawsey, James

Hirst, Michael

Percival, Rt Hon Sir Ian

Hogg, Hon Douglas (Gr'th'm)

Pollock, Alexander

Holland, Sir Philip (Gedling)

Portillo, Michael

Hordern, Sir Peter

Powley, John

Howard, Michael

Prentice, Rt Hon Reg

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

Proctor, K. Harvey

Howell, Ralph (Norfolk, N)

Raffan, Keith

Hunt, David (Wirral W)

Rathbone, Tim

Hunt, John (Ravensbourne)

Rees, Rt Hon Peter (Dover)

Hunter, Andrew

Renton, Tim

Hurd, Rt Hon Douglas

Rhodes James, Robert

Irving, Charles

Rhys Williams, Sir Brandon

Jessel, Toby

Ridley, Rt Hon Nicholas

Johnson Smith, Sir Geoffrey

Ridsdale, Sir Julian

Jones, Gwilym (Cardiff N)

Roe, Mrs Marion

Jones, Robert (Herts W)

Rost, Peter

Jopling, Rt Hon Michael

Rowe, Andrew

Kershaw, Sir Anthony

Sackville, Hon Thomas

Key, Robert

Shaw, Giles (Pudsey)

Knight, Greg (Derby N)

Shaw, Sir Michael (Scarb')

Knight, Dame Jill (Edgbaston)

Shersby, Michael

Knowles, Michael

Silvester, Fred

Knox, David

Skeet, Sir Trevor

Lamont, Rt Hon Norman

Smith, Sir Dudley (Warwick)

Lang, Ian

Soames, Hon Nicholas

Latham, Michael

Speed, Keith

Lawler, Geoffrey

Speller, Tony

Lawrence, Ivan

Spencer, Derek

Lee, John (Pendle)

Spicer, Jim (Dorset W)

116

Steen, Anthony

Wakeham, Rt Hon John

Stevens, Lewis (Nuneaton)

Walden, George

Stewart, Andrew (Sherwood)

Ward, John

Sumberg, David

Wells, Bowen (Hertford)

Temple-Morris, Peter

Wells, Sir John (Maidstone)

Terlezki, Stefan

Wheeler, John

Thomas, Rt Hon Peter

Wiggin, Jerry

Thompson, Donald (Calder V)

Winterton, Nicholas

Thorne, Neil (Ilford S)

Thurnham, Peter

Tellers for the Noes:

Twinn, Dr Ian

Mr. Tim Sainsbury and

Viggers, Peter

Mr. Michael Neubert.

Question accordingly negatived.
Main Question put:—
The House divided: Ayes 237, Noes 152.

Division No. 245]

[10.15 pm

AYES

Aitken, Jonathan

Dover, Den

Alison, Rt Hon Michael

Durant, Tony

Amess, David

Edwards, Rt Hon N. (P'broke)

Ancram, Michael

Eggar, Tim

Arnold, Tom

Evennett, David

Aspinwall, Jack

Eyre, Sir Reginald

Atkins, Rt Hon Sir H.

Fallon, Michael

Atkins, Robert (South Ribble)

Favell, Anthony

Atkinson, David (B'm'th E)

Fenner, Mrs Peggy

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

Finsberg, Sir Geoffrey

Baker, Nicholas (Dorset N)

Fletcher, Alexander

Baldry, Tony

Fookes, Miss Janet

Beaumont-Dark, Anthony

Forman, Nigel

Bendall, Vivian

Forsyth, Michael (Stirling)

Benyon, William

Forth, Eric

Best, Keith

Fox, Sir Marcus

Biffen, Rt Hon John

Fraser, Peter (Angus East)

Biggs-Davison, Sir John

Freeman, Roger

Blackburn, John

Gale, Roger

Boscawen, Hon Robert

Galley, Roy

Bottomley, Mrs Virginia

Gardiner, George (Reigate)

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

Gardner, Sir Edward (Fylde)

Bowden, Gerald (Dulwich)

Garel-Jones, Tristan

Boyson, Dr Rhodes

Glyn, Dr Alan

Braine, Rt Hon Sir Bernard

Goodhart, Sir Philip

Brandon-Bravo, Martin

Gow, Ian

Bright, Graham

Gower, Sir Raymond

Brittan, Rt Hon Leon

Greenway, Harry

Brown, M. (Brigg & Cl'thpes)

Gregory, Conal

Browne, John

Griffiths. Peter (Portsm'th N)

Bruinvels, Peter

Ground, Patrick

Bryan, Sir Paul

Grylls, Michael

Buchanan-Smith, Rt Hon A.

Hamilton, Hon A. (Epsom)

Budgen, Nick

Hamilton, Neil (Tatton)

Bulmer, Esmond

Hampson, Dr Keith

Burt, Alistair

Hanley, Jeremy

Carlisle, John (Luton N)

Hannam, John

Carlisle, Kenneth (Lincoln)

Hargreaves, Kenneth

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

Harvey, Robert

Carttiss, Michael

Havers, Rt Hon Sir Michael

Cash, William

Hawkins, Sir Paul (N'folk SW)

Chalker, Mrs Lynda

Hawksley, Warren

Channon, Rt Hon Paul

Hayes, J.

Chope, Christopher

Hayward, Robert

Clark, Hon A. (Plym'th S'n)

Heathcoat-Amory, David

Clark, Dr Michael (Rochford)

Heddle, John

Clark, Sir W. (Croydon S)

Henderson, Barry

Clegg, Sir Walter

Hickmet, Richard

Cockeram, Eric

Higgins, Rt Hon Terence L.

Colvin, Michael

Hill, James

Conway, Derek

Hirst, Michael

Coombs, Simon

Hogg, Hon Douglas (Gr'th'm)

Cope, John

Holland, Sir Philip (Gedling)

Corrie, John

Hordern, Sir Peter

Couchman, James

Howard, Michael

Cranborne, Viscount

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

Crouch, David

Howell, Ralph (Norfolk, N)

Currie, Mrs Edwina

Hunt, David (Wirral W)

Dorrell, Stephen

Hunt, John (Ravensbourne)

Douglas-Hamilton, Lord J.

Hunter, Andrew

117

Hurd, Rt Hon Douglas

Ottaway, Richard

Irving, Charles

Page, Sir John (Harrow W)

Jessel, Toby

Page, Richard (Herts SW)

Johnson Smith, Sir Geoffrey

Parkinson, Rt Hon Cecil

Jones, Gwilym (Cardiff N)

Patten, Christopher (Bath)

Jones, Robert (Herts W)

Pattie, Geoffrey

Jopling, Rt Hon Michael

Pawsey, James

Kershaw, Sir Anthony

Percival, Rt Hon Sir Ian

Key, Robert

Pollock, Alexander

Knight, Greg (Derby N)

Portillo, Michael

Knowles, Michael

Powley, John

Knox, David

Prentice, Rt Hon Reg

Lamont, Rt Hon Norman

Proctor, K. Harvey

Lang, Ian

Raffan, Keith

Latham, Michael

Rathbone, Tim

Lawler, Geoffrey

Rees, Rt Hon Peter (Dover)

Lawrence, Ivan

Renton, Tim

Lee, John (Pendle)

Rhodes James, Robert

Leigh, Edward (Gainsbor'gh)

Rhys Williams, Sir Brandon

Lennox-Boyd, Hon Mark

Ridley, Rt Hon Nicholas

Lester, Jim

Ridsdale, Sir Julian

Lewis, Sir Kenneth (Stamf'd)

Roe, Mrs Marion

Lilley, Peter

Rost, Peter

Lloyd, Sir Ian (Havant)

Rowe, Andrew

Lloyd, Peter (Fareham)

Sackville, Hon Thomas

Lord, Michael

Sainsbury, Hon Timothy

Luce, Rt Hon Richard

Shaw, Giles (Pudsey)

Lyell, Nicholas

Shaw, Sir Michael (Scarb')

McCurley, Mrs Anna

Shersby, Michael

MacGregor, Rt Hon John

Silvester, Fred

MacKay, Andrew (Berkshire)

Skeet, Sir Trevor

MacKay, John (Argyll & Bute)

Smith, Sir Dudley (Warwick)

McLoughlin, Patrick

Soames, Hon Nicholas

McNair-Wilson, M. (N'bury)

Speed, Keith

Major, John

Spicer, Jim (Dorset W)

Malins, Humfrey

Steen, Anthony

Maples, John

Stevens, Lewis (Nuneaton)

Marlow, Antony

Stewart, Andrew (Sherwood)

Mates, Michael

Sumberg, David

Mather, Carol

Temple-Morris, Peter

Mayhew, Sir Patrick

Terlezki, Stefan

Merchant, Piers

Thomas, Rt Hon Peter

Mills, Iain (Meriden)

Thompson, Donald (Calder V)

Mitchell, David (Hants NW)

Thorne, Neil (Illord S)

Moate, Roger

Thurnham, Peter

Montgomery, Sir Fergus

Trippier, David

Moore, Rt Hon John

Twinn, Dr Ian

Morris, M. (N'hampton S)

Viggers, Peter

Morrison, Hon C. (Devizes)

Wakeham, Rt Hon John

Morrison, Hon P. (Chester)

Walden, George

Moynihan, Hon C.

Ward, John

Murphy, Christopher

Wells, Bowen (Hertford)

Neale, Gerrard

Wells, Sir John (Maidstone)

Nelson, Anthony

Wheeler, John

Neubert, Michael

Wiggin, Jerry

Newton, Tony

Winterton, Nicholas

Nicholls, Patrick

Norris, Steven

Tellers for the Ayes:

Onslow, Cranley

Mr. Francis Maude and

Oppenheim, Phillip

Mr. Gerald Malone.

Osborn, Sir John

NOES

Alton, David

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

Anderson, Donald

Bruce, Malcolm

Ashton, Joe

Buchan, Norman

Atkinson, N. (Tottenham)

Caborn, Richard

Banks, Tony (Newham NW)

Callaghan, Jim (Heyw'd & M)

Barnett, Guy

Canavan, Dennis

Beckett, Mrs Margaret

Carlile, Alexander (Montg'y)

Beith, A. J.

Carter-Jones, Lewis

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

Clark, Dr David (S Shields)

Bermingham, Gerald

Clarke, Thomas

Bidwell, Sydney

Clay, Robert

Blair, Anthony

Clelland, David Gordon

Boyes, Roland

Clwyd, Mrs Ann

Bray, Dr Jeremy

Cohen, Harry

Brown, Gordon (D'f'mline E)

Coleman, Donald

Brown, Hugh D. (Provan)

Cook, Frank (Stockton North)

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

Cook, Robin F. (Livingston)

118

Corbyn, Jeremy

McKelvey, William

Cox, Thomas (Tooting)

MacKenzie, Rt Hon Gregor

Craigen, J. M.

McWilliam, John

Crowther, Stan

Madden, Max

Dalyell, Tarn

Marek, Dr John

Davies, Rt Hon Denzil (L'lli)

Mason, Rt Hon Roy

Davies, Ronald (Caerphilly)

Maxton, John

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

Maxwell-Hyslop, Robin

Deakins, Eric

Michie, William

Dixon, Donald

Mikardo, Ian

Dormand, Jack

Millan, Rt Hon Bruce

Dunwoody, Hon Mrs G.

Miller, Dr M. S. (E Kilbride)

Eadie, Alex

Mitchell, Austin (G't Grimsby)

Eastham, Ken

Morris, Rt Hon J. (Aberavon)

Evans, John (St. Helens N)

Mudd, David

Ewing, Harry

Nellist, David

Faulds, Andrew

Oakes, Rt Hon Gordon

Field, Frank (Birkenhead)

O'Brien, William

Fields, T. (L'pool Broad Gn)

O'Neill, Martin

Fisher, Mark

Owen, Rt Hon Dr David

Foot, Rt Hon Michael

Park, George

Forrester, John

Patchett, Terry

Foster, Derek

Pavitt, Laurie

Foulkes, George

Pendry, Tom

Garrett, W. E.

Penhaligon, David

Gilbert, Rt Hon Dr John

Powell, Raymond (Ogmore)

Godman, Dr Norman

Radice, Giles

Gould, Bryan

Randall, Stuart

Gourlay, Harry

Raynsford, Nick

Hamilton, James (M'well N)

Redmond, Martin

Hamilton, W. W. (Fife Central)

Richardson, Ms Jo

Hancock, Michael

Robinson, G. (Coventry NW)

Hardy, Peter

Rogers, Allan

Harris, David

Rowlands, Ted

Harrison, Rt Hon Walter

Sedgemore, Brian

Hart, Rt Hon Dame Judith

Sheerman, Barry

Haynes, Frank

Sheldon, Rt Hon R.

Heffer, Eric S.

Shore, Rt Hon Peter

Hicks, Robert

Short, Ms Clare (Ladywood)

Hogg, N. (C'nauld & Kilsyth)

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

Home Robertson, John

Silkin, Rt Hon J.

Hoyle, Douglas

Skinner, Dennis

Hughes, Robert (Aberdeen N)

Snape, Peter

Hughes, Roy (Newport East)

Soley, Clive

Hughes, Simon (Southwark)

Spearing, Nigel

John, Brynmor

Steel, Rt Hon David

Jones, Barry (Alyn & Deeside)

Strang, Gavin

Kaufman, Rt Hon Gerald

Thomas, Dr R. (Carmarthen)

Lambie, David

Thompson, J. (Wansbeck)

Lamond, James

Torney, Tom

Leadbitter, Ted

Wainwright, R.

Leighton, Ronald

Wardell, Gareth (Gower)

Lewis, Ron (Carlisle)

Wareing, Robert

Lewis, Terence (Worsley)

Welsh, Michael

Litherland, Robert

Williams, Rt Hon A.

Lloyd, Tony (Stretford)

Winnick, David

Lofthouse, Geoffrey

Woodall, Alec

McCartney, Hugh

McCrindle, Robert

Tellers for the Noes:

McDonald, Dr Oonagh

Mr. Allen McKay and

McGuire, Michael

Mr. Derek Patchett.

Question accordingly agreed to.
Resolved,
That this House endorses the Government's response (HC 457) to the Second Report from the Trade and Industry Committee on the Tin Crisis (HC 305-I); regrets the difficulties brought upon the Cornish tin industry, the International Tin Council's creditors and others as a result of the failure of the International Tin Council to reach agreement with its creditors, despite the considerable efforts made by the Government, and welcomes the Government's package of measures to help employment in Cornwall.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's sitting, the Latent Damage Bill [Lords] and the Education (No. 2) Bill may he proceeded with, though opposed, until any hour. [Mr. Lennox-Boyd.]

Orders of the Day
  Latent Damage Bill [Lords]
  Not amended (in the Standing Committee), considered.
  Latent Damage Bill [Lords]
    Clause 1

      TIME LIMITS FOR NEGLIGENCE ACTIONS IN RESPECT OF LATENT DAMAGE NOT INVOLVING PERSONAL INJURIES
      10.26 pm
      The Solicitor-General (Sir Patrick Mayhew): I beg to move amendment No. I, in page 2, line 14 leave out
      `any potential plaintiff first had'
      and insert
      'the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.
      (5A) in subsection (5) above "the knowledge required for bringing an action for damages in respect of the relevant damage"' means'.
      Mr. Speaker: With this it will be convenient to take Government amendment No. 2.
      The Solicitor-General: On 24 June, in our debates in Committee, I undertook to give further consideration to subsection (5) of new section 14A of the Limitation Act 1980 following expressions of concern raised by the hon. Member for Newcastle upon Tyne, East (Mr. Brown) and the hon. and learned Member for Montgomery (Mr. Carlile) about the references in that subsection to "any potential plantiff". That reflected concern about the drafting of the provision rather than its substance. I explained to the Committee that if the Government considered it necessary to clarify the position we would do so. The two amendments fulfil the undertaking that I gave to the Committee.
      Amendment No. 1 is the substantial amendment and the other is consequential. The purpose of subsection (5) is to define the starting date for reckoning the three-year time limit from discoverability or, to put it more strictly, from knowledge of the damage. The amendments are intended to remove the doubts expressed in Committee and in another place. They make it clear that the only person whose knowledge is relevant is any person in whom the plaintiff's cause of action was vested before it came to the plaintiff, and the plaintiff himself. I can now reassure the House that, in cases involving multiple plaintiffs, time will not start to run against any particular plaintiff only because another person has discovered separate damage to himself arising out of the same act of negligence. Thus, in the case of a negligently drawn will, for example, the knowledge of one beneficiary that he has suffered damage will not of itself cause time to start running at large against other beneficiaries. Each has his own separate cause of action against the wrongdoer.
      I am pleased to tell the House that the Law Society, whose concern about subsection (5) was reflected in speeches made during debates in another place, now considers that the amendments give exactly what is needed to remove a source of potential uncertainty in the Bill.
      120
      I am grateful to all those who have drawn attention to a certain lack of clarity, which has proved to be capable of being remedied. The amendments are purely drafting ones. I commend them to the House.
      10.30 pm
      Mr. Nicholas Brown: This issue was raised in Committee. I had the opportunity to discuss it with the Solicitor-General the day before the Committee sat. Our fear, as expressed in Committee, was about the drafting of the clause rather than about the Government's intention. I am grateful to the Solicitor-General for coming back with the amendment that he promised us in Committee. It is not a question of the Government's intention. It is a question of the ambiguity of wording. The new clause meets that to everybody's satisfaction.
      Mr. Alex Carlile: I add my thanks to the Solicitor-General. The right hon. and learned Gentleman met with alacrity and, I think, enthusiasm, the reservations which he knew were held throughout the Committee on the wording of the clause. In my view, the new clause gives the Bill a clarity which that area of the law has lacked in the past. It is most important that plantiffs should know not only where they stand but who they are. In my view, the new clause helps to achieve that.
      Question put and agreed to.
      Amendment made: No. 2, in page 2, leave out lines 19 to 23.—[The Solicitor-General.]

    Clause 2

      PROVISIONS CONSEQUENTIAL ON SECTION I
      Mr. Peter Thurnham Mr. Peter Thurnham (Bolton, North-East): I beg to move amendment No. 8, in page 4, line 19, leave out 'subsection' and insert 'subsections'.
      Mr. Deputy Speaker (Mr. Harold Walker): With this it will be convenient to consider the following amendments: No. 10, in page 4, line 20, after '(5)', insert 'Subject to subsection (6) below,'.
      No. 11, in line 25, at end insert—
      '"(6) Where, in any action to which subsection (1)(b) above applies, the deliberate commission of the breach of duty referred to in subsection (2) above was performed by a servant or agent of the defendant (or any person through whom the defendant claims or his agent), such that the defendant neither knew nor had reason to know of the breach of duty at any time prior to the expiration of the fifteen year period referred to in section 14B of this Act, then section 14B of this Act shall apply to such action, notwithstanding the provisions of subsection (5) above.'.
      Mr. Thurnham: The amendment concerns deliberate concealment, which we discussed in Committee on 24 June. Hon. Members will notice that Hansard refers to the date of the first sitting as 24 March, which can hardly be correct. As has been said on a number of occasions, the principles of the Bill are laudable. Its shortcomings lie in the proposed manner of implementation. Nowhere is that problem more acute than in the provisions regarding deliberate concealment. Regarding construction work, the provisions are such that, in the majority of cases involving latent defects, the 15-year cut-off will not apply. That is not because the defendant in a construction case has been guilty of some special misconduct; nor do those who

      121
      support the amendment believe that the Law Reform Committee deliberately set out to victimise the construction industry.
      Having studied my noble Friend the Lord Chancellor's responses in the debates in the other place, I feel less sure about his intentions. The Law Reform Committee commented on the matter in paragraph 4.20 of its report and recommended that where there had been
      "fraud, deliberate concealment or mistake"
      the defendant should not benefit by the 15-year cut-off. That lumping together was somewhat misleading, especially with the moral overtones involved, as neither fraud nor mistake is relevant to the Bill, as both would involve quite seperate causes of action.
      The only element of relevance is "deliberate concealment". In that respect, I criticise the Law Reform Committee for entering a field where specialist knowledge is required. The definition given of "deliberate concealment" in the 1980 Act is such that most latent defects in construction will, by their very nature, automatically fall into that category. The Law Reform Committee probably did not realise that it was on difficult ground, but what it needed was careful discussion jointly with an engineer, an architect and a lawyer specialising in construction law. The matter could then have been sorted out. Unfortunately, that did not happen. Consequently, we have provisions in the Bill that will render the 15-year cut-off inoperative as regards most latent defects in construction.
      Because the Law Reform Committee did not appreciate the practical problems inherent in the concept of deliberate concealment, it saw it only as a moral issue. As it said in its report, it considered that it would be wrong to allow someone to benefit from immoral behaviour that went beyond mere failure to comply with legal obligations. Expressed in those simple terms, its conclusion seems quite reasonable.
      The Bill was criticised in that respect in the other place by the noble Lords Hacking and Wilberforce, who adduced careful argument to back the criticism. As in die case of many other matters concerning the Bill, my noble friend the Lord Chancellor did not address the arguments that had been put to him, and they still lie unanswered. I find that frustrating when the arguments were put by a Law Lord of the eminence of Lord Wilberforce, who is a Cross-Bencher and was not representing any outside interests. He was simply offering useful and constructive criticism, based on his wide experience in dealing with such cases. However, reason seems to have little relevance in effecting changes to the Bill.
      In Committee in the House the arguments were presented again and were developed in more detail. In this instance, it is fair to say that my right hon. and learned Friend the Solicitor-General tried to deal with some of the points and undertook to consider them further. Had the Committee stage continued for two or three sittings, as would have been appropriate in view of the concern expressed in the House over the Bill, instead of being rushed through at great speed for no good reason, sufficient dialogue could probably have developed to enable the matter to be properly considered. Regrettably, however, with this Bill one has to do very much more than convince just my right hon. and learned Friend.
      The criticism of the Bill in this respect has two branches —one concerning the drafting and the other a matter of principle, which is related to this. I shall take the drafting point first. Clause 2(2) has the effect of ruling out the
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      15-year cut-off where there has been deliberate concealment of any fact relative to the plaintiff's right of action. On the fact of it, this seems reasonable, until one finds that the Limitation Act 1980 defines "deliberate concealment" in such a way that the majority of latent defects in construction work by their very nature fall into that category.
      In Committee, some 10 examples of latent defects in construction were given to illustrate that point and there is no need to repeat them now. When that matter was brought up on Second Reading by my hon. Friend the Member for Chipping Barnet (Mr. Chapman), my right hon. and learned Friend the Solicitor-General sought to answer him by saying that the situation would only arise where, in the wording of the 1980 Act, there had been a
      "deliberate commission of a breach of duty"
      and that most cases would not be of this category. That answer was opportune because, as I endeavoured to demonstrate in Committee, the situation will be the opposite because most cases of latent defects will arise through an employee not following his instructions. His act or omission will be deliberate and, as a consequence, by the principle of vicarious liability, his employer will be guilty of so-called deliberate concealment and the 15-year cut-off will not apply.
      This means that, despite the Lord Chancellor and my right hon. and learned Friend the Solicitor-General introducing the Bill as giving a balance between the interests of plaintiffs and defendants and providing a long stop that will bar proceedings after 15 years, it does no such thing — at least it may for solicitors and accountants, but it certainly does not for architects, engineers and contractors. It is a myth. This Bill gives with one hand and takes away with the other. One has to put the question: is this the result that the Government desire?
      I turn to the other branch—that of principle. The justification given by the Law Reform Committee for ruling out the benefit of the 15-year cut-off where there had been so-called deliberate concealment was that it would be unconscionable to allow some one to benefit from his immoral behaviour. But what further wrong has the employer done? He knew nothing of the act or omission and, if he had known of it, it is likely that he would have stopped it or had it rectified. What unconscionable thing has he done to lose the benefit of the 15-year cut-off? The answer is that he had done nothing and the Committee's argument just does not apply.
      My right hon. and learned Friend the Solicitor-General attempted to give us some comfort at the end of the Committee stage by suggesting that there would be a difficult burden of proof upon the plaintiff to show deliberate concealment. I wish that that were so, hut, with all respect to my right hon. and learned Friend, it seems to me that the wording of the 1980 Act plus the normal circumstances of construction work add up to a situation where most latent defects will automatically fall into that category. The Act is too recent for case law to help, and cases based on the earlier Act endorse our misgivings.
      It is clear that where a defendant might benefit from the 15-year cut-off, the plaintiff will go for deliberate concealment. I believe that he will have little or no difficulty in establishing this, but, if hon. Members doubt this point, they should consider the litigation that is likely to follow. There will be doubt and argument as to what "deliberate" means in the circumstances of the particular project. Many parties may have been involved, one way or

      123
      another, with one defect and "deliberate" may apply to some employees and not to others. All this will be 15 years or more after the event, when people have dispersed, records no longer exist and memories are unreliable. As with arguments about the starting date, it reads like a lawyer's benevolent fund.
      The proposed amendment was tabled in two alternative forms. The first, which was tabled as amendment No. 9, followed that of Lord Hacking in the other place and was my preferred amendment. It said simply that the provisions of the 1980 Act relating to deliberate concealment should not apply. Amendment No. 11 removes the unfairness that arises through vicarious liability and allows the defendant employer to benefit from the 15-year cut-off where he did not know of the breach of duty.
      I shall be pleased to hear what my right hon. and learned Friend can say to help us in this matter. Does he believe that sufficient notice was given to my noble Friend the Secretary of State for Employment, whose duties include the promotion of enterprise and deregulation, of the burdens on business which are implicit in the Bill? Is he familiar with the documents "Lifting the Burden" and published last year, "Building Businesses not Barriers", which was published in May? This Bill has undone much of the good proposed in those White Papers.
      Mr. Neil Thorne: My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) has expressed well the anxieties of many people about this matter. I have given much thought to the clause, and today 1 had the good fortune to discuss it with my right hon. and noble Friend the Lord Chancellor, who satisfied me on several issues. The important point that he made was that the intention of the clause relates entirely to one's own agents and that it does not affect other people's agents. Therefore, it would go a long way towards exonerating other professional advisers from responsibility for the actions and behaviour of the servants of other interested parties. That is a considerable assistance.
      I am reassured that inadvertence is not deliberate concealment, and that culpability must be beyond mere inadvertence. If that is the case, we can be reassured that engineers, architects, surveyors and others will not have problems erupting in their faces 10 or 15 years later. The problem is serious, because the contractors who are liable to be carrying out such work seem to go for company reconstruction about once every seven years. If the contractor no longer exists, the plaintiff is likely to look for other possible defendants. In those circumstances, it is natural that the professional advisers who were involved in any such scheme would be extremely worried, not only during their active lives, but during their retirement.
      At present, the professional person is insured only for the year for which he pays the insurance premium. That is common in many policies that are approved by professional institutions. In future, professional bodies should ensure, through the insurance market, that it is possible for their members', to obtain insurance to cover subsequent claims on actions that take place during the year of the insurance. If a professional person retires and has to continue to pay for an insurance policy, which
      124
      might cost about 10 per cent. of turnover, it will he a very heavy burden, particularly if, as I understand is the case after retirement, the cost could not be offset against tax.
      10.45 pm
      It would seem essential that the Government should stress to the professional bodies that they should reappraise insurance arrangements to ensure that such a burden would not descend on people at the time of life when they are least able to cope with it. I understand that even the estate of a deceased professional adviser could be affected and, if the estate had not been settled, his widow could be affected. That could lead to considerable press publicity and would not be a good advertisement for the Bill, which contains a number of definite advantages.
      I have been given assurances by the Lord Chancellor, but, bearing in mind the anxieties eloquently outlined by my hon. Friend the Member for Bolton, North-East. I hope that my right hon. and learned Friend the Solicitor-General will give us further assurances on this important matter.
      Mr. Nicholas Brown: I come to the debate without a professional axe to grind, which is something new. I cannot say that I come to it with an open mind, because I heard the arguments thoroughly trawled in Committee.
      I have to tell the hon. Member for Bolton, North-East (Mr. Thurnham) that his arguments are no more impressive now than they were in Committee and that his briefs have not improved with time either. The engineering associations that have been briefing the hon. Gentleman have had since the Committee stage to amend their briefs —it was a grievance in Committee that there had not been enough time for hon. Members to he briefed—yet their arguments have not changed.
      We must remind ourselves that we are considering how the law will affect deliberate concealment and whether a 15-year cut-off should advantage a person who is charged with deliberately concealing something that has disadvantaged someone who felt that he had a right to rely on that person's professional competence.
      The hon. Member for Bolton, North-East argued in Committee that these cases were difficult in law. That may he so, but that is no reason to say that we should not make laws to deal with difficult cases, which seems to be the broad thrust of the hon. Gentleman's case. He is asking that people standing accused of deliberate concealment should be able to take advantage of a 15-year cut-off. That seems morally unfair.
      Deliberate concealment might be difficult to prove in court, but that is what the courts are there for. That is what the case would be all about. A person who has done something that is obviously wrong should not be able to take advantage of a cut-off point. The whole Committee, with the exception of the hon. Member for Bolton, North-East, accepted that argument.
      I take exception to the hon. Gentleman's claim that we rushed through the Committee stage. He was supplied—admittedly lately—with copious briefs from all sorts of professional associations that presumably did not have enough confidence in their members to feel that the Bill would not disadvantage them.
      Mr. Neil Thorne: Is it not grossly unfair to say that professional associations cannot rely upon the competence of their members? After all, we heard from my hon. Friend the Member for Chipping Barnet (Mr. Chapman) that of

      125
      the total paid out by way of damages, about 50 per cent. went in lawyers' fees. That is a strange situation, which would suggest to the layman that there were difficult cases to consider but that, nevertheless, the legal profession was benefiting far more than the person who was harmed.
      Mr. Brown: Yes. I shall deal in a moment with whether one should resort to litigation. I am arguing at the moment that the option to go to law should be there for the party who feels injured. I shall come to whether the legal profession is the main beneficiary. My remarks about the confidence which professional associations have in their members was meant lightly and I hope that they are taken in that way. That was not a serious charge.
      However, I do take exception to the charge that the measure has been rushed through Committee. If the hon. Gentleman had wished to hold the Committee up he had only to read his briefs a little more slowly and he could have kept us there for hours. Indeed, it is not unknown to the House for Members to detain Committees for hour upon hour. The Committee stage was not rushed through; because there was a broad consensus. That is why there was only one sitting. The hon. Gentleman was the only person to object, and he could have made his arguments at length. but he did not want to. His point about rushing through the Committee stage is rhetoric which is only for the record.
      There is no more substance in that charge than in the charge that the Law Commission was composed of all lawyers and therefore has "fitted up" the report on which the Bill is closely based in order financially to advantage the legal profession. I asked in Committee how the gap between the 10-year period, wanted by the professional associations for which the hon. Gentleman is speaking, and the 15-year period, which the Law Commission recommended, could enormously advantage the legal profession.
      Are we really being asked to believe that a retired Law Lord and other senior members of the legal profession would, when trying to strike a balance between the rights of plaintiff and defendant, somehow adjust the law solely to the financial advantage of lawyers, perhaps in other branches of the profession? The argument borders on the ludicrous. I am not a lawyer, and I do not see it as my role to speak for the profession. As I made clear in Committee, I see it as my role to speak for the consumers of legal services. Yet it is utterly unacceptable, and impossible to substantiate the charge that somehow the Law Commission has deliberately recommended legislation in order to advantage the profession.
      Mr. Thurnham: The hon. Gentleman says that he speaks for consumers, but will he accept that the burden of the cost in the Bill will be imposed upon consumers in the prices that they are charged? That is why the construction industry is arguing. The cost here can only be carried by consumers.
      Mr. Brown: I accept that these cases are complex and may be expensive, but the hon. Gentleman's remedy is that they should not be heard at all and that advantage can be taken of the longstop. That seems even more unfair than having an expensive law case. I am sorry that it is expensive, but to say that the solution is to have no remedy at all cannot be just, and that is what the hon. Gentleman is advancing.
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      The hon. Member for Ilford, South (Mr. Thorne) spoke of professional people retiring and having the threat of an action hanging over their heads for 10 or 15 years. As he probably realises, the difference between 10 and 15 years is a contentious issue. The Law Commission recommended 15 years as striking a balance between 10 and 20 and the professional associations representing engineering industry said that they would prefer 10. The parliamentary Liberal party has struck a balance between 10 to 15 and has said that it would prefer something between 12 and 13.
      Mr. Alex Carlile: Twelve.
      Mr. Brown: The hon. and learned Member for Montgomery (Mr. Carlile) says 12. The alliance veers towards the employers rather than the plaintiffs.
      The House must consider seriously whether it wishes to reject a decision by the Law Commission and substitute something based on no more than splitting the difference or backing up the professional associations against the arguments put on behalf of the consumers. The consumers have rights too, and it worries me that all the arguments advanced from the Government side on Second Reading were on behalf of the professional association. Nobody said a word about the consumers, who would be the plaintiffs in such actions.
      We did hear highly dubious and contentious theory that somehow it was not in the consumers' interests that the professions be disadvantaged by this legislation. That was the thrust of the argument, but not one Government Member said that the consumers' point of view is the right one and that the special pleading from the professional associations had to be resisted. No Government Member urged the Solicitor-General to resist that pleading, although the Opposition did.
      The matter of professional insurance was raised in Committee, and the hon. Member for Ilford, South raised it in this debate. It is an important question, but why is it much more difficult to get professional insurance for 15 years than for 10 years? Nobody is saying that it is impossible to get it for 10 years. If it can be obtained for 10 years, it can surely he obtained for 15 years. I accept, based on an actuary's calculation, that it would be more expensive, but it is possible. Therefore, the argument rests solely on cost.
      Mr. Neil Thorne: The hon. Gentleman has got the situation wrong. I said that when a person retires he gets no tax relief on his premiums. For that reason, the insurance should work in a different way and should be on the basis of when the work was carried out and not on the basis of when the defect is found. I am not arguing that there should not be insurance. There should be, but it should be on a different basis, and at present the professional institutions organise insurance for their members on the basis that it must be continued into retirement. That is wrong.
      Mr. Brown: My right hon. and learned Friend the Member for Aberavon (Mr. Morris) whispers in my ear that, quite rightly, it depends on how the policy is framed. Nobody will be able to take out professional insurance after a cause of action has been discovered. I can see that and I am sure that the hon. Member for Ilford, South can see it. The professional indemnity is known to other professions and is usually arranged through professional

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      associations, or arrangements are made for it. That has to include an indemnity to cover all forms of action which might arise in the period envisaged in law.
      Actions can now be pursued in law. I find it difficult to understand that for the first time we are legislating for the concept of a longstop. This should put many retired people's minds at rest. They will know that there will come a time after they have ceased their professional activities when, unless they have done something really wrong, they are beyond the threat of actions of this sort. The Solicitor-General should be thanked for that and it should be welcomed by the profession. Instead of that, it is being resisted.
      On Second Reading and in Committee the Opposition welcomed the Bill. We asked the Solicitor-General to resist amendments of the kind that have been moved this evening and that were also moved in Committee. We are grateful to the Solicitor-General for resisting that special pleading and for his even-handedness towards both the consumers and the professions, as the Law Commission asked him to be.
      11 pm
      Mr. David Crouch: As there seems to be unanimity of thought on the two Front Benches, I wondered at one time whether the Bill was being presented by the Opposition or by the Government. My hon. Friends the Members for Bolton, North-East (Mr. Thurnham) and for Ilford, South (Mr. Thorne) have argued the case tonight very cogently. It was not very latent.
      I am distressed by the way in which the Bill is being rushed through the House, compared with what happened in the other place. I have read every word of the proceedings in the other place, and I have been immensely impressed by the legal views that were advanced there. It distresses me that the Bill is being discussed so late in the day. The Committee stage lasted for two hours and it took place after midnight. I tried to obtain a copy of the Committee proceedings, but I did not succeed. It was impossible to obtain a copy from the Vote Office. I was abroad during the Committee proceedings, otherwise I should have liked to be on the Committee.
      The Bill has been rushed through this House. The lawyers are trying to push it through, and we shall end up with bad law. [Interruption.] Oh, yes. The House is always packed with lawyers late at night, and somebody must say that the lawyers do not always make good law. The result is that we end up with bad legislation. I said this at Second Reading and I say it again now.
      Both Front Benches have said tonight, although it was resisted a little by my hon. Friends on these Back Benches, that the Bill is designed for housebuilding. It will protect house purchasers against contractors who build houses, and I commend it for that reason, but at Second Reading I put it to my right hon. Friend and learned Friend the Solicitor-General that the Bill should not apply to massive contracts for the building of chemical and process plants. That is entirely different from the building of houses.
      I must declare an interest at this point. I am a consultant, and have been for many years, to the British Chemical Engineering Contractors Association. (HON. MEMBERS: "Ah."] There is nothing "Ah" about that. It is a very interesting profession that makes a great deal of money for this country. There is a great deal at risk. If
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      things go wrong in chemical or process plants, the damages can run into millions or billions of pounds. The contractors therefore need to be protected.
      Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will address himself to the specific amendments that are before the House.
      Mr. Crouch: That is always very difficult for me, Mr. Deputy Speaker, at this hour of the night, particularly when I am seeking to make almost a Second Reading speech again, because my last Second Reading speech did not make as heavy an impact as it ought to have done.
      Perhaps I have said enough already. It must go on record that the Bill does a good job, as far as it goes, for the housing construction industry, but it should not cover the massive activities of chemical process plant builders. That is an entirely different matter. That is why I sought to catch your eye tonight, Mr. Deputy Speaker, and not to get you on your feet.
      Mr. Roger Moate: I do not know whether it can be said in truth that the Bill has been rushed through, but I think that there will be some surprise in later years when people look back at the proceedings in this House and find that it was passed after a fairly perfunctory debate. In years to come I believe that the Bill will give rise to very many complications and considerable controversy. I should have welcomed a fuller exchange and more flexibility and movement by the Government in response to many of the submissions.
      The case that has been put forward by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) merits far more consideration than has been given to it by the Government and the Opposition.
      Mr. Nicholas Brown: We have had this in Committee and other debates. It is one thing for the hon. Gentleman to say that he does not agree with what has been said by the Opposition and Government Front Benches—that is what democracy is all about. It is another thing to say that proper consideration has not been given to the points of view. That point was made in Committee against the Law Commission, and it is now being made against the Opposition Front Bench, and presumably against the Solicitor-General. That is unfair.
      Mr. Deputy Speaker: I remind the House that we are discussing specific and narrow amendments. We are not on either Second or Third Reading.
      Mr. Moate: With respect, Mr. Deputy Speaker, I was addressing the particular point about deliberate concealment, as the hon. Gentleman was in his intervention. I am not an engineer or an architect, but we have read considerable submissions from people very learned in that sector, who have studied the law in that regard, and to dismiss out of hand, as seems to have been done, their belief that a vast number of construction claims could be described as having been caused by deliberate concealment by an employee, not by the principal, merited considerable concern. For any construction organisation or professional undertaking working today, the possibility of an unlimited time during which it might be held liable presents it with insuperable insurance problems.
      On this as on all other amendments, with the exception of the technical amendments that were accepted earlier, and which I did not follow, the Government seem to have made no fundamental concession to the many professional

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      and sincere submissions that have been made to them. I hope that my right hon. and learned Friend the Solicitor-General will reply on this point at greater length.
      The hon. Member for Newcastle upon Tyne, East (Mr. Brown) has got it fundamentally wrong. Nearly every hon. Member who has spoken on this subject, throughout the debates on Second Reading and in Committee, was representing the interests of the consumer and the producer. The great test to be applied by the House and by the professionals is not the profitability of the contract or profession — that does not apply because most costs can be passed on — but the sheer practicality of legislation such as this. Many hon. Members have got this wrong. They believe that simply by extending the period, with a long stop in this case, they are helping the consumer. This is gesture politics which does not help the consumer. In practical terms it will not help, and it is delusion. We should have paid more attention and respect to those professionals whose job it is to build houses or give people advice because they are concerned with the practicalities.
      Something fundamental was missed on Second Reading, and is being missed tonight. The consumer is not the house buyer, to whom my hon. Friend the Member for Canterbury (Mr. Crouch) referred, or the small man. Over a 15-year period, it is most unlikely that the small consumer or the house buyer will be in a position to sue the original cause of that error. It is most likely that this amendment to the statute of limitation will be used mostly by the big institutions. They will he able to calculate more precisely who caused the error 15 years or more before, if they can adduce wilful concealment.
      In this case, the big buyers of products such as chemical plants, Government buildings and the like, are the Government or local government. They will most likely be able to harness the forces of law to prove their case. The big commercial organisations will be the biggest beneficiaries of the Bill if it becomes law. This is important, because if one is trying to protect the consumer who suffers through the purchase of a false product, or a house buyer, one does not look to legislation such as this to do it. One should look to more specific insurance.
      Mr. Deputy Speaker: Order. The hon. Gentleman is addressing himself to a clause in the Bill rather than to the specific amendment. I hope that he will address himself to the amendment.
      Mr. Moate: I apologise, Mr. Deputy Speaker. I was also making the mistake of responding to some points made earlier by Opposition Members.
      In conclusion, I shall deal with a fundamental point about the practicality because many hon. Members——
      Mr. Deputy Speaker: Order. The hon. Gentleman cannot do that. He must address himself to the group of amendments.
      Mr. Moate: Indeed, Mr. Deputy Speaker, and the practicality is about these amendments. Many hon. Members have said that one would simply insure against the additional exposure that occurs as a result of the amendment. The amendment seeks to extend the period during which claims can be brought if individuals can be deemed to be guilty of wilful concealment. Often it is not practical to do what those hon. Members suggest because the whole insurance world is endeavouring to move from
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      that type of coverage. In professional indemnity insurance cover is limited to policies under which claims must be made during that particular year. The insurance world is moving away from cover which can take one back over many years to the year in which the error first occurred. In the United States the old "claims occurring" basis is the basis of insurance and that has caused millions of pounds worth of claims today and has virtually caused that type of insurance to dry up.
      If we seek to protect the consumer, it is important that we should be practical. Often in this debate we have lost sight of the practicalities. Therefore, I do not think that hon. Members, no matter how sincere, will achieve the objective which they seek.
      The Solicitor-General (Sir Patrick Mayhew): My hon. Friend the Member for Bolton, North-East (Mr. Thurnham), in moving these amendments on deliberate concealment, has provided the House with the opportunity to examine clause 2(2) and its effects, following earlier discussions on Second Reading and in Committee.
      The intended effect and the effect of his amendments is to provide a defendant employer with a defence in the form of a time bar in negligence proceedings which arise from his vicarious liability for acts or omissions deliberately committed by an employee or agent so as to keep the plaintiff out of his knowledge of his right of action.
      Without transgressing your ruling, Mr. Deputy Speaker, I must say a word about the allegation that this part of the Bill has been rushed through. I hope that it was not suggested — I do not think that it was — that I responded in Committee cursorily to the points fully made by my hon. Friend. I was worried that I might have taken rather too long. Although I took a generous time in response to each debate there was still a substantial amount of morning Session to run when our business was concluded. That cannot be laid at the door of the Government.
      My hon. Friend the Member for Canterbury (Mr. Crouch) speaks of the Bill being rushed through and attributes it to the fact that lawyers always pack the Benches at this hour. I could see some force in that, were the number of lawyers so great that there was no room for anybody else, but on looking round I see that charge is not substantiated. The truth of the matter is that we have answered every point made, and if they have not been made over an extended period, it perhaps derives from the fact that the House as a whole and the Committee wished to see the recommendations of the Law Reform Committee implemented.
      Clause 2(2) has a limited objective. It gives effect to the Committee's recommendation that the long stop should not apply in cases of deliberate concealment or deliberate concealment of a breach of duty. But the long stop will come into play in those cases of latent damage where there has been negligence by inadvertent or careless acts or omissions. That is the crucial distinction between inadvertence on the one hand and the deliberate commission of breach of duty on the other.
      11.15 pm
      Every point made by my hon. Friend the Member for Bolton, North-East was by implication answered by my hon. Friend the Member for Ilford, South (Mr. Thorne). I am grateful to him for his reference to his conversation with the Lord Chancellor, which he said had satisfied him

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      on a number of matters. Those were the matters which my hon. Friend the Member for Bolton, North-East dwelt upon in moving these amendments, to which my hon. Friend the Member for Ilford, South had put his name.
      The amendments would permit a defendant to plead the long stop — in other words, 15 years have gone by, therefore the action is time barred — in cases where unbeknown to him his agent had deliberately committed a breach of duty with the intention of putting a plaintiff out of his knowledge of his right of action. Therefore, the defendant would be able to rely on the law of limitation to avoid proceedings in respect of alleged negligence for which a defendant may be held vicariously liable.
      The key to this debate lies in whether the House of Commons was or was not right when it passed section 32 of the Limitation Act 1980, because the provision in this Bill does no more than build upon section 32.
      The ordinary rule of limitation in relation to actions for negligence is that one has six years in which to bring one's action. But because that was widely perceived to lead to injustice, the House of Commons most recently in section 32(1) said that if:
      "any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant — the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake".
      That is the general rule in the 1980 Act. Parliament went on to legislate in the terms of subsection (2), which provides that:
      "deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty".
      If it was right in 1980 to make that provision—which prevents a defendant from relying upon the time bar— how can we possibly justify allowing him to rely upon the new time bar of 15 years, which for the first time is introduced into the law by this Bill? Are we to allow the defendant to take advantage of it, notwithstanding the deliberate commission of a breach of duty which amounts to deliberate concealment of the facts involved? I cannot see how that can be justified.
      The interesting thing is that when we consulted upon the recommendations of the Law Reform Committee, very few people indeed suggested that there should be any amendment to the provisions of section 32. That is the answer to this point. Of course I recognise the proper concern of my hon. Friends for the consumer who has to pay more in terms of the cost of additional insurance, but I do not agree that we have been neglectful of the interests of consumers. Time and again the Law Reform Committee and everyone who has spoken in the House has acknowledged that there is a conflict between the interests of the consumer of services, including the consumer of lawyer services—and I stress that point for the benefit of my hon. Friend the Member for Canterbury —because lawyers' opinions are caught by this as much as the constructor of some chemical plant.
      Mr. Crouch: Like the rest of the House, I am listening to my right hon. and learned Friend because no one can explain these detailed points of law better than he can. However, on the point about the statutory period of limitation as it affects contracts in the process plant industry, where such contracts ensure that the liability of both parties is well defined and that the contractor's
      132
      liability terminates absolutely — fraud apart — after a determined death defined period, usually of 12 months, after the successful conclusion of a performance test, we are considering a scientific and industrial world where that is the practice. Does my right hon. and learned Friend think that it is wrong that the statutory period is not a statutory period but and agreed period between the contractor and the purchaser or operator of only 12 months? Will that be overridden by the important Bill that we are debating tonight?
      The Solicitor-General: I am grateful to my hon. Friend for his helpful intervention. However, it is all a matter of contract. It is a matter of what the two parties to an agreement have agreed upon. It is open to parties to extrude their own liability for their own negligence provided that they do so in absolutely explicit terms. They can agree between themselves to limit their liability in terms of time, provided that they do so in the most explicit terms. Where they have not done that, the law has for centuries imposed a period of limitation — and that period has varied over the years—for liability in relation to actions based upon negligence or other breach of duty.
      That is the key to the debate. On the one hand, we must take proper care for justice and what we have called the consumer. Equally, the employer must be protected to a reasonable extent from stale claims. I hope therefore that my hon. Friend the Member for Bolton, North-East believes that I have not dealt summarily with his points. The Committee consulted extremely widely and so has my right hon. and noble Friend the Lord Chancellor. I hope that my hon. Friend the Member for Bolton, North-East does not seriously mean that reason has had little relevance to the way in which the Government have responded to various amendments to the Bill.
      My hon. Friend the Member for Ilford, South made an important point about insurance and that is a matter for the industry. I am glad that these important matters are now being considered within the industry and with those who advise the industry on insurance matters.
      My hon. Friend the Member for Faversham (Mr. Moate) felt that there had been no concessions in the Bill. I had hoped that I demonstrated that I had listened carefully to what was said about the lack of clarity in the Bill and the first two amendments that we have dealt with tonight represent my response to that. That response has been generally welcomed.
      There is a good deal more to the concept of vicarious liability than the idea that that is simply a matter of social convenience as my hon. Friend the Member for Bolton, North-East described it upstairs in Committee. That lies far beyond the law of limitation in negligence cases involving latent defects with which the Bill is concerned.
      I believe that the Bill represents a fair balance of the conflicting interests and I urge the House, although it has listened with the usual care to my hon. Friend the Member for Bolton, North-East on a matter in which he is deeply concerned and experienced, not to accept the amendment.
      Mr. Thurnham: I am grateful to my right hon. and learned Friend the Solicitor-General for his courteous and attentive replies both in Committee and on Report. I am not a lawyer and I am advised that some of the issues about which there is doubt will have to be tested in law. Time will pass before these matters are resolved; in other words, we shall have to wait and see. Accordingly, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 4

      TRANSITIONAL PROVISIONS
      Amendments made: No. 12, in page 6, line 8, after 'above', insert 'sections 1 and 2 of'.
      No. 13, in page 6, line II, at end insert—
      '(3) Section 3 of this Act shall only apply in cases where an interest in damaged property is acquired after this Act comes into force but shall so apply, subject to subsection (4) below, irrespective of whether the original cause of action accrued before or after this Act comes into force.
      (4) Where—

      (a) a person acquires an interest in damaged property in circumstances to which section 3 would apart from this subsection apply; but

      (b) the original cause of action accrued more than six years before this Act comes into force;

      a cause of action shall not accrue to that person by virtue of subsection (I) of that section unless section 32(I)(b) of the 1980 Act (postponement of limitation period in case of deliberate concealment of relevant facts) would apply to any action founded on the original cause of action.'. — [The Solicitor-General.]
      11.25 pm
      The Solicitor-General: I beg to move, That the Bill be now read the Third time.
      The Bill is a compromise — that has always been acknowledged — and we have been engaged in the difficult task of striking the right balance. The Bill came before us after having been examined carefully in another place, and it has received clear and careful scrutiny in this place from hon. Members on both sides of the House. The House will be especially grateful to my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) for bearing the heat and burden of the day for those with legitimate concerns in construction and other industries. He has been assiduous in drawing our attention to a wide range of problems that is faced by industry and appreciate his concern. I hope that I have dealt sensibly and fairly with it.
      The Bill will ensure, as far as possible, that potential defendants may confidently feel that after a definite period they may regard as finally closed incidents which might have led to claims being made against them. It is understandable that in the course of our debates reference has been made to the problems of insurance. I have taken up those references in what I have said to my hon. Friend the Member for Ilford, South (Mr. Thorne). These matters are currently under review as part of a separate initiative by the Building Economic Development Committee.
      Finally, I thank the hon. Member for Newcastle upon Tyne, East (Mr. Brown) for expressing the Opposition's support for the Bill. That is based, as the hon. Gentleman has made clear, upon their support for the careful consideration and recommendations of the Law Reform Committee.
      The Bill will bring about a substantial improvement to our law on the limitation of actions and I commend it to the House.
      11.27 pm
      Mr. Nicholas Brown: The Opposition welcome the Bill and wish it a speedy passage on to the statute hook. It attempts to strike as fair a balance as can be struck
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      between the interests of plaintiffs and those of defendants. That has been achieved by our efforts and, as I have said, 1 wish the Bill a speedy passage into law.
      11.28 pm
      Mr. Thurnham: Perhaps my right hon. and learned Friend the Solicitor-General will comment on whether the burden that he kindly referred to my carrying through the heat of our proceedings in Committee might have been shared a little earlier with the Government Department which it is intended should lift the burden from business in general.
      11.29 pm
      Mr. Neil Thorne: I thank my right hon. and learned Friend the Solicitor-General for his unfailing courtesy during our consideration of the Bill, as in all matters with which he deals, and for drawing the attention of the House to the fact that every hon. Member who has contributed to our debates on the Bill has had the interests of the consumer at heart. His acknowledgement of that fact is important, because it is ultimately the consumer who pays the bill. If professional advisers are not forthcoming because they find the burdens too great or because they cannot find adequate insurance, as has happened in certain spheres in the United States over recent years, it is the consumer who suffers. Perhaps on some future occasion it will be necessary to look into whether 15 years or 10 years is the right figure, because I understand that in the European Community there is a figure of 10 years. That is a matter for the future, and I am sure that my right hon. and learned Friend and his colleagues will follow that important aspect most carefully.
      Mr. Moate: During these proceedings some of us have made specific criticisms and suggestions in relation to the Bill. However, I hope that we will not lose sight of the fact that 1 and everybody else initially warmly welcomed the Bill in principle and welcome the new precision that is brought into matters that have been somewhat confused by various judgments in past years. Whether it remains precise once the courts nave had yet further bites of the cherry remains to be seen.
      I should like to address a specific question to my right hon. and learned Friend, and I am sure that, as usual, he will give me a specific answer. Will one of the implications be that henceforth all persons in commerce and Government should keep full records for a 15-year period? If that is so, can he confirm that Government Departments will, in future, keep all records for 15 years?
      The Solicitor-General: In answer to the point raised by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham), I have already confirmed that all relevant Government Departments were apprised of the provisions of the Bill before its introduction by my noble Friend the Lord Chancellor in another place and over a substantial period of years, there has been ample opportunity to comment upon matters that were within the purview of the Law Reform Committee.
      The keeping of records is a matter of prudence. I am a humble representative of the smallest Department in Government. Therefore, it is not for me to lay down rules of practice for greater Departments of State than any for which I have responsibility. It is obviously a matter of prudence for those who are responsible for work which may be liable to latent defect.

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      I am not terribly moved by criticism of a provision which, for the first time, brings a long-stop into our law. Under the present law, in theory it is possible for anybody who is responsible for a latent defect in work done for a consumer to be liable indefinitely. The Bill provides a long-stop. After 15 years, red railway signals flash and they prevent the plaintiff's train from leaving the marshalling yard from then on, subject to the one exception concerning concealment which we have already discussed.
      This is a benefit to employers and those who are in business. Everything that has been said has tended to suggest that it is some wicked imposition upon them. It is a benefit for which I feel that the Government have had scant credit——
      Mr. Nicholas Brown: Not from me.
      The Solicitor-General: From Conservative Members then. I am grateful for what has been said and for the care with which is has been expressed. I hope that what I have been able to say in answer to my hon. Friend the Member for Faversham (Mr. Moate) will satisfy him, at least for the moment.
      Question put and agreed to.
      Bill accordingly read the Third time, and passed, with amendments.

  Education (No. 2) Bill
  As amended (in the Standing Committee), considered.
  Education (No. 2) Bill
    New Clause 1

      REGULARISATION OF POOLING ARRANGEMENTS
      '(1) The Secretary of State shall make proposals, and any necessary consequential regulations required to implement such proposals, to ensure that the ILEA receives financial compensation for the difference between the contributions it has been required to make to the costs of advanced further education on the basis:—

      (a) as prescribed by section 6 of the Block Grant (Education Adjustment) (England) Regulations 1984; and

      (b) as prescribed by the equivalent regulations for earlier years;

      and those that would have been payable for those years had the basis of calculation for those years been that provided for in section 6 of the Block Grant (Education Adjustment) (England) Regulations 1986.
      (2) Subsection (1) above has effect in relation to the year 1982–83 or any subsequent year.'. — [Mr. Andrew F. Bennett.]
      Brought up, and read the First lime.
      11.34 pm
      Mr. Andrew F. Bennett: I beg to mop c. That the clause be read a Second time.
      I was told when I started to look at the Bill that it was a simple Bill, that it was non-controversial and that it was merely there to rectify anomalies. I accept that it is non-controversial. However, I do not accept that it is all that simple. What is a little more worrying is that it does not seem to have rectified all the anomalies which exist, especially in the pooling arrangements. For example, the 1981–82 pool has not yet been closed because there is doubt as to whether the Government have the legal powers to do it. In spite of pressure from the Association of Metropolitan Authorities and the Association of County Councils, the Government are still dithering. Will the Minister tell us whether he intends to deal with that in the House of Lords? It is an example of the way in which some local education authorities have been unfairly left worse off as a result of the pooling arrangements.
      The new clause deals with the specific way in which the Inner London education authority has lost out within the pooling arrangements since April 1982. In fact, after quite a lot of pressure from the ILEA, through the various committees that deal with pooling, it finally took action in the courts in 1985 and, of course, it won. In Committee, the Minister said that ILEA had not complained before it took court action. I am sure that he realises now that that was nonsense, and that the ILEA had raised that issue much earlier. I have letters to establish that, but I do not think that I need to read them to the House. I am sure that the Minister will accept that point.
      Since then, ILEA has been pressing not only that it should have got the money, which it did get, from the courts but that it should have got money for earlier years. Apparently the Government's argument is that they are not sure about whether they have the legal powers to make those retrospective payments. I hope that the Minister will accept that ILEA has been pressing for some time, and that letters went backwards and forwards between the Department and ILEA as early as 1983. The earlier representation was referred to in the court case, when it came on. Since ILEA was pressing much earlier, it has a

      137
      strong moral case for some retrospective payment. At least the new clause is an attempt to deal with the problem. The Government do not now have the excuse that there is no legislation. There is legislation before the House now. The Government have the chance to deal with it, and I hope that they will.
      I hope that the Government will also make it clear that they will use the Bill to clear up the rest of the pooling problems, particularly the 1981–82 pool, either now by accepting the new clause, or in the House of Lords, where the Government could draft it in a different form but retain the spirit of it. Perhaps by introducing another new clause to deal with the 1981–82 pooling arrangements, they can get rid of all the nagging anomalies in pooling and make good use of the measure.
      The Parliamentary Under-Secretary of State for Education and Science (Mr. George Walden): The hon. Member for Denton and Reddish (Mr. Bennett) has ingeniously raised two points under one new clause, but as I am in a generous mood, I shall deal with both.
      The first point concerning the 1981–82 pool. As the hon. Gentleman knows, advanced further education is financed through the AFE capped pool. The Secretary of State determines in advance of each financial year the total of AFE expenditure eligible for pooling. He also decides on how much of that total should be allocated to each local education authority following advice from the National Advisory Body. Exceptionally, in 1981–82, the method used involved the recalculation of the allocations once authorities' actual expenditure on AFE was known. The relevant information is now availble. But in the meantime it has come to light — this is the point that the hon. Gentleman made—that the legislation under which the capped pool is operated may not allow the recalculation to be carried through in the way that was originally envisaged. My Department is therefore examining ways forward in consultation with representatives of the local authorities in the pooling committee.
      The hon. Gentleman's point was: why should we not clear up the matter in the Bill? The problem over the 1981–82 AFE capped pool has come to light only recently. The Department put a proposal to the most recent meeting of the pooling committee, which did not find favour with local authority representatives. My right hon. Friend the Secretary of State was asked to look again, and that consideration is now under way. It may or may not point to a need for new legislation in due course. I hope that the hon. Member will note that. Therefore, it would be premature to seek to cover the point in the Bill. We are seeking much more important changes to pooling legislation — changes that are needed urgently if the pooling system is to continue its function.
      In other words, we must decide, first, whether legislation is needed, which is not yet established, and, secondly, whether time will allow that legislation to be appended, as it were, in another place to the Bill. Thirdly, we must beware of doing anything that for the reasons that the hon. Gentleman will be aware of could delay the progress of the Bill. There is a question of urgency which we discussed in Committee.
      Mr. Andrew F. Bennett: It seems to me that it would be possible to take powers to make regulations. I am not a great enthusiast for regulations. The Minister must accept
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      that, in sorting out local government finance in the year 1981–82, there is a certain measure of urgency that we do it within five or six years of the expenditure occurring.
      Mr. Walden: The hon. Gentleman is drawing a fine distinction between retrospective urgency and the more pressing urgency today, to which we are all subjected. I hope that he will take notice that we arc having discussions on the subject. The real point of the hon. Gentleman's amendment lies elsewhere.
      Last year, ILEA obtained judicial review of the decision of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) not to change, in respect of 1985–86, the formula which apportions contributions to the AIFE pools among local education authorities. The Divisional Court ruled that that was an unlawful decision in that my right hon. Friend had had regard to an irrelevant consideration. In recognition of that judgment, my right hon. Friend amended the relevant regulations to produce a new formula with effect from 1985–86. The new formula apportioned the contributions pro rata to the number of AFE students originating from each LEA area. That change had the effect of reducing (LEA's contribution by £31 million in 1985–86, and will have continuing effect. I should note, for completeness, that the new regulations are the Block Grant (Education Adjustment) (England) Regulations 1985, not 1986 as the new clause states.
      Last August, ILEA asked the Department to incorporate in the new formula to be applied in 1985–86 an allowance to rectify the injustice which the authority claimed to have suffered over a number of years as a result of the operation of the formula which the court had held to be unlawful. I describe that request in the authority's terms, not my own. My right hon. Friend the Member for Leeds, North-East refused. It has been asserted today that he did so on grounds that he lacked the powers to meet the request. The hon. Member for Denton and Reddish has moved the new clause to provide the necessary powers. However, I tell the House that my right hon. Friend considered ILEA's request carefully at the time. He refused it not only because he lacked the power to accede to it, but because he did not think it right to accede to it.
      Let me take the issues of law first. The primary legislation governing the education pools is schedule 10 to the Local Government, Planning and Land Act 1980. The schedule empowers the Secretary of State to make regulations specifying the "appropriate contribution" of each local eduction authority to the pools. The Secretary of State does not enjoy an unfettered discretion to determine what may be appropriate. The principle which the Divisional Court decided should be used in respect of 1985–86 was that the contribution should be related to the demand for AFE which an authority met in the discharge of its statutory responsibility. It is incompatible with that principle to incorporate in the formula a notional assessment relating to earlier years. That is not within the spirit of the court judgment which ILEA prays in aid.
      A further objection in law is that schedule 10 envisages the making of regulations to deal with AFE expenditure and contributions thereto year on year. It makes no provision for re-specification of contributions paid in respect of past years. The new clause is intended to change the position, but I ask the House to consider the consequences of a change with the retrospective effect which ILEA desires. First, there would be the technical difficulty—perhaps impossibility—of collecting the data

      139
      necessary to re-specify contributions originally made on a different basis. Then there would be financial disruption to all other local education authorities as a result of the financial transfers stemming from the revised contributions.
      What is the justification for asking other LEAs to put up with this disruption? I doubt whether the hon. Member for Denton and Reddish really means that the Secretary of State should ask them to do so. True, the new clause would put the Secretary of State under a duty to make proposals but he is under a duty also to implement them, apparently irrespective of the views of the parties to whom they are addressed. In all events, the Government must consider the effect on other LEAs, even if the Opposition apparently do not.
      The regulations in force in the years before 1985–86 were made in good faith and were laid before Parliament. They were not subject to legal challenge at the time. I should like to clarify what I said in Committee. 1 meant that the regulations were not challenged during the year when they were in force.
      Local authorities, including ILEA, took account of the pooling adjustments due under those regulations in fixing budgets and issuing rates or precepts for the years in question.
      Mr. Andrew F. Bennett: I am sure that the hon. Gentleman will accept that he received a series of letters from ILEA about that point before the court judgment. Surely, he would not expect local authorities to go to court first in such a complicated matter. They would normally make representations first, and only if they did not succeed would they go to court.
      Mr. Walden: The hon. Gentleman has answered his own question. I am grateful to him for doing so.
      The Government consulted the associations of county councils and of metropolitan authorities on the matter at the time. They were clear that a retrospective refund for ILEA from the pools would disrupt the finances of their members. In the light of their responses, we do not think it right to ask other LEAs to bear this burden, which would amount in total to a loss of about £75 million for all other authorities.
      The hon. Member implied that there would be no need to affect other LEAs if the Government made a special payment to ILEA from the Exchequer. But pooling is a system of inter-authority payments and an Exchequer payment of the kind envisaged would be unprecedented. If, as I have argued, there is no justificaton for asking other LEAs to bear this burden, still less would there be justification for imposing such an obligation on the taxpayer.
      Clauses 2 to 4 are essentially designed to enable the pooling system to continue to operate in a way that enjoys a consensus of support among local education authorities. The Bill as a whole is uncontentious and the House has treated it as such. It is not a suitable vehicle for enacting provisions which would be highly controversial among those whom they would effect, even if there were a case in principle for doing that.
      For those reasons, I ask the House to reject the motion.
      Mr. Andrew F. Bennett: I have listened to the Under-Secretary of State with considerable interest. I am not
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      certain that he is being fair to the Inner London education authority. The authority does not get credit for the good educational provision that it makes which benefits other people through the United Kingdom. It seems to have paid an undue proportion. It would have been helpful if the Government had considered a way of compensating it. The Government seem to be more enthusiastic about criticising the ILEA for what is provides rather than about meeting its finances.
      I do not believe that it would be appropriate at this stage to press the clause. I beg to ask leave to withdraw the motion.
      Motion and clause, by leave withdrawn.
      11.49 pm
      Mr. Walden: I beg to move, That the Bill be now read the Third time.
      The Bill deals with two separate topics. In both cases, its provisions are technical and uncontentious. I am grateful for the co-operation of the House in expediting the Bill's progress, and I shall not try hon. Members' patience by reiterating the technicalities and complexities to which the hon. Member for Denton and Reddish (Mr. Bennett) referred. I commend the Bill to the House.
      11.50 pm
      Mr. Robert Rhodes-James: Although I warmly welcome the Bill, I must repeat the point I made in Committee in relation to clause 1(2), which states:
      "In making a grant under this section the Secretary of State may impose conditions for any purpose mentioned in subsection (3)"—
      which are detailed—
      "and may also impose such other conditions as he thinks fit."
      As I said in Committee, that gives a Secretary of State excessive powers.
      My hon. Friend the Minister may say that there are precedents. Many years ago, when I was a Clerk in the House, I was on the Consolidation Bill Committee, which discovered that there was a precedent for the £5 note being illegal. It had been made illegal in 1914 and Parliament had forgotten to repeal the legislation. Millions of people had been illegally trading in £5 notes. This is not a trivial point. Giving powers to any Secretary of State in such terms requires careful consideration. Of course, I shall support this fine Bill, but I ask my hon. Friend the Minister seriously to consider with his colleagues whether, in the future, such powers should be incorporated into any Bill.
      11.51 pm
      Mr. Walden: I am aware from the remarks made in Committee by my hon. Friend the Member for Cambridge (Mr. Rhodes-James) and his anxiety about this phrase. In raising this matter, he is demonstrating a characteristic and commendable vigilance in relation to the way in which such phrases are used, and I sympathise with his sensibilities, to the point where I went back to my Department and asked why that wide-ranging phrase was used.
      In Committee, I tried to explain that the conditions in question are set out in the financial memoranda mentioned in the Bill. The Department draws up those memoranda in advance of the payment of grant to which they relate in consultation with the bodies concerned and with the agreement of the Treasury. My right hon. Friend the Secretary of State needs power to vary the conditions over time, because the circumstances—financial and other—

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      of the grant recipient may change. So, too, may the administrative and financial practices applicable to the expenditure of public funds. But I assure my hon. Friend that the Government do not make arbitrary or retrospective changes in conditions, nor would we alter the financial memoranda without giving the body concerned an opportunity to make representations on the proposed change.
      I hope that, with that assurance, my hon. Friend will be content with the clause. I have before me a formidable list of precedents with which I shall not bore the House, save to mention that the Education Act 1944 states that payment by the Secretary of State may be dependent on the fulfilment,
      "of such conditions as may he determined by or 'n accordance with the regulations."
      Mr. Rhodes-James: That is different.
      Mr. Walden: My hon. Friend says that that is different. I refer him—it will be very much to the forefront of his mind—to section 45 of the Sea Fish Industry Act 1970, concerning the herring industry board, which may make grants,
      "subject to such conditions as may he determined."
      I hope that I need not continue with the three pages of precedents and that my hon. Friend will he reassured by my remarks.
      Question put and agreed to.
      Bill read the Third time, and passed.

    BUSINESS OF THE HOUSE
    Ordered,
    That, notwithstanding the practice of the House as to the intervals between stages of Bills brought in upon Ways and Means Resolutions, more than one stage of the Finance Bill may he taken at any sitting of the House. — [Mr. Peter Lloyd.]

  Horticulture (Lea Valley)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Lloyd.]
  11.54 pm
  Mrs. Marion Roe: I sought this debate to draw attention to a number of important matters that affect the horticulture industry and particularly the glasshouse sector in the Lea Valley in which my constituency lies.
  The fortunes of the glasshouse industry have been steadily improving since the disastrous year of 1981 when all commodities in the sector traded very badly. Despite the fact that current trading profits are marginal, significant renovation and rebuilding of glasshouse structures, improvements in the efficient use of fuel and advances in marketing initiatives and co-operation have helped the industry to face the future with increased confidence. Much of that has been the result of enterprise by growers, but I stress that Government grant aid to the industry has also played a significant part.
  However, the trading position of growers is getting worse in relation to foreign competition. The figures for penetration of imports are worrying. Between 1976 and 1985, imports of cucumbers and tomatoes nearly doubled and those of lettuces and endives became seven times as great.
  The Lea Valley produces 43 per cent. of the United Kingdom's output of cucumbers. Indeed, two thirds of growers' acreage is given over to them and such an increase in imports is bound to damage the industry. Similar figures can be given for imports of carnations, chrysanthemums, roses and other cut flowers.
  The biggest worry for growers is the accession of Spain and Portugal to the EC. Although there will be a 10-year transitional period, during which the trade harriers between Spain and the Community will be dismantled, the horticulture industry still feels that it will be at a significant disadvantage at the end of that period. The reasons are obvious. The Spanish industry is far larger, Spain enjoys substantial climatic advantages, so crop heating is riot significant, and labour costs are lower.
  Ancillary to the problems caused by the enlargement of the EC are the additional arrangements being made with Mediterranean countries outside the EC in respect of imports of horticultural produce into the Community. That adds problems to a situation in which many horticultural products in this country are often in a state of seasonal oversupply.
  Two examples illustrate the difficulty. In early April this year, the Community reference price for tomatoes was not published. A large quantity of Canary Islands and other third country tomatoes flooded our market at a time when demand was low owing to exceptionally cold weather and at precisely the time that the United Kingdom grower requires high prices to compensate him for the high energy use that winter and spring necessitate. The high countervailing duties now imposed illustrate the degree to which those imports were undercutting United Kingdom prices. Added to that problem was the fact that there were insufficient Her Majesty's inspectorate staff to ensure that the quality of tomatoes was properly maintained.
  Secondly, in the week before St. Valentine's day, such large numbers of flowers were imported from Israel that the market for United Kingdom growers was ruined and

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  it has also been regularly disrupted on other occasions. It was an extreme example of the difficulties faced by growers when imports depress prices to such an extent that those growers cannot compete and stay in business.
  The accession of Spain and Portugal to the EC is a fact. There can be no question of trade barriers within the Community. But the industry needs to know what attitude the Government have towards EEC Commission proposals to give further concessions to non-EEC Mediterranean countries. In order to give sufficient protection to Community growers, there should be quantity limits on all products which benefit from tariff concessions and there should be an effective price safeguard for those products not covered by the reference price system.
  With regard to the expansion of the EEC, it is worth examining in what ways the industry can be assisted so that when the full impact of the membership of Spain and Portugal is apparent, growers are in the best position to compete.
  There are already a number of mechanisms for the support of United Kingdom horticulture. United Kingdom growers voted substantially in favour of a Horticulture Development Council, and I welcome the setting up of the council to finance horticultural research and development. The council will have a majority of grower members—that is only right since it is growers who will pay the levy. It is heartening to see the commitment that growers have shown to the future by investing in research and development. Horticulture is setting an example to the rest of agriculture.
  The Government, too, should demonstrate their commitment to the industry's future through publicly funded research, development and advisory activities. The Lea Valley growers very much regretted that the Government did not fully consult the industry before making cuts in ADAS activities such as the recently announced closure of the plant pathology unit and a reduction in other work at the Lea Valley Research Station. They hope that in future there will be close cooperation between the public sector decision takers and the industry—as represented by the National Farmers Union and the Horticulture Development Council—over such matters.
  As I mentioned earlier, schemes for grant aid have been a crucial factor encouraging investment in the glasshouse industry over the last five years. Current schemes come to an end in 1988, and while much work has been done, the task of bringing the industry up to date will take much longer. I hope that arrangements to provide grant aid beyond 1988 can be made. I should like to raise one point for consideration within that.
  There is a trend towards rationalisation in the industry, as larger operations are more competitive and are better placed to face the future. Given this, the current investment limit, for the purposes of grant, of £136,000 is not appropriate. It is barely enough to rebuild one and a half acres of glass, which is not significant for growers with a larger acreage. I therefore urge the Government to try to persuade other Community members to adopt a more realistic grant ceiling.
  Other incentives should be given through the tax system. In the United Kingdom, the depreciation allowance for tax purposes of glasshouses is set at an
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  annual rate of 4 per cent.; for plant and equipment, it is fixed at 25 per cent. The small budget concession that on sale or destruction the remaining value of buildings can be written off is welcome for agriculture, but it is not significant for the glasshouse sector, especially when placed alongside arrangements that exist in competitor countries.
  In Holland, the Dutch may write down annually 18 per cent. on glasshouses, 23 per cent. on heating systems, irrigation and other machinery, and 30 per cent. on lighting, CO , generators, thermal screens and climate control computers. Those figures give a proper incentive to gear up and modernise, and we would do well to consider something similar. Perhaps this problem can be addressed in conjunction with the discussions between glasshouse manufacturers and the Ministry of Agriculture, Fisheries and Food relating to a new British Standard for glasshouses which will redefine both specifications and the life-span of buildings.
  A final point needs to be addressed. With the defeat of the Shops Bill recently, hopes for sensible arrangements for nursery and garden centre trading hours received a severe setback. I need not run through the arguments with which we are all too familiar. Suffice it to say that Sunday is the most important day of the week for garden centres.
  Gardening is a major leisure activity, a fundamental part of the modern family Sunday. The enterprise of growers who sell their produce and the so-called inanimate products that go with it such as peat, compost, tools, fencing and other things, should not be stifled under the weight of more contentious arguments. The expansion of the industry, the jobs of those who work in it and the satisfaction and pleasure that their produce bring, all depend upon reform. I hope that the Ministry of Agriculture will give firm backing to any proposal to achieve such reform.
  Mr. Deputy Speaker (Mr. Harold Walker): Does the hon. Gentleman have the consent of the Minister and the hon. Member for Broxbourne (Mrs. Roe)?
  12.3 am
  Sir John Wells: Yes. Mr. Deputy Speaker. I shall be brief.
  I support my hon. Friend the Member for Broxbourne (Mrs. Roe) in all that she has said. She has described her Adjournment debate as being limited to her own constituency, but everything she has touched upon affects horticulture throughout Britain.
  Although under the rules of the Adjournment debate we cannot ask for legislation, it is open to Back Benchers to bring in ten-minute Bills or behind-the-Chair Bills and such like under our own steam. I hope that my hon. Friend the Member for Broxbourne or some other hon. Member will endeavour to remedy the defects that my hon. Friend spoke about in the last few sentences of her admirable speech.
  The present Sunday trading ban is deplorable in its effect on horticulture, because horticulture is suffering from increasing competition from agriculture generally, and all our friends in horticulture are fearful of the pressures coming upon them. It behoves the House as a legislature in whatever sphere of activity it is operating to assist that sector of agriculture that gets minimal support from Government. The people in the industry are not using taxpayers' money but are doing a good job and they need our support.
  12.9 am
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I congratulate my hon. Friend the Member for Broxbourne (Mrs. Roe) on her fine speech and on the skilful way in which she brought the glasshouse industry in the Lea valley and the challenges it is facing to the attention the House.
  I am also mindful of the comments of my hon. Friend the Member for Maidstone (Sir J. Wells). He was assiduous, as was my hon. Friend the Member for Broxbourne, in defence and support of horticulture. The Government are, of course, aware of many of the points mentioned by my hon. Friends and I am glad to have this opportunity to explain the Government's attitude to them.
  I assure the House that the Government are fully aware of the value of a healthy and prosperous glasshouse industry, both nationally and particularly to the local economy of the Lea valley. Of course, the industry operates within a market economy and the prime determinant of its success is the ability and enterprise of those directly engaged in it. I congratulate the industry on its contribution to our economy, both nationally and in the Lea valley, where it is especially important. While the Government can help in particular ways, I regard our role mainly as one of ensuring that the industry is able to operate in conditions of fair competiton to meet the demands of the market place in terms of both quality and quantity.
  I should like to mention some of the specific ways in which the Government provide help to the glasshouse industry. They provide capital grants, the full repayment of excise duty on oil used for glasshouse heating and soil sterilisation, a concession not available to any other sector, a comprehensive programme of research and development and technical advice through ADAS.
  In the context of Government aid I should like to dwell a little on capital grant schemes. In our manifesto we made a particular commitment to
  "help the glasshouse industry to sell more fruit and vegetables, and to make use of the best possible arrangements for heating and insulation".
  In November 1983, my right hon. Friend announced that enhanced rates of grant would be available for a limited period to encourage the more efficient use of energy in the glasshouse sector. Such grants cover the replacement or improvement of existing heated glasshouses, including thermal insulation. Grants of up to 50 per cent. are available for this work within an investment ceiling, as my hon. Friend quoted, of up to £136,000. Although grants on machinery and plant and equipment generally were removed at that time, those for boilers and energy-saving equipment for glasshouses and facilities for the market preparation of harvested horticultural produce being sold fresh were retained. The House will be aware that last October new capital grant regulations were introduced to implement the new EC structures directives. Although the general rate is 15 per cent., with an investment ceiling of £50,000, we were very pleased to be able to continue the favourable rates and the ceiling available to horticulture.
  We introduced these grants in recognition of the special needs of the glasshouse industry to re-equip itself with modern energy-efficient glasshouses. The situation of our glasshouse industry did improve, as my hon. Friend agreed, but last year I am afraid that it suffered from the poor summer. The demand for salad crops depends very
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  much on the weather, and last year's miserable summer made one more inclined to eat hot-pot than salads. The poor demand led to low prices in 1985; and with the sharp rise in energy costs during the heating season of 1984 it was a poor year and many growers lost money on the crop. This season's growing costs have been reduced by the substantial reduction in oil prices, and with normal market conditions we would expect financial returns to be significantly better. The cool weather up to a few weeks ago gave the growers a poor start, but the great improvement in the last few weeks has made the salad crop very popular. I am sure we all hope that the summer continues to favour that crop, for the growers' sakes as well as for our own.
  My hon. Friend mentioned one particular concern of the glasshouse industry: the effect of the accession of Spain and Portugal to the European Community. We are mainly concerned here with the beginning and the end of our growers' marketing season for protected crops, when there is an overlap with production in the Iberian peninsula. As my hon. Friend is aware, various measures have been taken to ensure a smooth transition to full membership of the Community for Spain and Portugal. The main element of these measures is an extended transition period of 10 years for fruit and vegetables, as opposed to seven years for most other sectors.
  During the first four years of this transition there will be annual reductions of 10 per cent. in tariffs, but the reference price system, which is effectively a minimum import price system, will continue to apply. In the second phase of six years the reference price system will be phased out in six stages. However, I hope that my hon. Friend will draw reassurance from the fact that during this second phase there is provision for what is described as a "supplementary trade mechanism" to be introduced so as to regulate any increase in Spanish and Portuguese exports of fruit and vegetables into the Community to avoid disruption to markets.
  Those of us who know the horticulture industry are constantly impressed by the innovation and enterprise shown by our leading growers, and I feel confident that they will meet the challenges of competition from Iberia.
  I know, too that some growers are concerned about the negotiations going on in Brussels about the trade agreements with Mediterranean third countries. As the House will know, the Community has close political and economic links with non-member countries in the Mediterranean area. Last year the European Council issued a declaration that the Community would seek to negotiate revisions to the agreements aimed at maintaining traditional trade flows. The discussions going on now are to prepare a revised mandate for the Commission's second round of negotiations with Mediterranean third countries.
  I know that some concern has been expressed that these discussions are going on behind closed doors, but I am sure the House will appreciate that details of the Community's negotiating position have to be kept confidential. Nevertheless, my officials have met the NFU to show the way in which the discussions are going and to ensure that we are fully aware of its particular concerns. The point I should like to emphasise most strongly to my hon. Friends is that we have been very mindful of our growers' interests in the negotiations. My right hon. and noble Friend the Minister of State has taken a close personal interest in the progress of these negotiations—as I may say he does in all matters horticultural. At present

  147
  the negotiations have become bogged down by Spanish demands for special measures to help the Canary Islands. I can assure the House that on this, as on other aspects of the negotiations, we shall take all possible steps to safeguard our growers' position.
  I applaud my hon. Friend's support for what the Government regard as a major development in the horticulture industry. I refer to the establishment of the Horticultural Development Council. Less than two weeks ago the order setting up the council received support from both sides of both Houses, and I and my right hon. Friends are delighted that Mr. Frank Thomlinson has agreed to become the first chairman. We are in the process of appointing other members, and we hope that the council will be able to have its first meeting within the next two or three weeks. I wish the council well in the task of commissioning research and development work to benefit the horticultural industry, including the glasshouse sector.
  My hon. Friend mentioned the Commission's failure to set a reference price for tomatoes on 1 April. The Commission claims that, because of the Easter holiday, it was unable to have the regulations translated and published in time, and we have left it in no doubt that we are not impressed by its performance. As it happens, the Canary tomatoes that came to the United Kingdom when the reference price should have been in operation were not sold below the reference price levels.
  148
  My hon. Friend was concerned about the flower prices in the run-up to St. Valentine's day, and she was right to say that they were poor. The Israeli suppliers were partly to blame, and this was a misjudgement on their part. They have no interest in selling at very low prices, because they have to pay a tariff of 17 per cent.
  My hon. Friend was concerned about the changes at the Cheshunt pathology unit. I can assure her that that work will in future be provided from the regional office in Cambridge. There are good communications between these two centres, so the quality and the speed of service will not be affected. The Cheshunt office, although it loses a scientific officer, has three horticultural advisers, who will be retained, and thus the unit will continue to provide a full glasshouse advisory service to growers in the Lea valley.
  My hon. Friend referred to the Sunday trading Bill, but she will not expect me to enlarge on that, as the House has defeated the Bill, and it is not for me now to be defending it.
  I hope that what I have said goes some way to assuring the House and my hon. Friends about our concern that horticulture in the Lea valley continues and its profitability improves. The hard work and enterprise of those with businesses there certainly deserves success, and I have no hesitation in joining my hon. Friends in wishing them that success.
  Question put and agreed to.
  Adjourned accordingly at nineteen minutes past Twelve o'clock.

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  County Courts (Damages Claims)
  High Court (Damages Claims)
  High Court (Damages Claims)
  Road Accidents
  Road Accidents
  Terrorism (Murders)
  Terrorism (Murders)
OVERSEAS DEVELOPMENT
  Uganda Police (Aid)
  Uganda Police (Aid)
  South Africa (EEC Aid)
  South Africa (EEC Aid)
  Bilateral Aid Projects
  Bilateral Aid Projects
  Aid and Trade Provision
  Aid and Trade Provision
ENERGY
  Coal Mining Subsidence
  Coal Mining Subsidence
  Northumberland Coalfield
  Northumberland Coalfield
  Power Stations (Coal Supplies)
  Power Stations (Coal Supplies)
  British Gas
  British Gas
  Alternative Energy Authority
  Alternative Energy Authority
  Coal Imports
  Coal Imports
  Petrol Prices
  Petrol Prices
  Sizewell Inquiry (Report)
  Sizewell Inquiry (Report)
  Electricity Generation (Nuclear Reactors)
  Electricity Generation (Nuclear Reactors)
  Combined Heat and Power District Heating
  Combined Heat and Power District Heating
  National Coal Board
  National Coal Board
  Electricity Supply
  Electricity Supply
  Gas Levy
  Gas Levy
  Israel (Oil Sales)
  Israel (Oil Sales)
  Tidal Power Schemes
  Tidal Power Schemes
  Coal Industry
  Coal Industry
  Oil Prices
  Oil Prices
  Energy Efficiency Year
  Energy Efficiency Year
  Gas Prices
  Gas Prices
  Power Stations (Oil Supplies)
  Power Stations (Oil Supplies)
  Magnox Reactors
  Magnox Reactors
  Hinkley Point Power Station (Incident)
  Hinkley Point Power Station (Incident)
  Fast Reactor
  Fast Reactor
  Rutherglen Explosion (Replacement Work)
  Rutherglen Explosion (Replacement Work)
  Magnox Nuclear Power Stations
  Magnox Nuclear Power Stations
  Coal Imports
  Coal Imports
SCOTLAND
  Power Stations (Oilburn)
  Power Stations (Oilburn)
  Small Firms
  Small Firms
  Microelectronics Industry
  Microelectronics Industry
  Glasgow, Rutherglen
  Glasgow, Rutherglen
  Job Creation (Glasgow)
  Job Creation (Glasgow)
  Strategic Defence Initiative
  Strategic Defence Initiative
  Pentland Regional Park
  Pentland Regional Park
  Women Police Surgeons
  Women Police Surgeons
  Universities (Funding)
  Universities (Funding)
  Planning Permission
  Planning Permission
ENVIRONMENT
  Planning Appeals
  Planning Appeals
  Town and Country Planning Act 1947
  Town and Country Planning Act 1947
  Green Belt
  Green Belt
  Southend Pier
  Southend Pier
  Homeless Persons
  Homeless Persons
  London (Owner-Occupation)
  London (Owner-Occupation)
  Liverpool (Ministerial Visit)
  Liverpool (Ministerial Visit)
  Thamesmead
  Thamesmead
  Commons Legislation
  Commons Legislation
  Travellers' Caravans (London)
  Travellers' Caravans (London)
  Lower Leigh, Churchstow, Kingsbridge
  Lower Leigh, Churchstow, Kingsbridge
  Housing Defects Act 1984
  Housing Defects Act 1984
  Deck Access Dwellings
  Deck Access Dwellings
  Bradeley, Stoke on Trent
  Bradeley, Stoke on Trent
  Property Services Agency
  Property Services Agency
  Council House Starts (London)
  Council House Starts (London)
  British Geological Survey
  British Geological Survey
AGRICULTURE, FISHERIES AND FOOD
  Cereals
  Cereals
  Fishing Industry
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  Food Stocks
  Food Stocks
  EC Trade Barriers
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  European Community (Food Products)
  European Community (Food Products)
EDUCATION AND SCIENCE
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  Dyslexia
  Dyslexia
EDUCATION AND SCIENCE
  Science and Engineering Research Council
  Science and Engineering Research Council
  Strategic Defence Initiative
  Strategic Defence Initiative
  Kidsgrove Primary School
  Kidsgrove Primary School
  Liverpool University (Ministerial Visit)
  Liverpool University (Ministerial Visit)
  Speech Therapy Training
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  School Playing Fields
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  Universities (Revenue)
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  Student Grants
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HOME DEPARTMENT
  Castington Youth Custody Centre
  Castington Youth Custody Centre
  London Fire Brigade
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  Central London (Road Closures)
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  Dr. Skuse
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  Day Fine System
  Prison Workshops
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  Bail Hostels
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  Diplomats (Breathalysers)
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  Lynne Marsland
  Lynne Marsland
  Libyan Students
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  Firearms Certificates
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  Bail (Refusal)
  Bail (Refusal)
FOREIGN AND COMMONWEALTH AFFAIRS
  Falkland Islands
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  British Overseas Citizens
  British Overseas Citizens
  Senor Juan Eduardo Fleming
  Senor Juan Eduardo Fleming
  Council of Foreign Ministers (Chairmanship)
  Council of Foreign Ministers (Chairmanship)
  Diplomats (Drink-Driving Offences)
  Diplomats (Drink-Driving Offences)
  European Commission Directives
  European Commission Directives
  FB111 Aircraft
  FB111 Aircraft
  Namibia
  Namibia
  Departmental Administrative Structure
  Departmental Administrative Structure
HOUSE OF COMMONS
  South Africa (Products)
  South Africa (Products)
SOCIAL SERVICES
  Hospital Statistics
  Hospital Statistics
  NHS Hospitals (Linen)
  NHS Hospitals (Linen)
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  Hostels
  Hostels
  Mileage Allowance
  Mileage Allowance
  Single Payments
  Single Payments
  Fair Rents
  Fair Rents
  Home Helps
  Home Helps
  Cancer (Smear Testing)
  Cancer (Smear Testing)
  Well Women Clinics
  Well Women Clinics
  Women Patients (Statistics)
  Women Patients (Statistics)
  Tranquillisers
  Tranquillisers
  Cervical Cancer
  Cervical Cancer
  Body Positive
  Body Positive
  Health Authorities (Employment)
  Health Authorities (Employment)
  Pharmaceutical Companies
  Pharmaceutical Companies
  Pharmaceuticals (Investment)
  Pharmaceuticals (Investment)
  Neuro Fibromatosis
  Neuro Fibromatosis
  Clinical Academic Staff
  Clinical Academic Staff
  Girocheques
  Girocheques
  London Teaching Hospitals
  London Teaching Hospitals
  Ombudsman (Wythenshawe Estates)
  Ombudsman (Wythenshawe Estates)
  Occupational Mortality
  Occupational Mortality
  Rate Rebates
  Rate Rebates
  Speech Therapists
  Speech Therapists
  Management Consultants
  Management Consultants
  Hearing Aids
  Hearing Aids
  Smoking
  Smoking
  Medicines Inspectorate
  Medicines Inspectorate
  NHS (General Managers)
  NHS (General Managers)
  Complex Lenses
  Complex Lenses
  Medical Records (Patients' Rights)
  Medical Records (Patients' Rights)
  North-Western RHA (Computers)
  North-Western RHA (Computers)
NATIONAL FINANCE
  Civil Service
  Civil Service
  Financial Management Initiative
  Financial Management Initiative
  Mortgages
  Mortgages
  Value Added Tax
  Value Added Tax
  Tax Arrears
  Tax Arrears
  Gay's the Word Bookshop
  Gay's the Word Bookshop
  Monetary Aggregates
  Monetary Aggregates
  Shipping
  Shipping
  Investment Promotion
  Investment Promotion
NORTHERN IRELAND
  Fair Employment Act (Northern Ireland) 1976
  Fair Employment Act (Northern Ireland) 1976
  Terrorism
  Terrorism
  Michael Tighe (Tape)
  Michael Tighe (Tape)
  Lost Working Days
  Lost Working Days
  Labour Statistics
  Labour Statistics
  Discrimination
  Discrimination
THE ARTS
  Museums (Insurance)
  Museums (Insurance)
  Young People (Musical Performance)
  Young People (Musical Performance)
  National Museums and Galleries Act 1964
  National Museums and Galleries Act 1964
  Musical and Theatrical Companies (Rural Tours)
  Musical and Theatrical Companies (Rural Tours)
  Museums (Charges)
  Museums (Charges)
  Sadler's Wells Theatre
  Sadler's Wells Theatre
  Public Lending Rights
  Public Lending Rights
  Free Library Service
  Free Library Service
  Business Sponsorship Incentive Scheme
  Business Sponsorship Incentive Scheme
CIVIL SERVICE
  Civil and Public Services Association
  Civil and Public Services Association
  Civil Servants
  Civil Servants
DEFENCE
  USSR (Backfire Bombers)
  USSR (Backfire Bombers)
  Vessel Design (S-90)
  Vessel Design (S-90)
  Management Consultancy
  Management Consultancy
  Civilian Manpower
  Civilian Manpower
  Strategic Defence Initiative
  Strategic Defence Initiative
  Royal Ordnance Factories
  Royal Ordnance Factories
  Defence Equipment (Sri Lanka)
  Defence Equipment (Sri Lanka)
  Prince of Wales (Wedding)
  Prince of Wales (Wedding)
  Mallet Blow Exercises
  Mallet Blow Exercises
  US Nuclear Bombers
  US Nuclear Bombers
  Trade Unions
  Trade Unions
  Procurement Contractors (Mergers)
  Procurement Contractors (Mergers)
  Virgin Atlantic Challenger
  Virgin Atlantic Challenger

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

Mergers: Public Policy Review
Lord Campbell of Alloway: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether redefinition of "public policy" within the jurisdiction of the Monopolies and Mergers Commission, as applied to both monopolies and mergers, lies within the ambit of the terms of reference of the review body on mergers and restrictive practices set up by the Secretary of State for Trade and Industry on 5th June 1986.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, the review is to examine all aspects of law and policy on mergers and restrictive trade practices, including the statutory definition of the public interest as it applies to mergers. Policy on monopolies does not fall within the scope of the review.
Lord Campbell of Alloway: My Lords, while thanking my noble friend the Minister for that unexpected reply, may I ask whether he is aware that the subject which his Answer has excluded from review has been accepted as ripe for a fall since the days when the noble Lord, Lord Cockfield, answered at that Dispatch Box and before? That being so, may I further ask him whether the terms of reference may not be extended to include redefinition of public interest in the context of monopolies?
Lord Lucas of Chilworth: My Lords, it is clear that mergers and restrictive practices legislation are the areas that at present are of most concern, and it is right that the review should concentrate on these particularly regarding the definition of public policy.
Lord Williams of Elvel: My Lords, is the noble Lord aware that in recent days we have had several Bills in this House which have sought to define the public interest for that particular purpose? I refer, for instance, to the Gas Bill, the Airports Bill, and indeed other Bills. We are now in a state where the public interest to which the Monopolies and Mergers Commission is required to address itself has several different definitions for several different purposes. Is it not right therefore that the review should decide where and how the public interest should be defined, and that this should be properly codified?
Lord Lucas of Chilworth: My Lords, it is in the areas of mergers and restrictive trade practices legislation that the definition of public interest is causing the most concern. As regards special arrangements for regulating privatised areas, I think that at the moment it would be inadvisable to disturb those arrangements since the regulations are so newly in force.
Lord Campbell of Alloway: My Lords, leaving aside for one moment—though I do not know why one should—the question of the privatisation Bills (as they are called), surely this subject, which has been ripe for a fall for many years, ought to be included in these terms of reference. Can my noble friend the Minister convey a hint to his right honourable friend that perhaps the review might be extended?
Lord Lucas of Chilworth: My Lords, as I have sought to explain, it is the areas of mergers and restrictive practices that are giving the most cause for concern. Therefore it is right that the review should concentrate on these areas. If anything should follow from that, of course it will be dealt with. I can give my noble friend the assurance that I shall do more than hint to my right honourable friend. I shall certainly convey to my right honourable friend the concern that my noble friend and others have in this regard.

Housing Management: Council Stock
2.40 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 whether they have recently received an Audit Commission report on Britain's council housing stock, and if so, what conclusions does it reach.
Lord Skelmersdale: My Lords, Her Majesty's Government have never received an Audit Commission report on Britain's council housing stock per se. However, in March this year the Government received copies of the Audit Commission's report on council house management subtitled Managing the Crisis in Council Housing. The commission concluded that many authorities could achieve substantial benefits for both tenants and ratepayers through the better use and management of their existing housing stock, from better financial controls, and by attracting private sector funds.
Lord Dean of Beswick: My Lords, I am grateful to the noble Lord for that reply. However, is he aware that on 20th June the very responsible magazine Building published an article which stated that the Audit Commission had recently submitted a confidential report showing that a further £750 million a year was required to be spent in order to repair and renovate council housing stock, in addition to the £ 19 billion called for in its original report to which the noble Lord referred? When will we get some action from the Government in this matter?
Lord Skelmersdale: My Lords, in answer to the noble Lord, Lord Dean, as I said in my original reply, we have not received any such report from the Audit Commission. Although the mazagine Building states that there is one available and it may well arrive, up to this morning we certainly had not received it.
Lord Cledwyn of Penrhos: My Lords, I hope that the House will forgive me for following so closely upon my noble friend's Question, but the noble Lord indicated that the report from the Audit Commission—which is a most responsible and important body upon which the Government depend for much of their advice in the area of local government—has said that there is a crisis in council house building; indeed that was the subtitle of the report. Do the Government acknowl-edge that there is a serious crisis, as the Opposition has been representing for a very long period of time? If so, what steps are the Government taking to deal with the crisis?
Lord Skelmersdale: My Lords, the report to which I referred, Managing the Crisis in Council Housing, is about the management of the existing position. It suggests ways, such as those that I outlined, in which councils can help themselves within their overall budgets to produce a better and more cost-efficient result.
Lord Mellish: My Lords, even without a report, is the Minister not aware that certainly in inner London in a large number of boroughs the council housing stock is in a deplorable condition? Thousands of houses are empty and squatters have moved in. It is a thorough disgrace, whether it is due to bad management or to lack of funds. Something must be done. The Government cannot just leave it like that.
Lord Skelmersdale: My Lords, I accept that housing in Britain today is in a state that none of us would wish, but most of the problems are due to its management. I think that I am right in saying that in the past two years local authorities have spent £2½ billion on repairs and maintenance. As we know, that does not appear to have achieved much of a result. I am led to the conclusion that too many authorities play politics with housing. It is about time that they considered the needs of their tenants.
Lord Dean of Beswick: My Lords, in order to give the House an idea of what the Government's response is, can the Minister tell us whether it is correct that the previous Secretary of State for the Environment put in a bid for an extra £1.25 billion for local authority housing, which has been reduced by Mr. Ridley, his successor, by £0.25 billion? Is that the Government's answer, to turn their back on the problem by reducing bids?
Lord Skelmersdale: My Lords, the noble Lord is falling into the trap that is common at this time of the year of speculating on the discussions taking place on detailed planned spending for the following year. All sorts of speculations exist, but no member of the Government can tell the House what the outcome of the discussions will be.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that the shortage of houses to let in inner London and greater London has led to a phenomenal increase in prices, far above the rate of inflation? Until adequate housing is provided, values in London and the South will be far too high for the average purchaser.
Lord Skelmersdale: My Lords, that is one effect of the shortage. Another factor is that many people come to the South-East to pursue employment and therefore need houses. It is no secret that we are looking at ways to diversify the pattern of the rented sector—indeed, that is already under way—for example, by housing trusts and tenants' co-operatives, and in direct provision by building societies, as we discussed last Thursday in connection with the Building Societies Bill. I accept that much more needs to be done, but I welcome the fact that the Halifax Building Society estimates that, with the provisions in the Bill, it could build 3,000 houses a year for rent in needy areas by 1990.
Baroness Gardner of Parkes: My Lords, can the Minister tell us the amount owing in rent arrears in the London area for council accommodation and whether anything can be done to resolve a situation which is unfair to those tenants who are paying their rent?
Lord Skelmersdale: My Lords, the report makes the valid point that average rents do not cover outgoings. The phasing of any increase in rent levels would need careful consideration, but since at least 50 per cent. of local authority tenants receive some form of housing benefit, more realistic rent levels would not hit the financially disadvantaged. The Government are considering those issues and the public expenditure implications of increases in rent levels.
Lord Diamond: My Lords, the noble Lord will be aware that the Audit Commission report refers to "the crisis" and not to the management of housing. First, do the Government accept that description? Secondly, the noble Lord made an extraordinary point, suggesting that a number of local authorities were playing politics instead of repairing houses. I am sure that he did not intend that to be a general smear. Therefore, will he be good enough to write to me with a list of the authorities to which that description applies and also put a list in the Library?
A noble Lord: Withdraw!
Lord Skelmersdale: I shall not withdraw, my Lords. In a supplementary question to a similar Question a couple of weeks ago my noble friend Lady Macleod drew attention to a Southwark councillor who admitted in, I think, the evening paper that there were 2,000 lettable empty houses in Southwark. But I shall of course accede to the noble Lord's request to furnish him with a full list and put a copy in the Library. We have here what is a subjective term in respect of housing. Certainly housing is in a serious state, but I am not sure that I would dignifiy it with the description "crisis".
Lord Mellish: My Lords, if it is any contribution to the debate that we are now having on housing, it is a fact that Southwark has declared that £24 million is owed to it by tenants. What will be done about that by the Government or by Southwark? If the Minister is in the mood, would he like to make a comment about direct labour?
Lord Skelmersdale: My Lords, I am sorry—a comment about what?
Lord Mellish: My Lords, direct labour.
Lord Skelmersdale: My Lords, no, I do not think that within the relevance of this Question I can realistically be expected to get on to direct labour, on which, like the noble Lord, I have fairly strong views. If it is true that in Southwark £24 million is owed in back rents, that is an absolute scandal and disgrace.
Lord Underhill: My Lords, is the noble Lord aware that he has not properly replied to the point raised by the noble Lord, Lord Diamond, as to whether he has made a general criticism and condemnation of the management of housing by all local authorities? Have there been discussions with the local authority associations on that matter, and, if not, will there be?
Lord Skelmersdale: My Lords, I was making a general point, but the general point naturally did not
6
cover all local authorities. Obviously there are good local authorities and bad local authorities.

NATO Role: US Proposal
2.51 p.m.
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have studied the "world policeman" role proposed by American Defence Secretary Weinberger for NATO and whether they will join other NATO members in rejecting such a notion.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, Article 6 of the North Atlantic Treaty of 4th April 1949, as modified by Article 2 of its protocol of 22nd October 1951, defines the geographical limits within which an armed attack on the territories, forces, vessels or aircraft of any of the parties to the treaty shall be considered an attack against them all. The national interests of various allies are not of course confined to the treaty area. They therefore have a legitimate interest in promoting stability in other parts of the world and their activities to this end contribute to the security interests of the Alliance.
Lord Jenkins of Putney: My Lords, is the noble Baroness aware that Mr. Weinberger's proposal is that NATO forces as such shall extend their activities outside the area which she has just defined? In effect, they would take upon themselves the role of world policemen prepared to put down whatever they see to be undesirable in any part of the world. Does she recognise that that is a development that has caused some concern among NATO members? Will she associate herself with that concern and say that we want NATO to continue to operate within the limit it has held for so many years, and not outside it?
Baroness Young: My Lords, the Government have no wish to see any change to the NATO area as defined in the North Atlantic Treaty of 1949 and its protocol of 1951. No NATO country has commented on Mr. Weinberger's speech. Of course, individual NATO countries have out-of-area interests.
Lord Cledwyn of Penrhos: My Lords, is it not the case that the Weinberger proposal emerges from the so-called United States maritime strategy? What is Her Majesty's Government's attitude to the United States maritime strategy, and has it been discussed within NATO?
Baroness Young: My Lords, the speech to which this Question refers was made at a symposium at Annapolis in Maryland. We of course regularly discuss aspects of foreign and defence policy with the American Government. I think that the noble Lord is referring to the United States exercises in the Pacific—Rimpac—which took place earlier this month. We are unaware of any plans to create an alliance of that description in the Pacific.
Lord Molloy: My Lords, if, as the noble Baroness has said, our Government are in contact with the United States Government on such issues, will she tell the House whether for the forthcoming summit, which seems to be almost a certainty, one of the points which has been agreed by Mr. Gorbachev and President Reagan is that they will try not merely to find reductions in nuclear weapons but will genuinely seek a full examination by both sides to try to reduce what are sometimes called conventional arms?
Baroness Young: My Lords, I think that the noble Lord, Lord Molloy, will recognise that the question he asked is far wide of the Question on the Order Paper. If he cares to put down a Question on that subject, I shall of course answer it.
Lord Hatch of Lusby: My Lords, in her original Answer the noble Baroness spoke of the members of NATO having separate and individual interests in promoting stability in different parts of the world which contributed to the security of the Alliance. Does she include within that definition the action of the American Congress and Administration with regard to Nicaragua; and in the discussion about foreign and defence policy to which she also referred have Her Majesty's Government responded to that policy decision which was reached about 10 days ago?
Baroness Young: My Lords, any United States activity in Central America is of course a matter for the United States. The noble Lord will of course be aware of the comment that we have made on the recent ICJ ruling.
Lord Jenkins of Putney: My Lords, in view of what the noble Baroness has said, she may regard this matter as no more than a floater by Secretary of State Weinberger and will perhaps leave it at that and hope that we shall hear no more of it.

Holloway Prison C1 Unit
2.56 p.m.
Baroness Ewart-Biggs: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress has been made in the proposed improvement to the C1 Unit at Holloway Prison.
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, work has now been completed on a series of modifications to 10 cells on C1 Unit, including replacement of sanitary fittings and plumbing, recessing of light fittings and radiators, replacement of flooring, improvements to observation within the cells and redecoration. Work on the installation of a protected room is due to be completed in two weeks' time. Improvements have also been made to facilities and accommodation for staff on the unit. The remaining phase of the improvements to the unit, on which work has recently begun, is the provision of an association area and day room to
8
improve facilities for out-of-cell activities. This work should be completed in January 1987.
Baroness Ewart-Biggs: My Lords, I should like to thank the Minister for that encouraging Answer. May I press him a little further on two other aspects of the proposed improvements for the Cl Unit? First, can he give us news of any progress on the planning of the replacement unit for C1? Secondly, in view of the recent manpower report on Holloway, when can we expect a response to the recommendations made on the staffing levels of the C1 Unit and on the organisation of the discipline and medical staff necessary to render flexibility between those two groups of staff in the C1 Unit?
Lord Glenarthur: My Lords, I share the noble Baroness's concern that progress must be made with the new unit. At this stage, I cannot give an estimate as to how long it will be, other than to say that planning is going on. We have had close co-operation with the DHSS on this matter. Experts from the Prison Department and the DHSS have met and seen the facilities at Broadmoor and Park Lane. The staffing levels of the present unit and the balance between nursing and discipline staff have been examined by the manpower team to which the noble Baroness referred. The aim will be to provide as full a regime as possible for the unit, with appropriate and adequate psychiatric treatment and nursing therapy and care. Recently a seminar was held to try to bring together the interests of the nursing and the discipline staff. It was a considerable success.
Lord Avebury: My Lords, how many women have passed through that unit since the passing of the Mental Health Act 1983 who would have been committed to a secure hospital but for the provisions in that measure regarding the susceptibility to treatment? Does the Minister consider that one of the reasons for the problems that have arisen is the pressure on accommodation and staff resources resulting from the increase in numbers since 1983? Is it not now clear that the regime in the C1 Unit is inappropriate for patients suffering from severe mental disorders, whether or not they are susceptible to treatment? Will the Minister therefore not merely content himself with improvement to the fabric, but proceed as quickly as possible with the alternative accommodation which the noble Baroness mentioned?
Lord Glenarthur: My Lords, I cannot tell the noble Lord how many have passed through the unit since the passing of that legislation. What I can say is that a senior medical officer with psychiatric experience who has responsibility for the C1 Unit has been in place for some time. He has certainly a key role to play in the creation of the right management framework and an appropriate regime.
Lord Mishcon: My Lords, does the noble Lord the Minister recollect, as I believe the House will, the pressure that has been applied from time to time by my noble friend Lady Ewart-Biggs in regard to the scandalous conditions that have existed at Holloway

9
and in the C1 Unit? Will he also accept the gratitude of this side of the House for the way that he has listened to those questions and has done his best, I am sure, to produce the situation that he has reported to the House today?
Lord Glenarthur: My Lords, I am very grateful to the noble Lord. Yes, I am aware of the pressure. I am aware of how necessary it was to put those things right. I should also like to say, however, that it is the Government's firm belief that those mentally disordered offenders whose disorder is of a nature or degree that makes it appropriate for them to be detained in hospital under the terms of the Mental Health Act 1983 should not be in prison.
Lord Ennals: My Lords, while I warmly agree with the statement just made by the Minister, may I press him on the question of the timescale regarding this new unit? Since the decision was announced to the House several months ago, is it not appropriate that some timescale should be established? I should also like to ask about consultation in respect of the new unit. The noble Lord will be aware that MIND, of which I am chairman, has been extremely involved in this operation for a long time. It has not been consulted at all about the new unit. Should there not be widespread consultation?
Lord Glenarthur: Yes, my Lords; I agree that there should be widespread consultation. As it stands, consultation has taken place between the DHSS and the Prison Department. I referred earlier to visits that have been made to Park Lane and Broadmoor. In addition, visits have been made to a regional secure unit. It is important that all of us learn about the latest developments in the treatment of the mentally ill and look at different types of accommodation available. If I were to put a timescale to this matter, I am sure that it would change. It is important to get this absolutely right. As soon as I have a timescale, I shall let the noble Lord know.
Baroness Ewart-Biggs: My Lords, it is crucial that within the C1 Unit two groups of disciplined staff should work well together and at the end of the day it will be for the Prison Department to make a decision on the recommendations of the manpower report. In view of that will the Minister give an assurance that he will press for the Prison Department to come to an early decision as to the level and organisation of staffing in the C1 Unit?
Lord Glenarthur: Yes, my Lords, it is, of course, important that the best use is made of all the facilities at Holloway—not just C1. I assure the noble Baroness that this is in the forefront of my mind.

Business
3.3 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lady Young will, with the leave of the House, repeat in the form of a Statement an Answer to a Private Notice Question in another place on South Africa.
10
It may be for the convenience of the House if I announce that the Report stage of the Gas Bill will be adjourned at approximately 7 p.m. for approximately one hour and that the Motor Vehicles (Variation of Speed Limits) Regulations 1986 and the Pool Competitions Act 1971 (Continuance) Order 1986 will be taken.

Wages Bill
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, I beg to move the Motion standing my name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 11,

Schedule 1,

Clause 12,

Schedule 2,

Clauses 13 and 14,

Schedule 3,

Clauses 15 to 32,

Schedules 4 to 6,

Clause 33.—(Lord Trefgarne.)

On Question, Motion agreed to.

Gas Bill
3.5 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Belstead.)
On Question, Motion agreed to.
Schedule 2 [Gas Consumers' Council]:
[Amendment No. 60 not moved.]
Clause 3 [Abolition of Corporation's special privilege]:
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 61.
Page 2, line 39, at end insert—
("( ) The Secretary of State shall not make an order under subsection (1) above until it appears to him to be in the national interest to do so.")
The noble Lord said: My Lords, I make no apology for returning to this matter, since the energy scene is ever changing, as, indeed, is the financial situation. The Bill itself is not in the national interest. It may very well be in the Tory Party interest; but the Tory Party interest is increasingly divorced from the national interest. In this House we are, I hope, concerned with the overall national interest, and we do not allow our personal political prejudices to cloud our judgment as to what is best for the British people.
Given that the Government are determined to have their way over the principle of privatisation, there is absolutely no reason why this House should not say

11
"Yes" to the principle, as it has done on Second Reading, but nevertheless say to the Government that privatisation should proceed only when it is in the national interest for it so to proceed.
The Government plan a flotation in the autumn. They have already announced details of how the flotation will be managed, who is to receive preferential treatment, and so on. But, already, doubts are being expressed by financial journalists about the wisdom of selling off British Gas at the present time. Max Wilkinson, writing in the Financial Times on 19th June, said a number of things. I should like to quote some of them. He says:
"For it may well be argued that now is the worst time in a decade to be trying to sell off a major energy company. Oil prices are less than half their level last autumn, and are about 40 per cent. below their level in 1975 after allowing for inflation".
He goes on to say:
"As a result, gas salesmen can no longer laugh off the competition from fuel oil in industrial markets, as they have been used to doing. The prices British Gas can charge are thus under strong competitive pressure, just as the era of cheap North Sea gas supplies is drawing to a close. Even though North Sea gas costs have fallen in sympathy with oil, gas now being developed in deeper, more hostile waters will cost five or six times as much as the cheap and abundant supplies from the Southern basin which were the basis for British Gas's remarkable expansion in recent years. The heady period of growth for the UK gas industry is probably almost over. It may well prove to be one of the ironies of history that British Gas's great years of high risk, adventure and vision came to an end at about the time that it ceased to be a nationalised utility".
In another part of the article Mr. Wilkinson says:
"British Gas therefore faces a classic combination of a nearly mature market, rising costs and increasing scarcity of supplies. British Gas's mainstream business, therefore, lacks the lustre of British Telecom, which was sold so successfully in 1984 as a company riding the crest of advancing technology towards new horizons of growth. On the other hand the weakness of the powers now agreed for the regulatory authority ensures competitive gas suppliers will have the minimum chance of penetrating British Gas's established markets".
He concludes the article:
"Nevertheless, with strong positive cash flow, pre-tax profits of around £1 billion and a partly captive market, British Gas will clearly be a safe investment well able to pay good dividends. A few fast bucks may be made on the flotation, no doubt; but when the dust has settled it is likely to be seen as a solid, safe and fairly boring stock in a little changed competitive environment.
"If that is so, historians of the Thatcher years may ask: 'Why did they bother to privatise it at all?' "
I think that says most of it. But since that article was written yet another OPEC meeting has broken up in disarray, and there seems to be no prospect that they can take any concerted action to raise oil prices or to prevent them from falling even further from their present low level. These factors alone demand a cautious approach, and there may be others nearer the time of flotation which ought to give the Government pause.
The industry belongs to the nation, not to Ministers or to the Tory Party, and it is to the nation's interest that the Government should be looking. It is for this reason that I ask support for this amendment—that is, unless the Government decide, in their wisdom, to accept it.
Lord Sanderson of Bowden: My Lords, I think that at this stage we have to consider the whole question of what is meant by the national interest. It is my view
12
that this Government would not be bringing forward this Bill unless they considered denationalisation to be in the national interest. The plc created will have the ability to raise money in the market and carry out its proper tasks. But one of the most important things is that if one looks back on the record of the last 15 years with regard to the nationalised industry, British Gas, one will see that the manipulation of gas prices is a matter which has not been appreciated by the British public at all, and particularly as they were mani-pulated in the late 1970s. We were living as if there was no tomorrow. Of course, there were no cheap national resources that would go on forever and a day. That is clearly being seen now. We are having to go further for gas supplies—going deeper and costing more money. But that was not considered by the Government of the day, and we have to pay the price for it.
The noble Lord, Lord Diamond, gave me credit for saying in the debate on one of the many amendments which were put before your Lordships recently that I knew something about industry. I will not argue today about the role of the regulator versus the public limited company's role with its board, but surely the national interest means, in the long term, wider share ownership.
The noble Lord, Lord Bruce of Donington, has told us on many occasions that he has no objection to small shareholders but an absolute aversion to institutions and, it seemed to me, the City in general. If one does not encourage wider share ownership one will never get the influence of the institutions of the City of London moderated. Surely arguing for wider share ownership and a spread of wealth through the ownership of homes and through the ownership of shares is something that is in the national interest. But we are dealing with this matter, and we have to face the facts. We must take on this whole question of the national interest as a matter of principle.
When I look at the recent announcement about social ownership I must say it looks to me as though it is a repackaging of re-nationalisation, and I for one will strongly resist this amendment.
Lord Diamond: My Lords, I rise briefly to support very fully the amendment moved by the noble Lord, Lord Stoddart. In reply to the speech to which we have just listened, according to my Marshalled List we are talking about page 2, line 39, which deals with the abolition of the corporation's special privilege and starts off", "As from such day". The amendment refers to making an order which is the order fixing the day. What we are therefore considering is not the general principles of which the noble Lord has reminded us, but the day on which the present monopoly of gas supply shall cease to exist. It is that day—not the general principles, which have been decided at Second Reading, whether or not we like them—with which we are seeking to deal, in order to prevent the Government being pressed into forgetting the national interest as a result of the cash flow to which they are increasingly becoming subjected and anxious.
Now that we know that other privatisation measures which were going to produce cash for the Chancellor (for whatever purposes he needs it) will no longer take place, there will inevitably be great pressure upon the Chancellor not to have regard to the national interest

13
but to have regard to temporary cash flow difficulties. Every businessman knows, and all of us know, the competing pressures of long-term national interest and short-term cash flow, to which everybody is subject from time to time, and how easy it is to make the wrong decision.
I am not claiming for myself the ability to determine what is the national interest. I have always taken the view that only a government can determine it, and that it is within a government's prerogative so to say. I know that this is not a generally accepted view, but it is mine.
However, the amendment seeks to limit the choice of date to a date that will clearly be, in the Government's view, in the national interest. I hope in those circumstances that this amendment will be fully supported, as it deserves to be.
Lord Boyd-Carpenter: My Lords, this is a very odd amendment indeed, because it is surely to be assumed that any Secretary of State in any government will act in accordance with what is his view of the national interest. I appreciate that noble Lords opposite do not feel that the provisions of this Bill are in the national interest. They have made that abundantly clear, and at full length. Equally, as my noble friend behind me has said, there are many of us on this side who believe very strongly that this is very much in the national interest. But surely to lay down that the Secretary of State can act only when it appears to him to be in the national interest is somewhat insulting to any Secretary of State. For that reason alone, I hope that we shall reject it.
Lord Brabazon of Tara: My Lords, this amendment seeks to introduce, as has been explained and debated, the national interest as a criterion in the Secretary of State's decision as to the appointed day under Clause 3, and to give Parliament a role in the timing of the order.
We have debated these points fairly fully during the Committee stage, and I am sorry that we have not persuaded noble Lords that this amendment is not necessary. Perhaps I could therefore briefly rehearse our views again.
On the appointed day the regulatory regime will come into force. This regime is in a number of ways better than exists at present. It provides better protection for the consumer and enhanced safety provisions. It is important, therefore, that these provisions should be implemented at an early stage as British Gas's authorisation will take effect at the same time and it is clearly necessary to establish public confidence in the new public gas supplier and the regulatory regime.
As we have made clear on many occasions, one of our aims in privatising British Gas is to create an environment where market forces can control and shape the nature of the industry within the overall framework of regulations set out in the Bill. We believe that this is where the national interest lies, rather than the development of an interventionist regime requiring reference to central government or Parliament at every turn. My noble friend Lord Sanderson made that point very clearly.
14
Parliament will already have decided that the introduction of the new regulatory regime is in the national interest by approving the Bill. The form and content of the regulatory regime will have been fully debated both here and in another place during the passage of the Bill. The authorisation of British Gas will also have been fully discussed and considered, and will have been granted to the corporation before the appointed day. I would remind noble Lords that several alterations have been made to the proposed authorisation as a result of consideration by your Lordships' Committee.
The noble Lord, Lord Stoddart, said that he did not believe that privatisation, or, in fact, the Bill were in the national interest. I am afraid that I have to disagree with the noble Lord. As my noble friend Lord Boyd-Carpenter said, we would not be bringing this Bill forward if we did not consider it to be in the national interest. Therefore, we are satisfied that the national interest will have been fully explored before the Bill becomes law and that the addition of the criterion put forward in the amendment is unnecessary. Therefore, I urge noble Lords not to accept the amendment.
Lord Stoddart of Swindon: My Lords, the noble Lord, Lord Brabazon, will not be surprised to learn that I fundamentally disagree with what he has said. Of course British Gas plc will raise money on the market, but the whole issue at stake is how much money will be raised on the market, and the amount of money which is raised on the market may very well be dependent upon the time when the flotation is made. It may very well be that there could be a conflict of interest between the Secretary of State and the Chancellor of the Exchequer, the latter being desperate for money by the Budget of next year, because the Chancellor, being desperate for money, may very well try to force the flotation at a time which is not in the national interest and not in the interests of the taxpayer. Therefore, we have tabled this amendment in order to give the Secretary of State for Energy some standing and some extra force when he is arguing the point with his right honourable friend the Chancellor of the Exchequer. That is why we have put down this amendment.
We perfectly understand that Ministers will interpret the national interest according to their lights, but nevertheless it could very well be that the departmental Secretary of State for Energy will have a conscience about floating British Gas at the wrong time. As I say, this amendment will give him some strength to argue with other forces within the Cabinet who are so desperate for money that they will sell off British Gas at virtually any price, whether or not it is in the national interest to do so. That is why we moved the amendment, and I believe that we should in fact test the feeling of the House by proceeding to a Division.
3.23 p.m.
On Question, Whether the said amendment (No. 61) shall be agreed to?
Their Lordships divided: Contents, 81. Not-Contents, 91.

DIVISION NO.1

CONTENTS

Airedale, L.

John-Mackie, L.

Ardwick, L.

Kearton, L.

Aylestone, L.

Kilmarnock, L.

Banks, L.

Leatherland, L.

Birk, B.

Listowel, E.

Blyton, L.

Llewelyn-Davies of Hastoe, B.

Boston of Faversham, L.

Lloyd of Kilgerran, L.

Bottomley, L.

McNair, L.

Briginshaw, L.

Mayhew, L.

Brockway, L.

Mishcon, L.

Bruce of Donington, L.

Molloy, L.

Burton of Coventry, B.

Morton of Shuna, L.

Caradon, L.

Nicol, B.

Carmichael of Kelvingrove, L.

Northfield, L.

Cledwyn of Penrhos, L.

Ogmore, L.

Crawshaw of Aintree, L.

Oram, L.

David, B.

Phillips, B.

Davies of Penrhys, L.

Ponsonby of Shulbrede, L.

Dean of Beswick, L.

[Teller.]

Denington, B.

Rathcreedan, L.

Diamond, L.

Rochester, L.

Donaldson of Kingsbridge, L.

Sainsbury, L.

Elwyn-Jones, L.

Seear, B.

Ennals, L.

Serota, B.

Ewart-Biggs, B.

Shackleton, L.

Ezra, L.

Shepherd, L.

Gallacher, L. [Teller.]

Silkin of Dulwich, L.

Gladwyn, L.

Stallard, L.

Gormley, L.

Stoddart of Swindon, L.

Graham of Edmonton, L.

Strabolgi, L.

Grimond, L.

Strauss, L.

Hampton, L.

Taylor of Blackburn, L.

Hanworth, V.

Taylor of Mansfield, L.

Harris of Greenwich, L.

Tordoff, L.

Hatch of Lusby, L.

Underhill, L.

Heycock, L.

Wallace of Coslany, L.

Hirshfield, L.

Walston, L.

Hunt, L.

Wedderburn of Charlton, L.

Irving of Dartford, L.

Williams of Elvel, L.

Jacques, L.

Willis, L.

Jenkins of Putney, L.

Winstanley, L.

NOT-CONTENTS

Aldington, L.

Elliot of Harwood, B.

Allen of Abbeydale, L.

Elliott of Morpeth, L.

Allenby of Megiddo, V.

Elton, L.

Annan, L.

Faithfull, B.

Bauer, L.

Foley, L.

Belhaven and Stenton, L.

Fortescue, E.

Beloff, L.

Fraser of Kilmorack, L.

Belstead, L.

Gibson-Watt, L.

Bessborough, E.

Glanusk, L.

Blyth, L.

Glenarthur, L.

Boyd-Carpenter, L.

Gray of Contin, L.

Brabazon of Tara, L.

Gridley, L.

Brougham and Vaux, L.

Hailsham of Saint

Bruce-Gardyne, L.

Marylebone, L.

Butterworth, L.

Halsbury, E.

Caithness, E.

Hayter, L.

Cameron of Lochbroom, L.

Hesketh, L.

Campbell of Alloway, L.

Hives, L.

Campbell of Croy, L.

Home of the Hirsel, L.

Carnegy of Lour, B.

Hood, V.

Carnock, L.

Hooper, B.

Constantine of Stanmore, L.

Hylton-Foster, B.

Cottesloe, L.

Killearn, L.

Cullen of Ashbourne, L.

Kinloss, Ly.

Davidson, V.

Kinnaird, L.

De Freyne, L.

Lane-Fox, B.

Denham, L. [Teller.]

Lauderdale, E.

Denning, L.

Layton, L.

Derwent, L.

Long, V.

Drumalbyn, L.

Macleod of Borve, B.

Dudley, B.

Mancroft, L.

Eccles, V.

Montgomery of Alamein, V.

Effingham, E.

Morris, L.

Ellenborough, L.

Mowbray and Stourton, L.

16

Newall, L.

Shaughnessy, L.

Norfolk, D.

Skelmersdale, L.

Nugent of Guildford, L.

Somers, L.

Porritt, L.

Stamp, L.

Portland, D.

Strathcarron, L.

Rodney, L.

Strathspey, L.

Romney, E.

Sudeley, L.

St. Davids, V.

Swinton, E. [Teller.]

St. John of Bletso, L.

Vaux of Harrowden, L.

Sanderson of Bowden, L.

Vivian, L.

Sandys, L.

Young, B.

Selkirk, E.

Ypres, E.

Resolved in the negative, and amendment disagreed to accordingly.
3.31 p.m.
Lord Gallacher Lord Gallacher moved Amendment No. 62:
Page 2, line 39, at end insert—
("( ) No order shall be made under subsection (1) above unless a draft of it has been approved by both Houses of Parliament.").
The noble Lord said: My Lords, Amendment No. 62 is of the same kind as Amendment No. 61, but makes an important distinction in that it seeks the authority for the draft order mentioned at page 2 line 39 to be approved by both Houses of Parliament. The purpose of this amendment is to give both Houses the opportunity, before the button is pressed in Clause 3, of saying "yea or nay" to the intention lying behind Clause 3 in the Bill.
It will be within the knowledge of noble Lords that the Bill was guillotined in fairly early course in another place, and to that extent a substantial part of this important Bill—particularly the financial clauses—has not been considered in the other place. Therefore, although in this House an attempt has been made to consider the Bill in detail, it would be appropriate to give the other place at least the opportunity of looking at the Bill as it emerges from your Lordships' House to decide whether or not to approve the draft order mentioned in Clause 3.
We insist on this side of the House that there is no popular mandate for this measure. There is of course on the basis of the first-past-the-post electoral system; but if one takes the concerted and continuing opposition to the Bill, both by the official Opposition and by the Alliance in this House, then on the basis of the popular vote we are entitled to say that it is doubtful whether, in the country as a whole, there is any disposition to see the privatisation of British Gas as being something which is beneficial to users or indeed to the nation as a whole.
It is important to have a brief look at the history of gas nationalisation because we have tended to concentrate hitherto purely on the advent of North Sea gas, which of course marked a turning point in the affairs of British Gas. The decision to take gas into public ownership followed an independent public inquiry which found that the supply of gas was indeed a natural monopoly. The public inquiry has been vindicated even by this Bill in that the decision to privatise has certainly not caused the present Government in any way to consider doing anything but maintaining it as a private monopoly, although within the framework of a public limited company.
The Second Reading for gas nationalisation took place in the other place on 10th February 1948, and the Minister in charge of the Bill at that time told the

17
House that there were 1,000 within the scope of the Bill. Of these, 350 were non-statutory; 700 were statutory—400 of them companies, and 300 of them municipal undertakings.
The question of compensation to municipalities which were losing their gas undertakings under the 1948 Bill was discussed at considerable length in the other place at the time. The government of the day, a Labour Government, regarded the transfer from municipalities to a new board as being from one public authority to another. That is to say, the enterprises were being taken over as they were with their assets and liabilities. The sum of £2 million only was provided by the Government to municipalities at that time for severance.
I personally regard it as being to the credit of the Opposition at that time—a Conservative Opposition—that they roundly criticised these arrangements as being thoroughly unfair to municipalities, and yet we have in this Bill a reversal of the process. An order was made on the same day as the Second Reading took place to prevent transfers from reserves of municipal gas undertakings for use by the general body of ratepayers, so that British Gas had the advantage not merely of the assets, and not merely took over the liabilities, but took over the reserves as well, and I think that from their point of view they had a very successful deal indeed.
When one has regard to some of the assets still in the possession of British Gas and which will accrue to private shareholders following the passage of this Bill, these assets, certainly in town centres—the sites formerly occupied by gasholders and the like—constitute a valuable piece of real estate for this enterprise. In our opinion these aspects have never been discussed. Therefore, taking the totality of the issue, and having regard to how little consideration was given to the Bill in another place—particularly the latter clauses—we are justified in asking the House to approve an amendment which would require the draft order to be approved by both Houses of Parliament under Clause 3 before that draft order takes effect. I beg to move.
Lord Brabazon of Tara: My Lords, this amendment, which seeks to make the appointed day subject to parliamentary procedure, is similar to the one we have just discussed. It is certainly similar to ones we discussed at Committee stage, and I have no doubt were discussed at length in another place as well. The only remaining questions that could be relevant to a debate would be the date specified on the order. A fuller debate would be totally inappropriate when the provisions have just been subject to the fullest scrutiny and debate in both Houses of Parliament.
I do not accept the noble Lord's accusation that, although the Bill was guillotined in another place, insufficient time was allowed for debate. I understand that after the guillotine fell the time limit was never reached on any particular day, so I think that there has been the fullest opportunity. Certainly, as your Lordships know only too well from the Committee stage, we have had an enormous amount of debate.
This amendment would also cause delay and inflexibility in introducing the new regulatory regime,
18
which, as I said in the course of the last amendment, we believe will bring advantages to consumers, and could also mean that the transfer of the ownership of the industry to its employees and the public at large could also be delayed. I cannot agree with the noble Lord, either, that privatisation has not been a popular measure. I believe from the massive success of the British Telecom privatisation that the population at large agrees with the Government that nationalisation is not the right way to approach these businesses.
I believe that it is the Opposition that is out of touch on this and not the Government. This is a similar amendment aimed at delaying what will have been discussed and debated at great length now and during other stages, and I must therefore once again ask the House not to accept this amendment.
Lord Diamond: My Lords, I very much regret that the Minister has repeated the most extraordinary statement made by his colleague that the implementation of a guillotine in another place does not affect the issue. I am sure that both the noble Lords will accept that that statement could only have been made by an individual who has not been a Member of the other House and suffered the guillotine procedure. Of course it is impossible, when you have a large committee such as a Standing Committee, to control the timing to the extent to which we are able to do so, here with our very small numbers attending the final stages of our discussions. It is therefore not possible to foresee exactly how many amendments will have to be jettisoned in order to reach the agreed point at the agreed time.
However, to suggest for one second that the guillotine does not affect the freedom of debate in another place is to my mind quite the most extraor-dinary statement which has been made by the Front Bench on this Bill—and my heavens, there have been some! My Lords, just ask the Leader of the other House whether he thinks that the imposition of a guillotine affects the issue! Why else would he impose a guillotine? We are on very safe ground here because colleagues who are of an age to have experienced it will remember that no guillotine was ever imposed in the Committee stage when gas supplies were first nationalised in 1948 or 1949, although the discussion went on for a considerable length of time, as the noble Lord, Lord Boyd-Carpenter, told us at the start of the discussion. I must reject that completely.
In fact, not only has this Bill been guillotined in the Commons, but it has been guillotined here in effect as well. The first guillotine was compulsory. It was a voluntary guillotine here in that we agreed to reach the end of the Bill by a given time on a given day, and within one minute of the clock striking the relevant hour that point was reached. It was reached only by very skilful jettisoning of amendment after amendment. On the last day alone, 42 amendments were not moved from this side of the Chamber. That was quite apart from the number of clauses that were accepted—39 clauses in that one day—without a single comment on clauses standing part, although many of us wished to make comments for the sake of clarification. I do not know how many comments the official Opposition wanted to make; but I wished to make about a dozen and I could not do so because of

19
the time limitation. I therefore hope that we are not going to hear any more, if I may say so, of that nonsense which implies that the guillotine is introduced for the fun of it and does not affect the time spent in Standing Committee in another place on a discussion on a Bill.
I want to speak very briefly indeed in support of this amendment because I think there is additional pressure that has been indicated for this to be done beyond that which existed at the time when we discussed this in Committee. The House will recognise and recollect that we are now in a different situation with a very large measure of privatisation which has been postponed. For example, the privatisation of the water industry has been postponed for reasons which are not very clear to any of us; and the implementation of another private measure dealing with the ROFs has been postponed for reasons which seem to be totally secret. No doubt those reasons are something to do with the defence of the country; otherwise, no Front Bench would be as secretive as the present one has been about the reasons for not implementing the privatisation and the marketing of shares of the ROFs. All this represents a totally different situation and makes it all the more essential that the House should be consulted in the way this amendment so wisely suggests.
Lord Gallacher: My Lords, I shall not echo the words of the noble Lord, Lord Diamond, regarding the effect of the guillotine on our deliberations, except to say that even without a guillotine we have endeavoured in this House on these Benches, at least, to co-operate fully with the Government. Indeed, that co-operation will be carried even further on Amendment No. 62 because we do not propose to seek a Division on it in view of the fact that we have divided on a similar amendment previously. Nevertheless, I think that it is an important amendment. I believe that the Minister's response to it has been disappointing.
The privatisation of British Telecom was a success. Opinions differ as to the basis for that success. On this side of the House we regarded that as a give-away. It is our sincere hope that even though, as I believe I accurately stated, British Gas came by a substantial part of its assets very cheaply indeed (to say nothing of the great good fortune of discovering natural gas in the North Sea) we sincerely hope on this side that there is not to be another give-away in the interests of window-dressing and raising revenue quickly for the Chancellor. That said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

South Africa
3.46 p.m.
Baroness Young: My Lords, with the leave of the House, I shall now repeat the Answer which has been given by my right honourable and learned friend the Foreign Secretary to a Private Notice Question in another place on South Africa. The Answer is as follows:
20
"I intend to make an early start on the mission entrusted to me at the recent European Council Meeting in the Hague. I accordingly proposed last week to the governments of Zambia, Zimbabwe and South Africa that I should visit them in the period 9–11 July on the first stage of the mission. The Zambian authorities have confirmed that a visit this week is convenient. The Zimbabwean authorities have given a similar indication, but we are still waiting for confirmation. The South African Government have made clear that they are ready to receive me, but have proposed alternative dates. These are now under consideration. I shall therefore proceed with the visit to Lusaka and Harare, leaving from Strasbourg tomorrow evening, and plan to visit South Africa later in the month. Further visits to and within the region are of course not excluded".
My Lords, that concludes the Answer.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Baroness for repeating the Answer to the Private Notice Question as a Statement; and in view of Friday's debate I propose to be very brief. We note that Sir Geoffrey Howe is now proposing to visit Zambia and Zimbabwe. Perhaps the noble Baroness will tell us what the object of this visit is, because when she was opening the debate on Friday she will recall that she made no reference to this possibility at all. Are we right in assuming that there is no clear date for a visit to South Africa at this stage and that what the Foreign Secretary now proposes is a preliminary visit to see Mr. Mugabe and President Kuanda, then to return to this country, and later visit Pretoria? Is that what the Foreign Secretary has in mind?
It seemed clear to us originally that in visiting South Africa the Foreign Secretary was representing not only Her Majesty's Government but also representing the 12 countries of the Community. This, in my view, gave it an even greater importance. Is it the case that he will now visit Zambia and Zimbabwe on behalf of the EC and not merely as the Foreign Secretary of the United Kingdom?
Finally, if the Foreign Secretary finds that he will be unable to visit Pretoria after visiting Zambia and Zimbabwe, will the sanctions agreed at The Hague then come into effect, and will Her Majesty's Government operate them without further ado?
Lord Gladwyn: My Lords, we, too, on these Benches are sorry that the Foreign and Commonwealth Secretary is not now going to South Africa, though it seems that he may go later in the month. We must surely recognise that if, and when, he goes to South Africa, there is only a very faint chance of his achieving anything by so doing.
If I may, I should like to take this opportunity to ask the Government three questions. They may not be able to reply now, but I should like to ask the questions. First, failing any further move on the part of the South African Government, is it the Government's view that some kind of sanctions become inevitable? If so, would that, in the opinion of the Government, be with the intention of not merely persuading the South African Government, but obliging them to act in the sense desired? If so, do the Government agree that the

21
only sure way of making mandatory sanctions effective would be, as I ventured to suggest in my last speech on this subject in this House, to arrange if possible for these to be imposed by the Security Council of the United Nations?
Baroness Young: My Lords, I should like to thank both the noble Lords, Lord Cledwyn and Lord Gladwyn, for their reception of the Answer to this Question. On the first question asked by the noble Lord, Lord Cledwyn, I can confirm that my right honourable and learned friend the Foreign Secretary will be going as the President of the Council of Ministers on behalf of, and with the full authority of, the Twelve. His mission is an effort to establish conditions in which dialogue can begin, and he hopes to build on the progress that has been made by the Eminent Persons Group. As I said during the course of our debate on Friday, his mission is not a fact-finding mission. He hopes to persuade the key parties to make progress towards the immediate European and Commonwealth objective of a dialogue and the suspension of violence.
So far as a visit to South Africa is concerned, as the original Answer made plain, the dates of such a visit are not yet clear, but the South African Government have agreed that they are prepared to receive my right honourable and learned friend. The intention would be that my right honourable and learned friend would go to Lusaka and Harare between 9th and 1lth July and would go to South Africa at a later date.
On the last question that the noble Lord, Lord Cledwyn, raised, I think it would be premature to comment on the outcome of the visits to either Lusaka or Harare, or indeed on the visit to South Africa, or to comment on whether or not sanctions would come into play. The hope of my right honourable and learned friend is that we shall be able to make some progress in a dialogue with the South African Government, and I think we must wait to see what is the outcome of these visits before looking at the next stage.
The noble Lord, Lord Gladwyn, asked me a number of questions. His first question, as I understood it, was that if there were no move by the South African Government, would that mean that sanctions would become inevitable? Again, I say to him that I think it would be a great mistake to speculate on what might be the outcome of these missions until they have taken place. I noted what the noble Lord said about mandatory sanctions being arranged through the Security Council. That is a point that I shall certainly draw to the attention of my right honourable and learned friend.
Lord Home of the Hirsel: My Lords, I must apologise for the fact that, with regret, I could not be present for Friday's debate. However, having read it all, I notice that time and again the valid point was made that if there was to be a settlement of the trouble in South Africa, it must be made in Africa by Africans and for Africans. That is not the only role which the Foreign Secretary can play to help that process along. I am glad that he is visiting Zimbabwe and Zambia, but is it not worth taking a lot of time and great
22
patience to make sure that when he does go to South Africa he has the best chance of helping that process?
Baroness Young: My Lords, I should like to tell my noble friend that we all felt his absence from our debate on Friday. We are very glad to see him in his place today. I have certainly noted what he has had to say. He speaks with enormous experience of foreign affairs and in a very wise sense about a possible settlement. I am sure he is right in what he says about the need for patience and the timescale on this matter.
Lord Bottomley: My Lords, it was for good reasons that the noble Lord, Lord Home, was not here on Friday, as I know; but it was an excellent debate, and I can tell him that the Government came out of it better than I expected.
Will the noble Baroness consider suggesting to her right honourable and learned friend the Foreign and Commonwealth Secretary that while he is in Southern Africa he considers going from Zambia to the British Ambassador's residence in South Africa, thereby enabling liberal minded South Africans and businessmen and probably African nationalist leaders to see him there?
Baroness Young: My Lords, I should like to thank the noble Lord, Lord Bottomley, first for his generous remarks about the debate on Friday. All of us who took part in it thought it was an excellent debate, and I have drawn it to the attention of my right honourable and learned friend. I shall also draw to his attention the remarks and the suggestion that the noble Lord has made today. I am sure that when my right honourable and learned friend visits South Africa it will be his hope to see as wide a spectrum of opinion as possible. There are always time constraints on these matters; but I thank the noble Lord for the suggestion he has made.
Lord Molloy: My Lords, I was sorry to miss the first part of the Answer repeated by the noble Baroness. We all wish God speed and good luck to the British Foreign Secretary when he goes to see Mr. Kenneth Kaunda and Mr. Mugabe. When will he be leaving, and can we assume that he will still be going as a representative of the EC as well as of Great Britain? Can the noble Baroness confirm what has been heard on the wireless, though it did not seem to be absolutely certain: that one good thing that may have come out of our debate—who knows—is that Mrs. Winnie Mandela has had the restrictions on her movements removed?
Baroness Young: My Lords, the dates that I gave in the original Answer are that my right honourable and learned friend will be visiting Zambia and Zimbabwe from 9th to 11th July; and he will be going in his capacity as President of the Council of Ministers. I am not in a position to confirm the report that the noble Lord has heard about Mrs. Winnie Mandela.
Lord Hatch of Lusby: My Lords, unlike most noble Lords who took part in the debate on Friday, I did not express good will regarding the Foreign Secretary's visit. Of course I have the utmost feeling of good will

23
for the Foreign Secretary, Sir Geoffrey Howe, personally, but in my view the mission is a delaying tactic and flies right in the face of the findings of the Eminent Persons Group. In its report the Eminent Persons Group made it quite clear that in its six months deliberations it had come to the firm conclusion that the South African Government had no intention whatever of abolishing, or even denting, either apartheid or white supremacy. Further, the group estimated that the delay in the imposition of sanctions was fuelling violence and causing bloodshed. In view of those findings what can be the purpose of the Foreign Secretary's visit to South Africa? Can it in any way be removed from the judgment of the Eminent Persons Group that the delay will increase violence, will increase bloodshed, will increase death?
Secondly, can the noble Baroness tell us whether the Government are quite firm that, whatever the purpose and whatever the consequences of this mission, it will be completed before the Commonwealth summit at the beginning of August and will not be used as an attempt by Her Majesty's Government further to delay the decisions of the Commonwealth summit which is taking place nine months, not six months, after the heads of Government conference at Nassau last October?
4 p.m.
Baroness Young: My Lords, I am fully aware of the views of the noble Lord, Lord Hatch, on this matter, as we have frequently discussed them across the Floor of the House both at Question Time and in debates. He will be aware from what I have said to the noble Lord, Lord Cledwyn, what is the purpose of the mission of my right honourable and learned friend. It is to build on the progress made by the Eminent Persons Group and to make an effort to establish conditions in which dialogue can begin. I am aware of what has been said in the report of the eminent persons; but we believe, and it is our hope, that my right honourable and learned friend will be able to persuade key parties to make concrete progress towards the immediate European and Commonwealth objective of both a dialogue and, equally important, a suspension of violence.
Perhaps I may draw to the noble Lord's attention and that of your Lordships the many measures that have already been taken by the British Government: first, at Luxembourg in 1985 there was a list of restrictive measures against South Africa; and then there were the further measures which were agreed at Nassau in October, 1985.
Lord Hatch of Lusby: My Lords, will the noble Baroness answer the second part of my question as to whether the British Government can assure the House that the mission will be completed before the Commonwealth summit at the beginning of August and that it will not be used as a further means of delaying decisions at that meeting.
Baroness Young: My Lords, as I have indicated, the South African Government have made clear that they are ready to receive my right honourable and learned friend. They have proposed alternative dates. These
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matters are still being looked at. I cannot give the noble Lord a precise indication of the dates, though I should expect, from what has been said, that the visit would be before the meeting of the seven countries of the Commonwealth early in August.
Lord Thomas of Swynnerton: My Lords, is my noble friend the Minister able to hazard a speculation as to why it is that so many of our European and other partners seem to entertain such high hopes of the idea of economic sanctions since they have proved so unsuccessful, most notably in the case of the Soviet Union in respect of its invasion of Afghanistan?
Baroness Young: My Lords, I think it is always very dangerous on occasions like this for Ministers to speculate exactly on what lies behind the views that have been taken by other governments. The point which is being made by my noble friend Lord Thomas was one that was made from a number of different parts of the House during our debate on Friday. I think the fact that economic sanctions were not successful in Rhodesia and were not successful (as the noble Lord, Lord Gladwyn, told us) originally when applied in Abyssinia—and the noble Lord, Lord Thomas, quotes the case of Afghanistan—makes one realise that they are not quite as effective as some people would make out they are.
Lord Molloy: My Lords, will the noble Baroness not admit that part of the argument is that many private organisations in many countries that ought to have imposed sanctions on various other countries indulged in what is now being called massive disrespect of the law of their lands by sanctions busting? Do the Government agree with that?
Baroness Young: My Lords, if the noble Lord is saying that countries have agreed to impose sanctions and have failed to keep that agreement, of course that is not something that one can accept. But it has been shown to be a fact that one of the difficulties about sanctions is not only getting all the countries to agree to impose them, but, even more important, ensuring that they are carried out by the governments and all the other private firms or individuals within those countries. If sanctions are to be effective, there must be no ways of getting round them. This has always been one of the difficulties.

Gas Bill
4.6 p.m.
Consideration of amendments on Report resumed.
Clause 4 [General duties of Secretary of State and Director]:
Lord Diamond Lord Diamond moved Amendment No. 63:
Page 3, line 1, after ("and") insert ("subject to the provisions of section (Directorate of Gas Supply).").
The noble Lord said: My Lords, I beg to move this amendment which subjects the exercise of the director's functions under Clause 4 to the provisions of an amendment which we have already touched on, Amendment No. 194, under which if the Secretary of

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State comes to the conclusion that the director of gas supplies (who is the person to monitor the operation of this Bill) is carryng too big a load, he—the Secretary of State—can appoint an additional officer of gas supply to share the burden.
It is very difficult to appreciate the width of the responsibilities and so I want to remind your Lordships of some of them. I also want to remind you that here is the main protection under this privatisation measure which creates a private monopoly; here is the major protection of the consumer. The consumer councils add to it after the event; but the individual who has the responsibility for seeing that the practices laid down in this Bill are carried out is the director himself. He is the person on whom rests the justification for turning a public monopoly, with all its parliamentary protection, into a private monopoly with none at all. So an enormous burden rests upon him and a variety of duties are expressed in the Bill.
What I want the Government to do is to have regard to what the noble Lord, Lord Belstead, has advised us time and again: do not produce an Act under which arrangements are frozen. Time and again the noble Lord, Lord Belstead, has said: "Don't bring such a proposal into the statute; leave it in the authorisation, leave it as an undertaking, leave it in an annexe. There is more flexibility that way". So says the noble Lord.
I am sure that he is accepting what I am accepting. What I am asking the House to do is to say that one cannot foresee the future; that it is not given to any man to foresee the long-term future completely. It may well be that during the course of the next 25 years for which an authorisation is about to be granted—and it can be extended beyond that period, of course—circumstances may change so as to require additional help being given to the director in protecting the consumer and monitoring the processes of this new plc. That is all that we are saying; it may happen. If one looks back over 25 years, one is looking at a very different scene. It is a totally different scene regarding the production and supply of gas, and for all we know it may vary again in a substantial way over the next 25 years or more.
I am therefore suggesting that the Government should take powers not to compel anybody but to enable the Secretary of State to say, "Clearly this is not what we anticipated" or "Clearly this is not working out in the way we anticipated and we shall need to give the director greater help". The help that is suggested is for additional officers concerned with gas supply, who together would form a directorate and would therefore be better able to carry out their monitoring duties.
I repeat that it is very difficult for your Lordships to appreciate the number and weight of the duties that are put upon the director. I want to remind the House of but a handful of them. Under Clause 4, for example, the director has responsibilities for seeing that all reasonable demands for gas in Great Britain are met: that is a huge responsibility. He has responsibility for protecting the interest of consumers of gas; for seeing to the continuity of supply; for ensuring the quality of gas; and for promoting efficiency and economy on the part of persons who not only supply the gas but who use it. I would ask your Lordships to think of those
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millions involved. He is also required to protect the public from dangers arising through the distribution of gas and to enable persons to compete in the non-tariff market.
Those are some of the existing responsibilities which are laid upon the director, and they are huge. There are other responsibilities which Members of your Lordships' House would welcome. For example, there are the responsibilities of ensuring that gas supplies are managed and used in accordance with the national interest, of promoting conservation and energy efficiency, of ensuring that the gas supplier maintains proper services for the elderly and the disabled; of ensuring that the interests of British manufacturers are taken into account; and of ensuring that persons can compete effectively in the supply of gas. There is also the responsibility to have regard to the interests of purchasers and users of gas fittings and appliances. The Minister himself is anxious that the director should have the additional responsibility of taking into account the interests of those who are disabled or of pensionable age. And so it goes on.
Those are enormous responsibilities and in my view, and in. the view of my colleagues on these Benches, they are incapable of being carried out satisfactorily by one man with a small office, which will start with 30-odd members. It is quite impossible. Therefore we hope the Government will recognise that it is wise to provide for the possibility that in the course of time it may be necessary to add strength to the monitoring process in the way suggested. I beg to move.
4.15 p.m.
Lord Boyd-Carpenter: My Lords, this is basically the same amendment as the noble Lord proposed at some length and in various variants at the Committee stage and which he proposed last week during the earlier part of the Report stage. They all turn on the simple point about which he has convinced himself—though on these previous occasions he failed to convince your Lordships—that the director general would be unable to perform the important duties entrusted to him because he was one man. Therefore he should be turned from one man into a syndicate. Whatever merit that argument carries, it has been threshed out at really very considerable length; and if I may say so with very great respect to the noble Lord, it seems a little wearisome (despite his observations about the guillotine in another place) that your Lordships should have to consider it now for the third time running.
The point is not one that is intellectually very difficult to apprehend; it is not one of great complexity. It is a perfectly simple point. The noble Lord takes one view. On previous occasions, after full and detailed debate, your Lordships have come to the contrary conclusion. I therefore express the hope, with very great respect to him, that we shall not be expected to spend further time on this same point yet again.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, I am particularly grateful, as always, to my noble friend Lord Boyd-Carpenter for his remarks on this occasion. It is true that the amendment to which the noble Lord, Lord Diamond, has just spoken is one of a series of about 25 which I had suggested we might group together. The noble

27
Lord, Lord Diamond, as he is perfectly entitled to do, felt that would not be the way to proceed. He then suggested that we should have eight groups on this issue. He has now delivered his thoughts on the second of those groups.
The first was Amendment No. 46, which we discussed at some length on the first day of the Report stage. With the greatest respect, the speech which the noble Lord has made is largely a re-run of what he said on Amendment No. 46, albeit with some additions. I think my noble friend Lord Boyd-Carpenter is perfectly correct in saying that it does become just a little bit tedious when we have to listen to the same arguments over and over again on what is virtually the same series of points. I am not complaining about that; but I would suggest to the noble Lord—and I am sure he would be the first to accept this, with his very considerable ministerial experience—that he would not expect an extended answer on each occasion, and that in the interests of not boring the House the answers I would be bound to give would become correspondingly shorter each time.
I think I congratulated the noble Lord on his persistence and single-mindedness in pursuing the appointment of commissioners; but he is not content to rest on those amendments and has now armed himself with a fall-back position. We have already explained at length why we believe that the right course is to appoint an independent regulatory body which will have at its head a well-qualified and experienced director, who will be supported by the number of staff necessary for the fulfilment of its functions.
It is likely, as in the case of Oftel, that a deputy director will be appointed; but, for reasons which we have already fully explored and explained, we do not believe it would be right or necessary to go further. Perhaps I could remind your Lordships again that the numbers of Oftel have doubled since it was first set up. It would be the Government's clear intention, as I said earlier, to ensure that Ofgas should be properly staffed in order to carry out the whole of its functions effectively. We believe that we have provided in the Bill for a strong and effective regulatory body, with the appropriate machinery for the appointment of staff. I must therefore invite noble Lords to accept that the Government have recognised the best interests of consumers in these arrangements, and I hope that the noble Lord will consider withdrawing his amendment.
Lord Grimond: My Lords, I would not wish to delay the House on this matter, nor to repeat arguments which, as the Minister said, were deployed on earlier amendments. However, it seemed to me that my noble friend was raising a rather different point.
What he is now saying is that some discretion should be left because we cannot foresee what the future may hold. As I understand it, the noble Lord the Minister agrees about that and says that the staff of the director general may have to be increased or altered. Does he take the view that without amendment the Bill would allow the changes which have been suggested by my noble friend? Is he saying that the amendment is unnecessary, or indeed that it is harmful?
Lord Gray of Contin: My Lords, by leave of the House, no, I am not saying that these amendments are not necessary. I am saying that we simply do not agree with what the noble Lord is proposing. The noble Lord has come back to this point. We had it in Committee; we had it again on the first day of Report; and we shall have it on a number of occasions before we conclude Report. We believe that in the legislation we have provided a very satisfactory system which will enable the director after negotiation with the Treasury to appoint the staff which is required for the purpose of carrying out his functions.
If I may quote, for example, Oftel, there has been no Treasury difficulty with regard to increasing the number of staff required. We have no reason to believe that such will be the case with Ofgas. For those reasons, and for the many reasons which I have explained at the Committee stage and since, we believe that the Bill as drafted provides a better system than that proposed by the noble Lord.
Lord Stoddart of Swindon: My Lords, I had not intended to speak, but following the Minister's reply to the noble Lord, Lord Grimond, it seems that the Government are being particularly obdurate over this matter. All the noble Lord, Lord Diamond, is suggesting, as I understand it, is that there should be provision within the Bill in case the Government at some future time decide that the director needs some assistance by way of assistant directors.
As the Bill is at present drafted if the Government want to do that—and it may well be that a future government would want to do it—they would have to bring forward an amendment to the Act. That would be entirely unnecessary and would be a waste of parliamentary time. I urge the noble Lord to accept this very mild amendment which may well make it much easier for governments of whatever political colour to do what may become necessary in the future in relation to the control and the regulation of the gas industry.
Lord Diamond: My Lords, I am most grateful to the noble Lords, Lord Grimond and Lord Stoddart, for making those important points. Perhaps I may deal first with the point made with such perspicacity by the noble Lord, Lord Grimond. My anxiety is based not only on the fact that the number of staff contemplated is totally inadequate for the purpose—30 against 100 which Oftel finds it necessary to have; there is also great concern in all parts of the House that Oftel is unable to function satisfactorily.
It has been established, and it has been made doubly clear by the Minister today, that although the director has power to appoint such staff as the Treasury agrees—and I accept that for the moment the Treasury has put no impediment in the way of increasing the staff—the director cannot strengthen his position. He can strengthen his accountancy arrangements. He can strengthen a variety of administrative arrangements by means of additional staff. He can visit more establish-ments. He can do those things, but what he cannot do is achieve what is the whole purpose of this amendment—and we have been pushing it forward time and again. He cannot strengthen his position as

29
one man on one-third of the salary of his opposite number who is supported by a whole board who are able and experienced in this field. What he cannot do is stand up against that weight of an organisation which is steaming ahead like a huge liner with all the impetus of past years of experience, and going on day after day. There will not be a single change, will there, from the day one licence is cancelled until the new licence—we have just dealt with that—is entered into?
Under its new name the British Gas Corporation will carry on exactly as before with its huge drive, an additional drive, towards commercialism, in the interests of the shareholders, instead of in the interests of both the shareholders and the consumers—the consumers whom we are out to protect. The only way that protection can be given is by having a director who can stand up to all that weight. The only way to stand up to all that weight is by having an equal number of persons. That is the argument we have been trying to put forward time and again.
I am sorry that I have not been able to persuade the Government. It is indeed a very mild amendment, as the noble Lord, Lord Stoddart, says. It compels nobody to do anything. It invites the Government to say, "In X years' time, 10 or 20 years' time, it may be necessary to do something which we did not think of earlier. Let us provide for it in the Bill without any compulsion whatsoever". I assert that that is normal prudency. It is non-political. It has nothing in particu-lar to do with gas. It is normal prudence when you are promoting a Bill. It is normal prudence to say, "Things may change. Let us not have the statute in a frozen form. Let us have the flexibility which Ministers have spoken about again today and give power to the Secretary of State if he wants"—"if he wants to"; nobody can compel him—"to take powers to do something additional to meet the needs of the occasion which are not foreseen at the moment".
I am sorry that I have not been able to persuade the Government as to the reasonableness of the amendment. It is extremely reasonable and moderate. I am not going to ask your Lordships to press it to a Division. 1 am, however, going to seek to continue to persuade the House that this provision ought to be made. Having made my desire and pertinacity clear in the belief that the Government are not as obstinate as all that and will in due course yield to sensible, impartial argument. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 64:
Page 3, line 3, after ("Part") insert—
(", which functions, without prejudice to the generality of the foregoing, include those described in sections 7(7)(a), 8, 11(4), 19 to 22, 23, 24, 26, 29, 31, 32(3), 34(1), 34(2), 34(4), 35(1), 36, 37, 38, 39(1), 39(2), 39(4), and in Schedules 1(4), 3(3), 4(2)(2), 4(4)(2) and 5(3)(3), together with those described in sections 7(2), 8(1) and 16 and in Schedule 3(1).)
The noble Lord said: My Lords, I can deal with this amendment very briefly. It was raised at an earlier stage in order to meet the convenience of those who had to deal with this Bill. It is a very well-known arrangement which happens in many Bills. There were two arguments put against my suggestion. The first, was that all the powers were not mentioned. I merely
30
took this from the Government annex. If the Government fail to put all the powers in their annex, it is not my fault; but I have added them now so that they are all here. The second complaint was that by particularising in this way one might be limiting the application of this clause. To deal with that I have said, in a classical form,
"without prejudice to the generality of the foregoing".
I have put forward those two new additions. I am certainly not going to push this amendment to a Division, unless anybody else wants to do so. I merely want to know from the Government whether or not they are happy, now that I have met the only two arguments which they put forward at Committee stage, that this convenience should be provided for in the Bill.
4.30 p.m.
Lord Brabazon of Tara: My Lords, as the noble Lord, Lord Diamond, has said, this amendment was tabled at Committee stage on a day when the noble Lord was, I believe, absent, and when the amendment was moved by his noble friend Lord Hanworth. I am surprised, in a way, to see the amendment tabled again because, following the previous debate, the noble Viscount commented, in respect of the response of my noble friend Lord Gray, that:
"I am impressed by what he said, and I shall, with pleasure. withdraw the amendment". (Official Report, 19/5/86; col 102.]
But here we are again. It is not clear why the full explanation that we gave previously did not persaude the noble Lord, Lord Diamond, that the amendment would not be a helpful addition to the Bill. However, I am happy to put our points again in the hope that we may satisfy the noble Lord this time, as we were able to satisfy his noble friend on the previous occasion.
One reason why we do not feel the amendment would be of benefit is that it might confuse the layman. There are functions on the director relating to other clauses in the Bill that are not listed but which are just as important. For example, the principal duties to supply on a public gas supplier under Clauses 9 and 10 are to be monitored and enforced by the director. If the noble Lord's amendment were included, a customer who considered that a public gas supplier had breached one of those duties might be misled into thinking that the director had no role in the matter as Clauses 9 and 10 are not included in the list of functions.
Mainly, however, the Bill already sets out clearly what are the director's functions. Clause 4 lists duties that the director must use as guidelines when exercising his functions. In addition, it is important to note that the duties set out in Clause 4 guide the Secretary of State as well as the director. It might risk further misleading the layman if one were to give a list of clauses that referred only to the director's functions and failed to give those of the Secretary of State. I hope that the noble Lord, upon reflection and having heard our argument again, will recognise the force of our reasoning and will agree to withdraw his amendment.
Lord Diamond: My Lords, I would be wasting the time of your Lordships' House if I were to pursue this matter any further. I have said that I do not propose to

31
press this matter to a Division, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 65:
Page 3, line 3, at end insert—
(" ( ) to ensure that gas supplies are managed and used in accordance with national interest and without detriment to other fuels and energy sources;")
The noble Lord said: My Lords, for the convenience of the House, perhaps we may take Amendment No. 80 together with this amendment. The debate on Amendment No. 65 was foreshortened at Committee stage because it took place late in the evening. I do not intend to speak at great length today, although I see that according to the timing clock I have been speaking for four minutes already. Nevertheless, we should have a short debate because it is an important amendment that deals with energy policy.
There is a need to include the gas industry as a part of a national energy policy. At Committee stage, I made it absolutely clear that we should have an overall energy policy, and we do not agree with the Government that energy policy can be left to the play of market forces. In our view, that is a course for disaster. Long-term investment decisions cannot be taken on the basis of present-day demands or energy prices. We know perfectly well that at the present time we need, for the long term, to continue to explore the North Sea and to sink new mines. But on the basis of present energy prices, it is certain that those decisions will not be taken.
We believe, therefore, that it is necessary to have a long-term, overall strategy that will embrace coal, nuclear, gas, oil, renewables and conservation. That is the only true way forward for the proper use and deployment of the energy resources that we have available at the present time and that we are likely to have available to us in the future.
As I have said before (but it is worth repeating), gas is a premium fuel and it should not be used in such a way as to hinder the proper development of other energy sources and fuels. I said at Committee stage (and again it is worth repeating) that it would be unfortunate if predatory pricing or any other means were used by the gas industry to place the other industries at a short-term disadvantage. Again, that is another reason why we believe it is necessary to have a long-term, properly-developed energy policy.
The Government seem determined to live only for today and appear to have no real concern for the future, which they seem prepared to leave to the exigencies of market forces and the profit motive. We do not believe that is good enough for the country. It is not good enough for the future generations of this country that they should be left in such a situation and that energy should be at the mercy of market forces and the profit motive.
I hope that the noble Lord opposite has read the previous debate, has considered what was said, will have made some modification to his own position, and will be able to say either that he accepts this amendment or that he will give it further thought and
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bring forward his own amendment at Third Reading, which he is of course well able to do. I beg to move.
Lord Diamond: My Lords—
Lord Boyd-Carpenter: My Lords, the noble Lord, Lord Stoddart, said that this was an important amendment, and I agree with him. It is the—
Lord Diamond: My Lords, if the noble Lord will forgive me—
Lord Boyd-Carpenter: My Lords, if the noble Lord is so anxious, because of the few opportunities that he has to speak, to speak now, then I shall happily give way to him.
Lord Diamond: My Lords, I am grateful to the noble Lord, who speaks with his usual courtesy. I rise only because Amendment No. 80 is coupled with Amendment No. 65, and it is the usual practice of your Lordships' House, when there is a coupled amendment, for the person whose name is to the second amendment to speak after the mover of the first amendment. However, I shall gladly give way to the noble Lord if he prefers to speak now.
Lord Boyd-Carpenter: My Lords, the House is always anxious to hear the noble Lord and I would not wish to stand between him and the House. If he wishes to speak now because his name is to the second amendment, then I shall be very happy to listen to him. I hope that the noble Lord will not necessarily give the House that pleasure too extensively.
Lord Diamond: My Lords, I am most grateful to the noble Lord. It has been agreed through the usual channels that Amendment No. 80 should be spoken to with Amendment No. 65. Amendment No. 80 raises a similar point but in rather wider terms, and I hope in terms that can be easily understood, in the sense that it provides that:
"the Secretary of State shall have a duty to exercise those functions which affect, directly or indirectly"—
nothing could be wider than that, and it is intended to be so wide—
"the supply of gas",—
and I could give many examples but will refrain from doing so, in order to save time—
"whether such functions are assigned to him under this Act or otherwise".
In short, we are here trying to deal with the responsibility of the Secretary of State, not the director, for having a wide view and for exercising his responsibilities under the Bill after taking account of what effect those decisions may have on the totality of the country's fuel, energy supply, and so on. Nobody can take a decision in isolation, and there is a risk as the Bill is drafted because the Secretary of State is only required to have a blinkered view of that particular, single source of energy—gas—and not to have regard to all the other sources of energy that are involved.
It is the Government who are saying that the present pattern, under which gas, electricity, water and so on are all subject to their overall policy view and that of

33
the Minister responsible, shall be broken and that one energy source should be taken out of that totality and left on its own, and then that the Secretary of State has to act with regard to that one source, totally disregarding the others. Clearly he does not do so at the moment. Clearly he has to answer to the House—to the other place and to Parliament as a whole—for his decisions on gas as they bear on the totality of energy sources.
Of course he does not like the idea of an energy policy, but this amendment does not call for that. This amendment is proposing that, as the Government have altered the situation so that the other sources of energy are now excluded from the Secretary of State's consideration—were it not for this amendment— nevertheless in exercising his functions under this Act he should have regard to the way that he considers will best promote the national interest in regard to the development and use of all sources of energy. I am sure it is a reasonable point of view and I hope that when the Secretary of State comes to take decisions he will in any event do this; but he might not, and this amendment seeks to make clear that his decisions, which are important policy decisions, should be taken having regard to the overall national interest with regard to all sources of energy, the majority of which were under his control before and one of which is now being removed from his control.
Lord Boyd-Carpenter: My Lords, Amendment No. 80, which has been tabled by the noble Lord, Lord Diamond, seems to me to say in six lines merely what the amendment of the noble Lord, Lord Stoddart, says in three. It is for that reason that I intend to confine my comments to Amendment No. 65. As I was saying—or was about to say when I gave way to the noble Lord, Lord Diamond, to enable him to speak to his amendment—Amendment No. 65 is an important one. I think it is the first important amendment that we have had this afternoon. Having said that, I also suggest that it is a very dangerous one. It seems to embody that approach to the management of our national economy which was a characteristic of Labour governments on many occasions in recent years. It was an approach which suggested that the whole management of our economic activities in this country was best conducted by a wise, all-seeing and all-powerful government co-ordinating all these activities and allowing neither those in charge of them nor the consumer to have any particular influence on what happened. That, of course, was the approach adopted by Labour governments, and your Lordships are well aware of the disastrous consequences that occurred when it was put into effect.
My only other comment is that I think the last part of Amendment No. 65 is extremely dangerous. Let us consider the meaning of the words:
"and without detriment to other fuels and energy sources".
Let us consider what those words must mean if, for example, under the good administration which we believe that the gas industry will have under privatisation, gas prices are kept so low as to be highly competitive with oil or coal shall we say so as to cause more and more consumers to go over to gas and less and less oil or coal to be used. Then if this amendment means anything, the duty of the Secretary of State
34
would be to compel the gas authority to put up the price of gas so as not to compete unduly with the other sources of energy. So much for the concern for the consumer which has been so eloquently expressed from the Benches opposite on any number of occasions during the discussions on this Bill.
If we really intend to ask the Secretary of State to prevent an efficient, competitive industry in the power world from being so efficient and competitive, because it will damage competing power industries, then whatever else we may do we shall not benefit the consumer. I am bound to say that I cannot read this amendment as carrying any other implication than that. It is for that reason that it seems to me that although this is an important amendment, as the noble Lord, Lord Stoddart, has rightly said, it is important in the sense that it will be highly damaging in its effect.
4.45 p.m.
Lord Ezra: My Lords, the noble Lord, Lord Boyd-Carpenter, always speaks very logically and effectively, but it seems to me that on this occasion he has missed an important issue: these are three industries which for the moment are crucial to the energy supply of this country and which are under public ownership. Under public ownership they come under the same sort of control and supervisory powers of the Secretary of State for Energy. Now one of them is being removed and is being privatised; the other two are to remain as they are. It seems not unreasonable that the Secretary of State, who will still retain a role in regard to the privatised gas industry, because indeed, it is defined in this Bill, should include in that role the overall relationship between the three industries and should bear that in mind. Surely this is the point of the amendment that has been moved by the noble Lord, Lord Stoddart, and of the other amendment of my noble friend, Lord Diamond.
The noble Lord, Lord Boyd-Carpenter, asked what would be the position if the gas industry, through its good management, were able to reduce its prices and capture a good deal of the market that is presently held by electricity and coal. Should the Minister intervene—
Lord Boyd-Carpenter: My Lords, I said coal and oil; I did not mention electricity.
Lord Ezra: Coal and oil, my Lords. The noble Lord asked whether the Minister should then intervene. My opinion is that he should not. But if a future gas enterprise were deliberately to reduce its prices in order to acquire a dominant position in the market, and having acquired it then put up its prices in a new, captive situation, I should have thought that those were circumstances in which the Minister should have the power to intervene. Therefore, we merely propose that, in addition to the other powers that will be given to him under this Bill, the Secretary of State, so long as other sectors in the energy group of industries remain under public ownership, should have an overall responsibility for the public interest.
Viscount Hanworth: My Lords, I believe that the issue behind this amendment is probably the most important that we have had to consider on this Bill so

35
far. My reason for taking this view is that it raises the question of our whole national policy on the use of limited energy resources. I have a horrid suspicion that the ministry that is promoting this Bill has, under extreme pressure, declined to take this wider view and on departmental grounds will again turn down this amendment or will not agree to something on similar lines.
Let us be quite clear about the national issue which I believe is at stake. So far all governments have endeavoured to keep the four major energy sources—electricity, gas, coal and oil—in rough balance; and I emphasise the word "rough". Our power stations have been forced to use British coal at uneconomical prices. The way in which governments constantly change agreements with the oil and gas companies operating in the North Sea is another example. So, of course, is the Government's gas levy. Without regulation, industrial uses of limited resources of natural gas would have skyrocketed. The use of gas and oil resources must surely be considered by any government.
Only a government with no concern for the welfare of future generations could contemplate leaving the gas industry and its policy to be determined always and only by market forces. Such market forces, for example, in the oil industry change almost overnight. Surely the Government must have some regulatory mechanism. Perhaps they can show that they have, because in the extreme they must be able to take some action. A good illustration which I have already given is the excessive use of gas in industry, which has so far been prevented.
I should be the last person to suggest that the Government should constantly interfere. All I am saying is that they should have the power to do something when energy uses are so obviously out of balance that some action must be taken. I hope that they can perhaps persuade us now that one way or another they have sufficient powers to do that without the amendment. If they have not, I hope that the matter can be taken to a Division.
Lord Campbell of Alloway: Before the noble Viscount sits down, does he recognise that the amendment could constitute the type of "national interest" clause which could adversely affect the drafting of the prospectus?
Viscount Hanworth: Could adversely affect what, my Lords?
Lord Campbell of Alloway: The drafting of the prospectus for the sale of shares.
Lord Harmar-Nicholls: My Lords, that was the point that I wanted to make after hearing the speech of the noble Lord, Lord Ezra. I rather think that he defeated his own argument. He was being fair. He presented the situation as he saw it. At the end, it meant that we should not accept the amendment. The first point I wish to raise lies behind the question which has just been asked by my noble friend. The more restrictions that one puts on allowing real competition without government interference, the more it is bound
36
to affect the price of shares when the industry is put on the market. There is no doubt about that. We have had the experience of the noble Lord, Lord Stoddart, and his friends on previous privatisation measures. They have attacked the Government if the share price has not been in the highest bracket.
The more restrictions we include the more they are bound to affect the share price. I do not think that would be a good thing. What the noble Lord, Lord Ezra, said in effect was: yes, we are going to privatise one out of the three categories of energy producing industries, but let us do it in a way which will ensure that it is not really privatised. Let us keep a safety chain, he argued, in the interests of the nation which will in some way be an obstacle to the people who have to manage a great industry being able to do what they like.
The words of the amendment moved by the noble Lord, Lord Stoddart, interest me. He does not say, "without detriment to the nation". We know that the Minister has all the powers necessary in the Bill to deal with any matter which he thinks would not be in the nation's interest. The words of the amendment are:
"without detriment to other fuels and energy sources."
Anyone who runs a business knows that, when one is in competition with others, if one is successful and as a result does more business than if unsuccessful, which affects one's competitors, the competitors would like someone to step in and remove the advantage which has been produced by one's skill and energy. If we want to test the effectiveness of privatisation in this important area, we must keep the safety chains to a minimum.
To give the impression to the oil and coal industries that they will have the Minister's protection—that is what the amendment does—to prevent someone more efficient or more capable of taking advantage of that efficiency or ability is bound to be detrimental. That point came out clearly in the speech of the noble Lord, Lord Ezra.
I make a point of listening to the noble Lord on these matters because he is one of the Members of your Lordships' House who has some practical experience of the competitiveness that always exists. He has had to sit in the chair where the buck stops in one of our most important industries. I do not believe we should add to what is already in the Bill with regard to the Minister's power to defend the nation's interest. That is correct and it is in the Bill. To put into words that he must intervene to protect the gas industry's competitors would be a constraint that could do only harm.
Lord Elliott of Morpeth: I intervene only briefly. When I listened to the noble Lord, Lord Stoddart, it occurred to me that that which he was advocating— the long-term plan for this industry or any industry— was exactly what the nationalisation Acts were all about. A banner headline was before us at breakfast time in the Guardian which read:
"Labour turns away from nationalisation."
Instead we are now to have something called social ownership. Perhaps after the persuasion of all these years the Labour Party also believes in a property-owning democracy.

37
Nationalisation has had its run and its chance. Planning, in the intense form advocated by the noble Lord, Lord Stoddart, when he moved the amendment, has not succeeded. After all, there was a magnificent overall plan for the nation's industry produced after 13 consecutive years of Conservative government when the Labour Government took over the government of the nation in 1964. It was called the National Plan. It was introduced by the late Lord George-Brown when he was Minister in another place. He was an energetic Minister as he was an energetic man. I well remember the National Plan being produced as the answer to all our industrial problems because at the time it seemed that a Conservative Government had been unable to plan. All I would say is: where is the National Plan now? does it still exist? Does it lie a little flyblown, perhaps, on some bookshelf in the Labour Party's national headquarters? We have heard little of the National Plan for some years. I suggest that planning in the intensive form which the amendment suggests has failed. It is time to try privatisation.
Lord Bruce-Gardyne: My Lords, I find myself in some small degree of dilemma over the amendment. I put down an amendment in Committee which is now Amendment No. 78. It is also germane to this argument. I hope that when my noble friend replies to the debate he will perhaps be able to deal with the point that was then raised to an extent that he could not do when we were discussing the matter in Committee. I go along with everything that my noble friend Lord Boyd-Carpenter had to say about the inevitable conclusion that one would draw from the amendment—that its intention is to deny the consumer the benefit of lower gas prices when the Opposition parties insist that it is the consumer's interests that they have in mind.
There is one aspect of the competition which we cannot ignore entirely. As far as I am aware, it has not been touched on. It is the subject of electricity generation. The trouble is that the CEGB is not in a free market for energy supplies. It is required by the Department of Energy to acquire its sources of supply not in the most competitive market but predominantly from the National Coal Board. It is therefore conceivable that when British Gas has gone into the private sector, British Gas could be acquiring a market share at the expense of the CEGB, not by predatory pricing of the sort that one could presumably expect the regulator to sort out, but simply because the CEGB was hamstrung to high coal prices through being required to buy from British domestic supplies; namely, the National Coal Board. This is an aspect of the consequences of competition to which the Government need to address their mind. I hope that my noble friend in responding to the debate can offer some reassurance as to how the relative competitive position of the CEGB is to be defended in an environment when the gas corporation has gone out as a monopoly into the private sector.
5 p.m.
Lord Belstead: My Lords, this amendment would seek to ensure that gas supplies are managed and used in accordance with national interest and without detriment to other fuels and energy sources. One of our aims in putting forward the privatisation of British
38
Gas is to create an environment where market forces can control and shape the nature of the industry' within the overall framework of regulation set out in the Bill. This is something that we believe is central to our approach to energy issues generally. I join with my noble friend Lord Boyd- Carpenter in saying that we really do not believe that ministers and civil servants can sit down and work out a grand plan in which all the industries are allocated a role which they have to carry out according to a rigid set of rules. My noble friend Lord Elliott of Morpeth reminded us of what happened, despite the enormous persuasiveness and energy of Lord George-Brown in those days, to the national plan in the 1960s. I cannot help but feel that a concept of this kind, put forward in these two amendments, would go very much the same way.
Noble Lords opposite may ask what we have to put in its place. As I say, we have this Bill, which we believe will be valuable for the future development of the industry. We believe that business and individuals should make up their own minds about the best kind of fuel for their needs and that the energy industries should then go out into the market place and sell their products in the way that they understand best. Talking of selling, it was my noble friend Lord Boyd-Carpenter who pointed out that the final words of Amendment No. 65 must inevitably involve price interference that could only be to the detriment of the customer. Indeed, it is extraordinary that noble Lords opposite who have the customer's interest very much in mind should put forward an amendment that could certainly be interpreted as one that would lead in certain circumstances to the artificial increasing of gas prices to the detriment of the consumer.
Having said that, I turn to the intervention of my noble friend Lord Bruce-Gardyne relating to the position of the electricity industry. I have thought a good deal about what my noble friend had to say at Committee stage on that subject. I realise that the position of the CEGB and British Gas, when this Bill goes on the statute book, will be different. I have to say, however, that my noble friend's intervention today is made in the context of the announcement by my right honourable friend the Secretary of State for Energy on 5th June. My right honourable friend announced that British Coal and the CEGB had reached a commercial agreement covering the supply of coal that would take due account of the fall in the price of oil. That agreement would mean, my right honourable friend said, a reduction of some 3.5 per cent. on the unit rate previously announced for electricity consumers, with consumers on the Economy 7 tariff benefiting even more. The average reduction for industrial consumers would be likely to be some 5 per cent.
I say seriously that the CEGB and British Coal are clearly taking account—it is stimulating that they should do so—of the position in which they find themselves with the reduction in oil prices at present.
The noble Lord, Lord Ezra, asked about predatory pricing. What would happen, he asked, if the gas industry in the private sector was artificially to reduce its prices in order to capture markets and then, once customers had become committed to using gas. put up its prices artificially in an unfair way. That, as I understand it, would clearly be predatory pricing.

39
Remedies already exist under competition law policed by the Office of Fair Trading to deal with such unfair practices. Indeed, our Bill takes full account of this possibility. There is no reason to saddle my right honourable friend with a duty that he could not possibly fulfil when the Director General of Fair Trading can already take action.
There is one more point with which I should like to deal. My noble friend Lord Campbell of Alloway was absolutely right when he indicated that we should not litter the statute book with meaningless duties concerning the national interest or indeed anything else when the the statute book already contains well thought out and specific provisions to deal with any problems that may arise. I understand the reasons that have prompted noble Lords to bring forward these amendments. As my noble friend Lord Boyd-Carpenter said, they are important amendments; but they carry dangers. I hope that those dangers have become apparent to the House in our short debate on these two amendments.
Lord Stoddart of Swindon: My Lords, this has certainly been a most interesting debate. I am grateful to all those who have taken part, although I do not necessarily agree with all the points of view put forward. However, the fact that so many noble Lords have spoken shows the importance of the amendment. I shall try, in as short a period as I can, to deal with some of the points raised, because they are important.
The noble Lord, Lord Boyd-Carpenter, thought that this was a dangerous amendment. I have to disagree with him entirely. I believe that it is a relevant amendment and that not to have it in the Bill is, in fact, dangerous—dangerous for the long-term energy stability of our country. The noble Lord said he believes that Labour Party policy is that the economy should be managed by a wise, all seeing authority, and that there would be no choice for the consumer. As a matter of fact, that is not Labour Party policy. I shall not go into Labour Party policy for the simple reason that it would take me rather longer than I intend to speak. But what I shall not take from the noble Lord, Lord Boyd-Carpenter, is that the Labour Party is centralist, as he suggests. As noble Lords know, we have in power at the present time the most centralising government we have ever had. For example, power has virtually been taken away from local government and centralised in Whitehall. The present Government quite obviously believe that decisions should be taken not locally, but centrally.
But the Labour Party's position is not (nor indeed is it the position of any other party, so far as I know) that there should be this all-embracing, all-powerful, centralised authority. However, we expect the Government to ensure that the privatised gas industry works within a national framework for the benefit of the consumer, and indeed for the national benefit. We believe that that is what should happen: that the gas industry should be as patriotic as everybody else and should work in the national interest. That is what the amendment is all about.
The noble Lord, Lord Boyd-Carpenter, also said that our price competitiveness in gas or any other
40
source of fuel was a matter for the market. Price cannot be the only criterion. As I said in my opening remarks in relation to energy, there are all kinds of other matters which should be taken into account. The long-term supply of our energy sources is a must. It is pre-eminent among the considerations which should be taken into account. It is no use, for example, and no benefit to the consumer if gas pricing forces other energy users such as the coal industry to close down resources or fail to develop them for the long term. If that were done the consumer would not benefit and he would be hurt in the long term because there would be an energy shortage when gas supplies ran out. That was the very relevant point that the noble Lord, Lord Ezra, put to the House. It must be taken into consideration. That is what we are trying to get the Government to do.
The noble Lord, Lord Harmar-Nicholls, seemed to believe that this amendment would affect the price of the shares. I am not at all sure that it would. But that is not our main concern. In this amendment we are concerned not about the price that the shares will be sold at, but that the long-term future of our energy supplies should be safeguarded. We shall rue the day unless we ensure that that is so.
The Government have taken themselves out of the oil market. They are now taking themselves out of the gas market. We have all seen what happened in the oil market. We have seen that depletion policy has led to a situation where we are now selling oil at knock-down prices and in a very few years' time we shall have to import oil at a much higher price. The depletion policy of this Government will, in a very short time, hurt the consumer and our energy industries. That ought not to have happened. Had we had a national energy policy, it would not have happened.
The noble Lord, Lord Elliott of Morpeth, said that nationalisation has had its run. Certainly it has had its run with this Government, because they are denationalising everything under the sun. They are denationalising, or privatising, the gas industry. But why are they doing it? They are not doing it because the gas industry is inefficient or is not profitable. The gas industry is one of the most efficient and most profitable industries that we have in the country, private or public. Therefore in a real sense nationalisation—public ownership—certainly has not had its run.
It has had its run with regard to this Government simply and solely because the Government are pressed for money and they are prepared to sell off our publicly-owned industries—at knock-down prices if necessary—in order that they can balance their books at the next Budget and at the same time give tax handouts in readiness for the general election. That is what it is all about—make no mistake about that. Nationalisation certainly has not had its run. We are here talking about one of the most efficient industries in the country which will be sold off at knock-down prices.
The noble Lord, Lord Elliott, also mentioned the national plan. The national plan did not collapse because it was not a good concept. It collapsed because the Treasury was against the Department of Economic Affairs.
Lord Harmar-Nicholls: My Lords, it would not work.
Lord Stoddart of Swindon: My Lords, it was never tried. It did not have sufficient time to get established. The fact is that it collapsed because the Treasury was against it and was going to make sure that it did not have any rivals over the control of our economic policy. But we should have had a national plan then. Had we had a national plan at that point in time, perhaps our manufacturing industry would not have collapsed as it has, and we would still be competing well not only in the home market but also the overseas market. The noble Lord, Lord Elliott, may be completely wrong about the national plan. Had it continued—had it been given a chance—this country might very well have been far better off than it is at the present time.
The noble Lord, Lord Bruce-Gardyne, mentioned electricity generation. He was right to do so because that is a very important element in our energy policy and one of the reasons why we have put down this amendment. The noble Lord, Lord Bruce-Gardyne, understands the matter perfectly. He is saying that the electricity supply industry uses coal and is being forced to use British coal by the Government, whereas the electricity generating industry says that it can buy 30 million tonnes of coal on the overseas market at a cheaper rate. The noble Lord, Lord Bruce-Gardyne, is absolutely right. He knows the score. But, again, in the long term it will not benefit the electricity supply industry or any other industry—certainly not our energy policy—if the Government decided to allow the electricity supply industry to buy coal where it liked, because it would close British coalmines which we would need in 20 or 30 years' time.
I am obliged to noble Lords for speaking in this debate. It has been rather longer than I expected. The Government are obviously not prepared to make any concession at all in this regard. We think it is an important amendment and I therefore feel that I must press it to a Division.
7 p.m.
Question, Whether the said amendment (No. 65) shall be agreed to?
Their Lordships divided: Contents, 95; Not-Contents, 112.

DIVISION NO.2

CONTENTS

Addington, L.

Carmichael of Kelvingrove, L.

Airedale, L.

Chitnis, L.

Amherst, E.

Cledwyn of Penrhos, L.

Ardwick, L.

Crawshaw of Aintree, L.

Attlee, E.

David, B. [Teller.]

Aylestone, L.

Davies of Penrhys, L.

Banks, L.

Dean of Beswick, L.

Barnett, L.

Denington, B.

Birk, B.

Diamond, L.

Blyton, L.

Donaldson of Kingsbridge, L.

Boston of Faversham, L.

Donoughue, L.

Bottomley, L.

Elwyn-Jones, L.

Briginshaw, L.

Ennals, L.

Brockway, L.

Ewart-Biggs, B.

Bruce of Donington, L.

Ezra, L.

Burton of Coventry, B.

Falkender, B.

Caradon, L.

Foot, L.

42

Gallacher, L.

Morton of Shuna, L.

Graham of Edmonton, L.

Mulley, L.

Grimond, L.

Nicol, B.

Hampton, L.

Northfield, L.

Hanworth, V.

Parry, L.

Harris of Greenwich, L.

Phillips, B.

Hatch of Lusby, L.

Pitt of Hampstead. L.

Heycock, L.

Ponsonby of Shulbrede, L.

Hirshfield, L.

[Teller.]

Hunt, L.

Rochester, L.

Jacques, L.

Ross of Marnock, L.

Jeger, B.

Scanlon, L.

Jenkins of Putney, L.

Seear, B.

John-Mackie, L.

Serota, B.

Kilbracken, L.

Shackleton, L.

Kilmarnock, L.

Shepherd, L.

Kirkwood, L.

Silkin of Dulwich, L.

Listowel, E.

Stallard, L.

Llewelyn-Davies of Hastoe, B.

Stoddart of Swindon, L.

Lloyd of Kilgerran, L.

Strabolgi, L.

Longford, E.

Taylor of Mansfield, L.

Lovell-Davis, L.

Tordoff, L.

McGregor of Durris, L.

Turner of Camden, B.

McIntosh of Haringey, L.

Wallace of Coslany, L.

Mackie of Benshie, L.

Walston, L.

McNair, L.

Whaddon, L.

Mayhew, L.

White, B.

Meston, L.

Williams of Elvel, L.

Milner of Leeds, L.

Willis, L.

Mishcon, L.

Wilson of Rievaulx, L.

Molloy, L.

Winstanley, L.

NOT-CONTENTS

Airey of Abingdon, B.

Hailsham of Saint

Aldington, L.

Marylebone, L.

Allenby of Megiddo, V.

Hampden, V.

Auckland, L.

Harmar-Nicholls, L.

Bauer, L.

Henderson of Brompton, L.

Belhaven and Stenton, L.

Hesketh, L.

Beloff, L.

Hives, L.

Belstead, L.

Home of the Hirsel, L.

Bessborough, E.

Hood, V.

Boyd-Carpenter, L.

Hooper, B.

Brabazon of Tara, L.

Hylton-Foster, B.

Brougham and Vaux, L.

Killearn, L.

Butterworth, L.

Kimball, L.

Caithness, E.

Kinloss, Ly.

Cameron of Lochbroom, L.

Kinnaird, L.

Campbell of Alloway, L.

Lane-Fox, B.

Campbell of Croy, L.

Lauderdale, E.

Carnegy of Lour, B.

Layton, L.

Carnock, L.

Long, V.

Coleraine, L.

Lucas of Chilworth, L.

Constantine of Stanmore, L.

Luke, L.

Cullen of Ashbourne, L.

Lyell, L.

Davidson, V.

Macleod of Borve, B.

Denham, L. [Teller.]

Mancroft, L.

Derwent, L.

Margadale, L.

Dilhorne, V.

Marshall of Leeds, L.

Dormer, L.

Maude of Stratford-upon-

Drumalbyn, L.

Avon, L.

Eccles, V.

Mersey, V.

Ellenborough, L.

Monk Bretton, L.

Elliot of Harwood, B.

Montgomery of Alamein, V.

Elliott of Morpeth, L.

Mowbray and Stourton, L.

Elton, L.

Norfolk, D.

Enniskillen, E.

Nugent of Guildford, L.

Erroll of Hale, L.

Orr-Ewing, L.

Faithfull, B.

Penrhyn, L.

Fanshawe of Richmond, L.

Peyton of Yeovil, L.

Foley, L.

Porritt, L.

Fortescue, E.

Rankeillour, L.

Fraser of Kilmorack, L.

Ridley, V.

Gardner of Parkes, B.

Rodney, L.

Gibson-Watt, L.

Romney, E.

Glanusk, L.

St. Aldwyn, E.

Glenarthur, L.

St. Davids, V.

Gray of Contin, L.

Sanderson of Bowden, L.

Gridley, L.

Sandford, L.

Grimthorpe, L.

Sandys, L.

43

Shannon, E.

Swinton, E. [Teller.]

Shaughnessy, L.

Teviot, L.

Skelmersdale, L.

Thomas of Swynnerton, L.

Somers, L.

Trefgarne, L.

Strathcarron, L.

Vaux of Harrowden, L.

Strathspey, L.

Vickers, B.

Sudeley, L.

Vivian, L.

Suffield, L.

Wolfson, B.

Swansea, L.

Young, B.

Swinfen L.

Resolved in the negative, and amendment disagreed to accordingly.
5.26 p.m.
Lord Ezra Lord Ezra moved Amendment No. 66:
Page 3, line 5, leave out ("so far as it is economical to do so")
The noble Lord said: My Lords, I beg to move Amendment No. 66. This matter was indeed raised at the Committee stage, and after reflection we think that it is sufficiently important to be brought up again. This is because we believe that the wording of the subsection goes too far against the consumers' interests. It is very difficult to visualise a reasonable demand for gas, which is not an economical demand for gas, otherwise what could the word reasonable mean? Therefore, we think that not only would it be more economical in words, but it would a fairer balance between the gas supplier and the consumer for the words:
"so far as it is economical to do so".
to be omitted.
When we discussed this matter at the Committee stage I believe that noble Lords opposite stated that these words had been used throughout gas legislation as far back as one could remember. However, we have been reminded that the intention of this Bill is to change all that past legislation and to introduce a new era in which there could be greater freedom. Therefore, we believe that this small but quite important amendment could help introduce that new era, to give a better balance between the gas supplier and the consumer, and to promote the interests of both. I beg to move.
Lord Stoddart of Swindon: My Lords, I believe that this amendment and my amendment, Amendment No. 67, are grouped together and, although I entirely agree with what the noble Lord, Lord Ezra, has said, I have put down a possible alternative. The problem with the words:
"so far as it is economical to do so"
is that this may be read as being profitable to do so. Then of course the question could arise: How profitable is profitable to be economical?
The amendment that I propose removes the word "economical" and substitutes the word "practicable". That is a good word which rolls nicely around the mouth, and I believe that it is probably a better word and more even-handed as between supplier and customer. I hope that the noble Lord, if he does not accept Lord Ezra's amendment, will see that this is a constructive attempt to overcome the difficulty, and that if he feels unable to accept Amendment No. 65 then this is an alternative.
Lord Brabazon of Tara: My Lords, as the noble Lord, Lord Ezra, reminded us, we discussed this at an earlier stage. The noble Lords will perhaps not be surprised if I am not too friendly to them again this afternoon. I should like to comment first on the proposal to delete the qualifying words:
"so far as it is economical to do so"
in the main supply duty on the Secretary of State and the director. The noble Lord pointed out, and it is right, that these words have been a feature of gas legislation since nationalisation in 1948, and in my view they provide the proper qualification for a general supply duty.
It is unfortunately the case that the cost of laying distribution pipelines is substantial and there are many locations where it is simply not economic for suppliers to supply gas. It would be a nonsense to give the director and the Secretary of State the duty to secure that all demands should be met irrespective of their individual circumstances and the economics of giving a supply. The duty we have proposed is, in the context of the gas industry, the right one, and one that I believe has stood the test of time since 1948. It will ensure that whenever supplies are economic, the director and the Secretary of State should do their best to encourage them. I think that that is the important point there.
Turning now to the proposal of the noble Lord, Lord Stoddart, to replace "economical" with "practicable"—and I think he was probably speaking as well to his Amendment No. 119 to Clause 9—it is, in the nature of gas supply, that the laying of pipes to premises a long way from a main may not be economic given the volume of gas to be delivered, whereas a similar supply to premises near to a main could be economic. It is for this reason that gas legislation has referred to an economic criterion rather than simply a practicable criterion. I believe it would be a mistake to change this now.
It has been appropriate for the British Gas Corporation in the public sector and for its predecessors, the area gas boards, only to be under an obligation to supply where this is economical, and I believe this is just as appropriate for British Gas in the private sector. To require British Gas to meet requests for gas which were uneconomic could prejudice the viability of the whole operation.
We all want to see a continuing healthy gas industry well into the next century, and an industry which can provide essential services to customers at a reasonable price. This is true both for domestic customers and for industrial customers who need low-cost energy supplies to enable them to maintain their competitiveness.
I should like, however, to mention, in the context of these amendments, the specific duty contained within Clause 10 of the Bill to supply any customers within 25 yards of a British Gas distribution main, or those already connected to a main. This provides full protection for those who already have gas and those in areas where there is a gas supplier. The Bill, taken as a whole, therefore provides proper protection for customers already using gas as well as incentives for gas supplies to be given to those areas not already served but without prejudicing the economics of the overall operation.

45
Removing the economic qualification might result in British Gas having to provide gas to some customers at an uneconomic price which could have a devastating effect on all other present customers depending on gas. None of us, I do not think, would want to see that; and I therefore urge the noble Lords not to press their amendments.
Lord Bruce of Donington: My Lords, the noble Lord in the course of his reply thought fit to refer to the performance of British Gas as a public corporation in this regard. He said that in so far as the public corporation is concerned this has functioned satisfactorily. One of the reasons it has functioned satisfactorily is that all the time the British Gas Corporation has been responsible, through the Minister, to Parliament. Therefore its operations have always been conducted on the basis that in the event of marginal circumstances occurring the Minister himself in another place is answerable for the actions of the corporation.
I do not think that the noble Lord is wise to call in aid the past performance and past conduct of the gas corporation in this respect. We are now operating in totally different circumstances. Under the new legislation the gas corporation will no longer be responsible through the Minister to Parliament and to the people.
Under the provisions of this Bill it will no longer run the risk of being called to account in another place for anything that it is suspected may have been done contrary to the public interest.
Indeed the Government are boastful of it. They make no apology. British Gas plc will be responsible to its shareholders and to no one else, subject always to the oversight of a somewhat restricted director of Ofgas. This amendment, combined with the amendment of my noble friend, seeks to widen the circumstances so that there is ground for intervention in the public interest.
The old gas corporation could take "economical" in a far wider sense than the new plc will be able to do with its prime responsibility to its shareholders. Therefore, it is quite useless carrying forward the circumstances under which the old public corporation still functions and comparing them in any way with the new. I should have thought that in the light of the extremely able advocacy put forward on behalf of this amendment, and also on behalf of the subsequent amendment by my noble friend the Government would have felt it wise to eliminate the words concerned.
As the noble Lord pointed out, under Clause 10 there is responsibility to connect supplies up to 25 yards. I repeat the question: what happens at 25½ yards? At 26 yards? At 27 yards? At 28 yards, and so on? Who is to determine? I suggest that either the amendment proposed by the noble Lord, Lord Ezra, is accepted, leaving it in the hands of discussions between the Director General of Ofgas and the corporation, or else the word "practicable"—which has a rather wider connotation in the public interest than "economical"—ought to be substituted. I would invite the noble Lord to reconsider the Government's opposition to these amendments.
Baroness Seear: My Lords, I too should like to ask the noble Lord to consider again whether he really needs both, "economical" and "reasonable"? If it is really uneconomic, other things being equal to do it, it is not "reasonable" to do it. Why does one need to have "economical" as well as "reasonable"? On the other hand, if you leave in "economical" as well as "reasonable" then it could be that it was not really within the powers of the gas company to put in a gas pipe where they might well think it was sensible and desirable to do so because they are restricted to it being economical in the narrow sense of the term, although they could see that it would be reasonable and even in their long-term interests to do it.
I draw the Minister's attention to the fact that Electricité de France, for example, which runs a very successful outfit, provides electricity to the most remote parts of France. One could well argue that when it laid the line it was not economical to do so but it was highly reasonable and the result has been satisfactory. Does he not have the protection he needs simply in the word "reasonable"? Does that not leave him the scope he might wish to have?
Lord Brabazon of Tara: My Lords, with the leave of the House I should perhaps respond to one or two of the points raised. The noble Lord, Lord Bruce of Donington, said that the Minister in Parliament no longer had any responsibility in this field. However, Clause 4 lays out the duties of the Secretary of State and the director and therefore if any of these matters were found to be unsatisfactory the Minister would be responsible and have to answer to Parliament for them.
Turning to the points which the noble Baroness, Lady Seear, raised, she asked: why have both "economical" and "reasonable"? I tried to answer that in my opening remarks. The phraseology is generally what has been used in the past and it has stood the test of time. The noble Baroness also mentioned the supply of electricity in France to the remoter areas. In some cases it is easier to lay an electricity line by overhead cable than it would be to lay a pipe in the ground.
Baroness Seear: But the principle is the same, my Lords.
Lord Brabazon of Tara: My Lords, the noble Baroness said that to use the word "economical" might restrict the powers of a gas company to connect a new supply. I can assure the noble Baroness that that would not be the case. This duty is on the Secretary of State,
"to secure that persons authorised by or under this Part to supply gas through pipes satisfy, so far as it is economical to do so, all reasonable"
and so on.
There is nothing to stop British Gas, if that is the public gas supplier in question, laying a pipeline even if it felt that it might not necessarily start off by being profitable. If it could see the supply going to a new town or something like that, so that it would develop over a period of years, it would certainly be able to do that. The reasonableness of demand is surely to be seen in the light of the person asking for the supply. A person in the country may want gas in exactly the

47
same way as any city dweller and it may be reasonable for him to do so. The question of the economics of such a supply is a quite different one. That is why we need to draw the distinction that we have.
Lord Somers: My Lords, with all the references that the noble Lord has made to the various duties of the Secretary of State, it seems to me that this Bill will make the gas corporation merely a different form of nationalised gas. I cannot see why, if it is to be denationalised, the Secretary of State has to have so much say. Perhaps the Minister can explain that.
Lord Ezra: My Lords, the amendment was intended as a relatively minor step towards increasing the flexibility in the cirumstances in which gas could be supplied. I regret to note that the Government are still adamant in not accepting it. Nevertheless, I do not wish to press it to a Division, and therefore I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
(Amendment No. 67 not moved)
5.45 p.m.
Lord Diamond Lord Diamond moved Amendment No. 68:
Page 3, line 9, after ("able") insert ("at the date of authorisation").
The noble Lord said: My Lords, we have touched on this matter before, but it is important to get it clarified because a very important principle is at stake. Clause 4(1)(a) provides for the supply of gas through pipes to satisfy "all reasonable demands". Subsection (l)(b) proceeds to pick out especially the duty to secure that,
"persons are able to finance the provision of gas supply services".
That is picked out as being of special importance and therefore meriting reference, although none of the other matters coming under Clause 4(1 )(a) requires it.
I do not think that the words produce the answers that the Government want. I think that what the Government are really after is the sensible duty of seeing that at the date of authorisation (which are the words of my amendment) the person who is to be given the licence to supply gas should be able to finance the provision of gas supply services. That is fine: of course he should. There is the responsibility of the Government to see that such a person has the necessary financial stability and standing in the financial markets to be able to secure the financing of the gas supply.
But it does not say that. It says:
"to secure that such persons are able to finance the provision of gas".
That means not only at the time of authorisation but in the future as well. How can a government secure—I ask your Lordships to have regard to the word "secure"; it is not "provide"—that an authorised supplier will for all time be able to finance the provision of gas, unless the Government do the one thing they say, and said at Committee stage, that they do not want to do; namely, provide such a cushion of inefficiency to a gas supplier that no matter how inefficiently he ran his business and therefore wasted the capital he started with and which was sufficient to justify the grant of authority, he would have to be
48
given the right to price his product in such a way that there would always be enough margin left over for financing the continuation of the supply of gas? There is no other way in which the continuity of the ability to finance could be secured.
I hope I do not need to remind the Government of what they said on this matter. I am quoting from the relevant Committee discussion. The Minister, Lord Gray of Contin, said:
"This means only that efficient suppliers can do this and not"—
this is the part I want to underline—
"that inefficient suppliers must be tolerated. The Government therefore share the feelings of the noble Lord that such a cushion should not be given". —[Official Report, 8/5/86; col. 928.]
That is the view of the Government, but I do not see how the words can achieve that. As the clause stands, there is a ridiculous situation. First, there is a privatised monopoly without any competition at all; and the whole argument behind privatisation is that competition is introduced. The second argument behind privatisation is that the weak go to the wall. If a firm runs inefficiently, it goes bankrupt. Only the efficient firms are left. That is the second argument for the private sector.
But here is a provision which can only mean that for all time the gas supplier in question is protected from going bankrupt. That is why I believe that the Government and ourselves are on the same side in saying that what is really intended is that they should have the responsibility for seeing that when the authorisation is granted the supplier should be financially capable of carrying out the terms of the authorisation.
From then on, it is up to the supplier to run his show efficiently. If he does not do so then he meets the fate that all inefficient undertakers of business in the private sector meet: they are unable to carry on; and they are not to have this cushion which the Government say should not be granted. I hope that this is an occasion therefore when we are on the same side, and that the Government are prepared to accept the amendment.
Lord Bruce of Donington: My Lords, I hope that the Government are going to find themselves able to accept this amendment. Clause 4 in itself relates to Part 1 of the Bill, and Part 1 of the Bill includes not only British Gas but, under Clause 8, other suppliers, Nobody doubts, unless there has been undue incidence of squandermania by British Gas over the past few months, that British Gas is capable financially at the time of authorisation of being able to supply the gas requirements, and to do the various things that are required of it under the Bill. But there are going to be other suppliers, particularly those that are under Clause 8 of the Bill.
It seems to me to be quite reasonable that the Secretary of State and the director should be able to be satisfied at the time of the authorisation to these various other bodies that are covered under Clause 8 that they are capable of financing the provisions of gas supply services. Otherwise, authorisations might be hawked around or might be sought by people who do not have the finances available at the time of authorisation and who are relying on the issue of the authorisation itself to be able to raise the necessary

49
capital for that purpose. I do not think that this would be a very satisfactory position. As I say, it would enable people, perhaps people even friendly to the party opposite comprising the Government, to apply for authorisation without having at the time of the authorisation the necessary resources.
For the purpose of straightforward commercial dealing, I do not think that the insertion of the words proposed by the noble Lord, Lord Diamond, impose a grave and onerous responsibility upon either the Secretary of State or the director. They would seem, I hope, to your Lordships to be plain commonsense, and I hope that the Government will be able to accept this very moderate amendment that has been so moderately moved by the noble Lord, Lord Diamond.
Lord Campbell of Alloway: My Lords, I am not quite sure what "at the date of authorisation" means. If you are able to borrow, say, £100 million as at the date of authorisation, it will appear you are able (if that is the sum required) to finance the provision of gas supply services. How does that become enforceable in practical terms? Do you have to show that you are able to borrow? Do you have to produce some form of document? Does this really make sense? Is it not an unnecessary and restrictive requirement in the Bill? Does it really serve a tangible, practical purpose?
Lord Ezra: My Lords, the difficulty arises surely from the use of the word "secure". It implies that in some way or other the Government will ensure that these people for ever and a day will remain in a viable situation. What I suppose it is meant to mean is, "satisfy themselves". If that is what it is meant to mean, it would have been better if it had said it. The reason for the amendment moved by my noble friend is to overcome that implication.
Lord Brabazon of Tara: My Lords, perhaps I can attempt to explain why the Bill is drafted as it is. There are two main duties in Clause 4(1) of the Bill. The first one, as we have discussed, is to secure that all reasonable demands for gas are met. That is in paragraph (a). Paragraph (b) is to counterbalance that. It ensures that, in exercising their functions, not only must the Secretary of State and the director be concerned about the financial viability of the suppliers at the time of granting their authorisation—which they would be—but that this concern must continue throughout the duration of any authorisation.
This will ensure that no action is taken gratuitously to drive suppliers into losses by over-regulation. However, I would stress that the duty we have included in the Bill in no way provides a guarantee for the public gas suppliers irrespective of their efficiency. The duty is designed simply to ensure that the actions of the Secretary of State or the director do not put a well-run and efficient company out of business; and that it should remain able to finance its business. Therefore, I think that, with that explanation, the paragraphs (a) and (b) go very well together, without the words suggested by the noble Lord's amendment.
Lord Diamond: My Lords, I find the Minister's answer as unsatisfactory on this occasion as it was on the previous occasion. It does not deal with the
50
argument at all. It is simply not the case that using the word "secure" means that the Government do not have to provide a cushion. Of course they do. How else can they do that? Of course, it would be very inconvenient if the single gas supplier were to go bankrupt and not be able to supply gas. We on these Benches were not proposing the privatisation of the gas industry; the Government are doing that. If the Government are doing it, they are doing it on the grounds that there will be no lessening of efficiency—let us put it that way—at all events.
Here is a guarantee that, no matter how inefficiently this business is run, there will be for all time the necessary balance or surplus—and it can only come from profit making—to enable this business to continue. The Minister says that the Government must not take any step deliberately to force the undertaker into bankruptcy. Of course they must not; but what are the Government promising to do about, for instance, the gas levy? The Government are proposing so far as we know, to continue the gas levy—a most important addition to the costs of this company. It is one of the expenditures that it incurs. If it had to incur it in certain circumstances, it would mean it would have to go bankrupt. It might not be able to pay either its other creditors or the Government—and the Government come first, as we all know; they have preference.
What are the Government going to do about that? The gas supply company may be running at such a low level of profitability that it could not afford any gas levy at all. Does that mean that the Government are not going to raise the gas levy? Of course not. It means, and can only mean so far as it means anything, that the words will ensure (and what the Minister has had to say will ensure) that for all time, no matter how inefficiently run this business is, there will have to be a margin of profit left over sufficient to pay for capital expenditure, capital additions and to run profitably. I repeat that it means not only that we have a private monopoly without any competition at all, but that we now have the added nonsense of a private monopoly that does not even allow an undertaking being carried on in the private sector going bankrupt. It provides them with the sole right to supply 16 million customers, and ensures that however inefficiently they carry out they will remain a viable concern financially. This is surely the most arrant nonsense on which we must divide.
6.1 p.m.
On Question, Whether the said amendment (No. 68) shall be agreed to?
Their Lordships divided: Contents, 93; Not-Contents, 117.

DIVISION NO.3

CONTENTS

Addington, L.

Boston of Faversham, L.

Airedale, L.

Bottomley, L.

Ardwick, L.

Briginshaw, L.

Attlee, E. [Teller.]

Brockway, L.

Aylestone, L.

Brooks of Tremorfa, L.

Banks, L.

Bruce of Donington, L.

Barnett, L.

Buckmaster, V.

Blyton, L.

Burton of Coventry, B

51

Carmichael of Kelvingrove, L.

Lovell-Davis, L.

Chitnis, L.

McIntosh of Haringey, L.

Cledwyn of Penrhos, L.

Mackie of Benshie, L.

Crawshaw of Aintree, L.

Mayhew, L.

David, B.

Meston, L.

Davies of Penrhys, L.

Milner of Leeds, L.

Dean of Beswick, L.

Mishcon, L.

Denington, B.

Molloy, L.

Diamond, L.

Monson, L.

Donoughue, L.

Morton of Shuna, L.

Elwyn-Jones, L.

Nicol, B.

Ennals, L.

Northfield, L.

Ewart-Biggs, B.

Oram, L.

Ezra, L.

Parry, L.

Falkender, B.

Phillips, B.

Foot, L.

Pitt of Hampstead, L.

Gallacher, L.

Ponsonby of Shulbrede, L.

Graham of Edmonton, L.

Rea, L.

[Teller.]

Rochester, L.

Grey, E.

Ross of Marnock, L.

Grimond, L.

Scanlon, L.

Hampton, L.

Seear, B.

Hanworth, V.

Shackleton, L.

Harris of Greenwich, L.

Shepherd, L.

Hatch of Lusby, L.

Silkin of Dulwich, L.

Heycock, L.

Stallard, L.

Howie of Troon, L.

Stoddart of Swindon, L.

Hunt, L.

Taylor of Mansfield, L.

Jacques, L.

Tordoff, L.

Jeger, B.

Turner of Camden, B.

Jenkins of Putney, L.

Underhill, L.

John-Mackie, L.

Wallace of Coslany, L.

Kilbracken, L.

Walston, L.

Kilmarnock, L.

Whaddon, L.

Kirkhill, L.

White, B.

Kirkwood, L.

Wigoder, L.

Llewelyn-Davies of Hastoe, B.

Williams of Elvel, L.

Lloyd of Kilgerran, L.

Wilson of Rievaulx, L.

Longford, E.

Winstanley, L.

NOT-CONTENTS

Aldington, L.

Faithfull, B.

Alexander of Tunis, E.

Fanshawe of Richmond, L.

Auckland, L.

Fortescue, E.

Bauer, L.

Fraser of Kilmorack, L.

Beaverbrook, L.

Gainford, L.

Belhaven and Stenton, L.

Gardner of Parkes, B.

Bellwin, L.

Gibson-Watt, L.

Beloff, L.

Glanusk, L.

Belstead, L.

Glenarthur, L.

Bessborough, E.

Gray of Contin, L.

Birdwood, L.

Greenway, L.

Boardman, L.

Gridley, L.

Boyd-Carpenter, L.

Grimthorpe, L.

Brabazon of Tara, L.

Hailsham of Saint

Brentford, V.

Marylebone, L.

Brougham and Vaux, L.

Harmar-Nicholls, L.

Butterworth, L.

Henderson of Brompton, L.

Caithness, E.

Henley, L.

Cameron of Lochbroom, L.

Hesketh, L.

Campbell of Alloway, L.

Hives, L.

Campbell of Croy, L.

Home of the Hirsel, L.

Carnegy of Lour, B.

Hood, V.

Carnock, L.

Hooper, B.

Coleraine, L.

Hylton-Foster, B.

Colville of Culross, V.

Killearn, L.

Constantine of Stanmore, L.

Kimball, L.

Craigavon, V.

Kinnaird, L.

Cullen of Ashbourne, L.

Lane-Fox, B.

Davidson, V.

Lauderdale, E.

Denham, L. [Teller.]

Layton, L.

Derwent, L.

Lindsey and Abingdon, E.

Dilhorne, V.

Long, V.

Donegall, M.

Lucas of Chilworth, L.

Dormer, L.

Lyell, L.

Drumalbyn, L.

Macleod of Borve, B.

Eccles, V.

Mancroft, L.

Eden of Winton, L.

Margadale, L.

Elliot of Harwood, B.

Maude of Stratford-upon-

Elliott of Morpeth, L.

Avon, L.

Elton, L.

Melville, V.

52

Mersey, V.

Sandys, L.

Monk Bretton, L.

Selkirk, E.

Montgomery of Alamein, V.

Shannon, E.

Mottistone, L.

Shaughnessy, L.

Mowbray and Stourton, L.

Skelmersdale, L.

Munster, E.

Strathcarron, L.

Norfolk, D.

Strathclyde, L.

Nugent of Guildford, L.

Sudeley, L.

Orr-Ewing, L.

Suffield, L.

Penrhyn, L.

Swinfen L.

Peyton of Yeovil, L.

Swinton, E. [Teller.]

Portland, D.

Teviot, L.

Rankeillour, L.

Teynham, L.

Ridley, V.

Thomas of Swynnerton, L.

Rodney, L.

Vaux of Harrowden, L.

St. Aldwyn, E.

Vickers, B.

St. Davids, V.

Vivian, L.

St. John of Bletso, L.

Wolfson, B.

Sanderson of Bowden, L.

Young, B.

Sandford, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.9 p.m.
[Amendment No. 69 had been withdrawn from the Marshalled List.]
[Amendment Nos. 70 and 71 not moved.]
Lord Ezra Lord Ezra moved Amendment No. 72:
Page 3, line 22, at end insert—
("( ) to promote conservation and energy efficiency by ensuring that any public gas supplier has an energy saving programme covering all consumers and by monitoring the implementation of that programme on the part of the supplier;").
The noble Lord said: My Lords, Amendment No. 72 refers to the promotion of conservation and energy efficiency. This is a subject to which we have referred repeatedly during the Committee stage of this important Bill. At one time during our Committee deliberations the noble Lord, Lord Belstead, undertook to consider these issues. By that I thought he meant that he would be introducing suitable amendments during Report stage. However, so far such amendments have not appeared and we feel it necessary to continue to emphasise our concern about the promotion of conservation and energy efficiency, particularly so far as consumers are concerned. It has been a surprise to us throughout our deliberations on this particular subject that the Government, who have in other ways done so much to seek to promote energy efficiency, should have resisted implanting that idea fairly and squarely into the Bill. We think this represents a degree of inconsistency in thinking which needs to be put right.
So it is that in this amendment and in a number of related amendments—for the benefit of your Lordships I will read them out: they are Nos. 103, 104, 117, 118 and 123, which are grouped with this one—we shall at various stages in the course of the Report stage be coming back to this. I should like at this point only to reiterate our serious concern that under one or other of these amendments the subject of the promotion of conservation and energy efficiency by consumers should be introduced into the Bill. I beg to move.
Lord Stoddart of Swindon: My Lords, if I may say a few brief words in support of this amendment, the new Condition No. 13 of the proposed authorisation, so far

53
as I can see, goes some way towards meeting the demands contained in this amendment. However, it does not go as far as I would wish since it does not state explicitly that British Gas should be required to promote energy efficiency. However, it does require British Gas to prepare statements about efficiency and to disseminate them to their customers.
We should like to see British Gas doing much more to conserve our gas reserves and not to deplete them unnecessarily to provide short-term profit for the shareholders. Energy efficiency promotion is good for the country as well as for the consumers. Even on the most optimistic forecasts, we shall cease to be self-sufficient in oil by the end of the century and it is very important that we should conserve stocks of gas, which is a premium fuel, and indeed conserve every sort of energy. I support this amendment.
Lord Grimond: My Lords, before the Minister replies, may I draw his attention to the old subject of the flaring of gas? He will know full well that it is still going on, and on an immense scale, in Orkney and Shetland. I do not know whether that comes under this provision for the promotion of energy conservation, but, if it does not, it ought to.
From time to time it has been suggested that there are various ways of using the gas which is now flared off on Flotta and at Sullom and at all gas installations and refineries. I believe that we should keep up the pressure so that if the gas cannot all be used for some useful purpose at least some of it will be. For instance, there is no gas supply in Orkney and Shetland; and yet this gas is flared off continually into the heavens.
Baroness Gardner of Parkes: My Lords, I do not think we should under-estimate the interests of the energy authorities in promoting energy efficiency. I do not see that it is necessary to write anything further into the Bill. Only within the last few weeks there was a major display of combined gas and electricity authorities in the Guildhall, and that concerned energy efficiency in business. That is only one of many energy efficiency displays that I have attended recently. I believe these industries are very well aware of the need for efficiency.
6.15 p.m.
Lord Gray of Contin: My Lords, I am grateful to the noble Lord, Lord Ezra, for including with his amendment five other amendments which are all related to the same subject. Amendment No. 72 would require British Gas to have an energy-saving programme monitored by the director or the Secretary of State. Many noble Lords have already referred to British Gas's commitment to helping their customers save energy, covering the use of existing equipment and developing new and more efficient appliance systems and controls. Perhaps I might mention some of their promotional activities—and my noble friend Lady Gardner of Parkes has just touched on this point—which include, for example: the Gas Energy Management award, now in its eleventh year; extensive publicity and advice to the domestic consumer in showrooms and through advertising, and "Thermsaver" energy efficient products; the Gaswarm Homes certificates; Therm, an exercise to assess
54
conservation measures in buildings, and a Design for Energy Management Award, sponsored jointly with the RIBA, for energy-efficient architectural design; and energy efficient education material and projects for schools.
These are all backed up by British Gas's considerable research and development effort for all sectors, including the development of energy efficient appliances. I do not believe that the requirement to have a programme, which they clearly already have, would add anything to British Gas's strong commitment to energy efficiency. It will need to continue the promotion of the efficient use of gas if it is to be successful in the competitive energy market in which it operates.
Amendment No. 104 would permit the Secretary of State to include conditions relating to energy efficiency in the Bill. This is already the case under Clause 7, so far as advocacy and advice through the publication of information is concerned. Clause 7(7) reads:
"An authorisation under this section may include … such conditions … requiring information to be furnished to the director or published, as appear to the Secretary of State to be requisite or expedient having regard to the duties imposed by section 4 above:".
Amendment No. 117, which requires public gas suppliers to observe the principle of least-cost resource acquisition, is very similar to Amendment No. 43 which the noble Lord, Lord Ezra, put down at the Committee stage, except that the duty now falls directly on the public gas supplier in Clause 9(1) of the Bill rather than on the director and the Secretary of State, as in Clause 4.
Amendment No. 123 refers to the development of energy efficient appliances. It would not be appropri-ate to lay such a duty on all public gas suppliers. A public gas supplier, supplying a small area, would probably not have the resources or the expertise to carry out such work and yet provide an efficient and effective gas distribution network. As I have mentioned, British Gas already carries out such activities, often in association with appliance manufacturers.
The noble Lord, Lord Ezra, will be glad to hear that I now turn to the good news. We undertook, in response to amendments at Committee stage, to consider an addition to the authorisation to require British Gas to provide information and advice to its customers. A completely new condition, Condition 13, has now been added to the authorisation. It will require British Gas to provide published information free of charge to tariff customers about the efficient use of gas, following consultation with the director and the Gas Consumer Council. The information must be updated when necessary. The British Gas Corporation will also be required to give every contract customer once a year a statement describing the advisory and other services available for contract customers which can help them to improve their gas efficiency. I hope your Lordships will welcome this new condition, which will reinforce the gas efficiency message and oblige British Gas to continue providing information and advice to its customers, and that in view of what I have said they will agree to withdraw the proposed amendments.
Lord Ezra: My Lords, I should like to thank the noble Lord, in particular for the last part of his

55
remarks. That is very helpful news indeed. We should like time to study this amendment to the authorisation. I should just like to emphasise that there is no doubt in anybody's mind on this side of the House or, I believe, on the other side that British Gas is at present doing a very good job in promoting efficiency. What we are concerned with is what could happen under some future administration which might not have the same motivation and should be brought back to this point. Having said that, and having heard that there is this amendment in the authorisation, we should like to study it and possibly come back to this matter at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 73 to 75 not moved. ]
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 77:
Page 3, line 28, at end insert—
("( ) to ensure that the interests of British manufacturers and suppliers are taken into account in the procurement policy relating to plant, equipment and appliances of a public gas supplier and to monitor the buying policies of such suppliers in this regard.").
The noble Lord said: My Lords, I make no apology for returning to this important amendment which was moved at the Committee stage. My intervention this afternoon to re-open this question arises from the nature of the reply from the Government Benches to the proposal that is set out in the amendment.
This amendment is very modest. It lays a duty on the Secretary of State and the director,
"to ensure that the interests of British manufacturers and suppliers are taken into account in the procurement policy relating to plant, equipment and appliances of a public gas supplier and to monitor the buying policies of such suppliers in this regard".
All the amendment seeks to do is to impose on the Secretary of State, the director general and British Gas the same obligations that have been carried out in the past, as the Minister was himself careful to point out in his reply, by British Gas.
They are policies that are followed in the United States of America by the Trade and Commerce Department in intervening directly to ensure that the maximum consideration is given in terms of supplying American requirements from American manu-facturers. It is a policy adopted also by MITI in Japan, which most carefully co-ordinates the buying activities of the various large-scale industries in Japan to ensure that wherever possible Japanese manufacturers get a fair consideration, to put it as its mildest, in comparison with imports from other countries. It is a policy pursued quite openly in the Federal Republic of Germany whose public utilities make every endeavour to ensure that the supplies required by those public utilities are supplied wherever possible from German resources. Similar considerations apply in France.
There is very good reason for that. It has been found in these various countries that the large public utilities exercise an effect on the manufacturing sectors of the economies within which they function. It is one of the advantages of public utilities that are directly responsible through the Minister to Parliament that they can in fact, sometimes under government persuasion, sometimes under government argument
56
or sometimes even by direct instruction when it appears in the interests of manufacturing industry within the country, use every possible endeavour to ensure that their requirements are satisfied within their countries, and in the Government's case within the United Kingdom.
It is common knowledge that manufacturing industry in the United Kingdom has still to regain its 1979 level of output. It is common knowledge that we have large-scale unemployment in the manufacturing industries. In those circumstances surely it is not unreasonable to lay down not that the British plc shall prefer British manufacturers but that it shall ensure, more modestly, that they are taken into account. I should have thought that that would appeal to every Member of your Lordships' House.
We were told when British Telecom was privatised that every endeavour would be made to ensure continuation of purchasing policy. Your Lordships will recall that British Telecom had 95 per cent. of its requirements supplied by manufacturing industry. We were told at the time that there was every confidence that this policy would continue, but since British Telecom has been privatised it has sought far wider in the interests of its shareholders. We have to decide whether this should apply to the very considerable requirements of supplies by British Gas that amount to thousands of millions of pounds and provide considerable employment throughout the United Kingdom.
The answer given by the noble Lord, Lord Brabazon of Tara, in cols. 948 and 949 of the Official Report for 8th May, was that he very much hoped that the new British plc would continue in the same way as its predecessor. He was very guarded about it. But, more importantly, he concluded on a note upon which I must now challenge the Government—not the individual Minister, because the Minister replying will reply on behalf of the Government and will commit the Government, as indeed the noble Lord did in the course of his final objection to the amendment reported at col. 949 of Hansard for 8th May.
I quote the noble Lord:
"Finally, perhaps the main reason that I cannot accept this amendment this evening is that such a specific focus on British products would be contary to Article 30 of the Treaty of Rome".
Since this involves quite a constitutional point I must now challenge the Government. Article 30 of the Treaty of Rome reads as follows:
"Quantitative restrictions on imports and all measures having equivalent effect shall, without prejudice to the following provisions, be prohibited between member states".
I invite the Government to say quite categorically and responsibly as a government (because there will be other Bills of constitutional importance coming before your Lordships' House) whether it is the considered view of the Government as a whole that the insertion of a provision to ensure that the interests of British manufacturers and suppliers are taken into account in the procurement policy relating to plant, equipment and appliances of a public gas supplier, specifically brings it within that article. If it does bring it within that article, there are very profound constitutional consequences on the independent courses of action that this country may pursue.
The noble Lord can reply, and he may reply—and I warn him that he is speaking on behalf of the Government as a whole—that any edict that comes from the Commission, and any directive to the United Kingdom that comes as a consequence of Article 30, must go through the Council; and that if it is considered to be against the British interests, it can be vetoed under the Luxembourg compromise. Perhaps I ought to warn the Government that I have before me a detailed memorandum by the noble Baroness, Lady Young, concerning the application of the Luxembourg compromise and the right of veto.
Will the noble Lord therefore tell the House that the veto is applicable in an instance of that kind, or is it inapplicable? It seems to me that if the Commission or the Council endeavoured to object to a British plc taking into account, in a procurement policy relating to plant, the interests of British manufacturers, then that is something to which the British veto ought to apply.
The question that I must ask the Government to answer definitely is this: if any endeavour were made in those circumstances, would they invoke the Luxembourg compromise, the details of which I have before me? I hope that the noble Lord would come to the sensible conclusion, first, that Article 30, which he invoked in aid of his argument, does not apply, secondly, that if it did apply, it could be overcome by the application of the Luxembourg compromise and the veto. In the meantime, it seems intolerable that, contrary to the practice of every other industrial country of significance, it should be wrong somehow for a large public utility, which will remain such even thought it will be in private hands, to be prevented from taking into account a procurement policy relating to plant, equipment and appliances, in order that the interests of British manufacturers may be reasonably taken into account and regard.
I would have hoped that, in this country, such would be a non-contentious matter. However, if the Government still resist, then I give notice that this amendment will be taken to a Division, and that the constitutional implications will be considered later.
Lord Campbell of Alloway: My Lords, before this matter were ever taken to a Division, perhaps it would be right to correct a possible misapprehension on the part of the noble Lord, Lord Bruce of Donington. As I see it, the right of veto and the Luxembourg compromise are not really applicable at all to a situation such as this. This is a legal matter for the Commission and then for the court of justice under Community jurisprudence.
In that context, if I am right, two points arise. The first is that the clause as such does not fall within Article 30 and following it the Treaty, but that its implementation could, on the facts of any particular case, be found to be in breach by the Commission and also by the court of justice. If that analysis is correct—and I hope that it is—then that of itself would be a very good reason for not including a clause of the kind proposed specifically by amendment to the Bill.
The next point that arises, if I am right, is that implementation of a similar clause in the context not only of freestanding companies, as proposed in the Bill, but also in the context of state monopolies as
58
under Article 92, has been held by the court of justice in many circumstances to be unlawful and in contravention of Community law. If it is a freestanding company, then your Lordships will be concerned with Article 30. If it is a state monopoly, then your Lordships will be concerned with another aspect of the treaty, which is Article 92.
Apart from all that, is it not wrong in principle to muzzle the buying policies of a freestanding board by statute? If it is right, is not that kind of muzzling the very sort of thing that would tend to operate to the detriment of the consumer so far as concerns prices?
Lord Ezra: My Lords, I support the amendment proposed by the noble Lord, Lord Bruce of Donington, because it raises a very important issue that goes considerably beyond the scope of the Bill. First, I am glad that the noble Lord, Lord Campbell of Alloway, has confirmed that the wording put forward in the amendment does not contravene Article 30 but that in particular cases there might be held to be a contravention. Obviously, that could be overcome by avoiding particular cases of that kind. That is the point I should now like to discuss, because British Gas as currently constituted, like the other nationalised industries, has for years pursued a policy very success-fully of giving full opportunity to British suppliers to compete for its business. I know from my personal experience with the coal board that that has been done on a proper, competitive basis.
It does mean, however, that one stimulates people. There is nothing in our international obligations that prevents us from stimulating our suppliers to give us what we want and from offering them the facility of seeing our installations—as we did, by taking suppliers to the coal mines and showing them the kind of opportunities that there could be for them. The British Gas Council has pursued that policy with great success. We want to ensure, naturally, that any successor organisation would do the same; would continue to give full opportunity, encouragement and stimulus to the British suppliers, on the understanding that they would only get the business if they were competitive. That was certainly the basis on which we in the coal board worked, and I understand that the other nationalised industries do the same.
I believe that the amendment as drafted, which is not in contravention of Article 30 if it were applied in the way that I have indicated, so that it did not give rise to any proceedings of the court of justice, is a desirable one. One of the ways in which British industry generally can be stimulated is by the large purchasers giving every possible opportunity to British suppliers to meet their needs. Opportunity and stimulus means encouragement, and that is what we should like to see under the new regime. We believe that the amendment proposed would achieve that.
Lord Boyd-Carpenter: My Lords, the noble Lord, Lord Ezra, knows that many British companies in the private sector do show preference to British suppliers. In the noble Lord's previous incarnation and in a previous incarnation of mine—he may recall the conjuncture—preference was given by a British company to the great organisation of which he was chairman. It was not without a certain amount of

59
discussion nor even perhaps without a certain modest adjustment on his part to the price, but still a preference was given. This is a perfectly proper attitude and certainly, as I understand it, does not get into the difficulties involved with the Treaty of Rome.
Putting this kind of provision into a statute troubles me because of its imprecision. If it is to be the statutory duty of the Secretary of State and the director to ensure something, they are entitled to know what that something is. How does one ensure that the interests of British manufacturers and suppliers are taken into account? Does it mean that if the price they quote is even marginally above that of the foreign competitor, it is the duty of the Secretary of State to see that the new gas authority goes to the British manufacturer? If that is so, what margin of preference is required to be given?
It is surely an extraordinarily vague phrase:
"to ensure that the interests of British manufacturers and suppliers are taken into account".
If your Lordships would put yourselves in the position of either a Secretary of State or a director, who are supposed to ensure that as a matter of law this is done, I think that you would feel that far more guidance as to what is meant would be required. The amendment does not say in terms that a preference shall be given up to 2 per cent., 5 per cent., or 10 per cent., which, whatever its many demerits would at least be precise. It just says that one takes into account the interests of British manufacturers. Well, the interests of British manufacturers are of course to secure the contracts. But how can one ensure that— again using this very vague phrase—they are taken into account?
Leaving aside the complications of the possible implementation, involving problems under the Treaty of Rome, with which my noble and learned friend has dealt, I am against this amendment simply because of its imprecision. If one is to impose a statutory duty on anybody, be he a Secretary of State or a director general, that person is entitled to ask that it should be clear what that duty means. I think that any of your Lordships who might have the duty of carrying out this provision if it were in the Act would be in a position of very real difficulty.
Baroness Seear: My Lords, with all due respect to the noble Lord who has just spoken, I should have thought that in his previous speech the noble Lord, Lord Ezra, had made it very clear how in fact he had taken the interests of British manufacturers into account. He explained what they did, and to me it sounded as though it were a perfectly reasonable approach that was easy to understand. If, as the noble Lord appeared to be suggesting, one were to write into the Bill a percentage of preference, then in my view one would very quickly get into deep trouble with the Treaty of Rome. It has to be worded in this way in order that one can give due encouragement and go out of one's way to do precisely the sort of thing that the noble Lord, Lord Ezra, mentioned, which is to take prospective customers along to the suppliers and along to the pits to see what is required so that they can get their designs right and be in a good position to compete. That is what he was saying and it seemed to
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be quite clear and make good sense. If anything precise is written in, one will indeed be up against the European Court.
Baroness Gardner of Parkes: My Lords, is this not the same problem to a large extent that we have with British industry? For a long time British industry has been unwilling to go out and sell its own products, and it is asking too much to put the obligation on the gas authority to go out and approach British industry. I think that the manufacturers in this country ought to be so competitive and so good that the contract should automatically go to them. I do not think it should be necessary to write this condition into the Bill. Sadly, all too often I am forced to buy overseas products simply because British manufacturers will not update their products or, frankly, they do not care about the market. I think it is up to British manufacturers to take a more positive approach.
6.45 p.m.
Lord Brabazon of Tara: We have had an interesting debate on this issue—and this is the third time round in fact so far as concerns this amendment because by accident we discussed it twice at Committee stage. On this occasion I shall obviously concentrate on aspects of Article 30 of the Treaty of Rome. We have been over the ground that British Gas has a very good purchasing record in Britain at the moment and I see no reason why that should not continue. I remind noble Lords that so far as offshore is concerned, it is very carefully monitored by the Offshore Supplies Office. This has resulted in a very large amount of business coming into this country; if I recall, it is 85 per cent.—
Lord Diamond: My Lords, may I ask as regards the offshore business whether anyone has alleged that it is contrary to Article 30?
Lord Brabazon of Tara: I gather not, my Lords; no, it is not. So far as I understand it, the agreement known as the Luxembourg Compromise, which was mentioned by the noble Lord, Lord Bruce, relates to voting in the Council when member states believe that a vital national interest is concerned. The application of Article 30 of the Treaty of Rome to this Bill concerns the interpretation of a treaty obligation which the British Government have entered into and which has been properly ratified by Parliament. As my noble friend Lord Campbell of Alloway explained very clearly, the application of Article 30 in a given case is a matter for the European Court of Justice and not a matter for the Council of Ministers. As he explained, it would not necessarily be from the actual amendment as proposed; it would be from any possible implementation of the amendment that trouble could arise.
Regarding the Treaty of Rome, I can only repeat what I said when we discussed the amendment in Committee: we consider that the imposition of this duty in the Bill would amount to a measure having equivalent effect to a restriction on imports, which is prohibited by Article 30. I know that many noble Lords opposite do not support the Government's commitment to our European partners and to the principles of freedom of trade underlying the Treaty of

61
Rome. That is only one aspect of the policies of those noble Lords opposite on which I believe that we are bound to differ, and I believe that noble Lords opposite are wrong.
My noble friend Lord Campbell of Alloway said that this provision would muzzle the buying policies of a free-standing company. One of the duties laid down in Clause (4)(2)(b) is:
"to promote efficiency and economy on the part of persons authorised by or under this Part to supply gas".
It could well be—I hope it is not applicable and I have no reason to believe it would be, because I believe that British suppliers can and will continue as they do at the moment to produce the right goods at the right price to supply British Gas with its needs—that subsection (b) and the new amendment would come into complete conflict if British Gas were always to choose from a British manufacturer when it might have been able to buy something cheaper from a foreign competitor.
In fact, I do not think that does any good at all to our industry either, because our industry must realise that if it is to compete overseas—and we do not want any restrictions placed on our industry to compete overseas—then it has to produce the goods at the right price and on time. If it has a sheltered market in this country, so to speak, then it will not receive the encouragement to do that. In fact, my noble friend Lord Boyd-Carpenter said that the amendment is so vague as to make its meaning almost uninterpretable. I suppose that it has to be vague if it is not allegedly to contravene Article 30; but in that case what is the point of having it in the first place? Really, we have been over this ground twice already. I do not believe that the noble Lord, Lord Bruce of Donington, has said anything new on this occasion to persuade me that this would in any way be a suitable amendment to add to the Bill. I therefore urge my noble friends to join me in rejecting it.
Lord Diamond: My Lords, I was sorry to hear the tone of the Minister's reply because it did not indicate that he is sympathetic to what is behind the amendment. I asked him whether the offshore supplies which have been achieved by British Gas and monitored by the Government (no doubt by the Treasury carrying out the responsibility which it used to carry in my time, when the responsibility of competition policy rested on my desk) contravened Article 30. His reply was that he thought it did not. There was no contravention.
The main argument that the Minister is proposing for refusing the amendment is that it would lead us into difficulties and, more particularly, is in contravention of Article 30. He went on to say that noble Lords opposite were opposed to the Community and liberal ideas of trade. I make it clear that on these Benches there is no party more sympathetic to the European experiment or determined to see that it shall live and expand, or more committed to free trade, than the Liberal Party. That has been the policy of the Liberal Party as long as anybody can remember. I am told that that was the case long before the Conservative Party came into existence.
The noble Lord is wrong on both those matters. He is wrong about Article 30 and about our motivation. I cannot imagine words more representative of the
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Prime Minister than this amendment. We are concerned to see that the policy pursued by many governments continues to be carried out; namely, that other things being equal the interests of the British manufacturers and suppliers are taken into account.
As has been said, there are many British private sector retailers. When we talk about the gas industry, we are thinking about very large retailers such as Marks and Spencer. I think that in the case of Marks and Spencer we are talking about an enormous percentage. I think they have something over 98 per cent. of British goods. Reference has already been made to British Gas having over 85 per cent. of British goods. There have in those cases been no complaints about breaching Article 30.
All we are asking is that the same policies should continue. It is not a question of preference. It is a matter of understanding the needs of British industry and taking them into account and co-operating with British industry. British Gas should continue to obtain a competitive quote but there should be co-operation with British industry.
I was delighted to hear my noble friend Lord Ezra talking about the matter as he saw it from the National Coal Board. That corresponded with how I saw it from the Treasury. The intention was being worked out exactly. The interests of British manufacturers were being taken into account. There was no breach of Article 30. There was competition. There was the economy in expenditure which every Treasury Minister must try to achieve.
I repeat that there is no reason why the amendment should not be accepted. I hope that a number of Conservative and Cross-Bench Peers will support the idea that the principle should be stated in the Bill to give everyone a reminder about the importance of properly maintaining and supporting British manufacturing internationally. I should have thought they would welcome the inclusion of the amendment in the Bill.
Lord Campbell of Alloway: My Lords, may I have the leave of the House to deal briefly with the point made by the noble Lord, Lord Diamond, about Article 30? Article 30 applies only where it affects trade as between member states. In the circumstances that the noble Lord has proposed in respect of offshore supplies from outside the United Kingdom into the United Kingdom, there is no appreciable effect on trade as between member states. Therefore, with respect to the noble Lord, Article 30 cannot apply.
Lord Sanderson of Bowden: My Lords, I see the difficulties which the amendment brings. I have some sympathy with the idea that British manufacturers should have a chance to supply goods to British Gas and so on. I feel, and this is something for the Government to think about, that the "Better Made in Britain" campaign should be given added force. That is the way to bring manufacturers and customers together. The movement has recently had several exhibitions where various trades and industries have been brought together so that one understands the problems of the other. Price, delivery and general quality standards are discussed openly in those forums. Rather than their being a passive observer,

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that is something which the Government should support financially and actively. I understand that is not the case at the moment. Perhaps that is the way to deal with the problem which is now facing us.
Like my noble friend Lord Boyd-Carpenter, I see difficulties in implementation for the director. However, I sympathise a great deal with the feeling behind the amendment that buying British should be a priority for major British companies.
Lord Bruce of Donington: My Lords, I am sorry that the noble Lord has not been able to respond favourably to the amendment, which, as your Lordships will note, does not require any preference to be given to British manufacturers even though within the terms of practice in other countries, including members of the EC, that might well have been justified.
This is a moderate amendment. I am glad that that point was conceded by the noble Lord, Lord Boyd-Carpenter, whose illogical support, which was confined to this issue, I think that I probably had. At any rate, he was kind enough to express himself in that way. All he complained about was the lack of precision. There is a little time yet before the Bill reaches its final stages in your Lordships' House. I give notice that I should welcome the able and erudite assistance of the noble Lord, Lord Boyd-Carpenter, to give our mutual wishes in this matter more precision.
I am sorry to note that the noble Lord speaking on behalf of the Government, and therefore committing the Government as a whole, has delivered his opinion that the amendment is likely to be in breach of Article 30. That point was qualified by the noble Lord, Lord Campbell of Alloway.
The need to have due regard to the interests of British manufacturers is in a way outlined by the remarks of the noble Baroness, Lady Gardner of Parkes, who complained bitterly about the inefficiencies of British industry. In Industry Year, I thought that those remarks were rather unjustified. She must surely be aware that the interests of British manufacturers should be studied at this time precisely because of the grossly distorted exchange rates which have made British manufacturers uncompetitive abroad and have encouraged imports into the United Kingdom.
Baroness Gardner of Parkes: My Lords, if the House will allow me, I did not complain about the inefficiency of British industry. My point was that it should be competitive. I am a strong supporter of British industry. I believe that British industry should produce the best value and best designed goods. There would then be no need to consider British manufacturers because they would automatically be best. I take exception to the noble Lord's description of me as claiming that British industry was inefficient. I did not claim that. I claimed that we have never been good enough at selling our goods.
Lord Bruce of Donington: My Lords, I am most anxious not to do the noble Baroness any injustice. If I have misinterpreted her in any way, I apologise. However, when she reads in Hansard tomorrow the
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exact words she used she will find, I believe, that my comments were not entirely unjustified. If they could perhaps have been more moderately expressed, I shall next time express them more felicitously in order to lay rather less emphasis on the particular points she made.
If the Government do not accept an amendment of this kind, which lays a responsibility to have regard to the interests of British manufacturing industry, they lay themselves open to the accusation, borne out by their conduct over the last seven years, that they are quite willing, regardless of their interest rate policies and regardless of their exchange rate policies, to expose British industry to completely unfair competition; that they are prepared for its best interests not to be regarded; that they would prefer stuff to be imported from Korea, where wage rates are 30 per cent. what they are in Western Europe; and that they would prefer it to meet the chill winds completely unfairly.
The Government can get themselves out of that dilemma by being reasonable. That is all we are asking. We are not asking for anything extreme at all. We are asking the Government to ensure, for once, that the interests of British manufacturing industry, despite all the damage that they have done to it, are studied and had regard to by the new corporation.
7.2 p.m.
On Question, Whether the said amendment (No. 77) shall be agreed to?
Their Lordships divided: Contents, 83; Not-Contents, 110.

DIVISION NO.4

CONTENTS

Addington, L.

Heycock, L.

Airedale, L.

Hooson, L.

Amherst, E.

Hunt, L.

Ardwick, L.

Jacques, L.

Attlee, E.

Jeger, B.

Barnett, L.

John-Mackie, L.

Boston of Faversham, L.

Kilbracken, L.

Bottomley, L.

Kilmarnock, L.

Brockway, L.

Kirkhill, L.

Brooks of Tremorfa, L.

Kirkwood, L.

Bruce of Donington, L.

Llewelyn-Davies of Hastoe, B.

Buckmaster, V.

Lloyd of Kilgerran, L.

Burton of Coventry, B.

Longford, E.

Carmichael of Kelvingrove, L.

Lovell-Davis, L.

Chitnis, L.

McIntosh of Haringey, L.

Cledwyn of Penrhos, L.

Mackie of Benshie, L.

Crawshaw of Aintree, L.

Meston, L.

David, B. [Teller.]

Milner of Leeds, L.

Dean of Beswick, L.

Mishcon, L.

Denington, B.

Molloy, L.

Diamond, L.

Morton of Shuna, L.

Donoughue, L.

Nicol, B.

Elwyn-Jones, L.

Northfield, L.

Ennals, L.

Oram, L.

Ewart-Biggs, B.

Parry, L.

Ezra, L.

Phillips, B.

Falkender, B.

Pitt of Hampstead, L.

Fitt, L.

Ponsonby of Shulbrede, L.

Gallacher, L.

[Teller.]

Graham of Edmonton, L.

Rea, L.

Grey, E.

Rochester, L.

Hampton, L.

Ross of Marnock, L.

Hanworth, V.

Scanlon, L.

Harris of Greenwich, L.

Seear, B.

Hatch of Lusby, L.

Shannon, E.

65

Silkin of Dulwich, L.

Walston, L.

Stallard, L.

Whaddon, L.

Stoddart of Swindon, L.

Wigoder, L.

Taylor of Mansfield, L.

Williams of Elvel, L.

Tordoff, L.

Wilson of Rievaulx, L.

Turner of Camden, B.

Winstanley, L.

Underhill, L.

Winterbottom, L.

NOT-CONTENTS

Alexander of Tunis, E.

Hesketh, L.

Allenby of Megiddo, V.

Hives, L.

Arran, E.

Hood, V.

Ashbourne, L.

Hooper, B.

Auckland, L.

Hylton-Foster, B.

Bauer, L.

Kimball, L.

Belhaven and Stenton, L.

Kinloss, Ly.

Bellwin, L.

Kinnaird, L.

Beloff, L.

Kinnoull, E.

Belstead, L.

Lane-Fox, B.

Bessborough, E.

Lauderdale, E.

Boardman, L.

Layton, L.

Boyd-Carpenter, L.

Lindsey and Abingdon, E.

Brabazon of Tara, L.

Long, V.

Broadbridge, L.

Lucas of Chilworth, L.

Brougham and Vaux, L.

Lyell, L.

Butterworth, L.

Macleod of Borve, B.

Caithness, E.

Mancroft, L.

Cameron of Lochbroom, L.

Maude of Stratford-upon-

Campbell of Alloway, L.

Avon, L.

Campbell of Croy, L.

Melville, V.

Carnegy of Lour, B.

Mersey, V.

Carnock, L.

Monk Bretton, L.

Cathcart, E.

Montgomery of Alamein, V.

Coleraine, L.

Mottistone, L.

Colville of Culross, V.

Mowbray and Stourton, L.

Colwyn, L.

Munster, E.

Constantine of Stanmore, L.

Napier and Ettrick, L.

Craigavon, V.

Norfolk, D.

Craigmyle, L.

Nugent of Guildford, L.

Davidson, V.

Orkney, E.

Denham, L. [Teller.]

Orr-Ewing, L.

Derwent, L.

Pender, L.

Dilhorne, V.

Penrhyn, L.

Donegall, M..

Peyton of Yeovil, L.

Drumalbyn, L.

Rankeillour, L.

Eccles, V.

Reay, L.

Elliot of Harwood, B.

Rodney, L.

Elton, L.

St. Aldwyn, E.

Enniskillen, E.

Sanderson of Bowden, L.

Faithfull, B.

Sandys, L.

Fanshawe of Richmond, L.

Skelmersdale, L.

Fortescue, E.

Soames, L.

Fraser of Kilmorack, L.

Strathclyde, L.

Gainford, L.

Suffield, L.

Gardner of Parkes, B.

Swinfen, L.

Gibson-Watt, L.

Swinton, E. [Teller.]

Glanusk, L.

Teviot, L.

Glenarthur, L.

Thomas of Swynnerton, L.

Gray of Contin, L.

Trefgarne, L.

Gridley, L.

Trumpington, B.

Grimston of Westbury, L.

Vaux of Harrowden, L.

Hailsham of Saint

Vickers, B.

Marylebone, L.

Vinson, L.

Harmar-Nicholls, L.

Vivian, L.

Henley, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
7.10 p.m.
Lord Brabazon of Tara: My Lords, I think that we have reached a suitable moment to adjourn for dinner, and I suggest that we do not return to consideration on Report of the Gas Bill until ten minutes past eight. I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Motor Vehicles (Variation of Speed Limits) Regulations 1986
7.11 p.m.
The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness)The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness) rose to move, That the regulations laid before the House on 3rd June be approved. [25th Report from the Joint Committee].
The noble Earl said: My Lords, these regulations make minor amendments to our system of vehicle speed limits which was established two years ago. I must stress that we are concerned with vehicle speed limits and not with our national or local road speed limits.
The effect of the regulations is threefold. First, they establish a 60 mph speed limit on motorways and dual carriageways for passenger vehicles and car-derived vans towing a trailer, typically a caravan. Secondly, a 60 mph dual carriageway limit is established for light goods vehicles towing a trailer. Finally, a 40 mph speed limit is introduced on all classes of road for agricultural motor vehicles.
These regulations have been the subject of much consultation. They have been approved by all the caravaning organisations, the RAC, the AA, the Society of Motor Manufacturers and Traders and the Police Federation. In particular I should tell the House that RoSPA was asked for its views by my honourable friend the then Minister of Transport, Mrs. Lynda Chalker. She was particularly concerned that its views should be taken into account, and it expressed no opposition. I beg to move.
Moved, That the regulations laid before the House on 3rd June be approved. [25th Report from the Joint Committee]—(The Earl of Caithness.).
Lord Underhill: My Lords, despite the consultation to which the noble Earl refers, I am extremely concerned about the regulations. They increase the speed limit of vehicles towing a caravan from 50 mph to 60 mph on dual carriageways and motorways. They amend the 1984 regulations. What has happened to justify the increase in the speed limit, especially bearing in mind that the 1984 regulations were based on the 1983 national speed survey?
I have a copy of that in front of me. I shall not deal with what it says about single carriageways because they are not affected by the regulations. But on dual carriageways cars towing a trailer had the lowest mean speed of all vehicles (47 mph). Only 28 per cent. of cars and other light vehicles towing a trailer exceeded the maximum limit, and of those the standard deviation was only 7 mph. What justification is there to throw on one side the result of that speed survey and the regulations that were passed in 1984?
On motorways, too, cars towing a trailer had the lowest mean speed of 53 mph. To achieve that mean speed, many would have been travelling below 53 mph. On both dual carriageways and motorways the speed limit is to be increased to 60 mph. What has taken place to justify that increase since the national speed survey in 1983 and the regulations in 1984? Is it that the Department of Transport no longer takes any notice of national speed surveys and advises the Minister accordingly?

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Noble Lords will recall that in 1984 caravan weight ratios were abolished. On 8th March 1984 (at col. 421 of Hansard) the noble Lord, Lord Lucas of Chilworth, who was at that time handling the matter for the Government, stated:
"In practice, it is likely that 50 mph is widely regarded as the limit for all combinations".
He was referring to combinations of weight. At that time 60 mph was proposed and some organisations expressed concern about the safety aspects. Hence in 1984 the Government decided to withdraw the 60 mph proposal in favour of 50 mph for all vehicles towing caravans and other trailers.
On that occasion, I expressed my concern for I travel a reasonable amount—including on touring holidays—and I travel on the roads in Scotland of which the noble Earl will be aware. It is frightening even how, with a limit of 50 mph, when caravans are being towed if there is a wind causing them to veer from side to side. I keep as far away from them in those circumstances as I can for my safety. I am worried about the extension.
Agricultural vehicles are something I know little about, but I do not think there are many which could exceed a speed of 40 mph. But the regulations say that the limit is to apply on all roads and not just dual carriageways, and so it includes lanes. Is there to be no limit on width? Many of us have driven along country lanes, and a wide agricultural vehicle travelling at 40 mph would put the fear of everything into me. I should not want to go anywhere near one. Has regard been paid to width? We cannot vote against the regulations, but I must ask that question.
Why have the Government changed a view which they formed based on the 1983 speed survey and in view of the arguments in this House when the regulations were introduced?
Earl Attlee: My Lords, on these Benches we broadly approve of the regulations. We accept that between 1983 and 1986 the power, the brake horse power and the braking ability of the average motor car has increased. I frequently travel on motorways and naturally stick to the 70 mph limit. But there are people who do not stick to the limits and even at 80 mph or 90 mph they are overtaken. Whatever speed, there is always a car that is going faster. In the past few years, the development of the internal combustion engine has increased dramatically. Vehicles are using less fuel and producing more power, and so it is logical that speed limits should be increased.
However, I support the noble Lord who has just spoken on this matter. I have driven a car towing a caravan. If a caravan is badly weighted even at 50 miles per hour, it will start to sway. If one has a caravan that tends to sway and it passes a high-sided commercial vehicle, or is overtaken by a high-sided vehicle, a vacuum is caused. As that vehicle passes—whichever way round it is—if the caravan is on an outward swing while being overtaken, the vacuum will cause it to swing out and the danger is that there will be a collision. I accept that if caravans and trailers are correctly loaded, this danger is very much less.
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Turning from motorways to dual carriageways, we have another problem. One has cars towing caravans, and they quite often have a "mating instinct"; they follow one another. If cars towing caravans are travelling at 60 miles per hour and ordinary cars are keeping to the speed limit, there is only a 10 miles per hour differential which I do not think is sufficient. It means that with almost every car today able to go just a little faster, with caravans being towed at 60 miles per hour, and cars which can travel at 65 miles per hour trying to overtake them, there will be an awful build up on our roads.
I think that we should be very much happier if noble Lords accept what I suggested earlier. I am quite sure that the noble Earl the Minister will say that cars are more powerful and faster these days. What if he were to say, "All right; caravans with trailers travel at 60 miles per hour. Therefore on motorways and dual carriageways we shall raise the speed limit of ordinary vehicles from 70 to 80 miles per hour"? The average speed at which most cars travel seems to be 80 miles per hour. I think that would cut down the danger because it would keep at least a 20 mile per hour differential.
I know that we cannot vote against this Motion anyway. I think that this is a step in the right direction, but we should like the noble Earl the Minister to give consideration to raising the national speed limit for ordinary vehicles.
Baroness Macleod of Borve: My Lords, in my view, as an ardent motorist (as obviously is the noble Earl) following caravans doing more than 50 miles per hour is a frightening experience because one becomes mesmerised by them going from one side of the carriageway to the other. They do not do it intentionally. It seems that if they are not locked solidly behind the car, and if they have any leeway at all, they swing from side to side. I imagine—although I am not particularly worried about it—that the crockery and everything else inside must also be thrown about.
I would also agree with the noble Earl, as we have done sometimes in this House before. I am quite certain that the majority of motorists in this country would hope that the private vehicles would be now allowed to travel at 80 miles per hour. I am overtaken by cars travelling at 120 miles per hour. I travel at the statutory 70 miles per hour, or perhaps 75, but no more. I can admit that because I do not expect I shall be taken away by the police. I have good views in both my back and side mirrors which I hope is a hallmark of good driving.
I think that the noble Earl is on the right lines. Everybody I have talked to about this over the last five years hopes for the introduction of an 80 miles per hour speed limit for private cars. Naturally those who tow caravans want the speed limit raised. They would, would they not?—presumably because they could get from A to B faster. I entirely agree with what the noble Earl has said. I think that the caravans will cause congestion on the roads. Lorries will be unable to pass the caravans, which delight in travelling in convoy. Certainly they do so on the roads of Scotland; but there are not, luckily, many dual carriageways or M. roads in Scotland. I hope that the day never comes

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when the beautiful small roads become big roads. I would want the limit raised, and I hope that the time will come when we can discuss that point.
Lord Swinfen: My Lords, I would not go upwards; I would maintain the speed limit of 70 miles per hour. Many cars, lorries and coaches regularly exceed that speed limit today. I know that this is slightly off the subject of trailers, but I am sure that most Members of the House who drive on motorways will agree that many vehicles drive far too close together. Therefore increasing the speed limit simply increases the chances of accidents. It also increases fuel consumption, and I think that through excessive speed we sometimes use an excessive amount of fuel on our motorways.
I am not at all happy with the increase from 50 to 60 miles per hour for towed trailers behind passenger vehicles. I drive regularly up and down the M.2 on the main route to Dover and the condition of that road is appalling. Caravans are relatively light in weight. These regulations do not refer only to caravans. A small trailer that is unladen bounces all over the place and can take charge of the car, particularly if it is a light car, and that can cause an accident.
1 think that the greater the speed, the greater the danger of jack-knifing occurring when a towing vehicle has to do an emergency stop. I know that there are anti-jack-knifing devices for large articulated vehicles. However, not being a caravan owner I do not know whether there are such devices for caravans or other trailers; I rather suspect not. I would be happier if we were not approving these regulations tonight because I think they are a retrograde step. Vehicles towing caravans tend to drag them all over the road, and the faster they move, the less chance the drivers have to control them.
I am also rather worried about the setting of a speed limit of 40 miles per hour for agricultural vehicles. Some of the lanes down which they go are extremely narrow, and very winding. I suspect that a vehicle such as a combine harvester will take up the whole road. Some of the more modern and powerful agricultural vehicles can go at 40 miles per hour. I do not wish to be harvested with my family in the car and end up as a mixture of chaff spread all over the road. 1 think that this is a possibility because there is no chance of getting out of the way. Farm trailers are not always very well loaded. They are loaded for a journey of only one or two miles. Therefore, in an emergency stop the trailer will take control of the towing tractor, no matter how large it is.
I think that this is an unwise move. I hope that my noble friend and his department will keep a very careful watch on the results and monitor them carefully. I look forward to my noble friend coming back in another two years' time to cancel these regulations and to return to the lower speed limit.
7.30 p.m.
The Earl of Caithness: Perhaps I may respond to some of the concerns raised; in particular that raised by the noble Lord, Lord Underhill, who asked: what has happened since 1984? As the noble Lord rightly said, these regulations were considered in 1984, but were not pursued at that time because further
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consultation was needed. That consultation has now taken place.
There are also other reasons for proceeding now. The police advise us that with the proposed regulations the law will be easier to enforce. That is a factor which has to be taken into account. Subsequent to the 1984 regulations the towing code has been published by those interested in caravanning, together with my department. This has made a lot of difference to caravanners who now have a sensible basis on winch to work when starting to tow caravans.
In the last couple of years a possible bunching on motorways has been noticed. When caravanners have to share the centre and nearside lanes with heavy goods vehicles which are permitted to travel at 60 miles per hour, as the noble Lord knows full well, to have a caravan going at 50 miles per hour in the centre lane of a motorway leads to bunching, with heavy goods vehicles behind which cannot use the outside lane to overtake. This is a problem which has been noted, and one of the many reasons why it is thought that these regulations should be introduced. The noble Lord also asked about the width of agricultural vehicles. These vehicles are already subject to a width limit, so there is no effect as regards that particular point.
The noble Earl, Lord Attlee, and my noble friend Lady Macleod of Borve mentioned badly-weighted caravans and said that they are particularly frightened when driving behind caravans that swing, which was a point also mentioned by the noble Lord. Lord Underhill. Whatever speed a caravan is doing—for instance, if it is doing 30 miles per hour in a high wind—it has been known to move about the road, but the onus is on the driver of the vehicle to drive with reasonable care. From our experience, the move from 50 miles per hour to 60 miles per hour will not exacerbate the situation or make it worse. I agree with the noble Lord, Lord Underhill, that when driving in the Highlands it is not very satisfactory having to follow caravans that sway from side to side, but now that the towing code has been in use for some two years I have certainly noticed an improvement. 1 think that the noble Earl, Lord Attlee, is right in saying that the weighting of caravans has improved, and they are now weighted more at the centre, which is the right place.
My noble friend Lord Swinfen asked us not to increase the limit to 80 miles per hour, which some noble Lords have suggested, but rather to keep it at 70 miles per hour. I rather felt that my noble friend wanted to bring down the limit to 60 miles per hour, but I shall pass the points to my honourable friend the Minister responsible, as indeed I shall the points my noble friend made about the M.2. My noble friend also said that to put up the limit for towing vehicles to 60 miles per hour would increase fuel consumption. I think that that would please the oil companies, particularly now that the oil price has dropped. I shall of course pass on the concerns of noble Lords to my honourable friend, and hope the House will now approve these regulations.
Lord Underhill: My Lords, before the noble Earl sits down, perhaps he could elucidate two points that he made. He mentioned that the police say that this is a

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better basis for enforcement. Can the noble Earl kindly explain the reasoning behind the statement by the police that it is better to enforce the law if caravans are doing 60 miles an hour rather than 50 miles per hour? The noble Earl also said that the question of the width of agricultural vehicles is irrelevant because there is no restriction on width at the moment.
The Earl of Caithness: My Lords, there is a width restriction.
Lord Underhill: My Lords, it is a little different to have a vehicle with a restricted width doing a lower speed than to have the same vehicle doing 40 miles an hour, and I cannot see the reasoning for this.
Lady Kinloss: My Lords, will horse-boxes which are being towed or, for instance, a trailer carrying goats, such as my daughter uses, still be confined to 50 miles per hour?
The Earl of Caithness: My Lords, to answer the last question: no, such trailers are not confined to 50 miles per hour unless the circumstances dictate that they should be. We are talking about a regulation affecting trailers, which includes the horse-box carrying the goats which the noble Lady mentioned.
With regard to the point raised by the noble Lord, Lord Underhill, about the width of an agricultural vehicle, having had experience of these myself I would point out that one goes only at what one considers to be a safe speed. The regulation has been introduced for such vehicles as Unimogs, which are high-powered vehicles. If one is driving a combine down a small lane, one probably does not have the front piece of the combine attached, so as a result my noble friend Lord Swinfen is unlikely to be harvested. However, I am sure that farmers and farm workers will pay due regard to the width of the vehicle whatever speed they are going, and will drive only at the maximum permitted speed, which I must emphasise is the maximum permitted speed when circumstances allow.
With regard to easier enforcement, I believe that this was the advice given by the police at the time, but I shall write to the noble Lord in detail on the matter.
Lord Swinfen: My Lords, before my noble friend finally moves that the regulations be accepted, I believe he said that a code of towing practice has been issued. What proportion of the towing public have received this code of practice? It is not just caravan owners who tow trailers. All sorts of other people tow trailers, from someone who hires a trailer to move a tent over the weekend to people towing horse-boxes, chimney sweeps towing trailers, and all sorts. What proportion of the towing public has received this towing code?
The Earl of Caithness: My Lords, I am of course unable to give the proportion of the public who have actually received the towing code. However, I can assure my noble friend that the National Caravan Council, the Caravan Club and the Camping and Caravanning Club, who together with my department, all contributed to the towing code, have made sure
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that this is freely available to their members. Many people who will be towing such things as horse-boxes do so on a regular basis because they derive their living from the land, but I agree with my noble friend that, whatever the circumstances, there will be the odd person who will not have seen the towing code and who will not be used to towing a trailer. If I was one of those people, I would take extra care.
Baroness Macleod of Borve: My Lords, perhaps I may ask my noble friend one more question. Is it the law that every car driver who tows, for example, a horse-box or a caravan must have extended wing mirrors on his vehicle? Because unless they do, in my view they cannot see the trailer moving from side to side on the road.
The Earl of Caithness: My Lords, I believe that that is right. The mirrors have to have a sufficiently clear view around the side of all trailers.
On Question, Motion agreed to.

Pool Competitions Act 1971 (Continuance) Order 1986
7.37 p.m.
Viscount Davidson Viscount Davidson rose to move, That the draft order laid before the House on 21st May be approved. [24th Report from the Joint Committee]
The noble Viscount said: My Lords, I trust that this order will be slightly less contentious than the regulations which we have just been discussing. I beg to move that the draft Pool Competition Act 1971 (Continuance) Order 1986 be approved. The Joint Committee on Statutory Instruments has considered the draft order and has made no comment. The order was considered in Committee in another place on 18th June.
The history and background to the Pool Competition Act 1971 will be familiar to your Lordships from the many debates on these orders in previous years. The 1971 Act was introduced as a temporary measure in order to assist various charities and sports clubs overcome a difficulty which had arisen for them over the running of "pool competitions". Your Lordships' House ruled in 1970 that these competitions did not amount to lawful pool betting. The prizes, for the most part, were awarded not for making accurate forecasts of the results of football matches but for holding or choosing numbers which happened to be lucky in a particular week.
The Pool Competitions Act 1971 allowed the groups then active in running these competitions to continue to do so, under Gaming Board licence, for a limited period of five years. Since 1976 successive governments have not found it opportune to bring the Act to an end and have continued to keep the Act alive in the only way possible—that is to say, by introducing orders annually.
Your Lordships may wonder why we believe that a further order should be made continuing the Act in force for yet another year, when it was so clearly intended as a temporary measure. In moving the equivalent order in 1983, my noble friend Lord Elton, speaking for the Government, said that, following

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consultation with the charities involved, the Government would continue to lay orders in this Parliament, but they saw no future for the Act beyond that time. For the first time the promoters and beneficiaries of these competitions were put on the spot and urged to seek other methods of fund-raising within the lifespan of one Parliament.
It would be depressing, frankly, if the message had been ignored. But in fact there have been positive signs. In 1983, there were six organisations running pool competitions. Now there are are only two. A further two organisations have retained their licences but are now trying other methods of fund raising. The Government's statements in 1983 were not just idle talk. There is no intention on our part of taking action to perpetuate the Act beyond the period covered by the Minister of State's undertaking two years ago. We trust the remaining organisations will accept this and look to alternatives. For the present, I ask your Lordships to agree to the Motion so that the Act may continue for a further year. I beg to move.
Moved, That the draft order laid before the House on 21st May be approved. [24th Report from the Joint Committee].—(Viscount Davidson.)
Baroness Ewart-Biggs: My Lords, I should like to thank the Minister for this clear explanation of this order, for which we are most grateful. I agree with him that. unlike the previous order, there is not a very contentious element in it. I am grateful to him for giving us the background as to how this matter arose.
May I, without in any way disagreeing with the order, put two small points to the noble Viscount in order to seek further clarification? First, the Minister said that the Government decided to proceed through the renewal orders rather than to make some permanent provision for pool competitions or simply to allow the Act to lapse. I did not quite understand what the arguments were. Perhaps the noble Viscount could repeat the arguments for renewing the orders rather than coming out one way or the other.
Secondly, I think that the noble Viscount said that originally there were 18 organisations which raised considerable funds through pool competitions; and the sums mentioned were large and presumably made a great contribution to the important work that the organisations did. The noble Viscount has now told the House that only two of those organisations are left still raising funds through pool competitions. That means that 16 organisations have been dissuaded from continuing this practice, and have presumably found other methods of raising funds.
The question I want to put is simply whether they have found alternative methods which are as good; whether they have managed to raise funds which have fully replaced the ones previously raised through pool competitions; and whether they have been able to continue doing as much work as they did before. Apart from those two small queries, from this side of the House we should like to give our wholehearted support to this order.
Viscount Davidson: My Lords, I am grateful to the noble Baroness for her reception of this order. On her first point, the reason the Government decided to carry on with laying an order annually before
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Parliament was really in fairness to the charities involved following the assurances given in 1983, so that they would have a period of time in which they could reorganise themselves knowing that by the end of this Parliament they would have to be getting their funds from other sources.
We do not have information about the various fund-raising activities of organisations which may have run pool competitions of one sort or another since 1971, because once the organisations concerned ceased to renew their licences it was no part of the Gaming Board's function to look at the financial affairs of those charities and sports clubs. But it seems reasonable to suppose that alternative fund-raising projects will have proved more satisfactory for charities previously involved, as pool competitions inherently are an inefficient method of raising funds. Therefore, I do not think that the noble Baroness need have any worries on that score. I hope that answers the noble Baroness.
On Question, Motion agreed to.
Baroness Hooper: My Lords, I beg to move that the House do now adjourn during pleasure until ten minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.45 until 8.10 p.m.]

Gas Bill
Consideration of amendments on Report resumed.
Lord Diamond Lord Diamond moved Amendment No. 79:
Page 3, line 28, at end insert—
"(e) to enable persons to compete effectively in the supply of gas'").
The noble Lord said: My Lords, this amendment was coupled with a previous amendment, but that amendment was not moved. That is why I am moving this amendment instead of merely speaking to it.
We are considering the end of the important Clause 4 in which the general duties of the Secretary of State and of the director are set out. There is nothing in the clause to deal with the problem of competition generally and competition effectively in the supply of gas—that means throughout from beginning to end. I know the Government take the view that one ought to consider competition only as Clause 4(2)(d) indicates in relation to persons who take a supply of gas in excess of 25,000 therms a year; the larger contract customers. We see no reason why the attitude of the Secretary of State and the director, and their thoughts, should not also be concerned with effective competition as a whole.
Indeed I remind noble Lords opposite of the Conservative manifesto at the last general election. What that manifesto undertook, if it undertook anything, was to promote competition. I am doing no more than trying to make an honourable lady of the Prime Minister—I should have said an "honourable woman"—in relation to the promise given in the Conservative manifesto. I do not think there is need for me to say any more at this stage. I beg to move.
Lord Belstead: My Lords, the amendment that the noble Lord is moving, Amendment No. 79, is about promoting competition between fuels. All I can say is that we believe there is already strong and effective competition and that this Bill is not the place to encourage competition between different fuels. Competition is achieved by the stimulus of market forces and needs no bureaucratic intervention from government. There is the duty in Clause 4(2)(d) to enable competition in the contract area of the gas market. In our view no such duty is necessary or appropriate to stimulate competition between fuels.
I recognise the concern which has been expressed in the House on more than one occasion about the electricity industry as a nationalised body in competition with the privatised gas industry. However, it is simply not possible to provide in this Bill for orderly competition without regulation since a duty on the Secretary of State and the director without any means of enforcement would be pointless.
I do not think there is all that much between the noble Lord, Lord Diamond, and the Government. But this is a question of how to achieve it. The noble Lord wishes to put in a specific statutory provision in Amendment No. 79, adding a new duty to enable the suppliers of gas to compete effectively. I am saying that the duty in Clause 4(2)(d) is there to deal with the contract area of the market, but otherwise I think that the market generally provides strong and effective competition.
Lord Ezra: My Lords, it is difficult to follow why the competition should be restricted to the contract area where it already exists. The Bill itself implies by the regulatory system and by the pricing system that the contract area is a competitive area. It is difficult in all logic to see why the competition should implicitly be eliminated from the tariff or domestic area. In practice it exists there anyway as the noble Lord has said, so why does not the Bill allow it to proceed as it now is? This implication that there can be competition in the contract area but not in the tariff or domestic areas seems rather surprising.
8.15 p.m.
Lord Diamond: My Lords, I am grateful to my noble friend Lord Ezra for the support that he has given. I add to that that the intention of the amendment was really not to talk about competition between fuels generally, but about competing effectively in the supply of gas: this is Amendment No. 79.
I am delighted to hear from the Government that they feel there is not a great deal of difference between the Government's point of view and our point of view. If one includes a provision such as Clause 4(2)(d) which talks about competing in a certain market, one is inevitably led to the conclusion that there is no intention to compete in the other huge market, the tied market, under which 16 million consumers are tied to the one supplier. I do not wish to detain the House by repeating my argument, but I have already referred to the possibility of circumstances changing in the same way that they have changed over the past 25 years in such a way that there would need to be a policy relating to competition in the tariff market, for reasons
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that we are not necessarily able to see at present but which will emerge as circumstances change.
There is both that situation and the present position under which the Government have to have regard to their undertakings, their manifesto and to the essence of their policy that privatisation is justifiable because it leads to competition in the private sector. So far that is totally absent. Although I suppose it is too early after a meal to disturb people by a further Division, I am very unhappy that the Government have not seen fit to accept this very modest amendment. In the circumstances, all I feel I can do is to ask—
Lord Belstead: My Lords, before the noble Lord either presses or withdraws his amendment, may I reply to the noble Lord, Lord Ezra, and also to the noble Lord, Lord Diamond? The Government's position, although noble Lords may not agree with it, is very simple. I apologise if my explanation was not very good. There is the whole history and practicability in the tariff sector of the laying of pipes in the streets, and the commonsense gained over the past 100 years or more about not having pipe networks being laid alongside one another. We felt when the Bill was originally drafted that it was not possible to put a competition duty in at all. As noble Lords know, Clause 4(2)(d) was inserted in another place; but it was confined to the contract market for the reason that I have given. The noble Lord, Lord Diamond, may feel that he does not agree with my explanation, but that is the reason that has guided us.
Lord Diamond: My Lords, I am grateful to the Minister. I am glad he intervened and I am sorry I did not see his first attempts at intervention. No, that is not our position. Our position is that you should search for competition if you are introducing a privatised monopoly. You should go out of your way to search for it. I agree that there are not many evident areas where you can compete. I agree with the whole problem that you cannot put down two sets of pipes next to each other. That is why we on these Benches maintain (and, indeed, the whole of the Opposition maintains) that this is a natural monopoly. Therefore, it has to be run in the only way that a monopoly can be run; that is, for the protection of the consumer—which only the state can provide. That is the whole argument for not moving at the present time until you can find real competition.
But I have suggested (and it will be for consideration again at this Report stage) how the Government, if they were willing to do so, could provide an area, at all events, of comparison, which is very near to competition. In a later amendment I will spell this out in more detail. So the noble Lord the Minister is wrong in saying that there is no way at all in which you can provide competition, or something very similar to it, so far as the tariff customer is concerned.
There is a way and we shall come to it later on. Perhaps, therefore, one ought to reserve one's major activities for that particular argument and in those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 81 not moved.]
Lord Belstead Lord Belstead moved Amendment No. 76:
Page 3, line 28, at end insert—
("(3) In performing his duty under subsection (2) above to exercise functions assigned to him in the manner which he considers is best calculated to protect the interests of consumers of gas supplied through pipes in respect of the quality of the gas supply services provided, the Secretary of State or the Director shall take into account, in particular, the interests of those who are disabled or of pensionable age.").
The noble Lord said: My Lords, I beg to move Amendment No. 76, and would suggest to your Lordships that we might take with it Amendment No. 76A which is an amendment to Amendment No. 76 in the name of the noble Lord, Lord Diamond, and Amendment No. 76B, in the name of the noble Lord, Lord Stoddart, which again is an amendment to Amendment No. 76, and Amendment No. 97. Amendment No. 97 is in the names of the noble Lords, Lord Diamond and Lord Ezra, and is an attempt to write into the Bill an amendment which was moved by my noble friend Lady Macleod in Committee. Amendment No. 76 which I am moving now, is in response to my noble friend's amendment which was moved in Committee. On that occasion, my noble friend Lady Macleod provided for a code of practice for the elderly and disabled to be provided in the Bill.
My noble friend then paid tribute to the services for the elderly and disabled provided by British Gas and said that her objective was to ensure that such good services should be continued. My response on that occasion was that the Government would make a change to the authorisation to meet the effect of the amendment proposed by my noble friend Lady Macleod, and that we would also bring forward an amendment to Clause 4 of the Bill so that we would have, on the face of the Bill, recognition of the particu-lar needs of the elderly and disabled.
So Amendment No. 76, which I am now moving, proposes a new subsection to Clause 4 which would require the Secretary of State and the director, in carrying out their functions to protect the interests of consumers in respect of the quality of gas supply services, to take account in particular of the interests of the elderly and disabled. This would mean that while the generality of interests of consumers are protected under Clause 4(2)(a) their particular interests in respect of special services would be protected by the new subsection (3).
Your Lordships may also be aware that, again in fulfilment of an undertaking which I entered into in Committee towards my noble friend Lady Macleod, we have extended Condition 12 of the British Gas authorisation to require British Gas to provide a code of practice describing special services for persons who are disabled or of pensionable age.
If 1 may refer to the other amendments which I suggested we might take, the noble Lord, Lord Diamond, is seeking to make a small drafting amendment to the Government amendment. I should like to hear what the noble Lord has to say. With respect, I think the drafting in the Bill is right. The noble Lord. Lord Stoddart, is seeking to introduce an extension to our amendment by placing a duty on the Secretary of State and the director to ensure that all domestic gas appliances used by the elderly and disabled may be checked free of charge.
Again, I must wait to hear what the noble Lord has to say; but may I make the observation that, with respect, I think an amendment of that kind ought not to be in Clause 4, which deals with the general duties of the Secretary of State and the director, while the noble Lord's amendment is seeking to impose a specific duty to ensure that a particular service is provided.
In moving Amendment No. 76, I am endeavouring to respond to a very important amendment which my noble friend Lady Macleod moved in Committee—an amendment which would have provided for a code of practice for the elderly and disabled. The Government's response to this has been to put into the authorisation in Condition 12 a clear requirement that British Gas must provide a code of practice describing special services for the elderly and disabled and must do so in consultation with the Gas Consumers Council and with the director. The amendment I am moving will put it on the face of the Bill that the director and Secretary of State must in particular have care for the needs of the elderly and disabled. I hope that my noble friend will feel that this is a proper response to the important amendment she moved at Committee stage. I beg to move.
Lord Diamond Lord Diamond moved, as an amendment to Amendment No. 76, Amendment No. 76A:
Line 5, leave out ("or") and insert ("and").
The noble Lord said: My Lords, I beg to move Amendment No. 76A. I am in a little difficulty because we are discussing a number of amendments together, and I do not know whether it is for the convenience of the House that I should limit my comments to No. 76A in moving that amendment or discuss what the noble Lord the Minister has just said.
Lord Belstead: My Lords, with respect, as the noble Lord's amendment is an amendment to my amendment, I should have thought that the noble Lord would be speaking to his amendment and my amendment.
Lord Diamond: Very well, my Lords. I am only too happy to deal with it in that way. The Minister is quite right: the amendment which I am moving is purely drafting. All that I want is assurance that the point is covered; that it is not really "either/or" but that it is really both.
We are grateful to the Minister for the amendment he has moved, which goes some distance towards satisfying the wishes of those of us on this side. I recognise that it goes even further towards satisfying the wishes of the noble Baroness, Lady Macleod. As far as we are concerned, if the noble Lord will be good enough to look at Amendment No. 97 in the names of my noble friend Lord Ezra and myself, he will see that the codes of practice specify not only in paragraph (c),
"the provision of special sevices for elderly and disabled"
but also, in paragraph (a),
"the nature of service available to tariff customers in relation to gas supplied",
and in paragraph (b),
"the conditions attached to the payment of gas bills including guidance to domestic customers if they have difficulty in paying".

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I know there is no difference between us and between our wishes and the wishes of the Gas Corporation in corresponding with the intention of those two paragraphs; but, again, we would have preferred them to be in the Bill, just as the noble Lord said that incorporating his amendment in the statute is a step forward. Therefore, we do not wish to seem ungrateful, but we do not feel that the noble Lord has gone far enough.
Baroness Macleod of Borve: My Lords, I am not certain how many amendments we are now speaking to. From my list, I thought it was Amendments Nos. 76, 76A, 76B and 97. I hope that that is correct. First, I should like to express my gratitude to the Minister for tabling his amendment. It seems, for the first time, to mention those of pensionable age and the disabled. Because British Gas, as it is now, is particularly good (to my certain knowledge) at looking after people in that particular circumstance, I am quite certain that we should like to see in the Bill that the ensuing authorities for gas should also be enjoined in the Bill to look after these particular people.
I do not quite see that Amendment 76B is, as I think my noble friend the Minister said, essential to this Bill. I do not think it should be part of this Bill that the future gas organisation will have to give free of charge checking of all domestic gas appliances. When one considers the numbers of people coming under these two categories—I do not know whether anyone knows those numbers, but I should have thought there would be a great many of them—I do not think that financially it would be wise for us to make this part of the Bill. On the other hand, I am quite certain that so far as practicable British Gas, as it is now, will conform to the wishes of the noble Lord, Lord Stoddart. However, I still think this should not be part of the Bill. I am most grateful for Amendment No. 76 and I should like to thank the noble Lord the Minister for arranging it.
8.30 p.m.
Lord Campbell of Alloway: My Lords, the thread that binds this bundle of amendments for grouping is a common concern for the provision of special services for the aged and infirm of which no mention is made in the Bill. That is a concern which is also reflected in Amendment No. 125, which warrants separate consideration on its own merits in due course. The main issue, I would suggest with respect, arising on this set of amendments is whether certain breaches of the code of practice for the aged and infirm should be brought within the enforcement procedures of Clauses 28 and 30 of this Bill.
Baroness Macleod of Borve: My Lords, may I interrupt for one second? I hope that the noble Lord will refer to those persons as being of pensionable age, and not the infirm. Those of age 60 to age 65 are not always infirm.
Lord Campbell of Alloway: My Lords, I hear what my noble friend says. I do not think I am really in a position to argue with her. What I was trying to say to your Lordships was that the main issue before the House, and it is an important issue which was totally
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ignored by my noble friend Lady Macleod, is this: whether breaches of the code of practice for the aged and infirm (as I call them) should be brought within these enforcement procedures of Clauses 28 to 30 of the Bill. One example of that would be the free of charge checking introduced by the noble Lord, Lord Stoddart.
The code to which reference is made in Condition 12(l)(c) of the revised authorisation of 30th June of this year is actually the main issue. The consequential issues are whether the condition of authorisation should have the prior approval of Parliament, and, further, whether or not the codes should be prepared before the granting of authorisation. The first issue has been very much in the mind of the noble Lord, Lord Stoddart. The second is very much within the province of the amendment proposed by the noble Lord, Lord Diamond.
The door to the enforcement to which I have referred would remain locked under Amendment No. 76 and Amendment No. 97 as they stand. That door would be unlocked by Amendment No. 76B, by the noble Lord, Lord Stoddart, and left ajar so that it could be opened by the noble Lord's Amendment No. 88 by requiring that the conditions of authorisation should have the prior approval of Parliament. It is no doubt assumed by the noble Lord, Lord Stoddart, that Parliament would not approve conditions of authorisation in which certain provisions of the code were not written into the authorisation so as to constitute relevant conditions as defined by Clause 28(8) of the Bill, but Amendment No. 88 to Clause 7 makes no express requirement in this regard and Amendment No. 76B is limited to free of charge checking. With respect to the noble Lord, there is something in the criticism of my noble friend the Minister that it might perhaps not meet the problem.
As a matter of construction, unless the provisions of the code, which is the code for the elderly and the infirm, were to be a relevant condition of Clause 28(8), there is no enforcement machinery available to the director under Clauses 28 to 30. It then follows that there is no restricted private action for non-compliance under Clauses 35 to 37. It cannot arise. At Committee stage my noble friend the Minister, as reported at cols. 870 to 871 of Hansard, when opposing Amendment No. 63A, which is now Amendment No. 97, and my Amendment No. 84ZB, which is now Amendment No. 125, took the view that no enforcement machinery was requisite in this context and that an obligation upon the director to take the interests of the aged and infirm into account and to publish the codes would be sufficient to meet any reasonable concern.
I support Amendment No. 76A, which seeks to dispose of the unacceptable disjunctive. However, leaving that aside, there are three choices in this set of amendments, Amendment No. 76, Amendment No. 97 and Amendment No. 76B. Amendment No. 76, by its tailpiece, together with paragraph (l)(c) of the revised Condition 12 of the authorisation, faithfully represents the concession made by my noble friend the Minister at Committee stage.
Amendment No. 97 leaves beyond the rim of that concession two points which are alive. One is that the code should be published before authorisation and not

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within three months after authorisation, as proposed in revised Condition 12. There I am with the noble Lord, Lord Diamond, in principle.
The other point he leaves open is that to which I took objection when Amendment No. 63 was moved at Committee stage: that the codes under paragraphs (a) and (b) should be treated as if in the same material as the code under paragraph (c). In my view, they should not.
Then one comes to Amendment No. 76B, which is limited to free checking and perhaps ought not to be where it is but ought to appear in another form in Clause 7, affecting the authorisation. At this stage in my judgment, if one has to make a judgment between the three choices, the mythical golden apple would go to the noble Lord, Lord Stoddart, notwithstanding that his amendment (No. 76B) is not wholly apt, because the principle for which he contends opens the door by Amendment No. 88 to the enforcement procedures which would be available for this code. I am more concerned with that principle than with anything else at all; but in order to argue it I have to detain your Lordships to show how important it is and how it may be achieved. I am grateful to your Lordships for bearing with me.
Although of course this could set a collision course with my noble friend the Minister, the hope is that perhaps he could think again in the light of today's debate. There is scope for seamanship, and my noble friend is a most experienced navigator, especially in such waters. There is no draft of the proposed code; I have searched for it in the Library and I have asked my noble friend. It is not yet available. So no discussion has taken place as to which provisions, beyond the provision referred to by the noble Lord, Lord Stoddart, should be written into the authorisation procedure so as to become relevant conditions for the purpose of enforcement under Clauses 28 to 30. All I am asking is that we should follow the principle espoused by the noble Lord, Lord Stoddart, and look to a means of implementation which could give effect to it, for it is only by his amendment that this principle is established. There is no other amendment on the Marshalled List that could give effect to it.
It may well be that my noble friend the Minister could re-examine the bearing of certain provisions of the code for the aged and the disabled within the enforcement procedures of Clauses 28 to 30. And I stress that my plea and that of the noble Lord, Lord Stoddart—he will correct me if I am wrong because we have not spoken about this—is exclusively related to l(c)of Condition 12 or paragraph (c) in Amendment No. 97, and excludes the codes of practice in paragraphs (a) and (b). I understand that to be the position and, if that be so, it would be well within the drafting competence of the parliamentary draftsmen without in any way endangering the structure of this Bill or challenging any main principle either to carry in a revision into Clause 7 to give effect to the principle for which the noble Lord, Lord Stoddart, contends in Amendment No. 88 or to amend Condition 12 of the authorisation to ensure that certain provisions of the code constitute relevant conditions within the meaning of Clause 28(8).
In conclusion, if on this main issue Amendments Nos. 76B and 88 stand at the wicket of the enforce-
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ment procedures, then the code of practice proposed under Amendment No. 125 serves as an available long stop. Therefore, to give two examples, the code could be taken into account in the negligence proceedings preserved by Clause 28(3)(b), and, subject to clarification under Amendment No. 149A, in certain actions for damages for breach of statutory duty, where breach involves danger to life, limb or property. But, my Lords, does one dispense with the wicket-keeper merely because there is an available long stop? I am grateful to your Lordships for having borne with me over this. It is the principle for which 1 contend and I think it is the principle for which the noble Lord, Lord Stoddart, contends. I await with considerable interest to hear what the noble Lord and my noble friend the Minister have to say.
Lord Boyd-Carpenter: My Lords, may I very briefly say to my noble friend the Minister that I hope he will accept Amendment No. 76A in the name of the noble Lord, Lord Diamond. It seems sensible in the light of his own amendment (No. 76) that both the Secretary of State and the director should have this responsibility whereas, in its present form, if it is the Secretary of State or the director, it perhaps leaves in doubt whose duty it would be in any particular case. 1 hope therefore that my noble friend will considet accepting this amendment.
Lord Ezra: My Lords, I was very pleased when the noble Lord, Lord Boyd-Carpenter, rose. I was hoping that he would go on and say, as he did in connection with a previous amendment we were considering, regarding when the Secretary of State and the directot are to take into account the interests of British suppliers, that he would equally have said in the case of the amendment proposed by the noble Lord, Lord Belstead, that taking into account the interests of those who are disabled or of pensionable age is itself a somewhat vague formula. That, I understand, is what the noble Lord, Lord Campbell of Alloway, was trying to put right by getting into the Bill itself much more precision than this wording proposes.
8.45 p.m.
Lord Stoddart of Swindon: My Lords, perhaps I had better say a few words about Amendment No. 76B which stands in my name on the Marshalled List. May I say first of all to the noble Lord, Lord Belstead, that we had down an amendment to Clause 4 (Amendment No. 74) which we withdrew in order to save time because the noble Lord had placed his own amendment (No. 76) on the Marshalled List.
We felt it would be for the noble Lord's convenience and indeed for the convenience of the House to tag on to his amendment the provision regarding checking of all domestic appliances free of charge. We thought that that would be convenient and indeed that it was in the correct part of the Bill. I think that is probably the case. This is really a very simple amendment, and the noble Lord really ought to have no difficulty at all with it, because it is the present practice—as I am sure the noble Baroness, Lady Macleod, knows—of British Gas to do exactly that. All we are seeking to do—and I have to say to the noble Lord, Lord Campbell of Alloway, that it is as simple as this—is to ensure that British Gas plc retains that service. I find it very difficult to believe

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that the noble Lord does not want that to happen as well. Indeed, I believe it has support from all sides of the House. What we are concerned about is that British Gas plc may very well decide at some stage that, because it is a private organisation, it has no need to consider this service. That is why we should like to see it on the face of the Bill and that is the simple reason for moving the amendment.
The noble Lord, Lord Campbell of Alloway, is right. He has studied this Bill very closely indeed, and I must compliment him on his Amendment No. 125, with others, which seeks to tie up the matter very closely indeed and to see to it that, while breaches of the code of practice might not be the subject of a case in law, they could nevertheless be cited in any case in law. I believe that is the position. The noble Lord has given a lot of attention to this matter and he is to be complimented upon it. We shall be coming to this amendment later on, either tonight or on Wednesday. We shall have to see what progress we make. But I can assure him that his amendment has a good deal of support in the House.
Clearly, if Amendment No. 76B is carried—and I hope that the noble Lord will either accept it or will say that it is not in the right part of the Bill and will put it somewhere else—we shall come to Amendment No. 88, in which the noble Lord, Lord Campbell of Alloway, is again absolutely correct. I must not speak to that amendment now, but if it is carried it will ensure that these matters are properly enforceable, because Parliament will have said that they should be enforceable. I do not know whether we shall be fortunate enough to carry that amendment. As I said, I must not refer to it; but, again, the noble Lord is quite correct.
I do not want to take up the time of the House unduly, but I want to say in support of the amendment that gas is a dangerous and volatile subject and people who are above retirement age, and people who are disabled and who are either over retirement age or below retirement age, need additional protection. One of the protections which can be given to them is the free inspection of gas fittings and appliances, and it is essential that those people should not feel constrained in any way by cost from having their appliances properly checked. It is important to them, and it is important to all of us, that they should continue to have this service available.
There should be absolutely no shadow of doubt at all that the service will continue as at present, and they should have an assurance in law that that will continue as at present after British Gas is privatised. I do not think that is asking too much. I feel sure that the Minister will wish to respond sympathetically to this amendment, in the light of the support that has been given to it during this debate; and I shall just have to await his reply to see whether it needs to be pressed to a Division. I hope that it will not be and that the noble Lord will find some way of assisting us.
Lord Belstead: My Lords, may I reply as quickly as I can, because we have a lot of business? I am sorry that we seem to have rather a plethora of amendments. I wanted to have a word with my noble friend Lady Macleod about this, because it is she who is instrumen-
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tal in bringing us together on this subject this evening. It was her amendment at Committee stage which got the Government to say that we would endeavour to respond by changing the authorisation. My noble friend has achieved that. It was also her amendment which got us to say that we would put a duty in Clause 4—which was certainly not in the Bill when it came to your Lordships' House—to the effect that the director and the Secretary of State should have particular care for the needs of elderly and disabled people. So I thank my noble friend, and I am sorry that we seem to have rather a lot of amendments. That was the effect of Amendment No. 76.
The reason we have had to take Amendment No. 76A, in the name of the noble Lord, Lord Diamond, is that it is an amendment to Amendment No. 76. It has achieved the distinction of having been supported by the noble Lord, Lord Boyd-Carpenter, who on this matter is at one with the noble Lord, Lord Diamond. In the face of that very powerful double-barrel, all I can say is that I shall consult parliamentary counsel about this point. My advice was that this is right, because of the use of the third person singular in Amendment No. 76. But in the light of this formidable combination I will, if noble Lords will allow me, write to both noble Lords about Amendment No. 76A.
Lord Diamond: My Lords, I thank the noble Lord very much indeed. When the Minister says that it is right, does he mean that the intention of my amendment already exists within the wording of the amendment which he himself has proposed?
Lord Belstead: Yes, my Lords, that is precisely what I mean. I shall take advice, and if the noble Lord will forbear from pressing the matter, I shall write. It was necessary to take Amendment No. 76B, in the name of the noble Lord, Lord Stoddart, who made the final speech in this debate, because that is also an amendment to Amendment No. 76, the effect being to ensure that in respect of these two groups of people arrangements exist for the checking of all their domestic gas appliances, free of charge. Once again, my advice is that this is really not in the right place; but I recognise the strength of feeling which the noble Lord put not only into the drafting but into speaking to this amendment, and I should like to say a further word about it when we come to Amendment No. 125.
It is not quite as simple as perhaps the noble Lord feels. I understand his wish to say that what is free shall remain free; but my advice is that among the very valuable services for the elderly and the disabled provided by British Gas, to which my noble friend Lady Macleod paid tribute in Committee, the gas safety checks on gas appliances and installations, which are available to people aged 65 or over who live alone, or who are registered handicapped at any age and who live alone, are free up to a cost of £2·50 plus VAT.
But additional work has to be paid for, and for special controls and adaptors to help the disabled operate gas appliances, and for braille or studded controls fitted to some gas fires, cookers and central heating units, the standard charge is £2.30 plus VAT for each appliance. For moving a coin meter to a more convenient position for disabled people, if it is within three feet of its present position, the standard charge is

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£3.30 plus VAT. In addition to that, there are some absolutely free services. But I must come absolutely clean. My advice is that the service is enormously valuable, provided, certainly at costs which can be met but it is not necessarily falling within the scope of the way in which the noble Lord has put down his amendment. But may I look again at this in order to see to what extent it may be possible to move towards the noble Lord?
That finally brings me to the intervention of my noble friend Lord Campbell of Alloway. My noble friend is speaking to Amendment No. 125, and, as your Lordships know, the main effect of that amendment, on which my noble friend has put particular emphasis, is enforceability. There are other effects, but that is the effect on which my noble friend has put the main emphasis. Indeed, my noble friend specifically asked whether I could re-examine the bringing of certain provisions in the code for elderly and disabled people into the enforcement provisions of Clauses 28 to 30.
I am sure that we must reflect on that view expressed by my noble friend. I hope that I may be able to return to the subject again. I should certainly like to take the matter away and to consider to what extent on this aspect of my noble friend's amendment, and indeed any other aspects, it may be possible to move towards Amendment No. 125.
I had thought that by putting the provision in Clause 4 in response to my noble friend Lady Macleod, and by putting the condition in the authorisation for a code of practice, we had gone as far as we ought to go. But my noble friend has explained that he does not take that view and he has down Amendment No. 125. So that there is no misunderstanding, I am saying I should like to reflect on what my noble friend has said. I should like particularly to reflect on the express question which my noble friend has put to me. I should like to look at what my noble friend has said generally, and I hope to be able to come forward at Third Reading with a response to my noble friend which of course I shall discuss with him before we get to that stage of the Bill. That is all I ought to say in moving Amendment No. 76.
9 p.m.
Lord Diamond: My Lords, in response to what the noble Lord the Minister has just said, is he not going to say a word about Amendment No. 97?
Lord Belstead: My Lords, I am extremely sorry. If the House will bear with me for just a few more sentences, there is of course Amendment No. 97 on the Marshalled List. I apologise to the noble Lord, Lord Diamond, and to the noble Lord, Lord Ezra.
This amendment has the effect of writing into the Bill the amendment which my noble friend Lady Macleod put down and which started off the whole proceedings about two weeks ago. My noble friend Lord Campbell was quite clear in his advice. He felt that paragraphs (a) and (b) were in a different category from paragraph (c). I must confess that I feel the same about it. It is not a question of importance; I think it is a question of having to consider exactly what the treatment and status of a code ought to be, bearing in mind that not every code may necessarily have to be of the same status and indeed enforceability as another
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code. By putting those two codes in paragraphs (a) and (b) of Amendment No. 97 into Condition 12 of the authorisation, which is where they are, perhaps I may remind the House that the authorisation can be changed only by the mechanisms which are contained in Clauses 24 to 27 of the Bill, and of course those two codes will be subject to the enforceability proceedings of Clause 28 in the sense that if what is in the code is not the practice of the public gas supplier it will be possible under Clause 28 for the director to come down on the public gas supplier and to say, "Your code is not commensurate with your practice".
I believe that this is the right way to treat those two particular codes which are to be found in paragraphs (a) and (b) of Amendment No. 97, although recognise that we need to think perhaps rather differently about the code of practice for the elderly and disabled.
Lord Molloy: My Lords, speaking now in my capacity as president of the largest area of the Royal British Legion, the metropolitan area, and being associated with BLESMA, the British Limbless Ex-Servicemen's Association, I am very grateful indeed that the noble Lord is keeping the door ajar in looking at the valuable amendment moved by my noble friend Lord Stoddart. I ask him to consider this. Among the tens of thousands of new old age pensioners this year a large percentage will be British ex-servicemen who served from 1940 to 1946. That applies to the womer as well. Among the disabled will be a considerable number who are limbless, ex-service and old age pensioners, and who have managed somehow or other to eke out a living. Therefore, I should be most grateful if the noble Lord the Minister will be gracious enough to make representations on the points I have made
Lord Belstead: My Lords, with the leave of the House, perhaps I may say that we shall certainly take into account what the noble Lord, Lord Molloy, has said on this matter.
Lord Sanderson of Bowden: My Lords, as one of those who took part in an earlier stage of the Bill dealing with this question of the elderly and infirm may I say that I am very grateful to the Minister for putting down this amendment, which at least starts the ball rolling in the direction in which we intended it to roll. It is very useful to find that Clause 4 will be added to in this way. With regard to an amendment to which we are still to come and about which we are not meant to talk, I detect a note of hope in what the Minister says about the outcome of that amendment and I look forward to seeing what happens this evening when we come to that amendment, and perhaps hearing more of it at Third Reading.
Lord Campbell of Alloway: My Lords, is it in order to say that I am wholly content personally with the wonderful assurances and the open mind that the Minister has kept with regard to having a look at all this and trying to get it into shape? I should like to express to him my personal gratitude.
Lord Diamond: My Lords, I moved Amendment No. 76A, which, strictly speaking, is the one before us at the moment. As I therefore have a right of response. I believe, perhaps I may say first of all that I though

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the Minister was on a very good point when he said as a matter of procedure that we had a plethora of amendments before us. We are all very willing to be guided by whoever suggests putting one amendment with another and discussing a group of amendments in order to save time.
However, perhaps I may suggest for future consideration that that practice tends to lead to confusion. I doubt whether it saves any time whatsoever when amendments to amendments are not disposed of before we reach further amendments to those amendments and further amendments not to those amendments. We get into a very confusing position. I am happy to try to work with the system but I am bound to make that suggestion.
Secondly, I may say how grateful I am to the noble Lords, Lord Boyd-Carpenter and Lord Campbell of Alloway, for being good enough to support the very modest amendment that I put forward at line 5. We are told that the great characteristic of the British is that they do not discuss politics until after dinner. Perhaps we should take advantage of that and not discuss amendments to gas Bills until after dinner. Certainly there seems to be a different attitude in your Lordships' Chamber, for which I for one am most grateful. It only shows that if, as a true Yorkshireman, one keeps on what I call persisting in a good cause, and what others may call plain obstinacy, one may win support from unexpected quarters in the House. So I am most grateful to both noble Lords.
I am particularly grateful to the noble Lord, Lord Campbell of Alloway, who said that he was very content with the Minister's comments. If the parliamentary draftsmen, who are really superb in this matter, advise the Minister that the word "or" means "and" in this particular context, as indeed I thought it might (I put down the amendment for confirmation), and if the noble Lord, Lord Boyd-Carpenter, is content with that, as I gather he is, then I shall seek in a moment to beg leave to withdrawn that amendment.
I say "in a moment" because I have first to deal with Amendment No. 97, as we are discussing that amendment also. I repeat the gratitude that I have already expressed for bringing part of the authorisation's terms and conditions into the statute itself. I am bound to say that I was not wholly convinced by the Minister's remarks that the part that he proposed to introduce was properly introduced, and that the part that had been proposed at an earlier stage by the noble Baroness, Lady Macleod, and the further part introduced by myself tonight, was not wise drafting or legislation. The best thing for me to say at this stage is that I shall read very carefully what the Minister said. Certainly I shall not press the matter further tonight.
I shall not press it except to this extent. We are in the difficulty that we have an authorisation that is a most important condition. The whole condition under which the British Gas Corporation changes from that name to British Gas plc is in the terms of the authorisation. The Bill adds much to what the Minister, the Secretary of State and the director have to do. However, the real guts of the matter are contained in the authorisation. That authorisation is not part of the statute. Attempts have been made to
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introduce it into the statute but the Government have not been willing for that to be done.
We had an authorisation—at least we had one. It is now different from the authorisation we had when we were last discussing this matter. That is because the noble Lord, Lord Belstead, said that he has introduced something different into it. I hope that I am right in understanding him in that way. So it is a different authorisation. To what extent can he alter the authorisation before the appointed day?
Where do we stand with the authorisation? We have no protection, or the consumer whose interests we are trying to look after has no protection, against further alterations. It may be an alteration that is desirable, but the Government may think of another alteration during the Recess that is not, in our view, so desirable. Ministers have a long time in which they will be working hard and the rest of us will be gadding about in whatever way we think appropriate. The Government will not have the benefit of your Lordships' views as expressed in this Chamber. They may take the wrong view about altering the authorisation. I am bound to ask the noble Lord, "Where do we stand with the authorisation?". I understand that after the relevant date of transfer—
Lord Campbell of Alloway: My Lords, will the noble Lord give way? I am grateful and shall not keep him a moment. Will the noble Lord, Lord Diamond, agree that what he is saying is very important, but strictly relevant to Amendment No. 88 tabled by the noble Lord, Lord Stoddart, which takes this very point? As we have all kept off Amendment No. 88, other than to refer to it as an important amendment, perhaps it would be convenient to deal with the matter when that very important amendment is moved.
Lord Diamond: My Lords, I always listen with great interest and respect to the words of the noble Lord, Lord Campbell of Alloway. Amendment No. 88 is not before us at the moment and the alteration in the authorisation is before us, so perhaps the simple way is to continue with the consideration of this amendment. Thus the Minister will be warned, so that when we come to discuss Amendment No. 88 he will be fully charged with all the particulars that he wishes to put before the House with regard to that amendment.
Perhaps I may continue for just one moment to say that I well understand the arrangements in the statute that provide for the changes in the authorisation and inhibit changes which are not so provided for. But up to the date of transfer we are in this great difficulty, so I hope that the noble Lord will have a word to say on that matter. As I understand that I have the consent of all the noble Lords who have spoken to Amendment No. 76A, I beg leave to withdraw that amendment.
Amendment to the amendment, by leave, withdrawn.
9.15 p.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon had given notice of his intention to move, as an amendment to Amendment No. 76, Amendment No. 76B:
At end insert ("and shall ensure that in respect of these two groups arrangements exist for the checking of all their domestic gas appliances free of charge.").
The noble Lord said: My Lords, I really only move this amendment formally in order that I can withdraw it. I am grateful to the noble Lord for what he said on this amendment. There is no need for me to keep the House any longer than is necessary. I understand his difficulty; but I accept his offer to take the matter back, to consider it between now and Third Reading, and it is to be hoped that if he feels that he can assist, then he will do so by way of amendment. Of course, if he is unable to be of assistance, then I shall have to try again. Having said that, I beg leave to withdraw the amendment.
Amendment to the amendment, by leave, withdrawn.
On Question, Amendment No. 76 agreed to.
[Amendments Nos. 78 and 80 not moved.]
Viscount Hanworth Viscount Hanworth moved Amendment No. 82:
Page 3, line 28, at end insert—
(" £ Subject to subsection 1 above, the Se cretary of State and the Directors shall each have a duty to ensure that if persons authorised under this part adopt practices which in their view are inimicable to fair competition between suppliers of other fuels they shall refer the matter to the Office of Fair Trading.").
The noble Viscount said: My Lords, I think it will be for the convenience of the House if I speak to Amendments Nos. 82 and 83 but I should like to move them separately. The point of these two amendments and the reasons for them can be very simply and briefly stated. The electrical generating industry is very worried indeed that a newly-privatised gas industry may employ methods of promotion and selling of their products which are unfair and cannot be matched by a nationalised electricity industry with the constraints which such nationalisation implies.
Even when all supplies of alternative fuels were nationalised there was fierce competition and this competition was sometimes unethical, or at least it was against the consumer's interest and that of free choice: for example, an agreement with a property developer that in his new housing complex only electricity and not gas would be available. I know that the boot was on the other foot, but it illustrates what may happen—even more so when one of these two industries is privatised.
My first amendment is very moderate indeed. All it does is to encourage the director and the Secretary of State to make themselves aware of abuses and, where they consider them of importance, to refer to the Office of Fair Trading. This has two merits. In the first place it will be a warning and a discouragement to the privatised gas industry to avoid anything which might be considered unfair. Secondly, it should mean that action is taken in time and before a major scandal blows up. Surely the Government do not want their privatisation programme jeopardised and rejected for such a reason.
In case your Lordships may still think that those fears can be ignored, let me mention what some authorities have said. In 1980 the Monopolies and Mergers Commission published a report on domestic gas appliances. In paragraph 13.83 it was concerned that the British Gas Corporation had a monopoly in the retail supply of gas appliances and that that was against the public interest. Finally, the gas industry accepted those structures and no government action was necessary.
On another amendment concerned with industrial tariffs the Government have argued that firms could change their fuel and chase the free market forces. I forbear to comment, except to say that even if that were possible or wise in a highly volatile oil situation no such possibility, except in the long term, is available to the domestic consumer. In view of those fears of the electricity industry, I very much hope that the Government will be able to meet my first amendment. If, on the other hand, they do not do so, I shall formally move the second amendment and I am afraid, as a protest, drive it to a Division. I beg to move.
Baroness Gardner of Parkes: My Lords, I am not in favour of the amendment and I cannot see the need to protect the electricity industry in the way stated. I am a member of the London Electricity Board, and we are well aware that there will be differences when gas is privatised. But I thought that the concerns were more that skilled staff might be attracted by better salaries in the gas industry.
The point is made about ensuring fair competition, but I think that our ordinary laws already cover that adequately. Although I am a great supporter of the electricity industry, I do not believe that it should be wrapped in cotton-wool any more than the gas industry. My concern is for the consumers, but I think that the electricity industry has access to even home in the country—which is a point made by the noble Viscount—whereas gas goes to only a limited number of premises. Many areas of the country have no gas pipes, and I am keen to see an extension of gas supply after the industry is privatised. I know of many parts of the country that would like to have gas. I do not think that the amendment is to the advantage of consumers or is necessary for the electricity industry.
Lord Molloy: My Lords, I think that the amendment is worth supporting. The noble Baroness said that the CEGB does not need wrapping in cotton-wool. But we had to establish the Office of Fair Trading because there was so much cheating and swindling in private industry. Had that not been so, we should not have established it. We should not take a chance. If we are sensible we will acknowledge that there is sense in the amendment.
Lord Boyd-Carpenter: My Lords, it is significant that the noble Viscount referred to the alarm in the electricity industry at the threat of competition from the privatised gas industry. One can draw important conclusions from that, one of which is that it seems to be appreciated, even in a nationalised industry, that privatisation will increase the competitive power and efficiency of the industry that is privatised. I therefore very much welcome the noble Viscount to the ranks of those who favour privatisation.
The other point that I want to make is an obvious one. If the electricity industry is to be specially protected against competition from gas, it would seem logical that the converse should also apply. But it is only the gas industry which is to be privatised. In any event, I should have thought that current law, the Monopolies and Mergers Commission and the Director-General of Fair Trading were sufficient to deal with any such problems as may arise.
Lord Stoddart of Swindon: My Lords, I think that the noble Lord, Lord Boyd-Carpenter, was being unfair to the noble Viscount, Lord Hanworth. He knows well what the noble Viscount was getting at.
Lord Boyd-Carpenter: I do, my Lords.
Lord Stoddart of Swindon: Yes, indeed, my Lords. May I say to the noble Baroness, Lady Gardner of Parkes, that there is a distinct difference between the electricity supply industry and the gas industry? One industry is not constrained or restrained by 25 yards from the main. The electricity industry has a statutory duty to provide electricity wherever it is demanded. That is one of the constraints under which it operates. The problem is that when British Gas is privatised the electricity industry will be under a constraint of government. The noble Lord, Lord Boyd-Carpenter, will no doubt come back and say, "That is simple. Let us denationalise the electricity industry as well".
Lord Boyd-Carpenter: The noble Lord said it, my Lords.
Lord Stoddart of Swindon: My Lords, no; that is what I said that the noble would say. I was not saying it. It will not be so easy to privatise the electricity supply industry as it is to privatise the gas industry. That being so, the electricity industry knows that it will be some while before the Government can privatise it, if at all. We are opposed to the privatisation of gas, electricity or coal. We believe that oil should have remained under some form of state control through BNOC.
For the time being, the electricity industry will be operating under the constraint of government. Because of that, and because it will have to burn the fuels which the Government say it must burn and will have to buy them mainly from the sources which the Government say it must buy them, it will be at an unfair disadvantage in relation to gas. That is what this amendment is all about. That is why the noble Viscount has moved it. I can understand it. There will be real difficulties. Let us make no mistake about that.
The amendment is designed to be fair to the electricity industry and through it to the coal industry. It is incumbent upon the Government to accept the amendment or something like it so that the electricity industry can be protected. That will go some way towards ensuring that North Sea gas is not depleted at a rate which will cause us difficulties in 20 or 30 years' time.
Lord Ezra: My Lords, the noble Lord, Lord Stoddart, has put his finger on the real issue that we are debating. We are not saying in this amendment that we are against competition. We are saying that we consider that competition should be fair. On authorisation, a privately-owned gas enterprise will be given considerably more freedom than at present it possesses. It will compete with an electricity industry which will continue to have the restraints which at present it possesses. It will therefore be at a competitive disadvantage. That is what we are drawing attention to. To say that the solution then lies in privatising the electricity industry may be logically
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correct but it is not relevant in present circumstances. So long as that inequality exists, something must be put into the Bill to correct it. This is an attempt to do so.
9.30 p.m.
Lord Diamond: My Lords, before the noble Lord replies, I should like briefly to support my noble friend Lord Hanworth in the amendment that he has moved. I wish to deal with a matter that is very relevant and that worries me considerably. I am talking about advertising. The amendment refers to fair competition between suppliers of other fuels. At the moment, the nationalised British Gas is conducting an enormous amount of advertising. One sees it on full pages in The Times, on huge areas of the Underground and all over the place. It is gas that is doing all the advertising. Electricity is not advertising on anything like a comparable scale that I have noticed.
It is clearly gas that is spending all the nationalised industry's spare cash while it can in advertising its product in the hope, no doubt, of getting one up on electricity, while electricity, for all that we know, has no opportunity to respond. Perhaps the noble Lord, Lord Gray of Contin, is able to enlighten us. Has the electricity industry attempted to respond or sought permission to respond? Has it sought permission to spend millions of pounds on advertising? Has it sought permission to engage American advertising contractors to advise it on advertising as opposed, for example, to going to the British advertising contractors used by the Conservative Party to help it win elections? How has the electricity industry attempted to deal with this matter in order that there should be fair competition? I would be grateful if the Minister could respond to these points.
Lord Gray of Contin: My Lords, no doubt during my remarks I may be supplied with some additional information that I can pass on to the noble Lord, Lord Diamond. I should like to say straightaway, however, that I do not think that the noble Lord can watch as much television as I do. I am not a television addict by any means, but for many months the electricity authority have had a highly successful advertising programme on television. It must be very expensive, because television is an expensive media through which to advertise. I would suggest to the noble Lord that it matches anything I have seen on behalf of the British Gas Corporation. No doubt, as I am talking, I shall be given some figures that I can pass on to the noble Lord. If not, I shall let him know in due course.
I am most grateful to the noble Viscount. I know his views on the matter because he has discussed them with me, and we have also had correspondence. I am particularly grateful to the noble Viscount for leading the debate on this subject. I would also thank noble Lords for making a total of seven contributions inside 16 minutes. How wonderful it would be if all our debates could be so succinct!
My noble friend Lord Boyd-Carpenter seized immediately and correctly on fears that the British Gas Corporation, under the full benefit of privatisation—enjoying the efficiency that can follow and the tremendous new life that an industry, liberated from the control of Government, acquires—will be

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free to compete in the energy market. As my noble friend rightly pointed out, this is obviously something that gives cause for concern to those who take a different view. My noble friend Lady Gardner of Parkes was right when she said that the amendment was not needed. She saw no need for it, and I certainly agree. The Office of Fair Trading is equipped to deal with any unfair competition between fuels, such as predatory pricing against the electricity industry, using its powers under normal competition law.
It is not necessary for the gas consumers council to intervene for the Office of Fair Trading to be able to act. The Bill provides for the modification of public gas suppliers' authorisations after competition law investigation by the MMC. Under Clause 42 the director of Ofgas will be able to pass across to the Director General of Fair Trading any information which he considers would assist the latter in the performance of his functions. There is therefore the possibility of introducing proper control through mechanisms set out in the Bill in the event of real abuse. I know that the noble Viscount feels very strongly about this.
Lord Stoddart of Swindon: My Lords, I hope that the noble Lord will not mind if I ask him a point of information. He was talking about predatory pricing. One understands that the Office of Fair Trading would be able to do something about that. But there is a real difficulty because—at least as I understand it and the noble Lord will correct me if I am wrong—the contract price for gas is fixed to the prevailing oil price. Am I right on that? The noble Lord will tell me. If that is so, willy-nilly by the reduction in oil prices, the price of gas will reduce. But there is no compensating link between coal and oil prices. Therefore without predatory pricing it could very well be that gas—not because it is privatised but simply because of the way it has been organised over a long period of time—would be competing unfairly with the electricity industry.
Lord Gray of Contin: My Lords, no, I would not accept that that would be the case at all. With regard to the electricity industry, it is not dependent upon one fuel alone. Certainly the Government have an influence on where the electricity industry buys its coal and at what price. But electricity is made from nuclear power and from hydro-electricity, which is very much cheaper than anything else. There is little doubt that if we had the potential to produce hydro-electricity in the kind of quantity which we presently produce electricity from coal then it would be very attractive—but that is another argument. I simply use these examples as a comparison in the argument that the noble Lord is using.
I do not accept that the gas situation vis-a-vis oil would necessarily be a disadvantage with regard to the electricity industry. They will be competing in a market in which they had been competing for many years. The fear, for example, that the gas corporation will slash its prices to such an extent that nobody will be able to compete with them at all is to my mind a fantasy which one would naturally get during
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Committee and Report stages of a Bill—and rightly so—but it is totally devoid of realism in the commercial world.
Perhaps I can return to what I was saying to the noble Viscount. I obviously respect the view that he holds. He has explained it very clearly to me. I also thank him and appreciate his frankness. He said straight away that if I was not prepared to accept Amendment No. 82, then he would wish to move Amendment No. 83 and would insist on a Division on it, as he is perfectly entitled to do. I do not think that there is any point in my spoiling the excellent record which your Lordships have created on this amendment in being brief by being other than brief. I wish to mention the noble Lord, Lord Molloy. who has not in the past taken a very great deal of part in our energy subjects. We are delighted to see him with us and thank him for his contribution. With those few words, I leave it to the noble Viscount to decide what he wishes to do.
Lord Molloy: My Lords, before the noble lord sits down, may I thank him for what he has just said, and ask him whether he would clarify a point for me? I listened very intently to what he had to say. He seemed to indicate that the Central Electricity Generating Board could carry on what he called a massive and expensive television advertising programme, and that no doubt the new gas plc will do the same. They will carry on—using his words—a very expensive television programme. However, will that not inevitablv put up prices? Do we not all know that the people who pay the price for television advertisements are the consumers? Rather than have a television war, which can be massively expensive and for which the consumer will pay (because that is who will pay; otherwise they would not indulge in it), would it not be far better that there be written into the Bill—
Lord Brabazon of Tara: My Lords, I should just like to remind the noble Lord that we are at the Report stage of the Bill and that noble Lords are allowed to speak only once. The noble Lord is making a second speech.
Lord Moiloy: My Lords, I thought that it would be courteous to explain the point that the noble Lord made. In conclusion, if the amendment were accepted, would it not be far better to avoid this sort of television war, for which in the end only the consumer will have to pay?
Lord Gray of Contin: My Lords, by leave of the House, I said to the noble Lord, Lord Diamond—and the noble Lord, Lord Moiloy, has raised the same point—that I hope to give him figures. I am happy to tell the noble Lord that the note which I have received from the Officials' Box is almost verbatim the remarks I made earlier. Therefore, in due course perhaps I may drop the noble Lord a note and give him some indication of the costs.
Viscount Hanworth: My Lords, I am rather surprised at the two noble Lords who spoke against the amendment because, although I understand that one can take the view that it is unnecessary, I should have thought that that was the only logical view that one could take. The amendment simply says:
"if persons authorised under this part adopt practices which in their view are inimicable to fair competition between suppliers … they shall refer the matter to the Office of Fair Trading".
The point is that they can do so anyway. I am simply writing it into the Bill to remind them, where necessary, to do so. For reasons which I have explained (and, once again, I wonder whether some people listened to what I had to say), the electricity industry is
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very worried. This would reassure that industry, and it is reasonable because it reminds the director and the Secretary of State that they have an obligation to look round and make sure that nothing is going wrong.
Therefore, I shall change my mind and divide the House on this amendment. I shall not move the next amendment, which is tougher still. I see no point in putting forward a tougher amendment when there is obviously a certain amount of opposition to this extremely sensible amendment. Therefore, I shall not withdraw the amendment.
On Question, amendment negatived.
[Amendment No. 83 not moved.]
9.45 p.m.
Clause 5 [Prohibition on unauthorised supply]:
Lord Belstead Lord Belstead moved Amendment No. 84:
Page 3, line 36, leave out ("public gas supplier") and insert ("person authorised to supply it by or under section 6, 7 or 8 below").
The noble Lord said: My Lords, I beg to move Amendment No. 84 and at the same time speak to Amendment No. 169. These two identical amendments are slightly technical but their purpose is clear. Subsection (2) of Clause 5 as presently drafted provides that a person, on selling gas supplied to them by a public gas supplier—that is a supplier authorised under Clause 7—for use in a building owned or occupied by him, does not commit an offence under Clause 5 in respect of unauthorised supply.
We have since given further thought to this and it seemed to us over-restrictive in creating a distinction between supply by a public gas supplier and by other suppliers, whether Clause 8 suppliers or those able to "notify" in respect of supplies of over 2 million therms a year under Clause 6 of the Bill. We could see no logical reason, for instance, to create a distinction between buildings supplied by British Gas or by Calor Gas in an isolated network in the country. We have therefore decided to bring to your Lordships a proposal to extend the scope of Clause 5(2) to any person authorised to supply by or under Clause 6, 7 or 8. This needs to be reflected in Clause 16, which deals with the quality of gas supplied, hence the second amendment to subsection (9) of that clause. I beg to move Amendment No. 84.
On Question, amendment agreed to.
Clause 6 [Exception to section 5]:
Lord Diamond Lord Diamond moved Amendment No. 85:
Page 4, line 7, leave out ("either").
The noble Lord said: My Lords, I am sure that we are on the Gas Bill. Apart from that, I could not say anything with precision. I gather that it is for the convenience of the House if, with this amendment, we discuss Amendment No. 86. We are now dealing with Clause 6, and the main substance of my amendments is the proposal that there should be added at line 13:
"that he is of the opinion that the gas supplier is unable to finance such a supply of gas."
Here there are a number of conditions which, all told, form an exception to Clause 5, and I could not understand why this one was omitted because it is one of the main conditions under Clause 4 which the Government have inserted into the Bill. I hope that with that short introduction, as we are all seeking to make the maximum progress on this Bill, the noble Lord the Minister will feel able to give us his views. I beg to move.
Lord Brabazon of Tara: My Lords, I hope that I can deal with this point briefly. This clause carries forward the provisions of Section 29A of the Gas Act 1972 as introduced by Section 12 of the Oil and Gas (Enterprise) Act 1982. The whole point about Clause 6 is that it deals purely with contracts between the gas supplier and very large customers who are taking more than two million therms a year. We believe that those
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supplies of over two million therms a year can only be undertaken by companies of substance who will be of sufficient weight to meet their contractual supply obligations without the application of a test of the kind proposed in this amendment.
Clause 4 is quite a different matter about public gas suppliers from Clause 7. This is purely for the large customers taking more than two million therms a year. Those customers are quite capable of making a contract with the gas supplier without any need for the director to get involved in the proposal in the amendment as to the financial viability of that supplier.
Lord Diamond: My Lords, I gather that what the noble Lord the Minister is saying is that the customer here is capable of looking after himself and does not need the assistance given under Clause 4. If I understand that correctly, then I shall give thought to what the Minister has said, and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 86 and 87 not moved.]
Clause 7 [Authorisation of public gas suppliers]:
Lord Diamond Lord Diamond moved Amendment No. 87A:
Page 4, line 41 after ("section") insert ("or an amended authorisation").
The noble Lord said: My Lords, we have now reached the important Clause 7, which provides for the authorisation of public gas suppliers. This amendment deals with the variation of that authorisation. It proposes, at page 4, line 41, to insert, not "for an amended authorisation". I apologise to the House: that is a misprint on the Marshalled List for "or". The "f" has crept in unexpectedly. It would read:
" 'public gas supplier' means any person who holds an authorisation or an amended authorisation".
The other amendment, Amendment No. 194A, to which I am speaking, merely defines what an authorisation is.
Why do we have to refer to an amended authorisation in this way? It is because of the restrictive way in which Ministers have hitherto interpreted the authorisation. I have the details somewhere among the mass of paper on the Bench. It is not easy to refer to it, but if my recollection is reasonably correct, the noble Lord, Lord Belstead. said on an earlier occasion, in relation to another amendment, that an authorisation could not be altered; if one did alter it, the gas supplier would not be a gas supplier under the terms of the Bill because according to the Bill a gas supplier is the supplier who had been given the original authorisation. If the authorisation was altered, he would no longer be a public gas supplier and everybody would be in a terrible fix. The noble Lord used that argument against amendments we were proposing in order to make adjustments.
I suggested at the time we were discussing this point that there were other ways out of it. But on further thought it seemed to me that the simple way was to provide in this clause that a public gas supplier is a

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person who holds either an authorisation or an amended authorisation. That is the purpose of my amendment. I beg to move.
The Deputy Speaker (Lord Airedale): My Lords, the amendment proposed is on page 4, line 41: after ("section") insert not as printed on the Marshalled List but ("or an amended authorisation").
Lord Belstead: My Lords, Clauses 23 to 27 set out the arrangement for modification of public gas suppliers' authorisations whether by agreement or following a reference to the Monopolies and Mergers Commission under the provisions of the Bill or under competition law. I am advised that an authorisation as modified under those clauses remains an authorisation granted under Clause 7. A public gas supplier whose authorisation has been so modified remains a public gas supplier within the meaning given by Clause 7(1). Therefore the amendment proposed by the noble Lord, Lord Diamond, is unnecessary, for the reasons I have just given.
Lord Diamond: My Lords, I have listened to what the noble Lord the Minister has said. Regretfully I cannot turn up at this moment the one or two statements that the Minister himself made during the course of our Committee proceedings dealing with the difficulties arising out of an amended authorisation. I shall come back to that if necessary, though I hope it will not be. I have listened to what the Minister has said and I shall read it all very carefully in Hansard and, if necessary, come back at a later stage. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 88:
Page 5, line 1, at end insert ("and following approval of the conditions of the authorisation by both Houses of Parliament").
The noble Lord said: My Lords, it may be convenient if we discuss with this amendment Amendments Nos. 90, 91, 92 and 93. If this amendment were carried, Clause 7(2) would then read:
"The Secretary of State after consultation with the Director and following approval of the conditions of the authorisation by both Houses of Parliament may authorise any person to supply gas through pipes to any premises in that person's authorised area",
etc.
Noble Lords will recall that at Committee stage we attempted to write the authorisation into the Bill as a schedule. Had we been successful in doing so, it would have been possible at a further stage to amend the schedule in accordance with what we felt the authorisation should cover. But unfortunately—and perhaps the matter was a little complicated because the schedule was very long and complicated by the price formula—the Committee felt that it could not agree to that course of action. The opportunity is therefore given by this amendment and others for this House to ensure that before an authorisation is agreed Parliament has the opportunity to see it and to agree it. Unfortunately, orders cannot be amended and that is why this method is not as good as our previous
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method. An order cannot be amended, but at least both Houses would have the opportunity to see the conditions and would be able to approve or disapprove of those conditions.
As we said at Committee stage—all those of us who took part in it—we are very concerned that Parliament should continue to have some kind of input. Here we have an industry, the gas industry, which has been under public control for over 40 years. The opportunity has been available to the public to have their say through their Members of Parliament in what the gas industry is doing or what it is not doing. The fact is that it has been an industry responsible to Parliament; people know that it has been responsible to Parliament; the gas industry itself has known that it has been responsible to Parliament. Therefore Parliament has been able to exert a considerable influence on the development of that industry and on the way that industry treats its customers.
After the Bill becomes law, there will be no such opportunity. The gas industry will be in private hands and Parliament will be very much at arm's length. The noble Lord will say, "Yes, but the Secretary of State has certain duties and powers within the Bill and he is responsible to Parliament". But in my view that is an arm's length relationship. It is therefore essential that Parliament should be able to see the authorisation, should be able at least to comment on that authorisation and, if necessary, reject the order which contains the authorisation.
Quite frankly, I should have thought that that was the least we could do. That is the least that we could say to the customers, to the consumers; and it is the least we could do for Parliament, which is to lose control of a great industry that it has controlled over a long period of time. With an industry such as this, which is to be converted from a public monopoly to a private monopoly, it must be right that Parliament has some say as to how that industry is going to be regulated and run in the future.
This is the way that we now see of achieving just that. It is not as good an amendment as we proposed at Committee stage. That would have been the ideal, that would have been the real way in which Parliament could have had an influence on the authorisation and a way that would have enabled Parliament to revise the authorisation itself if it felt like doing so. However, that was not agreed. We believe that this amendment and the amendments associated with it are the right and proper way now of ensuring that Parliament keeps some measure of control over the industry, which, as I have said, will be converted from a public monopoly to a private monopoly.
I hope that the noble Lord will feel able to accept this amendment, especially in the light of the discussion we had on the previous amendment where I detected some support for continued Parliamentary input into the authorisation of the privatised gas industry. I have moved this amendment shortly because we really must get on. I hope the noble Lord will be able to offer me some encouragement on this amendment, and I beg to move.
10 p.m.
Lord Campbell of Alloway: My Lords, I only wish to speak to Amendment No. 88 which affects the enforcement of the code of practice for the aged and infirm. I have supported this amendment hook, line and sinker for the reasons I gave when I spoke to the group of amendments. It is a prime consequential issue as to whether and how certain breaches of the code of practice for the aged and disabled should be brought within Clauses 28 to 30 of the enforcement procedures. This amendment, in another form, could constitute a relevant requirement by amendment to Clause 28(8). This amendment is the door to Clauses 28 to 30, concerning enforcement. It is fundamental.
One has to consider the drafting of Amendment No. 76B in context with Amendment No. 88 and also with Clause 28(8). My noble friend the Minister agreed to take this back for consideration. It is Lord Diamond's point that it is rather odd to keep amending the proposed authorisation under Clause 7. This amendment disposes of that objection because it requires that the authorisation before grant should be laid before Parliament.
Your Lordships would no doubt agree it is right to give my noble friend the Minister an opportunity to consider with his advisers how this may best be drafted and I hope that in those circumstances effect can be given to the main principle, and that the amendment need not, subject to Lord Stoddart's view, be pressed.
Lord Diamond: My Lords, we are discussing this amendment together with Amendments Nos. 90, 91, 92 and 93. Amendment No. 91 is in my name and provides that on page 5, line 2, after the word "authorised" one should insert:
"by order (except in those cases where the Secretary of State considers that, having regard to the likely volume of gas to be supplied, the representations made, and all other relevant circumstances, no useful purpose would be served thereby)".
I want to make it absolutely clear that I support Amendment No. 88; but one has to be satisfied with something less than the ideal if one is, as we are, a minority in the House dealing with a Government which has a very substantial majority. The noble Lord, Lord Stoddart, has proposed an amendment which would provide the proper safeguard in these circumstances. In view of the objections that were raised at an earlier stage in our discussions, I thought perhaps the Government, even supposing for one moment that they were prepared to accept the amendment, might be prepared to accept a less useful and less forceful amendment of the kind that I have put forward. That would be where the Secretary of State can of his own consideration and within his own mind come to the conclusion that the likely volume of gas to be supplied is so small, the representations made so negligible and all the other relevant circumstances so satisfied that no useful purpose would be served by making an order of that kind. So it is really spelling out the de minimis rule, to which we always subscribe in legislation, hoping that by doing so we can make it more possible for the Government to accept an amendment which goes part of the way, if it is not prepared to accept the amendment which has been
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moved, which goes much further and which I support entirely.
Lord Bruce of Donington: My Lords, since we are taking Amendments Nos. 92 and 93 together with the three amendments which your Lordships have just been discussing, I should like to return, if I may, to those Amendments Nos. 92 and 93, which were discussed in Committee on the 3rd June last. I then put the case to your Lordships that during the passage of the Telecommunications Bill we successfully argued with the noble Lord, Lord Cockfield, that the licence granted to the new British Telecom plc should be the subject of review by the House. The review by the House, under the provisions of the Telecom-munications Bill was exactly in the same words as those put down in Amendments 92 and 93, applicable to the authorisations granted to a public gas supplier in this Bill which, for all practical purposes means (at any rate for the moment and indeed for the foreseeable future) British Gas plc. I ventured to give quotations from the noble Lord, Lord Cockfield, at col. 729 of Hansard for 3rd June last, but I would not wish to detain your Lordships by repeating those quotations here.
In reply, the noble Lord, Lord Belstead, seemed rather to fasten on only one aspect of the authorisation to be granted to British Gas plc: that of safety. He rather fastened on that one and, in the course of his reply, referred to the Health and Safety Act and all the rest of it. The gravamen of his argument was that this particular authorisation was not comparable with the licence granted to British Telecom, as in the Telecommunications Act the main legal framework for the operator's activities was contained in the licence, and that is not the case in this Bill. Whether the main framework was in the licence, as in the case of British Telecom, and the main framework is not in the authorisation proposed to be granted to British Gas plc is surely very largely immaterial.
The authorisation covers a variety of matters. It provides for separate accounts for the gas supply business; the restriction of gas prices to tariff customers; standing charges; pricing for contract customers; connection charges; the provision of information to the director; the provision of informa-tion to the Gas Consumers Council; the conveyance of gas for others; the supply of back-up gas; the emergency service; the codes of practice for tariff gas supplies and payment of bills; the supply to public lamps and the payment of fees. There are also a couple of schedules dealing with the revocation of authorisation and Annex A on gas supply business.
This is fairly comprehensive and one of our difficulties in discussing this Bill in Committee and, so far, on Report—and this has been referred to many times by my noble friend Lord Stoddart and the noble Lord, Lord Diamond—is that all we have before us is a proposed authorisation. It is not reproduced in the Bill and it has not been put in as a schedule. There is nothing to stop the Government from altering this proposed authorisation, provided that it accords with the broad general parameters of the Bill. They can more or less do what they like with it and there is

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nothing that another place or this House can do about it. The Government can change their mind, even after the Bill has gone through Report stage and Third Reading, on, for example, the price formula. There is nothing in the Bill to stop them from altering that. This goes right to the roots of the Bill.
The noble Lord, Lord Cockfield, was not always accommodating to the Opposition, and I say that with some personal experience. But—and I say this without offence to any noble Lord opposite—he was so public spirited in this matter, and saw the force of the arguments put forward by the Opposition, that he met us on this point on the Telecommunications Bill, in the words that are incorporated in Amendments Nos. 92 and 93.
If the Government have no intention of making any substantial amendments to the proposed authorisation, prior to the date of transfer or prior to the granting of the first authorisation, but after the passing of this Bill through this House and another place and after it has come back to this House again, why can they not do precisely the same as the noble Lord, Lord Cockfield, did in respect of the Telecommunications Bill? Why can they not see that the authorisation is laid before the House in the form of an order? I do not want to prolong the argument at this time of night, but why cannot the noble Lord agree with that or, alternatively, give some rather more convincing reasons than he gave on 3rd June last?
10.15 p.m.
Lord Belstead: My Lords the effect of these amendments generally is to provide for consultation with Parliament in granting an authorisation to a public gas supplier. As your Lordships are already well aware, there is in the Bill a full system of consultation prior to the issue of an authorisation to a public gas supplier. We have already provided ample opportunity for Parliament to scrutinise and comment on British Gas's draft authorisation by publishing it before the Second Reading of the Bill in another place, and I really do not accept the need for further parliamentary involvement. It is basically for that reason that I cannot accept the amendment.
Incidentally, may I repeat what I have already said this evening. If an authorisation is to be changed in future, there is a mechanism in the Bill in Clauses 23 to 27 for changing it; and only by referring to those clauses can an authorisation be changed. We have not yet come to these clauses during our Report stage; but here again both Houses of Parliament have every right to put their stamp on Clauses 23 to 27.
The only other thing I think I need to say is in reply to the question put to me by the noble Lord, Lord Bruce. I shall not go into the points put to me by my noble friend Lord Campbell. Why, asks the noble Lord, Lord Bruce, can we not do what my noble friend Lord Cockfield did when he was Minister in this House so far as the Telecommunications Act was concerned? The parallel with the Telecommunications Act where the order designating public telecommunications operators contains equivalent provisions to those in Schedule 5 to this Bill is not a true one. These provisions are in our case fully contained in the
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statute; namely, in Schedule 5. It would not be appropriate for the same parliamentary procedure to be involved. I said very much that at rather greater length during the Committee stage. I am sorry that, if rather more briefly, I am saying the same thing at Report stage in reply to the noble Lord, Lord Bruce.
Lord Diamond: My Lords, before the noble Lord sits down, is he going to say anything in relation to the other amendments which are being discussed at the same time?
Lord Belstead: My Lords, I apologise to the noble Lord, Lord Diamond. The noble Lord has down Amendment No. 91. I simply say that I do not believe that even a reduced form of parliamentary approval which is contained in the noble Lord's amendment would be appropriate, having regard to the fact that once again Parliament will have passed the Bill with the draft of the authorisation before it. Perhaps I may remind your Lordships that the first draft of the authorisation was put before the House of Commons. We made sure that the revised draft of the authorisation, taking into account drafting points and points put forward in the House of Commons, was put before your Lordships' House at Second Reading. I have now made sure that a further draft of the authorisation, taking into account points put by your Lordships in Committee, has been placed before your Lordships for the Report stage. All along so far as the authorisation is concerned we have kept your Lordships fully informed. I repeat that if either the director or the public gas supplier later wants to make a change to the authorisation, he has to do so via Clauses 23 to 27. If the House wants to change Clauses 23 to 27, the House has every right to do so. They will receive full parliamentary scrutiny.
Lord Ezra: My Lords, can we be quite clear on up to what point in all this the Government can change the authorisation? I am quite clear that once the procedure starts operating the changes are covered by Clauses 23 and 24. But up to what point can the Government unilaterally alter the authorisation?
Lord Belstead: My Lords, I believe I am right in saying that it is up to the time of the setting up of the public gas supplier. Up to that time we will ensure that Parliament is kept fully informed, as it has been so far, about the authorisation.
Lord Diamond: My Lords, before the noble Lord finishes that point, and, if necessary, with the leave of the House, may I ask for further clarification? We are now fairly near to the Summer Recess. I have already raised this point but I do not recollect having had an answer to it. What will happen if after the House has risen the Government decide that owing to represent-ations made by sections of the trade or whatever—perfectly good representations—they ought on second, third or fourth thoughts to alter the authorisation? It would still be before the relevant date. It would still be within the power of the Government to alter it. It would not be within the power of the Government to notify the House or to obtain the reaction of the House to it. What does the Minister propose to do about that?
Lord Belstead: My Lords, for the last time, and only by leave of the House, the answer to the noble Lord, Lord Diamond, on that important point is that the changes that have been made to the authorisation hitherto have been confined to drafting changes and to changes made in response to points raised in both Houses of Parliament. That will remain the situation. There is, therefore, no danger that something will be put into the authorisation of which Parliament would not approve.
Lord Stoddart of Swindon: My Lords, there is clearly a yawning gulf between the two sides of the House, and certainly between the Minister and this side of the House. The Minister says that Parliament has been able to discuss the authorisation. The quarrel is that we have only been able to comment on the authorisation and not properly to discuss it, and certainly not to amend it.
So far as concerns changes, it may be that the director, the supplier, the Office of Fair Trading and the Monopolies and Mergers Commission may have something to do with changing the authorisation and making amendments to it, but Parliament will have absolutely nothing to do with it. That is what the debate has been all about. We believe that Parliament should have an input, and that there is no provision for Parliament to have such an input.
I feel, therefore—and I do this in the interests of brevity—that I must press this amendment to a Division. It is important that we do so. I beg to move.
10.21 p.m.
On Question, Whether the said amendment (No. 88) shall be agreed to?
Their Lordships divided: Contents, 18; Not-Contents, 51.

DIVISION NO.5

CONTENTS

Airedale, L.

McNair, L. [Teller.]

Bruce of Donington, L.

Molloy, L.

Crawshaw of Aintree, L.

Morton of Shuna, L.

Dean of Beswick, L.

Northfield, L.

Diamond, L.

Ponsonby of Shulbrede, L.

Ezra, L.

[Teller.]

Gallacher, L.

Seear, B.

Grey, E.

Stoddart of Swindon, L.

Kilmarnock, L.

Tordoff, L.

Mackie of Benshie, L.

NOT-CONTENTS

Arran, E.

Crathorne, L.

Bauer, L.

Davidson, V.

Belhaven and Stenton, L.

Denham, L. [Teller.]

Belstead, L.

Donegall, M

Boardman,L.

Elliot of Harwood, B.

Boyd-Carpenter, L

Elliot of Morpeth, L.

Brabazon of Tara, L.

Elton L

Brougham and Vaux, L.

Erroll of Hale, L.

Caithness, E.

Cameron of Lochbroom, L.

Ferrers, E.

Campbell of Alloway, L.

Gainford, L.

Carnegy of Lour, B.

Gardner of Parkes, B.

Carnock, L.

Gibson-Watt, L.

Clinton, L.

Glanusk, L.

Coleraine, L.

Glenarthur, L.

Craigmyle, L.

Gray of Contin, L.

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Henley, L.

Pender, L.

Hives, L.

Rankeillour, L.

Hood, V.

Sanderson of Bowden, L.

Hooper, B.

Sandford, L.

Long, V.

Sandys, L.

Lucas of Chilworth, L.

Skelmersdale, L.

Macleod of Borve, B.

Suffield, L.

Margadale, L.

Swinton, E. [Teller]

Monk Bretton, L.

Thomas of Swynnerton, L.

Montgomery of Alamein, V.

Trumpington, B.

Resolved in the negative, and amendment disagreed to accordingly.
10.30 p.m.
Lord Diamond Lord Diamond moved Amendment No. 89:
Page 5, line 1, at end insert—
("and, except in those cases where the Secretary of State considers that, having regard to the likely volume of gas to be supplied, the representations made, and all other relevant circumstances, no useful purpose would be served thereby, after a public hearing.").
The noble Lord said: My Lords, I understand that it will be convenient to discuss also Amendments Nos. 95 and 96. Amendment No. 89 deals with the authorisation of the Secretary of State. The authorisation should be given only after a public hearing unless the circumstances to which the amendment refer apply.
The more that we discuss the grant of authorisation and alterations to such an authorisation, the more are we anxious that the matter should be dealt with properly, either, as we have previously suggested, by the authorisation of both Houses of Parliament, which has not been agreed, or by a public hearing.
I noted carefully what the Minister said on a previous amendment as to the extent of the variations that would be permitted to the authorisation. He made it clear that the Government were denying themselves the right to consider alterations to the authorisation once the House had risen for the Recess. Presumably there will be no opportunity to inform the House in the spill-over period, because I assume that will be too late, and there will be no opportunity for further alteration to be made. I shall read carefully what the Minister said in case I am reading too much into his comments. But, nonetheless, even if no authorisations are made before the transfer date, alterations in the conditions can be made after that.
The first relevant provision is in Clause 23, and although we have not yet reached it, let me refer to it in passing. It refers to modification by agreement. The whole authorisation or conditions in it can be varied, without a word to Parliament and without a public hearing, by what might turn out to be a cosy arrangement between the director and the public gas supplier.
One has to provide for all eventualities when drafting legislation of this size and importance and legislation which affects so many of Her Majesty's subjects, and therefore we should take every possible precaution. The amendment would provide the precaution of a public hearing.
The provision in the statute is an important one. It would affect the interests of many people, and there should be a public hearing, unless, as the amendment proposes, the circumstances are so slight—and that is defined in the Bill—that it would be a waste of everybody's time, and the Secretary of State would

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then be given the power to make that decision. As I have said, the de minimis rule applies to those circumstances.
In Amendment No. 89 we propose that except in those minimal circumstances there should be a public hearing. We are also considering Amendment No. 95, in the name of the noble Lords, Lord Stoddart and Lord Gallacher, and Amendment No. 96 which is in my name. The clause provides:
"Before granting an authorisation under this Section, the Secretary of State … shall consider any representation or objections that are duly made and not withdrawn".
The amendment provides that after "shall" the words "after a public hearing" should be inserted, again with the de minimis exception, in the way that I have defined it. That is by way of being a rather better alternative to the amendment that I have already moved.
I shall say no more about Amendment No. 96 because the arguments have already been expressed. I beg to move.
Lord Gallacher: My Lords, as Amendment No. 95 is being discussed with this amendment, it may be for the convenience of the House if I speak to it at this stage. It will be recalled that in Committee we tried to open up this clause in the belief that the public hearing procedure gave the Secretary of State the opportunity to practise open government. We argued that it need not be bureaucratic or time-consuming or too revealing or expensive. We referred to the fact that public hearings were common in the United States system, but we did not wish slavishly to follow that system although we did not regard the United States system as being devoid of merit.
However, our arguments then failed to carry the day with the Government. Therefore on the basis that the Government are not prepared to accept a completely open system we merely propose in Amendment No. 95 that objections which are not subsequently withdrawn should be subject to a public hearing so that the public may know, a propos of authorisation, which objections the Minister has failed to resolve by consultation with the parties. That seems to us to be the minimum that the Government could do so that this important aspect of the Bill may be as open to the public as possible. I hope that on that limited basis the Minister may be more sympathetic on Report than he was in Committee. I shall be interested to hear what the Minister has to say about Amendment No. 95.
Lord Belstead: My Lords, we have already discussed in Committee the principle of including a public hearing in the authorisation procedure. We had a vote and the Committee voted against the proposal.
Your Lordships will forgive me if I am brief in my reply. The Bill already provides for the public to make their views known on a proposal to give a Clause 7 authorisation. We do not believe that a public hearing would be likely to be of help to my right honourable friend in coming to a decision on an application. It would be extremely time-consuming and could lead to substantial delays before supplies were authorised and consumers received the gas that they were waiting for.
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The noble Lord, Lord Diamond, said that the interests of many people are involved. Yes, indeed; and that is why there is provision for full represent-ation on an authorisation application written into Clause 7. It is for those reasons that I am sorry that I cannot accept the proposed amendment.
Lord Diamond: My Lords, I do not think that there is any point at this stage in pursuing the argument. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 90 and 91 not moved. ]
Lord Diamond Lord Diamond moved Amendment No. 94:
Page 5, line 6, at end insert ("in accordance with the provisions contained in Schedule (Standing Charges) to this Act.").
The noble Lord said: My Lords, I am sure that with this amendment it will be convenient to discuss Amendment No. 127, which is the schedule in question. I understand from the noble Lord, Lord Stoddart, that it will be convenient to discusss also Amendment No. 141, dealing with standing charges, which is in the names of the noble Lords, Lord Stoddart and Lord Bruce of Donington.
The substance of the amendment is of course the schedule. Aś noble Lords will recollect, we had a short discussion in Committee when this was seen as a matter of considerable importance. If my recollection is correct, the Government undertook to provide a drafting amendment in respect of the words "best endeavours". I hope that they will wish to say something in response to this amendment. I do not believe that Ineed pursue my remarks until I have heard what the Government have to say. I beg to move.
Lord Stoddart of Swindon: My Lords, it would perhaps be as well, before the noble Lord replies, if I were to speak to Amendment No. 141 standing in my name and that of my noble friend Lord Bruce of Donington. The noble Lord has gone a little way to meet some of our objections. He has amended the authorisation and has removed the offending words, "best endeavours". The new condition in the authorisation, as I understand it, will not be a question of using "best endeavours". British Gas plc will be required to ensure that standing charges do not go up in any relevant year by more than the retail price index. If that is not correct, the noble Lord will put me right when he replies.
But of course Amendment No. 141 is a little different from the amendment proposed by the noble Lord, Lord Diamond. We say in our amendment:
"Where in the light of such investigations the Director is satisfied that—

(a) the services provided and paid for by the standing charge have been reduced; or

(b)the public gas supplier has achieved significant cost reductions in the components making up such a charge, then he may give direction to the public gas supplier to reduce standing charges or to increase them by amounts in any one year less than the increase in the retail price index.").

We are going a little further than the Minister has done and a little further than the noble Lord, Lord

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Diamond. We seek to ensure that if the cost of the services covered by standing charges goes down, then the gas customer should not have to pay increased standing charges in accordance with the RPI but would be paying standing charges at a lower rate than the increase in the RPI. I hope that I have that right. The noble Lord will understand, I think, what we mean. I hope that he will see the sense of this amendment. It is sensible that if it were found that the costs of the standing charges had gone down, the savings should be passed on to the customer. I hope that the Minister will see the sense of it and give some indication that he will either accept the amendment or at least consider it between now and Third Reading.
10.45 p.m.
Lord Belstead: My Lords, both the noble Lord, Lord Diamond, and the noble Lord, Lord Stoddart, have expressed their concern about proper control over standing charges. We share that concern. It is for this reason that the draft authorisation which has been made public includes provisions controlling standing charges. These fall within the general control of prices under the price formula set out in Condition 3. Under this formula British Gas will have a clear and strong incentive to reduce the costs within its control and customers will benefit from improved efficiency through the efficiency factor X which is now set at 2. There will be adequate incentive for British Gas to keep the standing charges as low as possible. I suggest to your Lordships that it is clear rules of this nature rather than intervention by Secretaries of State after wide-ranging consultations which provide the necessary incentive. However, there is the important question as to how the total should be recovered between the standing charge and the rate per therm. Here I come much closer to Amendment No. 141. It is in order to prevent unreasonable increases in the standing charge that the Government believe that there should be a further control to ensure that they rise no faster than the rate of inflation. That is why we have Condition 4 of the draft authorisation setting out the obligation. Indeed, we have removed the words "best endeavours" from Condition 4 so that the obligation is absolutely direct that the standing charge shall not rise faster than the rate of inflation.
I realise that my answer does not go as far as the noble Lord, Lord Stoddart, would wish, but, my goodness, this is a belt and braces situation. Standing charges are part and parcel of the non-gas costs in Condition 3 and they are protected with regard to the RPI in Condition 4. I do not think that we can go further than that.
Lord Diamond: My Lords, before the noble Lord sits down will he say a word about paragraph 2 of my Amendment No. 127? I did not refer to it because I did not know what the Government were going to say. Paragraph 2 of the amendment says:
"The Secretary of State may, after consultation with the supplier, the Director and the Council, limit the said percentage increase to the extent he considers appropriate".
Is the noble Lord saying that under no circumstances will that limitation take place?
Lord Belstead: My Lords, I did not refer to it because it is not part and parcel of the deal that the Government are offering, which I think is an excellent deal.
Lord Bruce of Donington: My Lords, before the noble Lord sits down, I wonder whether he will answer one question. We are very appreciative of the removal of the words "best endeavours" from Condition 4, but paragraph 1 of that condition refers to the percentage increase in the retail price index. The point on which I seek some clarification is this. What is to happen when the whole basis of the retail price index is changed? As the noble Lord well knows, there has been some discussion about a change in the basis. Is it the intention of the noble Lord that the retail price index one year taken against another should be on a published consistent basis? That would help because otherwise one might find all kinds of unexpected things happening to the standing charges as a result of quite unexpected factors—particularly where the noble Lord, Lord Young of Graffham. was involved—arising regarding the RPI.
Lord Belstead: My Lords, I think that this arose at a previous stage of the Bill, but whether or not it did the noble Lord has asked me a direct question. My answer is that if there is a material change in the basis of the index, such other index as the director may, after consultation with the supplier, determine to be appropriate in the circumstances would be the index which would be used.
Lord Bruce of Donington: My Lords, I am obliged.
Lord Diamond: My Lords, it is difficult to keep up with the pace at which your Lordships' House is dealing with all these amendments. I think that we are now discussing Amendment No. 94, which I have moved. The Government have replied in a rather unsatisfactory way, but we cannot do very much about that, and I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 92, 93 and 95 to 98 not moved.]
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 99:
Page 5, line 38, at end insert ("but such period shall not, in any case exceed 15 years").
The noble Lord said: My Lords, I shall briefly move Amendment No. 99. It has not been possible to make any amendment to the proposed authorisation, so I move this amendment to the Bill in an attempt to limit the period of the authorisation to 15 years rather than to the 25 years contained in the draft authorisation itself. We believe that a period of 25 years is far too long. After all, it is a quarter of a century, and a lot can happen in that time. Governments change and have different outlooks, policies and attitudes, and we should not circumscribe their actions for so long a period ahead. Franchises granted to the ITV companies run for only eight years, yet here we are proposing to give what is literally a franchise to private people to operate a public gas industry for 25 years.
Twenty-five years takes us to the year 2011, assuming that British Gas is sold off this autumn, and few, if any, of us will be around then unless we have the constitutions of a Shinwell, a Macmillan (who we hope will soon be restored to full health) or a Brockway. Fifteen years is much more rational and reasonable, and in fact more convenient since the licence would run until 2001—just about the turn of the century.
If this amendment is accepted, we of course understand that notice of termination would need to be altered, probably to five years. I think that this is a reasonable and sensible amendment, and one which the noble Lord could easily accept. I beg to move.
Lord Belstead: My Lords, as the noble Lord is very well aware, the problem with this amendment is that it is essential, where investment of the kind necessary to sustain activities of a public gas supplier is concerned, to provide some certainty as to the duration of the authorisation. In this case we provide what we regard to be a realistic period, which totals 25 years. However, if the Secretary of State was minded to terminate the authorisation he must give 15 years' notice; and, of course, as the noble Lord is again aware, there are the provisions in Clauses 23 to 27 whereby there is a mechanism for changing the authorisation either by agreement or not by agreement. We think that this adds up to a fair package, but of course different arrangements might be appropriate in the case of other suppliers.
Therefore, we believe that it is right to leave the Secretary of State discretion in this matter, and we think that it is right to have a period which totals 25 years. It is in fact a 10-year period with a 15-year notification period written in. I am sorry; it is a 15-year period with a 10-year notification period written in.
Lord Stoddart of Swindon: My Lords, I was about to query that because the position seemed much worse than I thought it was. The fact is that we do not really agree with the noble Lord. We think that 15 years is quite adequate; but we have aired the matter and the Minister now knows our point of view. I should have said that it might be convenient if, with this amendment, the House discussed Amendment No. 113. That will save us time later. In view of the time of night, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 100:
Page 5, line 40, after ("the") insert ("present and future").
The noble Lord said: My Lords, I beg to move, on page 5, line 40, after "the" to insert "present and future". The Bill would then read:
"An authorisation under this section may include— (a) such conditions relating to the present and future supply of gas".
I gather that with that amendment it would be convenient to take Amendment No. 101, at line 44. That would mean that the authorisation may include:
"such conditions relating to the present and future supply of gas … as appear to the Secretary of State to be requisite or expedient having regard to the duties imposed by section 4 above and to the need for a supplier to engage in such research and development activities as are likely to preserve the long term future of its markets".
These two amendments taken together mean that we are anxious that the authorisation should include —although we recognise that the provision is only that it may include; and we have not suggested altering "may" to "must"—the need to have regard to preserving the long-term future of its markets, and to the present and future supply of gas.
I had better say a word about Amendment No. 122, at line 33 on page 8. Page 8 deals with the general powers and duties of public gas suppliers. The amendment is of considerable importance and I had better read it out. It proposes:
"It shall be the duty of the public gas supplier to settle from time to time with the Director a general programme of research affecting gas supply and other matters affecting their functions, which will also include matters affecting the supply of gas for a specified forward period as well as matters affecting the general policy of the gas supplier towards all classes of customer and, insofar as it is practicable, consideration of the supply and demand of other energy sources".
I now see that this is an amendment in the name of the noble Lord, Lord Stoddart, and there is no need for me to pursue that matter further. I apologise for impinging on his territory. He will no doubt want to move that amendment and explain it. I return to the amendment I have moved at page 5, line 40, regarding the present and future supply of gas. That opens up the whole question of taking the long-term view as well as the short term view and the need for research and development activities so as to preserve the long-term future of its markets. As is stated in the amendment, we are anxious about this important aspect. It may be that regard will be had to it in any event; but we think that it ought to be specified in the statute because it is of much importance. I beg to move.
11 p.m.
Lord Brabazon of Tara: My Lords, on the noble Lord's first point on Amendment No. 100 concerning "present and future" I can give him the assurance that he seeks. The interpretation of the words in the Bill as presently drafted already covers both the present and the future supply of gas.
Turning to the substance of the amendment, which is the need to continue with research and development, we had a very good debate on a similar amendment at the last stage in which a large number of noble Lords took part. I made the point clearly, and it was accepted by the Committee, that British Gas already runs a whole range of schemes and spends millions of pounds looking into ways of improving the technical aspects of its business. Through privatisation we are seeking to release the industry from political interference and to place British Gas in an atmosphere of commercial discipline and competition. I have no doubt that British Gas will invest in research and development as a way of ensuring the continued success of its business: indeed all other large businesses spend large amounts of money on research and development in their particular fields. I further believe that imposing the kind of regulatory oversight which conditions of the kind proposed would entail would not be consistent with achieving the aim of lifting unnecessary bureaucratic burdens.
As my honourable friend the Parliamentary Under-secretary of State for Energy said in another place on a similar amendment, nationalised industries are

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creatures of statute and their duties and powers are appropriately encompassed in the statute. Private sector companies have articles and memoranda of association. Moreover, it is part of the make up of industrial and commercial life for such companies to make major investments in research and development. I am sure that noble Lords know from their own experience that that is the case. I therefore really cannot accept this amendment. I do not believe a duty such as this should be put on the director and I cannot accept the amendment.
Lord Stoddart of Swindon: My Lords, I really should have spoken to Amendment No. 122 before the noble Lord replied, but my noble friend Lord Ponsonby was so concerned about the progress we were making that I was discussing that with him and I could not turn my attention to the amendment.
I shall not keep the House for long. We had a discussion about it and about the research effort of British Gas at Committee stage, but although we are perfectly satisfied with the research effort made by the present British Gas Corporation, we are concerned that when the industry is privatised that effort may not be continued. It may seem on the face of it that it is the sensible and reasonable thing to do; but industries, particularly when they are under private control, do not always do what is reasonable and sensible.
For example, if they are under pressure from the shareholders or from a group of directors to increase their profits if their profits are falling, then they may say to the board. "You must cut down on research and development". Frankly, that would be disastrous for the industry. That is why the noble Lord, Lord Diamond, and I are trying to write something into the Bill to ensure that does not happen and that British Gas plc is under a duty to maintain a good research and development effort.
That is the reason we have proposed this amendment. I hope that explains our position without going into too much detail, and I hope the noble Lord will be rather more sympathetic than he has been to date on this group of amendments.
Lord Brabazon of Tara: My Lords, with the leave of the House perhaps I may say that I do not see why British Gas, when they go into the private sector, would wish to spend any less on research and development than they currently spend in the public sector. They are in competition, after all, to a large extent with other fuels. The oil companies all spend a great deal of money on research and development. If they are going to remain competitive with other fuels, particularly in the industrial market, then they are going to want to continue their large programme of research and development. I really think that there is no need to put this sort of thing into statute.
Lord Diamond: My Lords, I am grateful to the Minister for his assurance that the words in the Bill mean what my first amendment, No. 100, indicate. I accept that if that is the advice the draftsmen have given him then that is the correct situation. So that point is met. As to the rest of it, particularly page 5, line 44—
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"the need for a supplier to engage in such research and development activities as are likely to preserve the long term future of its markets"—
I am really very unhappy that the Minister is saying that there is no need to put it in the Bill. There is, indeed, need to put it in the Bill. There is need to help the public gas supplier and the director to understand that there is a long term interest to this country which may not coincide with a particular short term interest of the shareholders.
The two interests may not coincide. They may be in opposition. It is not the case that they would automatically, in the circumstances of a private sector company, do what they have been doing in the circumstances of a public sector company, where it is accepted to be in the national interest that research and development should take place and where, therefore, the Government are prepared if necessary to provide the funds for that to happen. So I am bound to say that I cannot accept that there is no need for this amendment or, indeed, for the amendment moved by the noble Lord, Lord Stoddart. I can only repeat that in the circumstances, if the Government are not prepared to move, there is nothing more that we can do about it and therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 100A:
Page 5, line 40, after ("the") insert ("prices charged and the other terms of).
The noble Lord said: I beg to move this amendment, which again is referring to the conditions that may be included in an authorisation. It would then read:
"An authorisation under this section may include"—
again, it is only "may" an not "must"—
"such conditions relating to the prices charged and the other terms of the supply of gas".
This is an attempt to introduce the question of a price—which is, after all, one of the most important elements of the whole thing, and has been totally left out of the statute so far—into the statute. The Government have acknowledged that the authorisation is of great importance and that they have not published the authorisation or any terms of the authorisation, although such terms exist and such authorisations exist. They have not brought that into the statute. At all events, we should bring a reference to the price (which, after all, is the main condition of the authorisation) into the statute because it is the price formula which is intended to protect the consumer so far as the future supply of gas is concerned. I beg to move.
Lord Brabazon of Tara: My Lords, the noble Lord, Lord Diamond, has sought in this amendment to clarify the first paragraph of the subsection permitting authorisation conditions relating to the supply of gas by adding specific references to the prices charged and other items of supply. However, I am afraid that in his search for clarity the noble Lord has brought about the incidental effect of limiting the vires for such authorisation conditions. In any event, the clarity which he seeks is quite unnecessary since paragraph (a) refers back to the duties on the Secretary of State

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and the director in Clause 4, which cover a range of matters but specifically include those referred to by the noble Lord. I therefore have to say that this amendment is both inappropriate and unnecessary, and I must invite the noble Lord to withdraw it.
Lord Diamond: My Lords, I may astonish the noble Lord, but I think that what he said is quite right and therefore I seek to leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 101 not moved.]
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 102:
Page 6, line 5, after ("authorisation") insert ("but which shall not exceed 0.1% of the annual turnover of the public gas supplier unless authorised by affirmative order of both Houses of Parliament").
The noble Lord said: My Lords, I shall move Amendment No. 102 briefly. The noble Lord might wonder why I put down this amendment. The reason is that I have a suspicious mind. I am suspicious that the licence fee could be used to milk the industry and the consumer. I do not believe in taxing by stealth. Tax policy should be patent and not surreptitious. The 0.1 per cent. mentioned in this amendment would be roughly £7 million on a 1986 basis and that, in my view, would adequately cover the running of the director's office and the national Gas Consumers' Council.
It may very well be that I should not be suspicious, and I hope that the Government will tell me that all is well. I have read Condition 15 of the new draft authorisation and it seems to cover the point, except of course that the authorisation can be amended without reference to Parliament. Perhaps the Minister should like to comment on that.
Just to prove that I have read the condition, may I point out that there is an error in Schedule 2 of the new authorisation which refers to Condition 14 when it should refer to Condition 15. Perhaps that can be corrected before it goes into operation. I beg to move.
Lord Brabazon of Tara: I shall certainly look at the last point that the noble Lord, Lord Stoddart, has raised regarding whether Schedule 2 should refer to Condition 14 or Condition 15. In turn perhaps I may draw the noble Lord's attention to Schedule 1, paragraph 5, and Schedule 2, paragraph 7, where he will see that the cost of Ofgas and the Gas Consumers' Council is met out of money provided by Parliament. That means that the amount to be paid to Ofgas and the Gas Consumers' Council will appear in the estimates and it will therefore be open to Parliament to raise any matter of concern on the level of fees, which I believe is the appropriate way forward. I quite accept that in practice the moneys will be provided by the fees raised from the supplier, but it will, through that route, be subject to parliamentary attention in any case.
Lord Stoddart of Swindon: In the light of that explanation I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11.15 p.m.
Lord Ezra Lord Ezra moved Amendment No. 103:
Page 6, line 5, leave out ("and").
The noble Lord said: My Lords, although this amendment, and Amendment No. 104, were referred to at an earlier stage, I should like to make a brief point in connection with them. The draft authorisation now includes in Condition 13 a requirement for the public gas supplier to encourage the efficient use of gas by consumers. It would therefore seem to me to be appropriate that the fact that this is now included should be stated in the Bill, and this would be an appropriate place to bring it in. It is on that basis that I should like to move Amendment No. 103. I beg to move.
Lord Gray of Contin: My Lords, I think I may have touched partly on those amendments when replying to the debate on Amendment No. 72. The noble Lord, as he indicated, realised that those were grouped with it; so if I reiterate some remarks I have already made, perhaps the noble Lord will be tolerant with me.
I gave various examples of the methods which the British Gas Corporation has already taken in order to ensure efficient energy management at that time and so I shall not repeat them. But these are all backed up by British Gas's considerable research and develop-ment effort for all sectors, including the development of energy-efficient appliances. As a result of the resources of the British Gas School of Fuel Management and the British Gas Technical Consultancy Service, already hundreds of millions of therms have been saved; and there is even greater potential for saving. British Gas has played its part in many of the programmes which have been launched and have been successful.
Amendment No. 104 would permit the Secretary of State to include conditions relating to energy efficiency in the Bill; but this is really the case already, because under Clause 7, so far as concerns advocacy and advice through the publication of information, there is already provision for that. Clause 7(7) reads:
"An authorisation under this section may include— … such conditions",
and then goes on to describe them.
There is an energy-efficiency duty in Clause 4, backed up by Clause 7(7)(a), which relates to these duties. I think that covers the points made by the noble Lord. I can quite see the reason for this suggestion that it should be written into the Bill; but I would submit to him that the provision already exists in the Bill to do as much as is reasonable to legislate for. Perhaps he will consider, in the light of this, withdrawing the amendment.
Lord Ezra: My Lords, in those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 104 and 105 not moved.]
[Amendment No. 106 had been withdrawn from the Marshalled List. ]
Lord Diamond Lord Diamond moved Amendment No. 107:
Page 6, line 12, at end insert—
("and
( ) conditions requiring the public gas supplier to publish, six monthly, accounts showing separately the profit or loss arising from sales of gas subject to maximum price regulation, which accounts shall be certified by the Director as showing, with reasonable accuracy, the costs and revenues ascribable to those activities;").
The noble Lord said: My Lords, I beg to move this amendment. Again, we are dealing with the same clause. There was a discussion on a similar amendment during the Committee stage and a number of objections were put forward to it. Those objections have, I hope, been met in the amendment which I am now moving.
One of the proposals made earlier was that there should be audited accounts. There is no reference here to audited accounts, because I understand that the position of the auditor is somewhat different from that of the director, and it was put forward by the Government that it was too difficult for the auditor. So one has left out the question of audited accounts, because the important thing is that the accounts should be figures which the director himself has been able to examine. As it is no longer a question of audited accounts, there is no reason why one should wait 12 months, so this amendment proposes six-monthly accounts, and that every six months the public gas supplier should publish accounts showing separately,
"the profit or loss arising from sales of gas subject to maximum price regulation".
I shall come back to that. A further condition is that those accounts,
"shall be certified by the Director as showing, with reasonable accuracy, the costs and revenues ascribable to those activities."
The words "reasonable accuracy" have been put in because the Government suggested that it was quite impossible to arrive at precise figures. So we are saying that we do not entirely share the view, but reasonable accuracy is enough in the circumstances, because we are dealing with very large figures. The important point is that the accounts should show,
"separately the profit or loss arising from sales of gas subject to maximum price regulation".
There are certain costs which are not subject to maximum price regulation and certain costs which are, and they are about 50–50. For example, the costs of gas purchase are not subject to maximum price regulation. The costs of gas purchase are passed onto the consumer, together with a figure representing the increase in the retail price index. It is not correct to assume that there is no flexibility as between the costs of gas and costs which are similar, but which do not come into the costs of gas and are subject to maximum price.
For example, there is the great problem of the winter peak supplies. During the course of the winter, gas consumption goes up and, therefore, the gas supplier has to be prepared to supply additional gas. He can do it in more than one way. He can simply contract to buy larger quantities of gas at that time, and may have to pay the increased price which results from the extra demand on the market, in which case that cost will be passed on directly to the consumer. Alternatively, he
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can do it by providing additional storage facilities, and himself incurring the costs of additional plant, and so on, involved; and the depreciation on that would be part of those costs which are subject to a maximum price. He could do it in either way, and it would affect the answer considerably.
There has to be some control over that and therefore the answer has to be that there should be some way of finding out what profit has been made by the gas supplier on that part of his business which relates to maximum price regulation.
There are many other ways in which there could be costs which could be charged either to the part that is not subject to maximum price regulation or to the part that is. But I do not want to delay the House on those examples at this point in time. I therefore invite the Government to agree to this amendment, which would enable the director and the public to know what is the true situation. I say "the true situation" because the accounts would have to be certified by the director and he would therefore have to have the necessary access to documents and information to enable him to do that. He would be concerned in the apportionment of costs and revenues to these various activities. The answer would therefore be a reasonably reliable answer, again having regard to the size of the figures that we are concerned with.
I hope that the Government will recognise that this is the case and recognise that in order to protect the consumer, in addition to the limitations on the build-up as is provided in the authorisation, you have to have an overall view to see whether a reasonable or unreasonable profit is being made all told out of the business which is price regulated, because it is the only way of protecting the consumer. That is what we are concerned with still. We are concerned with protecting the consumer in a private monopoly by seeing that the price is reasonable.
The provisions for that are inadequate in that there is no overall view. My recollection of the Oftel arrangements is that there is the right to have an overall view of its activities so that it is possible for the director of Oftel to be able to say whether the profits being made (albeit within the individual price formula which applies there, which is a different price formula) although consistent with the price formula, amount in total to a figure which in his view is excessive, or not, as the case may be. In judging whether it is excessive in total, you would have to have regard to the level of profits made by industry in that field generally. That would be a fair comparison.
With that further explanation, I hope that the Government appreciate the kind of anxiety that we have here, an anxiety based on experience of the difference between the make-up of individual items and the total looked at from an entirely different point of view. We have this anxiety. We think it can be met only by something along the lines of this amendment and we hope therefore that the Government will regard it as a reasonable amendment, either to accept or accept with modifications. I beg to move.
11.30 p.m.
Lord Gray of Contin: My Lords, as the noble Lord has acknowledged, a similar amendment was debated

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at some considerable length during the Committee stage of the Bill. It is not possible to associate in a rigorous way specific costs to individual sectors of the market. Not only do tariff and non-tariff sales have the same pipes, but the same emergency, gas purchasing and general services. There are serious technical difficulties in apportioning those costs that relate to meeting peak supply in the middle of the winter, when the supply system is running flat-out, and those that relate to meeting demand at normal times. That is a significant factor because tariff customers have a higher relative demand in the winter than industry. Indeed, interruptible contracts to industry—where gas supply can be temporarily stopped during peak demand periods—have a key role to play in balancing supply and demand.
British Gas's long-term gas purchase contracts contain a range of provisions as to time of supply, and they have developed over the last 20 years to reflect changing market circumstances. As a result, there is no simple relationship between a particular kind of demand and costs. Allocating the cost of meeting specific demands can therefore be done in any one of a variety of ways.
I am well aware of the accounting expertise and experience of the noble Lords opposite, but it is not a matter of ½ or 1 per cent. Relatively minor alterations in the way cost allocations can be done make a large difference to the relative profit levels between tariff and non-tariff sectors. It would therefore be an unreliable indicator of the relative profitability of the two sectors and would fail to meet the purpose of the amendment.
Of course the Government have looked very carefully at the problem, and we have sought advice from the accountants Touche Ross. Their advice was that the range of acceptable cost allocation would be large in relation to the net profit of each market segment and would introduce considerable uncertainty about the accuracy of the absolute level of profits shown by the accounts. On that basis, it is the Government's view that the objective accuracy of separate profit figures for the price-regulated sector of the market is not sufficient for the authorisation to require audited published accounts. The aim behind the amendment, though understandable, is simply not in line with the realities of the business. Perhaps, therefore, the noble Lord will consider withdrawing his amendment.
Lord Diamond: My Lords, I hear what the Minister has to say, and I am grateful to him for explaining that the Government have taken the point on board and have paid serious regard to it, but have not been able to come up with an answer. I think that they will have to find an answer.
It is quite unsatisfactory to have a distinction between controlled prices and uncontrolled prices, and not to be able to see overall the profit being made by that section of the private monopoly that is subject to price control. There will be no benefit whatsoever in terms of protecting the consumer in seeing the overall figures that will be produced. The overall figures will reveal absolutely nothing except the overall profit, as it will no doubt be and I hope it will be. But they will reveal nothing beyond that.
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As to how the profit has been made, who has contributed to it—whether it is the contract customers who have been paying of their free will and against a small amount of competition a price that has produced a profit, or whether it is the poor tied consumer who has no alternative and who has no other shop at which to shop, but who by necessity must buy his or her gas from that one supplier, we shall not know.
That is a totally unsatisfactory position. The Government may claim that they are trying to protect the consumer by price regulation, but they are not. There is a minimum amount of examination under the Bill. It is quite inadequate and, with respect to the distinguished auditors whom the Government consulted, I have endeavoured to cover that point by making it clear that we are not seeking audited figures but figures of a kind with which the director would be satisfied, showing with reasonable accuracy the amount of the profit of the price-regulated sector.
If the director is not satisfied he can say so. He can say, "I am not able to give a clean certificate, as it were. I am not able to report as required by the Act, because I find it impossible, for the following reasons, to arrive at the correct answer". So one would know where one was. At the moment there is the intention to launch on to the public a system under which the public will believe that it has some measure of price protection; but that price protection will be very limited indeed.
So it is a very unsatisfactory state of affairs. I am sorry that we cannot do anything about it at this time of night other than withdraw the amendment, which is what I seek to do. However, I am bound to say that I shall have to come back at a later stage to this immensely important protection of the consumer if I am compelled to do so after reading what the Government have to say. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 108:
Page 6, line 24, at end insert—
("() to comply with any direction given by the Director as to the formulation of indicators of standards of service to be published with the annual accounts; ").
The noble Lord said: My Lords, I beg to move this amendment. We are still on the same clause and this amendment provides the power,
"to comply with any direction given by the Director as to the formulation of indicators of standards of service to be published with the annual accounts".
Perhaps I may deal with this amendment and also with the other amendments which are to be taken at the same time—namely, Amendment No. 121 (which is not in my name) and Amendment No. 186G (which is tabled in my name). So far as concerns Amendment No. 108, I think its purpose is fairly straightforward. It is to ensure that there should be compliance with,
"any direction given by the Director as to the formulation of indicators of standards of service".
The annual accounts are not complete if they merely provide an indication of the overall profit and loss and of how that has been arrived at. That is the minimum requirement under the Companies Act, but it is by no means sufficient to enable the public to see whether there has been adequate service provided. We

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are interested not only in the costs and the charges but also in the standards of service, which can be measured in a number of ways, as they are already, and these indicators should be published. One should publish the number of complaints, broken down so far as they reasonably can be. For example, I am told that the number of complaints concerning British Telecom has risen very substantially indeed. One does not quite know the cause. It may be unsatisfactory service, or to some extent that the public is more aware of its rights of complaint. I want to be absolutely fair about that, but the number of complaints has increased enormously. I think that it has more than doubled. That is one indication.
There should be a compulsion on the gas supplier to comply with any direction that the director thinks is appropriate, reasonable and not too troublesome, so as to give the public an indication of the standards of service to be supplied. There are many other methods by which that can be done, such as with graphs and pictures of little men running up and down ladders. We are all familiar with the different methods of making the position clear to the public. But we should have comparisons set out with figures and indicators of the previous six years, or something of that kind, showing how the service is developing. That is essential to a total understanding of how the industry is being run. Everybody is anxious that once the private monopoly is established there will not be solely a consideration of shareholders' interests and the maximisation of profits for the shareholder but that reasonable regard shall also be given to the service to the consumer, so that he can also get a fair deal for what he pays.
Everybody understands that merely to limit the payment is not a full protection for the consumer. It limits only what he pays and not what he gets: and he gets a whole host of services in addition to the gas supplied and its quality. That is what we are anxious about. That is the reason I move Amendment No. 108, and I hope that the Government will look on it with considerable sympathy.
Amendment No. 186G much later on provides that:
"It shall also be the duty of the Director to lay down, and from time to time amend, such standards of consumer service as may appear to him expedient in the public interest".
That is the associated power of requiring the standard of service to be improved or altered, as the case may be, and it corresponds to the publication of indicators of service to which I have already referred. The point is the same. The consumer needs protection in regard to services as well as in regard to charges. I hope that the Government will have regard to both amendments. I beg to move.
Lord Gallacher: My Lords, it may be for the convenience of the House if I speak at this stage to Amendment No. 121 which is grouped with the amendment just moved by the noble Lord. The object of Amendment No. 121 is again in line with the statement made by the noble Lord, Lord Diamond. The Government have chosen price control through the tariff formula as their main method of regulation of a monopoly supplier. With, say, a changed directorate it is possible, in our view, that the monopoly supplier may institute cuts in the standard
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of service in order to enhance profits. It is to guard against that possibility that Amendment No. 121 has been tabled.
The effect of the amendment would be to allow the director of gas services, in consultation with the Gas Consumers' Council—and we regard that consultation as very important—to ensure that those standards of service are complied with by the supplier. That would have the additional effect of allowing the director to collect information which would enable him to monitor quality control. We regard this as an important provision. As has already been said, there is a feeling, for example, that since privatisation British Telecom has stopped giving information which would allow the director of Oftel to monitor standards. In the light of that experience, it is our view that it is important that the provision should be included in the Bill at this stage. That is the justification for Amendment No. 121.
11.45 p.m.
Lord Gray of Contin: My Lords, we debated an amendment almost identical to this one which was tabled by the noble Lord, Lord Diamond, in Committee. As my noble friend Lord Brabazon then said, we do not believe that standards of service should be legislated for, but should be the responsibility of the supplier, who in responding to normal commercial pressures will have every incentive to maintain and improve standards of service.
If the Gas Consumers' Council, which will be monitoring trends in complaints, should identify a particular problem with the quality of gas supply services, it can pass that information on to the director. As my noble friend pointed out at that time, it will be within the director's powers to propose changes to the British Gas Corporation's authorisation if it becomes clear to him that that would be desirable.
As we have made clear, we believe that this matter should be principally one for the supplier. The House has already voted on this matter and rejected the noble Lord's proposal by a substantial majority. In the light of that and what I have said, I urge the noble Lord to withdraw the amendment.
Lord Diamond: My Lords, before the noble Lord sits down, will he help us by giving an indication as to where in the Bill are to be found provisions which would enable the director to insist on alterations in the authorisation so as to require an improvement in the services which he thinks are inadequate? The amendment deals with standards of service. The noble Lord has stated that the director has powers to alter the conditions of the authorisation. I agree that he has certain powers, but where does he have the powers to insist on alterations in the conditions of the authorisaton of a kind which related to his view that the standards of service are inadequate?
Lord Gray of Contin: My Lords, with the leave of the House, Clauses 25 to 27 deal with the director changing the authorisation. The procedure is laid down in those clauses. Condition 7 of the authorisation will permit Ofgas to obtain any informa-tion needed to monitor the quality of service. I reject

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the suggestion that British Gas will be able to conceal any changes to the provision of services which it offers.
Clause 4(2)(a) duties relate to the quality of gas supply services. I have nothing more to add.
Lord Diamond: My Lords, I am grateful to the noble Lord for having taken the trouble to remind us of what we are familiar with; that is to say, the contents of Clause 4. Clause 4(2)(a) provides:
"The Secretary of State and the Director shall each have a duty to exercise the functions assigned to him by this Part in the manner which he considers is best calculated … to protect … the continuity of supply and the quality of the gas supply services provided.".
I quite understand that. It is a function that is put upon them. My anxiety is that there is nowhere in the Bill a power on the part of the director to require an improvement in the standard of service or the continuity of gas supply services if, in his view, they are not being supplied. The Minister says that the director will be able to ascertain this. I quite agree that the director, if he and his staff are lively in their examination of what is happening and if the council is efficient in bringing to his attention complaints by consumers, will be aware of inadequate services being supplied or a drop in the level of services. I cannot, however, see in the Bill anything that protects the consumer in the way that I suggest he should be protected.
I am bound to refer to this because we know what has happened in regard to British Telecom. British Telecom was carrying out certain services as British Gas is carrying out certain services at the moment. There was nothing in the Bill to require those services to be continued. I refer to free emergency telephone calls relating to fire, ambulance, and so on. These ceased to be provided free after British Telecom changed its practice. The justification, as I heard from the mouth of a British Telecom spokesman on the radio, was that there was no provision in the pros-pectus for these services to be continued, that British Telecom had to have regard to the interests of its shareholders and that there was nothing in the prospectus sent to the shareholders to indicate that this service would of necessity be increased.
I am trying to press upon the noble Lord what is a very reasonable point of view if there is nothing in the Bill that requires the quality of service to be maintained. I know that it is something in the mind of the director and the Secretary of State, but if there is nothing that requires it, I do not see how it is to be achieved. Certainly, there is provision for the authorisation to be amended by agreement. If there was agreement between the director and the gas supplier that the services were inadequate and should be increased or that the services were failing in certain respects, that could be increased. But that can only be done by agreement. One is contemplating a circumstance in which the gas supplier had decided deliberately to vary a service that was being supplied at the start of the licence but that was not required by any power and that was, as a consequence, under normal commercial pressure, falling. It is the power to remedy that situation that I invite the Minister to indicate in the Bill.
Baroness Gardner of Parkes: My Lords, is the noble Lord, Lord Diamond, pressing the amendment or withdrawing it? We have, I feel, had due discussion on it. I have noticed since coming into the Chamber that the noble Lord has spoken more times than is normal at Report stage.
Lord Diamond: My Lords, I am sorry to say that I could not hear everything that the noble Baroness said. I gather that she is asking whether I intend to press the amendment or withdraw it. I am doing both. I am pressing the amendment on the Government in the hope that they will listen to what seems to me to be farily good sense. As the hour is late, I seek leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 109 not moved.]
Lord Diamond Lord Diamond moved Amendment No. 109A:
Page 7, line 7, leave out ("with").
The noble Lord said: My Lords at the moment the Bill reads:
"Neither the requirement to consult with the Director",
and so on. This is not a question of the content of the Bill. It is a question of protecting the English language. There is no such proper use of the verb "to consult" as to "consult with". One consults a person or one has a consultation with a person. But with the verb "to consult" the requirement should be "to consult the Director". "To consult with the Director" and the horrible phrase "I am going to meet with so-and-so" are wretched Americanisms which ought not to be incorporated in our language, and I propose that they should be excluded. I beg to move.
Lord Gray of Contin: My Lords, the noble Lord has identified what at first sight may appear to be an unnecessary word in Clause 7(13). In fact, the inclusion of the word is appropriate and I shall briefly try to explain why.
The noble Lord will see that Clause 7(13) refers the reader back to a requirement under subsection (2). Subsection (2) uses the phrase "after consultation with the Director". The Bill also uses the phrase "consultation with" in various other places; for example, Clause 8(1) and Clause 16(1) and (2). The phrase "consult with" in subsection (13) which the noble Lord is seeking to amend is simply used so as to be consistent with the wording in subsection (2) to which I have referred and should, I think, remain as it is. I hope that on those grounds the noble Lord may be prepared to withdraw his amendment.
Lord Airedale: My Lords, this will not do. Surely one cannot leave out "with" when one says "consultation with" somebody; but one does not have to "consult with" somebody. One can consult somebody. I am quite sure that the noble Lord, Lord Diamond, is right. If we want to get good English into our statutes this is an example of where a subsection should be amended and an unnecessary word cut out.
Lord Diamond: My Lords, I am grateful to my noble friend. I should have thought this was obvious. I am objecting to the use of the word "with" attached to the

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verb "to consult". One consults a person. The noble Lord has referred me to the use of the word "with" attached to the noun "consultation". Of course one has to have "with" when one has the noun, and one does not have to have "with" when one has the verb. If the draftsman wanted more particularly that this subsection should hark back to previous subsections, he should have said "Neither the requirement to have consultation with", because that is what is referred to in the previous subsections.
It is perfectly all right to use the words "Neither the requirement to consult", but it is not right to say "Neither the requirement to consult with". This amendment does not alter the Government's policy at all. It is part of the duty of the House of Lords to try to protect the Queen's English. I should have thought that is what the Government would be prepared to do.
12 midnight
Lord Gray of Contin: My Lords, by leave of the House, I have listened very carefully to the noble Lord, Lord Diamond, and the noble Lord has been convincing on this, if not on a great deal else this evening. I am certainly prepared to take this away and discuss it with the draftsman who drafted this Bill. I do not have to tell the noble Lord how difficult it can sometimes be to persuade draftsmen, but I am prepared to take this back and look at it with the draftsman, and in due course I shall drop the noble Lord a line.
Lord Diamond: My Lords, I am most grateful to the noble Lord for his promise to have a look with the draftsman, and I hope that he will consult the draftsman as to this horrible Americanisation which has crept into the legislation and which I have every reason to believe will be removed. In the light of those circumstances I repeat my gratitude and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 [Authorisation of other persons]:
[Amendments Nos. 110 to 116 not moved.]
Clause 9 [General powers and duties]:
Lord Ezra Lord Ezra moved Amendment No. 117:
Page 8, line 27, at end insert—
("() to promote energy efficiency and economy, and in particu-lar to ensure that in acquiring gas supplies, the principle of least cost resource acquisition is observed; and").
The noble Lord said: My Lords, part of this amendment has already been the subject of discussion in relation to energy efficiency and economy, but the principle of least cost resource acquisition has not been mentioned earlier during this stage. This is in connection with the acquisition of gas supplies. This was a matter that was discussed at the Committee stage, but as the cost of gas supplies is directly reflected in the tariff price, this is an important issue. The American well tried practice applies this principle. I know of the objections of noble Lords opposite to anything that the Americans have tried in this connection, but nevertheless it has been well tried. It is an additional protection for the consumer and I should, therefore, like to urge that this amendment be seriously considered. I beg to move.
Lord Gray of Contin: My Lords, with the greatest respect to the noble Lord, Lord Ezra, these groupings were agreed, and when amendments are grouped the first amendment is spoken to and it is not common practice to speak to each amendment when it comes up. I answered this debate when I spoke to Amendment No. 72. The noble Lord then spoke to Amendment No. 4, which had already been spoken to, and I answered it again then. With the greatest respect to the noble Lord, I can find nothing new to say about Amendment No. 117 at this stage. I know that the noble Lord is not doing it out of any malice aforethought, but it is not the common practice in the House to speak to these amendments as they come up when they have already been grouped.
Lord Ezra: My Lords, will the noble Lord not agree that I have raised a totally different issue from the question of energy efficiency?
Lord Gray of Contin: My Lords, with the greatest respect to the noble Lord, he should have raised the issue when Amendment No. 72 was debated and with which this amendment was included.
Lord Ezra: My Lords, in those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 118 and 119 not moved]
Lord Diamond Lord Diamond moved Amendment No. 120:
Page 8, line 30, at end insert—
("and
( ) to draw up, in consultation with the Director, the Gas Consumers' Council and organisations representing consumers who have difficulty in paying bills, a Code of Practice for the protection of such consumers from hardship. A code drawn up under this section shall include provisions to prevent the unreasonable disconnection of gas supply to elderly and disabled people.")
The noble Lord said: My Lords, I suppose that there is nothing improper in moving an amendment of which notice has been given on the Marshalled List and which has not been subject to the words, "Not moved". As so many amendments are not moved, it is very difficult to keep pace and to follow the reasons why some of the amendments are not being moved. Some of the amendments which have not been moved refer to important aspects of the Bill on which some of us should have liked to seek the views of the Government.
However, we have reached an amendment which I now move, Amendment No. 120:
Page 8, line 30, at end insert—
("and
( ) to draw up, in consultation with the Director, the Gas Consumers' Council and organisations representing consumers who have difficulty in paying bills, a Code of Practice for the protection of such consumers from hardship. A code drawn up under this section shall include provisions to prevent the unreasonable disconnection of gas supply to elderly and disabled people.")
The amendment is set forth in the plainest of terms and simplest of language. I hope it represents the views of noble Lords and noble Baronesses on all sides of the House, and I hope that it will draw sympathy from the Government. I beg to move.
Lord Belstead: My Lords, this is covered in Condition 12 of the authorisation, and I therefore resist the amendment.
Lord Diamond: My Lords, I have not got the authorisation with me. I suppose some of your Lordships have. Could the noble Lord say whether it is covered completely? If it is, then there is no need to press it.
I was asking the noble Lord, Lord Belstead, if he could say whether the amendment is covered completely in the authorisation to which he referred. I have not got a copy of it. If he says it is, that is the end of the matter.
Baroness Gardner of Parkes: My Lords, as this is the second time the mover of this amendment has spoken, it is the occasion on which he should be either pressing the amendment or withdrawing it. He did not ask the leave of the House to ask a question or to intervene a second time. Therefore, I think it important that he now makes clear whether he is pressing the amendment or withdrawing it.
Lord Stoddart of Swindon: My Lords, under those circumstances, perhaps it would be as well if I asked the noble Lord, Lord Belstead, the same question. I have a copy of the revised authorisation, and it is difficult to make the comparison, but probably the matters in Amendment No. 120 are covered in Condition 12, "Codes of practice for tariff gas supplies and payment of bills". But the noble Lord, Lord Diamond, can hardly be expected to take it from me that Condition 12 covers his amendment. He needs to have that assurance from the Minister.
I hope that the Minister—I am sure the House will give him leave to reply to me—will say whether Amendment No. 120 is covered by Condition 12. If he can say that my view is correct, then I may very well be satisfied and it may satisfy the noble Lord, Lord Diamond, as well, and get us out of a difficulty.
Lord Diamond: My Lords, for reasons which I fail to understand the noble Lord the Minister does not seem to be willing to respond to a normal, courteous request. I shall endeavour to acquire—it is quite impossible at the moment—a copy of the authorisation. It is not available. It should be. It is part of the Government's duty to see that every relevant document involved in a discussion in your Lordships' House is available. I did not want to have to make this point, but we have tried to get hold of it and cannot. In the absence of the document I asked the Minister to be good enough to confirm that it is precisely covered in the document. That is not open to me, and therefore all I can do is endeavour to get a copy at a later stage to see whether it is in there. If it is, there is no need to take the matter any further. If it is not in, we shall have to bring it up, with the necessary implications, at a later stage. That being the case I seek your Lordships' leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 121 to 123 not moved.]
Lord Diamond Lord Diamond moved Amendment No. 124:
Page 8, line 33, at end insert—
("( ) It shall also be the duty of a public gas supplier to avoid any undue preference in favour of, and any discrimination against, any person from whom he purchases gas.").
The noble Lord said: My Lords, we now come to a very substantial amendment which refers to the supply of gas by public gas suppliers. It refers to their general powers and duties. The purpose of the amendment is to insert the following words:
"It shall also be the duty of a public gas supplier to avoid any undue preference in favour of, and any discrimination against, any person from whom he purchases gas".
The difficulty of the present situation has been well described by many of your Lordships who have spoken in the debate. Not only do you have a private monopoly, but what is unhappily called a monopsony as well—that is to say, not only is there one seller but there is also one buyer for all practical purposes. In those circumstances, those who supply gas may find themselves discriminated against because the purchaser of the gas, having the total power that he has, may prefer one supplier to another for no good reason. That is why one talks about "undue preference". This would not produce economy in the supply of gas. It would not produce cheapness of supply of gas, which is an essential part of the price protection, because as I have already indicated previously there is no protection to the consumer on that element of the price which represents the cost of gas and is therefore roughly one half of the consumer's bill. There is no protection there unless there is an avoidance of undue preference and an avoidance of discrimination. I should have thought that this was something that the Government would share my view about. It is for that reason that I am hoping for a sympathetic reply. I beg to move the amendment.
Lord Bruce of Donington: My Lords, I hope that the noble Lord may be disposed to give a favourable response to Amendment No. 124 as moved by the noble Lord, Lord Diamond. It is unfortunately the characteristic of a private monopoly responsible to no one to develop a cosy relationship between itself and those people with whom it has been habitually engaged in entering into contracts for the supply of various commodities. In this case we are dealing with gas.
All the noble Lord, Lord Diamond, is seeking, as I understand him, is that a strictly competitive condition should apply in what is almost an undifferentiated quality of supply in gas. If I may run the risk of being criticised technically by any noble Lord who is engaged in the gas production business, one is tempted to say "Gas is gas". Therefore, all that the noble Lord, Lord Diamond, is asking (and, in my view, quite reasonably) is that there should be no undue preference to any particular supplier. This, I would have thought, fits very well within the oft-proclaimed philosophy of the Conservative Party, which, of course, does not owe anything to sentiment, does not owe anything to philosophy, but owes everything to the naked cash nexus 'twixt man and man. Therefore, I trust that the noble Lord may feel disposed in this case to accept the amendment put forward by the noble Lord, Lord Diamond.
12.15 a.m.
Lord Ezra: My Lords, I should like to support this amendment on the ground that we have here a situation in which virtually a single purchaser is facing a number of suppliers. While that single purchaser was under public ownership, there was recourse to the public organisations responsible for supervising the operation of that public supplier to take the necessary action were it necessary. Under private ownership, however, that will be removed and therefore the non-discrimination principle, which is already applied in the clause that we are talking about in relation to those who purchase gas, should also be applied in the case of the purchase of gas by the supplier.
Lord Belstead: My Lords, if we were to accept this amendment it would mean giving the director a role in vetting gas purchase contracts, which, I must say, we believe would be clearly against the best interests of gas consumers and, indeed, gas producers alike. I can assure the House that while we share the keenness of noble Lords opposite to avoid any unfairness which could arise in the purchase of gas, we are satisfied that existing competition law would be adequate to tackle it. It is for that reason that I oppose this amendment.
Lord Bruce of Donington: My Lords, before the noble Lord sits down, will he please bear in mind that Clause 9, which this amendment seeks to amend, deals with the duty of a public gas supplier. It does not deal with the duties of the director, as such. Perhaps he would care to modify his reply in the light of the text of Clause 9.
Lord Diamond: My Lords, we have reached an extraordinary situation in your Lordships' House, quite clearly, where the Government are not prepared to deal in any real sense with the amendments put forward from this side of the House.
Lord Belstead: My Lords, that is not the case. The noble Lord got up a little while ago and charged me—and I am in charge of the Bill on this side of the House together with my noble friends on the Front Bench—with not providing the necessary and correct papers. The papers to which the noble Lord referred were safely in the Printed Paper Office. The noble Lord had no right to do that and owes an apology to the House for acting in that particular way.
The noble Lord now sees fit to rise to his feet and to say that amendments are not being replied to. Again, I am being charged with that. The reply which I have given to this amendment is quite clear. It is unneces-sary, and it is unnecessary because of competition law, which is a matter that we have gone over again and again, not only today but recently. It may be that the noble Lord, Lord Diamond, does not agree with me, but it does not mean that the answer which I gave was wrong.
Lord Diamond: My Lords, of course, if I accused the noble Lord unfairly I would be the first to apologise. All that I can say is that I caused inquiries to be made at the Printed Paper Office and the answer was that it was not available. If it is available, why do the Government demonstrate it on the Government Front
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Bench instead of having the normal courtesy to pass it round?
Lord Brabazon of Tara: Since the noble Lord made his last remarks I have been to the Printed Paper Office and picked up a copy of the proposed authorisation. I have it with me. If the noble Lord wishes to go to the Office and collect a copy, he is welcome to do so.
Lord Diamond: All I can say is that when my noble friend Lord Ezra went to the Office and asked for a copy, it was not available. I should not make accusations like that if it was in fact available. All I can say is that it is obviously now available if the noble Lord, Lord Brabazon, has been able to get a copy. I am very grateful to him for his courtesy in passing it along. A little courtesy of that kind saves a great deal of bad temper and waste of time. I am grateful to the Government for having supplied that document. I do not suppose that, in the circumstances, the Minister asks me to apologise. I have explained why I made the statement which I made, and I am sure he does not deny that it is the responsibility of the Government to provide the papers. He now says that the papers are available and I am glad that they are.
Lord Denham: Will the noble Lord now apologise?
Lord Diamond: If the Minister will tell me what I have to apologise for, I shall be the first to apologise. I can only repeat, in case the noble Lord, Lord Denham, did not hear what I was saying, that my noble friend Lord Ezra was unable to obtain a copy. It may be that copies have since been obtained, but as a result of that lack of facility at the time. I was relating what I thought was the fact at the time, which was confirmed as the fact at that time. I am grateful to have the copy now. We could have avoided this storm in a teacup if the Government had been good enough to pass the document round a little earlier.
Baroness Gardner of Parkes: It is your amendment.
Lord Diamond: My Lords, if it is my amendment, then I owe an apology to the House for not withdrawing it earlier. It is difficult to keep up with the pace of business this evening. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Campbell Lord Campbell of Alloway moved Amendment No. 125:
After Clause 9, insert the following new clause:
"Code of Practice for supply to elderly and infirm.

.—(1) The Secretary of State shall, prior to such day as may be appointed by him in accordance with section 3 of this Act, issue and approve a Code of Practice relating to the provision of special services by gas suppliers for domestic customers qualified to receive state benefits by reason of age or infirmity; and from time to time he may issue or approve alterations to such a Code.

(2) The Secretary of State shall consult the Director and the Council before issuing or approving such a Code, or issuing or approving any alteration to such a Code under subsection (1) above.

(3) Failure on the part of any person to comply with any provision of a code issued or approved under subsection (1) above shall not of itself render that person liable to criminal or civil proceedings but—

(a) any such code shall be admissible in evidence in any such proceedings; and

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(b) if any of its provisions admitted or sought to be admitted in evidence appears to the court having conduct of the proceedings, or to any revisory court, to be relevant to any question arising in the proceedings, it shall be taken into account in determining that question.

(4) The Secretary of State shall lay before Parliament—

(a) copies of any code issued by him under subsection (1) above and of any alteration made by him in any such code; and

(b) copies of any code approved by him under subsection (1) above and of any alteration approved by him in any such code;

and if either House of Parliament passes a resolution requiring the code of alteration mentioned in paragraph (a) above, or the approval mentioned in paragraph (b) above, to be withdrawn the Secretary of State shall withdraw it accordingly; and where he withdraws a code issued by him or his approval of a code he shall issue or approve a code, as the case may be, in substitution for the code previously issued or approved.

(5) Nq resolution shall be passed by either House under subsection (4) above in respect of any code or alteration after the end of the period of forty days beginning with the day on which a copy of the code or alteration was laid before that House; but for the purposes of this subsection no account shall be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.")

The noble Lord said: My Lords, I beg to move the amendment. At Committee stage (cols. 870 to 871 of Hansard), the Minister opposed this amendment, saying in effect that what has become his concession, as reflected in Amendment No. 76 and revised Condition 12, rendered it not necessary to have either a wicket keeper to bring the code of practice for the aged and infirm within Clauses 28 to 30, enforcement procedures, or to have the longstop in the form of a code of practice as proposed by this amendment.
He also raised two other objections: the burden upon Parliament and the fear of political interference. So far as these matters were discussed on the amendments grouped with Amendment No. 76, this requires no repetition. It is contended that both the wicket keeper and the longstop are required, and this without even the clarification sought from Amendment No. 149A which relates to actions for breach of statutory duty. This code of practice would, for example, be taken into account in such proceedings and in the negligence proceedings preserved by Clause 28(3)(b).
This code would be approved by Parliament before any authorisation would be granted by the Secretary of State and no doubt would serve as the code to which reference was made in Condition 12, irrespective of whether any or all of the provisions of the code were relevant conditions for the purpose of enforcement within Clauses 28 to 30. Without enforcement machinery this amendment stands as the essential bare minimum; with the enforcement machinery it is still a modest proposal. As the Minister has already intimated that he would wish to have time to consider the matter (for which I am indeed grateful), I should not wish to divide on this amendment and neither would my noble friend Lord Henderson of Brompton. In due course, I shall ask leave to withdraw the amendment.
Lord Diamond Lord Diamond moved, as an amendment to Amendment No. 125, Amendment No. 126:
In subsection (2) after ("consult") insert ("the gas suppliers to domestic customers,").
The noble Lord said: My Lords, I beg to move Amendment No. 126. I apologise for intervening in the amendment which the noble Lord, Lord Campbell of Alloway, has moved, but I could not understand why subsection (2) of the new clause merely provided that the Secretary of State should consult the director and the council. Clearly two of the parties affected would be the gas suppliers—or, to be more precise, the gas suppliers to domestic consumers—and the consumers themselves. I should have thought therefore that the first need for consultation was with the gas suppliers. If I have got it wrong, I shall of course not pursue the matter, but I should have thought that it would improve the amendment which the noble Lord has put forward. I beg to move.
Lord Belstead: My Lords, my noble friend Lord Campbell of Alloway accurately recorded the objections which I raised to this amendment when my noble friend moved the same amendment at the Committe stage. Because I am still uncertain on the particular issues I raised at that time I said on an earlier amendment today that I should like to look again at this particular amendment. That I shall do; and indeed I have given an assurance that I shall come back with a response to this amendment and will get in touch with my noble friend and the other noble Lords who have added their names to this amendment before the next stage of the Bill. With that assurance I hope that my noble friend Lord Campbell will feel that it is right to withdraw the amendment.
Lord Campbell of Alloway: My Lords, I am grateful yet again to my noble friend the Minister for his concession and I beg leave to withdraw Amendment No. 125.
Lord Diamond: My Lords, I thought that the noble Lord, Lord Campbell of Alloway, was going to say something about Amendment No. 126.
Lord Campbell of Alloway: By leave, no, my Lords.
Lord Diamond: My Lords, the conclusion is fairly obvious. I beg leave to withdraw Amendment No. 126.
Amendment to the amendment, by leave, withdrawn.
Lord Bruce of Donington: My Lords, I do not want to protract the proceedings unduly, but I should like to have an assurance from the noble Lord, if I may, that he intends in particular to pay attention to subsections (4) and (5) of Amendment No. 125. The noble Lord will recall that in addition to the other questions of legality raised by the noble Lord, Lord Campbell of Alloway, in subsections (1), (2) and (3) of Amendment No. 125, we attach particular importance to subsections (4) and (5). We should like to have the noble Lord's assurance that those, too, will fall fully within his review.
Lord Belstead: My Lords, as I said, I raised objections at a previous stage of the Bill. I still have reservations about this amendment, but I give the undertaking the noble Lord asks for—that in looking

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at Amendment No. 125 we will look at it from beginning to end.
Amendment, by leave, withdrawn.
[Amendment No. 127 not moved.]
Schedule 3 [Acquisition of land by public gas suppliers]:
[Amendment No. 128 not moved.]
Schedule 4 [Power of public gas suppliers to break up streets, bridges etc]:
[Amendment No. 129 not moved.]
12.30 a.m.
Lord Diamond Lord Diamond moved Amendment No. 130:
After Clause 10, insert the following new clause:
("Avoidance of cross subsidisation.

.1 —(1) A public gas supplier shall in any financial year during which he supplies goods or services otherwise than relating to free safety checks and other essential safety work, avoid cross-subsidisation between one part of his gas supply business and another and between his gas supply business and any other business.

(2) For the purposes of subsection (1) above and without prejudice to subsection (7)(c) of section 7 above, the supplier shall furnish to the Director, in such manner and at such times as he may reasonably require, such documents, accounts, estimates, returns or other information as he may require to determine whether the tariffs and charges fixed by the supplier in respect of the goods and services which the supplier provides involve cross- subsidisation.

(3) For the purpose of this section "cross-subsidisation" shall be defined as the unreasonable allocation of costs by the supplier when fixing tariffs and charges; and "financial year" shall be defined in accordance with section 227 of the Companies Act 1985.").

The noble Lord said: My Lords, this amendment provides for the avoidance of cross-subsidisation. I gather that with this amendment it would be convenient to discuss Amendment No. 147, which is in the names of the noble Lords, Lord Harris of High Cross and Lord Bruce-Gardyne, who make very much the same point but who may not be able at present to move their amendment.
Perhaps I may draw the attention of the House to subsection (1), which states:
"A public gas supplier shall in any financial year during which he supplies goods or services otherwise than relating to free safety checks and other essential safety work, avoid cross-subsidisation between one part of his gas supply business and another and between his gas supply business and any other business".
We had a discussion at Committee stage on a very similar matter and my recollection is that the reply of the Government was that there was difficulty in subscribing to the view of avoiding cross-subsidisation, because there were certain facets of the work of the gas supplier which would necessarily involve that. They instanced free safety checks and possibly other essential safety work. At all events, free safety checks were instanced so those have been eliminated, because it is a perfectly valid point that they could be held to be a form of subsidisation. Anything which is not charged for at full cost price could be so held, and therefore that has to be eliminated. Indeed, if there is any other small point of that kind I shall be happy that it should be eliminated.
But apart from those very minor points, there is clearly a need to avoid cross-subsidisation if the purposes of this Bill and of the privatisation of gas are to be carried out. Cross-subsidisation is defined in subsection (3). All that subsection (2) states is that,
"the supplier shall furnish to the Director … such documents, accounts, estimates, returns or other information as he may require to determine whether the tariffs and charges fixed by the supplier … involve cross-subsidisation."
It is essential for the director to have access to and sight of all these documents and so on, because without that he would be quite incapable of seeing whether there had been cross-subsidisation. It might have taken place deliberately or through an oversight, but whichever it is it is only the furnishing to the director of all this information that will enable him to determine the true position. Therefore, I hope that the Government will feel that this is an amendment that meets the anxiety they expressed. I beg to move.
Lord Bruce of Donington: My Lords, the noble Lord will recall that, when speaking to an earlier amendment at Report stage, the noble Lord, Lord Diamond, outlined the difficulties with which the director general would be faced, particularly in the light of what the noble Lord, Lord Diamond, considered—and we agree with him—was to be a very limited staff. All the noble Lord is asking for here is material which in another context has always been insisted on by members of the noble Lord's own party. The noble Lord may not have been actively engaged here at the time of the Telecommunications Bill—perhaps he was moving in circumstances more astral than that at the time—but he will recall in particular the interventions of his noble friend Lord Orr-Ewing, who within the context of the Telecommunications Bill was very insistent that all cross-subsidisation should be limited.
In his amendment, the noble Lord, Lord Diamond, has very properly excluded from this consideration the free safety checks and other essential work on which he has touched in some detail during the course of the Report stage. But otherwise the amendment provides for the provision to the director general of certain information, rather than the director general being required with a restricted staff at his disposal to unearth information that he requires.
I should have thought that this is a very non-contentious matter, It is purely practical. The noble Lord, Lord Diamond, is fully justified in raising it, and we on this side of the House sincerely hope that the noble Lord will on this occasion be able to give a favourable response to the noble Lord, Lord Diamond, if only in pursuit of the policy so often pressed upon him by his own Back-Benchers in this place.
Lord Gray of Contin: My Lords, it is important that there should be proper safeguards against unacceptable behaviour by a gas supplier damaging to the interests of consumers or competitors. I believe that the Bill and the draft authorisation already meet the noble Lords' concerns.
First, let us consider the tariff market. In addition to the specific provisions in the Bill protecting tariff customers, including the provisions relating to no

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undue preference, there is direct control over prices by means of the price formula set out in the draft authorisation. The formula, monitored and enforced by the director, will ensure that there is no room for British Gas to manipulate prices, and by setting a price ceiling the formula would prevent British Gas from raising tariff prices in order to subsidise activities elsewhere. Furthermore, price rather than profit control will ensure that British Gas has a clear incentive to increase efficiency, not to engage in uneconomic subsidised pricing.
As regards the contract market, there is strong competition, but we have nonetheless provided safeguards against anti-competitive behaviour generally and this would include cross-subsidised predatory pricing. Here the Director General of Fair Trading has a role. Competition and fair trading legislation applies, and in addition there is specific provision in Clause 27 that the authorisation may be modified to take account of any order made by the Secretary of State following an investigation by the Monopolies and Mergers Commission.
On appliance retailing and servicing, the noble Lord will recall that the corporation was the subject of a Monopolies and Mergers Commission inquiry in 1980. As a result, British Gas reformed its accounting procedures. That demonstrates how fair trading law operates. The Director General of Fair Trading also looked at installation and contracting last year when there were allegations of cross-subsidisation of work. Again, that demonstrates that there are proper safeguards to deal with anti-competitive behaviour.
Because we have built in full safeguards, the new clause proposed by noble Lords is unnecessary. Although, as I have explained, cross-subsidisation to enable unfair anti-competitive pricing is an abuse, a blanket prohibition of cross-subsidy, as the new clause would require, would not be right. It is important that British Gas should be able to provide free safety checks and undertake other essential safety work free or at below full cost. In view of what I have said, and in view of the extensive discussions that we have had on this and on similar amendments throughout the course of the Bill's passage, I reject the proposed new clause and invite the noble Lord to withdraw his amendment.
Lord Diamond: I am grateful to the Minister for his consideration and for having given a full and courteous reply to this amendment. I hope that he does not get into any trouble on that account. We are grateful to him; but of course it is not the case that the amendment requires no cross-subsidisation in relation to free safety checks. It specifically excludes, in line 3 of subsection (1) of the proposed new clause, work relating to
"free safety checks and other essential safety work".
That is the only example that the noble Lord has again given of the kind of cross-subsidisation that inevitably has to take place. I am sorry that his answer is not as convincing as he would expect it to be. Nor am I happy that the procedure he recommends should be the only way of preventing cross-subsidisation.
The noble Lord proposes that one should rely on the existing law, which works very slowly and only after
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there has been an offence; only after allegations of cross-subsidisation, which then have to be investigated. The OFT takes the case on board and it then makes a report that goes to the Monopolies and Mergers Commission. The commission in turn conducts an inquiry that may take many months or one or two years, as the case may be. It will be one or two years after the event, in the normality of circumstances, before one can obtain an answer to the allegation.
Here is an attempt to deal with the difficulty before it arises, and not to have allegations examined at length after the incident has arisen. Nonetheless, I repeat my gratitude to the noble Lord for having explained why it is that the Government believe that the principles behind the amendment are met in the legislation. That being the case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 [Power to require security]:
12.45 a.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 131:
Page 11, line 14, at end insert—
("and such security shall not exceed one-sixth of the anticipated annual payment for supply of gas.").
The noble Lord said: My Lords, the House will be aware that Clause 11(1) applies essentially to the normal domestic consumers of gas. At a time when poverty in the United Kingdom among the 50 per cent. of the population who own only 4 per cent. of the disposable assets of the country is increasing, there are a number of potential gas consumers who are probably not as well placed financially as many of us who live not necessarily in affluence but in comparative comfort. To them the provision of sums by way of security represents quite a significant drain on their personal resources. I am well aware that members of Her Majesty's Government tend to concentrate on the wellbeing of that quite considerable section of the working population who are in work, but there are quite a large number who are not; and among those who are working there are a number of people who are on very low incomes indeed and a number of people who lack any significant financial resources or disposable property other than the clothes in which they stand, the furniture that they may have and the few personal possessions which they have managed to acquire over the years. They are not well off people; they are poor people.
I think that very often in this modern age there is a tendency among those who are more comfortably off to pretend that "the other half does not really exist, or if it does, that it is of no particular consequence and not particularly deserving of any concession. It is on behalf of those poorer people that we on these Benches seek to speak on this occasion and we hope to be joined by all like minded people in whatever part of the House they may sit.
We think that the security ought not to exceed two months' consumption at current prices. The amendment says:
"one-sixth of the anticipated annual payment".
We do not think that figure is unreasonable and we do not see why this provision should not be written into the Bill. If the Government can find any particular reason that impels them to exclude the amendment, we should be glad to hear it. We just think that it is fair; and we commend that fairness to your Lordships' House. I beg to move.
Baroness Gardner of Parkes: My Lords, I am sorry, but I think that this amendment is totally wrong. First of all, this clause covers work such as the laying of a pipe which might involve a very large sum of money. Clause 11 (1)(a) covers the pipe laying and the security is related to that. Certainly if one intends to become involved in the cost of laying an expensive pipe, there must be a high security for that. On the other hand, the sort of persons to whom the noble Lord, Lord Bruce, is referring, who are not able to afford any significant security, would not be having a new pipe laid. Rather they would be wanting a supply connected, and this is now dealt with on quite a different basis by supplying a prepayment meter. If such a meter were supplied, no security would be required. Therefore, though I think that the noble Lord's reasons and motives may be good, his amendment is not.
Lord Brabazon of Tara: My Lords, this is a subject on which we have touched on earlier occasions. At the Committee stage noble Lords opposite originally tabled an amendment calling for one-twelfth of the deposit, and in another place they were asking for one-twenty-fourth. We understand the anxieties to which the need for security payments gives rise. At the same time, we have to recognise that the Bill, like current gas legislation, places onerous supply obligations on public gas suppliers and there has to be a counterweight to these. Security payments are one.
It is not unreasonable that a public gas supplier should be able to obtain security in respect of charges which are likely to arise. But this security must be realistic. The practice of British Gas is to secure a sum equivalent to the two heaviest quarters' consumption. What the amendment proposes would come nowhere near that. It would be insufficient even to offset one quarter's charges.
It is a question of balance. There is of course no fixed amount or formula specified in the Bill with regard to security payments, and ultimately it would be for the director to determine whether an amount demanded was reasonable in enforcing the public gas supplier's duty to supply under Clause 10(1). My noble friend Lady Gardner rightly mentioned the possibility of a pre-payment meter, which in the case of poverty, to which the noble Lord, Lord Bruce, referred, would probably be the best answer.
I am afraid that we consider the best way to approach security deposits is to leave the Bill as it stands; that is to say, with it being for the director to determine whether an amount demanded is reasonable. Therefore, I regret to say that I cannot accept the amendment.
Lord Bruce of Donington: My Lords, I am sorry that the noble Lord is not able to accept the amendment. I assure the noble Baroness that I fully understood the implications of the provision in the Bill when I moved
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the amendment, but I accept the view that she put forward as to its application. However, that point does not ameliorate hardship.
I am sorry that the noble Lord has not been able to comply with the request, but I suppose that that is all one can expect in such circumstances, when the Government have shown themselves throughout the proceedings singularly immune to suggestions that their precious Bill might in any way be wrong, even in the detail. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 132 not moved. ]
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 133:
Page 11, line 28, leave out ("in writing").
The noble Lord said: My Lords, with the leave of the House, I shall speak also to Amendments Nos. 159 and 191. The purpose of these amendments is essentially drafting, and quite straightforward. Clause 48(1) of the Bill defines "notice" as notice in writing. Where references to notice occur in Part I of the Bill, the additional words "in writing" are therefore redundant. We are simply removing them to improve the drafting of the Bill. I hope that noble Lords will agree. I beg to move.
Lord Bruce of Donington: My Lords, we on this side of the House are very glad indeed that, on reflection, the noble Lord has fallen in with the suggestions that we ventured to make to him in Committee.
On Question, amendment agreed to.
[Amendment No. 134 not moved.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 135:
Page 11, line 41, leave out ("six") and insert ("three").
The noble Lord said: My Lords, it may be for the convenience of the House if, with this amendment, we discuss Amendment No. 152. I did not move Amendment No. 134 because I appreciate that it is difficult to fix a rate of interest which is not less than the market rate. The market rate changes often. In relation to the period of six or three months, it seems wrong that British Gas plc should be able to hold money for six months without paying any interest. Three months would be a more reasonable period.
I feel sure that the noble Lord will have thought about this matter since we discussed it in Committee. I hope that he will be able to accept the amendment or at least tell me that he accepts its principle, and if the amendment is not correctly worded will bring forward an amendment of his own on Third Reading. I beg to move.
Lord Brabazon of Tara: My Lords, I listened carefully to what the noble Lord, Lord Stoddart of Swindon, has just said and what he said in Committee. If for a moment I may perhaps have the attention of the noble Lord, Lord Bruce of Donington, I should like to say that we accept the amendment as it stands and also the consequential amendment, Amendment No. 152.
Lord Bruce of Donington: The noble Lord had my attention, my Lords.
Lord Stoddart of Swindon: My Lords, I should like to thank the noble Lord for accepting the amendment and considering what we said in Committee. I must now press the amendment.
On Question, amendment agreed to.
[Amendment No. 136 not moved.]
Clause 14 [Fixing of tariffs]:
Lord Diamond Lord Diamond moved amendment No. 136A:
Page 14, line 8, at end insert ("after consultation with the council").
The noble Lord said: My Lords, I am confident that the amendment will meet with the same success as the last amendment. The amendment provides that at line 8 on page 14 in the clause which deals with the fixing of tariffs, at the end should be inserted:
"after consultation with the Council.".
I understand that it will be convenient to discuss also Amendment No. 138, in the names of the noble Lords, Lord Stoddart and Lord Gallacher. If the amendment were accepted the clause would read:
"the prices to be charged by a public gas supplier for the supply of gas by him shall be in accordance with such tariffs as may after consultation with the council be fixed from time to time by him".
At the moment, we want to concentrate on consultation with the council. There was some discussion at an earlier stage, at about 5 a.m. when no one claims to be at his or her brightest. It was with some difficulty that it was established that the prices were fixed by the gas supplier. It was also a little difficult to establish the point that consultation with the council was being pressed because one wanted to have that consultation before the tariff was fixed and that we should not have a method of complaining afterwards which was much more roundabout and time-consuming.
I hope therefore that on reconsideration of the matter during more acceptable hours of daylight, the Government have come to the conclusion that it is reasonable that the council should be consulted and that it should be consulted before the price is fixed. I beg to move.
Lord Gallacher: My Lords, as Amendment No. 138 is also relevant in this context, it would perhaps be for the convenience of the House if I spoke to it now. Clause 14(1) seems to us to be heavily loaded in favour of the gas supplier. Provided that he is operating within the tariff laid down, any reading of Clause 14(1) leads one to think that the gas supplier may do what he likes. Any changes he makes to the tariff can be as complex as he likes and as bewildering as he is capable of devising. Provided that no one can prove that anything within the tariff structure is not in accordance with the tariff scheme, he is free to proceed as he wishes.
That seems to us an excessive power and a negation of what a gas consumers council is supposed to be about. The purpose of Amendment No. 138 is to bring the Gas Consumers Council into the ball game,
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although not in any decisive way. It is not permitted to take penalty kicks at the public gas supplier's goalkeeper. It is simply entitled to information so that, as a council, it is capable of comprehending what is being proposed. The amendment also seeks a timescale for consultation of such a kind that the Gas Consumers Council can legitimately say that it has a meaningful relationship with the public gas supplier about tariffs.
1 a.m.
It seems to me that, short of that kind of arrange-ment, the Government are demeaning the Gas Consumers Council, about which they made a great song and dance when they told us that this body was to be set up, and that thereafter, in conjunction with the Director General of Ofgas, all would be well and that the consumer would have nothing to fear from this public limited company that they are creating on the basis of a statutory monopoly. Some of us think rather differently. We feel that the consumer may have a great deal to fear. I might say, in passing, that one is surprised at the comparative complacency of the consumer movement in this regard. One can only assume that the penny has not yet dropped. That seems to us regrettable.
It will be a tragedy, in our opinion, if we pass into law a Bill which the Gas Consumers Council reduced to the mere transmission of complaints either to the Director General of Ofgas or to the public gas supplier itself. That, for our money, is not a fit and proper role for a gas consumers council. Certainly under public ownership the Gas Consumers Council, at national and regional levels, enjoys powers far in excess of those it is proposed should be given to it under the Bill. For this reason, we feel that the amendment in the name of the noble Lord, Lord Diamond, and also Amendment No. 138 in the name of my noble friend Lord Stoddart and myself, are fully justified. I hope that the Government will at least say something meaningful at this stage, having had due notice of our concern about the issue.
Lord Belstead: My Lords, as Clause 14 makes clear, the public gas supplier will be required to publish not only tariffs but also the principles on which charges are to be made. This should provide the necessary assurances that within the overall framework of price control, tariffs are being set in a way which is both fair and non-discriminatory as required by Clause 14(3). Although he has no direct role, Clause 14 is, of course, one of the clauses to which the director's enforcement powers under Clause 28 of the Bill apply. If the public gas supplier failed in any of his duties under Clause 14(1) or (3), the director would be able to make an enforcement order which, if not complied with, would open the way for damages by anyone whose interests were adversely affected.
The regulatory regime therefore provides an effective and reliable means of policing a public gas supplier's tariff obligations. I have not said anything, I realise, about the Gas Consumers Council. Condition 8 of British Gas's draft authorisation will require it to inform the council of any change in the price of gas or in the principles of charge. It will be open to the

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council to advise the director, using its powers under Clause 40, if it is concerned about any aspect of tariffs. It is right that the director should have a role in relation to the important matter of tariffs and that enforcement powers should be available to him. I devoted my first few words in reply to this trying to set that out. But although the Gas Consumers Council will have an important advisory role through which they will be able to exert considerable influence, I do not think that it is right to write them into Clause 14.
The noble Lord, Lord Gallacher, was critical of the powers given to the Gas Consumers Council; but I must say that I think the range of powers given to the council—particularly with the rounding off of their powers in Clause 33 which was put into the Bill in another place—means that the council has powers which are as wide as they could possibly want. However, in this particular case it is the director who is the policeman, seeing whether the public gas supplier is fulfilling his obligations under Clause 14, albeit with advice from the council. It is for that reason that I hope noble Lords will not press this amendment.
Lord Diamond: My Lords, I heard what the noble Lord had to say with regard to the strength of the director's position. I must say that I cannot see that his position is weakened in any sense by offering consultation with the council. I am sure that the two are complementary to one another and not opposed to one another. I should have hoped therefore that the Government would have accepted what is a very minimal amendment; namely, to bring in the council in its proper function of being consulted—nothing more than that—when the price is fixed.
I am sorry that they are not prepared to do so, but there is nothing that I can do about it at this hour although I have the strongest views to the contrary. Unless any other noble Lord wants to intervene at this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 136B:
Page 14, line 9, after ("him") insert ("in agreement with the Director or, where such agreement is not reached, by the Secretary of State.").
The noble Lord said: My Lords, I beg to move this amendment. In view of what we have just heard, there must be every reason to hope that this amendment will be accepted. This amendment inserts the words:
"in agreement with the Director or, where such agreement is not reached, by the Secretary of State".
Therefore, that part of the clause would now read that the tariffs will be fixed from time to time by the gas supplier and that the tariffs shall be so framed as to show the methods by which the charges are to be made as well as the prices which are to be charged, and shall be published, and so on. The amendment adds the words, "in agreement with the Director".
The Minister has said what an important role the director has. I can therefore see no reason why that role should not be incorporated in the clause and for it to be made clear—not as at present provided that the tariff was fixed by the gas supplier without any limitation whatever—that it should be fixed by him in agreement with the director.
If the gas supplier and the director find it impossible to reach agreement because they represent two different points of view—the one concerned with maximising the profits from the point of view of the shareholder, and the other concerned with maintain-ing a balance between the interests of the shareholder and the interests of the consumer—then the amendment which I am proposing suggests that, if agreement is not reached between the director and the gas supplier, then the Secretary of State should be the person to determine what the charges, and so on. should be. He is the person who has final responsibility and I cannot see that the Government could resent him being named in the Bill as having that responsibility. Therefore, all-told, I think that it is a very reasonable amendment which restores the balance which at present is lacking in the wording of the clause.
The wording of the clause makes it appear that the public gas supplier is the person who, without consult-ing the council, without any other limitation, fixes the tariffs; whereas in fact, as the Minister has pointed out, the director has a considerable say in the matter. This amendment gives shape and words to that say. I hope, therefore, that the Government will find it possible to accept the amendment, which I beg to move.
Lord Belstead: My Lords, if I may say so, I do not think that the noble Lord, Lord Diamond, need worry that in some way the public gas supplier, in trying to satisfy his shareholders, will, inflate prices for the consumer, because your Lordships will remember that the Bill has already provided for the director to have a considerable control over gas prices to tariff customers through the price formula in the authorisation. If the formula is exceeded, the noble Lord will remember that the director has the right to step in and, in the ultimate case, actually fix prices if there has been overpricing by the supplier.
Of course, the whole formula has been designed to ensure that any change in the price of gas is controlled by reference to changes in gas costs. In addition to this, the director can also use his Clause 28 enforcement powers in respect of the obligations placed on public gas suppliers by Clause 14. This clause requires the public gas supplier not only to publish tariffs but also the principles on which changes are to be made. Therefore, the regulatory regime which is being proposed here will provide an effective means of controlling the increase in the price of gas.
In moving this amendment, the noble Lord, Lord Diamond, spoke about the balance. With respect, I think that the balance here is about right. The director is acting as the policeman of what the public gas supplier is under a duty to do in Clause 14. However, that is quite a long step away from saying that the public gas supplier must go off and get his tariffs individually agreed by the director. That would be the effect of this amendment, and it is something which the Government would not wish to be carried out.
Lord Diamond: My Lords, I am grateful to the Minister for that explanation. I shall consider it carefully, and in the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 137:
Page 14, line 9, leave out from ("tariffs,") to ("shall") in line 11.
The noble Lord said: My Lords, I beg to move Amendment No. 137. As the clause presently stands, it says:
"Subject to the following provisions of this section, the prices to be charged by a public gas supplier for the supply of gas by him shall be in accordance with such tariffs as may be fixed from time to time by him, and those tariffs, which may relate to the supply of gas in different areas, cases and circumstances, shall be so framed as to show the methods by which and the principles on which the charges are to be made",
etc.
This amendment seeks to remove the words:
"which may relate to the supply of gas in different areas, cases and circumstances".
If this amendment were carried it would then read:
"and those tariffs … shall be so framed as to show the methods by which",
etc.
We move this amendment because, as the law stands, it seems that different prices can be charged for different areas. Indeed, that is the case. We fear that a great deal of unfairness will be caused; that those people who are remote from gas storage at the end of a pipeline may very well suffer and be charged additional costs for those reasons. The people in rural areas—particularly, for example, in Cornwall—may well be adversely affected. We see no reason why that should be so, and can see no good reason why those words should remain in Clause 14. We believe that the matter would be clearer and that there would be less risk of unfairness if they were removed, and that is what the amendment seeks to do.
We had a discussion on this at Committee stage. The noble Lord then rejected our amendment out of hand and I hope he has had second thoughts about it. There are worries about this, and they will continue. I hope he will agree with us that there are circumstances where people who are disadvantaged could very well have their gas prices increased, or fixed at a level above other areas.
I have mentioned rural areas because it is obvious that there the costs will be rather higher than in urban areas. At the moment the Gas Corporation evens out its charges and the price of gas in one area is virtually identical to what it is in another area. We do not want that to alter when British Gas is privatised. We want to ensure that there is no method by which the privatised Gas Corporation can alter the situation, and that is why we move our amendment and hope that it will be passed. I hope the noble Lord will look at the amendment sympathetically and accept it. I beg to move.
1.15 a.m.
Lord Belstead: My Lords, I recognise the reasons which have prompted the noble Lord to move this amendment; they are valid and understandable. I ask the noble Lord to recognise that in this part of the Bill we are not changing the law. I understand that when the Bill was being prepared considerable thought was given as to the way in which an avoidance of undue preference duty should be imposed upon public gas suppliers. The 1972 Act requires the corporation to avoid undue discrimination in fixing tariffs for supplies
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to premises of under 25,000 therms. A similar duty existed in the 1948 Act, except that it extended to all suppliers of gas. The limiting of the requirement was designed to mirror the restriction of the supply duty to customers requiring less than 25,000 therms. The law is as we are intending to continue it in the Bill. There was a considerable precedent for couching the undue preference duty in respect of tariffs in the way that it is couched in the Bill. That is what the amendment seeks to change.
The noble Lord has laid considerable emphasis on the problems of rural communities. The reason the law stands as it does, and why we want to continue it, is that it is always possible that circumstances might arise in the future whereby charging on a uniform tariff across the country no longer represented a fair or equitable distribution of the cost of providing the gas, and that it would be right in order to avoid unfair discrimination between consumers that a supplier could charge according to different tariffs in different areas. We believe that it is essential to provide flexibility in the Bill to allow for such a situation. I cannot agree to the amendment not because of a hidebound principle, but because if one is to have an undue preference provision in the Bill, one has to have written in some flexibility in case it is needed. British Gas has, I understand, given an assurance that it has no intention of changing its present arrangements for isolated communities.
I would not wish the House to believe that my reply to this amendment in some way presages a change in the policy of British Gas. We simply believe that we must have the drafting of the Bill as it is. As I say, if you are to have an undue preference provision, then if you do not have the ability to be able to charge according to different cases, areas and circumstances, the day could eventually come when a public gas supplier could find that he was in breach of his undue preference duty.
Lord Stoddart of Swindon: My Lords, I understand the point that the noble Lord is making, but I remain rather unhappy about it because it seems that there is a loophole here whereby the privatised gas corporation could make additional charges to those in remote parts of the country. However, I have taken note that the present British Gas Corporation has said that it will not seek to alter its present arrangements. This debate is on record and can be referred to. I sincerely trust that it will hold to this arrangement and its assurances. In the light of that and in the hope and expectation that it will, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 137A:
Page 14, line 11, leave out ("framed") and insert ("designed").
The noble Lord said: My Lords, this amendment is admittedly rather lighthearted. It proposes that as tariffs are to be fixed by the gas supplier they shall be so framed as to show the methods. "Framed" is a word that has certain overtones which might be misunderstood in this context. I think, therefore, that the word suggested in the amendment is a more happy choice. I therefore beg to leave out "framed" and to insert "designed", or any word other than one that carries the overtones of "framed".
Lord Belstead: My Lords, I recognise that the noble Lord is moving this amendment in a desire to frame nobody, but the parliamentary draftsman is quite clear that the word "framed" is the one that we ought to use. I understand that it is defined as meaning "to form or construct by fitting parts together". As your Lordships may be aware, the tariff may be composed of a variety of elements such as the charge for gas supplied and the standing charge, and it is those various elements which have to be fitted together in such a way as to show the methods by and the principles on which charges are to be made. It is for those reasons that I feel we ought to stick to "framed".
Lord Diamond: My Lords, I never disagree with the considered view of the parliamentary draftsman and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 138 not moved. ]
Lord Diamond Lord Diamond moved Amendment No. 138A:
Page 14, line 15, at end insert—
("() In fixing such tariffs the supplier, the Director and the Secretary of State shall have regard to the pursuit of efficiency and economy at all times and in particular, but without prejudice to the generality of the foregoing, in the acquisition of gas (whether from fields whose owners are at arms' length from the supplier or otherwise) and in resolving the problem of winter peak supplies.
Such tariffs may be based on the recovery of all costs properly incurred and ascribable to the supply in question together with a margin of profit, or on the price customarily charged at the date of authorisation as varied subsequently from year to year, first in respect of any increase in the cost of gas, and secondly, in regard to all other costs, as increased in respect of inflation and reduced by no less than 4 per cent of such costs as representing an efficiency factor.")
The noble Lord said: My Lords, this is indeed a very important amendment. It is at page 14, line 15, to insert the words on the Marshalled List; and there are quite a few of them. We are still dealing with the fixing of tariffs. I had better read the relevant parts of the amendment. It reads:
"In fixing such tariffs the supplier, the Director and the Secretary of State"—
the three major parties concerned—
"shall have regard to the pursuit of efficiency and economy at all times"—
there is no problem about that; that is already provided for under Clause 4—
"in the acquisition of gas (whether from fields whose owners are at arms' length from the supplier or otherwise) and in resolving the problem of winter peak supplies".
May I stop there for the moment and refer to the "acquisition of gas (whether from fields whose owners are at arms' length from the supplier or otherwise)". One knows of course that British Gas own their own fields and there is going to be quite a problem in the objective fixing of the price of gas when it is their own gas that British Gas plc will be acquiring and supplying to their customers. The cost of that gas will go directly on a cost-plus basis into the charge to be made. That provides a very great difficulty indeed, and therefore there has to be some care taken about it, as the amendment provides by saying that,
"the supplier, the Director and the Secretary of State shall have regard to the pursuit of efficiency and economy".
The amendment, as I have already indicated, also refers to,
"resolving the problem of winter peak supplies".
Your Lordships know that this is an ever-present problem and that that problem of winter peak supplies can be dealt with either in a way which does not affect the price formula—it is treated as an additional cost and is just passed on, as would happen if British Gas merely made arrrangements or continued the arrange-ments which it has already made for acquiring winter peak supplies at, presumably, well-above average costs—or, alternatively, the costs would not be passed on in that way at all but the costs would arise, as I have already indicated, from the alternative method of dealing with this problem by storage, by having additional storage facilities; in which case the additional cost would not arise to anything like the same extent and there would instead be what might well be a much smaller cost of the depreciation, and so on, of the capital involved in the facilities provided for the winter storage. Therefore, that is one of the problems which has to be referred to and that is why that is provided in the amendment.
Then the amendment goes on to say:
"Such tariffs may be based on the recovery of all costs properly incurred and ascribable to the supply in question together with a margin of profit"—
that is to say, it can be cost-plus. The alternative is then described:
"or on the price customarily charged at the date of authorisation as varied subsequently from year to year, first in respect of any increase in the cost of gas, and secondly, in regard to all other costs, as increased in respect of inflation".
So that provides for the two methods which refer to both the charges for gas supplied and to the standing charge which we have recently discussed.
The amendment which I am moving brings into the Bill (in the only way in which I can see one can bring it into the Bill) the whole of the charging formula which at the moment is completely absent from the Bill. It is the main method of protecting the customer, and yet it is not in the Bill at all. It is left to an authorisation which can be changed, as we know, by agreement. That provides very little protection to the consumer and that is why the amendment has been framed in the way it has, to enable discussions to take place concerning the basis on which the tariff should be fixed.
The amendment continues:
"Secondly, in regard to all other costs, as increased in respect of inflation and reduced by no less than 4 per cent, of such costs as representing an efficiency factor."
Again, this is the only way in which we can discuss the efficiency factor, and the factor that is proposed here is a figure of 4 per cent. of such costs.
We have, first of all, a precedent to follow. In the case of British Telecom, the efficiency factor was 3 per cent. on the totality. The figure that the Government have proposed is 2 per cent. on certain costs, but excluding the cost of gas itself. Gas itself costs approxi-mately one half of the total costs, and therefore, in fixing 2 per cent. on the other half, the Government are in effect proposing an efficiency factor of roughly 1 per cent. on the total. That is to be compared with 3 per cent. for British Telecom.
It is, of course, a totally inadequate figure. It does not match up at all to the kind of efficiency which could be achieved by British Gas with the greatest of ease. One per cent. on the total costs, which is what the Government propose, is a negligible factor. It means, as I feared (and I expressed my fear at Committee stage), that what is going to be involved is a straight cost plus, with only a deduction of 1 per cent. That is negligible, and I hope the Government reconsider that before establishing it in the authorisation. It is a negligible attempt to talk about efficiency in such a reduced percentage.
All the experience I have had would indicate that a figure of 5 per cent. would be more appropriate. I have compared notes with the noble Lord, Lord Bruce, and his view (he being more concerned with care and courtesy toward the Government than I am) is that 4 per cent. would be appropriate, and in the hope of getting his support I limited it to 4 per cent. I regard 4 per cent. as being the absolute minimum for a figure of efficiency as an encouragement to the managers of an industry like this which is changing so rapidly, and where the costs could be reduced so considerably.
The amendment introduces into the Bill the question of charges, which is perhaps the main protection for the consumer. It also encourages efficiency by providing an efficiency factor of 4 per cent. of the costs which are variable and which do not include the cost of gas itself. I hope that I have sufficiently explained the purpose and meaning of the amendment. I beg to move.
Lord Belstead: My Lords, the noble Lord, Lord Diamond, is seeking in this amendment to involve the director and the Secretary of State in the setting of tariffs. We went through this at Committee stage and I sought then to explain that the Government believe that the primary responsibility for the setting of tariffs should be with the supplier but within the overall framework of control set by the Bill and the authorisation. It will be for the director to ensure that the supplier adheres to the requirements of the Bill and the authorisation. He will also, of course, need to have regard to the duties set out in Clause 4, which include promoting economy and efficiency.
I like to think that the Bill, as drafted, meets to a considerable extent the spirit of the first part of the noble Lord's amendment but, as I have said, leaving primary responsibility for the setting of tariffs to the supplier. Perhaps I may just say in that connection that the noble Lord drew the attention of the House to the problem of winter peak supplies; and of course he is absolutely right. Ordinary domestic customers normally take the bulk of their gas in the winter, and therefore impose costs on British Gas for meeting winter peak demands. The tariff which British Gas sets reflects the costs of meeting this kind of demand and hence is implicitly covered by the arrangements already in place.
In the second part of the amendment the noble Lord proposes that there should be an efficiency factor of 4 per cent. in his version of the retail price index minus X plus Y formula, instead of the 2 per cent. chosen by my right honourable friend. I really cannot accept
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what the noble Lord has said about the efficiency factor. The cost reduction within the control of British Gas will be 2 per cent., this figure representing the results of an exhaustive study of the circumstances of British Gas. I am sure this represents the right figure to protect the interest of consumers.
The noble Lord's amendment also seeks to involve the director in the decisions made by a supplier on the acquisition of gas. We have been over this ground many times before, but may I simply say that the example of the United States, where direct control of prices at the well head led to almost a complete paralysis of exploration, shows the very undesirable effects of such an approach. I really think it would be very much in the long-term interests of British Gas to acquire gas on the best terms possible, since only in this way can it ensure that it remains competitive with other fuels.
I recognise that we have reached a moment with the formula when we are starting to disagree about the details, particularly on the value of the X factor. I am afraid that there is nothing we can do but disagree, and for me to say that the 2 per cent. figure was reached after a very thorough study.
Lord Diamond: My Lords, before the noble Lord sits down, on that single point of the 2 per cent. I am sure he will confirm that that is on the part of the costs other than the cost of gas. The cost of gas is about half, and therefore this represents about 1 per cent. on the total.
Lord Belstead: My Lords, the noble Lord's premise is absolutely right; it is the retail price index minus X that the non-gas costs must not rise above. I agree with the premise on which the noble Lord based his remarks. I am sorry; I am not capable of saying whether the noble Lord's conclusion is right. If I may say so, I should think that he is putting it low. But there it is. I shall look at what the noble Lord has said, and if I feel I ought to write to him, of course I shall do so.
Lord Diamond: My Lords, it is somewhat late and therefore I cannot pursue this matter to the same extent as I would otherwise want. This is an absolutely crucial matter. It is crucial for the protection of the consumer, and I cannot see that the premises, which the noble Lord has been good enough to agree with, lead to any conclusion other than the one I have drawn. It is the non-gas costs to which the 2 per cent. refers. The non-gas costs exclude the cost of gas, by definition. I am sure I can turn it up in an answer by a Minister, but it is firmly implanted in my mind that the cost of gas is approximately one-half.
The Minister has been good enough to nod and I am not putting it higher than that. Therefore, the 2 per cent. on one-half is equivalent to 1 per cent. on the whole. I had to use that figure, because it is the figure comparable with the 3 per cent. which applies in the case of British Telecom, and it gives some indication of the extent to which the Government are going easy with regard to British Gas. It is a wholly unsatisfactory figure. I am grateful for what the Minister said about the earlier part of the amendment, but the crucial figure is the efficiency factor and I have no doubt that

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we shall have to come back to this again. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Diamond Lord Diamond moved Amendment No. 138B:
Page 14, line 15, at end insert—
("( ) The tariffs referred to in subsection (1) above shall not apply until the Director has certified that he is satisfied that they are fair and reasonable having regard to the provisions of this section and of Part 1 of this Act generally.").
The noble Lord said: My Lords, this is a very moderate and modest amendment indeed. It does not seek to alter in any way the price-fixing arrangements or the reasons which the various parties must have in mind. The clause states that the prices to be charged by a public gas supplier shall be fixed by him. There is no doubt about that bald statement. The amendment merely removes some of the severity and the lack of balance of that statement, by adding that the tariffs
"shall not apply until the Director has certified that they are fair and reasonable having regard to the provisions of this section"—
there is nothing new there—
"and of Part I of this Act generally."
There is nothing new there. Part I includes, in particular, Clauses 4 and 7. No new material at all is being introduced. It is merely a statement of what the Minister referred to in more precise terms.
He has referred to the responsibility of the director and the input of the director in arriving at the tariffs and it is only reasonable, if the noble Lord insists on leaving the clause as it stands—namely, that the gas supplier shall fix the tariff—that the director shall be able to say "Yes, I have looked at them. I am satisfied that the tariffs are fair and reasonable having regard to the provisions of this Act." That seems a minimum and reasonable amendment and I hope that the Government will be prepared to accept it. I beg to move.
1.45 a.m.
Lord Belstead: My Lords, I regret to have to say that I must oppose this amendment for two reasons. The first is that it is really a re-run of Amendment No. 136B. The effect of that, your Lordships may remember, would have been to require the public gas supplier to agree his proposed tariffs with the director. This amendment says that the director must be satisfied that a new tariff would be fair and reasonable.
To replace the system of clearly established rules for tariff fixing by the general requirement that the director should be satisfied that tariffs are fair and reasonable would not produce satisfactory results for customers or for the health of the gas industry itself. It would in effect transfer the responsibility for individ-ual pricing decisions to the director. The incentive for efficiency which the price control formula brings would be lost. In its place there would grow up a bureaucratic system, as the justification for each and every price change had to be scrutinised.
If the noble Lord will forgive me for saying so, this is precisely why I mentioned the United States only a few minutes ago, because this is exactly what happened there with absolutely disastrous results for a time for the gas industry. I really feel that an amendment of this kind would also be disastrous for the gas industry in this country as well.
Lord Diamond: My Lords, I heard what the Minister said and I am grateful to him for giving attention to this matter. But of course I do not know the precise circumstances in America to which he is referring, or whether the Americans have continued the system of protection they have and to which we have referred in earlier clauses and which, so far as I knew, had continued. So there may have been a temporary upset which has been cured, for all I know, and the main essence of the system continued. I do not know, without going into the matter with much more care, whether it is a fair example to bring to show that this provision would not work.
I think it would work perfectly well. The director would be a reasonable person. He would be informed by the public gas supplier of the arrangements and tariffs proposed. He would not have to interfere unless he thought they were unfair and unreasonable. It is far better that he should be consulted in advance, which would have to be the case, rather than this long procedure, on which the Government rely and which the Minister has indicated, of the director complaining if the formula has in some way in his view not been carried out. There would certainly be argument about whether it has or has not. We have experienced that already with Oftel. There would be argument which would only be settled after years by the long-drawn-out process of making a direction, the direction being disregarded, and having to go to the courts to have it enforced.
I do not think that is the happy way of carrying on this industry. It would be far happier for the gas supplier and director to work together in the way that has been indicated. But if the Government are not prepared to accept the amendment, there is nothing more that I can do about it at this stage. I therefore ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 139:
Page 14, line 17, after ("may") insert ("not").
The noble Lord said: My Lords, it may be for the convenience of the House to discuss with this amendment Amendment No. 140A. The amendment seeks to exclude the possibility of a standing charge being made in addition to the charge for actual gas supplied.
At the present time, Clause 14(2) allows a supplier to make a standing charge in addition to the normal charge for gas. We believe that there ought to be at least a discussion, and perhaps even a vote, as to whether that system should continue to prevail. The amendment seeks to prevent the public gas supplier from making a standing charge as such; but taking into account Amendment No. 140A, it would allow the supplier to make a charge for the hire of meters and gas fittings.
Noble Lords will know that there has been a good deal of public disquiet about standing charges over a very long period of time. They are not understood by consumers of gas, who believe that they are simply a surcharge levied against them for no good purpose. They believe also that all charges should be on the basis of gas used, so that those who use most, pay more

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and are not subsidised by way of standing charges by the low gas users, who are usually the poor.
I know, and the noble Lord opposite knows, that standing charges have a legitimate purpose, but the public do not understand, nor do they accept, the reasons for standing charges. It would be far better therefore if they were done away with. The two amendments together would make it perfectly possible for the gas undertaking to make a charge for the hire of meters, fittings and what-have-you, and the public would understand, because they could see what those charges were for. They do not understand standing charges because they are not itemised and therefore the public do not know for what it is that they are paying.
It would be far better if standing charges were done away with. I do not expect the noble Lord to accept the amendment, and nor do I expect him to agree with my reasoning. However, I assure him that the public at large, if they were present and if they could hear what I was saying, would agree with me. If the public were voting, I have no doubt at all that the amendment would be carried. I beg to move.
Lord Diamond: My Lords, I support what the noble Lord, Lord Stoddart, has just said. Not only would the abolition of standing charges be good in terms of public relations, but it would be a minimum justice to those at the poorest level who use the minimum amount of gas and who therefore pay more for their heating per therm than do the rest of us. Those who are in particular difficulties, and perhaps even elderly persons who may suffer if they do not have enough gas, are discouraged because of the price. They use as little gas as they can because they cannot afford to consume as much as they need, and the net result is that they pay a price per therm that is excessively high. That would be avoided by the adoption of this amendment, which commends itself to the House.
Baroness Gardner of Parkes: My Lords, the poorest people would not benefit from this proposal. As I explained in Committee, when the rebate system for low usage was introduced, it was found that it did not benefit poor people and it was discontinued. The amendment would not be to the benefit of the poor.
Lord Brabazon of Tara: My Lords, the noble Lord, Lord Stoddart, said that he understood the purpose of standing charges but that the general public would no doubt accept his amendment. I shall seek to convince the noble Lord and the general public, if anybody is listening—which I rather doubt at this hour of the evening—that there is a good and valid reason for making standing charges.
Such charges cover the costs, as noble Lords know, of reading meters, the preparation of accounts, the maintenance of meters, connection to the mains, and of course the provision of an emergency service to deal with gas escapes. The standing charge is an important part of the tariff, in ensuring that the costs of providing gas are shared equally fairly between different customers, whether they consume large or small quantities of gas.
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Of course nobody likes paying the standing charge, but then I should imagine that nobody likes paying their gas bills at all. Abolishing the standing charge would mean that the costs that it cover would have to be recovered by increasing the rate per therm, and the amendment certainly does not make this clear to the general public who might observe it. It would definitely mean putting up the rate per therm.
I have to disagree with the noble Lord, Lord Diamond, in particular. He said that many pensioners and old people use only small quantities of gas. The reality is that there are a lot of pensioners and old people in this country who use more energy and have higher energy bills in order to keep their homes warm than do younger members of the population. These people would be hit harder by the abolition of the standing charge because of the increase in the price per therm.
I appreciate that standing charges are not popular.This subject has been looked into over many years and I think in fact that it was examined when the last Labour Government were in power, when it was decided that the best way was to keep them as they are at the moment. Therefore I cannot accept this amendment.
Lord Stoddart of Swindon: My Lords, I have listened to what the noble Lord has said and I have to tell him that over a very long period of time I have argued and discussed this matter at great length with all sorts of people. At the end of the day they still come to the conclusion that they would prefer standing charges not to be levied, particularly at the present level, and that they would prefer to pay per therm for their gas through either a credit meter or a slot meter.
I have already said that the Minister and I know the reasons for standing charges, but they are so complex that the ordinary public simply do not understand them or how they work. We can explain to them until we are blue in the face, but they still will not understand. I believe that it would be far better if standing charges were abolished. However, at this time of the morning I shall not put the matter to a vote, and under the circumstances the only thing I can do is beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 140 had been withdrawn from the Marshalled List. ]
[Amendments Nos. 140A, 141 and 142 not moved.]
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 143:
Page 14, line 34, after ("are") insert ("in the opinion of the Director.").
The noble Lord said: My Lords, I beg to move Amendment No. 143. Clause 14(4) reads as follows:
"Notwithstanding anything in section 12 or 13 above"—
that deals with the various rates—
"or the preceding provisions of this section, a public gas supplier may enter into a special agreement with any consumer for the supply of gas to him on such terms as may be specified in the agreement if either—
(a) the tariffs in force are not appropriate owing to special circumstances".
This amendment seeks to insert after the word "are" in subsection (4)(a) the words "in the opinion of the Director".
The director, whose function is to safeguard the interests of the consumer as well as to enforce the various obligations under this ever-amended authorisation, has been given a position of considerable importance in the whole of this Bill, and there is no reason why the word "appropriate" should not be qualified by,
"in the opinion of the director".
Is there any reason why the director should be excluded from the operation? On the face of it, it does not appear to us to be reasonable. The Government ought either to supply convincing reasons why the director should not be involved or accept the amendment. I beg to move.
2 a.m.
Lord Brabazon of Tara: My Lords, Clause 14(1) provides that the prices to be charged by a public gas supplier for the supply of gas by him shall be in accordance with tariffs that are to be fixed by him. This requirement on a public gas supplier is a "relevant requirement" which is enforced by the director under Clause 28. Clause 14(1) is, however, subject to subsection (4), which enables a special agreement to be entered into if the tariffs are not appropriate owing to special circumstances or the supply is for more than 25,000 therms a year.
The position therefore is that a customer who takes less than 25,000 therms a year pays for gas supplied on the basis of the Clause 14(1) tariffs unless these are not appropriate owing to special circumstances. As the requirement under Clause 14(1) is a relevant require-ment, and Clause 14(4) is in effect an exception to that requirement, it is open to a customer to complain to the director that a public gas supplier is insisting on a special agreement being entered into when the supply is for less than 25,000 therms a year and that there are no special circumstances which make the tariffs inappropriate. If the director was satisfied that there were no special circumstances, he would be under an obligation to take enforcement action against the public gas supplier under Clause 28, which would require British Gas to comply with Clause 14(1) and charge that customer according to the tariffs fixed under that subsection.
I hope that with that rather complicated explanation the noble Lord will feel that his amendment is unnecessary.
Lord Bruce of Donington: My Lords, I am greatly obliged to the noble Lord for having sought to elucidate the complexity of the position. Perhaps he will go a little further. I deeply sympathise with him in the interpretation of Clause 14, on which, as the noble Lord, Lord Gray of Contin, will recall, we had exchanges during the Committee stage. It did not appear clear as to whether the price is fixed by the gas supplier or by the director. He will recall the altercation, which was somewhat inconclusive, as he declined to contribute anything further to that part of the debate. I sympathise with the noble Lord, Lord Brabazon, in his endeavour to elucidate the complexities.
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Perhaps the noble Lord will supply one further glimmer of information even at this early hour. I am quite sure that noble Lords are feeling just as sprightly as they were at 2.30 in the early afternoon. Can he indicate the special circumstances that are envisaged in subsection (4)(a) and (b)? The words "special circumstances" can cover a multitude of sins or (shall we say at this time of the morning?) virtues. Can he please explain what he means by special circumstances? For all practical purposes, what are the circumstances that he envisages?
Lord Brabazonof Tara: My Lords, I must admit that at the precise moment I cannot give the noble Lord an example of the type of special circumstance that there might be. It may be that my memory will now be jogged as to exactly what a special circumstance could be. It could, for example, be a supply which was needed on a few days a year only. That is the only example that I can give the noble Lord at the moment. I can perhaps think of some more and write to him about them.
Lord Bruce of Donington: My Lords, I am greatly obliged to the noble Lord for having enlightened us with that example. It affords us some clue as to the way in which the mysterious mind of Her Majesty's Government and their advisers work. In those circumstances I ask the leave of the House to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 144 to 147 not moved ]
[Amendments Nos. 148 and 149 had been withdrawn from the Marshalled List. ]
Clause 15 [Public gas supply code]:
[Amendment No. 149A not moved.]
Schedule 5 [Public gas supply code]:
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 150:
Page 74, line 41, at end insert—
("() A public gas supplier shall in the case of credit meters ascertain at intervals of not more than 4 calendar months, the consumption of gas by the tariff consumer and recover any charges due to him.
() Where a prepayment meter is installed the tariff for gas supplied shall not exceed the total of the following—

(a)such proportion of the standing charge as is payable by credit meter consumers;

(b) the cost of gas supplied;

(c) a sum not exceeding 0·1 per cent. of the annual charge (this sum to be used to insure the contents of prepayment meters);

(d) a sum not exceeding two-and-a-half per cent., of the customer's net weekly income where an agreement has been reached for recovery of previous charges.

() Prepayment meters shall be recalibrated as soon as is practicable after the granting of any price increase and in any event not later than one calendar month afteer such an increase. Prepayment meters shall be emptied by the public gas supplier at intervals of not more than three calendar months.")
The noble Lord said: My Lords, the amendment seeks to ensure that the privatised British Gas will read credit meters at intervals of not more than four calendar months and that there is a proper relationship in the treatment of people who pay for their gas by coin-operated meters and those who pay by credit meter.
The present Gas Corporation has for some while been guilty—and I used the word advisedly—of not reading meters at least every four months. The result has been that many people feel most aggrieved because they receive instead of a proper bill an estimated account every six months and a real account every year. That is one thing in the case of a nationalised corporation, but it is another in the case of a private monopoly.
The amendment therefore seeks to ensure that meters are read once every four months and that the customer receives a proper bill every four months showing the amount of gas that has been used and charging for no more and no less than the gas that has been used.
We also seek to see that those who pay for their gas by slot meter are treated fairly in relation to credit customers. I understand that at present the additional charge (a surcharge) on people who pay as they go is high. That is most unfair. Time is moving on. I have no more to say at present. I shall welcome the noble Lord's reply. I beg to move.
Lord Belstead: My Lords, I realise that in this amendment the noble Lord seeks to be as fair as possible to the customer. I shall go straight to the part of the amendment that deals with meter reading and the emptying of meters. This is, of course, a very expensive operation. The man-hours involved lead to a significant cost, which is, of course, passed on in turn to the consumer. Given this, I do not believe I can agree that it would be right to lay a statutory require-ment on British Gas to read meters within specified time limits, since this would reduce the flexibility we desire and would require British Gas to carry out an expensive exercise which we do not consider to be, as a tried requirement, of advantage to consumers generally.
I should like to refer quickly to the practice of having meters read. I understand that the current practice of British Gas is that about two-thirds of its customers have their meters read every six months, but in all cases the customer receives a quarterly bill which includes a facility for the customer himself to correct an estimate, if he considers this to be inaccurate. I believe it is far better for British Gas to have the flexibility, based on experience, to decide on the optimum period which enables it to recover fully the cost of gas supplied while keeping to a minimum administrative costs passed on to the consumer.
Recalibration of prepayment meters is only occasionally necessary since the appropriate adjustment will be made from the rebate and to the customer from the money collected. As to emptying of prepayment meters, the normal cycle for emptying is 1'7 weeks. This reflects the average levels of consumption and the relatively high staff costs involved. In addition, however, British Gas will make a special visit to empty a full meter without charge.
I feel that the arrangements made are at the moment in the interests of the customer and that it is very much in the interests of the customer to allow flexibility for British Gas in the future. It is because I am genuinely worried about the way this amendment would tie
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down British Gas to arrangements that would not be in the interests of the customer that I feel I must resist it.
Lord Bruce of Donington: My Lords, I am very sorry that the noble Lord has not seen fit to accept the amendment. I am more particularly concerned with prepayment meters. It is well known that people with prepayment meters are, normally speaking, not the more highly endowed in monetary terms of the population of our country. They tend to be among the poorer people. From what the noble Lord has said, it seems to me that not only are they saddled with the extra burden involved in the prepayment meter but they are also involved in part with the charge that arises by reason of the visits that have to be made to clear the meters. As the noble Lord pointed out, this involved some extra cost that had to be recovered.
I am well aware that these circumstances have existed during the time that British Gas has remained a public corporation responsible through the Minister to Parliament and that therefore it would be open to Members of Parliament or to the public at large to mount a campaign to secure a fairer deal for those who have to have prepayment meters. So long as British Gas remained a public corporation, it would always be susceptible to public pressure. This is no longer to be the case. The noble Lord cannot even tell me that the regulations concerning the limitation of amounts paid in prepayment meters are incorporated in the authorisation.
He cannot even wave that document in my face and say, "It is all right, it is in the authorisation however susceptible that authorisation may be to alteration without the knowledge of Parliament." Bearing in mind that one of the aims of the Government in this matter is the avowed protection of the consumer, with a particular claim on the Government for the poorer consumer, I should have thought it right—because the sums of money are not vast—that this should have been incorporated in the statute.
Speaking for our part therefore we are very dissatisfied with this and we feel that we ought to test the opinion of the House upon it.
2.15 a.m.
Lord Stoddart of Swindon: My Lords, I moved the amendment and I am replying to the amendment.
Baroness Gardner of Parkes: My Lords, I should have liked to comment very briefly.
Lord Stoddart of Swindon: My Lords, I am sorry.
Baroness Gardner of Parkes: My Lords, I think that the problem with this amendment is that it is completely out of date. By the time the Bill is prepared it is totally ignoring the move within the industry away from meter reading altogether to remote meter reading and to prepayment by card that will be calibrated right at the source. I therefore think it very wrong.
Lord Stoddart of Swindon: The noble Baroness knows a lot more than I do about what is going on in the gas industry. I understand the system that she described is a long way off. It certainly will not be

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universal so far as I understand for a very long time yet. But we are talking here about charging most customers many hundreds of pounds for gas which they may or may not have used. There is a good deal of disquiet about estimated accounts. I have to confess that I do not like estimated accounts myself. I like to pay for what I have used.
We are reaching a situation where it would be possible for the gas industry, and indeed the electricity industry, to read meters by remote control. But, as far as I know, there are no real moves being made to do just that. It seems to me that rather than allow a privatised gas industry to carry on with the unsatisfactory method of estimating accounts and sending them out to people, causing a good deal of disquiet and sometimes financial difficulty, we ought to be insisting, through this amendment, that credit meters should one way or another be read every four months and that people should receive a bill every four months saying exactly how much gas they have used and how much they owe the gas corporation. That is the only proper and satisfactory way of dealing with matters.
My noble friend Lord Bruce dealt with the position of coin-in-the-slot meters and the difficulties that people have who pay their gas bills by this means. They are unfairly discriminated against—of that there can be no doubt at all. It is quite wrong that they should be discriminated against because, as my noble friend pointed out, they are very often among the poorest people. Sometimes they are people who have not been able to meet their obligations through a credit meter and have been forced into taking a prepayment meter by the gas board, or indeed perhaps at their own request, in order that they can better manage their affairs. My noble friend gave an indication that we would vote on this amendment; and we attach such importance to it that I think we should.
2.20 a.m.
On Question, Whether the said amendment (No. 150) shall be agreed to?
Their Lordships divided: Contents, 3; Not-Contents 18.

DIVISION NO.6

CONTENTS

Gallacher, L. [Teller.]

Ponsonby of Shulbrede, L.

Stoddart of Swindon, L.

[ Teller. ]

NOT-CONTENTS

Belstead, L.

Glenarthur, L.

Brabazon of Tara, L.

Gray of Contin, L.

Brougham and Vaux, L.

Hertford, M.

Campbell of Alloway, L.

Hooper, B.

Coleraine, L.

Long, V.

Denham, L. [Teller]

Lucas of Chilworth, L.

Elton, L.

Monk-Bretton, L.

Gardner of Parkes, B.

Skelmersdale, L.

Gibson-Watt, L.

Swinton, E. [Teller.]

2.28 a.m.
The Deputy Speaker (Lord Aberdare): My Lords, there have voted: Contents, 3; Not-Contents, 18. As it appears that fewer than 30 Lords have voted, in accordance with Standing Order No. 55 I declare the Question not decided, and that further proceedings on the Bill stand adjourned.

Clifton Suspension Bridge Bill [H.L.]
Returned from the Commons agreed to.
Disabled Persons (Services, Consultation and Representation) Bill
Returned from the Commons with the amendments agreed to.
Protection of Military Remains Bill
Returned from the Commons with the amendments agreed to.
Protection of Children (Tobacco) Bill
Returned from the Commons with the amendment agreed to.

Incest and Related Offences (Scotland) Bill [H.L.]
Returned from the Commons agreed to with amendments; the amendments ordered to be printed.
House adjourned at twenty-nine minutes past two o'clock.

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  LIFE SENTENCE REVIEW BOARD: MEMBERSHIP